The Toxic Effects of Fraudulent Money

The Hidden Cost of Our Money System and the Path to Genuine Abundance

July 1, 2026 | By AD News Network

For decades, a deceptive financial architecture has quietly reshaped societies around the world. It promises stability and growth while delivering rising inequality, environmental destruction, and widespread insecurity. Recent analysis by Alex Krainer in his article "The Toxic Effects of Fraudulent Money" republished below lays bare this reality through a compelling parable. In a simple village economy, a banker introduces interest-bearing notes that force competition where cooperation once thrived. Because the interest demanded is never fully created in the system, some participants must inevitably lose. Over time, this leads to bankruptcy, land consolidation and rent seeking (oligarchs are now competing against each other) among the wealthy, social division, and relentless pressure for expansion that eventually consumes the natural world itself. What begins as a convenient tool for exchange becomes a mechanism that turns neighbors into rivals and abundance into engineered scarcity.

This is not abstract theory. It describes the debt-based fiat money system that literally has a death grip on our "modern" lives. Most people think about where to obtain their next Federal Reserve Note fix and not on alternatives. They are so totally locked into this monetary system their minds cannot imagine any other alternative. Central banks create currency through lending, Professor Richard Werner calls it "fairy dust magic money," and government borrowing, injecting ever-larger amounts of credit to sustain growth and service existing debts. The result is chronic inflation that quietly erodes savings and wages while inflating asset prices held primarily by the already wealthy. Those who control or have privileged access to new money creation benefit first and most. Everyone else pays the price through diminished purchasing power and heightened economic anxiety. Japan's yen just hit 162 yen to one US dollar yesterday, the first time in 40 years. Inflation is eating the average Japanese citizen's lunch - and dinner.

Entrepreneur and author Jeff Booth has spent years examining this dynamic with a focus on technological reality. In his book The Price of Tomorrow: Why Deflation is Key to an Abundant Future, Booth argues that exponential advances in artificial intelligence, automation, renewable energy, and other fields are inherently deflationary. These innovations dramatically reduce the cost of production and distribution. In a truly free market, prices should fall as efficiency rises, allowing society to achieve more with less human labor and fewer resources. This should be cause for celebration, a doorway to shared prosperity. Yet the prevailing monetary order fights against this natural progress at every turn. Booth explains that the system depends on inflation to make debt manageable. Without continuous credit expansion, the mountain of obligations accumulated over decades would collapse under its own weight. Policymakers therefore prioritize measures that maintain or accelerate price increases, effectively punishing savers and workers while protecting large debtors and financial institutions. The public has been led to believe this arrangement represents a free market. In truth, it is a highly managed environment where the rules favor entrenched elites who have first dibs on all newly created money while everyone else gets slammed by inflation.

Booth highlights a crucial point that resonates deeply with Alex Krainer's critique (see below). We have never truly experienced a free market in modern times because money itself has been distorted by centralized control. Bitcoin (btc) changes that equation. As a decentralized protocol, with emphasis on protocol, with a hard cap of 21 million coins, btc operates outside the reach of inflationary policies. It functions as sound money grounded in verifiable scarcity and secured through energy-intensive computation. In Booth's view, btc represents the first genuine global free market for value exchange. It allows prices to reflect real technological improvements rather than monetary manipulation.

The implications are profound. Individuals and communities can begin to opt out of the extractive cycle by shifting their time, energy, savings, and economic activity toward this alternative foundation. Booth encourages people to allocate more of their resources to btc, not merely as speculation but as a long-term alignment with deflationary abundance. This move reduces dependence on depreciating fiat currencies and the debt structures built upon them. It fosters personal sovereignty and supports the development of parallel systems less vulnerable to centralized failure.

For those concerned about job displacement from advancing technology, Booth offers a hopeful perspective. Rather than resisting deflation, society should embrace it. Falling prices mean that the benefits of higher productivity can be widely shared without massive government redistribution programs. People may need to work fewer hours to maintain a good standard of living, freeing time for creativity, learning, and community building. The challenge lies in transitioning thoughtfully before the tensions within the old system produce greater instability.

