Divine Neutrality

The essential premise: Prosperity is desirable.

Austerity is undesirable. Everyone wants prosperity. Austerity brings violence and unrest.

What is prosperity?

Prosperity is the ability to buy what you need - or what you may not need.

It is everyones desire - this ability to buy what you need.

When there is much buying and selling we have prosperity. Those are times when people are employed. They sell their time and buy goods and services with their earnings. Thus causing other people to be employed and, themselves, to buy things. Prosperity is connected to economic activity; the vigorous exchange of goods and services.

To be able to buy things is the ultimate measure of prosperity. So to ask for prosperity is to ask for economic activity.

Of course, the benefits of economic activity may not fall equally on all, but those who prosper do so from economic activity. Governments try to create prosperity. Adversity drives Governments from office.

Fundamental equation:

spending    minus    revenue = deficit = must be borrowed

Any government - municipal, national - is an economic unit. During the year it spends an amount called ’spending’. The taxes and the fees it collects are its ‘revenue’. The difference between these two is called the ‘deficit’; its negative is the surplus.

The deficit is the amount of money that must be borrowed in order for the government to pay its spending bills for that year.

Government borrowing takes the form of bonds. These are promissory notes sold on the open market. In the U.S. all such borrowing is done only with the consent of the electorate. It is we who permit government to borrow; either directly, by vote on a bond issue, or indirectly as when Congress raises the Debt Limit.

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Living cells multiply. Their number grows exponentially. The more there are the faster they increase. An exponentially growing population has a doubling time: the time it takes for the population to double. Having a doubling time is a characteristic of exponential growth. In the time it takes each individual cell to divide into two cells, the whole population of cells doubles. The population doubles because each of its members doubles. Anything that is growing will eventually double in size and then double again and then again if one waits long enough. But only exponential growth has a single characteristic period of time that is the same for every doubling.

Things that do not grow exponentially are the distance the train carries you away from the train station or the amount of coffee in the cup you are pouring. These increase only linearly with time. The increase has a rate of growth but no characteristic doubling time. The time for the second doubling is not the same as that for the first doubling. Rather it is twice as long. The third doubling takes four times as long. So, in linear growth, no single period of time characterizes a doubling.

An amount of money invested at a compounded interest rate of, say, 7%/year, grows exponentially. It has a doubling time. Ten years. After 10 years the return on the investment will be as much as the original investment itself. The original investment will have doubled in value. Each of the dollars in it will have doubled. In the next ten years the money will have doubled again - to four times the original investment. The next doubling - to eight times the original amount - again takes ten years. The rate of growth, r, is related to the doubing time, T, by the simple formula: rT = Ln 2 = 0.7 (approx). At a growth rate of 10%/yr the doubling time is 7 years.

The motion diagram shows exponential growth through four doubling times at the rate of 7% per second. The exponentially growing brown bar doubles in size every 10 seconds. The green bar increases in size linearly at 7% per second. Clicking on GO starts the growth. Clicking on STOP freezes time. You can assess the doublings by stopping at 10 seconds (first doubling), 20 seconds (two doublings) and 30 seconds (three doublings) etc.

No matter what mathematics governs its increase, any physical quantity must eventually stop increasing. Nothing goes on increasing forever. Eventually the mathematics of growth fails to describe the phenomenon. Growth is never sustainable.

See Can growth be sustainable?

Up to even 100 years ago a large fraction of people in the world lived without using money! Most people managed on subsistence farming and barter. Or they were peasants or serfs or share croppers. They were fed, clothed and housed by their masters; not paid a wage. Occasional small quantities of money sometimes changed hands but people’s lives did not depend on it.

Our lives do depend on it. Excepting a very few extreme outdoorsmen or women we all need money to live.

That we need the material things - water, food and shelter - is understandable. But money is not an ordinary material thing! Proof: A monied (wealthy) person need possess no specie at all in his pockets nor need he have it in a vault. His ‘money’ is entirely a matter of figures in a ledger. The material thing called specie - dollar bills, euros, pound notes, yen etc. - is not the same as money. It is only one form of it; used when relatively small quantities are involved. There is no vault in the bank holding your bank account money in specie. Only the poor have their wealth in specie!

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