Gavin Andresen - 2010-11-29 01:12:42

I saw a version of this at a presentation of a local "time dollars" group... and I think their arguments go wrong at a couple of places.

First, wealth creation is limitless (we continue inventing more efficient ways of doing things and new things to spend our time and money on), so it's simply not true that an ever-increasing money supply (created via debt) is unsustainable.  If there was some way of pegging the creation of the 'right' amount of money to the overall amount of wealth being created, then we'd get stable prices and the 'right' level of investment.

And second, the argument is that the system is stacked against the borrower-- that it is designed so that there's never enough money for everybody to pay off their debts.  So if I WANT to pay back my debt, I'll find out there's a money shortage, and I won't be able to.

That ignores the fact that I can walk away from my debts via bankruptcy.  And the fact that many loans are secured with some form of collateral, which lenders accept in lieu of cash.  Borrowing/lending is not an entirely closed system, and, ideally, lenders have to be smart and fund borrowers who are creating real wealth.