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This is incorrect, in standard macroeconomics, credit theoretically has no effect on the long term growth rate of an economy. The only thing that grows an econ
by oa335 4y ago
This is incorrect, in standard macroeconomics, credit theoretically has no effect on the long term growth rate of an economy. The only thing that grows an economy are increases in worker productivity, theoretically driven be technological advancement.
See https://www.stlouisfed.org/on-the-economy/2015/june/what-drives-long-run-economic-growth https://www.stlouisfed.org/on-the-economy/2015/june/what-dri...
Loans are just move the money around and create “business cycles” of booms and busts. Which in my opinion exacerbate wealth inequality as opposed to reduce it.
- airstrike 4y agoI'd say that's a crude reductionist view. See https://www.jstor.org/stable/2118406 https://www.jstor.org/stable/2118406 to name one paper but there's tons of research on the link between capital markets and economic growth
- oa335 4y agoWhat part of that crude or reductionist? Technological progress being the sole driver of growth is the dominant view in macroeconomics. Even the paper you link attests to that.
- airstrike 4y agoIt's reductionist because "technological progress" is too broad a stroke. "Productivity" is not directly observable or measured, right? Access to inexpensive capital is a key driver of technological progress. Robust capital markets allow for more efficient allocation of savings into business ventures, driving productivity forward