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Yes it does, but they also imported the credit based fractional reserve monetary system. This really does require constant growth for positive (or even near zer
by kurthr 3y ago
Yes it does, but they also imported the credit based fractional reserve monetary system. This really does require constant growth for positive (or even near zero negative) interest rates. Although there are a lot of monetary controls, there are really only trade-offs not fixes, if loans are made for which the asset does not cover a loss. You have to pick winners and losers.
That said monetary controls are much stronger than you'd see in an open market country, and one could force a digital currency with negative interest rates.
- skybrian 3y agoConstant growth in monetary terms doesn't require real growth. Most currencies are at least somewhat inflationary. Bad loans, like broken promises, will always be with us. Sometimes you take a risk and trust someone, and it doesn't work out, so you're poorer than you thought. It doesn't mean we shouldn't take risks.
- wolverine876 3y agoBad loans usually are not about mistrust and deception, but about business risks that don't work out. Lenders very much expect that to happen, and charge interest accordingly.
- skybrian 3y agoYes, agreed. The same is often true of other promises.
- wolverine876 3y agoThey are different. When I get a business loan from a bank, I make no promise to pay it back. I promise to pay it back with interest if the business succeeds, and we agree that it might not succeed and they might lose their principal. When I tell my romantic partner that I won't sleep with other people, it's an absolute promise.
- skybrian 3y agoInfidelity happens. So do divorces. Also, people get sick. People die. Society has procedures for these things. There are very few absolute promises. Most contracts have some provision for what happens when they're broken. If there isn't one, it's poorly written.