[quote=davelj][quote=arraya]And therein lies the problem with leverage…it relies on ever-expanding leverage and debt.
Our monetary system is based on debt and compound interest, which results in an ever expanding amount of “money” chasing dwindling natural resources on our finite planet.
To put another way: All money is born of debt and all interest on debt has yet to be created and is preferably created out of more debt. Got it, infinite debt has to be possible for it to work out. Faith-based economics.
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That first quote looked suspiciously canned, and indeed it can be found verbatim on many “green” websites on the internet, including this one: http://www.grassrootsnetroots.org/articles/article_15155.cfm. Next time, do the authors a favor and use quotes. Or better yet, state a position using your own words, if possible. But, to your point, have you noticed that as time and technology progress that humans have managed to become increasingly more efficient in their use of the “dwindling natural resources on our finite planet,” thus allowing both populations and standards of living to grow at the same time? Basically, Malthus called and he wants his theory back.
The “All money is born of debt…” bit comes almost verbatim from Paul Grignon’s “Money as Debt” animated piece, which I imagine many Piggs have watched at some point or other. Again, quotations would be in order.
But, again, to the point you’re trying to make, let’s use a quick micro example to show that debt, in fact, can be paid down without one’s micro economy collapsing. People who are in debt regularly cut back on spending and/or earn more money in order to pay down debt. Happens all the time. Their lives don’t necessarily require ever-expanding debts to keep their micro economy, as it were, expanding. And if the debts do expand, more often than not (the last few years excepted, of course), the expanding debt is accompanied by expanding earnings. There’s nothing wrong with debt expansion, per se, so long as it’s accompanied by an equal degree of earnings expansion.
We, as a nation, can pay down debt relative to GDP and still have GDP expand. But because our debt levels are so great relative to GDP (because we’ve been irresponsible with debt for the last 20 years), GDP will expand at a much lower rate (via lower consumption) than it has in the past as we pay down that debt. It’s simple economics. But we cannot pay down the debt all at once. It will take some time.
On a general note, when folks just use other peoples’ quotes verbatim (and don’t acknowledge them as such) to make their points I sometimes wonder whether they really believe what they’re quoting or whether they just think it “sounds good.” I suspect that many folks feel the same way. I don’t know where you stand, specifically.
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The first quote I did steal from somebody else who quoted from somewhere else on another blog. The problem is I don’t even remember where I specifically got it. I suppose I could have said “unknown source” from an unknown blog.
The second quote is mine and I never saw that film so there you have it.
Here is another quote for you. This was from M King Hubbert who modeled the rise and fall of oil production back in the 50s.
The world’s present industrial civilization is handicapped by the coexistence of two universal, overlapping, and incompatible intellectual systems: the accumulated knowledge of the last four centuries of the properties and interrelationships of matter and energy; and the associated monetary culture which has evolved from folkways of prehistoric origin.
The first of these two systems has been responsible for the spectacular rise, principally during the last two centuries, of the present industrial system and is essentially for its continuance. The second, an inheritance from the prescientific past, operates by rules of its own having little in common with those of the matter-energy system. Nevertheless, the monetary system, by means of a loose coupling, exercises a general control over the matter-energy system upon which it is superimposed. Despite their inherent incompatibilities, these two systems during the last two centuries have had one fundamental characteristic in common, namely exponential growth, which has made a reasonably stable coexistence possible. But, for various reasons, it is impossible for the matter-energy system to sustain exponential growh for more than a few tens of doublings, and this phase is by now almost over. The monetary system has no such constraints, and, according to one of its most fundamental rules, it must continue to grow by compound interest.
The preachers keep on preaching but the congregation is losing faith. (Ok, admittedly I stole this from somewhere but I don’t remember it’s been years)
No matter how hard you try you can’t have exponential growth on a finite planet.
“The greatest shortcoming of the human race is our inability to understand the exponential function.”
— Dr. Albert Bartlett
