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This understanding becomes crucial as we navigate the relationship between debt and wealth. In a debt-based monetary system, which is the standard across various economies like the UK, the US, and Australia, money is inherently created through loans. Thus, all money in circulation represents credit owed by someone, creating an intricate web of financial possibilities.
The Cycle of Debt and Wealth Accumulation
When mortgage debt rises significantly, it signals that a certain group is accumulating substantial wealth elsewhere. Conversely, if there's an observable increase in wealth, it necessitates that others are incurring debt. This reciprocal relationship between debt and credit is the foundation of our financial system.