Sweden's JAK Bank: Liberating community finance from the ball&chain of compound interest
Article from the Canadian Centre for Coummunity Renewal's Making Waves magazine, Winter 2009/2010. For more articles, click here.
Compound interest rates have a huge impact on our lives,socially,
economically,and environmentally.Yet this issue is seldom discussed let alone
analyzed.The sheer mathematical facts reveal what the compounding of interest
over short intervals does to governments,small businesses,and households for
the benefit of global banks.In ordinary circumstances,a debt at 3% compound
interest will double in 24 years;at 6% will double in 12 years;and at 12% will
double in 6 years.Thus with a variable rate interest on a 25-year mortgage,
homeowners frequently pay three to four times the sum they borrowed in the
first place.If payments are missed,penalty charges,default fees,and interest
charged on interest can escalate costs higher still.
The Latin origin of the word“mortgage”–“grip of death”– spells out the
dangers that the debt treadmill involves.The more people owe creditors,the more
they have to work to pay it off.Forty years ago,mortgages were mainly paid by
one wage-earner.Now it takes two earners to keep pace with the treadmill.
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