When you look at truly generational welfare. Where nobody worked and people received subsidies for kids. Those generations of humans could not have existed without the benefits. Those benefits wouldn’t have existed without deficit spending.
Then think about poor countries that have received foreign aid dollars for decades.
We have financed humans, lots of them. The world economy is over levered. I hope that productivity gains from 3d printing, AI etc… will all be enough to keep the juggling act in the air.
As a thought experiment, what would happen if we just said that all debts and savings are erased?
No actual resources, goods, services, knowledge, or means of production would cease to exist. Everybody could continue working, producing, and consuming and everything should keep working. But the problem is that motivations to do so would be altered.
That’s my point. Motivations would be altered. But the ability to produce goods and services would stay the same. Money, savings, and debt are the grease that keeps everyone motivated. In that way, they are simultaneously critical to economic function while being irrelevant to economic production if you could somehow convince everyone to keep doing what they have been doing.
You’re skipping a great deal of steps there @Silyak . Money is an intermediate good. Most common people throughout the course of civilized human history sold their labor to purchase money, then used money to purchase other goods they needed or wanted.
I don’t think there were any real worthwhile societies that used solely barter as a medium of exchange (I could be wrong, there might be one).
Barter is just a pain in the butt. There’s a reason the ancient Chinese, mesopotamians, Egyptians, mayans etc… all used money despite being different in nearly every other way.
In your scenario if some wizard deleted all money and any precious metals we could use as money then society would have to just find another intermediate good to use as money.
In the ensuing chaos anyone who couldn’t create barter-able goods or their own food would likely starve. Nothing would get delivered anywhere on earth (how you going to invoice for your shipment). It would be bad for a long time.
When my wife moved in with me she told me that all of my towels were like the old towels she kept in the bottom of the closet for cleaning up dog vomit.
I think we all have a stack of dog towels. In fact, that’s exactly what I call my old, beaten up ones because they’re used to dry the wet dog, wipe the floor etc.
On the other hand, they usually feel better than new ones because they’re so worn.
My favorite bath towels are cheap beach towels (from Target or even the drug store) that have gotten worn down. They’re big and soft. Thick towels overwhelm me. I just use them for company, but even then our “dog” towels are mixed in because we don’t have a dog.
I recently finished the book ‘Sapiens: A Brief History of Mankind’ where it scratched the surface of how wealth is generated, and it’s through credit. A necessary mechanism to make it a better world for everyone and to generate wealth. As someone who doesn’t know a whole lot about economics I found this part fascinating. Credit isn’t “bad”, it’s necessary…but it can be mishandled as we see too often. My gripe is when you don’t need it, and it’s forced upon you…or it’s hidden and you’re basically being lied to (debatable I’m sure).
Ben Bernanke’s Memoir goes into quite a bit of detail about this. He states that the Great Depression was caused by a lack of available credit. It’s a good read, if you can stomach the 600+ pages of financier/economics.
Edit: I also suggest reading about Jakob Fugger who was perhaps the first large finance, during the 1500s
‘Subtle Art of not Giving a Fuck’ for a more modern take…Some very interesting points. I really enjoyed that one.
I have 'Meditations"…but I couldn’t handle the choice of words and I had a hard time understanding what each sentence was saying. So I got the audiobook, and somehow I think it was worse listening to someone speak the words. So soon I’ll go back to the book.
Nice, as I read it I knew I was going to need to go back and highlight certain parts. It seems weird that a modern, and young(er) guy can write a book with so much value in it. He doesn’t have a long grey beard, and he’s not a professor at a major university.
