It’s charging interest, stupid – important comment

1 04 2009

By Katkins

Great analysis D but the new money created by an interest rate can be supported in the economy if it is constantly expanding and growing exponentially.  This is where the imperative for growth in our global economic system comes in.  When the economy stops growing at the necessary rate then things get really problematic (as you describe).  And we also have to recognise that our earth has limits to the resources that it can supply and the waste that it can assimilate, which means that constant and ever expanding growth is certainly not an option.
A new report by the sustainable development commission in the UK tackles the problem of growth…
http://www.sd-commission.org.uk/pages/redefining-prosperity.html

In a sustainable, stable state economy, interest rates would be low.  and there would inevitably have to be regulatory instruments to ensure that lending was limited.  The problem with this is that the cost of borrowing can no longer act as a way of rationing the credit.

We need to find an alternative to our destructive ways and that has to happen now. We watch the deliberations of the G20 with interest today.

Economicsfairy: A very interesting comment, thanks – I was thinking about this myself, but at the moment I believe we need to design an economic system without interest, must be possible somehow.

Will update you on people who are thinking about this very shortly.

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