El Interés Compuesto y los Impuestos en Demarquía/en

De Demarquía Planetaria

Compound Interest

The Original Sin of the Current System: The Tyranny of Compound Interest

"He who sets rules against the current of the universe, always fights and always loses."

It is imperative to diagnose the fundamental disease that makes our current economic system not only unfair, but mathematically unsustainable .

The system is based on a deception as simple as it is devastating: interests .

The Inevitable Collision: Infinity vs. Finite

Money generated by interest is a number, and numbers, by their abstract nature, can grow to infinity through the magic of compound interest.

The real economy, however, is not a number . It is a physical system, composed of tangible resources, energy, and human labor time. It has limits.

Herein lies the inevitable collision: the infinite growth of debt clashes with the finite growth of real wealth .

A debt with compound interest doesn't grow linearly in parallel with the productive economy; it doubles, quadruples, grows exponentially. If it continues, it demands to be repaid with more value than exists in the physical world.

Sooner or later, the mathematical curve of debt shoots up towards infinity, demanding an amount of resources that exceeds the atoms available on the planet to represent it.

Crises are not an accident, they are a programmed reset

When abstract debt becomes so enormous that it is impossible to repay with real production, the system collapses. We call this unintentionally programmed collapse an "economic crisis."

Crises are not an unforeseeable failure of the system; the system is like that , they are like earthquakes for the Earth, a readjustment to restore balance, a necessary and undesirable characteristic of it.

They are the violent "reset" mechanism that attempts to reconcile the fiction of infinite debt with the reality of a finite world. It is the way the system purges unpayable debts so that it can begin the cycle again.

Every "reset" translates into real human suffering :

  • Bankruptcies
  • Evictions
  • Mass unemployment
  • Forced austerity

...only to start the same deadly cycle again, inflating the next debt bubble which, however much is done, will inevitably—as centuries of history have shown—burst again.

The Demarchic Solution: Aligning Mathematics with Reality

Demarchy attacks this disease at its root. As we will discuss in detail below, by prohibiting interest as the engine of the economy and replacing it with:

It eliminates the possibility that abstract debt will grow faster than the real economy.

In our new system, value is created and shared in direct proportion to tangible economic activity, not through the fictitious multiplication of numbers.

The cycle of recurring crises is broken because the economy is no longer forced to follow the impossible rhythm of an exponential mathematical formula. A stable, fair system is built, and for the first time, one synchronized with the laws of the physical world .

The Direct Consequence: The End of the Hidden Tax in Every Price

Once the tyranny of compound interest is understood, its most tangible consequence in our daily lives is revealed: the invisible cost that inflates the price of absolutely everything we buy .

The Hidden Tax

Various economic studies estimate that between 20% and 40% of the final price you pay for any product or service does not correspond to the labor, materials, or innovation

That percentage is the snowball effect cumulative cost of the interest on the capital needed at each step of the production and supply chain.

It is a gigantic hidden tax , a financial toll that we all pay to the banks and the owners of capital simply for allowing the economy to function.

From the bread you eat, to the clothes you wear, to the house you live in, a substantial portion of its cost is nothing more than the sum of the interest paid by the farmer, the transporter, the manufacturer, and the seller.

Even if you pay everything in cash, you are still paying the interest for others .

In the Demarchy, this cost disappears completely.

By eliminating interest and replacing debt-capital with partnership-capital (the Automatic 50/50 Partnership), and incentivizing the movement of capital through the "evaporation" of stagnant money, this financial "tax" is eradicated at its root.

The cost of a product becomes its real cost again:

  • Materials
  • Energy
  • Wear and tear of common resources
  • The entrepreneur's fair reward

The Result: Massive Structural Deflation

The result of adding:

  1. Total automation of production and administration
  2. Eliminate the chain of financial interest
  3. Eliminate chain fees and taxes
  4. Eliminate chain locks

It is a massive and beneficial structural deflation .

