And yet another reason why your kids should never, ever blindly trust authority.

Ever wonder why the media, community leaders, all the presidential candidates, the neighbors and your Uncle Billy all robotically worship “economic growth”?

Of course not; you’re human. You never question the consensus. In the warm, sweaty grasp of the group lies your safety (so says your herd-brain).

All your life, you were conditioned to it by repetition. Well, why is it that we need growth? Are we a cancer on the Earth? The pessimists among you hear bells… cancer it is, Alex!

The reason we “need” this economic growth is that our money system requires it. It’s a feature built into the way we organize.

Forget that perpetual growth on a finite planet is impossible, a terrible proposition slowly suffocating other forms of life. To economists, the environment doesn’t even exist. It’s merely a function of capital.

These blowhards also believe that people are perfectly rational in their decision-making. Has there been a foolhardier pseudoscience?

Even bad Facebook marketers know how irrational we are. They master it merely by A/B testing emotionally-charged headlines with the right words and phrases to carry you carefully through a sales funnel, dancing to the tune of their fiddles like Pied Pipers drawing rats to their drowning.

Meanwhile, the economists who run the world A/B test nothing empirically, using only theoretical models — spreadsheets and hubris — to tinker blindly with your ability to feed and roof your children.

The Flaw in our Construct

Here’s the deal, Daniel-san. It’s time to understand why you’ve been waxing Mr. Miyagi’s collection of old cars. Each dollar in existence is (and in our current system, can only be) created as a loan.

The first dollars are created when the Fed buys bonds (loans by another name), and the rest are created in a process called “fractional reserve banking”.

You make a deposit at the bank, they keep only a small fraction (10% or less), lending the rest back out to the world, nearly doubling the money supply with the stroke of a pen. That money is deposited in other bank accounts and lent out again and again (increasing the money supply by a factor of nine).

All these loans, the government bonds, the consumer loans, the business loans, the student debt, all created with new money, and all call for re-payment of principal plus interest.

The need for more dollars tomorrow to cover the principal plus interest necessitates economic or “GDP growth”. It’s for this reason that your family – all families — are goaded into debt, to ensure the creation of new money (growth) through borrowing. No money down, no payments for six months!

Come on down, folks, step right up!!

If we don’t have perpetual GDP growth (on what is an increasingly small planet, relatively speaking), the loans cannot be repaid, causing wealth to vanish.

Assets – bonds, credit-backed securities, and the equity of companies that own them – are wiped out in a cascade of failures and bankruptcies, leading to unemployment, recessions, and depressions. It’s a domino effect called “debt deflation”. Economists and politicians see it as the boogie-man.

The problem is that we are nearing the limits to what corporations, governments, and individuals can borrow, with interest rates already nearly at zero.

We are approaching the end-game, the day of reckoning.

The Fed itself has just admitted failure in its attempt to normalize rates, reversing course last week. Markets are reeling as they begin to smell fear like a wild, hungry dog.

Where to from here?

Our leaders, they must know what they’re doing, right?

Sadly, it matters little, Daniel-san.

Some (most?) are clearly clueless, while others may understand it, but are just trying to hold it together long enough to retire comfortably or siphon off truckloads of cash and escape to New Zealand.

Whether they discuss this predicament in varnished conference rooms over dessert trays or not, the ones who do get it understand there isn’t any way out without massive pain, either through debt-deflation (like the Great Depression), or currency destruction via hyperinflation (like Venezuela).


The only strategy – if there is one – would be a large, controlled inflation (i.e. confiscation), where every dollar loses at least half it’s purchasing power over the next 10 years.

It’s how they reset the system in the 1970s, and 1930s.

That’s our best-case scenario to avoid a total collapse. The pain is spread evenly across enough who are unprepared if and only if the maestros can dance gracefully on the head of a pin.

After all, the money system doesn’t care about the purchasing power of the new dollars, only that there are many more tomorrow than there are today.

Why isn’t this discussed in the debates?

They can’t talk about this, because you’ll not sit quietly around and take it in the backside. You’ll get out of your dollars and into gold, real estate, swiss francs, or even Bitcoin.

They can only lie or distract; race-baiting and finger-pointing are quite effective, keeping you confused and complicit while they steal what little your family has scrimped together.

And thus, the leaders you love (or patriotically grin-and-bear), the ones lined up to walk you hand-in-hand to the promised land of hope, change, to make America great again…

They can only stand in one of two camps: The first is ignorant, blissfully unaware, and the second spews lies through their freshly whitened teeth.

Camp Clueless and Camp Evil overlay both parties, republicans and democrats in each, buzzing around, stuffing their honeycombs and preparing only for reelection.

We cannot raise children to trust them blindly. Children must question authority.

This predicament we’re facing… it feels like a ton of bricks, no?

It need not, friend. Consider the alternatives to being alive and informed, as you are now. Consider this the first day of the rest of your life.

Join us, as we tackle it with a smile, relishing the fleeting moments we share, the laughter of children at our back, and a stiff drink for courage.


Want more like this? Try Debt and the Marshmallow Experiment.