I have just listened to the last Soros lecture and he makes many good points http://www.ft.com/indepth/soros-lectures .
Jackson says to solve the GFC we must invest in ways to reduce the growth in consumption of finite resources while still growing the economy. He says that the current economic system is one where growth comes from consuming more finite resources and that this is unsustainable. Soros says that the global financial system is unsustainable as it has what he calls reflexive feedback in the way we invest in existing assets. What he means by reflexive is positive feedback.
There is a single solution to both these problems and it does not require any change in the existing economic system – only an addition.
The addition is to provide zero interest loans for greenhouse gas reduction investment or other investments that reverse consumption of finite resources.
This will not change the existing economic system – only favour investments in a particular area of the economy. It solves Soros reflexive problem because the loans increase the amount of productive assets rather than push up the price of existing assets. Our current system is one where it is financially cheaper to borrow money to buy existing assets than it is to build a new asset. Reverse this (with some – not all) assets – particularly where we have asset bubbles – and we would find the reflexive forces diminish and financial markets stabilise so making the stable equilibrium hypothesis better reflect reality.
I would most appreciate any comments on the following slide show. It takes 8 minutes and it shows a financially responsible way to give zero interest loans without causing excessive loans to be created and ensuring that most of the loans get repaid. It can also be constructed to be equitable and reduce the influence of vested interests (those who already possess wealth) while at the same time fairly compensating those (like the fossil fuel burners) whose asset values are destroyed.
It is practical, can be quickly implemented and can be constructed so that the whole of society shares in the increase in wealth from the new investments. This should make it politically saleable.