What DOAC Didn’t Tell You About the Economy (and Why It Matters)

So maybe you're one of the 3 million-plus YouTube people that caught the recent conversation between Gary Stevens, Daniel Priestley and Stephen Bartlett. It's great to see that big business figures like these guys are talking more about the harsh realities of the modern economy, and particularly when it comes to wealth inequality.

But I think there was possibly some big topics that they missed talking about. So today I wanted to sort of explore what maybe some of those topics were and take things a little bit deeper. Because once you understand what the economy really is and what it runs on, you might also start to see things a bit differently. Now, I'm by no means someone that pretends to understand economics and I think this is part of the thing because from what I've read, it actually seems to be at the heart of the issue. No one really seems to know what it is and how it works equally. I'm not saying I have all the answers and I certainly won't cover off all the possible solutions here. I just wanted to add some thoughts into the mix. So what is the economy? We tend to think of the economy as numbers. So we think of gdp, inflation, employment.

Consumer confidence. Like this is all the sort of buzzwords that you hear in and around the media, in the news maybe. But there's a really cool dude, obviously he's a cool dude, he's called Tim, Dr. Tim Morgan. And he thinks actually that we've got the whole economic thinking completely backwards. I always chuckle when you hear on the news like an economic update and I just imagine them throwing to this big fat dollar sign, sat in one of those leather wing back chairs and he's sort of eating, he's got a plate of really fancy food and he's quaffing a nice glass of Bordeaux and sort of waxing lyrical on either how he's amazing, he's a brilliant day, or he's feeling terrible and he's a bit down and that somehow influences the entire universe.

This is the thing, like the economy isn't just numbers. And what Tim Morgan talks about is how actually it's an energy system. And it makes sense when you stop to think about it. Everything from a loaf of bread to a skyscraper requires energy to make it, to move it, to maintain it. So everything that's been shipped around the world, you know, it all takes energy. And so what really drives prosperity in an economic system is surplus energy. So the energy that we have left over after securing all the energy that we need. I'll put some links to his website so you can sort of really go into this because it, it, it's a bit of a, like what's your, what, what's this Tim on about? And right now this is the thing like the surplus of energy is shrinking. So as energy becomes harder and more expensive to find and extract, it takes more energy just to keep the system running. So he calls it the energy cost of extraction. So the amount of energy it costs to extract the energy to run the system. And so it's a hidden cost in the economic system that no one's kind of really talking about. And so Dr. Morgan's research shows that recent GDP growth has basically actually been fueled only by debt. So the true state of the global economy is not actually even being recognized. So, so between 2003 and 2023 about $92 trillion in GDP growth occurred, but it cost 280 trillion in debt to create that GDP. So what his research is showing is roughly $3 of borrowing needs to occur for $1 of GDP output. So like the whole meta model is built on smoke and mirrors seemingly.

He has this model called seeds which basically shows that when adjusted for debt, real economic growth is much lower than anyone is reporting. And in fact he argues that prosperity per capita is now in decline. So basically the take home money that us little minions in the workforce all have, or us self employed people like me, we basically have less disposable income now than maybe like 50, 60 years ago when he sort of really started researching this. So prosperity is declining at the same time as costs are rising with diminishing energy returns and debt burdens, which means the real standard of living for most people is declining. So that's, you know, the middle class and the working class. So when we think about it in terms of the context of the diary of a CEO content, and so what Dr. Morgan is warning is that this reliance on borrowing creates a false picture of health and poses serious long term risks for economic and social stability. So that's kind of like at the meta level in the diary of a CEO, YouTube or podcast. I think I originally listened to it on Spotify. Don't know how many views they've had or listens they've had on that. You know they sort of talk about the economy and they talk about a couple of distinctions within the economy. But I think one thing that they really didn't touch on was this idea of the real economy versus is what's called a rentier economy. So the real economy is where people make things. So I'm part of the real economy. I provide services to people if you are creating, if you're building something, if you're solving problems, you are part of the real economy. You're providing real work in return for real money. We'll get onto that in a minute. But the rentier economy is where people earn income from owning things. And so if we think about lands, stocks, patents, property, any kind of capital. And so people in the rentier economy make money simply by owning things that other people need. Now this is like one of the rabbit holes that we could. This is like a whole thing in and of its own. Like, some people can't afford to buy a house, some people can afford to buy a house. Some people therefore buy houses to rent them out. Okay, that's possibly one way of providing housing. Where I think it gets tricky is, you know, are you profiteering from someone's lack of ability to own a house? That's like, like I said, there's, there's a whole bunch of wormholes and rabbit holes. We go down on this one.

