Infinite growth vs. Finite planet
This financial system depends on more and more money being given in loans. The loans in the end have an environmental impact as people use them to buy a car, to travel, to expand a factory facility or to build houses amongst other things. Thus this system of economic growth by means of loans depends on the constant and growing conversion of natural resources into CO2 and waste. Hence at a time when we are reaching the limits of growth in energy production due to the decline of oil and when the output limits of many mines are also being approached, it seems safe to conclude that this system created more than 300 years ago on the basis of expanding credit cannot continue in the way that we know it today.
This reflection coincides with a major global financial crisis, so we are prepared to ask the question: Does the current crisis mean the end of a financial system based on growth?
Wars and finance
You
will perhaps not be surprised to learn that behind all wars there is
the interest of the armaments industry in selling more weapons and
pocketing lots of money. The generation of needs when previously they
did not exist is common practice in modern-day capitalism: whether
they be weapons, new TV sets, video surveillance systems or domestic
electrical appliances, you will always find major commercial
interests behind them.
Less well-known among the public at large is the use of wars by the world of finance. Banks use wars in at least two fundamental ways. Firstly, the astronomic financial expenditure that is generated by war enables the financial powers to take control of the countries which are fighting; the latter will spend many years paying for the foreign debt that they have taken out as can be seen in the cases of Nicaragua, the Philippines, Nigeria, Cameroon, Ivory Coast and Zaire. Then in second place, wars in which the leading world powers such as the USA take part make it possible to create a large quantity of money in the shape of public debt on which only interest is paid and which serves to provide the system with the liquidity it needs.
The war in Iraq has enabled American banks to create 3 trillion dollars since it began. This has been the cost of the war for the United States and it is also the amount by which the country’s national debt has risen over the same period to stand now at around 10 trillion dollars. This is money which is not paid by the citizens of the United States but instead by people all round the world through inflation.
References for further reading:
Capitalismo (financiero) global y guerra permanente. El dólar, Wall Street y la guerra contra Iraq. Ramon Fdez Duran, Virus Editorial
Money as debt: animated video about how the monetary system works: http://www.moneyasdebt.net
Documents, books and articles about the way the monetary system operates: http://www.altruists.org/375
A digital news bulletin: another way of thinking about economic events: http://www.altereconomia.org
Forums for debating and learning about the financial and real estate bubble: http://www.burbuja.info /li>