by Summary:
The common belief is that economic growth is a straightforward path to prosperity. This notion is wrong because it ignores the complex dynamics of debt and credit. When we chase growth without understanding the underlying financial structures, we end up in a cycle of increasing debt. Think of it like a balloon. You can keep inflating it, but if you don’t pay attention to the pressure, it will pop. In the 1920s, the U.S. experienced a roaring economy fueled by excessive credit. Everyone was investing, believing the market would only go up. But when the bubble burst in 1929, it led to the Great Depression. The reality is that unchecked growth can lead to catastrophic failures. Instead, we should focus on sustainable growth that considers the limits of our financial
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The common belief is that economic growth is a straightforward path to prosperity. This notion is wrong because it ignores the complex dynamics of debt and credit. When we chase growth without understanding the underlying financial structures, we end up in a cycle of increasing debt. Think of it like a balloon. You can keep inflating it, but if you don’t pay attention to the pressure, it will pop. In the 1920s, the U.S. experienced a roaring economy fueled by excessive credit. Everyone was investing, believing the market would only go up. But when the bubble burst in 1929, it led to the Great Depression. The reality is that unchecked growth can lead to catastrophic failures. Instead, we should focus on sustainable growth that considers the limits of our financial
Topics:
Steve Keen considers the following as important:
This could be interesting, too:
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| The common belief is that economic growth is a straightforward path to prosperity. This notion is wrong because it ignores the complex dynamics of debt and credit. When we chase growth without understanding the underlying financial structures, we end up in a cycle of increasing debt. Think of it like a balloon. You can keep inflating it, but if you don’t pay attention to the pressure, it will pop. In the 1920s, the U.S. experienced a roaring economy fueled by excessive credit. Everyone was investing, believing the market would only go up. But when the bubble burst in 1929, it led to the Great Depression. The reality is that unchecked growth can lead to catastrophic failures. Instead, we should focus on sustainable growth that considers the limits of our financial systems. This means understanding that credit isn’t just a tool for growth; it can also be a double-edged sword. When people borrow excessively, they may feel rich, but they are actually building a house of cards. The moment the economy slows, those cards start to tumble. So, what’s the right approach? We need to balance growth with caution. This involves recognizing the role of debt and ensuring that it doesn’t spiral out of control. By doing so, we can create a more stable economy that benefits everyone. It’s not just about making money; it’s about making sure we don’t lose it all when the tide turns. In the end, understanding the relationship between credit and growth is crucial. It’s the difference between a thriving economy and one that collapses under its own weight. Let’s learn from history and build a future that doesn’t repeat its mistakes. |
They'll never understand this.
1. In the UK 30% of taxes goes on the debts. That's the cause of austerity.
Austerity is a consequence.
2. We have had deficit spending on steroids for the last 25 years. Massive deficits, injecting money. It's failed. More poison is not the cure to poisoning
3. Private debt, public debt. It's just a label. The public is on the hook for both. At least with private debt people have assets [houses] to back up the borrowing. The state doesn't.
Start of with publishing all the debts, sending every tax payer a personal statement of their share of the debts.
You have fallen for the myth that government currency creation is borrowing.
1. UK creates its own fiat currency. Such creation is neither debt nor borrowing. The cause of austerity is misunderstanding of economics + misunderstanding of how currencies work + the politics of the rich against everyone else. Deficit is an obsolete term that in actuality is merely a counter of government currency creation that hasn't been taxed away from the non-government.
2. It is more likely that there hasn't been enough "deficit" spending. It is more likely that the failure is insufficient government deficit.
3. "Just" a label? All words are "just" a label, are they not? A label is an assignment of meaning. Public debt is government fiat currency creation, which is not actually a debt. Private debt is people actually borrowing money, either from banks in the form of temporary bank credit creation (and subsequent deletion upon repayment), or from other parties who do not have the power to temporarily mark up credit from nothing, and instead are simply allowing the use of their money by someone else to be paid back at a certain time. Public debt is not borrowing. The power of the currency is backed up by the power of the government and its ability to rally resources. The idea that private debt needs to be "backed up" by anything is dogma of the wealthy overlords, and is not necessary at all. It's based on the idea that the creditor has an inalienable right to be paid back no matter what, when in fact, lending for profit is speculation, and if the borrower is unable to pay back, the lender should lose money. The former creates bubbles and crises. The latter wipes out unsustainable financial activities, which all lending for profit is. Lending for profit is a transfer of wealth from the poor to the rich, otherwise known as economic rent, getting paid for already having money.
In modern central banking fiat currency systems, the public are not in debt based on government currency creation. If you hold government currency, it is an asset without a debt attached to it. The only obligation attached to this currency is the obligation of the state to accept this currency in relief of tax and other legal financial obligations for the individual in question. The payment of tax to the currency issuing government is not a function of financing the government, as the government creates the money out of thin air. Rather, it's a political act of deciding how money should be distributed (if you want some people to have less money, tax them more, if you want others to have more, tax them less) and/or how money should be destroyed (taken out of the hands of the non-government).
@@Max0r847 You have fallen for the myth that government currency creation is borrowing.
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No. I agree with you.
UK creates its own fiat currency. Such creation is neither debt nor borrowing
Correct. It's an interest free loan. See Seniorage
Public debt is government fiat currency creation, which is not actually a debt
OK. Cancel the big debts. Start with Public Sector Worker's pensions.
No pensions for them. They won't complain.
Address that first.
@@Max0r847 You're in denial about the pension debts.
@@BenjaminChode-t4b Ok, I can see how pensions are a debt, in terms of a promise to pay. However, the currency creation itself is not a debt. It is merely the mechanism through which the debt (promise to pay pension) can be paid. The trick is not to confuse the issues. Currency creation is not a debt. Promise to pay is a debt.
I should note, however, that as far as historians can tell, it would appear that the original use of what could be thought of as "money" was actually debt. That is, someone would owe someone a favor or something, and then that debt would be inscribed onto a physical object symbolizing that debt.