4 ms·

The author is correct. Growth is typically just a debt-fueled spending binge. The cancer is actually the fiat, soft money that’s improperly aligning incentives

• arcticbull 4y ago
  > The cancer is actually the fiat, soft money that’s improperly aligning incentives in the economy. What a conclusion. Debt and borrowing exist in hard money environments too. Debt is as old as time. Low interest rates reduce the threshold for what could be considered a successful business from a macroeconomic perspective, though, and can lead to misallocation of capital. Nothing to do with fiat.
• ajb 4y ago
  Debt-fuelled spending binges were just as common before fiat. In fact, booms and crashes were more frequent and severe because there could be no central bank to turn the heat down under the cookpot.
• glass3 4y ago
  It's the other way round. Dept is discounted potential future growth. Potential growth and the ability to pay back dept is the foundation for receiving money. What the author ignores is that it is a race. There are many opportunities but not all will be successful. Failed investments transfer the money from those who made wrong predictions to those who made successful ones. This creates sustained progress because those who are good at predicting the future have the most influence.
  • 20after4 4y ago
    Once you have a lot of influence you can influence the future instead of predicting it. This is a handy way to profit without providing any value to the rest of the system.
    • glass3 4y ago
      Like high frequency trading, it's also valuable because things that are important to those in power are protected.