Before describing the aspects of the virtual economy, let me draw a parallel concept which exists in computer systems. Analogy helps understand the scope and the significance of the problem.

In the earlier days of computer systems, memory devices were very expensive and their sizes were relatively small. For example, 1 megabyte of memory (RAM) cost more than $10,000! It was almost impossible to build a computer system with say 100 megabytes (memory would cost more than $1 million). The smart architects of computer systems invented the notion of virtual memory. The idea was to create the illusion that the memory was virtually large (say 100 gigabytes). The illusion is made possible by using the relatively inexpensive and large storage provided by hard disk space.

The concept of virtual memory works under the assumption that user programs do not need to reside in the main (expensive) real memory all the time. A small portion of the program will reside in main memory, while the rest of the program and its data reside on the cheap but large disk space. Over time, pieces of the program and data will be swapped back and forth between the memory and the disk. The user will never know that the memory is too small to hold her program. For the user, the memory has a virtually large size. She is happy and can execute larger programs using much smaller real memory; it is an illusion, but a nice one. Of course the computer system may crash when a greedy program begins to use more real memory than the system actually has. This concept is known for computer architects as thrashing and they are well aware of it and have come up with different ways to cope with it or prevent it altogether. Now, where is the analogy in the economic system?

The simplest financial economic analogy to the virtual memory concept is the credit card system. Take the example of a family with a monthly income of $3,000. The family pays $2,500 as a minimum payment on their debt balance, which could be $360,000 including the payments on a house, two cars, and holiday shopping. The actual real wealth of the family is $36,000 a year (36 megabytes in computer analogy); this amounts to $360,000 over ten years (similar to 360 megabytes of virtual storage). Instead of using the real wealth of $36,000 a year, the family uses the extended (virtual) wealth of ten years ($360,000). In reality, the $360,000 does not exist at the time when the family begins to use this large virtual money.

The bank supported by the Federal Reserve steps in and allocates the large amount of money in anticipation that this money will actually be generated over time. If all goes well, the family continues to earn $3,000 a month and continues to pay their minimum payments; then everything goes smooth and the difference between what is virtual and what is real will not surface to cause any problem. The family continues to happily live with the illusion of $360,000 virtual wealth.

But when something goes wrong, such as a layoff of the working member of the family, which is not uncommon, or a serious health condition occurs and consumes more money than what the insurance company pays resulting on more healthcare debt, or any other reason, then thrashing will take place. The virtual capacity of the family evaporates, and the assets acquired with virtual memory may also vanish. In fact, the collapse of the virtual wealth of the family may affect the absolute real wealth of the family, such as a land owned through inheritance! This type of scenario occurs all the time, and we all know many real-life examples. One outstanding example, which was reported in the media, is the case of the billionaire Donald Trump. He is used to running projects sizing in billions of dollars, and when he fails to meet the demands of the creditors, he files for bankruptcy135.

Figure 22 shows the growth of the virtual wealth (proportional to the debt), while the real wealth (proportional to income) remained almost steady for more than thirteen years. Note how the home-related debt has increased from $120,000 to $183,000 per family while the corresponding income remained unchanged over the same period.

At the larger scale of the economy, where corporations, factories, and all types of enterprises interact and function, the concept of virtual wealth is similar to the examples above but much larger in scale. Over the years, the virtual economy under capitalism became the most dominant part of the economy which has almost totally masked the real economy. In fact, the virtual economy has become so prominent that the political leadership warns against the possibility of pushing the economy down from the virtual values to its more real values.

In a statement made to a congressional committee on April 3, 2008, the Fed Reserve chief Bernanke said99,

If Bear Stearns had been allowed to fail, it would have led to a chaotic unwinding of Bear Stearns investments held by individuals and other financial institutions. Moreover, the adverse impact of a default would not have been confined to the financial system but would have been felt broadly in the real economy through its effects on asset values and credit availability.

Note how Bernanke alludes to the protection of the real economy as the objective cited for protecting Bear Stearns from failing.

In an article published by the Newsweek, October 11, 2008, Daniel Gross writes100, “Back in 2002, Apple’s stock was trading far below the level of cash on its books, ascribing a value of zero to its brands and products, compared with several billion at the height of the boom.” Note how the statement refers to the existence of two views of the economy: a real economy which is reflected by the level of cache on corporate books and an inflated, exaggerated view which is reflected in the current stock values of the market; in this case the virtual value was observed to be below the real value.

