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This page contains all of the posts and discussion on MemeStreams referencing the following web page: Slashdot | New Explanation For the Industrial Revolution. You can find discussions on MemeStreams as you surf the web, even if you aren't a MemeStreams member, using the Threads Bookmarklet.

Slashdot | New Explanation For the Industrial Revolution
by Lost at 12:59 am EDT, Aug 9, 2007

At first the easy credit is funnelled into investment (because investment is already a habbit of the old savings-based society). Businesses do amazingly well with all of the new capital and a bunch of new products appear on the market.

Then, people realize that there's even more credit to be had and start spending it on a few luxuries here and there. Seeing that a few luxuries didn't lead to immediate bankrupcy, people go out and buy more and more things on credit. At some point, the loans come due and since people aren't usually willing to get rid of their stuff they pull their investments out of businesses and use them to pay the loans that have come due. Businesses suffer, wages don't go up and prices don't go down as fast as they should, people go get more loans to support their new spending habbits.

The spiral continues until many of the jobs have been outsourced to cheap foreign labour (since the locals are demanding higher wages which businesses can't/won't provide - especially when they face the threat of having their share price go down). Desperate politicians resort to pork-barrel spending and random wars to prop up the economy, but the inflation these actions cause hurts the middle and lower classes more than it helps the businesses that sustain them, forcing them further into debt. The random wars make foreign suppliers leery of said nation (they're afraid said nation might spend all its money on bombs and end up unable to pay for the last shipment of cheap stuff, let alone the next one) and the price of imports starts to go up - forcing people even further into debt yet again.

At some point the banks realize that nobody's going to be able to repay their loans because nobody actually owns anything of value and the cheap credit dries up. This breaks the consumption cycle and plunges the nation into a depression. Small banks go out of business. Big banks, naturally, forclose on everything and find that they now own the place. They sit tight and wait for the economy to pick up again so they can sell (well, loan, really) all the stuff they just acquired for free back to the people they took it from.

This lasts until people figure out that being able to produce goods is actually important and shouldn't be neglected in favor of rampant consumerism. The banks regain their confidence in the economy and start mortgaging all the assets they foreclosed on back out again, and businesses start working hard to earn a proffit and repay those loans. At this point we come back to a thrifty, productive, society that saves its money and invests in its own enterprises.

A few generations go by. People forget all about the crash of 'whenever. The cycle repeats.


 
 
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