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129 comments on Our World Is Finite: The Implications of Resource Limitations

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Gail the Actuary on October 24, 2007 - 11:28am Permalink | Subthread | Parent | Comments top

Airdale,

Why is growth necessary?

Part of the reason for growth is simply to pay back all of the debt with interest. If you stop the growth cycle, there isn't going to be enough money to pay back the debt with interest. When limitations on oil make growth more difficult, one way around the problem is to just borrow more, to keep up the illusion of growth. I think that this is what has happened recently, and is part of the reason that the whole system is coming close to collapse.

Another reason for growth is that all of the economic models are predicated on growth. Stock values reflect the net present value of future earnings (at least sort of). If earnings are rising it is easy to justify a high stock price. If earnings are level, the price is lower. If earnings are expected to decline year after year in the future, the stock price goes in the toilet.

A third reason for growth is that benefit programs like Social Security and Medicare were priced assuming that there would be more and more people paying into the system, and that they would be earning more and more, so that the benefits would not be excessive in relationship to the future earnings of the people who will be paying into the system at the later date. If we don't have growth, the benefit programs cannot be funded at the promised levels.

Pension programs have some of the same issue as Social Security and medicare (won't work unless there is growth), but the reason is different. Pension programs are usually funded using stocks and bonds. If there are major defaults on bonds because of lack of growth (leading to an inability to pay back the interest plus principal), or the stock values fail to grow by the assumed rates, the pension plans will not have enough funds in them when it comes time to pay benefits.

One thing people did do back in the 50's was have lots of children. This has been part of the growth cycle too.

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CrystalRadio on October 24, 2007 - 12:07pm Permalink | Subthread | Parent | Comments top

Hi Gail good show!

About debt ,I feel it is merely an outgrowth of original communal living. We began by doing for each other communally , if for instance a barn or house needed building the community would do it. (for brevity(and maybe other reasons:) this is rather a simplistic model). As communes grew to cities basic community was lost but houses etc were still needed. Debt is merely a substitute for what each member of a commune owed each other member.

I think what one might see from this that interest on a loan is unnecessary and in reality a theft by nonproductive middlemen.

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airdale on October 24, 2007 - 12:34pm Permalink | Subthread | Parent | Comments top

Thanks for the reply.

Gail said :
"One thing people did do back in the 50's was have lots of children."

Mhhh...when the war was over and my father returned..sometime in 1945-6 or so.we lived in Ky still..some trips back and forth to city living but briefly...and yes, I agree that on the farm people did have more children BUT that was a biological necessity for in order to continue to farm one needed offspring..to carry on and in case of disablity or accidents and to take care of the parents in their old age. Far better to have a few sons to help out..and daughters to marry well and increase the kinship and extended families that are so important in the rural outback.

And it did happen that way, where the offspring housed and cared for the elders...in fact to this very day you see it happening albeit to a far lesser degree. But old habits and customs die slow..

So then in 1949 my father came to the farm and hauled us up to St. Louis county to something that looked weird..suburbs..the very very early beginning of suburbs...

And I an my brother(the only two offspring) were set admidst a lot of other families BUT looking back most all of them either had no children, or two children and in the odd case three children. Most had two.

I dated girls and had lots of friends back in those days as a teenager and most of those early suburban families usually had just two children.

So where did the huge increases come from then? Was it that divorce became common and therefore new 'mixmaster' families were created...like my wifes? One from a previous and two from the original? The sexual revolution?

Or was it new arrivals in our country? Or illegal immigrants?

Mostly in the burbs where I then lived and grew up..2 was usual and 3 did happen and 0 was there as well.

My wife and I had two. That was all.
My grandfather and grandmother had 14!! Most all of those 14 aunts and uncles had at most 2. And of the males none had another male except for one and so me and my brother were two and he never married..of my two, a boy and a girl..my daughter has only one and no more..my son will never marry.

So out of 14 total that line is about to die out..and in fact no male children of those 14 offspring..only 2 males were born and they never propgated,except for me.

I find this in many kinfolk around here...so I am at a lose as to the dynamics of childbirth of those who have been here for some time...I am 5th generation on my grandfathers side and 12 generation on my grandmothers. Mostly on both sides we are slowly disappearing instead of increasing.

