Healthy Money Healthy Planet - library.uniteddiversity.coop

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but few citizens are also aware that a similar chronic shortage is a key feature of
our financial system!
When a bank creates a new loan, the assets of the bank increase by the same
amount as the liabilities, so everything balances and there are no problems.
There is just an asset sheet expansion and it doesn’t mean that total debt has
risen at all.
It is this very ‘asset sheet expansion’ that is eating into the planet’s natural
capital. Continual asset sheet expansion demands that there be continual
economic growth – an impossibility on a finite planet. For instance, when fish
are left in the sea to replenish stocks, they are not considered a monetary ‘asset’
to the economy; only when they are sold in the markets are they classed as
such. With this perpetual pressure for the economy to grow, the rate of
extraction of fish starts to exceed their rate of regeneration, leading to an
unsustainable situation. So the continuing expansion of the money supply leads
to the continual monetisation of natural capital and to the depletion of natural
resources.
Things wouldn’t be so bad if the rate of growth was decreasing, but it is
actually increasing. Compound interest means that the money supply has to
grow exponentially. As the curve goes up and up it cannot be sustained, and so
from time to time it has to collapse.
To argue that ‘everything balances’ sounds convincing, but when ‘money’
balances it doesn’t mean that the social and environmental consequences are