Virtual economy (VE) is strongly related to the failure of the financial capitalist system as being witnessed today. VE allows the economy to appear much larger than its real size. As in the case of virtual memory computers, virtual economy is based on the assumption that the real money will not be tapped into, and therefore, it is possible to deal with an assumed larger (virtual) value for the money.

Recall that one of the main principles of capitalism is related to the definition of value of products. Product value under capitalism is a measure of the relative benefit of a given product or its relative exchange value compared to the benefit of other things; in case the exchange value is relative to money, the value is known as the price. Hence, the foundation of capitalism allows the existence of a virtual relative value for products instead of a real value which people can always refer to. As such, in the market economy, it is possible for the value of a given segment of the market, such as oil, to fluctuate between two extremes in a short period of time. The definition of value under capitalism allows for this fluctuation to occur depending on the current conditions. Economic, political, and social conditions would act as a trigger which causes the values of various products and market segments to fluctuate and create turbulence which potentially can cause a total collapse.

Virtual economy organization (similar to virtual memory organization) provides two views of the economy. The first is the real value of commodities and services in a given economy which corresponds to the real economic growth and production. The second view of the economy represents the virtual imaginary value of the market. The virtual values of the market are typically measured by the exchange value which is the monetary value or the price.

A virtual economy system, similar to virtual memory systems, is bound to crash (thrash) when the instant demand for finance at any given time exceeds the real value of the real economy. The current financial crisis in the United States and the world at large is a striking example of virtual economy crashing or (thrashing). Conditions which facilitated the current crash include the overwhelming expenses of multiple wars, the unexpected high cost of hurricanes, and the unexpected high rate of defaults on house loans. The total cost of wars in Iraq and Afghanistan is approaching $1 trillion. Hurricane Katrina added more than $150 billion to the burden of the economy136. The cost of defaults on house loans exceeded $1.5 trillion137. A combination mix of these conditions caused the bill to exceed the real value of the economy which in turn deflated the virtual economy and caused the collapse.

The stock market activities at the start of the twentieth century created a new phenomenon in the economy, where the wealth associated with stock values grew at much higher rate than the wealth associated with the real economy. When the stock market collapsed in New York in October 1929, the economists attributed the crash to the great difference between the inflated values of stocks and the values of the real assets of the economy. Although economists may not agree on the cause of the 1929-1932 stock market crash, they all admit that the utility stocks prices drove up too high.

The Economist magazine insisted on November 2, 1929, that the stock prices were too high and wrote134, “There is warrant for hoping that the deflation of the exaggerated balloon of American stock values will be for the good of the world.” In other words, the stock values were highly inflated. To elaborate further on this issue, it was found that the stock values in the financial market increased during the period between 1925 and 1929 by 120%, while the economic growth for the same period has not exceeded 17% (an average of 3.5% per year). In 1932, when the market finally collapsed, it lost over 90% of its value. The market returned to its real value which was obviously much lower than what the stock market indicated (101, 134).

President Herbert Hoover concurred that the prices of the stock market were extraordinarily high and that they were nothing but a speculative bubble caused by the mistakes of the Federal Reserve Board. Hoover explained, “One of these clouds was an American wave of optimism, born of continued progress over the decade, which the Federal Reserve Board transformed into the stock-exchange Mississippi Bubble”102. Thus, the common viewpoint was that stock prices were too high.

One similarity between the crash of the 1929 and the current crisis is the rush of economic analysts and politicians to falsely declare the end of the crisis. Leading economists of the first half of the twentieth century such as Irving Fisher and Maynard Keynes declared the end of the 1929 crisis only six months after the crash. Both managed to lose a large portion of their wealth in the subsequent stock market crash.

Aside from all the postanalysis of the 1929 crash, one fact stands straight. That is of the existence of two views of the market: a real one which measures the production rate and the real economic growth; the second is the virtual view which represents the speculative values. In reference to the real economy and its performance, Harold Bierman concludes in his article on the 1929 crash, saying, “There was little hint of a severe weakness in the real economy in the months prior to October 1929.” The high productivity rate during the period preceding the 1929 crash was evident and easily observed by economists. The problem is that the virtual value of the stock market grew at a much higher rate than the production market. The virtual view of the market provided a much higher value than the real one. In the case of the 1929 crisis, the virtual value of the market was more than 90% higher than the real one. The crash (thrashing as known in computer systems) brought the market back to the levels indicated by the real economy before the crash.

