Read it again. It was about how our monetary system could deal with economic growth when the energy to do so is declining?

I think if you look below I wasn't nearly so definite. I did point out that they were stretching the truth when they say that economies have NEVER grown without increases in energy consumption (and which I still maintain) It never was the heart of my argument, again look below the next sentence says that "my primary beef" is on a completely different topic.



I rather though this thread was about whether or not our monetary system was compatible with oil depletion not how to grow the economy when the primary energy source is in decline.

It seems we're stuck on this question: can the monetary system survive without growth?

If so, how? Describe what will happen to the monetary system without economic growth. This assumes that at some point, all opportunities for increased efficiency will be exhausted.

If not, why not? What characteristic of the monetary system would cause it to collapse without economic growth?

Since I'm agnostic on the question, I'll just sit back and watch the debate.

The money supply increases to provide for the demands of economic growth. No growth in the economy and you have no mechanism for paying off debt. If you don't understand that a debt-based money system requires growth to function, then I am wasting my time trying. How could you assume that anything else would be the case? Poverty, unemployment, and lack of resources pays off debt? Growth pays off debt. Always has. Always will. That or bankruptcy and liquidation of hard assets.

Ahh, the old 'roasted chicken' model. Using roasted chickens as a currency has been well debated before, and the conclusion was that because they decayed, frozen roasted chickens are better.

Frozen roasted chickens can also be used to build houses, but obviously the problem is they defrost, and consequently frozen roasted chickens are currently only used as currency by populations in very cold countries; they can't be used in warmer countries. (I believe Shell and Esso are funding a joint project to develop a frozen chicken that doesn't defrost even in warm countries which when completed, will obviously solve all problems associated with PO.)

Still maintain that economies have grown without an increase in energy use? Show me proof, not some average over time that hides the truth.



Duh? There's difference?

The debt could not be repaid.

Yes you seem to miss the point of my Bob, Dick, the Bank Manager and Mary story that points out you do not need to grow to pay off debt.

We have been here before MQ. You don't believe that the monetary system can and has survived shrinking economies and when I dispute your premise you get hot under the collar . You're almost resorting to an adhominum attack with "If you don't understand ...., then I am wasting my time trying".

That's because I don't think the question is valid. The monetary system is not based on infinite growth. We're still basically trading chickens for goats like in prehistoric times. Only we use little notes, and we've made the agreement that one such note represents so many chickens and so many goats.

The value of the money is set by us and is outside the reach of the politicians. When you go to the butcher and look at a piece of meat you can say that it is reasonably priced and buy it, or too expensive and leave it. In order to sell the meat the butcher has to move to a price level which he thinks is reasonable.

By that action you don't determine the price of the meat, but you determine the the value of your money. Money is an agreement between a group of individuals, its value is set by common consensus. That principle holds in periods of growth as well as decline.

So the monetary system can survive any catastrophe and it doesn't necessarily has to grow.

It is our monetary and political leaders which are focused on infinite growth. They will do everything to create the perception of growth. And that includes the expansion of the monetary system. The monetary system does not expand by itself, it is forced to do so by the printing press. But they can only create money not value.

Ouch that's a bit harsh MQ! It's not necessarily obvious why "a debt-based money system requires growth to function". Shouldn't you take the time to justify your arguments to others who don't understand? Are you beginning to losing your cool on this one MQ?!

Miss your point? Hardly? None was made. Besides making your story backwards from reality, I showed that the $20 came into existence through borrowed money at interest.

Monetary systems have survived shrinking economies, but they survived by growing their way out, using increased energy use to do so. You fail to understand the implications of peak-oil, my friend. And in a big way! Hot under the collar? Frustrated is a better word. With your lack of understanding the way the money system works, all your comments end up doing is muddying the thread.




Remember that, folks. Just pay it out of your hide.

OK, Sweden for years 1996, 1999,2000,2002

links:
EIA stats for Sweden Total Energy Usage
appendix to OECD outlook No76 for sweden's real GDP

If growth is defined as an increase in income (or in the case of a nation, in GDP), it does not seem necessary. That is, if I have a $200 car payment and a $2000 monthly income, I can simply make the payments until the debt is paid off, even if I don't get a raise.

I get confused when I try to apply the same logic to an entire country though. Fractional reserve banking! Money supply! Ugh. I'm glad I don't have to manage this thing.

Harsh? I have been taking my time to justify my arguments and have refuted all thrown at me, but still I make no headway.

It's about the debt folks! If, it was like smiley says and we were just trading one thing for another, all is well. But we don't, we lend money at interest, and only through economic growth can the debt be repaid. No growth, no debt repayment. The house of cards collapses.

Hey where DID my Bob Dick, the Bank Manager and Mary story go? That particular reply seems to have disappeared. Hey MQ is that possible?



But MQ you have never really addrerssed my "polite fiction" argument about the central bank holding the federal governments bonds.