Debt in a decreasing economy

[etienne]

Hello,

I was thinking at a way to explain Ali Samsam Bakhtiari's recommendation to reduce individual debt in a context of peak oil (for example here https://dailyreckoning.com/decline-of-peak-oil/) and the reality that debt was a great way to improve our living at least since WWII.

I remember friends of my parents explaining that when they bought their houses, that debt was a heavy load for a few years, but thanks to inflation and increasing salaries, this ended up to be very light and didn't have any long term impact.

My experience is that there is not much inflation and even less salaries increase. I get most of the time an inflation adjusted salary, so the load of my mortgage really doesn't go down.

Now if the economy would decrease, well, mortgage would stay the same, but the load would go up because interest rate would go up with inflation, or salary would go down. Decreasing economy also means decreasing consumption possibilities.

So my idea is that :
- When there is economical growth, debt is not an issue, because it means that I already use now a part of my future incomes that would anyway be much more than right now, so I anticipate future comfort.
- When economy decreases, debt is a terrible problem because I already use now ressources that I will badly need in the future. Of course we (most people) need debt to buy a house, but that's not an issue if the house is adapted to future incomes, because lodging has a cost today and also will have one in the future, but if we make debts for a car in which we wouldn't be able to put gasoline in a decreasing economy, than we will have to pay for a car that will stay on a parking lot, and maybe won't be able to buy a bicycle to go to work.

This is a cartoonish way to turn it, but I think that there is some truth behind the concept.

Etienne

[sidd]

Rem acu tetigisti. Debt kills in shrinking economy.

sidd

[wdmn]

Hello,

I was thinking at a way to explain Ali Samsam Bakhtiari's recommendation to reduce individual debt in a context of peak oil (for example here https://dailyreckoning.com/decline-of-peak-oil/) and the reality that debt was a great way to improve our living at least since WWII.

I remember friends of my parents explaining that when they bought their houses, that debt was a heavy load for a few years, but thanks to inflation and increasing salaries, this ended up to be very light and didn't have any long term impact.

My experience is that there is not much inflation and even less salaries increase. I get most of the time an inflation adjusted salary, so the load of my mortgage really doesn't go down.

Now if the economy would decrease, well, mortgage would stay the same, but the load would go up because interest rate would go up with inflation, or salary would go down. Decreasing economy also means decreasing consumption possibilities.

So my idea is that :
- When there is economical growth, debt is not an issue, because it means that I already use now a part of my future incomes that would anyway be much more than right now, so I anticipate future comfort.
- When economy decreases, debt is a terrible problem because I already use now ressources that I will badly need in the future. Of course we (most people) need debt to buy a house, but that's not an issue if the house is adapted to future incomes, because lodging has a cost today and also will have one in the future, but if we make debts for a car in which we wouldn't be able to put gasoline in a decreasing economy, than we will have to pay for a car that will stay on a parking lot, and maybe won't be able to buy a bicycle to go to work.

This is a cartoonish way to turn it, but I think that there is some truth behind the concept.

Etienne

Debt will always grow faster than overall money supply as long as there is compound interest... Such debt will always eventually cause the economy to crash and start shrinking, for the same reasons you said: more and more money goes to service debt, less and less to spend into the real economy. In ancient times there was periodic debt forgiveness to wipe the slates clean, otherwise the economy would crash.

[TerryM]

Inflation is increasingly hard on anyone on a fixed salary.
Deflation is disastrous for everyone else.


Borrowing to purchase depreciating assets allows you to lose in either inflationary or deflationary times. 
Terry

[gerontocrat]

Borrowing to purchase depreciating assets allows you to lose in either inflationary or deflationary times.
Terry

99.9% of automobiles are a depreciating asset.
Perhaps that is why some economists and the Fed are concerned on the volume of "can't pay, won't pay" loans given for vehicle purchases. 

[El Cid]

The issue is quite simple: if nominal interest rates are lower than the nominal growth rate then borrowers are better off, savers suck. If nominal interest rates are higher than the nominal rate of growth of the economy, then borrowers are smashed and savers win. Since nominal rate = inflation + real rate , and nominal growth = inflation + real growth, there can be many solutions.

Currently, central banks are trying to engineer a so called "beautiful deleveraging" by keeping nominal interest rates below the nominal growth rate, eg. in Europe: interest rates are around zero, whereas nominal growth rate is cca 3-4%, US: rates are cca 2-3% with growth (forward looking) probably 4-5%.

