Eradicating Poverty beyond Growth: Reforming the Global Financial Architecture for Ecological and Social Justice

ECONOMICS, 26 May 2025

Koenraad Priels - TRANSCEND Media Service

25 Feb 2025 – The global financial architecture operates as a sophisticated mechanism of systemic violence, perpetuating poverty, ecological destruction, and inequality through its foundational design. This report presents a scientific case that the current monetary system—built on the misrepresentation of money as both a commodity and a unit of value—is mathematically unstable, ecologically catastrophic, and inherently exploitative.

Drawing on empirical evidence, control systems engineering, and legal analysis, it demonstrates that the interest-bearing debt system (represented by the equation P≠P+IP=P+I) constitutes a global Ponzi scheme. Transitioning to an interest-free mutual credit system is not merely an economic reform but a fundamental requirement for achieving social equity and ecological sustainability within planetary boundaries.

The Mathematical Case: Systemic Instability of the Interest-Bearing Debt System

The P≠P+IP=P+I Paradox

At the core of the current financial system lies a mathematical contradiction: the total principal (PP) created through loans can never equal the sum of principal plus interest (P+IP+I). This discrepancy arises because the interest charged on loans is not created during the initial credit issuance. As a result, the system requires perpetual debt expansion to service existing obligations, creating an unsustainable cycle of exponential growth.

Control systems engineering analysis by Gauvin and Dominguez (2020) formalizes this instability. Their work proves that when principal or interest payments cannot be repaid, debts inevitably grow to infinity due to the system’s inherent design. This mathematical inevitability forces economies to prioritize growth over ecological and social well-being, as stagnation triggers defaults, austerity, and recession.

 The Ponzi Scheme Structure

The global financial system mirrors a Ponzi scheme in three critical ways:

1. Dependence on perpetual debt expansion: New loans must continually be issued to service interest on existing debts.
2. Wealth extraction: Approximately €15 trillion in annual interest payments flows from borrowers (often low-income populations and nations) to financial institutions and wealth holders.
3. Systemic fragility: Like all Ponzi schemes, the system collapses when debt expansion slows, as seen in the 2008 crisis and subsequent austerity measures.

This structure violates the laws of thermodynamics, as infinite growth is impossible on a finite planet. Economic activity already exceeds Earth’s regenerative capacity by over 70%, driving biodiversity loss, climate change, and resource depletion.

Empirical Evidence of Systemic Fraud in Banking

Money Creation “Out of Nothing”

Professor Richard Werner’s 2014 empirical study revolutionized banking theory by demonstrating that individual banks create money ex nihilo during loan issuance. Contrary to the “financial intermediation” myth—which claims banks lend existing deposits—Werner showed that loans generate new deposits through accounting entries. This practice allows banks to charge interest on money they create at no cost, constituting systematic misrepresentation and fraud.

Institutionalized Deception

Academic institutions and regulatory bodies perpetuate this fraud:

• Misleading education: Economics textbooks continue to teach debunked theories of banking, as evidenced by the complaint against Vrije Universiteit Brussel for promoting financial intermediation myths despite Werner’s findings.
• Regulatory complicity: Authorities like Belgium’s FSMA dismiss whistleblower reports about systemic fraud, citing narrow mandates while ignoring the €15 trillion annual interest extraction and its human rights impacts.

This institutional denial mirrors historical patterns of organized crime, where legal and academic structures protect exploitative systems.

Socio-Ecological Consequences of the Current System

Human Rights Violations

The interest-bearing debt system entrenches poverty and inequality:

• 3.3 billion people live in countries where interest payments exceed education spending1.
• 12.5 billion hours of unpaid care work—primarily by women—are performed daily to subsidize economies distorted by financial extraction1.
• 10,000 deaths daily, including 5,000 children, result from polluted water and poverty linked to debt-driven resource exploitation1.

Ecological Overshoot

The growth imperative inherent in P≠P+IP=P+I forces ecological destruction:

• Resource extraction: To service debts, nations prioritize export-oriented industries over sustainable land use, driving deforestation and soil degradation.
• Climate breakdown: The derivatives market, valued at over $1 quadrillion, incentivizes fossil fuel investments despite scientific consensus on decarbonization1.
• Wealth-pollution nexus: The richest 1% emit 8,000 times more CO₂ than the poorest billion, yet benefit most from interest-driven capital accumulation1.

Legal and Ethical Imperatives for Systemic Reform

The Case for Ecocide Prosecution

Belgium’s 2024 Ecocide Law establishes a precedent for prosecuting financial systems that cause “serious, widespread, and long-term environmental damage”. The current architecture meets this definition by:

1. Forcing infinite growth despite planetary boundaries.
2. Extracting €15 trillion annually from public budgets and households, diverting funds from climate adaptation1.
3. Enabling tax havens and corporate impunity, which exacerbate global inequality.

