>>Pyramid scheme - stage overgrown!
>>At this stage infinite growth theory does work... ahem on the public debt side only. It will last as long as the rest of the world is ready (or forced) to tolerate/suck up those debts one way or another. But how long can all this last ? It could take just one more Lehman style bankruptcy (JP Morgan for instance) to bring world financial system crumbling/crushing down.
>
>And you say that based on some economic theory? A number of things, which were just about the same size of a disaster, have already happened and didn't cause anything worse than inventing more imaginary money (i.e. robbing everybody equally), in form of overt and covert bailouts, haircuts and other things which became normal within the week they were invented.

It is regular capitalism mantra more then real theory but nonetheless... {g}
In that theory, economy/stocks should always grow (pushed strongly by free market, competition, endless innovation, free flow of capital... freedom ... democracy... and so forth). In reality/history it was more like repeated Bubble-Bust-Revolution/War cycles. Right now we are approaching an end to one of those cycles. This one started back in 60-70ies with abandoning gold standard and ensuing enormous expansion of money supply, which was then to be justified by economic growth and expansion of economy base for ever and ever... How ingenious huh ? Create money, invest it, economy grows (stocks & house prices) and justifies it. No inflation. Nice! Everybody happy! (Or so mantra bangs into everybody's head {g}).

In reality (which is about to surface it's ugly head sooner or later) those stocks (economy) are worth fraction of their nominal prices, banks no longer have single (real) penny to their name (if you count out all possible liabilities it is potential black hole!) and whole system is being maintained by pumping in virtual (+black/gray) money.
I posted link to one article recently which shows various graphs; Only one that has long term steady upward trend is - public debt!
Question is how long can all this last ?

You sure remember mid 80ies; Milka Planinc economic reform program named: 'Stabilizacija' and all that happened to our middle class la-la land there and after ? (Reminder: 2 cycles of hyper inflation wiping out everybody's money (debts as well!), and finally big civil war and ultimate destruction of our bellowed country)

Does 'Austerity' rings any bells ? Nowadays you have people like Christine Lagarde and notably Angela Merkel trying to do exactly the same. In Europe they finally realized (good morning Columbus!) that this system of building huge public debt for the sake of (temporary) busts to economy is simply UNSUSTAINABLE. The same is known to many people in US, but 'big boys' still don't care for as long as they can just print money and get away with it.

Back to economic theories;
My conclusion after all these years (ok, confession of naivete) is that simply THERE IS NO such thing as successful economic system. Western Economy is just as unsustainable/inefficient as our socialist ('dogovorna') once was. It is simply insolvent and depends on constant adding of value from elsewhere. In our case those were foreign loans/aid, and in western model, it is printing money and/or constantly increasing public debt. It is bad if you increase public debt it is worse if you don't. Scary question is; Will the outcome be as disastrous as we both witnessed back with exYU ? Considering the scales and known outcome, I wish and prey that JM Keyns & Co indeed discovered economic 'perpetuum mobile' {g} in which we will all live happily ever after.

Here is an interesting read;
http://www.brookings.edu/~/media/projects/bpea/1993%202/1993b_bpea_akerlof_romer_hall_mankiw.pdf


>This is a planned, or command, or agreement (dogovorna) economy. Anything goes if the guys say so.

>>After that there will be no even cakes left to feed French poor.

>If the guys say so. Unless people start growing their own food.

It will eventually come to that. Hence me being interested in your new neighborhood :))