The purchasing power of each individual skyrockets by more than 90%, not only because they receive the Planetary Dividend , but because the cost of living plummets radically and permanently.

It is one of the most direct, universal, and tangible improvements that every citizen would experience from day one.

Having eliminated the first cancer of purchasing power, interest, let's go for the second: taxes.

The End of Taxes

From Taxes to Dividends: The Demarchic Economic Engine

The current state's economic system is based on coercion (taxes) and friction (bureaucracy). Both are a cancer that must be eradicated.

Demarchy proposes a model based on association and fluidity .

The Universal Partner: The 50% Universal Partnership (AU50)

Every economic activity has an automatic partner: The Universal 50% Partnership (AU50) .

This isn't a tax; it's a 50/50 share of the profits and the risks. Your partner is the rest of the world, for better or for worse.

The AU50 acts as a gigantic venture capital company in which all citizens are shareholders by birthright.

Permission-Free Innovation: Trust Capital (TC)

Instead of asking permission from a bureaucrat or an investor, any citizen can start a project.

The Common Fund (CF) acts as an automatic co-investor, providing 50% of the necessary initial capital.

The scale of this co-investment is not limited by the individual's previous wealth, but by their Confidence Capital (CdC) .

What is Trust Capital?

The CoC is a dynamic and algorithmic reputation metric that:

  • It increases with each successful project (one that meets its goals and generates authentic value)
  • It decreases with failures resulting from lack of ethics, negligence, or mismanagement

A track record of success and integrity grants you access to more capital for increasingly ambitious projects. Honesty and good work are rewarded. It's meritocracy in its purest form.

Ethics and Truth as Requirements

But the CdC is not limited to measuring financial success: it also assesses ethics, honesty, and sincerity .

Highly successful projects that were based on fallacies, half-truths, or deceptions will not only fail to gain points, but will actually lose them.

Why? Because there can be no true freedom without truth .

Whoever plays with the truth is playing with the freedom and trust of those who listen to them in good faith.

Demarchy's fundamental axiom is the freedom of the individual, who, in order to develop projects, voluntarily associates with other free individuals. And for this collaboration to flourish, trust in the word of others is essential.

In Demarquía, lies are more expensive than honest failures.

Calculating the CoD

The CoD is calculated on a logarithmic scale (base 10) to reflect that social trust has diminishing returns:

The difference between "unknown" and "reliable" is huge, but the difference between "very reliable" and "extremely reliable" is marginal.

CdC_efectivo = log₁₀(CdC_bruto + 1)

This compresses differences at the top end, preventing excessive point accumulation from translating into disproportionate power.

Indicative ranges:

  • 0-1: New
  • 1-2: Active
  • 2-3: Established
  • 3-4: High reputation
  • 4+: Exceptional

CdC as Information, not as a Barrier

The CdC never establishes automatic minimum thresholds. This information is available to the selected Assemblies.

If someone with a low CdC requests it, after listening to them, they freely decide what weight to give it according to the context.

Example: In 1904, Einstein had a CdC of zero according to academic standards. In 1905, he revolutionized physics. If you filter only for high CdC, you miss Einstein.

Assemblies can promote projects proposed by someone with a low cost of capital if their proposal is sound, establishing safeguards such as:

  • Trial periods
  • Audit by a proposed mentor

The Co-op must serve as a guide and springboard, not a burden

Ultimate power lies with the Assemblies, not with the algorithm.

This capital of trust is the Demarchy's most valuable asset, capable of granting unprecedented influence. But what prevents this newfound power from stagnating and creating an entrenched caste?

The answer lies in the principle that ensures the constant flow of the economy: Selective Oxidation.

Selective Oxidation (Demurrage): Capital Must Flow or Die

Every stagnant system tends towards entropy and corruption. Demarchy has been designed to be a system in perpetual flux, and its main hemodynamic engine is the principle of Selective Oxidation (Demurrage).

Technical Operation

Technically, its operation is simple:

  • All liquid capital that remains idle suffers an automatic and constant "evaporation" or depreciation of 1% per month
  • Capital in idle assets suffers depreciation of 0.5% per month

True Genius: Social, Not Economic

But his true genius is not economic, but social .