Perhaps my experiences are just far different.

As for Social Security..those of us who are on it surely recognize that the day will come , and not too far , when there will be no more EFTs deposited in the bank. We all pretty much know that its a ponzi scheme.

My feelings on SS is that a lot, a whole lot, more recipents have been 'added' to the roles than those who paid in. All for political gain I think. And then there was those who never paid in but get benefits anyway. Forget the name of that program. Then children were added and so on .....

airdale

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DIYer on October 24, 2007 - 2:14pm Permalink | Subthread | Parent | Comments top

... on the farm people did have more children BUT that was a biological necessity for in order to continue to farm one needed offspring ...

You've answered your own question there. It is in the nature of biologicals to reproduce. And the "Economy" is thought of in similar grow-or-die terms. We are victims of the success of humanity.

As a side note, I think your family tree is typical. My own is similar: Dad came from a family of 5, 2 of whom were male. None of his sisters ever had children, nor did my brother, and he has a total of 1 grandchild (my child). It doesn't look like she's interested in propagating, so his brother's kids, and theirs, are the only outcome of 3 or 4 generations of our family. His brother's widow is so obnoxious we don't talk to her very often -- I'm not sure how many descendants they have. Dad's other siblings and most of their spouses have passed.

| The problem will solve itself.
|  But not in a nice way.

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oilmanbob on October 24, 2007 - 4:11pm Permalink | Subthread | Parent | Comments top

Airdale,
You and I are in 100% agreement today. There has been a fundimental shift in values in our civilisation over the last 60 or 70 years, and the winning set of values aren't values that will help us survive in a more resource constrained world. What is being mislabeled as capitalism and democracy is actually greed and materialism, and its about to strangle us all. The Islamic conflict with the West is to a very large extent revulsion with this part of our society and an attempt to return to values that are 1400 years old. Unfortunately, they don't work well either with the modern world, and don't include tolerance.

I put the blame on how we get our information. Its pretty unfortunate, but televisions rule most households in America, they are on on a constant basis. And, television isn't an information medium or an entertainment medium, its an advertising medium with that other stuff just to keep us hooked.

We're not that far from the same age. I'll be 56 on Tuesday, November 6 and I think from the things you've said you are about 15 years older than I, but we can both remember the changes that came in society between about 1960 and 1975, when TV pretty well took over. Before then, people satisfied their need for a feeling of community by participating in the community, by being members of churches, local political organisations, local social organisations like lodges or service clubs like the Rotary or J.C.'s. At any rate, they went out and actively participated with actual people in making their communities a better place. People often had their families living near, perhaps a relic of most people having a farm.

But around 1960 the sitcom ideal on television started to make people who didn't live in a big house with two family cars feel inferior, so Mom got a job so the family could purchase these things, and they did. Credit expanded, and instead of people saving up to buy a house, they purchased it with a down payment and a twenty year note. And instead of Mom being home when the children came home from school, even cooking dinner and eating waited on her coming back from her job. And, our society became much more fearful from the advent of all the cop shows on television. Kids weren't allowed to play outside until after dusk.

And because of exhaustion, we left the TV on and didn't talk to each other any more. So we've sowed the wind, and reaped the whirwind. People seem to have forgotten that they only wear one pair of pants at once and sleep in on bed. We are fixing to start the third generation of people who seldom eat home cooking and have no idea of how to grow a tomato. Even churches have become giant megachurches on television, instead of groups of friends and neighbors doing their charity at home and working on community problems.

Peak oil though has the potential to reverse this process and set us back on the right path as humans. Its going to be such a huge shock to materialism that people wil be forced to look within themselves for the answers, rather than seeking other places to put the blame. The survivalist hole up in the woods with sardines and canned pinto beans and enough guns and ammo to terrorise the world mentality won't be nearly as succesful as organising a community garden and setting up jitney routes to the local train station. In one you have friends and neighbors, in the other you've got to worry about someone to watch your back when you sleep. What has more social status-a 12 MPG Hummer with an empty tank and no ration left or an electric bike that recharges from a solar cell set up on the garage roof? Bob Ebersole

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airdale on October 24, 2007 - 5:03pm Permalink | Subthread | Parent | Comments top

Bob,
I am in my late 60s but I feel more like late 50s.

