The Impossibility of Growth

[Dinner]

He just keeps digging deeper and he's showing a Ben like tenacity wrt his digging deeper (and being wrong) for page after page after page...

[Fake Boris]

1. Subsistence farmers don't need currency.
2. Someone else is receiving the interest. I still don't see why you think money is just going to disappear into some black void and we'll run out of money.

I didn't make myself clear enough: the money supply runs out as the principal is paid, not the interest per se. You're correct on this, but this doesn't give an accurate picture.

If the principal is never paid, then you're paying interest forever, for no other reason that someone holds a title over you. Hence serfdom, which is permanent debt with no growth.

If the principal is paid, money has to be resupplied through additional credit. But the interest money is never supplied by the creditor: you have to find it from other's credits, or by being a stakeholder of the interest (which is still someone else's debt).

New credit will be extended if there's a reasonable assumption that you can turn the money into something more valuable (so that interest can be paid). That little extra is bound, at a certain point, to imply resources of a material nature.

Loans from the bank's perspective are assets, and a bank's interest is to grow its assets as much as it can. This is why credit, growth, and material resources are inherently tied.

When a politician says we need growth, what he's really saying is that we should be increasing the bank's assets.

Which is not to deny that technological miracles will help us increase the efficiency of our production, reducing both our use of raw materials and the production of waste, as well as miniaturising many things which used to require a lot of resources and take up a lot of storage space. This is powerfully argued (and hopefully spruiked) by Diamandis and Kotler in their analysis of the power of new technological developments to ‘dematerialize’ growth. [Diamandis and Kotler 2012, p. 150ff] But dematerialisation is a slippery concept: reduction of material use is not elimination of material use, and just as with relative and absolute decoupling, the reduction in unit cost or size can be overcome by the growth in units. So a world of abundance without limit will eventually be a world crammed too full of perhaps tiny stuff, regardless of our technological progress.

This is the outcome of neverending credit to fuel the money supply.

Failing that, the other outcome is serfdom.

[Fake Boris]

This is probably why KrazyHorse became an investment banker. He realized the best way out of serfdom was to be a stakeholder of the organization collecting the interest.

I made the same realization years ago, but chose socialism instead.

[AAAAAAAAH!]

I didn't make myself clear enough: the money supply runs out as the principal is paid, not the interest per se. You're correct on this, but this doesn't give an accurate picture.

If the principal is never paid, then you're paying interest forever, for no other reason that someone holds a title over you. Hence serfdom, which is permanent debt with no growth.

But new loans are getting created all the time, because people need to borrow money for various things that they will still need even if the economy isn't getting bigger. No one has to remain in debt forever.

If the principal is paid, money has to be resupplied through additional credit. But the interest money is never supplied by the creditor: you have to find it from other's credits, or by being a stakeholder of the interest (which is still someone else's debt).

This would be an issue if creditors saved 100% of their income, because then their assets would have to keep growing perpetually. However, people don't save all of their income. The whole purpose of having that income is to eventually spend it on something.

New credit will be extended if there's a reasonable assumption that you can turn the money into something more valuable (so that interest can be paid). That little extra is bound, at a certain point, to imply resources of a material nature.

Not all credit is for investment- sometimes people borrow because they need to consume more now, and credit is a way to trade future earnings for present consumption.

Loans from the bank's perspective are assets, and a bank's interest is to grow its assets as much as it can. This is why credit, growth, and material resources are inherently tied.

The bank exists to deliver a profit to its owner or its shareholders, and will only grow its assets when it expects to profit from doing so.

When a politician says we need growth, what he's really saying is that we should be increasing the bank's assets.

What he's really saying is "vote for me, naive idiots".

[Fake Boris]

There can't be consumption without investment.

[AAAAAAAAH!]

Of course there can, although without investment the capital stock would rapidly depreciate and the economy would shrink. I guess the environment would improve if we stopped investing.

[Fake Boris]

Well that's the whole point isn't it?

Without credit, the economy would shrink and banks would fail. Shrinking doesn't have to be a disaster. There are more than enough resources for everyone anyway, even if the economy shrunk by 50%.

We need to devise a political and economic system that makes harmonious shrinking possible.

[AAAAAAAAH!]

There's probably a more orderly and efficient way to reduce pollution than dismantling the financial system.

[Fake Boris]

Which is?

[Kidlicious]

There are more than enough resources for everyone anyway, even if the economy shrunk by 50%.

[AAAAAAAAH!]

The global gdp per capita is ~$10500. I take it that Oncle thinks ~$5000 a year qualifies as a "living wage"?

[Kidlicious]

It would be less painful to just exterminate some segment of the population.

[Fake Boris]

The global gdp per capita is ~$10500. I take it that Oncle thinks ~$5000 a year qualifies as a "living wage"?

Look at the actual goods and services rather than their nominal value.

[AAAAAAAAH!]

Are you talking about purchasing power parity? Even then we're only looking at an average global income of $12000 to $14000. So you'd be satisfied with an income of $7000?

[Kidlicious]

Look at the actual goods and services rather than their nominal value.

We should probably figure how many people will die.