so...it would take actual generations for people to get out of being utterly broke since in your world, you'd have to save up as a poor person to actually open up a business or do anything worthwhile. sounds so fun, sign me up. i want my family to be poor for 250 years until we finally have 2 million that we need to start that farm my great great great grandfather wanted to.

some people on this website literally live on a different planet

sadly you can remove the "on this website" qualifier from your last sentence and it holds just as well...

How easy is it for a real life poor person to just get $2M to start a farm? Almost everyone I've met with family farm inherited the land which was probably traced back to it being claimed in the frontier days.

In the agricultural corner of the world I consider my motherland, there are banks that cater specifically for farmers and fishermen. Actually, my first bank ever belong in this category, probably the biggest fish in this pond. It's honestly rather inconvenient if you are not in the agricultural demographic; if you live in the urban areas it's next to impossible finding a convenient branch.

I'm not in a position to elaborate how their loans work but they do exist and I'm also pretty sure two million of our not-USD currency is not a prohibitive amount to loan to start a farm. It's a realistic investment people in rural areas can do.

A lost folks in general (and SV in particular) operate on the principle of "got mine f you". They're comfortable so now we don't need to do anything to make anyone else so. It's a symptom of the greater issue of a lack of empathy.

> Savings.

Those savings are gonna grow at a pretty slow rate if you can't lend with interest.

Being able to create money out of thin air doesn't actually create the associated claim on value that the money represents.

So you're looking at this in terms of how you interact with money in the existing system. But all else being equal there would still be the same amount of value created & we can imagine ways that the value is distributed without the weirdness of banks & how we currently create money.

Savings are just delayed consumption.

If I want returns I should seek an investment.

In the current system (that is 'better') inflation exceeds the interest on savings, so you lose money by keeping it in a bank.

In tons of countries compound interest is a fairy tale found only in "Economy 101" books...

Savings don't grow, not in real terms and on a societal scale. A miniscule fraction of real goods and services in the economy can get buried in the basement and saved for thirty years.

my cousin's grandfather is 101 and lives in the house he lived his childhood in; i think he was born there. he and his parents have expanded the house significantly since then, as well as, of course, repairing and maintaining it. it's very comfortable now. a society that builds durable housing stock is saving up the goods and services that went into its construction

one of the things in the house is a nearly complete collection of national geographic magazines, going back before he was born; a treasury of knowledge about how people lived all over the world during that century-plus, as well as how they were seen from the point of view of the usa, ready to be perused and enjoyed at any moment without tracking cookies, broken links, images scanned at the wrong settings, or javascript incompatibilities. the images are mostly "retina display" resolution and famous for their beauty. preserving them for this century-plus has consumed very little resources

right now i'm listening to a song by rush recorded 40 years ago; every year there is a wider variety of recorded music available for me to listen to and compositions for me to sing, as long as we don't start losing it faster than it is recorded

last night i washed a shirt i got as a gift 17 years ago; if i can keep it from getting eaten by moths or sour sweat, it will surely last another 13 years

— ⁂ —

but these are mostly consumer goods, not capital goods like lathes and motorcycles; having more shirts, national geographics, or rush songs won't increase my economic productivity, which is what is needed for such savings to grow rather than shrink more slowly (though plausibly you can be more economically productive if you have a house big enough to set aside a space for sewing or grinding telescope mirrors or enlarging negatives). and for that it isn't necessary for the actual material good itself to survive for decades; it is only necessary for it to augment economic production by more than its own value during its lifetime, however short that lifetime may be

a car may have a lifetime of 10 years and, by enabling an uber driver to provide higher-value services than they otherwise could have, produce twice as much value as its inflation-adjusted cost of manufacture over that lifetime, 20% of the cost of manufacturing it every year. multiply that by the number of uber drivers in a society, and you have savings growing, in real terms, on a societal scale. and there are a thousand kinds of capital goods like this which continue to produce real value over a period of time once savings have been invested in them: house insulation, refrigerators, washing machines, olive trees, engine lathes, kitchen knives, electric drills, laptops, and so on. even factors of production that are consumed within a few months or a year can qualify, like knitting yarn

(however, a drill you buy, use once, and then leave in the garage and never use again does not; it may not be decaying very fast but it's not growing)

this is how a society can grow its savings in real terms on a societal scale, through accumulating capital goods and knowledge so that its productivity can increase over time

Nice stories, and I don't doubt that some money can be productively invested. But does the marginal dollar saved wind up in a productive investment, or does it wind up malinvested? In other words, is money the bottleneck for increasing productivity, or is it figuring out improved processes and predicting the future economic landscape?

most of it gets wasted

but money is not really a bottleneck or a resource; it's just a way to keep score

making a loan is an investment with real skin in the game

What you've just created is a world in which the only people who can afford to buy a home are people with rich families they can borrow money from. Congratulations, you've concentrated wealth in even fewer hands.

Low interest rate debt turned housing into a lending arms race to see how deep you can bury yourself.

There are other ways. Like buying one brick at a time. It's a real thing in places where access to lending is less common.

I've lived in homes built that way. They're always a little janky, but usually much higher quality overall because they're built for a family and not for quick turnaround.

I know guys who are literally growing the timber for their dream home while they live in a singlewide. Lifestyle inflation in the USA is caused in large part by access to this easy debt, and it routinely ruins people in the bottom half of the income distribution.

so the economy grows annually at ~0.0% meaning no real value gets created because productivity basically never improves and labor participation tanks

congratulations, you've taken us back to Feudalism

This is incorrect, in standard macroeconomics, credit theoretically has no effect on the long term growth rate of an economy. The only thing that grows an economy are increases in worker productivity, theoretically driven be technological advancement. See https://www.stlouisfed.org/on-the-economy/2015/june/what-dri...

Loans are just move the money around and create “business cycles” of booms and busts. Which in my opinion exacerbate wealth inequality as opposed to reduce it.

I'd say that's a crude reductionist view. See https://www.jstor.org/stable/2118406 to name one paper but there's tons of research on the link between capital markets and economic growth

What part of that crude or reductionist? Technological progress being the sole driver of growth is the dominant view in macroeconomics. Even the paper you link attests to that.

It's reductionist because "technological progress" is too broad a stroke. "Productivity" is not directly observable or measured, right?

Access to inexpensive capital is a key driver of technological progress.

Robust capital markets allow for more efficient allocation of savings into business ventures, driving productivity forward

Owners typically have skin in the game now as those that provide a loan.

There's a reason that people don't save up the purchase price of a home in order to buy it. They are willing to pay a serious premium in terms of Interest so that they can have a home today instead of waiting 15 years for 30 years in order to purchase a property.

If you want a car to get to a job and make money, you want it now, and are willing to pay more later. Without the car, you wont be able to work and save.

How would you pay for university? How would you buy a house? How would a company build a factory?

You would have to use the money you inherited or were given annually from your parents more carefully so that you have it to spend on the things you really need or where you see a big opportunity. It's a sacrifice but it's all worth it in the end to get rid of fractional lending, which I find confusing and distasteful.