I often see statements in the news from economists saying things like “only 0.2% growth reported, which might have bad effects on the economy”. In my eyes infinite growth is simply impossible when we have finite resources, or is that a misconception from my part?
Edit: thank you for all the detailed an in-depth answers! Learned a lot of new things 🙂
In: 96
On a psychological level, economy is a game of trust. If I know the economy will grow, I will then trust that if I invest something today I can get more money return back tomorrow, which enables the person receiving my money to actually buy or do something to generate more business, and the economy grows, and the cycle continues.
Once the trust that the economy will grow is broken, then I won’t invest anything and the person down the chain will not have money to do any business.
Then you factor into a large sector of economy that just survives by skimming the money received by business based on that trust – government taxes (enforce fair rules to run business), banks (provide loans and capitals so businesses can exist in the first place), retirement funds (old people with disproportionate political power), etc.
So ultimately the economic growth must continue at all cost to keep the trust up, or the entire facade will collapse.
Latest Answers