No Growth Economy

[ziggy12345]

I think we can all see what’s happening at present with business as usual being shawed up by debt and any perceived growth being wiped out by a stock market or currency collapse. This growth-collapse cannot continue for much long before most people realise that the economic model based on growth is no longer viable.

So what happens? How do we get from where we are not to where we will have to be in 10-15 year? can we leave it up to "the market"? I don’t think so.

QE3 is now under way in Europe and USA. Will this lead to hyperinflation? What about the Dollar? gold prices etc...Can the stock market exist?

Comments?

[Lord Beria3]

1) We will see a partial collapse of the globalised free market system on finance and trade and a shift into protectionist trade blocs with the miltarisation of the global energy system.

2) The above will involve more authoritarian regimes, including in the West. This era is about managing decline and Scarcity Industialism captures it well.

3) I'm sure that the powers-to-be will go down further QE in a desperate attempt to save the current system. It won't work and will create powerful inflationary pressures on the globe - whether it leads to hyperinflation or just inflation is difficult to say, but eventually the fiat system will collapse and some kind of gold standard will return.

Stocks will continue to exist - but as whole sectors of the economy contract, stocks in those areas will collapse. Other areas will do better, mining, agricultural shares and so on. Anything which is based on a 'real' productive asset basically.

On that note, there is nothing wrong with owning gold mining shares. Its not just paper. Very few of us can actually own a gold mine - but owning shares in a gold company which mines gold is a easy way to buy 'a bit' of a gold mine.

I recommend it.

[AutomaticEarth]

I was just watching BBC News 24, and they were talking about the governments fears for slowing growth, and the the fact that Italy will be difficult to bail out.

The commentator was saying that 'it's very difficult to see where growth is going to come from, given the precarious state of the developed world's finances and the relatively high prices of commodities'.

I was thinking 'no sh*t Sherlock, come to Powerswitch and have a read, pretty much all of us have been saying this for ages...'

[madibe]

AutomaticEarth +1

[emordnilap]

I'm getting pig sick of hearing the damned word. What's wrong with 'enough?'

[UndercoverElephant]

I think we can all see what’s happening at present with business as usual being shawed up by debt and any perceived growth being wiped out by a stock market or currency collapse. This growth-collapse cannot continue for much long before most people realise that the economic model based on growth is no longer viable.

So what happens? How do we get from where we are not to where we will have to be in 10-15 year? can we leave it up to "the market"? I don’t think so.

QE3 is now under way in Europe and USA. Will this lead to hyperinflation? What about the Dollar? gold prices etc...Can the stock market exist?

Comments?

Your questions seem to assume that there is a coherent "we" that has a choice about whether or not we can leave it up to the markets to sort the problem out. What's actually happening is that the ability to arrive at a consensus decision is becoming much harder, especially higher up the power-scale. That's why the EU and US are now both in deep political crises.

I think we are going to see the process of globalisation going into reverse, although less certain than Beria about what will happen next.

Hyperinflation can only happen if wages follow prices up, there's no sign of this happening and there are reasons to believe that it may not happen at all. If everybody is terrified of losing their job, they are more likely to accept a pay cut than demand rises.

What I am absolutely certain about is that the fiat-money financial system that came into existence in 1971 when Bretton Woods could no longer be held together is itself now fatally-compromised. Bretton Woods fell apart just before the US passed its own peak oil, and it did so because an increasing number of foreign holders of US dollars were asking to turn their $35 into ounces of gold. It fell apart because the US, which already had an unfair economic advantage over everybody else, could no longer afford to back its currency with gold. It wasn't planned or negotiated with other countries. It was a unilateral decision taken by President Nixon in response to the threat of financial catastrophe for the US. Since then the system has sort of evolved on its own. The banksters were allowed to make their own rules up.

How do we get from here to "where we will have to be" in ten years time?

We have to wait for the system to fall apart however it is going to fall apart, and we have to do our best to get as many other people as possible to understand what is really happening rather than the disinformation they will no doubt be being fed. We have to hope that democracy does not fail in the UK and that at some point there will be a public acceptance of the fact that our financial system is broken and will need to be radically changed. There then may just be a window of opportunity to influence what comes out the other end of this transition.

