4 ms·

Credit doesn't demand growth. It is completely viable in a steady state economy. You just need a loss elsewhere to offset it. Imagine a country with zero GDP g

Credit doesn't demand growth. It is completely viable in a steady state economy. You just need a loss elsewhere to offset it. Imagine a country with zero GDP growth. There will still be some businesses that grow on profit, and some that fail. There will be professionals that die and new professionals to take their place

matheusmoreira 2y ago
How could credit not demand growth? People are literally enslaved by it. They are driven to extract value from the world in order to pay back the debt plus interest. Failure to do so means losing what little they already had. Worse: people spend money to make money. Spent money ends up getting deposited right back into the bank. Which means it gets loaned out once again. The same dollar gets loaned out a potentially unbounded number of times. Banks attempt to recover lost loans by liquidating assets put up as collaterals. There are people out there who are leveraging everything they own into liquid assets they can spend. If they don't pay it back with interest, they are liquidated. They lose it all. Liquidate enough people's assets and the losses become so extensive you literally crash entire markets if not the entire the economy. Crash the US economy and the entire world might as well follow. Liquidations mean people are defaulting on their debts. Defaults mean the money which was created through loans could be lost if collaterals can't be liquidated. Banks would be in danger of being rendered insolvent were it not for government bailouts. The only difference between banks and the likes of FTX is the banks are able to get the government to erase the consequences of the failures of their risky investments.
- s1artibartfast 2y ago
  Im not sure we are speaking the same language. It seems like you are fixated on some specific situations outcomes, not the concept of credit itself.

matheusmoreira 2y ago

How could credit not demand growth? People are literally enslaved by it. They are driven to extract value from the world in order to pay back the debt plus interest. Failure to do so means losing what little they already had. Worse: people spend money to make money. Spent money ends up getting deposited right back into the bank. Which means it gets loaned out once again. The same dollar gets loaned out a potentially unbounded number of times. Banks attempt to recover lost loans by liquidating assets put up as collaterals. There are people out there who are leveraging everything they own into liquid assets they can spend. If they don't pay it back with interest, they are liquidated. They lose it all. Liquidate enough people's assets and the losses become so extensive you literally crash entire markets if not the entire the economy. Crash the US economy and the entire world might as well follow. Liquidations mean people are defaulting on their debts. Defaults mean the money which was created through loans could be lost if collaterals can't be liquidated. Banks would be in danger of being rendered insolvent were it not for government bailouts. The only difference between banks and the likes of FTX is the banks are able to get the government to erase the consequences of the failures of their risky investments.

s1artibartfast 2y ago
Im not sure we are speaking the same language. It seems like you are fixated on some specific situations outcomes, not the concept of credit itself.