We agree on a lot more than we likely disagree on.

But to answer my own question, after thinking about it some,I would assume the big change was the 'baby boomers'.

Must have shepherded in a new order of thinking perhaps.

I remember that even when TV came along..we might watch Howdy Doody and a bit of the other but mostly we preferred to be outdoors and the burbs hadn't yet killed off everything,,then later I joined the Boy Scouts and found my outdoors environment there,,then later hunting,fishing and canoeing, then spelunking in caves and on and on but always a hankering to return to living on a farm.

Straddling two far different ways of living , I am more comfortable with the rural lifestyle even though I still work on computers for some of the businesses in town and keep my hand in electronics.

airdale-watching as the future approaches on the horizon

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Gail the Actuary on October 24, 2007 - 8:04pm Permalink | Subthread | Parent | Comments top

I, too, am from the not-so-young group. I remember the days before television and having lots of cousins and aunts and uncles around when growing up. My grandparents lived on a farm, and my mother grew up on a farm. I sometimes visited a one-room school with my cousins.

I have never watched much TV - can't understand how some folks have it on night and day. We have a TV in the basement and watch it when we are there because of tornado warnings. Once in a blue moon there is a particular program I want to watch, and go to the basement and see it.

You are probably right that peak oil has the potential to set society back on the right path again. The story of economics and capitalism and "buy more" has been so pervasive that many people do not recognize it as anything other than the "truth" and the way things are.

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WNC Observer on October 25, 2007 - 9:26am Permalink | Subthread | Parent | Comments top

The question of societal change, and particularly of when and how and why we started changing for the worse, is an interesting one. I suspect that it is a complex set of factors, and can't be put down to any one factor.

Whole books have been written about this, and many more will undoubtedly follow in the future. Here are just a few fragmentary, incomplete thoughts:

Television certainly has played a role. Of course, it was around in the 1950s, but not everyone had a set, the programming was all black & white, and except for a few classics the programming was really not very good - inferior to the old radio programs in some ways. I am old enough to remember turning on the TV and seeing test patterns, so it wasn't on ALL the time. And speaking of radio, of course that filled the niche that television supplanted. It is strange, but listening to the radio seemed to be more of a family and even neighborhood social event than was television. Part of it might have been that an entire room could hear a radio program, while you had to sit pretty close to view TV in the old days -- large screen televisions are a relatively modern invention, in the 1950s the screens were SMALL. Since it didn't require watching, one could be doing other things while listening to the radio: knitting, darning socks, shelling peas, whittling, building a model airplane, etc.; thus, families could be sharing work at the same time that they were sharing the experience of listening to the radio. Maybe there is something deep about visuals + sound hooking our attention in a way that sound alone doesn't. Then too, remember that people were used to watching visuals + sound already -- they had been going to the cinema for years. Even when one went as a group, one sat in individual seats all facing the screen, and everyone's attention was focused on the screen (well, except for the young couples making out in back). Thus, television became more of a cinema-in-the-home instead of a visual radio, and family television time didn't work the same way that family radio time did.

The Kennedy assassination seems to have been some sort of turning point, maybe even a tipping point. I'm not sure why. Lots of people loved him, but in retrospect he was only so-so as a President, and certainly had his share of personal flaws. Yet, it seems to have hit a lot of people pretty hard. The whole psyche of America did seem to change in some sort of strange way after that; I'm not sure how or why, I just know that I felt it at the time.

Of course, the Vietnam fiasco was another thing which damaged the country terribly. We're still paying the price for that in so many ways. Prior to that, I think there was a pretty high level of genuine patriotism and of trust and respect for the government and for those in positions of leadership. That all pretty much died with Vietnam. What patriotism one sees today seems to me to be somewhat forced rather than flowing naturally. Government and people in positions of leadership are despised, not respected, and certainly not trusted. It also permanently damaged the relationships between the generations. Even today, one can still sometime sense a certain strain in interactions between boomers and the elderly. This might have something to do with the decline of civic clubs and other organizations. Most of these are dominated by the elderly, you see very few young members. It is not just the case, I suspect, that people are not active in their communities any more (though there is truth to that); I suspect that a lot of boomers became alienated from these organizations during the Vietnam era, and have never come back around. Unfortunately, they never got around to forming their own alternatives to replace them.

