The debt based Economy

[mu_enrico]

So if we change the system that money will be not Born from the debt?
What will be other way then?
And how it will be controlled how much money is given away to people to use it.

Laissez-Faire plus going back to commodity money?

On this Rothbard wrote,
In contrast to directly used consumers' or producers' goods, money must have pre-existing prices on which to ground a demand. But the only way this can happen is by beginning with a useful commodity under barter, and then adding demand for a medium to the previous demand for direct use (e.g., for ornaments, in the case of gold). Thus government is powerless to create money for the economy; the process of the free market can only develop it.

https://mises.org/library/how-does-money-acquire-its-value

[bearexin]

Well, if you have a limited amount of money and there is no more new money, there is only one option left, the rich will have to share, because there are no more money that we could create and print, which means poor who have nothing will require to get money somehow, so if they keep working they will get the money from the rich who will pay their salary and if they do not have any left at the end of the month they can't spend it on new iphones and big Samsung tv's and so forth, that is why everyone will be a bit more "poorer" in the general sense but the gap will close and everyone have a bare minimum amount of money instead of right now where people who keep getting poorer because dollar loses value while rich people get more of it at faster rate whereas poor people get lower rate of it.

[Sanugarid]

Let's go back in the past and just do barter. You pay what you have in exchange for the things that you are about to get food, water and other necessities. It's real-life trading of goods and services you have for another goods and services that you want.

Going back to the old way of buying and selling goods, barter, will be chaotic. It is simply as decentralization in disguise coz there is no regulation on the value, like some values the rock more than the metal and they would not trade it unless you doubled what metals you got. Barter won't do so much now, as much as I think of it, it is very problematic. There will be a lacking of measurable common value.

But, I still can see that debt could start out with that kind of economy. Changing the system will require you tremendous resources and power. There's no coming back and this kind of economy will remain.

Changing or restarting the system will so much, the government knows it, coz if it so easy to fix things in the system they could have done it a decade before so they could avoid financial and economy problems. Huge and wealthy countries might cope up easily but those poor countries, like mine, will get poorer.

[Shasha80]

Most of the countries in the world have a debt-based economy, this can be a good thing if country have good governments too.
But the reality is that the corruption rate is quite high in various countries. This make debt-based economy comes at risk,
if the government is not good at managing state finances, the citizens who will become victims of course.

[Wapfika]

Most of the countries in the world have a debt-based economy, this can be a good thing if country have good governments too.
But the reality is that the corruption rate is quite high in various countries. This make debt-based economy comes at risk,
if the government is not good at managing state finances, the citizens who will become victims of course.

We we're experiencing it in the previous administrations, even no matter how good our president is now. There are too many flaws and debts left by the previous administrations that didn't been take care off and feel by the citizens. Now all the blames of having too much debt were put into the present administration were in fact it can only be seen before the pandemic how good in performing the economy been and improving. This Pandemic our country were put in a much debt to be avail to provide foods and supplies to more needy.
There should be a proper allocation of money, be transparent to their people and no corruption to provide better service for their countrymen.

[webtricks]

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For DeFi, which in reality, are only experimental cryptocurrency-play-things and glorified Ponzi Schemes, it's OK. But for actual central banking, and monetary issuance? I believe it just adds complexity, but with little added benefit.

Although, I'm not an economist, I'm just a pleb. Hahaha.

You are right about DeFi. Decentralization has both benefits as well as drawbacks. At one side, DeFi allow us to create modelled economic functions like borrowing/lending, market operations, etc and commit the rules to blockchain via smart contracts so they work as defined no matter what. But at the same time, blockchain is heavily abused by spammers/scammers who create good-for-nothing contracts in order to earn quick bucks and there is no way to stop them because blockchain is decentralized.

Same happened to Ethereum chain is 2017-18 when `ICO Boom` over-glorified Ethereum but that didn't end well. We do have some great projects which used ETH ecosystem to create big Business Value (BV) by tokenizing valuable assets or services. One great example is DIGITAL GOLD, the project which has successfully tokenized gold on ethereum blockchain and maintaining par-value with real world gold.

However, problem initiated when people started promising `stars and moon` on-chain and diluted ICO/tokens market. Same is happening with DeFi. YAM token is one great example.

