Who knew?The Real Reason the Economy Must Grow like a Tumor
My sister and I are like clones of one another. We know what the other is going to say before it’s said. We laugh at the same things. In fact, we laugh the hardest with one another. Our beliefs are nearly identical, and we hold the same values.
Except in one area. My sister cannot fathom my fascination with money. Why would I want to be a money coach? It is beyond her. Money is so boring! There are so many more important things to think about.
Until the other day. We were talking politics again, and ended up on a discussion of big corporate chains and the loss of unique little shops in both of our neighborhoods.
I started to tell her about my recent discovery related to the growth of corporate chains, and why such growth was necessary. I had always wondered why the economy needs to grow continually. What else in nature grows without stopping? The only answer I could think of was cancer.
So how could it be healthy for our economy to grow forever?
It just didn’t make sense to me.
Then I found Bernard Lietaer and Charles Eisenstein – writers about the “new economy.” They were finally able to answer my question about growth.
And this is it: the reason we need continual growth is because of interest charged on everything and how this system of lending really works.
Did you know that the majority of the cost of everything we buy consists of interest? Say you buy a winter coat. The retail store is paying interest on its loans; the truck company that delivered the coat to the retailer is paying interest on their loans; so is the company that sews the coat, the company that makes the buttons, the textile company that dyes the wool, and the farmer who raises the sheep.
Everyone pays interest, and that gets passed on to the buyer (that’s us!).
And here’s what I found beyond belief. When the bank lends the money, the amount of the loan is “created.” But the interest to pay back the loan is not created. Therefore, the economy must grow so that the businesses who borrow money can pay back the loan and the interest.
In other words, when lenders charge interest (BTW, called “usury” in the past, and illegal!) we create an economy that must grow.
So what? you might say. Why should I care about this? How does it affect me?
I’ll answer with some questions:
Do you care about the environment and preserving it for your children and grandchildren? The constant need for growth is rapidly ruining the environment! When we live in a system that requires growth in order for businesses to succeed, then cutting down the rainforest becomes more important than preserving it.
Do you see yourself as a “socially conscious” entrepreneur or consumer, part of a “new economy” that is less about competition and more about compassion and sustainability? Our current system of lending and interest actually creates competition and scarcity in our economic system. If the economy doesn’t grow at all or doesn’t grow enough, then not all the borrowers will be able to pay back their loans + interest. Only some of them will. Which means there is only enough room for a certain number of businesses to succeed, and the rest must fail. It doesn’t matter how much we want to create something different, as long as we are entrenched in the current system, it will continue to be a scarcity and competition system.
Do you believe that all people are created equal and that there should be equal opportunity for all? Our current interest-charging system encourages hoarding of money by those who have it. When they can find a business that is not too risky to lend to, then they lend or invest, and make more interest, and now have more money. And guess who pays the most interest? Yes, the poor. The poorer you are, the more you will pay interest versus earn interest. The end result is the concentration of money into the hands of fewer and fewer people, which is exactly what we are seeing in our global economy. The rich keep getting richer and the poor keep getting poorer. This, too, is built into the system.
In short, our current economic system requires destruction of the environment, competition, scarcity, and concentration of wealth into the hands of the few. No matter what else we do, our economy will support these things, as long as we stick with the current system.
After I told my sister about this, she was incredulous and stated, “I had no idea.” To which I replied (Oh, wonderful, opportune moments!) “That is why money is interesting, and why we need to understand it!”
If we (the women of the world, the environmentalists, the believers in social justice and equality) are to “change the world” we must first understand how it currently operates! Then, and only then, can we find ways to change it.
And then you know what happened? My sister asked for website names and more information about our economy. Miracle of miracles!
Don’t despair, there are already movements afoot to change the growth system that is eating us alive! To find out how you can support a more healthy economy, go to www.denvermoneycoach.com/healthyeconomy/.