Here is a simple explanation of the modern monetary system:
1. Money is created out of thin air (spawned into existence on a computer screen) whenever a person ties a real physical asset to a loan (eg. Mortgage to buy a house).
2. A majority of money in existance is created out of debt.
3. There is not enough money in existance to re-pay the principal+interest.
4. To prevent collapse, more money has to be spawned into existance (eg by lowering interest rates to encourage people to take loans and be more in debt.)
5. As a result, inflation is inevitable. For example, the US Dollar has lost 96% of it's value since 1914 when a cartel of private banks created the Federal Reserve (the name is misleading, there is no government oversight or control of the money supply).
6. To prevent collapse, the economy has to grow at roughly 3.5% per annum to make up for the ever increasing need to pay of balooning debt.
7. Exponential growth (geometric progression) cannot occur indefinitely. It is practically and mathematically impossible.
8. A "boom and bust" cycle is inevitable, as the ones unable to pay their debts/mortgages get foreclosed.
Failure to grow forever will result in either inflation or collapse of the monetary supply - as people stop taking loans, the money pool shrinks further, banks reach their threshold of spawning money into existance (the fractional reserve requirement), and the money supply freezes.
It is easy to blame people for not being thrifty enough or not having enough savings. This may be true in some cases. But what if everyone were thrifty and miserly? The system will still guarantee that there will be those unable to repay their debts and be pushed into bankruptcy.
In addition to that, inflation is a collective tax upon everyone as it decreases the value of their savings.
A system that relies on perpetual growth to function (and risks imploding otherwise) is also known as a pyramid/ponzi scheme. It is a crime against humanity that the financial elite are able to pull such bullshit on a global scale.
We live in a world where governments have minimal control over their money supply, and are in fact in debt to the global banks, who spawn money into existance when governments "sell bonds" (read: "become in debt to") to the banks. It's horrifyingly stupid how governments take pieces of paper known as "bonds" and give them to banks in return for virtual cash on a computer screen. These "bonds" then need to be repaid with interest using the same virtual cash created by the banks. The US national debt currently tips 16000 billion dollars. Sixteen thousand thousand million dollars.
That's how ludicrous the situation has become. Even governments cannot create money without going into debt!
For a better understanding of the topic of money creation, the following documentary is highly recommended:
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