In a (theoretical) continuously shrinking economy cash must be abolished and interest rates kept below zero so that nominal rate <nominal growth, if we want to engineere a debt reduction

[wdmn]

Why wouldn't inflation just drop out since it's on both sides of the equation? Isn't the relationship between interest rate and growth rate?

[etienne]

In a (theoretical) continuously shrinking economy cash must be abolished and interest rates kept below zero so that nominal rate <nominal growth, if we want to engineere a debt reduction

This would be so cool and would solve many mortgage problems, but I don't believe this could happen. Cash is easier to abolish by getting companies and people bankrupt. If interest rates are negative, people would make many loans and this would create cash. The other way to reduce cash is having people paying their loans back.

[gerontocrat]

In a (theoretical) continuously shrinking economy cash must be abolished and interest rates kept below zero so that nominal rate <nominal growth, if we want to engineere a debt reduction

This would be so cool and would solve many mortgage problems, but I don't believe this could happen. Cash is easier to abolish by getting companies and people bankrupt. If interest rates are negative, people would make many loans and this would create cash. The other way to reduce cash is having people paying their loans back.

The last financial crash was caused by plonkers (the banks & other financial institutions) lending money to people who could not pay them back.

Debt in the world on any measure is worse now than before the crash. Add to that QE by the FED, the ECB and the Bank of England, the sugar rush from tax cuts for the rich by Trump, and no wonder the markets have a fit whenever interest rates go up.

If people pay their loan back in a declining economy that hits consumption so the decline is even faster - the Keynes multiplier effect. The Keynes idea was for Governments to save when the economy was going well, and spend when the economy hit bad times.

Governments all over the world have let deficits increase even though the world economy is going well, and are likely to cut spending when the economy hits the fan. A double whammy.

It might reduce CO2 emissions but at vast social cost. (Because of Brexit, the UK is likely to be the pioneer of this misery).

Arithmetic rules, OK.

[SteveMDFP]

 
So my idea is that :
- When there is economical growth, debt is not an issue, because it means that I already use now a part of my future incomes that would anyway be much more than right now, so I anticipate future comfort.

I agree wholeheartedly with the bulk of your post.  But I think even this portion may be too optimistic.  It seems to be a part of human nature to underestimate risks. 

Buying as much house value as one can reasonably afford has long been a pretty sound investment idea -- if nothing goes wrong.  Loss of a job, a disabling illness, or other personal crisis can turn a sound strategy into a disaster.

This risk is writ large in a severe economic downturn.  House values can fall below mortgage balances at the same time as one becomes unemployed.  Going from affluence to poverty, even homelessness, can happen with breathtaking rapidity in such a situation.

Climate change just adds to the risks of, e.g., one's home losing most of its value from previously unappreciated flood risk.  Or wildfire risk.  Or, or, or. . .

In a time of increasing risk of many unknowns, most of us homeowners would be wise to purchase no more than we truly need.  Building savings is likely to be the better way to security.  One can invest in real estate without putting all the savings into the one home you also need to live in.

[etienne]

When we bought our first house, my wife and I knew that we wanted childrens, so we decided that the house shouldn't cost more than what we can pay back with just one salary. This is an easier choice when you both have an university diploma, but most people were looking at us just like we were crazy. This gave us the possibility to pay it back in like half the normal time and it ended up to be a great investment.

[etienne]

If people pay their loan back in a declining economy that hits consumption so the decline is even faster - the Keynes multiplier effect. The Keynes idea was for Governments to save when the economy was going well, and spend when the economy hit bad times.

I started this topic because I wonder if Keynes is still valid in a decreasing economy. He died in 1946, so he probably never thought that there would a limit to growth.
When I mean decreasing, I don't think at a crash, but at a voluntary decrease because of climate change, or an imposed one in the case where renewables wouldn't be built up fast enough to compensate peak oil.

[wili]

We did the same, ettienne. We also paid ahead on the principle, and kept track of the (at the time falling) interest rates (harder to do than it should have been, imho) and refinanced when we saw it would not increase our monthly payments. Probably saved at least $100,000 that otherwise would have just gone to the f'n banksters in interest.

[El Cid]

There is one more thing I wanted to add. Most people do not understand this but debt is not created out of thin air (though some believe it is). For every debtor there is a lender.  Every dollar owed is a dollar owned by someone. The indebtedness of a society is therefore a measure of inequality. The reason that indebtedness grew so much since the 80s is that inequality grew. Inequality means that some people have (much) more wealth than others, much more money in the bank (this is the asset side) and the banks lend this money to borrowers (this is the liability side). The one can not exist without the other. Basically (intermediated by banks) a select few lend to many many people.

