Why Economic Growth Is
by Michael Bond
The present global
economy is caught in a catch-22 of its own making. Solutions exist, but
the blindness that created the problem also stops the solutions from
Problem 1 How Much Is
The present economy is obliged to grow annually at between 3% and 6%.
Too much less than 3% for too long and the economy will collapse from
lack of currency. Too much over 6% for too long and inflation will
spiral out of control, rendering currency meaningless.
Below is a table that points out how long it takes for something to
double, triple, etc in size, when it increases at rates of 3%, 4%. 5%
and 6% per year. For the last 15 years the global economy has been
growing at an average of about 4% per year. Note that at 4% growth
the economy doubles every 19 years, and grows 10 times its size in a
mere 59 years.
the beginning of the 21st century the world's environment was
in critical decline. Oceans are turning acidic from atmospheric CO2 threatening marine life, melting glaciers are flooding
cities where soon little water will flow at all, species are
disappearing from the Earth at a faster rate than during the
dinosaur extinction 65 million years ago.
The design of the global economy demands that by 2019 the economy will be twice
the size it was in 2000. At its present rate of growth, by 2059 the global economy will be ten
times its 2000 size. But
Earth cannot sustainably support a global economy the size it
was in 2000.
Even if the economy slid along at a minimal 3% growth it would still be 10 times its 2000 size by
the year 2080.
So in order to survive, the global economy is compelled to keep
growing like a cancer, at an unsustainable rate that will kill its host. This self-destructive design is a direct
result of the flaw in the global money system (see accompanying
article Money - Deadlier Than
But wait - there's more!
Let's assume, like most corporations and politicians do, that the
world's resources are endless and that no environmental
threats exist. Even if that were the case, the global
economy is self-destructive for an entirely different reason, if
the first way isn't fast enough.
Problem 2 - Coming Ready Or Not!
The second problem stems from the fact that in order to sustain
4% annual economic growth, global debt must increase at
about 10% annually.
Because it is annual growth, this means it is exponential
rather than mathematical growth. The difference between the two
is shown below.
Mathematical Growth 1 + 1 + 1 + 1 + 1 +
1 + 1 = 7
Exponential Growth 1 + 2 + 4 + 8 +
16 + 32 + 64 = 127 (Much faster growth in same time.)
Because global debt increases exponentially 6% faster than the
global economy, debt will quickly smother the economy by demanding its
entire output merely in interest payment.
stems from a
fault in global money supply. This fault is described in
To the left is a table that
illustrates the global situation using the Australian economy as an
example. In 2003 the OECD rated Australia's economy as "one of the best performers" in the developed world. The table to the left
showing Australia's debt and income figures, demonstrates that even the best performers in the global economy
will be bankrupt before 2030.
If Australia stays on its present "good" course, within a few
decades Australia's interest bill each year will be
larger than Australia's entire national income. . Australia
would be bankrupt well before it got to this. The figures
of 4% economic growth and 10% debt growth are about the same
for the entire global economy. The Global Economy is on
course to collapse well before 2030 due to a looming
global inability to
repay annual interest.
The reason why debt outpaces economic
Money - Deadlier Than Plutonium, available from
A copy of this document is available from
Michael Bond is a promoter of social and environmental reform.
His book Eve of the Apocalypse sheds light on
the present global situation and its affect on individual people.