David Korten: A System Designed to Crash

[marmar]

from YES! Magazine:



A System Designed to Crash
David Korten on why a money system dependent on constant growth can't last.

by David Korten
posted Mar 21, 2011


The unrealistic expectation that money should grow effortlessly in perpetuity is more than an issue of unrealizable expectations. It combines with a Wall Street controlled debt-based money system to create an imperative for the economy to grow the profits of bankers, and thereby the richest among us, to keep the financial system, and thereby the economy, from collapsing.

It is odd that we experienced a financial collapse in 2008 because of a credit crunch, a shutdown on lending, at a time when the world was already awash in money. BusinessWeek’s July 11, 2005, cover story shouted “Too Much Money” and spoke of a savings glut. Its June 11, 2008, European issue reiterated the theme: “Too Much Money, Inflation Goes Global.”

Most discussion of the financial crisis focuses on the details and misses the big picture. First, much of the money was tied up in the Wall Street casino rather than facilitating productive activity in the real economy and was simply pumping up a phantom wealth bubble. Second, virtually every dollar in the system was borrowed, because in our money system, banks create money by lending it into existence. When this debt is used to inflate financial bubbles and support Ponzi schemes, eventual default is inevitable.

Third, Wall Street and the Federal Reserve are joined in an alliance to keep “wage inflation” below the level of growth in the real cost of living. This assures that the benefits of productivity gains all go to owners rather than being shared with workers. It also keeps inflation confined to financial bubbles that inflate the phantom wealth financial assets of the rich. ...........(more)

The complete piece is at: http://www.yesmagazine.org/blogs/david-korten/a-system-designed-to-crash

[Demeter]

1. Too much paper, too much hoarding of wealth

not enough common sense or common humanity.

[WingDinger]

2. Wrote a song about it, and it goes like this

http://journals.democraticunderground.com/WingDinger/11

[girl gone mad]

3. This was a pleasant surprise..

a writer who understands how modern money works:

"virtually every dollar in the system was borrowed, because in our money system, banks create money by lending it into existence"

ETA: Galbraith wrote that this concept is so simple that most people instinctively reject it.

[formercia]

5. The bank loans you funny money to buy a house

Then they foreclose, leaving them with real assets, derived from money that exists only on paper.

[yurbud]

6. once I heard about this, I couldn't believe they're allowed to charge interest on top of that

If you only paid back the principle of the loan, apart from the small administrative cost, every penny would still be profit.

They loan money they don't have, and we repay it with money we actually WORK for.

[applegrove]

4. Excellent article. Thanks for posting.

[bertman]

7. Excellent primer. Thanks, marmar. REC. nt

[freshwest]

8. Thanks for bringing this here.

I read some of his writings a few years ago and saw some youtube videos posted about an opposite way of looking at organizing creativity and wealth, the emphasis on people.

He described an inverted pyramid instead of what we have now. He has unusual insight with refreshing new ideas.

YES magazine is always uplifting. Go and type 'david korten' into the search function at youtube and see his ideas on leaving this corporate system. 'The Great Turning' is the one I saw some time back. Great stuff, I think.