As an example, assume that the real value of some company is equivalent to 10% of its total virtual value; this is not uncommon in the realm of virtual economy world. Practically, the amount that can be turned into real money can be no more than 10% of the total virtual capital given by the stock value of the company; the rest is equal to none. When the owners of the company shares (or stockholders) notice that a major investor begins to sell his possessions (to convert them to real money), a panic among shareholders begin to propagate; they rush to sell their possessions hoping to cache in some real money before their stocks lose value. Then a collapse takes place and brings down the virtual value of the company to its more realistic basic value.

Let’s work out the example more thoroughly using simple analysis and calculation so as not to confuse the readers (figure 23). Assume that there are one thousand shares in a company. Also, assume that each share is worth $100. So the virtual stock value of the company is $100,000. For the sake of argument, assume that the real value of the company based on its assets and production is $10,000. In other words, the real value of the company is 10% of its virtual value. Now assume that a major investor sells fifty stock shares at $100 and caches $5,000. If the rest of the shareholders start selling their shares hoping to get real money from the company, they will be able to get no more than $5,000 at best, which is the remaining portion of the real value of the company. This translates to 5,000/950, which is approximately $5.25 per share. Now if one more person was able to act faster than the rest and sell fifty shares at say $50 and caches $2,500, then the rest of the crowd will have to share the remaining nine hundred shares for no more than $2500; that is $2.75 a share if all shares are sold at once. Say that two hundred more stocks were traded at $10 a share which amounts to $2,000. What remains of the company value is $500 distributed over seven hundred shares. The stock value of this company will be dropped down to $0.71. Eventually when all $10,000 are gone, the share will go to zero. The remaining stocks will lose their value completely.

This is how the stock values of Enron, 3Com, Martha Stewart companies collapsed and were tarnished when senior executives began to sell large amount of stocks in attempt to convert their stocks into cache. The first few individuals who manage to sell a large portion of their stocks get lucky and transfer part of their virtual wealth into real one. Those who come late or wait for a short while lose. In the final analysis, a company will never be able to translate its virtual value into real cache equal to its virtual value. Just as in virtual memory computer system, it is impossible to stack all the virtual memory pages into the real RAM memory pages! When a program attempts to do that, the system crashes; the difference is that in the case of computers, they call it thrashing instead of crashing. The result is the same.

Usury is the second major cause for the creation of virtual wealth which causes the economy to appear much larger in size than its real value. Usury is defined in Merriam-Webster dictionary as “the lending of money with an interest charge for its use”; this comes from the Medieval Latin usuria, which means interest. A modification was made to the meaning of usury to indicate the interest rate charged above a predetermined rate. This modification was made in order to legitimize the charging of interest on money. In the Islamic culture and religion, the word usury is mapped to the word riba. Riba comes from the word increase. When applied to the concept of usury, it means the increase of money at the expense of the money of other people. This definition is based on the Quranic verse:

That [usury-riba] which you lay out for increase through the money of other people will have no increase with Allah. (Quran 30:39)

Usury, or the interest rate as most frequently referred to, is a cornerstone of the financial policies under capitalism. It is used by the Federal Reserve to adjust market and economy fluctuations. During a recession, the Federal Reserve Bank reduces the interest rate (usury value) in order to encourage borrowing and increase the demands on goods and services. Conversely, it increases the value of usury to curb inflation during excessive economic growth. The point here is to understand that usury in the capitalist political economy is one of the most important tools used for the control of the ups and downs of the economy. Perhaps the single most unique characteristic of capitalist economy is the widespread use of financial institutions that offer loans to individuals, companies, institutions, and even governments themselves.

In this section, we are interested in the role of riba-usury in the creation of virtual wealth. More on the subject of usury will be addressed in the second part of this book when we discuss the Islamic economic system, which is usury free in contrast with capitalism which is based on usury.

The main usury organ under capitalism is the banking financial institutes. Within this usury-based economy, money flows in two directions. In one direction, the money flows from the investors and customers towards the banks in a form of deposit payments. The other direction of flow is from the banks towards the investors and customers in a form of loan payments or withdrawal from customers’ accounts (figure 24). Except for rare cases where the inflation rate is higher than the interest rates during the repayment period, the amount of money going towards the bank is steadily more than the amount of money going towards the investors.