The current arrangement has enriched a small class of insiders while leaving many families struggling with stagnant real wages especially like in Japan, rising living costs, and precarious financial footing. Krainer's parable and Booth's analysis both point to the same conclusion: this system is unsustainable and corrosive to human flourishing. It commodifies the commons, rewards financial extraction over productive work, and sows division where mutual support could prevail.

Real change begins with awareness and personal action. Educate yourself on how money is created and circulated. Reduce exposure to inflationary assets and high-interest debt where possible. Explore Bitcoin as a store of value and medium of exchange, understanding its protocol and best practices for self-custody. Support innovations that build resilience outside traditional financial channels. Most importantly, shift your mindset from one of scarcity and endless competition to one rooted in technological abundance and individual agency.

The tools for a better system already exist. Jeff Booth and others like him are not predicting inevitable collapse but warning that the longer we cling to a failing model, the more painful the adjustment will become. By moving our thinking and resources toward sound money and deflationary progress, we can help construct an economy that serves people rather than extracting from them. The window for thoughtful transition remains open, but it will not stay that way indefinitely.
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The toxic effects of fraudulent money

Alex Krainer's Substack | July 1 2026

A simple parable on the creation of money shows the many ways in which a fraudulent money system turns humanity into a radical perversion of itself.

Perhaps the most powerful defining feature of modern societies is the monetary system at their foundation. To convey some of the absurdities of this system, economist and former hedge fund manager Bernard Lietaer wrote a parable titled, "The Eleventh Round" in his book, The Future of Money.

From barter to money

Once upon a time, in a small village in the Outback, people used barter for all their transactions. On every market day, they brought their chickens, eggs, hams, breads and other produce to the market to exchange them for other items they needed. One day, a prosperous-looking stranger came by and proposed the villagers a helpful innovation: he rolled out a large cowhide, cut perfect leather rounds out of it, and put an elaborate stamp on each round.

He then gave ten rounds to each family and explained that each round represented the value of one chicken. "Now you can trade and bargain with the rounds instead of bartering the stuff," he explained. That seemed to make sense, and it made the villagers' lives easier. Everybody was impressed with the wealthy stranger's solution.

However, his service wasn't free. He told the villagers that, in a year's time, he would return, and wanted the villagers to repay him 11 cowhide rounds. The 11th round was a token of appreciation for the technological improvement he just made possible in their community. The wealthy stranger was, in fact, a moneychanger - a banker. The villagers wondered where that 11th round could possibly come from, but the banker reassured them: "don't worry, you'll see..."

From mutual support to rivalry

With the size of the community and their annual production remaining the same during that following year, a problem emerged. Namely, that 11th round for each family was never created, and in order for ten families to come up with 11 rounds, one family had to lose all their allocated rounds. In other words, one in 11 families inevitably faced bankruptcy. Clearly, there would be winners and there would be losers in the banker's new money system, which changed the way families related to one another: people started to become a bit less generous in offering their neighbors a helping hand if they suffered a misfortune.

While using the banker's rounds was more convenient than barter, the new system discouraged the cooperation and mutual support that was previously taken for granted. In its place arose competition and rivalry among the families. Another effect of the banker's new system was the polarization of wealth. Because one in eleven families could go bankrupt, they were forced to sell their land to their more fortunate neighbors, or surrender it to the banker. Over the years, the cohesive community changed beyond recognition: it now consisted of a few wealthy families that owned most land and others that were destitute.

The wealthy families loved the banker and acted as partners in his system, but now they also needed to protect their possessions and their families from those who felt cheated by the system. In this sense, Lietaer's parable begins to show how interest based money introduces insecurity, competition, and greed into the economy. It also corrodes the fabric of society, splitting it into two classes that become hostile to one another.

The imperative of growth

These dynamics can't be eliminated from society so long as the necessities of life remain denominated in interest-based money. In fact, they're just the start of the its toxic effects. The system also created the pressure for perpetual economic growth. The community's inability to come up with 11 rounds to repay the banker would lead to one of two possible outcomes: default or inflation. Namely, the villagers could tar-and-feather the banker and refuse to repay his rounds. Alternatively, they might agree to borrow more cow-hide rounds from the banker, and keep the system going. The families that emerged as winners in the banker's system favored cooperating with him and borrowing more.

