Modern money is often misunderstood. Many people still imagine that banks lend money that already exists, that savings come first and credit comes after. In reality, in contemporary economies, commercial banks create money when they grant loans. Money is created ex nihilo as a counterpart to debt.
This does not mean that banks can create money without constraint. They face regulation, capital requirements, risk, central-bank policy and demand for credit. But the essential mechanism remains: a bank loan creates a deposit. The borrower receives money, and at the same time a debt is recorded.
This architecture has enormous consequences. If most money enters the economy as debt, then the circulation of money is tied to repayment obligations. The economy must constantly generate enough income to service past debts. Growth is no longer merely a political choice or cultural obsession. It becomes a condition of monetary stability.
Money as a social institution
Money is not a natural object. It is not a metal, a substance or a neutral technical tool. It is a social institution, a system of recognized claims, a collective language of value and obligation.
The key question is therefore not whether money exists, but how it is created, by whom, for what purposes and with what consequences.
A society whose money is created mainly through debt will not behave like a society whose money is created debt-free to finance collective needs. The origin of money matters. Its architecture matters. Its conditions of issue matter.
The creation of bank money
When a bank grants a loan, it does not simply transfer pre-existing savings from one account to another. It creates an asset — the loan — and a liability — the deposit credited to the borrower. The borrower can then spend this money, and it circulates through the economy.
But the money was born with a shadow: the obligation to repay principal and interest.
This is the core of debt-money. Money appears as a temporary advance that must return to the banking system. The system works as long as enough new income, new credit and new activity allow old debts to be serviced.
The problem of interest
Interest intensifies the growth pressure. If only the principal is created when loans are issued, but principal plus interest must be repaid, then the economy needs continuous monetary expansion, refinancing, income growth or defaults.
In practice, the system does not require a simplistic mechanical shortage of money, because new credit is constantly created and interest payments circulate. But the structural pressure remains: debts must be serviced through future flows, and future flows must be large enough to sustain solvency.
This creates a permanent demand for growth, productivity, competition and expansion of monetized activity.
The debt treadmill
Households borrow to buy homes, cars, education and consumption goods. Firms borrow to invest, survive competition and expand. States borrow to finance deficits, stabilize crises and support infrastructure. Banks and financial markets package, refinance and trade claims on future income.
Everyone runs to keep the system solvent. This is the myth of Sisyphus of debt: the rock is always pushed upward, but the slope never ends. Each generation inherits obligations from the previous one and must expand activity to avoid collapse.
When growth slows, the fragility appears immediately: defaults rise, unemployment increases, tax revenues fall, deficits expand, banks tighten credit and public authorities intervene to prevent collapse.
Ecological contradiction
The debt-growth architecture might appear manageable in a world without ecological limits. But we do not live in such a world. We live on a finite planet, with climate limits, biodiversity thresholds, resource constraints and fragile ecosystems.
If monetary stability requires expanding economic flows, and if expanding flows require energy and materials, then the monetary system becomes one of the engines of ecological overshoot.
This does not mean that every loan is destructive. Credit can finance useful projects. But when the system as a whole depends on expansion, even green investments are embedded in a broader growth imperative.
The false solution of austerity
One might think that the answer is simply to reduce debt through austerity. But austerity in a debt-based monetary system often makes the problem worse. If public spending is cut, incomes fall. If incomes fall, debts become harder to repay. If debts are harder to repay, defaults and social suffering increase.
Austerity attempts to restore accounting balance by compressing the real economy. It treats the symptom — debt ratios — without changing the monetary architecture that produces dependence on debt in the first place.
The false solution of unlimited credit
The opposite error is to imagine that central banks and states can simply create unlimited money to avoid the debt constraint. But money creation without criteria can fuel asset bubbles, inflation, waste and political capture.
The question is not whether more money should be created. The question is what kind of money, for which activities, under which limits and with what mechanisms of destruction.
Toward debt-free money creation
NEMO IMS proposes a different principle: debt-free monetary creation targeted toward socially and ecologically necessary functions. Instead of creating money primarily through credit for profitable activities, society could create money to finance what strengthens collective robustness.
This includes ecosystem restoration, care, education, health, climate adaptation, low-impact infrastructure, water protection and other essential functions that markets often underfund because they do not generate sufficient private returns.
Debt-free money creation does not mean irresponsible creation. It requires rules, governance, measurement, democratic oversight and mechanisms to prevent abuse. But it breaks the link between money and repayment-driven growth.
Monetary destruction and circulation
A system that creates money without debt must also think seriously about monetary destruction. Otherwise, monetary creation can become inflationary or uncontrolled.
This is why NEMO IMS links creation to destruction through transaction-based demurrage. Money can be created to finance regenerative functions, then gradually destroyed through transactions according to their ecological and social impact.
Low-impact transactions face a low basic rate. Degenerative activities face higher rates. In this way, the monetary system regulates circulation and makes destructive flows bear part of their systemic cost.
Changing the question
The current system asks: how can we generate enough growth to repay debt?
NEMO IMS asks: how can we create and destroy money so that the economy remains within ecological limits while financing the essential?
This shift is decisive. It moves the debate from debt management to monetary design; from growth to robustness; from solvency at all costs to the preservation of the conditions of life.
Conclusion: pushing a different rock
The myth of Sisyphus of debt is not fate. It is the consequence of a monetary architecture. If money is created as debt, society must run after repayment. If money is created for life, and destroyed according to impact, the direction of the economy can change.
The task is not to abolish money. It is to free money from the logic that turns the future into collateral for the present and the living world into fuel for repayment.
A civilization facing ecological limits cannot remain trapped in a monetary system that requires endless expansion. It must learn to create money differently, circulate it differently and destroy it differently.