Can someone explain to me what Goerge is getting at here?
The issue is that capitalism involves lending money at interest. If you lend at 5%, then one of two things must happen. Either the money supply must increase by 5%, or the velocity of circulation must increase by 5%. In either case, if this growth is not met by a concomitant increase in the supply of goods and services, it becomes inflationary and the system collapses.
I quite seriously cannot make head nor tail of what he means here. Even if you had an entirely static economy, with a stable money supply and a stable velocity of circulation, you would still have interest: for there is still risk of repayment and still a time value to money.
The second part, that an increase in the money supply (or the velocity of circulation) without an increase in goods and services will inevitably lead to inflation is of course Milton Friedman: monetarism pure and simple. Nice to see that George has caught up there at least.
But why does the practice of lending at interest lead to this? Anyone?
But a perpetual increase in the supply of goods and services will eventually destroy the biosphere.
That, of course, is not what we\’re trying to do at all. We\’re trying to get an increase in the value of goods and services provided, not volume. That is how economic growth is calculated after all.