Quote:
Originally Posted by acropolite
Growth is the problem to the answer, while ever our dinosaur governments think we can have continuous (=infinite) growth the boom bust cycles will continue and our environment both physical and financial will suffer.
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This is a popular criticism, but I think it misses the mark.
Consider the case of negative growth, which leads to deflation.
In a deflation environment, it makes no sense to spend your money today because it will be worth
more tomorrow as assets deflate and you can afford to buy more of them.
Owning you home would be pointless, because it would be worth less and less each day.
Banks would not lend to you because they would get no return on investment due to low interest rates. Any assets you purchase will be worth less tomorrow, and they can't get their money back if you default.
There is no point making any risky investments, because you become richer simply by doing nothing.
In this environment, there is no investment, no innovation or incentives, because doing nothing with your money is the smart option.
Our whole economic system is built around growth and without it, society will collapse. Recessions and depressions are not fun times for this very reason.
So unless you can come up with another system to encourage investment without growth, I'm afraid growth is the only answer to the question.
Cheers.