Tag Archives: debt based money

The Delusion of Perpetual Economic Growth

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Fairy Tales of Growth

Directed by Pierre Smith Khanna (2019

Film Review

This documentary is about the urgent need to abolish the mindset that measures human progress in terms of economic growth. It also emphasizes the price we pay for growth in terms of heavy resource extraction and even heavier human exploitation.

The filmmakers begin by referencing Limits of Growth, published by the elite round table group Club of Rome published in 1973. Relying on MIT computer modeling, it predicted unrestrained growth would lead to economic and ecological collapse in the early decades of the the the 21st century.

The film makes many of the same points as Michael Moore’s recent documentary Planet of the Humans (see The Corporatization of the Climate Movement). Both depict the notion of “Green Growth” as a corporate scam. Politicians and environmental NGOs who claim that a switch from fossil fuels to renewable energy will allow unlimited economic growth without causing irreparable harm to the planet are either deluded or deliberately lying to you.

Both films films assert our only option, at this point, for preventing environmental collapse is  to significantly reduce consumption and to prioritize human welfare and the environment over the continual acquisition of more stuff.

The filmmakers cite an interesting study revealing that every new purchase gives people an average of 15 minutes of happiness. In fact, a growing number of psychologists and sociologists believe improve if we focus away from material possessions to to improve health care and education, spending more time with our families, and rebuild our communities.

For me, the high point of the documentary is the link it makes between our debt-based system of money creation and the pressure for ever increasing economic growth. Contrary to public belief, at present 97% is created, not by government, by by private banks when they issue loans. (See We Need to End Money Creation by Private Banks – Urgently)

Because money only comes into existence when someone borrows money, the only way to keep enough money circulating in the economy is to continually increase (both private and government) debt. The cost of repaying this exponentially increasing debt is a continual increase in resource extraction, environmental degradation and pollution, and exploitation.

 

How Economic Growth is Destroying the Environment

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Growing Pains: The Ecological Costs of an Insatiable Economy

Al Jazeera (2019)

Film Review

This film begins by linking the new concept of GDP (Gross Domestic Product) introduced after World War II) with the popular myth that ever increasing GDP is a magic formula for preventing recessions and depressions and the mass unemployment and misery that accompany them.

Following the second world war, western countries experienced three decades of 8% GDP growth, resulting in near full employment and massive expansion of their middle class.

Unfortunately by the 1970s, most of western society had acquired all the cars, TVS, fridges and washing machines they could ever use; growth stalled and unemployment started to rise again. It was around this time the elite round table group Club of Rome* first questioned whether unlimited growth was possible on a finite planet.

In the 1980s, Wall Street’s answer to stalled growth was monetarism, a belief they could stimulate growth and prevent recessions by deregulating the the financial industry and simply controlling the money supply.

Instead of relying on the production of goods and services to increase growth, western economies began relying on the creation and trading of financial products (credit cards, mortgages, currency exchange, commodities futures, debt-based bonds, options and other derivatives) to keep the economy ticking over.

This seems to to work pretty well until 2008. Global growth collapsed that year and never really recovered.

The film directly challenges, from several perspectives, the pro-growth hype put out by various financial gurus. First they look at the heart breaking ecological damage wreaked by skyrocketing growth in Brazil’s Amazon rain forest. Next they examine evidence that the creation and trading of financial instruments is actually glorified gambling and speculation (in which winners have become fabulously wealthy at the expense of most of the middle class). And finally they talk to psychologists who challenge Wall Street’s claim that human beings have an endless desire to accumulate more useless stuff.

In my view the film’s major weakness is its failure to link the pressure for perpetual growth to our debt-based monetary system. At present, contrary to popular belief**, private banks create 97% of our money out of thin air when they issue loans (see An IMF Proposal to Ban Banks from Creating Money). This results in an ever increasing debt spiral, which can only be repaid via continuously increasing economic growth.

*See The Steady State Economy Movement

**When polled, most people in western countries express the belief that all money is issued by government.

The film can’t be embedded for copyright reasons but can be viewed free at the Al Jazeera website Growing Pains

Catalonia: Economic Reform from the Ground Up

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Autogestio: Adventures into the New Economies of Catalonia

Enfable (2015)

Film Review

Autogestio* begins with an update on Spain’s modern Robin Hood Enrique Durand. In 2008, Durand borrowed a half million pounds (around $700,000) from 38 banks and donated it to various Spanish anti-capitalist organizations. When he defaulted on the loans, the banks took him to court, where he called numerous expert witnesses to explain no banks had lost any money because they created the loans out of thin air. Despite the fact this is where all money comes from – banks create it out of thin air – the court dismissed the witnesses and Durand went into hiding.

The documentary is based on a June 2015 visit Devon activists made to Durand’s home region of Catalonia to study Cooperativa Integrale Catalonia (CIC). The latter is a coalition of work and and mutual aid co-oporatives created by Catalonian activists seeking to build an alternative economy outside the corporate money system. Many of the activities CIC engages in are technically illegal, such as occupying abandoned land and buildings as living space or to grow food, start cooperatives or provide various community services. However through the years, they have discovered a number of creative ways to turn these squats into legal tenancies.

At present there are 26 local currencies in use in Catalonian communities. Some have been created by CIC and some by other eco-groups seeking to strengthen their local communities. The beauty of local currency is, unlike fiat (bank-created) currency, it can’t be spent outside the community that creates them. This means it can’t disappear into the pockets of billionaires or distant corporations.

In addition to promoting the use of local or “social” currencies for local transactions, the CIC promotes the use of Fair Coin for national and international transactions. Fair Coin, a type of cryptocurrency,** is an eco-friendly alternative to Bitcoin.

The filmmakers challenge the popular misconception that the Bitcoin isn’t central controlled like fiat currency. In actuality, Bitcoins are controlled by a handful of people who have computers powerful enough to “mine”*** Bitcoins, by unlocking the algorithms needed to create new block chains. These and other individuals are constantly speculating in Bitcoins, driving up their value. Because they can’t be traced, they are also widely used on the Dark Web to pay for illicit drugs and other activities (such as hired assassinations).

Unlike Bitcoins, it’s impossible to speculate in Fair Coins because their value is carefully regulated by a network of cooperatives to main a relatively stable value. Fair Coop, the group that monitors and regulates Fair Coins, was started by Enrique Durand and anyone can become a member.

At present Catalonia is seeking independence from Spain – via national referendum or otherwise. See Catalonia Independence Referendum

*Autogestio is a Catalan word meaning collective self-management.

**A cryptocurrency is a digital or virtual currency that uses cryptography for encryption for security.

***Bitcoin mining is the process through which bitcoins are released into circulation. It involves solving a computationally difficult puzzle to discover a new block, which is added to the blockchain, and receiving a reward in the form of few bitcoins.