Russell Brand Revolution

Michael Hardner · November 12, 2013

No youre just flat wrong. Growth prior to the current monetary exeriment was not exponential it was for the most part linear.

I'd really like to see that graph, and I do believe the discussion on that would be a long one.

The current system has arbitrary rules that make exponential growth a requirement, and make debt a requirement for growth to happen.

Most of this discussion has been had before and I just don't accept the idea that fractional banking is causing our problems, mostly because the arguments I read tend to be one-sided on the topic.

But when it comes to describing growth as exponential vs linear, I think we're actually just talking about rates of growth.

If the economy grows year over year by 4%, that's exponential growth, if it's 10%, 1% or .1% then that's exponential growth. For it to be linear growth over a long period, then wouldn't the rate of growth have to decline at (not sure about this part) at a logrithmic rate ?

It just seems like somebody is throwing these terms around to differentiate an economy with or without reserve banking.

Michael Hardner · November 12, 2013

The red line in your diagram has declining growth rates year over year. I don't think such a line models natural processes like economies.

cybercoma · November 12, 2013

Russell Brand is little more than a political gadfly.

GostHacked · November 12, 2013

Most of this discussion has been had before and I just don't accept the idea that fractional banking is causing our problems, mostly because the arguments I read tend to be one-sided on the topic.

Then you don't understand it then.

I can put 100$ into the bank. The Bank can now lend out money on a ratio of 10:1 based on that. Meaning they can loan out 1000$. This is what caused a 'growth' but it is absolutely contrived out of thin air. Eventually this is going to create a problem, where we have more debt and not a surplus of money. The whole fractional reserve banking is to get people into debt, and stay in debt. The bank is loaning out more money than they actually have on hand. They are making it up. If regular banks work like that, and the Federal Reserve works like that, then you can see the issue at hand.

The Federal Reserve has been loaning out money like crazy in the past few years with the bailouts and other things. Where does the Federal Reserve get it's money? How much cash on hand does the Federal Reserve have? How long can the Fed dump billions into the economy every year? Where does it go? Who does it go to? Do you go up the chain to another international bank like the IMF or World Bank to get money? If they are using fractional reserve banking as well, the whole system is a house of cards that are on fire. Now your global economy is tied in with fractional reserve. Meaning there is 10X (for sake of argument) more debt globally than there is money.

The system turns people into debt slaves.

If the economy grows year over year by 4%, that's exponential growth, if it's 10%, 1% or .1% then that's exponential growth. For it to be linear growth over a long period, then wouldn't the rate of growth have to decline at (not sure about this part) at a logrithmic rate ?

No, if the economy grows by 4% every year, that is not exponential. That is linear growth with a slight increase of incline over time. Exponential would mean, 4% growth this year, 8% growth next year, 16% the next,,, ect.

The economy is directly tied to fractional reserve banking. It is how all this money was conjured up into existence in the first place. Conjuring something out of nothing is akin to magic. It's all misdirection and illusions. It's not real.

It might be a hard concept to grasp, but there is more debt than money in existence right now.

-1=e^ipi · November 12, 2013

No, if the economy grows by 4% every year, that is not exponential. That is linear growth with a slight increase of incline over time. Exponential would mean, 4% growth this year, 8% growth next year, 16% the next,,, ect.

How the Canadian education fails us!

Michael Hardner · November 12, 2013

Eventually this is going to create a problem, where we have more debt and not a surplus of money. The whole fractional reserve banking is to get people into debt, and stay in debt.

The bank is loaning out more money than they actually have on hand. They are making it up. If regular banks work like that, and the Federal Reserve works like that, then you can see the issue at hand.

Not really. This system has been in place for a long time, too. If the lenders are prudent in their lending then I don't see what the impending problem is.

No, if the economy grows by 4% every year, that is not exponential.

Year over year 4% growth is exponential, see Dre's point above.

dre · November 13, 2013

Not really. This system has been in place for a long time, too. If the lenders are prudent in their lending then I don't see what the impending problem is.

