Going from Asia to Europe allowed me realize the difference between a leverage based economy versus non leverage based economy and I am leaning more towards a leverage based economy now.
The essence lies in the fact that most people cannot produce more energy than they consume. In absolute raw material term, we are a net consumer of raw materials and converting them into time and value. The society is working under the assumption that time, value and raw materials are freely exchangeable units, which is true due to the fact that energy can be expended to create raw materials out of thin air eventually and that the sun is an almost infinite source of energy when compared to human lifespan.
So, assuming these values areÂ interchangeable and is represented by “money” to keep score most human consumes more than they produce while a few produces more than they consume. Look at any group dynamic in university, 1/3 of the people does all the work. Look at the Canadian economy, 1/4 of the people don’t work.
Human, when left in a cash based society, will opt for short term solutions that requires constant repair and maintenance because so few will be able to break the equilibrium point between consumption and production. At a leverage ration of 1:20, a debt based society immediately make everyone a net producer of value, even though a bankruptcy should have the same multiplication effect i n the negative side. What happens in reality is that any negative is wiped away by a stroke of pen called bankruptcy, with the loss being carried by anyone who still have a net positive production.
Neither way is perfect, but the allowance for long term planning makes a debt based society more attractive in my point of view for now. Until I discover a flaw in my assumption.