Economic Policy that only pursues growth will always lead to debt

For some time I have been asking myself on the one hand whether constant growth is either sustainable or desirable, or whether we should develop our plans on the basis of debt.

My brother shared with me an interview contained in SPIEGEL with Tomas Sedlacek:-

“Greed is the Beginning of Everything”

Czech economist Tomas Sedlacek discusses morality in the current crisis and why he believes an economic policy that only pursues growth will always lead to debt. Those who don’t know how to handle it, he argues, end up in a medieval debtor’s prison, as the Greeks and others are experiencing today.

For the first time I have read a paper which intuitively I feel highlights my views. I hope you enjoy…!

To view the article in PDF, please click here:- SPIEGEL Interview with Tomas Sedlacek


Revolutionary Investment Strategy

Over the past couple of years, I have continually seen a number company’s state that they need to increase their prices now in order that they are able to fund their investment in providing their services. This is particularly the case by companies who effectively have a monopoly or a significant market share.

Maybe I am “old fashioned”. But I have always been brought up on a “diet” that you reap your rewards from making the investment through one of the following:

• Cost savings achieved
• Increase your customer base
• Benefits to customers that you can enhance your revenues

So what are the consequences of this revolutionary investment strategy?

1. Effectively, the investing company does not have to be creative in developing their product or service offering to achieve enhanced returns.

2. Since their capital investment is already funded by the customers, there is likely to be less due diligence or creativity around ensuring that the capital costs are optimized or managed effectively, for either benefit to the customer or the shareholder!

3. Once the investment has been made there is likely to be less commitment and scrutiny to ensure that the revenues or cost savings are accruing in accordance with the business case, as it simply just too easy.

It is absolutely critical that the regulators ensure that these businesses and operators are not able to operate in this manner! Or am I delusional…?