Tax cuts for the rich, globalization, etc, that is neoliberal economic policies led to big inequalities, that is, it led to big debts. To reduce indebtedness of society, we need to create more equality. 

[etienne]

There is one more thing I wanted to add. Most people do not understand this but debt is not created out of thin air (though some believe it is). For every debtor there is a lender.  Every dollar owed is a dollar owned by someone.

Well, it's not what I undertsood. I understood that banks can lend like (don't know exactly how much) 5 times more than what they own. This would be why lending money creates cash. I don't know exactly how it works and what it is good for, but banks can also lend or place money in the central bank, I see it as a balance because money doesn't always enter and leaves in the same proportions.

[SteveMDFP]

There is one more thing I wanted to add. Most people do not understand this but debt is not created out of thin air (though some believe it is). For every debtor there is a lender.  Every dollar owed is a dollar owned by someone.

Well, it's not what I undertsood. I understood that banks can lend like (don't know exactly how much) 5 times more than what they own. This would be why lending money creates cash. I don't know exactly how it works and what it is good for, but banks can also lend or place money in the central bank, I see it as a balance because money doesn't always enter and leaves in the same proportions.

The vast majority of dollars are created through lending/borrowing.  It's also possible, however, for central banks to create new money without associated debt--"quantitative easing."  Effectively, printing money (though the printing is actually electronic ledger entries).  The only practical limit to how much money can be created this way is the inflation this can cause.  The EU and US have had difficulty getting inflation up to steady levels.   Until very recently in the US, there simply hasn't been enough money printing.

[El Cid]

Every dollar owed is a dollar owned by someone.

Well, it's not what I undertsood. I understood that banks can lend like (don't know exactly how much) 5 times more than what they own. This would be why lending money creates cash. I don't know exactly how it works and what it is good for, but banks can also lend or place money in the central bank, I see it as a balance because money doesn't always enter and leaves in the same proportions.

Banks do lend more than their net worth. A bank's balance sheet looks something like this:

The bank has 1 dollar of capital, then depositors deposit 9 dollars in the bank, so now the bank lends 10 dollars. Although the bank's capital is 1 dollar but it lends 10 dollars. But out of those 10 dollars 9 must be paid back to depositors should they demand it.

(I did not want to go into quantitative easing because that is the government/central bank. Governments/ technicallycentral banks can and do print money. )

[TerryM]

When we bought our first house, my wife and I knew that we wanted childrens, so we decided that the house shouldn't cost more than what we can pay back with just one salary. This is an easier choice when you both have an university diploma, but most people were looking at us just like we were crazy. This gave us the possibility to pay it back in like half the normal time and it ended up to be a great investment.

Congratulations!
Living (well) within your means is becoming a lost art. It requires a degree of self discipline to ignore the Jones's and to chart a path that's sustainable even when the winds aren't at your back.


I was always heavily involved in real-estate (house poor), but spread it through a number of rental homes while living in fixer uppers that would be rented out in ~5 years.


Paying down the principal at twice the billed rate is painless for the first decade, and by then inflation has eased the bite allowing 15 year payoffs that save a fortune in interest payments.


If you're in a region with growth potential it's simple and painless to accumulate rental property if you don't mind doing the necessary repairs, and don't need to live in a mansion.


People may assume you're "crazy" now, but the course you're on will pay dividends for as long as you live.
Terry

[wdmn]

El Cid,

What you describe is commonly known as the "money multiplier" or "fractional reserve banking" model. (Both versions of the "loanable funds" model: https://www.bankofengland.co.uk/working-paper/2018/banks-are-not-intermediaries-of-loanable-funds-facts-theory-and-evidence). I don't have my notes with sources on me right now, but from what I've read, it is actually not how lending works. (There were actual empirical studies done showing that it could not work that way).

Lending is not tied to deposits. The bank can issue as many new loans as they want, without consideration for the amount of money they have in reserve. They then have some time period (I think 3 weeks) to bring the reserve up to match the minimum requirement for the amount of liabilities. They report to the central bank, and the bank issues them enough to make up for any short fall in reserves. The central bank has pretty much no choice, since failing to do this would result in economic chaos.

The lending is never based on looking at the amount of money in reserves. It happens through double entry bookkeeping. When the loan is paid back the money is destroyed. Private commercial banks thus have the most power over money supply.

