Wednesday, January 20, 2016
You think interest is a good thing, don't ya? You want the nest egg.
Really. I mean, who wouldn't? Everyone wants financial security.
Suppose we run with that. Suppose everybody saves every dollar of income they ever get. What happens then? What happens to GDP?
GDP goes to zero.
What happens to income?
Income goes to zero.
Suppose instead, there is just a little inequality. One guy gets ahead of everybody else. And that one guy saves a little out of every paycheck. What happens?
Eventually, income goes to zero.
You don't believe that, do you. But if only one guy is saving, eventually that guy ends up with all the money. Or, with so much of the money that the economy can no longer function. And then income goes to zero. Or you know, we have a crisis. Call it zero.
Call it unacceptable.
Everybody wants a nest egg. Everybody wants to save. Suppose that happens. What's the result?
There is an increase of savings, relative to everything else.
Suppose this continues for a long time, a hundred years say. What's the result? There is, after a hundred years, a very large amount of money set aside in savings. And not to say people are greedy, but right is right, and nobody wants somebody to come in and steal their savings. Nobody wants that. And nobody wants their savings eroded by inflation. That's not right, either. Yeah, those bristly bums that don't have savings, they might call for inflation. But they're just trying to steal my money. Can't have that. We have to prevent inflation. We have to limit the quantity of money to prevent inflation.
See? We put so much money in savings that it starts to cause problems in the economy, on the way to zero income but still yet a long way off, so much money in savings that the transaction economy begins to suffer because there is not enough money for transactions. And then we say: Oh, no! Don't you dare print more money! You'll erode my savings!!
See how it works?
But it's natural to want a nest egg. And it's natural to want to protect it, once you have it. So this problem will always arise.
Fall of civilization.
Those who do not learn from history...
Posted by The Arthurian at 4:27 AM