The monetary reformer quoted some of my last lot of replies out of context, and didn’t put the rest on his blog. So I’m not sending him this lot, I’m just posting them here. I hope there won’t be any more.
X: For you, economics seems to be about money. For us, economics is about life.
A: That’s not fair.
You wrote: “Economic growth requires (at least in part) increasing loans. If loans do not increase, the economy, as it is presently structured, fails.“
That’s a purely monetary definition of economic failure. Also I think its wrong, from a monetary point of view as well as from a Green one.
I wrote “Economic growth or decline is about GDP, in other words, money. Sustainability is about resources, climate, population, and other species, as well as money.”
That definition of economic growth is not just my opinion. Wikipedia says: Economic growth is the increase of per capita gross domestic product (GDP) or other measure of aggregate income, typically reported as the annual rate of change in real GDP. (en.wikipedia.org/wiki/Economic_growth)
And we agree that there is more than just money to the definition of a sustainable economy, but I said it before you did.
X: I take it you standardised the figures for a generation according to the life expectancy at the time you were measuring?
A: Its about age at reproduction not life expectancy. I used lognormal distributions to model age-specific fertility rates, and let the computer find the numbers which fitted the data best. For more details, see “Couples and the K-wave” on my website.
X: If it is not created at the point a loan is made, where and when is it created, in your view?
A: You‘re arguing with yourself. I’ve already agreed that money is created when a loan is made.
X: One cannot sustainably borrow in order to provide for daily living needs.
A: As I’ve already commented, the mortgage system is an example of sustainable borrowing to meet daily needs, and its also an example of sustainable investment, usually, with exceptions, as in the last decade.
X: A: I have shown that [debt does not necessitate ever increasing production and productivity.]
A: The bit in square brackets was added by you. Its confusing without a hyphen after “ever”. You had written “Hoogendijk has shown that debt necessitates ever increasing production and productivity.” I replied that I had shown that it doesn’t. My opinion is that debt does not always make it necessary to increase production and productivity.
X: Two manufacturing firms . . . They are now in competition as before, but now they have to service their debt. How can this fail to drive both to boost throughput of materials?
A: You’re talking to yourself again. I didn’t say it would fail, I said they probably wouldn’t get into debt if the economy was unfavourable, because they wouldn‘t get a loan.
X: This system is an important driver of economic growth, since the real economy is burdened with the necessity of paying back interest.
A: Now you’ve gone full circle right back to where we started.
1. The real economy also benefits from the interest, which is paid to the depositor, from the borrower, through the bank.
2. The real economy is also burdened with the necessity of paying wages. Nobody thinks that wages should therefore be abolished.
I don’t want to go round this circle again so I hope there won’t be any more replies.
Tags: Monetary policy
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