Kids stopped playing in the neighborhood unsupervised and stopped walking or biking to school in the 70s. School consolidations and interracial busing played a small part in ending the practice of kids walking or biking to school. However, the really big factor was that this was when a lot of crimes against children started making the news, and parents freaked out. Why did the crimes start happening in the 70s? Certainly their were mentally deranged people around before then? Yes, but there were also plenty of stay-at-home mothers around then. As a kid, you knew that if you got too out of line, somebody's mother was likely to march out of their house, intervene, send you home, and call YOUR mother to report on you. Everyone's parents knew that they could count on each other to keep an eye out for the general safety of the neighborhood kids. Of course, when women started entering the workforce in increasing numbers, that went by the wayside.

I'm not so sure that it was the case in the late 60s or early 70s that Mom went to work because the family needed the money. Remember that by then, most of the boomers were at least teenagers, so increasing numbers of mothers at last felt free to be out of the house and at work during the day. Since they now also had washing machines, dryers, dishwashers, etc., there really wasn't all that much for them to do all day in the house. Remember, too, that they had seen THEIR mothers work during WWII, so the thought that they might too didn't seem so strange. I'm not sure if the women's lib movement is what prompted many women to take the plunge and head to work, or if it was the fact that increasing numbers were already heading back to work that made the ground fertile for the women's lib movement. Maybe it was a mutual feedback system. In any case, it was only a few years after women started working in greater numbers when the 1973 oil embargo hit, and inflation started spiraling out of control. What had at first been a discretionary thing became a necessity.

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airdale on October 25, 2007 - 10:19am Permalink | Subthread | Parent | Comments top

WNC and Gail,

How odd it is that we are all of about the same age group and view our society almost exactly the same!! Well it reinforces to me the changes and how we can recall so clearly how it all was back then.

I agree totally with both of your inputs and views.

When I try to talk to the younger generations about 'how it was' and what might work and why do they do what they do....

I get this very huge 'disconnect'. They just seem to completely lose the whole thread and their attention is always somewhere else..usually due to their cell phone going off..

..and the odd thing is that they consider the cell phone call,,even if irrelevant.to be far more important to answer than to even pay attention to what the other party is saying...its very dismissive..and I usually about then say to myself "well screw them then"..and a bit goes out of our relationship at that point..

I also remember that sitting with my wife when she was always so completely absorbed with nonsense on the TV that I would say something to her and she would not even turn her head,,just give an off the cuff reply..

And so when she started staying more and more away from the farm where we lived...I finally disconnected the satellite and eventually removed the tv...I got the idea then that what was on TV was more important than what her husband of 45 years had to say.

She still sits for many many lost hours watching the TV and the nonsense on it..and thinks that what they say is the
'absolute truth'. Since she lives in N.Carolina now I took the tv down to her for good but I stayed here on the farm.

Perhaps the boomers raised on TV think that everything they hear by the MSM is in fact the truth!!

airdale

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Gail the Actuary on October 25, 2007 - 9:46pm Permalink | Subthread | Parent | Comments top

WNC Observer,

Your post brings back lots of memories. I was still in high school when Kennedy was shot.

I walked to and from school, or rode my bicycle, every day through high school. My mother was always at home, with the seven children. My mother said as long as she was home with one, she might as well be home with several. Also, the first five were girls, and my parents wanted a boy. (The seventh one was unplanned - another girl.)

My mother worked until a few weeks before I was born. She had a master's degree, and was in charge of the medical laboratory in a large hospital. She hid her pregnancy with her lab coat-thought she might be fired. She never worked after I was born.

Some time in the mid to late sixty's, there was quite a bit of publicity about it not being desirable for women to have so many children, so the birth rate declined . When women only had one or two children, working outside the home became easier. The US Statistical Abstract (Table 76) shows that there was a big drop in the birth rate between 1957 and 1972. This big drop in the birth rate, together with the other conveniences, made it easier to work outside of the home.

The usual pattern was for women to work full time and leave their children in day care (or with relatives) for long hours. I was fortunate enough to be in a position where I didn't need to do this. I chose to work fewer hours, and pay someone to come to the house and help with cooking and cleaning (mostly while kids were at school) and do some child care. This way I was able to spend almost as many hours with my children as a stay-at-home mom, and avoid quite a bit of the household chores. This approach was not a method of maximizing net income, but it was closer to what I was used to growing up.

