As I've long maintained capitalism only works when resources are readily available and the externalities of depletion and pollution are ignored. The borrowed money is paid back, with interest, by extracting value from resources which aren't accounted for. The continual existence of resources is also assumed which allows for permanent growth. An impossibility.

Now that the first person has acknowledged that capital is not the key to development how long will it be until the next economist admits that growth has to be replaced by a steady-state social state?

"Capital" and "Credit" have unfortunately become conflated because our Money is Credit (created by Banks).

The monetisation of Debt/ credit began to take on its modern form in 1718, courtesy of John Law's Banque Royale, and the result then was the Mississippi Bubble.

As I said in my Peak Credit Diary, I think that the monetisation of Bank credit reached the end of the road last year, and that it is now downhill all the way - for the US and UK anyway.

I believe that we need instead - through a "Debt/Equity swap" on a massive scale (albeit with a non-toxic form of "Equity") to monetise the output of productive Capital generally, and land and renewable energy in particular.

I think that this is in fact achievable through using new legal tools to create "asset-based", rather than "deficit-based" financing.

In my view, "Capital" consists of "Property" (rights of ownership and use)in respect of productive assets and this is now in massive oversupply, albeit concentrated in increasingly few hands - which is where taxation applied to Capital - not income - could help redress the balance.

The "market (clearing) price" or "Cost" of productive capital has come down from maybe 25% in Babylonian times (when it was almost entirely Land), through 10% pa in Medieval times, to 5% pa prior to the Industrial Revolution, and is probably now between 0.5% and 1.5% pa.

The cost of Credit (aka "Time to Pay") is a different issue, and comprises a system cost, shared costs of defaults, and the credit intermediary's profit (if there is a credit intermediary).

Neither the cost of Capital nor the cost of Credit has anything whatever to do with the arbitrary interest rates set by Central Banks, which were always unnecessary intermediaries and are even more otiose in the evolving "Peer to Peer" era of the Internet.

Unfortunately, Investors' expectations in relation to what constitutes a reasonable return have been distorted by inflation, which is caused by a combination of deficit financing (both by government cf Zimbabwe and banks) and the profit motive (aka Greed).

"The future is already here -- it's just not very evenly distributed" William Gibson