An MMT site bringing you dogma-free economics without the pleadings of self interest
I got a little lost reading this. I thought it was about 100% reserve banking. But somewhere along the way it turned into an argument against lending at interest. Aren't those logically distinguishable? You could have a banking system in which interest (above and beyond some service or insurance fees) is forbidden, but in which banks can lend with less than 100% reserves. And you could have a 100% reserve system that permits interest.Also, continued growth of the economy does not necessarily mean continued expansion in the use of natural resources. It means the continued addition of value.
Dan, Herman Daly is a steady-state economist. He holds that the assumption of unlimited growth based on unlimited resources and unlimited credit is leading to humanity toward a cliff. Part of his view is that the need to grow in order to service credit is a driving force in this dangerous dynamic.
I understand that. But I don't think we should be aiming at a steady state. I think we can aim at a reduction in the use of natural resources and a reduction in our demands on the environment without moving to a steady state economy. Economic growth and growth in resource use are not the same thing - although they have tended to be linked in the past.
We are going to be having this debate as realization of the increasing effects of global warming dawns, as it is already doing around these parts (farm belt).
Wouldn't a steady-state economy be focused mainly on the preservation of limited resources, not necessarily growth per se?Economic growth can occur without an expansion of the consumption of limited resources. See Banking and Finance (obviously not good examples of things we want to grow).
The idea is doing more with less through technological innovation — what Bucky Fuller called "design science" after the model of naval architecture and engineering — instead of raping the planet for resources to make trinkets pushed by advertising.
I can understand how a steady state could allow for interest. However, I think the larger idea behind this is that keeping the 100% reserve guarantees insurance against disaster better than an agency like the FDIC ever could. It would also protect against a crash of real resources too, so it has two main advantages in one. Herman Daly has really got it lately, just discovered this article after reading another one of his that describes ignorance as a commodity. Clearly he can see the big picture everywhere.
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