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Cherenkov on October 24, 2007 - 3:32pm Permalink | Subthread | Parent | Comments top

We cannot know exactly what the future will hold, if technology is not able to overcome the many issues associated with a finite world, including declining oil and natural gas supply, decreasing fresh water supply, and climate change.

We can know what the future holds, particularly when it comes to the issue of technology saving our butts.

Not going to happen. Technology is not energy, nor water, nor topsoil, nor any other finite element that allows us to live in our current farcical way.

But what really chaps my ass is your statement:

Part of the reason for growth is simply to pay back all of the debt with interest. If you stop the growth cycle, there isn't going to be enough money to pay back the debt with interest.

Oh lord, what a high crime it would be if we didn't pay back the fictive element known as "interest."

Economists lose all credibility when they start touting the idea that "interest" is more important than the actual PLANET!!!!!!!

To me, the tone above is a bit like a parent patiently explaining to a child that the reason we tithe the slithing toves is because the Wanderal Wraiths are loath to come to the fourth plane of existence and breath the loamy air of Barthing Time. Of course, this explanation is being given even as they are about to be ripped to pieces by an onrushing tornado.

These fictive financial devices are artful conceits and nothing more. With a pen-stroke, we could simply write them away like so many tears in the rain. The problem is many very greedy, uncaring people who are largely responsible for our situation want what they feel is rightfully theirs, and damn the planet!

I say we declare a Jubilee Year, or Decade!!

Let's increase taxes on the rich to 75%. Growth on a finite planet is just short of retarded, perhaps criminal, so let's just wipe out these criminals and put ourselves to work building an actually sustainable world.

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Samsara on October 24, 2007 - 3:51pm Permalink | Subthread | Parent | Comments top

Oh lord, what a high crime it would be if we didn't pay back the fictive element known as "interest."

Great stuff.

For anyone wanting to know how we (in the US) got into this, read a little history about it. It will be good for you.

AMERICA'S FORGOTTEN WAR AGAINST THE CENTRAL BANKS

"Let me issue and control a nation's money supply, and I care not who makes its laws."
(Mayer Amschel Rothschild, Founder of Rothschild Banking Dynasty)

Every dollar created is an instrument of debt lent out at interest. The extra money required to pay back the interest can only come from one place, that being the central bank. As such, the central banks must continuously increase the money supply.

snip

Growth of Currency

For the 2007 fiscal year ending Sept 30, 2007, the total interest charges to the Total Outstanding Public Debt of the United States was US$430.0 billion making it the forth largest expense after Human and Health Services, Social Security Administration and National Defense.

By means of comparison, for that same 2007 fiscal year, the total revenue collected from individual income taxes was US$1,156.8 billion (see table S-8 Receipts by Source on page 169 of the Budget for the Fiscal Year 2008 here).

Thus, the equivalent of a little over 37 cents of every dollar the U.S. government collects under the Sixteenth Amendment goes towards paying the interest on the national public debt. This amount doesn't include any repayment on the principal, nor does it include any State or Local public debt.

Not a bad rate of return for the Federal Reserve which literally creates the money that indebts the nation out of nothing but the want thereof!

snip

http://www.financialsense.com/fsu/editorials/dollardaze/2007/1020.html

john

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CrystalRadio on October 24, 2007 - 4:33pm Permalink | Subthread | Parent | Comments top

Take much care Cherenkov!.. you are not doffing cap and tugging forelock in suitable manner. There are even now intractable forces that have entered loamy air of Barthing Time, they are watching, watching!! :)

The only reason for interest on debt is that the fix is in. As I was trying to say, in a bit of a rush above, is that debt itself is a substitute for the help one has from and is returned to ones fellow tribe, commune, village, mates. No interest paid then Why now? It is just a way for leaches to suck much blood. A fee for service okay but interest is a crock and if (big, big if) any civilization worthy of the name should develop after the great undoing (polite form for dieoff..must be careful careful), it would be a fine thing for it to develop keeping that in mind.