The money which flows from the banks towards investors and customers is related to the real economy of production. It is responsible for the increase of production; it is used to maintain price stability as required by the fiscal policy, and it is responsible for creating the supply-demand balance in the market.

The amount and rate of money which flows in the direction of investors and customers will certainly be less than the amount and rate of money which flows in the direction of the banks. Over time, the banks accumulate more wealth than the total wealth collected by the market either through loans from the banks or through production of goods and services. The difference between the wealth accumulated by the banks and the wealth sustained by the market provides another reason for the dual views of the economy: the real and the virtual. To further illustrate this phenomenon, consider the following two cases.

Consider the loan case, where the bank provides a loan for an investor. Let’s assume that the bank provided a loan of $100 million with 5% usury for one year. Let’s assume also that the inflation during this period was 2%; the actual value of the interest rate becomes 3% after inflation adjustment. Assume further that the investor who borrowed the money was able to use the borrowed money to produce goods and services and generate 2% profit at the end of the loan period. Now the total amount of money to be paid back to the bank is $103 million, while the real available money due to the loan, investment, and profit is $102 million. This means that there is $1million in the bank account which does not correspond to any real value on the ground. This surplus is the usury; it represents the pure growth of money which does not correspond to any growth in the economy. The economy grew by $2 million; the money grew by $3 million. Only $2 million of the money growth corresponds to economic real wealth growth. This is what the Quran refers to as money growth at the expense of other people’s money: “That [usury-riba] which you lay out for increase through the money of other people will have no increase with Allah” (Quran 30:39).

Note that the biggest borrowers in the world are governments which borrow money to pay for their operation and not for profitable production. Consequently, the accumulated pure usury will be much higher than the ratio of (1%) as indicated by the above example. That is why, in a short period of time, usury money grows to several hundreds of billions of dollars and becomes much greater than the size of the real economy. It is worthwhile to know that the real economic growth rate in United States was no more than 3.5% during the last thirty years, while the actual interest rate (after inflation adjustment) was more than 8% per year. On the average, 4.5% of the wealth increase was on the virtual side, which did not correspond to the real economic growth. This means that the virtual money over thirty years was (135%) of the actual value of the economy. So if the real value of the US economy was $5 trillion, then the usury-related excess wealth was $6.75 trillion. The total virtual wealth will appear to be $11.75 trillion instead of $5 trillion.

The second case which leads to an increase in the virtual money is the case when investors invest their money in the banks for a given usury/ interest value. Assume that an investor invests in the bank $100 million for a usury of 5% rate averaged over ten years after taking into account inflation. After ten years, the value of the invested money becomes $150 million. For the bank not to lose money, it in turn invests the $100 million. Let’s say the bank gets an average 7% return on the reinvestment of the $100 million. The bank now has $170 million; it made $70 million profit over ten years. Let’s say that $50 million of the profit generated by the bank (5%) was a result of investment in real production projects; the rest ($20 million) was usury gained through the reinvestment of the money in other banks. The end result is that the initial $100 million have become $170 million. Only $150 million correspond to real growth of the economy; the remaining $20 million represents usurious money which does not map to any real value on the ground. The reality is that most banks do not invest their money in production processes, but rather by reinvesting in other banks and by recycling the loans to other borrowers. As a result, the virtual money increases at a rapid rate repeatedly until its value becomes extremely high.

Figure 25 shows how the Federal Reserve Bank pumps money into its own account without consideration to the economic growth on the ground107. The data shows how the money reserves multiplied more than four times between 1994 and 2008; the total cache currency and reserves doubled in less than four months after the collapse of the Lehman Brothers Bank. The currency reserves rose from $850 billion on September 10, 2008, to $1,702 billion on December 31, 2008. It is needless to say that during this period (112 days), the economy could not have grown 200%.

The practice of the Federal Reserve contributes to the explosion of virtual wealth instead of working to control it. Instead of containing the phenomenon of virtual wealth growth at the expense of real economy growth, the Fed aggravates it.

Worldwide, the interest baring debt of states and governments is shocking. The total amount of debts for sixty countries exceeded $65 trillion at the end of 2008112. The interest paid on this debt exceeds $3 trillion a year; this interest alone is more than the amount of money required to pull the world out of the deep recession it plunged in.

