Oh come on. There were no investment banks in Soviet Russia yet the Soviets drove economic growth as hard as they could.
If banks lend money at a 5% interest rate, their customers must grow their businesses by 5%.
So what? You can easily grow an economy without consuming more raw materials and a simple thought experiment will prove it: consider that you buy some paper and a pen and write a book. What is the economic value? Well it could be zero, or negative because you've wasted perfectly good paper and the time of everyone who read it. Or it could be billions because it's the next Harry Potter. But the raw materials consumed in the process are the same either way.
>You can easily grow an economy without consuming more raw materials and a simple thought experiment will prove it: consider that you buy some paper and a pen and write a book. What is the economic value? Well it could be zero, or negative because you've wasted perfectly good paper and the time of everyone who read it. Or it could be billions because it's the next Harry Potter.
Isn't that dependent on the economic school of thought you subscribe to? While that may generate economic activity, unless you're exporting it won't generate economic growth, as no new tangible value has been realized. As per the current trope of selling houses to each other at ever-increasing prices.
A billion dollars flowing from thousands of people to a few, all within a single economy, doesn't seem like growth, it just seems like activity.
Now, foreign market sales or flogging off the international film rights to said book - That's growth.
Oh come on. There were no investment banks in Soviet Russia yet the Soviets drove economic growth as hard as they could.
If banks lend money at a 5% interest rate, their customers must grow their businesses by 5%.
So what? You can easily grow an economy without consuming more raw materials and a simple thought experiment will prove it: consider that you buy some paper and a pen and write a book. What is the economic value? Well it could be zero, or negative because you've wasted perfectly good paper and the time of everyone who read it. Or it could be billions because it's the next Harry Potter. But the raw materials consumed in the process are the same either way.