Debt Pyramid Simulator
The Debt Impossibility Demonstrator
This version is designed to show one very specific point: in a closed system where banks create only the principal of a loan, but require principal plus interest in return, there is not enough money in existence to retire all debts simultaneously.
Simulation Controls
Closed-System Proof
Compare what exists with what is demanded.
Repayment Sequence
This sequence shows why returning every dollar still leaves debt unpaid.
Bank creates new money equal to the principal only.
The bank demands more than it created.
The public tries to pay back every dollar in circulation.
Even after all money is returned, unpaid debt still exists.
Either default occurs, or new borrowing is needed to fill the gap.
After Returning All Money
Why the Gap Exists
In this closed-system model, the bank creates the principal but not the separate money needed to extinguish the aggregate interest charge.
The key insight: if the banking system creates only the principal of loans, then the public collectively owes more than the total money stock created by those same loans. Therefore, the system cannot fully retire all debts simultaneously unless one of the following occurs: new credit is created, defaults occur, or money enters from outside the modeled system.