Slow-Death from the Less-Discussed Invisible Tax, No, Not Inflation
Nasim Beg 22nd April 2026
We normally understand tax as the share the State takes out of the GDP to meet its expenditure. While the impact of inflation is seen as an invisible tax. However, the monetary system’s constantly growing extraction stays undetected like a disease that gradually saps away one’s strength.
As indicated in an earlier Blog of mine, the global nominal GDP (the aggregate size of the world economies) grew from $11.45 trillion to $117.2 trillion, i.e., by 10.2 times over the last fifty-five years, (from around the time the US Dollar delinked from the Gold Standard), while global debt grew from $12.5 trillion to $348 trillion over that period, i.e., 27.8 times in size. Along-with this, the financial services extracted twice as much out of the productive side of the economies as compared to its extraction fifty-five years ago (8% of the world GDP versus 4% fifty years ago). The trend is clear; the share of the extraction is structured to grow till it overwhelms the productive side.
Going by conventional wisdom, aggregate debt (borrowed by whomsoever), should be out of savings of others which go into investments of sorts, including in bonds, bank deposits etc.
The savings in turn are out of the GDP; however, since the mere size of debt, excluding other investments, has grown 27.8 times in size versus GDP by 10.2 times, the excess debt growth is attributable to money creation, rather than economic growth.
While the data indicates the obvious, the impact is much more than meets the eye; the factitious money creation feeds inequality in several ways, one through the earning of interest on the debt created out of the fictional money; second the already wealthy prime borrowers having access to relatively low cost debt for growing their businesses, and third, on top of that getting a tax set off for interest on the ' fictional' capital deployed.
We have a structure which is designed to increase inequality, and this design will get to a level where unearned income (financial extraction) will overwhelm the earned (the productive) segment of income in the economy, leading to an inevitable collapse. Debt creation of money through fractional reserve banking is a disease which is gradually eating into our collective strength; it will ultimately kill us, through the parasite simply outgrowing the host. We must rid ourselves of the parasite. The State creating fiat money excessively is one thing, but feeding private banks in the process is quite another matter.
