Imagine two field mice discover an overturned truck of grain. From their perspective they have hit the jackpot – an unlimited food supply. As they feed on the grain and reproduce their numbers double, say every two months, as does their consumption of grain. After 2 years they have consumed all the grain and experience a rapid die-off.

Question 1: At what point in time is half the grain left uneaten? Answer: One month before it is all gone.

Question 2: What is the population of mice at this time? Answer: Over 8 million rising to 16 million in the final month.

Question 3: When does it become obvious to the mice that there is a problem? Answer: When it is far to late to do anything about it.

What the Irish Banking Inquiry wont reveal is that our financial system is based upon the principles of exponential growth outlined in the story above. Exponential growth in the economy is central to the functional wellbeing of our monetary system. Without growth the financial system will tear apart in a wave of private, corporate and sovereign debt defaults and banking failures.

The root cause of the problem is that money is created through interest bearing bank loans. But because banks create only the principal and not the interest the amount of money in society is always less than the total amount of debt in society. Unless the money supply grows year after year, through more borrowings, it is inevitable that some borrowers will fail to repay their loans as everyone competes for their slice of an ever-shrinking money pie. This conundrum forces a growth compulsion upon society whereby the economy must grow year after year at an ever-increasing exponential rate. Our money system is designed to work in only one direction. Up.

But consider the implications of an economy growing forever, say at the celtic tiger rate of 7% per year. It would double in size every decade. Astonishingly it would be over 1000 times its current size in less than a century! Even an economy growing at 3.5% per year, the much sought after ‘stable growth’ rate, is still a doubling every two decades. Imagine twice the cars, houses, infrastructure, plasma screens, air travel, carbon emissions, mines, waste…. Now imagine four times….eight times….sixteen times…. Is it even desirable let alone possible?

As we push up against the limits of oil, soil, food, fresh water, fish, timber, metals not to mention a stable climate even a child can see that economic growth cannot continue forever on a finite planet. Ultimately the only stable growth rate will be a zero growth rate. Why is it then that most politicians and economists don’t see this. Why the endless talk of returning to ‘sustainable growth’ when growth itself is clearly anything but sustainable?

Almost everyone will agree that the goal of our time is to work towards a sustainable society. To achieve this we need a stable money supply free of the growth compulsion. What the banking inquiry needs to reveal is that our current money system works against this goal of sustainability. It needs to do this so that a wider debate on the nature of money can take place and that alternatives to the present system can be discussed. Sadly, I see little chance of this happening. Rather, like the field mice who could not comprehend the implications of exponential growth but experienced them nonetheless we seem destined to follow a similar path.