[yhiaali3]

In my view, a debt-based economy is possible for people only, but for states and governments, it does more harm than good. For people on the individual level, you can build your own business through debt, achieve success and profits, then pay off the debt and end your problem.
As for countries, the matter is completely different. In my opinion, a debt-based economy cannot succeed, perhaps achieving some successes in the beginning, but in the end it must end in failure and the debtor's subordination to the creditor state, this matter will reflect on politics and the state will become non-sovereign as a result of its need for loans continuously.
In fact, you can see a lot of countries that are economically booming but they are really not fully sovereign because their economy is based on debt. A fully sovereign state must rely on its own resources and be able to make its decisions without any external pressure as a result of debt or anything else.

[EthanDavis1992]

The issue with being in debt with other countries is huge risk. When one country has financial issues, everyone is effected. The main problem I'd say is that the global economy has forgotten what independent country economies are. One country depends too much on another and so on. Perfect example not too long ago: USA and China. One simply can't live without another.

I'd say we have to go back to industrialization and more physical jobs than just relying on services. When the economy weakens, services aren't that needed. The more basic needs and products become important. People tend to save on psychologists for example since it's not their first need.

Countries have to be absolutely more self-determined. Maybe going back to gold and other truly existing currencies (most money on the market doesn't even exist) will make things develop at a slower pace, but definitely makes it safer. Looks what Corona has done to the global economy...

[iyamoxjhian]

if a country will be debt free economy then it would be a happy life.. we can enjoy goods and services and benefits from the government. and less corrupt people in the position.

[ADLANE33]

So if we change the system that money will be not Born from the debt?
What will be other way then?
And how it will be controlled how much money is given away to people to use it.
This Question is specially for those who is against this debt based economy?

the problem it is not controllable in general. anyone who is going to claim opposite is just trying to put economy in a shitty place.

[AicecreaME]

In the future it might be better if the money is not from debt. Money may come from services performed, such as miners, who confirm every transaction and get the reward. and all of that is not controlled because of decentralization.

I don’t think some time in the future debt would be totally eliminated.

Debt is plays an important role to the economy. There will be times that a country will need more funds to build infrastructures and to sustain some developmental projects. The government would then have to borrow for the operations to start. Same goes with big and small enterprises. These businessmen tend to borrow money from the banks to improve and to expand their businesses. They allot their funds for the betterment of their establishment to gain profit. And the list goes on and on.

You see, there are good debts and bad debts. What should be done here is not eliminating debt, but spending wisely the money you borrowed to turn it to be a good debt. In addition, one must pay on time to avoid unnecessary accumulated interest rates and to retain your reputation as well.

[tbterryboy]

There is truth behind debt not being needed the way we use it and not how it should be given away as well. Right now debt is not given how it should be, banks provide the governments with how much default rate they have and when they get under certain levels they actually do end up with making as much profit as they can with as little amount actually getting out of their vaults as possible.

When you move your money from one bank to another bank, do you think they actually carry that much cash from one bank to another? They just exchange ledger and that is it, which is the problem here, cash is no longer really a matter to them. Plus people are taking out loans or maxing credit card to get the latest iPhones or whatever, that is not what a debt should be about at all, it should be about getting better, and a new phone doesn't make you any better.

[Ucy]

You mean money lend to individuals or governments borrowing money?
Anyway, I think the huge debts are not that necessary. Lots of the things I see governments or people borrow money for can be done without the borrowing atall. Unfortunately we all share in the government debt (including those who normally dislike debt or hardly borrow individually), even when we don't benefit from it.

[Wind_FURY]

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For DeFi, which in reality, are only experimental cryptocurrency-play-things and glorified Ponzi Schemes, it's OK. But for actual central banking, and monetary issuance? I believe it just adds complexity, but with little added benefit.

Although, I'm not an economist, I'm just a pleb. Hahaha.

You are right about DeFi. Decentralization has both benefits as well as drawbacks. At one side, DeFi allow us to create modelled economic functions like borrowing/lending, market operations, etc and commit the rules to blockchain via smart contracts so they work as defined no matter what. But at the same time, blockchain is heavily abused by spammers/scammers who create good-for-nothing contracts in order to earn quick bucks and there is no way to stop them because blockchain is decentralized.

Curious. "Smart contracts", for the the layman, is really just "automation". Is there a real need to "decentralize" it, and make it unstoppable from human intervention?

I believe the DAO was an example that it shouldn't.

[Assface16678]

I think if the money does not bear we are focusing on the rocks, gold, copper, steel, silver, and more with the old age because this is the common thing we are using at the oldest years also could be possibly the use of the trading of items.

If those are already passed away and we are on the modern age I think we are now focusing with the digital currency or more on the online payment or cardless payment which is a good thing too because it's less hassle and doesn't have any physical money related also right now we are using this online payment and I think the bitcoin will become one of the most popular coins among all thing.