People don't usually fundamentally alter their views about things without experiencing some sort of major psychological shock. Those shocks are surely coming. There is going to be a lot of confusion.

[emordnilap]

People don't usually fundamentally alter their views about things without experiencing some sort of major psychological shock. Those shocks are surely coming. There is going to be a lot of confusion.

Fingers crossed it doesn't go down a 1920s/30s German route...

[UndercoverElephant]

People don't usually fundamentally alter their views about things without experiencing some sort of major psychological shock. Those shocks are surely coming. There is going to be a lot of confusion.

Fingers crossed it doesn't go down a 1920s/30s German route...

I think that fate can be avoided, although there's no guarantee that the alternative won't be even worse.

I think the only hyperinflation we are going to see is that of gold (and possibly some other valuable, non-consumable physical assets) priced in fiat money. Most other goods will just get steadily more expensive whilst wage rises are mininimal or going backwards. What I'm less certain about is how the price of property will be affected. There will be upward pressure because of the currency devaluations, but the only people who will be able to buy property will be those who can do so outright with cash.

[UndercoverElephant]

http://uk.reuters.com/article/2011/08/0 ... 8H20110807

(Reuters) - Business secretary Vince Cable warned that growth forecasts are likely to be slashed this week, adding to fears that the UK is tumbling towards a double dip recession, as global markets are expected to open heavily down Monday.

It looks like hell is going to break loose tomorrow.

"People's living standards have been quite badly hit. That is only going to change if we get sustainable growth. It's too difficult to say when," added Cable.

[emordnilap]

"People's living standards have been quite badly hit. That is only going to change if we get sustainable growth. It's too difficult to say when," added Cable.

Aaargh.

[ujoni08]

Next week is the 40th anniversary of one the more important economic events of recent decades: Nixon's unilateral cancellation of the Bretton Woods agreement:

http://en.wikipedia.org/wiki/Bretton_Woods_system

'On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. As a result, "[t]he Bretton Woods system officially ended and the dollar became fully 'fiat currency,' backed by nothing but the promise of the federal government."[1] This action, referred to as the Nixon shock, created the situation in which the United States dollar became the sole backing of currencies and a reserve currency for the member states'.

Jon

[UndercoverElephant]

"People's living standards have been quite badly hit. That is only going to change if we get sustainable growth. It's too difficult to say when," added Cable.

Aaargh.

The words were actually chosen well, I think. My bold. He doesn't assume it is ever going to happen. He's left other people to read that into what he actually said. "When" maybe never.

[emordnilap]

Fair enough. My cringe was at the two words being conjoined yet again when clearly no-one has a clue what it actually means, even if VC pretends he does.

Essentially, 'sustainable' has now been effectively hijacked by the BAU crowd. It needs reclaiming and/or we need a more in-your-face descriptor.

[UndercoverElephant]

Fair enough. My cringe was at the two words being conjoined yet again when clearly no-one has a clue what it actually means, even if VC pretends he does.

Essentially, 'sustainable' has now been effectively hijacked by the BAU crowd. It needs reclaiming and/or we need a more in-your-face descriptor.

"Sustainable" always had more than one meaning. We use it to mean "ecologically sustainable." They use it to mean "economically sustainable", which may or may not take into account ecological sustainability.

Who sets the boundaries for what economists are supposed to take account of? Is every economist supposed to also be an ecologist, an oil geologist, sociologist, political scientist, psychologist and philosopher?

I think you were right in the first place. The problem is not so much the word "sustainable", but the fact that this it is continually uttered in the same breath as the word "growth."

[UndercoverElephant]

http://www.bbc.co.uk/news/business-14458282

There has been no sign of a let up in the big drops in value on the world's financial markets.

Overnight, the leading Asian Stock Exchanges lost between 4% and 6% of their value.

Investors are still worried about America and the eurozone running out of money to pay their debts.

Alan Brown is the chief investment officer at Schroders and he told the BBC "we must get used to a low-growth world".

Is that the sound of pennies dropping....?