Actually the system is younger than you are, and the same age as me, and in the short time is been in use both debt and the size of the money supply has exploded, and the pace at which we use natural resources has exploded along with it.

As for the potential problems with the system?

1. Extreme wealth concentration.

2. Vulnerability to recessions/depressions caused by malinvestment (see 2007)

3. Vulnerability to recessions/depressions caused by deleveraging.

4. The absolute requirement that all prosperity is accompanied by a matching debt that must be repaid later.

5. The pressure that the requirement for exponential growth will put on our ecosystem.

6. The inherent unfairness in leaving future generations with a debt that matches our prosperity today.

7. Destructive and violent malinvestment funded by debt (wars)

8. Misallocation of resources through trade imbalance.

To name a few.

Michael Hardner · November 13, 2013

You're attributing other problems not caused by fractional banking.

GostHacked · November 13, 2013

How the Canadian education fails us!

I see my mistake, 4%, then 16 % ect.

dre · November 13, 2013

You're attributing other problems not caused by fractional banking.

Some of them are directly caused by it, and some of them are enabled or excasturbated by it. And we arent talking about fractional reserve banking, we are talking about a flavor of it with no permanent money component.

In any case if we are going to have a discussion about the sustainability of our economic system, and consequences of it, monetary policy is the elephant in the room. Its not the cause of all things good or bad, but its the primary driver of the way our system works.

It also provides a more accurate alternatives to Mr Brands understand of what caused these problems. Its NOT capitalism. Capitalism is not regressive, and theres no rule or attribute of capitalism that causes concentration of wealth. In fact almost a century of capitalism saw the largest deconcentration of wealth in history. its not the profit motive either.

Edited November 13, 2013 by dre

Michael Hardner · November 13, 2013

It's speculative. Furthermore the arguments against it pin the start date for this practice as the Nixon administration, when the practice was already in place, even when there was a gold standard.

There is a lot to talk about with regards to our economic system: there's the environment, there's employment and taxation. Debt and banking have been with us for decades, but global trade, global commerce and investment are new phenomena - that's what is driving this.

It's like 9/11 truth - there's no arguing against these things because you can't argue against a ghost.

dre · November 13, 2013

It's speculative. Furthermore the arguments against it pin the start date for this practice as the Nixon administration, when the practice was already in place, even when there was a gold standard.

No the practice before the end of convertability was very very different, and the results and consequences were also very different. This is an objective truth... if you do even a tiny bit of research you can watch the money supply explode after convertability ended. Its not a ghost and these claims are nothing like 911 truth claims at all. They are all verifiable by empyrical research and data. The only thing left to argue about is how big a part this played compared to other things.

There is a lot to talk about with regards to our economic system: there's the environment, there's employment and taxation. Debt and banking have been with us for decades, but global trade, global commerce and investment are new phenomena - that's what is driving this.

Most of this trade would have been impossible on permanent money. Remember for decades the expansion of global trade consisted mostly of real goods going in one direction and only bits of paper and electronic spreadsheet entries going in the other. Think of it this way... if you suddenly had the power to print as much money as you wanted, I would imagine that you would see a rapid increase in the flow of goods to your house from neighbors, vendors etc. "Trade" would definately increase would it not?

Do you at least agree that it would have been hard or impossible for the US and other countries to run the kind of huge trade deficits you are talking about without monetary expansion? What would they have traded for all these goods?

global commerce and investment are new phenomena

No... trade and commerce have been around for centuries. whats new is the capacity to run large trade deficits, and THAT is what has underpinned "globalism" so far. Every single country running trade deficits is racking up a huge and corresponding debt. It might feel to you like you can suddenly get stuff for next to nothing, but all you are doing is passing on your bills to your children and grand children.

It's like 9/11 truth - there's no arguing against these things because you can't argue against a ghost.

No its nothing like that at all. Our monetary system has well documented rules that produce direct and objectively verifiable consequences.Unlike the idea that Dick Cheney organized 911 which is believed by a few quacks, the machinations and the consequences of the debt money system are supported by a significant portion of the worlds economists including entire schools of economic thought, and they are written about by bankers and people inside the reserve system as well. And unlike 911 truthers we have a historical record of dozens of such non-permanent money systems crashing and civilizations having to switch back and forth from money backed by various commodities to money backed by nothing more than government decree and legal tender laws.