The banker would issue new cowhide rounds, but he'd allocate them preferentially to the families that were most likely to pay him back - the ones with the most wealth. He might also lend more rounds to the most ambitious among the community members - those, for example, who could convince the banker that they can grow their flock of chickens in the future, since one chicken equals one interest-based money round. Any entrepreneurial-minded villager who could grow his chicken flock by more than 10% per year might qualify for more rounds.

In fact, as long as enough villagers could commit to expanding their chicken production, the banker stood ready to issue them more rounds, since that generated more interest income for him. Over time, some families would go bankrupt, some would lose their land and effectively become serfs to wealthier families, but as long as the chicken production grew, the overall system could expand without any issues.

However, there came a point in time when the community grew more chickens than anyone wanted or needed, and the leading families decided it would be necessary to create additional demand for chickens and chicken products, since the production of chickens was making them wealthier and wealthier. They encouraged each family to have a feather-filled bedding and change it regularly; they declared chickens and eggs to be health foods for children, grownups and elderly alike; they even invented festivals with huge egg-throwing battles for the villagers' entertainment.

Green to brown to red

With time, the green and fertile fields surrounding the village started to turn brown and foul. All the vegetation was stripped away to plant grain to feed more chickens. The ponds and streams, once full of fish became cesspools of stinking manure. The system was now ruining the community's life and many wanted to end it and go back to the old ways of living. But the community's wealthiest families, supported by the banker, proposed a different plan.

They said there was another village nearby where they had plenty of fertile fields and some chicken production could be outsourced to them. And if they wouldn't oblige... well, our community outnumbers theirs, so they'll have to agree, one way or another. At any rate, the growth had to be preserved, else the banker couldn't issue more rounds and bankruptcies in the community would soar. Even the banker might fail.

In another few years, many villages fought bitter wars among each other for the remaining fertile green spaces that could support a few more years of economic growth. But in spite of all that, the pace of growth began to slow and debts began to rise in proportion to income. Our original community was now spending most of their remaining cowhide rounds servicing the debts they owed to the banker. Those who couldn't went bankrupt, lost their possessions, and were forced to accept any work they could find, often at subsistence wages or less. Now fewer and fewer of them could afford to buy chickens or eggs, they no longer replaced their feather bedding and mud-throwing became the new egg-throwing at village festivals.

Scarcity amidst the abundance

"This island is almost made of coal and surrounded by fish. Only an organizing genius could produce a shortage of coal and fish in Great Britain at the same time." - Aneurin Bevan, Welsh Labour leader

The natural abundance they started with, gave way to austerity and scarcity. Returning to growth required creating more "goods and services," which meant converting nature's abundance into anything that could be sold for the banker's rounds. Forests had to be converted to timber, ideas into intellectual property and traditional herbal medicines had to be packaged, approved and regulated. Even seeds and water had to become for profit "products." Collecting and conserving them was banned and stiff punishments awaited "hoarders." Mutual support and social reciprocity had to become paid, for-profit services.

The ultimate result of the new system was that the vast commons, the abundance that was once available to all villagers, became cordoned off, exploited and commodified until very little was left outside the banker's money realm.

The system must be scrapped and replaced

Lietaer's tale is flawed in that it assumes that money came into circulation as a replacement for barter. That's not how money originated. In spite of that, his parable is a valid illustration of why debt-based money is profoundly toxic to society and why, if left to itself and the game's winners, can turn humanity into a radical perversion of itself, exemplified in a small predatory financier "elite," served and protected by a ruthless Praetorian guard.

One does not need to be a socialist or a communist to notice the profound depravity among many of these people. This is the Epstein class, which seems to have been present throughout history, a by-product of a fraudulent money system. Transcending this system, confining it to history's trash heap and engineering a new, improved operating system for society is the single most important task we need to accomplish in order to direct the development of human societies toward the beautiful and the divine. I can't think of a single reason why we shouldn't; this is our nature, and our choice is to allow it to blossom, or to allow it to remain stunted.

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Great, let the French have their poverty, but keep that substandard pathetic scarcity thinking out of America:

Frenchie has a plan: A Villainous Blueprint For Managed Poverty