The Lifecycle of the Substitute and Its Purchasing Power, 4
Continuation: The existing purchasing power received by the debtor circulates, and so does the proof of debt received by the creditor, on the proviso that it is in tradeable form, so the purchasing power of the proof of debt circulates in addition to the existing one and is backed by a commitment to deliver actual purchasing power in the future. Individuals can freely trade the proof of debt, including loaning it at interest, and that the mere existence of the certificate in itself involves any interest owed by the debtor to its bearer depends on its agreed conditions.
End: When the commitment to deliver comes due, the debtor either fulfils it or not, in all or in part; in case of fulfilment, the proof of debt and its purchasing power, based on a promise of future delivery, are replaced by the delivery of actual purchasing power that will continue to exist the way any other actual one does; in case of failure to fulfil, the proof of debt and its purchasing power somewhat continue their existence following a dwinding course according to its residual payability and the related legal provisions, while no actual additional purchasing power has been created.
Fiat debt money, at the moment the universal all the rage fashion, consists of fiat currency without intrinsic value almost magically springing into existence without much questioning who, where and how, and then of it circulating rather indefinitely from then on, perpetually generating a credit for the issuer, always without much questioning it all. Let’s set aside here who exactly is its issuer, and concentrate on the mechanism in itself abstractly. Wittingly or unwittingly, the issuer and the receiver factually agree there is a moment fiat debt money assumes its face value from zero, that is, despite it is brought into existence at zero or nearly zero cost, and therefore the first exchange of that money is as fiat money: the issuer gives absolutely nothing and receives some existing purchasing power in exchange. Then, the debt factor enters the scene: the issuer is perpetually entitled to claim not only the credit of that face value but even an interest on that face value as well, of that nil exchanged with existing purchasing power.