Edited November 13, 2013 by dre

-1=e^ipi · November 13, 2013

I see my mistake, 4%, then 16 % ect.

How the Canadian education continually fails us!

Here math noob, maybe this link will help you:

http://en.wikipedia.org/wiki/Exponential_function

Edit: btw, I also live in Ottawa. If you are looking for a math tutor please do not hesitate to ask.

Edit 2: Seriously, I need the employment, lol.

Edited November 13, 2013 by -1=e^ipi

Bonam · November 13, 2013

How the Canadian education continually fails us!

Here math noob, maybe this link will help you:

http://en.wikipedia.org/wiki/Exponential_function

I think you'll generally be highly disappointed in the mathematical literacy of people in the general public, including those who post on political forums. Many of the otherwise relatively intelligent posters on these forums couldn't tell the difference between a linear, geometric, and exponential function to save their lives, let alone understand intuitively what the differences between these functions would imply in the context of economic growth or other human systems.

Bonam · November 13, 2013

Of course it can. Species become extinct all the time when demand exceeds the resources available or those resources disappear altogether.

Your second sentence is true, but your first is wrong. If, as dre says, we reach the point that we are using "1 planet worth of resources per second", then, obviously, our civilization must span many many planets, since if we are still bound to Earth (or only a small number of planets), it would not be possible to use all of its resources in one second given an exponential economic growth model, because by the time we were using resources that quickly, they would long long since have already been used up.

Think about it, if in the second in question we use all the planet's resources, that means in the second prior we must have used 99% of its resources, and in the second before that, 98% of its resources, etc (example numbers, but point remains true for any and all growth rates). If that were the case, we would have used up 3x the resources that existed, and that is impossible.

eyeball · November 13, 2013

There is a lot to talk about with regards to our economic system::

Why is there a lot to talk about - what is it about a cage full of dying canaries that people don't get?

there's the environment...

Where is it again exactly? Last time I checked, cutting-edge economic scientists were still regarding the environment as something external to or outside of our economy.

I'm sure there must be some highbrow mathematical logarithm that explains where it is in the scheme of things. Maybe they rolled it up into M-theory.

Edited November 13, 2013 by eyeball

dre · November 13, 2013

If, as dre says, we reach the point that we are using "1 planet worth of resources per second", then, obviously, our civilization must span many many planets, since if we are still bound to Earth (or only a small number of planets)

Even on a universal scale an exponential growth curve is unsustainable by its very definition. Even based on 4% growth we would be using up entire star systems within a few of thousand years. Eventually that 3% growth will be a galaxy per yer then one million per second. But the real problem is that we are already colliding with natural boundaries to growth here on earth, and we are still hundreds of years or thousands away from colonizing other solar systems.

And the debt money system actually puts those goals further away, because more and more resources are allocated towards funding consumption after the fact. We are defunding real human space exploration in favor of technologies that we hope will result in quick gratification. The increase in the cost of finite resources is already an impediment to economic growth NOW. Never mind in the future.

Moonlight Graham · November 13, 2013

Even on a universal scale an exponential growth curve is unsustainable by its very definition. Even based on 4% growth we would be using up entire star systems within a few of thousand years.

But does capitalism need exponential growth? Doesn't it just need growth, period? Western countries with highly developed economies have growing GDP per capita around 1-2% growth per year (compared to ie: China which is somewhere around 8% growth per year in the last decade or so). As long as profit continues, isn't that enough for the system to continue?

Bonam · November 13, 2013

But does capitalism need exponential growth? Doesn't it just need growth, period? Western countries with highly developed economies have growing GDP per capita around 1-2% growth per year

1% growth every year, year after year, is exponential. So is 0.1% or 0.00001%.

dre · November 13, 2013

But does capitalism need exponential growth? Doesn't it just need growth, period? Western countries with highly developed economies have growing GDP per capita around 1-2% growth per year (compared to ie: China which is somewhere around 8% growth per year in the last decade or so). As long as profit continues, isn't that enough for the system to continue?