At the world level, the International Monetary Fund (IMF) and the World Bank (WB) practice similar role to the one played by the Federal Reserve in the United States. The IMF and the WB grant loans with interest to almost every country in the world; the IMF and WB impose on many of the recipients of their loans conditions which impact the real economic growth of each country as well as the currency reserves and values. The external debt to IMF of twenty-five poorest countries reached $129.3 billion at the end of 2008.

The stories of IMF wrecking nations’ economies are repeated in Argentina, Jamaica, Latvia, Ukraine, Hungary, Ethiopia, and many more. In an article published by the Center for Economic and Policy Research (CEPR)113, the impact of IMF policies on the economic downturn of Ukraine, Latvia, and Hungary is detailed. These countries turned to IMF to help them cope with economic downturn. In all three countries, there were mistakes in economic policy that increased their vulnerability to external shocks. The governments’ responses to the downturn, along with IMF conditions for assistance, have caused harm with procyclical policies. In Hungary, for example, a surge of foreign borrowing caused the country to run large account deficits in 2006 and 2007 (7.5 and 6.4% of GDP, respectively).

Latvia also suffered from a large reversal of capital flows due to a combination of procyclical fiscal and monetary policy—supported by an IMF agreement as well as funds from the European Union. By some estimates, the Latvian economy contracted by as much as 18% in 2009.

The decision by the Latvian government, in conjunction with the European Union and the IMF, to maintain Latvia’s pegged exchange rate with the euro, has made recovery much more difficult. With the currency fixed rate, the only way to reduce the country’s account imbalance was through shrinking the economy, which reduced imports faster than exports and reduced real wages.

Gold/silver standard refers to the monetary system where the currency of a nation is backed by a precious metal such as the gold and/or silver. When the currency such as the dollar is backed by gold or silver, it would be almost impossible to grow the finances of the country to such high limits where the country risks the depletion of its gold or silver reserves. The virtual economy, which thrives in the world of capitalism today, could not have become a reality, if main currency (e.g. US dollar) remained linked to the gold standard.

Until World War I, gold ruled as the monetary standard of all the major trading countries in the world. Each country pegged its currency to gold at a constant and unchanging rate. Under the gold standard, the international monetary systems enjoyed a period of unprecedented stability and prosperity. In essence, the gold standard provided monetary discipline. The amount of currency a country could print was limited by the amount of gold in their reserves, because countries could have faced the requirement to convert their money to gold. Exchange rates between currencies of different nations remain fairly constant in the classical gold system.

The gold standard era was abruptly interrupted in World War I. Warring countries decided to print money without backing it up with gold in order to finance the extremely high costs of the war. An enormous amount of cache was poured into the markets without a solid backup for the money, giving rise to high inflation. This situation continued throughout the war and beyond. Germany had to repay under a reparations plan 132 billion marks and was required to back this amount by gold. Evidently, this requirement could not have been met by Germany; Germany could not spend its gold to pay for war crimes. The Europe allies have borrowed too much money from the United States, which demanded its loans be paid. The inability of Germany to comply with the postwar reparations plan and the failure of the allied countries to fulfill their loan obligations to the United States constituted a pretext for the Second World War.

In the mid-1920s, the gold standard was partially restored. However, the currency exchange rates were scrambled to reflect imbalances between the monetary power of the United States and the relatively weak currencies of European states, both victors (Britain and France) and defeated (Germany and Italy).

The restoration of the gold standard did not last for long. The world began to sink in a deep depression in 1928; and in 1929 the stock market in the United States crashed, leading to a worldwide economic panic. By 1931, major banks in Austria, Germany, and Hungary collapsed; the UK and many other countries decided to take their currencies off the gold standard. The world monetary system faced the same fate of inflation and lack of confidence for the second time since the beginning of the twentieth century.

Major industrial nations convened a “world monetary” conference in London in 1933 to discuss the possibility of restoring the gold standard; the participants failed to formalize any significant agreement. The world economic conditions fell under the pressure of a deep depression, coupled with a floating monetary system detached from gold, and as a result, high inflation, high unemployment, and high poverty rates. A second world war was imminent in 1939. The war and the massive military spending helped in stimulating the global economy and ending the Great Depression.