[johnm33]

Banks do create money when they make a loan, they also 'create' a security which they may hold or sell, that balances their book. https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy skip to 1min.
Once created that 'money' remains in the banking system until the debt is cleared, the banks bring nothing  but their bookeeping ability to the table, zero zilch nada. Once they have your loan deposited they can begin to play around with it constrained only by ever looser regulation and their own imagination, technically they should keep enough to cover anticipated withdrawals, if they don't they just borrow from the CB to cover it.
Governments have conceded their soveriegn right to create money to corporations, they even borrow money for their own spending from them, and spin a fantasy narrative for the gullible that a government operates like a household. There simply cannot be a shortage of something created by a few keystrokes, and should any government wish to they could create enough interest free money/debt to cover all the debts owed by itself and it's citizens, and since 40% of every purchase now goes to service upstream interest payments to the bookeepers perhaps now is the time. Instead they have chosen to do exactly that but insist on only supplying it to the bookeepers.

[litesong]

99.9% of automobiles are a depreciating asset.....

That's why people should keep vehicles for 10 or 20 years. Some people say to buy used vehicles. The problems are, many used cars aren't carefully driven or taken care of & the inflated used car market prices are zoos. The best is to buy a new, good(200,000 to 300,000 miles), but stripped car (in 2009, TWO Hyundai Accents were selling for $14,000). Our 12 year old, 135,000+ mile, small gas-tank Accent had its first 500 mile tank of gas, had 8 tanks in a row over 40 MPG & two tanks over 47 & 48MPG this past summer. Looks good for 200,000 miles & onto 300,000(?) miles.
Yeah, don't buy fancy, high tech, electronical (ha ha) splashy vehicles. Get a manual tranny (auto trannies are too expensive to buy & repair), smaller engine (no turbo) & learn to skip gears. Make the tranny, engine & suspension last a long time(at least, make the repairs cheaper). Stop going 80+MPH & accelerating & braking hard. Make it last. As families make less money (due to re-pubic-lick-uns giving rich people money), it is most important to make vehicles last, that they serve you & NOT your bank debt.     

[etienne]

Rem acu tetigisti. Debt kills in shrinking economy.

sidd

Definition of rem acu tetigisti : you have touched the matter with a needle : you hit the nail on the head

This is a big worry for me. Right now, economy is still growing, but I'm not sure that it is true if a ratio is done with the number of humans, just like petrol's extraction doesn't grow if you look at extraction per person.

Anyway, ressources are limited, so growth will not last forever and climate change requires a decreasing economy, so curbing climate change could also mean curbing debt.

[johnm33]

Etienne try listening to this jump to 15:30, Micheal Hudson lays it out. https://www.rt.com/shows/keiser-report/446750-yellow-vest-debt-crisis/

[etienne]

Etienne try listening to this jump to 15:30, Micheal Hudson lays it out. https://www.rt.com/shows/keiser-report/446750-yellow-vest-debt-crisis/

Well, the idea of erasing debt is very interesting, but I believe that past and actual situation can't be compared.
3000 years ago, if somebody was smart enough to get the 1000 gold coins of the village, he would be able to lend them and get them back a few times since people had to pay interests. The only problem was that there were only 1000 coins, so erasing the debt didn’t change anything in the number of coins that the rich man was able hide in his safe. It's a little bit like when playing Monopoly, sometimes people prefer not to ask for all the money so that the game can continue.
Nowadays with virtual money, the situation is completely different. Money is created by debt and value is insured by a mortgage or whatever the borrower can provide as insurance, so if you erase a debt, you also erase a security. If we look back at the subprime crisis, a major problem is that the houses that were seized had often no value, so we had a valueless security for a not payable debt. In this context, if people had been able to stay in their home under some fair conditions, situation might have been better because for example mortgages would not have lost all their value.
Don't know if this is a solution regarding debts reduction to curb climate change, I don't even know if that concept makes sense.
To reduce debt, the best way is to increase interest rates, but this would be an economical catastrophe in many countries, even for myself since I moved in a bigger home.

[kassy]

The houses had no value because no one had the money to buy them. With the people less in debt they might have been able to buy them so the security had at least part of the value.

[etienne]

A lower debt is the solution to everything, this would also have allowed the mortgages to be paid like planned. The question is how to get there and if it would help regarding climate change. I guess yes because lower debt means lower consumption, but it might also mean bankrupted economy. I have no clue.

[kassy]

Who owns the Bank of France?

[ArcticMelt1]

The world economy is such a trifle compared to the upcoming planetary catastrophe.