Capitalism is simply a system where some people invest in the enterprises of others. It could exist in a zero growth environment or even a negative growth environment.

As long as profit continues, isn't that enough for the system to continue?

Yes. Even through periods where profit is scarce and only a minority of investments yielded profit capitalism could still continue. Especially in the absense of a credible hedge. In fact capitalism thrives on volatility and periods of loss and gain. Investors can make the same ammount of money on the long as they can the short.

Thats not what im talking about when I bring up the requirement for exponential growth thats build into the modern monetary system. Every single dollar in our money supply (almost) is loaned into existance by commercial banks. The principle is injected into the economy but the interest may or may not be, and secondary lenders make the problem worse.

This is what makes exponential growth a rule of the monetary system.

Let me give you a simple example....

You have a new country with a central bank that has a 1:10 reserve requirement. A single citizen lives in the country. There are zero dollars in the money supply A commercial banker sets up shop and he has one dollar. He puts that dollar in his reserve account and now he can loan out 10 dollars to the single citizen. He loans that out at 5% interest, and the single citizen now has ten dollars to spend or invest. The citizen now owes 10 dollars plus 5% interest but the entire size of the money supply is only 10$. Its mathematically impossible for him to pay of his loan and he will default.... UNLESS... citizens 2 comes along. He has a dollar and he desposits it in a commercial bank. Then citizen 3 comes along and borrows 10 dollars which is now spent into the economy. The total money supply now is 20$ and if citizen #1 plays his cards right, then he can repay his loan. We just witnessed 20$ worth of monetary expansion!

Under our existing system almost every single dollar in existance has an opposing entry on the balance sheet that is someone elses debt. If a wealthy person accumulates a billion dollars that means that everyone else OWES a billion dollars. Every single dollar in the money supply except for the 5% that is created by the mint is loaned into existance and has a corresponding dollar of debt for someone else. The problem is when new money is loaned into existance only the principle enters the money supply. The interest may or may not enter the money supply. So each year that goes by the money supply and the economy (and the ammount of natural resources harvested) must grow enough for borrowers to pay off existing loans or you have a glut of defaults (a recession).

None of this has anything to do with "capitalism" or "profit". Its a simple and predictable RULE of how money is created in the debt/money system. Capitalism, investment, and the profit motive are an entirely separate phenomenon. Capitalism could exist if the means of exchange was pieces of cloth, silver coins, gold coins, bushels of wheat, or paper claim checks or even rocks and stones with unique appearance. Despite what Russel Brand has to say its NOT a regressive system, and it does not concentrate wealth. A poor person has roughly the same chance of conceiving of a proftiable idea as a rich person. Investment (in the absence of ideas or innovation) IS rewarded but historically those rewards are clawed back through property taxation, progressive graduated income taxation, and estate taxation, and returned into the "pool" to be competed for.

Edited November 13, 2013 by dre

dre · November 13, 2013

How the Canadian education continually fails us!

Here math noob, maybe this link will help you:

http://en.wikipedia....ential_function

My explanation of the difference between linear and exponential growth was completely accurate. You shot your mouth off about "canadian education" there despite the fact the example I posted was a simple textbook illustration. Then when GH made an error in a subsequent posted you blabbed on about "canadian education" again. Maybe if you are so smart you could actually contribute to the discussion instead of just trolling? I guess if thats all you are capable off, you just might be right about "canadian education",

-1=e^ipi · November 13, 2013

My explanation of the difference between linear and exponential growth was completely accurate.

Your understanding of the word exponential is incorrect. Cubic growth is not exponential (which you claimed in an earlier post),

Also, your idea that fractional reserve banking causes exponential economic growth is completely retarded. Especially given that fractional reserve banking only increases the money supply by a finite amount, and the fact that you are mixing real GDP growth with nominal GDP growth. The USA for example has had nearly 2 centuries of approximately 2% real GDP growth per capita.

Edited November 13, 2013 by -1=e^ipi