Monetary Interest as a Percent of GDP

Graph #1: Monetary Interest Paid as a Percent of GDP

Now, the monetary interest shown here is not a part of GDP. Only the net interest is. And anyway you'd see it as part of GDI, not GDP. Nonetheless, there is that much interest being paid, as much as 30% of GDP being paid as interest every year.

If debt-as-liability and debt-as-assets were both equally distributed, then you could say "we pay it to ourselves". But that's not so much the case. It's more like "we pay it to the one percent." Something like that.

I always come back to this: If we spend the interest we receive, then it doesn't matter much what portion is interest. But if the interest we receive stays in savings, then it matters very much. For even if interest expense and interest income both were owned and owed equally by everybody, but we tended to save more of it than we spend, then we would eventually -- inexorably -- create the sort of financial crisis that just ruins an economy for years and years and years.

If wealth and income are not equally distributed, that only speeds the process.

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Related post: Disastrous, cumulative and far-reaching repercussions of saving