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  • Salanis

    Dec. 3, 2008 4:00 p.m. Salanis SuperDork

    In short: Capitalism.

    It takes money (capital) to start or grow a business. The idea is that the business will make more money for you than you initially put into it. Most people do not have this initial capital lying around. So, they get a loan. Of course, the bank doesn't actually have cash for all the loans they give out, only a certain percentage, but they're large enough to absorb a few failed ventures.

    So you get money, that didn't used to exist, for a business. The business makes you money, and you are able to pay back interest on the capital the bank gave you. So the size of the economy expands.

    You have more buying power now. So you buy more. So value on goods goes up because there is more wealth in the system.

    Other people expect raises because as they get more experienced because, the economy is inflating, and their time is becoming more valuable as they gain experience.

    That last part maybe doesn't matter as much, because people are retiring, and younguns are entering the workforce for the first time. Except that people are retiring later and the population is expanding.

    So, yeah. Capitalism essentially requires an expanding economy. If you wanted the economy to remain totally constant, you'd need a different economic system.

  • ignorant

    Dec. 3, 2008 4:46 p.m. ignorant SuperDork

    The one thing that makes me highly suspect of any sort of gold standard money is that when times are bad people talk about them and how great they are, but when times are good the rhetoric dies down and everyone happily cashes their dividend checks and buys Maple leafs..

    I want to say I think both systems are flawed and imperfect.

  • Coupefan

    Dec. 3, 2008 4:49 p.m. Coupefan New Reader

    My nod goes to TJ. He did hit on something that perhaps only someone who was not raised on the religion of business and finance would see. I have a science background, and a fairly wide one at that. I believe it allows me to see the big picture, where as some of my business major friends seemingly never left the main business building and have a narrower view of existence. Our present economic system is built on consumerism--taking raw materials, creating a product (or service) and then selling to a market.

    Growth requires you to find new markets to sell to. But here's were it gets fuzzy. This third rock from the sun is nearing a breaking point on the amount of human population it can support. We need food, land to grow on that does not suffer from topsoil erosion, we need petroleum for fertilizer and pesticides (see Agricultural Miracle of the 50's/60's), fresh water and of course, other raw materials for our daily needs. Eventually, fate (can't believe I used that word) will catch up to us as our numbers continue to grow. I don't believe continued growth is physically possible. I will leave you with an illustrative experiment I witnessed years ago, from a macrobiology course (?):

    Take a cup, place some organic matter in it (resources). Allow the mold to grow and feed on the resources within their 'contained world.' Finally, watch the mold die off as all of the resources are exhausted. Just ponder that for a moment.

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