The, the challenge or the, the what? Where the rentier economy leads is basically wealth creation accelerates exponentially, but only for those that are part of that rentier economy. So while the real economy struggles with the rising cost, stagnant wages, you know, if you own assets, you can ride this wave of speculative growth. Um, so it's, it's, you know, there's no innovation. And obviously in the original piece, Daniel Priestley was talking about, hey, look, you know, we need more people innovating and creating businesses. And sure, like, that's fantastic. Like, let's have more people trying to do, do that. But you know, equally, the, the harsh economic reality is if you're just trying to pay to put food on the table for your family, you possibly don't have the option of just quitting that and trying to create a startup, when we know that most startups fail in year one. So there's a whole, like a whole bunch of stuff there. So this leads into the next part of like, okay, well, what is actually money? And it's probably not a question that you've really ever asked yourself. There's an interesting guy on the Interwebs called Mike Maloney, and he talks about how actually most people confuse currency with money. So currency is what we use. That's notes, coins, digital entries. It's a tool, it's a medium of exchange. Like on. I'm kind of. It still has it now, but I'm like on, on British pound. Not. It used to say, you know, the, the, the bearer will provide on Demand, you know, it's like this is a medium of exchange. I could go into a whole bunch of. The history of money is quite interesting in itself. Maybe we'll go on a tangent on that in a second. So currency is a medium of exchange. It's not actually money. Money by definition must also hold value over time. So it has to be typically scarce, durable and trusted. And that's why historically gold and silver were money and currency. But today currency is what's called fiat currency. So it's basically paper and pixels and it only has value because we believe it has values. And basically because the government says, this is a New Zealand dollar, this is an Aussie dollar, this is, you know, a US dollar or whatever it is that your, your currency or a British pound.

Again, like entertaining my medieval history degree for those of you long term listeners. It's really interesting when you look back at the history of money and if you're super, super interested, I can provide some links on, on all of this stuff. So Henry II, he was king of England in like the late 1100s. So back in those days they actually used to use sticks called tally sticks as a form of money and currency because it was kind of incorruptible and it was a mechanism that you couldn't artificially and create the number of the number of tally sticks that were, that were around. Today though, when you take out a loan, the bank doesn't have to have that money in the bank. So I think a lot of people are under this misconception that if you've got savings that are sat in your bank account right now, the bank is taking that physical money that you've put in that account and it's handing that money out to someone else and that person's using it in the real economy to create something. And then once they've created something, they then hand that money back with a bit of interest. Like that's not how it works in the modern banking world. And I mean, if you work for a bank, like do you know this? Because my impression is that most people working in the bank possibly don't know this. When you take out a loan, the bank literally creates that new money as digital dollars. And you sign this contract with them to say that that money now exists. And so that's called fractional reserve banking. There's a really cool documentary, there's a film about it, the bank of Dave. But actually the, if you go on YouTube, there's, there's like a documentary which is way better than the movie. And that's a really good way of understanding how money is created. I'll put some links to all this stuff. So in this fractional reserve banking, every dollar in the system is created artificially as debt and it then has interest put on it. I remember when we signed up to get the mortgage on the house that I'm recording this video in. The representative from Kiwi bank, who's one of the New Zealand banks here, they came to the house and they were like, cool. How much do you want to borrow? Well, we need to borrow X amount. How long do you want to pay it off? Over X number of years. Okay. And then they just randomly created an interest, they attached an interest rate to that repayment and then boom, the money was created and literally they just transferred it into, you know, like the transfer happened, the contract occurred, like that money didn't exist. And I just always remember sitting there thinking, you, you've just made up some numbers. You could choose to make up different numbers. So why don't we just make up different numbers that work for everyone? Hey, I don't know. So this links back to Dr. Tim Morgan. He points out, like I say, in the last two decades the global economy added $92 trillion in GDP, but it's taken $280 trillion in debt to do that. So $3 of debt for every dollar of growth. It's not prosperity. It is this like debt fueled illusion. Another really interesting and again entertain my medieval history degree. Throughout history there has been this idea of what's called debt jubilees. And again, I think that's something.

