Let us flatten the debt curve and save the human species
Covid19 diagrams show the capacity of the health system to handle the number of cases created by the pandemic. A problem with Covid19 is that without intervention, there is an exponential growth in cases that overwhelms the health system. To solve the problem, we have to reduce the growth rate of the infections so that the capacity of the health system can meet the demand.
Global debt has been increasing at an exponential rate, and there is a direct cause and effect link between global debt and greenhouse gas emissions. The emissions created by humans is outstripping the natural systems ability to absorb the gases, and so we get climate change. One way to address the problem is to reduce the demand for natural resources by increasing the value we obtain from the use of natural resources. When we increase debt beyond the ability of businesses to repay the debt, some of the payment will come from exploiting natural systems. Natural systems don’t object to exploitation, and so it is easier to increase to “take advantage” of the earth. The inevitable result is that if we increase debt, we will increase the exploitation of natural resources.
To reduce the amount of debt to a sustainable level, we first need to stop producing it. To preserve the economy, we need to follow the reduction in debt with ways to create more value for the same amount of debt and reduce the temptation to exploit the natural world.
Fortunately, we can reduce debt, do it quickly while increasing the value of each dollar invested by saving money on a bloated financial system.
Currently, we use debt to finance investments in new means of production. One way to reduce debt is to change the way we fund investments to remove the exponential growth of the money supply and to remove inflation. We do it using prepay funding and change economic returns from exponential growth to linear growth and, at the same time, eliminate inflation.
The second task is to break the cause and effect between economic growth and consumption of natural resources. Fortunately, that will occur with prepay funding because the best way to increase the return on investment with prepay funding is to produce more value for less consumption.
Prepay funding changes the dynamics of economic activity from increasing profit by using more resources to increasing profit by reducing consumption of resources. Producing more gains for less cost is an improvement in productivity, and it results in people having more of their income for other goods and services.
The approach works because it increases the efficiency of market economies and typically doubles the returns on investments.
Covid19 has shown we can model social systems and explain the effects to the general population. Modelling a world where we replace debt with prepay funding to finance renewable energy and then running experiments to implement the models is a straight forward task.
We can convince the population to support the change by running economic experiments where we replace debt with prepayments and report the progress through the news. The daily bulletins can show the amount of debt removed from the economy. It can show increases in discretionary income. At the same time, we can deliver the achievements of recycling, reuse, refurbishment of assets that continue to produce value but at a lower cost. We can reward people who do more with less by giving them the resources to invest in ways to do even more with even less.
Keeping the planet habitable for humans is possible if we approach it as a series of economic experiments where we devise ways to increase wealth while reducing the impact on the natural world. Removing debt one loan at a time is an experiment any community can try immediately.