Karl Denninger elegantly demonstrates that compound interest on debt will always tend to blow up the economy, if the interest rate x is more than y (the average rate of economic growth) + z (the average rate of default).
Lenders will try to achieve this blessed state of affairs, but if they succeed, they will eventually end up owning everything, and the system will go "pop" long before that point. Which is why the Bible talks about a Jubilee year of total debt forgiveness, occurring every half-century.
Getting governments to take over all bad debts interferes with that reset, and so the "pop" must be louder when it finally, inevitably happens.
I believe that I have a solution to those of us who would like to see a little justice: Find a livable but uninhabited island in the Pacific, and put all of the top finance executives there with remote cameras, and boats to keep them there. As incentive, give them the $1 trillion that has just been printed. See how much good the money will do them.
ReplyDeleteJust one of those things that Karl is wrong about.
ReplyDeleteWe will have to be content with the fantasy, Paddington; in real life, they're more likely to do it to us (the 8 coxes firing the rower).
ReplyDeleteACO: why should money-owners expect to acquire the world effortlessly?
Which is why the Bible talks about a Jubilee year of total debt forgiveness, occurring every half-century.
ReplyDeleteIt does?
In Leviticus, apparently: http://en.wikipedia.org/wiki/Jubilee_(Christian)
ReplyDelete