[jaysabi]

So if we change the system that money will be not Born from the debt?
What will be other way then?
And how it will be controlled how much money is given away to people to use it.


This Question is specially for those who is against this debt based economy?

Money is a manmade construct and it doesn’t exist except as an arbitrary concept. There is no such thing as a medium of exchange in nature, it has been created as a necessity to live in an organized society as a means of making cooperation easier. But as a made up construct, the idea that money created out of debt is bad is false. There’s nothing inherently bad about that. Deflationary currencies will never be the future. They’re too restrictive for a growing and well-functioning society. The money supply has to expand to accommodate a growing consumer base otherwise there is pressure on decreasing economic activity over time. There’s a reason we left the gold standard.

[lepbagong]

So if we change the system that money will be not Born from the debt?
What will be other way then?
And how it will be controlled how much money is given away to people to use it.


This Question is specially for those who is against this debt based economy?

Money is a manmade construct and it doesn’t exist except as an arbitrary concept. There is no such thing as a medium of exchange in nature, it has been created as a necessity to live in an organized society as a means of making cooperation easier. But as a made up construct, the idea that money created out of debt is bad is false. There’s nothing inherently bad about that. Deflationary currencies will never be the future. They’re too restrictive for a growing and well-functioning society. The money supply has to expand to accommodate a growing consumer base otherwise there is pressure on decreasing economic activity over time. There’s a reason we left the gold standard.

In terms of development to advance a company, there is no way that can be done if you do not have the capital to expand. debt is capital to make economic improvements in order to run the wheels of production by making a profit and being able to pay debts. there's nothing wrong with getting into debt for good and it's used to being done and it's not a strange thing in the economy.

[jaysabi]

So if we change the system that money will be not Born from the debt?
What will be other way then?
And how it will be controlled how much money is given away to people to use it.


This Question is specially for those who is against this debt based economy?

Money is a manmade construct and it doesn’t exist except as an arbitrary concept. There is no such thing as a medium of exchange in nature, it has been created as a necessity to live in an organized society as a means of making cooperation easier. But as a made up construct, the idea that money created out of debt is bad is false. There’s nothing inherently bad about that. Deflationary currencies will never be the future. They’re too restrictive for a growing and well-functioning society. The money supply has to expand to accommodate a growing consumer base otherwise there is pressure on decreasing economic activity over time. There’s a reason we left the gold standard.

In terms of development to advance a company, there is no way that can be done if you do not have the capital to expand. debt is capital to make economic improvements in order to run the wheels of production by making a profit and being able to pay debts. there's nothing wrong with getting into debt for good and it's used to being done and it's not a strange thing in the economy.

Yes, this is my point. “Capital” is a manmade construct as well. It’s just another word for stored value. Value/money is made up. It’s a consequence of man’s ability and need to plan for the future. Things have value because we anticipate needing them in the future. Capital is just things we’ve acquired of value. But the value is represented in dollars so we can all trade our valuable things in the same medium. But there would be no reason for me to give you my capital if I was not expecting something back for it. That’s the essence of debt. I give you capital, you use it to start a business and create more value INT he World, then you pay back my capital with interest from the proceeds of the new value you created. There’s nothing wrong or bad about this.

[amishmanish]

Curious. "Smart contracts", for the the layman, is really just "automation". Is there a real need to "decentralize" it, and make it unstoppable from human intervention?

I believe the DAO was an example that it shouldn't.

The way De-Fi is working on all of these platforms is that you stake or lock your tokens in their contracts on the ethereum blockchain. The contract then allows borrowers to take loans and pay interest on it. The value of the liquidity that lenders provide to contract is balanced automatically based on data obtained from exchanges. Traders who will jump at any arbitrage opportunities ensure that the "pegs" are maintained.

In a way, this does provide a kind of bank on the blockchain into which you can deposit money and from which you can borrow money. It is decentralized so you aren't actually trusting anybody except the robustness of the code itself. The problem is that even for a simple implementation, the transaction costs and time becomes too steep for any PoW chain (Like ETH in this case). If instead PoS is used, it becomes a whole new question of whether it is decentralized anymore. What really happens in practice is that any small player is driven out simply on the basis of transaction fees. It ends up as nothing but a place for price manipulation and arbitrage milking for whales and traders who are expert at this sort of thing.

To answer your question, yes, there is a need to decentralize. But, there isn't yet any way to do it without these other pitfalls which make the whole system pointless.

[mung_nasib]

the impact of someone who will commit debt is likely to be ready to accept the form of the risk but with the confidence to be able to achieve successful people this method is usually by setting up a business to try to earn income every day.