That very few people consider or talk about or even mention. And so throughout history these have been used to reset the economy to basically prevent social collapse. So first recorded history was in ancient Mesopotamia where rulers like Hammurabi issued clean slate edicts to cancel debts, free indentured servants and return any seized land reckless recognizing that too much debt ultimately can destabilize a society.

In ancient Israel there was the, you know, in the Bible there is descriptions of the biblical jubilee required debts to be forgiven, slaves freed and land returned every 50 years to ensure justice and prevent generational poverty. Wow. It's kind of like. It just never ceases to amaze me that we've learned these lessons previously and we always go and forget them. And then similarly in medieval Christian Europe, the church condemned interest bearing loans or usury and encouraged periodic forgiveness of debts. Again because they saw that excessive wealth accumulation as both spiritually and socially corrosive. So great religious thinkers like Thomas Aquinas actually believe that charging interest was immoral because it profited from time, which ultimately belongs to God. How about that one? Yeah, go and chew on that one. If you're sitting in your, in your bank issuing out some money to some people today.

So, you know, how do we fix this? So like debt jubilees, that could be one way of doing it. But ultimately for me, and this kind of sits at the theory of change for all the work that I've been doing for the last decade is, you know, choosing purpose over profit over possessions.

Is it a coincidence? I don't know. Another Tim, he's a really interesting guy, psychologist Tim Casser. He's done all the research on this. He's shown that materialism, chasing wealth, status, more stuff leads to lower well being. But the people who actually value community, personal growth and meaning report far higher levels of happiness and life satisfaction. So instead of asking, you know, what can I get? If people ask what can I do? What, what can I help solve?

