It has been known since 600 BCE Babylonia that the aggregate debt of society increases exponentially, whereas the aggregate economic growth (GDP, gross domestic product) of a society increases according to an S-shaped function (Hudson 2018; also see Figure 1). This mathematical reality causes the wealth of a society to be transferred from a majority to a minority of people, namely to those who were in position at the time of their birth to control the creation of credit. In the United States, this control is done by private bankers and elite asset holders who have amassed extraordinary wealth through hard work, innovation or crime or by some combination of these—as taught at the Harvard Business School.

Before resorting to debt forgiveness (Hudson 2018), wealth transfer to a minority of individuals can be interrupted through decentralized banking—having many small banks/credit unions distributed throughout a country—thereby minimizing the fees charged to debtors and maximizing the interest paid to local creditors of a community by marginalizing the middleman (Ryan-Collins et al. 2012; Werner 2003). Furthermore, if the credit is directed locally toward the production of products rather than the production of consumption and the purchase of assets (which fuels inflation) this further diminishes the creation of debt traps that spiral into Ponzi schemes (which some believe is where the United States is today with its interest payments on the government debt that exceeds the war budget).

The Big Beautiful Bill recently passed by the Trump Administration will further balloon the government debt (despite the regressive taxes imposed on the population vis-à-vis the tariffs) and bring about a further acceleration of income transfer from the poor to the rich in America, which may only be solvable using a Robespierre-like remedy and which will unleash a creative destruction of America that the Chicago School of Economics failed to anticipate because of its superficial understanding of human nature going back to Babylon 600 BCE (Hudson 2018).

So, how should societies regulate the wealth transfer between members of society to avoid the natural creation of Ponzi schemes favoring a minority of creditors to a majority of debtors? Warren Buffett has a solution to this. That his offspring do not become delinquents—such as Prince Andrew of the Royal family—Warren has restricted the amount of wealth transferred to his children so that they might be encouraged to create their own fortune through hard work and innovation rather than through crime and indolence leading to oligarchy/monarchy (Paine 1776).

Figure 1: Aggregate debt is plotted as a function of time juxtaposed against aggregate economic growth. Notice that once economic growth begins to reach relative asymptote the income disparity accelerates (for many mature economies economic growth continues at a reduced rate although economic collapse is also possible as experience by Greece between 2009 and 2018). The creation of debt by the issuance of loans (IOUs, I Owe You) to support agricultural production during the Neolithic period, for example, was such that the debt typically preceded the harvest of the crops (Hudson 2018). This fact also supports the idea that money is created by creditors to enable production within an economy (Hudson 2018; Werner 2003).