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Matt on October 25, 2007 - 11:00am Permalink | Subthread | Parent | Comments top

Read here in Hubbert's notes about a steady state economy that interest rates in a non-growing industrial system have to be zero:
http://www.hubbertpeak.com/hubbert/hubecon.htm
An extract:

Income in Units of Energy

On this basis our distribution then becomes foolproof and incredibly simple. We keep our records of the physical costs of production in terms of the amount of extraneous energy degraded. We set industrial production arbitrarily at a rate equal to the saturation of the physical capacity of our public to consume. We distribute purchasing power in the form of energy certificates to the public, the amount issued to each being equivalent to his pro rata share of the energy-cost of the consumer goods and services to be produced during the balanced-load period for which the certificates are issued. These certificates bear the identification of the person to whom issued and are non negotiable. They resemble a bank check in that they bear no face denomination, this being entered at the time of spending. They are surrendered upon the purchase of goods or services at any center of distribution and are permanently canceled, becoming entries in a uniform accounting system. Being nonnegotiable they cannot be lost, stolen, gambled, or given away because they are invalid in the hands of any person other than the one to whom issued. If lost, like a bank checkbook, new ones may be had for the asking. Neither can they be saved because they become void at the termination of the two-year period for which they are issued. They can only be spent. Contrary to the Price System rules, the purchasing power of an individual is no longer based upon the fallacious premise that a man is being paid in proportion to the so-called 'value' of his work (since it is a physical fact that what he receives is greatly in excess of his individual effort) but upon the equal pro rata division of the net energy degraded in the production of consumer goods and services. In this manner the income of an individual is in nowise dependent upon the nature of his work, and we are then left free to reduce the working hours of our population to as low a level as technological advancement will allow, without in any manner jeopardizing the national or individual income, and without the slightest unemployment problem or poverty. "

Yes, this is the same Hubbert who predicted peak oil in the US in 1970

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CrystalRadio on October 25, 2007 - 12:20pm Permalink | Subthread | Parent | Comments top

Hey Matt,

Zero interst??!! who is this Hubbert guy? Sounds pretty much a commie to me. Let guys like that on this site and who knows where that will lead, geez get real Matt, you'll get 'that guy Hubbert' on here talking about PO in relationship to liberating Palestine or some weirdo stuff like that next!

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Matt on October 26, 2007 - 7:09am Permalink | Subthread | Parent | Comments top

It's the same guy who gave the Hubbert's peak its name. Oildrum is a peak oil site. Why don't you go here:
http://www.hubbertpeak.com/
and have a look. It has nothing to do with communism.

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WNC Observer on October 25, 2007 - 1:45pm Permalink | Subthread | Parent | Comments top

In fact money grows exponentially by the rule of compound interest." He next derives the equations for the growth of the stock of money, the rate of industrial growth and the generalized price level. The expression for the generalized price level states that this level "should increase exponentially at a rate equal to the difference between the rate of growth of money and that of industrial production. In particular, if the industrial growth rate a and the average interest rate i have the same values, then the ratio of money to what money will buy will remain constant and a stable price level should prevail. Suppose, however, that for physical reasons the industrial growth rate a declines but the interest rate i holds steady. We should then have a situation where i is greater than a with the corresponding price inflation at the rate (i-a). Finally consider a physical growth rate a=0, with the interest rate i greater than zero. In this case, the rate of price inflation should be the same as the average interest rate. Conversely, if prices are to remain stable at reduced rates of industrial growth this would require that the average interest rate should be reduced by the same amount. Finally, the maintenance of a constant price level in a non-growing industrial system implies either an interest rate of zero or continuous inflation.

There's his problem. The money supply does not increase because of compound interest, but because of the movement of loaned funds through a multi-bank fractional reserve system. Eliminate fractional reserve banking, and you can end up with a stable money supply (which is what you want in a zero-growth sustainable economy). With a relatively fixed money supply, loaning some money out with interest does not change the money supply, it just changes who has the money initially, and who has it later.

With zero interest, the supply for loans would be zero - no incentive to loan money out.

Can a sustainable economy remain sustainable with no loans? Borrowing can (and arguably should) be a way to spread the cost of an asset over the lifetime of the asset, matching its costs with its benefits. If you don't do this, you can run up into issues of intergenerational equity. For example, why should people save up for most of their lives (i.e., make sacrifices by consuming less than what they had the means for) in order to pay for an asset that will only benefit the generations that follow? Yet, if such saving and investing is not done, how is the economy going to sustain itself? Even in a zero-growth economy, productive assets wear out and need to be replaced.

