What Has Gone Wrong With Oil Prices, Debt, & GDP Growth?

9 Dec 2016   Economy

Our economy is a mystery to almost everyone, including economists. Let me explain the way I see the situation: (1) The big thing that pulls the economy forward is the time-shifting nature of debt and debt-like instruments . If we want any kind of specialization, we need some sort of long-term obligation that will make that specialization worthwhile. If one hunter-gatherer specializes in finding flints that will start fires, that hunter-gatherer needs some sort of guarantee that others, who are finding food, will share some of their food with him, so that the group, as a whole, can prosper. Others, who specialize in gathering firewood, or in childcare, also need some kind of guarantee that their efforts will be rewarded. At first, these obligations were enforced by social norms such as, “If you don’t follow the rules of the group, we will throw you out.” Gradually, reciprocal obligations became […]

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