Money doesn't run the economy. Confidence does. Economy is and has always been a confidence game.
If people in the baby-sitting co-op are confident to find / earn more scrips in the future, they will spend their scrip today - even if its their last remaining scrip. But if they have no confidence of earning a scrip in the future, they will save it.
But if everyone starts saving the scrip, exchange doesn't happen. And economy suffers. And because the economy suffers, people save more scrips. And it creates a downward spiral loop.
On the other hand - if everyone gets over-confident and starts spending scrips they don't have, we see a bubble and then a bubble-burst. Which leads to some very bad consequences too.
So the trick has always been: make sure the people remain confident about the future. But that they don't become over-confident.
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The article makes wrong conclusions.
Money doesn't run the economy. Confidence does. Economy is and has always been a confidence game.
If people in the baby-sitting co-op are confident to find / earn more scrips in the future, they will spend their scrip today - even if its their last remaining scrip. But if they have no confidence of earning a scrip in the future, they will save it.
But if everyone starts saving the scrip, exchange doesn't happen. And economy suffers. And because the economy suffers, people save more scrips. And it creates a downward spiral loop.
On the other hand - if everyone gets over-confident and starts spending scrips they don't have, we see a bubble and then a bubble-burst. Which leads to some very bad consequences too.
So the trick has always been: make sure the people remain confident about the future. But that they don't become over-confident.