Look at the three great graphics about the gloomy future of the planet.

1.
No one wants to reduce greenhouse gas emissions (hydrocarbons are being extracted more and more, their production is getting cheaper). Global CO2 emissions from fossil fuels and industry will rise around 3% in 2018, the fastest in 7 years.

2.
The content of greenhouse gases is already the maximum in the last 20 million years, and in the coming decades will be the maximum in the entire history of the planet.

3.
Human activities in the 21st century produce major disturbances in the gravitational field of the Earth (melting glaciers and intensifying earthquakes, depleting groundwater).

[TerryM]

AM1
I'm inclined to agree, with the caveat that those entities without financial liquidity or available credit will have enormous difficulty attempting to mitigate the shocks that global warming will cause.


Terry

[etienne]

What is the trap that obliges us to grow ? Why is it impossible to choose another direction until we reach the limit and then go down with a lot of pain, doesn’t matter if the limit is climate change or ressources depletion ?
I wonder if the debts are not the main part of the trap. You can't agree to reduce your salary if you need it to pay back your debts.
Same thing with the countries: as long as the ratio debt on GDP is ok, the country is fine, but if GDP goes down, the ratio gets bad, so countries have to increase all the time the GDP in order to have the possibility to make debts when needed.
I feel that if we want to curb CO2 emissions, which I guess we agree that it means reducing the size of the economy, we need some flexibility and it seems to me that it is not possible with so much debt.

[johnm33]

Whatever the problem, the answer is always to make the rich a little bit richer. https://www.oftwominds.com/blogdec18/entrenched-elites12-18.html
also worth reading http://simonthorpesideas.blogspot.com/2018/11/global-debt-now-over-247-trillion.html
plus, the other half of M. Hudsons interveiw, skip to 12:50 [although Max Keiser is worth listening to]

[GoSouthYoungins]

What is the trap that obliges us to grow ? Why is it impossible to choose another direction until we reach the limit and then go down with a lot of pain, doesn’t matter if the limit is climate change or ressources depletion ?
I wonder if the debts are not the main part of the trap. You can't agree to reduce your salary if you need it to pay back your debts.
Same thing with the countries: as long as the ratio debt on GDP is ok, the country is fine, but if GDP goes down, the ratio gets bad, so countries have to increase all the time the GDP in order to have the possibility to make debts when needed.
I feel that if we want to curb CO2 emissions, which I guess we agree that it means reducing the size of the economy, we need some flexibility and it seems to me that it is not possible with so much debt.

The trap is a world owned and run by a banking cartel. "Money" gets loaned into existence by the cartel who have a monopoly on this right, and it must be repaid to them with interest. Simple enough trap. But people don't understand it, so this underlying cause of most everything goes unacknowledged.

[TerryM]

John33
Thanks for the video link. A few comments:


Sleepy has explained in a few posts how the Nobel Prize in Economics has nothing to do with the Nobel Prize Committee, but was foisted on a Nobel heir by neo-con economists to increase the stature of their own co-conspirators. - Sleepy, please excuse my crude synopsis.


I'd been aware that in Ancient Sumeria the temples controlled what today would be considered banking. They decided who to loan funds to and at what terms and interest. I was unaware that this persisted into much later eras, and had spread so far from it's origins. Debt forgiveness by these entities (other than the 50 year Hebrew Jubilee) was also new to me.


More stuff to research.
Terry

[gerontocrat]

A good few analysts, (including me) think that most of us will be in a real-world test bed to see what happens to "debt in a decreasing economy" over the medium-term.

I wonder what will happen to the debt in Venezuela?

I wonder if the "Paris Club" still exists (the purpose of which was to acquire funds from rich nations to forgive debt racked up by poor nations)?

ps: Debt is usually issued by institutions that are supposed to know what they are doing to private individuals, companies and Governments who often do not know what they are doing. It is not those who were supposed to know what they were doing who are usually punished when things go belly-up.

[johnm33]

"Ancient Sumeria" I can't remember the name but the first translations of their records were a serious dissapointment, it was mostly bookeeping.

[Nemesis]

Read the sumerian Gilgamesh Epic about the first historic tyrant, gawdking of Uruk. It's an eyeopening epic about the historical upcoming of the funny global elite

https://en.m.wikipedia.org/wiki/Epic_of_Gilgamesh

[Nemesis]

Btw, you can also learn about the historical roots of some tales in the bible like the great flood (Noah) in the Gilgamesh Epic, interesting shit.

