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By the time you get into any depth in that rabbit hole, the question really starts being about what money actually is. In the end, money is just some kind of a
by Delk 4y ago
By the time you get into any depth in that rabbit hole, the question really starts being about what money actually is.
In the end, money is just some kind of an abstract quantity that we collectively believe and agree can be used for obtaining something directly useful or desirable later. Its value is based on that mutual understanding and belief.
As long as the economy isn't a zero-sum game, thinking of money that way makes debt (and interest) actually kind of make sense without having to turn it solely into a vicious circle of more debt to pay off the interest.
If the real economy keeps growing and those abstract resources borrowed from someone else (debt) can be used for investment that allows for creating added real value (or decreasing real costs), that added value can be used for offsetting the interest. The entire arrangement may still require "printing" more money and creating more debt but that's not necessarily the only thing that's happening. The real value that can be obtained with that increased amount of money in circulation also increases as long as the real economy also grows.
It kind of does seem to make it a requirement that the real economy actually keeps growing, though.
Or, at least that's how it looks to me as a layman.
- neilwilson 4y agoMoney is just a promise. It is a formalisation of "Bill, here's a pig, owe me one". Then Fred does some work for you and you say to Bill "don't owe me, owe Fred". Humans know who they owe and who owes them. We write it down when society gets too big to hold all the people we might owe in our collective heads.