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what is the problem with interest?
The essential problem is the following: interest in a debt based system
becomes compound interest. This means you always need to pay back more
than
you got, typically doubling every 20 years or so.
yes, that reflect the fact that capital multiplies, work adds
capital is not linear
There are two scenarios:
- in a static economy, you have to take that surplus from somebody else,
and
that would destroy a static economy, which is why interest was outlawed
in
every precapitalist society
in a static economy interest rate should be 0
- the other solution is growth, that way you take it from a growing pie,
the
higher the interest, the more you need to grow,and it's really a system
that
needs very high growth rates; you can't stagnate without going bust
interest is aligned with grow rate
... but
infinite growth is a problem in a finite environment
yes, life problem
Fractional reserve banking, creating debt without any true collateral,
compounds that problem, creating lots of debt that has no real possiblity
of
being paid back in the real economy. The financial casino becomes
eventually
more interesting than the real productive economy, which is what happened
in
the last 30 years.
when money and interest is not aligned with grow, yes that happens,
oscilations happens.
aceleration, desaceleration, economic cicle
The political issue is the following: interest breeds accumulation, since
it
becomes interesting to keep your money, so that creates political power
by
those able to accumulate. Why has social-democratic reform become so
difficult since neoliberalism, because whenever you want to change
something, capital flight occurs, and your economy is bankrupt.
yes, you need global political power to fix that, or an isolated economy
(or
power to control
external fluxes, like Chavez)
--
Diego Saravia
Diego.Saravia gmail.com
NO FUNCIONA->dsa unsa.edu.ar
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