The choice was in the hands of US financial policy makers between two forms of economy. A real economy backed by gold-based currencies, which grows slowly but surely. Or a virtual economy characterized by pure-paper (and later digital) currencies without any backup from any precious metal, gold or silver. The virtual economy option allows for a virtually large liquidity, allows for an unprecedented wealth growth, allows unparalleled superiority over the Soviet Socialists camp, and allows the preservation of the US gold reserves. As attractive as this option could be, it became the first brick in the grave of the capitalist economy.

The cold war and the fierce struggle with the Soviet socialism provided the suitable environment for this option to flourish and provided the shield which prevented policy makers from carefully evaluating the dangers of such option. The greed of the financial institutions which were responsible for providing the liquidity, in particular the US Federal Reserve Consortium pushed this option forward with great avidity and eagerness. The path was thus paved for the revocation of Bretton Woods Act.

The dollar-gold convertibility crisis was evident by the amount of dollars held in the central banks of Europe. By 1966, Europe held in its central banks more than $14 billion. The United States had only $13.2 billion in gold reserves, of which $10 billion were needed to support US internal market needs. If governments and foreign central banks tried to convert even a quarter of their holdings at one time, the United States would not be able to honor its obligations. The relatively low price of gold at $35 an ounce as determined by Bretton Woods tempted speculators, gold merchants, and rich entities to purchase and hoard gold, thus increasing the rate of gold depletion in the world markets.

In 1971, the central banks in Europe began to redeem gold for their large stockpile of dollars. The US gold supplies were at the risk of vanishing. On August 15, 1971, the United States stunned the world by declaring that it would no longer redeem dollars for gold from its reserves. Essentially, the United States unilaterally aborted Bretton Woods Agreement. The dollar’s link to gold was severed. A quarter century of economic stability had finally collapsed, and a new era of unbounded financial growth began. By 1973, other countries in the world abandoned the gold standard.

For the first time in history, the gold officially became just a commodity, whose price is subject to market rules and regulations. Figure 26 shows the rise of gold prices and their fluctuation based on the London Spot Gold Prices117. The gold prices remained almost stable until 1972 when the United States relinquished the gold standard. After the financial crisis in 2008, the price of gold exceeded $1,200 per ounce.

Since the breakdown of Bretton Woods in 1971 and the end of the gold standard, the dollar has become the default international reserve currency. The twenty years prior to 1970, international dollar reserves increased only about 55%, at a rate of 2.7% a year. Between 1971 and 2001, with the adoption of the dollar instead of gold standard, reserves have increased over 2,000%, at a rate of more than 66% a year118. Figure 27 shows the growth of the world wealth since 1972. Such growth could not have been possible under the gold standard. But when United States turned against Bretton Woods Agreement and broke the link between the dollar and the gold, it freed the dollar from the rein of the gold and unleashed its potential for virtual growth.

After the death of Bretton Woods Agreement, the gold could no longer set boundaries to the growth rate of the dollar based economy; yet there was another string attached to the dollar, which kept it from skyrocketing at exponential rates as noted in figure 27. The string was a set of regulations and restrictions which were placed against financial institutions after the great 1929 Depression. Restrictions were introduced in the 1930s by political leaders to prevent another depression in the future. In essence, the restrictions limited the ability of the financial institutions to grow their wealth by giving more and more loans and generating more and more interest on the loans. Borrowers were required by the regulations to put a significant amount of money down when they borrowed to finance a house purchase. That left the interest-bearing portion of the loan relatively smaller.

In 1982, the Reagan administration decided that the government regulations were impeding the progress of the economy. The government lifted those regulations and removed the restrictions as Regan signed the Garn-St. Germain Depository Institutions Act in 1982 (140, 141). As a result, the US banks embarked on a credit and loan spree with almost no government restrictions, or sound fiscal prudence. Before the Reagan deregulation, the average American household debt was 60%. By 2007, this figure had doubled to 119%119. This was made possible by relaxing the standards placed on borrowing and lending.

The two main constraints placed against the free rise of the dollar wealth were removed by the early 1980s. The gold standard was revoked in 1971 and a decade later the regulations on the financial industry were lifted.

In the final result, the economy in the largest capitalist country has been split into two almost independent branches: a real branch responsible for the production of goods and services and a virtual branch responsible for the production of money. Each branch grows or shrinks at its own pace, and possibly in opposing directions. The real economy might shrink, while the virtual money continues to grow. The growth of virtual money is driven mainly by the stock market value and the interest/usury generated through an extensive credit and loan system. The virtual part of the economy reigned over the rest of the economy.