We're living in the Debt Age

When we learn about the history of civilization, we get to hear about the Stone Age, the Bronze Age and then the Iron Age. Whatever follows is named after historical events or political systems rather than technology, although some historians do use Steel Age, Atomic Age, Information Age and so on.

I will argue that after the Iron Age there came the Debt Age and we are still in it. Currency is nothing else than proof of debt. You have something like a digital record, a piece of paper or a copper coin that says to other people you are due a certain amount of value. But since the coins stopped being made of precious metals - and even then the price of their metal was quite different from the price of the coin, civilization worked entirely on the concept of debt.

You may have heard the explanation of how the concept of debt increases the pool of existing total market value without any of it being emitted. You start with an economy of fixed value of 100 and one man holding it. He can use it to buy real stuff like food. But he can also lend it. So let's say a second man wants to buy stuff, but he has 0 money, he goes to the first man and says "hey, give me 10 and when I give it to you later I'll add 5". When the deal is agreed upon, the total money in the system is 90 + 10 + 5, with the extra 5 being virtual. The value of real things has not changed, but the currency value has. If every person in the system would suddenly ask for their money back, the system would collapse.

This only means one thing: even in a completely stable and stagnant system, the real value of currency decreases. You can lend and lend and lend thus increasing the pool of total coinage while the underlying objective value remains the same, thus making the currency value less and less per unit - so called inflation. The only way out of this is a growing economy to keep up to inflation.

Note here the change in paradigm. We are being told that we are growing, as a species, in wealth and resources and that is reflected in our economies. What I am saying is that the only way an economy can function in the age of debt is if it grows. That is the reason everybody loses their shit when economies stagnate. We are living on debt and we need to pay it. We can't just stop and relax, there is money to be paid for simply having the option of using money.

But who is this mysterious debtor? Surely if everybody borrows from someone, it has to balance somewhere. You can't just make up money, it has to represent something. And that is true, the mystery resource that is bought with all this money is time. Debt means you buy with a promise of future money time to do something to make that money. The debtor is the future.

Yeah, we can be dramatic and say that we just roll the debt forward and the people who have to pay it are going to be our children and so on, but don't fret, the fertility rate in the world has decreased spectacularly. We won't have children to pay the debt. We're fine!

OK, drama and cheap sarcasm over. The inverse correlation between global debt and fertility is a shallow one and I don't want to make that case.

Thing is, I was prompted to write this post because I've read this article about how fertility rates are going down worldwide, meaning that the economic output of the world in 2100 will be a third lower than that of today. And one has to wonder, right? If we are fewer and we work less, why is that such a big deal? It's a big deal because without permanent growth, modern economies crumble! They cannot pay their debts! It takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!

And this is not particularly about currency. The same effect can be achieved in a barter system as well. All you have to do is lend and borrow - although it would certainly work against taxes, banks and that stuff, the reason barter is now routinely made illegal.

Is it so bad, though? Isn't a system with the drive to continuously grow inherently good?

Yes, it's good at growing. Not growing you, not making you happy, not keeping you healthy, but growing as an overarching abstraction that includes people just incidentally. Yes, civilization is made of people, they are the ones that - theoretically - have debts to pay and money to spend, but the choice and direction is collective, not individual.

When you eat the cheap unhealthy food made from the exploitation of animals and vulnerable people and you just shrug, that's not rational. When you take the money you saved by eating said cheap food to buy weird stuff to own and put on yourself to appear superior to other people, that's not rational either. When wealth accumulates in the hands of a few people that only use it to make more wealth, that's just dumb.

The thing that grows with no other reason than to grow, with no regards to the damage it does while doing so, is called cancer. It always leads either to its failure or the death of its host. Cancer does not scale!

Can we survive systems of balance with ourselves, our neighbors and our environment? History says no. Every single civilization that tried this was destroyed by another. In fact, this is the mechanism that keeps the system working: if you stop, you get trampled by someone who doesn't; if you are inefficient, you get left in the dust by someone who does things slightly better. The reason why we don't immediately die from this malignant growth is that the civilizations that survive have found temporary stop gap measures to compensate. The ones that did not, did die!

Can we steer away from this debt driven growth for the sake of growth? I don't see how. Since I made the analogy with cancer and nature tried a lot of stuff, maybe we can draw inspiration from there, but the conclusions are not good. There are local mechanisms that stop cancer early on. Vigilance, general health and energy are required to keep this working. When cancer does inevitably skirt them, it is unstoppable. Only an outside treatment can help.

For us, that means that we create the mechanisms to eliminate corruption and maintain vigilant and focused on real human values. And when we ultimately fail and our lives are taken over by growing psychopathic organizations, we can only hope someone from outside is going to come to our aid.

That is why a monoculture will destroy the planet. That is why we need many countries that think differently and try new things. That is why we have to allow diversity of thought and system, while also holding on to human values. I want to write another post about this particular claim, but I am still ruminating about the content and direction.

I was thinking the other day, is it possible that the whole Greenland thing is a kneejerk reaction from a system that has provenly failed its people against one that has showed a viable alternative? It's probably oil and territory, but what if it isn't? What if the cancerous American capitalism has realized Communism failed, but Socialism is viable in Northern Europe and China, and therefore it must be stomped?