[TerryM]

"Ancient Sumeria" I can't remember the name but the first translations of their records were a serious dissapointment, it was mostly bookeeping.

I'd become very interested in Sumerian maritime trade at one point and the involvement of the temples in financing these expeditions was an intriguing facet.
They were sailing huge vessels to the mouth of the Indus river when the Egyptians were still contemplating the erection of pyramids. A portion of one of these cargoes was 40 tons of copper that may or may not have been of inferior quality.
Columbus's vessels could all have been carried as deck cargo!


My contention was/is that their ships regularly sailed and tacked into the wind. Something the Royal Navy was incapable of in the "Age of Sail".


A fascinating subject but far from being even close to our topic.
Terry

[Nemesis]

There would be no economic debt without some economic system, the base of modern economics, so Sumer isn't really that far away from the topic of debt as the sumerians resp babylonians invented the first grand scale money/economic system (among modern writing ect ect):

" The Mesopotamian civilization developed a large-scale economy based on commodity money. The shekel was the unit of weight and currency, first recorded c. 3000 BCE, referring to a specific weight of barley, and equivalent amounts of silver, bronze, copper etc. The Babylonians and their neighboring city states later developed the earliest system of economics as we think of it today, in terms of rules on debt, legal contracts and law codes relating to business practices and private property..."

https://en.m.wikipedia.org/wiki/History_of_money

Debt is deeply rooted in economics and funny money historically. Anyway, the money system will be over rather soon I bet To give some more tasty meat to the topic:

" 11.6.2018 - Global debt hits a new record at $247 trillion"

https://www.cnbc.com/2018/07/11/global-debt-hits-a-new-record-at-247-trillion.html

And rising

[gerontocrat]

Anyway, the money system will be over rather soon I bet

When there is specialisation of labour, inevitable when people start to live in large groups, barter becomes too complex to work well. E.g. picture a reasonably sized village with a blacksmith, a baker, a candlestick maker, a weaver, a fisherman, a farmer, a butcher, a priest (or wise man). Now try and make barter work.

And there are always those who spend less than they earn, and others who spend more than they
earn. And so lending and borrowing begins. And now the Law of Entropy kicks in, which basically says that everything tends to disorder, and itself creates increasing complexity. The complexity of borrowing and lending systems quickly increases.

An occasional hobby horse of mine is that this applies to everything we do. Back in 1981, Microsoft's MS-DOS program was so simple that a good programmer could understand it all. Today, no-one really knows Windows 10. Not surprisingly, faults appear with frequency.

Today the lending and borrowing systems are so intertwined globally that no-one really knows what is going on. Chaos theory has a chance to work in practice. Hardly a surprise when disorder and calamity breaks out when a parameter, e.g. economic growth, changes substantially.

One of the many big ideas in physicist Sean B. Carroll’s The Big Picture: On the Origins of Life, Meaning, and the Universe Itself is the concept that entropy can drive increasing complexity. In fact if our universe did not have increasing entropy as one of its fundamental components, we would not have the complex world we see today, including you and me.

Entropy can't be reversed - if you reverse one bit, disorder and complexity break out elsewhere. When you make hydrogen and oxygen from water, you use up vastly more energy than the potential energy created, and have made complex systems and machines to do it.

People have tried to group themselves into communities where self-governance is a form of "to each his needs, from each his ability". So far it has not gone well. The end result is usually confusion, disorder and complexity.

To summarise -
- Homo Sapiens is stuffed. We are already banking on AI to handle the levels of complexity we can't deal with, thereby multiplying complexity which will require even bigger AI brains to handle it.
- any attempt to put order back into lending and borrowing will end up with even more complex systems being invented (as has happened since the 2008-2010 crash).

And that's all I'm going to say about that

https://medium.com/@marktraphagen/entropy-and-complexity-the-surprising-paradox-behind-our-universe-60f11409da9b

[Nemesis]

Ah well, god is on your side at least 

[etienne]

A good few analysts, (including me) think that most of us will be in a real-world test bed to see what happens to "debt in a decreasing economy" over the medium-term.

I agree, it's why I opened this topic.
The french Newspaper "Le Monde" has an interesting article (in french) about mental health of climate scientists, that it is difficult for them to see what's coming, many would suffer of pre-traumatic stress disorder.
https://www.lemonde.fr/m-le-mag/article/2018/12/21/les-climatologues-ont-le-blues_5400708_4500055.html
The debt is also a topic where the disaster is fully predictable.