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Silvio Gesell essentially makes the argument that the return on mere ownership of real capital is negative in the real world. Positive interest can only exist i

Silvio Gesell essentially makes the argument that the return on mere ownership of real capital is negative in the real world. Positive interest can only exist in a world where demand for capital exceeds supply. Since capital produces capital, we reach the excess capital "regime" eventually. The holding costs of excess capital are negatively therefore people destroy the excess capital. In the positive interest range there is a tendency for the interest rate to drop. In the negative interest rate range there is a tendency for the interest rate to rise. Both lead to the equilibrium real interest rate being exactly 0% in the long run. But a 0% interest rate has some quite significant implications. The value of non-extracted rock in earth's crust and the mild steel it eventually becomes are equivalent, despite being separated in time. Capital requires energy to operate, which also comes from the earth's crust. In other words, everything that exists today is just a long winded transformation of one chunk of the universe into another. Nothing is ever "produced". All wealth is based on the direct or indirect ownership of land and its resources playing out over the ages. Mind you, in this framework, owning an expensive machine is equivalent to having the mining rights to dig out the materials and energy sources. It is not literal ownership of land that is important, but the access to its benefits. Basically, we will never escape feudalism.

peterweyand38 2y ago
My position is that global GDP is a compounding function on interest. So you if you take the sum total of the world's GDP you can take out (x - m). You can simplify the equation further to goods produced today and investment, which is similar to your argument. So you have a total stock of raw resources, the current production function based on technological transformation, and computed interest in the future (which is a compound function). The resource stock is finite no matter its size (like all resources on earth), and the future expected return to transform those resources is expected to go up exponentially. Competition doesn't matter under these circumstances. So long as investment has a compound function you run out of resources quite quickly or reach a point where whoever owns the most raw resources is the person that wins under the condition of a complicated game of musical chairs. At 3.5 percent GDP growth rate at a compounded return you have to double the real return of goods in twenty years. Or you have inflation. In a generation the system collapses. You have to massively redistribute wealth and flatten the gini coefficient almost immediately while assuming that GDP can no longer increase. Or you don't believe in math. There isn't a middle ground. Giving people bonds based on what they do that are nontradeable would be a start, although how you forbid resale is legally difficult. Forming investment vehicles that do what Benjamin Franklin did with the college in philedelphia might help. But the math doesn't work if you have a finite set of resources and a compound function of return. Technological transformation of raw resources into goods isn't a guaranteed exponential function. Or we'll see more of what's come before. We can afford fancy computers but not homes because cell phones are cheap to produce and land is expensive to own. Compound interest is a massive problem.

peterweyand38 2y ago

My position is that global GDP is a compounding function on interest. So you if you take the sum total of the world's GDP you can take out (x - m). You can simplify the equation further to goods produced today and investment, which is similar to your argument. So you have a total stock of raw resources, the current production function based on technological transformation, and computed interest in the future (which is a compound function). The resource stock is finite no matter its size (like all resources on earth), and the future expected return to transform those resources is expected to go up exponentially. Competition doesn't matter under these circumstances. So long as investment has a compound function you run out of resources quite quickly or reach a point where whoever owns the most raw resources is the person that wins under the condition of a complicated game of musical chairs. At 3.5 percent GDP growth rate at a compounded return you have to double the real return of goods in twenty years. Or you have inflation. In a generation the system collapses. You have to massively redistribute wealth and flatten the gini coefficient almost immediately while assuming that GDP can no longer increase. Or you don't believe in math. There isn't a middle ground. Giving people bonds based on what they do that are nontradeable would be a start, although how you forbid resale is legally difficult. Forming investment vehicles that do what Benjamin Franklin did with the college in philedelphia might help. But the math doesn't work if you have a finite set of resources and a compound function of return. Technological transformation of raw resources into goods isn't a guaranteed exponential function. Or we'll see more of what's come before. We can afford fancy computers but not homes because cell phones are cheap to produce and land is expensive to own. Compound interest is a massive problem.