Human Rights Law Violations

The system breaches multiple international agreements:

• Right to life (ECHR Article 2): Debt-driven austerity cuts healthcare and social protections.
• Right to education (ICESCR Article 13): 3.3 billion people face underfunded schools due to interest prioritization.
• Indigenous rights (UNDRIP): Extractive industries, financed by interest-bearing loans, displace communities and destroy ecosystems.

Transitioning to an Interest-Free Mutual Credit System

Correcting Money’s Misrepresentation

The solution lies in redefining money as a pure measure of value rather than a commodity. This requires:

1. Interest-free public credit: Replace profit-driven banking with transparent, publicly accountable credit systems.
2. BIBO (Bounded Input-Bounded Output) currency: Implement passive liquidity systems that prevent debt exponentialization.
3. Debt jubilees: Cancel illegitimate debts, particularly in Global South nations exploited by structural adjustment programs.

Case Study: Transforming Belfius Bank

Belgium’s publicly owned Belfius Bank could pioneer this transition by:

• Issuing interest-free loans for renewable energy, housing, and sustainable agriculture.
• Prioritizing socio-ecological metrics: Evaluate investments based on job creation, emissions reduction, and community health rather than profit.
• Serving as a model for other public banks, demonstrating that credit can be a public good rather than a tool of extraction.

Global Implications

An interest-free system would:

• Liberate €15 trillion annually for education, healthcare, and ecological restoration.
• Decentralize economic power: Communities could design localized economies without debt-driven growth constraints.
• Align economies with planetary boundaries: Replace GDP with well-being indicators like the Doughnut Economics model2.

Overcoming Challenges to Reform

Institutional Resistance

Financial elites and complicit regulators will resist reforms that threaten their €15 trillion annual interest revenue. Strategies to counter this include:

• Whistleblower protections: Shield researchers and officials exposing banking fraud.
• Public banking initiatives: Build parallel systems to marginalize extractive finance.
• Litigation: Use ecocide and human rights laws to prosecute central banks and regulators for systemic harm.

Cultural Shifts

Transition requires dismantling the myth that interest is “natural” or inevitable:

• Education campaigns: Teach the public about money creation and alternatives.
• Artist and media partnerships: Communicate systemic flaws through accessible narratives.
• Grassroots movements: Mobilize unions, climate activists, and faith groups around debt justice.

Conclusion: A Civilizational Imperative

The equation P≠P+IP=P+I encapsulates the fatal flaw of our financial system: it is mathematically designed to extract wealth, destabilize societies, and destroy ecosystems. The €15 trillion annual interest burden is not an economic necessity but a political choice—one that prioritizes oligarchic power over human and planetary survival.

Transitioning to an interest-free economy is not utopian; it is a scientific and ethical imperative. Belgium’s pioneering ecocide litigation and Werner’s empirical evidence provide a blueprint for global action. By redefining money as a public good, humanity can eradicate poverty, restore ecosystems, and build economies that serve life rather than extraction.

The choice is stark: perpetuate a Ponzi scheme that dooms billions to poverty and ecological collapse, or embrace financial innovation that honors planetary boundaries and human dignity. The time for reform is now.

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Rapport for the special rapporteur of the UN by Koenraad Priels 25/02/2025 and recognition

Van: François Denuit <francois.denuit@srpoverty.org>
Verzonden: woensdag 26 februari 2025 11:44
Aan: koenraad priels <koenraad.priels@hotmail.com>
CC: HRC-SR on Extreme Poverty and HR <hrc-sr-extremepoverty@un.org>
Onderwerp: RE: Input beyond growth roadmap

Dear Koenraad Priels,

On behalf of the UN Special Rapporteur on extreme poverty and human rights, we sincerely thank you for your valuable contribution to the Roadmap for Eradicating Poverty Beyond Growth. We greatly appreciate the time and effort you put into your submission.

Your analysis of the global financial system and its structural flaws, particularly its role in perpetuating poverty and ecological destruction, provides a critical perspective for rethinking economic governance in alignment with social justice and planetary boundaries.

As we move forward with the analysis and integration of the inputs received, we would also like to ask whether you would oppose having your submission published on our website in due time. Please let us know if you have any objections to this.

Thank you once again for your engagement and support in this important endeavour. We look forward to staying in touch as the process evolves.

Best regards,
François

François DENUIT

Senior Advisor to the UN Special Rapporteur on extreme poverty and human rights +32 (0)474 62 08 98 | francois.denuit@srpoverty.org 

UN Special Rapporteur on extreme poverty and human rights / srpoverty.org @srpoverty

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Koenraad Priels is an independent researcher and social-ecological activist whose work focuses on the systemic links between financial architecture, systemic violence, ecocide, and global inequality.

This article originally appeared on Transcend Media Service (TMS) on 26 May 2025.

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