Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Okay: this stuff can make my head spin. My interest in economics lies at the foundational, theoretical level rather than in the part that translates theory into testable formulas capable of being evaluated against experience in order to make predictions.  (And I'm all for doing this; I just can't do it.)

So, Soddy's insight is about at the level of "MV = PQ" or "C + I + G = GDP".  Both of those formulae can be (infinitely?) developed, refined, tinkered.

One thing that occured to me:  if the human members of the economy exhibit an increasing preference for holding debt, then that takes up some of the mis-match between debt, on the one side, and real wealth, on the other.  A debt that is never called in doesn't come into the system as a claim on real wealth.  There are probably historically derivable formulae that describe this changing preference over time--and I'd wager that as this preference ebbs and flows, sharp declines lead to these periodic bouts of debt repudiation.  The system comes cascading down in a flurry of margin calls (which are one step in transforming debt into a claim on real wealth:  debt has to be changed into money, first, in order to be spent.)

Industrial society is not sustainable. Unsustainable systems change--or disappear.

by Eric Zencey (Eric dot Zencey at UVM dot EDU) on Tue Mar 11th, 2008 at 03:05:01 PM EST
[ Parent ]

Others have rated this comment as follows:


Occasional Series