Growth, growth, growth

For as long as I can remember we, as a nation, have been told that we have to grow our economy or, presumably, we are doomed.

Sometimes we get it right, sometimes we don’t.

But, generally speaking, most of us couldn’t care less about the nation’s growth prospects providing our little part of the world continues to function.

There is such a disconnect between the political/financial system, why should we care?

That is the part of society we cannot influence even though we pretend we can every three years or so.

Well, some quiet reading of a book that has been lying on our coffee table for a while finally explained why the powers that be are so besotted with growth even though continuing to grow forever in a finite world is simply not possible.

When we deposit money in one of the big Australian banks the money used for the deposit certainly exists.

Someone then applies to the bank for a loan.

The bank then ‘‘creates’’ the money required for the loan out of thin air using the deposit as collateral should something go wrong. New money is thus created, inflating the money supply and coupled to the new debt represented by the loan.

There is no downside to this part as long as the loan is repaid in full.

Unfortunately the bank charges interest on the loan but no money has been created to pay the interest.

This has to be paid by increased productivity within the country, read sweat and labour, or by borrowing from overseas; essentially using foreigner’s savings.

This is the growth they keep banging on about.

If our productivity remains stagnant we have to borrow or import the growth through immigration which, for all its positives, and there are many, also creates pressure on our teetering infrastructure.

Now you know why our political class want low to zero interest rates and have to use smoke and mirrors when letting millionaires slip past the immigration ramparts designed to keep ruffians beyond the castle walls.

It is their unencumbered money they want or, in reality, need, to ensure there is enough money in the system to pay all the interest.

Unfortunately, some of it ends up in the home of the big banks, Australia. Geoff Orchard, O¯ haupo¯

DOMINICO ZAPATA/STUFF Moore-Jones, after serving as a mapmaker and artist in WWI’s 1915 Gallipoli Campaign, became the first art teacher at Hamilton High School, and Boys High students crafted the commemorative seat. The bronze rests atop a block of stone gifted by Turkey from the Gallipoli battlefields.