Working paper / preprint — not peer-reviewed. This paper proposes a theoretical policy framework and is not an empirical study. Drafting and formatting were AI-assisted; some figures and country-specific statistics have not been independently re-verified and may contain errors. Findings are conditional on the framework's stated assumptions and should be read as structural illustrations, not real-world predictions or forecasts. This is not financial, investment, or legal advice. Corrections, critique, and independent replication are welcome — contact mo_barakatm@yahoo.com.
The global financial system relies overwhelmingly on interest-bearing debt. With global public debt exceeding $102 trillion, this paper examines whether debt-compounding dynamics are a structural feature of interest-based finance, and proposes an alternative architecture — "Economic Sovereignty" — built on interest-free financing.
The framework rests on four pillars. First, a zero-interest policy intended to remove the compounding-debt mechanism as a driver of cost-push inflation. Second, profit-and-loss-sharing (PLS) finance, which replaces debt contracts with equity-style investment, so that financial returns are tied to real economic performance rather than fixed obligations. Third, a 2.5% asset-based tax replacing income and corporate taxation, designed to discourage capital hoarding and encourage productive circulation. Fourth, a dynamic monetary stability mechanism intended to anchor money supply to the real economy and absorb supply-side shocks.