Charles Hugh Smith: You Can’t Fool Mother Nature for Long

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Charles Hugh Smith

You Can't Fool Mother Nature For Long: The Substitution of Debt for Productivity

Of Two Minds, 19 January 2012

The “big story” of the U.S. economy is that we have substituted expansion of debt for meaningful increases in productivity.

For the past 30 years, the U.S. economy has become increasingly dependent on explosive debt expansion for its “growth” rather than on meaningful rises in meaningful productivity. Growth is in quotes because growth based on secular increases in productivity–that is, the same investment of labor and capital produces goods and services of greater value–is qualitatively different from “growth” based on a pyramiding of debt.

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