Grow grow grow...

My son educated me that "Stranger Things" was taken, apparently a television serial, and whilst there is a low risk of getting sued in Pakistan, why create a hassle. Today is about the Stranger Things that form the basis of economic theories of eternal growth in the GDP, money, and the stock market. Logically, not to sound Malthusian, but in a finite world - even with technology - there has to be an end point for any kind of growth.
Everything, oil, iron, every other mineral, water and even land are finite, and therefore there must be a limit, even if not discernible today, to technology increasing utilisation of such finite resources through efficiencies eternally.
According to United Nations predictions, world population could reach to over 11 billion by 2100; but even that must have a limit, given that the world itself is finite, even if you somehow managed to raise Atlantis again.
Eternal growth on finite resources defies every known universal law.
Hence it can safely be concluded that GDP cannot grow forever.
It is, therefore, also debatable whether or not a theory based on a false premise can be right; perhaps the reason why, even with technology where it is today, there is no precise or realistic manner to accurately calculate the primary indicator of the theory of eternal growth, the GDP itself.
But how was the world sold a theory that effectively relies on eternal growth in the first place?
Every illusion requires a gullible audience and a magician; the yarn spun for GDP took care of the gullible audience, but a magician was still needed.
And hence paper money was invented.
There was not enough gold in the world for the required fixed percentage increase in the money supply every year to support the so-called ever-increasing productivity; paper money and debt are the magicians for the GDP illusion.
No points for guessing who the gullible audience is.
"The world's debt pile is hovering near a record at $244 trillion, which is more than three times the size of the global economy, according to an analysis by the Institute of International Finance", from the Bloomberg website.
Who does the world owe all these trillions of dollars worth of debt? Jupiter? - Joke from the net. Somebody sure messed up; they created more money than the GDP! For that to have happened, the world had to even ditch paper money.
Money is now imaginary: you cannot see it, but it exists in your accounts maintained at your banks, who have carte blanche to create money out of thin air; probably, there isn't enough paper to print sufficient money if all the worlds creditors suddenly insisted on a cash settlement.
In the information age, however, where GDP growth can be increased by sitting on your computer posting your family pictures on Facebook, even money in the banks cannot be enough.
Banks need to have feasibility, or at least a plan, to lend and hence create money.
How and where do you get a trillion dollars when you sell Microsoft?
Pursuant to the latest fad, crypto currency, the argument that money can grow forever without any plan or policy limitations is perhaps undeniable; given my limited understanding of how it is created.
But even if technology, or Stranger Theories, did invent an endless supply of money, it logically would be rather imprudent to spend only to improve an indicator, which is based on a false premise; what matters is not how much you spend, but where you spend.
But if the only objective is showing GDP growth, who cares!
And as a nation, even when we were growing, we perhaps were not spending wisely.
Spending unwisely aside, an endlessly growing supply of money chasing finite resources will not know when to stop; sometimes magic can go wrong.
The urge to keep creating money as a solution for economic woes is strong, especially in the case of developing nations; resultantly, with more money chasing a finite supply of goods, inflation was the inevitable pitfall.
If anything, during the times when Pakistan was faced with security issues, the value of property should logically have gone down; contrarily, land values boomed.
Nothing tangible happened to the plots you own, they just lay where they were, but you are wealthier.
Simply, the bankers kept making money all through the period, not knowing when to stop.
Stranger Things economic theories do not provide for an end point.
A growing supply of money created the wealth effect, and the feel good atmosphere made people spend more; hence, more money was needed, and was dutifully created, but more money was still pursuing finite goods, and hence inflation grew even more.
Remarkably, the solution for growing inflation, according to Stranger Things economic theory, is growing interest rates.
Economics is obsessed with growing everything.
The stock market should also always keep growing; but how can it always grow in a finite world with the same number of securities? More money again!
And why should it keep growing?
Not because it is a barometer of anything!
Playing the stock market is a zero sum game, like gambling; there always has to be someone who makes an equal but opposite bet for any trade to happen, and depending on how the market moves, up or down, one party to the bet will lose; only if the market keeps growing will the investors be able to keep their hopes alive and ignore that they are losing.
Let me further explain this; if there were only two securities and only two investors - okay, I am stumped.
And now even more jealous of Ricardo!
In the Stranger Things version of economic theory, he, with the help of just two nations and two products, was able to convince the entire world, to keep growing international trade!
Again that obsession with growth!
If we are ever going to stabilize our economy we need to get over this obsession with growth alone; we need to focus on tangible things, like setting up industry and creating jobs in the real economy, rather than pursuing Stranger Things economic theories of grow, grow, grow...
(The writer is a chartered accountant based in Islamabad. Email: [email protected])