The economic system is at war with the environment

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I am concerned that so few environmentalists understand the connection between the environment, resource depletion and the economy. 

The economy has a built-in growth imperative. The economy must either grow, or it collapses. Why does this happen? Because we allow the bulk of our money to be created by commercial banks as interest-bearing debt. (Even our own Reserve Bank has belatedly acknowledged this. In their article on money creation, they state, “The vast majority of money in circulation is created by commercial banks, through the process of bank lending”). 

Banks create the money to pay back the debt but they don’t create the interest. So when the debt is paid back with interest there is not enough money in the system to allow everyone to do this. Therefore someone must go into more debt. This has two effects: it widens the gap between rich and poor (net lenders and net borrowers) and it expands the total money supply. 

If you didn’t fully understand this first time, Bernard Lietaer spells out the story of the Eleventh Round here. An easy clear read.

And of course it means that banks have dangerous power over what is mined, grown or manufactured.

Nowadays with resource depletion of fossil fuels, it takes more energy to get energy. So we have progressively less net energy year on year available for the economy. Remember that economic growth and energy growth go hand in hand. There is a close correlation. So because we have less net energy, for the last few years there have been progressively lower rates of economic growth.

This in turn leads to desperation from right-wing politicians who want the economy to expand faster, no matter what the consequences. (And that is leading to far-right dictatorships becoming increasingly common.)

But can the global economic system known as capitalism be reformed?

Recently Ted Trainer published a 22p critique of the degrowth movement in which he argues that the answer is no. Capitalism can’t be reformed. It’s too hard.

This article changed my thinking. 

I know very few people like to explore the money supply part of the economic system, and that the very word “economics” tends to turn a great many people off. But academics here who are also environmentalists surely can understand this explanation. No equations are necessary, just the simple story of the Eleventh Round.

All this of course makes me very depressed. The actions of our change of government demonstrate this trend.

Is there a solution to inflation?

FacebooktwitterredditpinterestlinkedinmailIn July 2022 New Zealand inflation hit 7.3%.  It was worse in some other countries. Both US and UK were at 9.1%. In US 85% thought the economy is getting worse, a figure that should make us all think hard.

The usual solution to inflation is for the Reserve Bank to raise interest rates, but we will never win this way. Inflation is here to stay until we see the light regarding currencies. This at least will resolve food price inflation to some extent. Continue reading “Is there a solution to inflation?”

Welcome to a baby born at 416ppm CO2 and overshoot

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Welcome to a baby born at 416 ppm CO2 on the day that COP26 was meeting in Glasgow. This was said to be the last chance to turn around runaway climate change. Mind you they said that last time and the time before.

Continue reading “Welcome to a baby born at 416ppm CO2 and overshoot”

Re-localisation includes local currencies and local banking

FacebooktwitterredditpinterestlinkedinmailIt is not uncommon these days to see advertisements urging us to buy local because local shops have done it hard during the Covid-19 lockdowns. This sentiment used to be confined to the Greens and the new economics groups, but it is now widely accepted. Continue reading “Re-localisation includes local currencies and local banking”

New Zealand’s agricultural emissions are high

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Nearly half of New Zealand’s emissions are from livestock. A shocking 46.1% for the year 2012 as calculated by the Ministry for the Environment. (MfE). A large proportion of this comes from beef and to a less extent sheep. The MfE paper tells us tells us that in 2012 we had 6.4 m dairy cattle, 3.8m beef cattle, 3.1 m sheep and 1 m deer. So a total of 14.3m ruminant livestock. Continue reading “New Zealand’s agricultural emissions are high”

Time to halt privatisation of high country

FacebooktwitterredditpinterestlinkedinmailAlthough about a fifth of the South Island high country is owned by Government and leased out to runholders, this is changing. Since 1992 the Government has allowed the privatisation of leasehold land. Called “tenure review” it involves an unusual deal and the government loses. The runholders because of their input into the farm claim the improvements belong to them. They end up getting part of the farm for a song. No I am wrong – they sometimes make money on the deal by a strange mechanism. And then they flip it on, making millions in the process. The less valuable land is kept for conservation. There is something strange about the land valuation process. Continue reading “Time to halt privatisation of high country”