It is the anti-ossification mechanism that guarantees perpetual fluidity.

Out of pure self-interest, the most successful become the biggest investors in the next generation of entrepreneurs, creating a constant "rain of capital" from the top to the bottom .

Hoarding is not only useless, it is counterproductive.

The Planetary Dividend (PD)

All benefits accumulated in the Common Fund (CF) through:

They are added up and distributed equitably among all citizens on a regular basis.

It is not charity, it is a property right ; it is the return on investment of being a shareholder in the largest company that exists: human civilization .

Free humanity from economic servitude so that it can dedicate itself to innovation, creativity, caring, science, and exploration.

How is the Administration financed without taxes?

The most profound economic change in the Demarchy is not the reduction of taxes, but their conceptual extinction .

The immediate and logical question that arises is: if there are no taxes, how is the Common Administration (CA) and collective infrastructure financed?

Correcting the Fundamental Error

The answer lies in correcting the fundamental error that has corrupted all previous economies: the false separation between the "citizen" and the "State" .

In the old paradigm, the State was an external entity that extracted resources from its subjects (taxes) to finance its operations. It was a predator-prey relationship, disguised as a social contract.

Demarchy undermines this separation. It does so through a principle we have already introduced:

You own the world and you're your neighbor's partner.

This is not a metaphor. It is the funding mechanism.

The Common Administration is not a separate entity and does not "collect", "participate".

The system is financed through the 50% Universal Partnership (AU50). By birthright and as co-owner of planetary resources, the community—that is, all citizens—is the majority shareholder in any economic enterprise.

50% of all profits generated are not "paid" as a tax to a distant entity; they are transferred to the common fund as the principal partner's legitimate share.

What does the community contribute to justify its 50%?

An old-world critic might ask, "Why would an entrepreneur give up 50%?"

The answer is simple: because the other partner (the community) provides the most extraordinary value creation ecosystem that has ever existed:

Immediate Financing and Corporate Backing

This isn't a tax; it's a 50/50 share of the profits and the risks. Your partner is the rest of the world, for better or for worse.

For every token the entrepreneur contributes to the project, they receive another and the peace of mind of knowing they are not alone. They have the full support of the common fund.

It's a Stock Exchange

You're not giving anything away. You, too, are a partner, along with the rest of humanity, in 50% of each other's ventures

The Universal Partnership is not a burden; it is the access fee to a platform that guarantees that the remaining 50% of the entrepreneur is worth infinitely more than 100% in the previous chaotic system.

Protection Against Failure

And in case of honest failure and total loss, the Common Risk Fund will cover 25% of your loss so that you don't end up with nothing and it's easier for you to get back on your feet.

Closing the Cycle: From the Common Fund to the Citizen's Pocket

Herein lies the beauty of the system. What happens to that immense Common Fund (CF) generated by 50% of all the planet's profits?

First: Operating Costs

Covers the now minimal operating costs of:

Second: Common Good Projects

It finances common good projects previously approved by citizens, evaluated not by strictly economic metrics, but by their social impact:

  • Medical-pharmaceutical research of the Universal Health Fund (FSU)
  • Global security
  • Public infrastructure
  • Other strategic initiatives

Third: The Planetary Dividend

Everything that remains — the vast majority — does not accumulate in state coffers or get trapped in bureaucracies: it flows directly back to its rightful owners, the citizens , in the form of the Planetary Dividend.

Unapproved Services

Services currently provided by the State that are not expressly approved by the Citizens' Assembly (AsC) will be left in the hands of private enterprise

Citizens will be able to:

  • Hire them individually
  • Organize themselves communally
  • Use volunteer services
  • Manage them as you see fit

Freedom of choice replaces imposed paternalism.

Financing through Withholding, Not through Taxes

There are no taxes. The Common Administration (CA) does not "take" money from citizens.

