The (Bad) Economics of Perpetual Growth, Part 2

June 19, 2012 at 5:27 pm | Posted in Decentralism, Political theory | Leave a comment

Modern central-bank-capitalism is a debt based system. Central bank money is created into existence by debt…selling government bonds.

There is an equally famous debt based system called ā€” a Ponzi scheme. The two systems share fundamental similarities. The only way a Ponzi scheme can forestall collapse is to perpetually grow faster with new victims than it pays out to early participants. Bernard Madoff showed that it could go on for a couple decades with just one person knowing the facts.

This is how a central bank operates, but instead of just one person at the helm, it is a semi-united effort of all industrialized central banks. Futher, they have financial control over nearly all the wealth in the world. So the fact it can survive hundreds of years does not remotely prove it is sustainable. It merely proves they have so far managed to encourage on average growth faster than they have expanded the money supply.

There is a specific financial predictor that shows this is collapsing, discovered by the late Dr. Kurt Richebacher. Namely, the declining productivity of each dollar of new debt, sometimes referred to as the change in debt to change in GDP ratio.

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