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JakeS:
I still don't see how it drives growth in the amount of funny-money, nevermind the real economic output. I don't understand the deterministic causal mechanism you postulate exists between interest-bearing debt and a requirement for ever-increasing industrial production.

Since our Money consists of interest-bearing debt - which few realise - then all else being equal, the money supply must increase more or less exponentially.

It cannot do so unless productive assets exist (or are expected to exist) over which credit institutions may make financial claims. ie growth in money supply requires economic growth which is denominated in this funny money.

JakeS:

It seems to me that I can construct a toy steady-state economy by having the government exercises its power to issue and confiscate fiat currency appropriately.

There are several ways which have been postulated for arriving at a steady state economy, all of them aimed at counterbalancing the malign and unsustainable effect of money created as interest-bearing debt.

Keynes' Bancor took the Gesellian approach of interest being charged on both credit and debit balances.

Social Credit postulates issuance of interest-free credit by State Treasuries.

State capitalism implies the government issuing credit to itself.

JakeS:

But that's a rather less sweeping reform than re-arranging the entire monetary system...

I have to say that moving from your toy-sized economy to an adult-sized one is every bit as sweeping a reform.

Besides, I am not proposing reforming or re-arranging anything - I see the system reforming and re-arranging itself by rapidly evolving from its current unsustainable centralised financial dinosaur architecture to a decentralised disintermediated furry mammal playground... ;-)

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

by ChrisCook (cojockathotmaildotcom) on Sun Feb 22nd, 2009 at 10:56:29 AM EST
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