I think that a sustainable, zero-growth economy does need a positive rate of interest. All resources, including money, need to have a "rental value" so that they will be used efficiently and carefully.

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CrystalRadio on October 25, 2007 - 8:44pm Permalink | Subthread | Parent | Comments top

WNC

If you have an obligation to society and I have an obligation to society why should we be paying interest on this obligation to a third party?

In the military buildings are not insured using this same reasoning. Why should they pay money to a third party when they can use their own resources to insure their property and save the insurance costs?

Both insurance and interest are used in situations that are intrinsically dysfunctional due to lack of cooperation (for a variety of reasons).

There are other ways other than the use of 'interest' for assuring that resources will be used effectively, as I am sure, while a child, you learned one way or another:)

You say there would be no incentive for loans if there were no loans. As Dickens said in Hard Times:

'It was a fundamental principle of the Gradgrind philosophy that everything was to be paid for. Nobody was ever on any account to give anybody anything, or render anybody help without purchase. Gratitude was to be abolished, and the virtues springing from it were not to be. Every inch of the existence of mankind, from birth to death, was to be a bargain across a counter. And if we didn’t get to Heaven that way, it was not a politico-economical place, and we had no business there.'

And if that philosophy is the one we wish to take with us then I guess then the use of interest is quite correct.

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WNC Observer on October 26, 2007 - 9:06am Permalink | Subthread | Parent | Comments top

Interest and insurance arose as expanding communications, transport and commerce linked together people that did not live near each other and no longer knew each other.

If you presume that all of those are going away and that we'll contract back down to the local village level, then yes, it is possible for everyone to just pitch in for the common good and help each other out as needed.

Possible, but how likely? When I look at most of the people I have encountered for most of my life up to now, I'd have to say: Not very likely.

I think we'll have to contract substantially to the local level, but I'm hopeful that we won't have to end up completely isolating ourselves into small little clusters. That will mean the end of just about everything that we've discovered & invented over the last 3000 years. While I think a decline and contraction is inevitable, I am not yet convinced that a contraction to that extreme level is necessarilly inevitable.

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CrystalRadio on October 26, 2007 - 11:14am Permalink | Subthread | Parent | Comments top

Interest and insurance arose as expanding communications, transport and commerce linked together people that did not live near each other and no longer knew each other.

Yes I agree and have stated much the same same couple of times on TOD but the statement doesn't seem to hold true for organizations like military ones. Yes, of course, these organization hold together together through authoritarian forms of central control but couldn't that be substituted with self control by the individual?

If there is a great change including a massive dieoff coming should we continue to carry all socio/economic apparatus that bought us to this hi tech point. Might it not be better to drop it much like a space shuttle drops its boosters.

I don't think it would be necessary to drop 'everything' as you say here: That will mean the end of just about everything that we've discovered & invented over the last 3000 years, discoveries and inventions can be stored on stainless steel gold plated disks if necessary:) What we really need to do is look at how we relate to and nurture each other. That is the new field of human exploration that I think needs working on. We have enough hard science to be going on with for the moment how about a bit of the soft kind that we need to survive with even more than we need new forms of energy.

BTW for fun try reading Aldous Huxley's ISLAND if you haven't already. Set with a fight for oil resources too!
It was panned by reviewers when it came out, I believe as considered too Utopian, not enough grit in it to produce tears in the steely eyed:(

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Beach Boy on October 25, 2007 - 8:57pm Permalink | Subthread | Parent | Comments top

WNC, the easiest way to see this issue is by thinking in terms of the currencies used for several thousand years, gold and silver (without fractional reserve banking, of course). With them, the money supply was almost fixed before the Industrial Revolution (the annual rate of growth of above-ground gold stocks was 0.11 % from 1200 BC to 600 BC and again from 300 BC to 500 AD, dropping to 0.05 % during the Middle Ages).

When that was the monetary system, it was in full effect the biblical prohibition of interest. Which obviously did not affect the sustainability of economies.

Loans are not the only or primary way to finance an enterprise. Equity is.

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