Imagine a world where every dollar in circulation must be repaid—with interest.
Now imagine that same world trying to live sustainably.
That contradiction lies at the heart of Monetary Systems, Sustainable Growth and Inclusive Economic Development, a paper I presented in Kuala Lumpur. It explores how the very design of our money—not just our industries or habits—pushes societies toward overconsumption, debt, and inequality.
The Growth Paradox
Modern economies treat growth like oxygen—without it, governments panic, markets stumble, and politicians lose their jobs. But there is a catch: most of this “growth” is driven not by real production, but by money itself expanding.
In today’s monetary system, every unit of money is created as debt. Banks issue loans, expect repayment plus interest, and to make those payments possible, new loans must constantly be issued. The result is exponential monetary growth—a curve that rises faster and faster, never leveling off.
Real ecosystems, however, do not grow exponentially. They mature, stabilize, and renew. The economy, if tied to an ever-expanding money supply, can never do the same without exhausting the planet.
Why Sustainability Is Impossible Without Monetary Reform
The study compares this exponential pattern to a cancer cell: at first small and invisible, but eventually consuming everything around it.
When money grows faster than real output, two things must happen:
- Prices rise—inflation quietly erodes savings and wages.
- Or output must chase money—overproduction and resource depletion follow.
Either way, the current system forces us to consume more simply to survive within its logic. That is why “green growth” under a debt-based system remains a contradiction in terms.
Inclusion—or Illusion?
If the system were at least fair, one might justify its risks. But it is not.
Because banks create money as loans—with interest attached—there is never enough money for everyone to repay what they owe. Some must fail. This built-in scarcity turns access to money into a competition, systematically favoring those already holding financial assets.
Studies cited in the paper, including Margrit Kennedy’s analysis of German households, reveal that the top 10% of the population receive twice as much interest income as they pay, while the bottom 80% lose out. In other words: the system quietly transfers wealth upward every day, through prices, rents, and debt service.
So the same monetary mechanism that drives environmental collapse also drives inequality.
Searching for Better Models
The paper explores three potential alternatives to the current Modern Money Mechanism (MMM):
- The Islamic Gold Dinar (IGD):
A return to gold-backed money, limiting artificial expansion and anchoring value in a real commodity. Its discipline mirrors natural growth rates and aligns with Islamic principles of fairness and anti-usury. - Free-Money (Silvio Gesell’s Model):
A fiat money that depreciates slightly over time, discouraging hoarding and ensuring constant circulation. It introduces a “negative interest” that rewards spending and investment instead of speculation. - A Commodity-Based Information System:
The most forward-looking idea—using gold as a unit of account, but allowing transactions through digital information credits or mutual clearing systems. This model uses today’s technology to make exchange flexible and transparent, while keeping value anchored in tangible assets.
Each approach aims to realign money with the real economy—so that finance serves life, not the other way around.
Why It Matters
Our planet’s environmental and social limits are now impossible to ignore. But “sustainable development” remains hollow unless we confront the engine driving unsustainability: the way we create and distribute money.
A just and sustainable monetary system must circulate wealth instead of concentrating it, grow naturally instead of exponentially, and integrate ethics—whether through zakat (charity), demurrage (decay), or shared information systems—into its design.
Final Thought
We cannot heal an economy built on endless debt with more of the same medicine.
If growth is to serve humanity—and not consume it—we must start where the problem begins: in the logic of money itself.
Only by redesigning how money is created and circulated can we hope to achieve what both Islam and modern sustainability strive for: balance, justice, and inclusion for all.
Read the full study: Omerčević, E. (2013, January). Monetary Systems, Sustainable Growth and Inclusive Economic Development.
Presented at the 2nd International Conference on Islamic Economics and Economies of the Muslim Countries, Kuala Lumpur, Malaysia.