Simply put, before distributing the difference between the Universal Royalty for Access to the Commons (RUAC) and the Planetary Dividend (DP), it retains the minimum percentage necessary to:

  • How it works
  • To finance common good projects previously approved by the citizens

Radical Citizen Control

And who decides what that "minimum requirement" is? The Citizens' Assembly (AsC) .

Each year, the Assembly reviews and approves the Common Administration's budget, creating the most powerful possible incentive for efficiency: every token the Administration spends is a token that doesn't reach the pockets of citizens .

Austerity and efficiency cease to be empty political promises and become an inescapable mathematical requirement.

The Citizen as Owner-Beneficiary

Thus, the citizen ceases to be the taxpayer—the source to be exploited—to become the owner-beneficiary , the final destination of the wealth generated

Money doesn't make a one-way trip to a bureaucratic leviathan with no return; it completes a virtuous cycle :

  1. It flows from companies to the Common Fund (CF)
  2. It covers the approved minimum expenses
  3. It returns to the citizen in the form of a Planetary Dividend
  4. This is reinvested in the FC, in new businesses, or in consumption that fuels the economy.
  5. The cycle continues

From Coercion to Universal Society

The abolition of the tax is neither a financial vacuum nor a naive utopia. It is the natural consequence of having transformed the fundamental economic relationship:

From one based on coercion —where the State extracts by force—to one founded on universal co-ownership and common expenses , where every citizen is a legitimate shareholder of the system that sustains him.

"Taxation dries up the sources. Withholding simply feeds the channel from which we all drink."

Security through Abundance, not through Coercion

The universal guarantee of resources and well-being, along with the maturity of the population, the disappearance of states and a system that makes being evil exhausting and unprofitable, causes the collapse of economic crime .

Security ceases to be a police-military function that currently devours our taxes, and becomes a natural consequence of the system itself.

Unification and Military Reduction

National armies are dissolved and merged into a single Planetary Protection Force , with a negligible budget and dedicated to existential threats (such as asteroids, earthquakes, floods, fires, discouraging fights between regions, etc.), not to war.

We don't need to manufacture more weapons; we have more than enough with what we already have.

Structural Peace

By eliminating artificial scarcity and competition for survival, the root causes of conflict and crime disappear

As life expectancy increases considerably, and with it the maturity of the population, there is less urgency to achieve personal goals by using "shortcuts" that you know will eventually be discovered, and you will still be here to answer for them.

The need for surveillance and control is greatly reduced.

Freedom and Trust

The result is a society with an unprecedented degree of individual freedom, based on systemic trust and not surveillance

Conclusion

In short, the second phase of the Demarchy does not reform the old system; it makes it obsolete

By eliminating taxes, compound interest, and replacing coercion with universal association, an economic system is created that, for the first time in human history, is aligned with:

  • The laws of physics
  • Human dignity
  • Planetary sustainability
  • Mathematical justice

Glossary of Terms

Acronym Meaning Acronym Meaning
AU50 50% Universal Partnership AdC Common Administration
CdC Trusted Capital FSU Universal Health Fund
FC Common Fund AsC Citizens' Assembly
DP Planetary Dividend BC Common Vault
RUAC Universal Royalty for Access to the Commons FSR Solidarity Risk Fund
DB50 Dividend on Profits at 50% MIR Real Investment Market

Explore Demarchy in Greater Depth

Philosophical Foundations

Understand why Demarchy is necessary and how it is founded:

Diagnosis of the Current System

Analysis of the Conditioned Individual

Foundations of Individual Liberation

Mathematical and Architectural Principles

Solutions for the AGI/ASI Challenge

Understand why Demarchy is Necessary to Face the Future:

Economic System

The architecture that aligns individual prosperity with collective well-being:

Governance

How collective decisions are organized without permanent elites:

Technology and Infrastructure

The tools that make the system possible:

Law and Justice

The legal framework that protects sovereignty:

Culture and Society

Human Transformation in the Post-Scarcity Era:

See Also

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