There's probably a ton of people who have a ton of cash who do a lot of. There are, I know there are a load of people who have a lot of cash who do a lot of good, but I think it's partly a lot of that good is done at the end of the journey. It's like, hey, I've made all this money, now I want to go and do some good with it again. It's kind of like medieval kingship, you know, hey, I've been a bit of a bad ruler, but I'm gonna go off and I'm gonna go and build a monastery in my last, you know, few years and then I'll. All my sins will be forgiven. And sure, like I'm sounding very religious on this, on this video content, but I think it's just, it's interesting that there are these connections to, yeah, to ancient history and, and you know, some of those spiritual belief systems that, that we have been a part of and we are ultimately descended from. So yeah, so yes, repent of your sins, but ideally what you want to do is actually lead a life of purpose and doing something bigger than you for the betterment of the people and the planet around you, because that's where true contentment lies. You know, fulfillment does not come from consumption, it comes from contribution. I am going to drop a biblical quote on this one because it is such a good quote. It is from. Let me just check my sources on that one. It's from Matthew 16:26. For what is a man profited if he shall gain the whole world and lose his soul or what shall a man give in it? For what shall a man give in exchange for his soul? And it's like we've just known this stuff. You know, we've got Socrates, Plato, Aristotle, we've got the Stoics, like we've known for years and years and years. Even in the Egyptian Book of the Dead, the whole idea of you entering into the afterworld would be your heart was weighed and basically it was measured by how much good you'd done. And if you'd done enough good and you got onto the good side, if you hadn't done enough good, you went into some pretty bad places. So we kind of know this but we get lost. You know, there's the whole modern marketing world which is built on the, the ideals of this guy Edward Bernays who was the cousin of Sigmund Freud. Like the modern consumer capitalist world is built on driving your fears and desires to make you buy stuff that you don't need to impress people that don't care about it. And you kind of get on that hedonic treadmill and that's, that's a big part of it and then the other part. So for you as an individual, if you, if you can just seek to do more purpose, do more contribution, that's one way that we can kind of short circuit this. Maybe have your own mini debt jubilee, I don't know. But obviously the big thing that I'm a part of is, is this B corp movement. And so you know, this shift isn't just happening or doesn't just have to happen for individuals, it's happening in business too. And I thought, you know, this was again a really interesting area of that discussion with these three well known business, you know, people, smart people, the idea of actually having a business that aims to make money but also actually aims to make doing good a core part of what it actually does. Like that that wasn't a way of circumventing the need for taxing the wealthy. Which seemed to be like the main argument across the the two and a bit hours was Gary just like, well we need to tax multi people. And it's like, well sure, maybe, I don't know. But again if we like we can short circuit that by creating businesses that are committed to using the business as a force for good. Which is what B Corps. And part of being a B corp is that you have to commit to a legal mission. Lock. So charities, if we wanted to start a charity today, you have to have a mission, you have to be Having a clear problem that you're aiming to solve through the work of that charity. B Corp kind of have to have a similar but slightly different ethos that underpins them now. So all B corporations have to have a purpose statement and a stakeholder statement which essentially means that they must consider the impact of all their decisions on all stakeholders, not just the shareholders. So it's getting business to think long term. Think about community impact, think about environmental impact, think about, you know, how we treat our supply chain, how do we treat our employees. So it's a much broader definition of what business is all about and ultimately it's, it's part of this redefinition of what does success look like. So the B Corp community are busy. You know, we're leading the, the concept behind this, you know, the aim is of building a regenerative economic system. So we're trying to do that I guess from the inside out. You know, make profit, yes, don't profite here, but make profit by also trying to solve real world problems. Like that's the ultimate B Corp in the current economic system. Now I did a blog recently, well, I said recently, a wee while ago, where I emceed an event on different models for different economic systems. That is possibly part of the answer too. But I kind of think in the current system we can tweak it enough that actually most people can do really well under the current system and then maybe we look at what the other options are like. I say I don't have answers, I just have probably more questions, some thoughts. I, I, I would like to be paid to be someone's muse. That's the job I'd like. So if you're a really wealthy person who wants to give some money to a really nice human who can just sit here and talk about stuff like medieval history and bang out random quotes from the Bible at you, I'm your man. So I think the, the DARA CEO video, like, like I said, it's really cool that it's getting, it's getting people to think about this stuff at that level with some really big hitters who've got big audiences. But like everything in this business for good purpose driven world, it's, it's not simple. It's not just like hey, tax rich, job done. It's messier, it's, yeah, it's gray, it's not black and white. But I think it's clear to see that the current economic system, you know, again it's really interesting. Like you look at the preto principle the 8020. So the current economic, well, all economic systems, all systems do ultimately lead to those with more getting the most and those with less ending up with less. It's, it's like a part of all systems, which is why we have that predictive principle. And that's why I think perhaps things like the debt jubilee and some of these resets are really, really.

Valuable ideas that we can be talking about.

So, you know, it's not set in stone, I think is the key thing we can choose to shift from scarcity to abundance, mindset, from consumption to contribution. Whether you're an individual, whether you're a business leader, you have, you know, more power than you think in how you can play a part in having this conversation. I don't know, maybe I'll go to, if I can find my local bank, maybe I'll wander around there today and ask them if they know about fractional reserve banking and what that does. But I'll finish with the words of David Graber. He was a anthropologist, very, very smart guy. He's written a ton of books and he's got just a really, really cool quote that I just think sums up everything in life. The ultimate hidden truth of the world is that it is something that we make and can just as easily make differently. So what are you going to go and try and make differently today in your world to make the world a bit better for more people and the planet? If you thought this was any value, share this, drop us a comment, start a conversation. Choose purpose, ultimately choose impact, choose doing good and maybe we can co create a better world for more people.