All economic activity requires energy to perform useful work. Without an increasing flow of net energy to society the economy starts to contract. The extraction of finite fossil resources cannot sustain increased growth as depletion and diminishing returns eventually leads to bankruptcy and falling supply.

Monetization based on the assumption that the resource base is endless, which flies in the face of fundamental physics, can only lead to financial collapse. Intermediate stages that we have witnessed since 2008 is the erosion of the middle class, increased wealth inequality and increased numbers of poor people in society. Borrowing of work and resources from the future, through debt fuelled credit expansion, has become completely insane. To the extent that we are eroding the life-support systems that make up the basis for our own long-term survival. It has indebted future generations in ways they can never repay and is a grave intergenerational injustice. 

Thermodynamic limitations of the physical world don’t even enter the grammar of most economists or central bankers who are wilfully inept to give advice on anything but how to ruin entire nations. The lack of a systems perspective has made the public unaware of the real dangers of a out of control financial system. Economic growth based on credit fuelled debt, which has exploded since the early 1980s, in form of unlimited issuance of government bonds, credit cards without security, sub-prime mortgages or quantitative easing are all just sophisticated ways of sending the bill to the future. 

Its obvious that it's not possible to cure problems that arise from too much of something (debt) by doing more of it (piling on more debt). That's just insanity. If credit costs are larger than income minus other expenses then either the income must increase to balance losses or bankruptcy is the only way out. By now, we know that the pile of debt accumulated is unpayable and so a debt restructuring or debt jubilee is the only way forward. The young generation, especially, need to have their debts forgiven or we will have riots in the streets, political turmoil and an increase in crime rates.

In the fall of 2008 the financial system in Iceland collapsed leading to a closure of the three main banks and a 50% fall in the value of the Icelandic króna. When the banks collapsed they left huge obligations to lenders and customers without coverage. The Icelandic government issued a guarantee for all Icelandic accounts, releasing comparative demands from a large volume of overseas accounts (a net deficit of €3.2 billion after all assets were sold). The government had no way of covering this demand, causing the collapse of the Central Bank of Iceland and the currency. Iceland went bankrupt and loans in foreign currency became unpayable for state, businesses and private persons. The Icelandic people voted no in referendums to repay foreign debts, elected different people in office and jailed bankers for corruption. They basically had to restart the system. However, the real reason that Iceland has not suffered like Greece, for example, is because they were able to keep increasing their oil consumption (from imports) while relying heavily on domestic hydropower and geothermal for electricity production. This is not the case for the PIIGS countries which all were heavily reliant on oil imports that they could no longer afford.

Many of the driving factors behind the Icelandic banking crisis and the GFC arose from a fundamental systems crisis in our present world. The economic model based on eternal financial and material growth has started to meet limits, where the human civilisation has outgrown the capacities of the planet to support it. Borrowing from the future to cover up this fundamental problem is a short sighted strategy that will come to an end, sooner rather than later. And it also means that the collapse curve will be even steeper as we have depleted more resources without making a transition to renewable energy resources.

Against such limitations, all talk or negotiations are futile, and pretending the dilemma does not exist has only lead to bigger risks with ever more debt - stealing from future generations. Countries may be able to handle a purely financial crisis, like Iceland, but they won't be able to handle a energy-induced financial crisis, like in the case of Greece. It doesn't matter what financial reforms they make as long as they can't afford the energy needed to operate society they will continue to contract. So while debt forgiveness is necessary it's not sufficient in solving Greece's problems.

According to 2014 Global Wealth Report, by Credit Suisse, world wealth has reached a record $263 trillion but is now even more concentrated at the top. The richest 1 percent of the worlds 7.3 billion people have accumulated even more wealth, now owning more than 48% of global wealth. The authors of the report warns that growing inequality may spark a recession, as high disparity leads to economic friction.

Few household characteristics vary across individuals as much as income and wealth. This has been the case throughout much of human history, with wealth ownership often equating with land holdings, and wealth more often acquired via inheritance or conquest. But a combination of factors caused wealth inequality to trend downwards in high income countries during much of the 20th century, suggesting a new era. However, that downward trend has now stalled, and started going into reverse.

Since the 1980s wealth distribution have developed differently in a number of countries. In some countries, especially the US and the UK, inequality has risen sharply. This increase has taken place from a level that was already high in relation to others before it started. In countries like Sweden and Finland, increases have also been substantial but here from internationally low levels that are much higher but remain among the lowest (Roine and Waldenström, 2014).

According to Credit Suisse 2014 report, a person that owns $3,650 (including equity of their home) is today considered to be among the wealthiest half of global citizens. A person owning more than $77,000 is considered to belong to the top 10% and a person owning $798,000 to belong to the top 1%. 

“Taken together, the bottom half of the global population own less than 1% of total wealth. In sharp contrast, the richest decile hold 87% of the world’s wealth, and the top percentile alone account for 48.2% of global assets” (Credit Suisse, 2014 pp.99). 

The richest nations, with over $100,000 wealth per adult, are found in North America, Western Europe and among the rich Asia-Pacific and Middle Eastern countries. They are headed by Switzerland ($587,000), Australia (431,000), Norway ($359,000), United States ($348,000), Sweden ($333,000), France ($317,000) and the United Kingdom ($293,000). See map below.

From 2013 to 2014 global wealth grew 8.3%, $20.1 trillion, and is the largest increase since 2007. Total global wealth has risen every year since 2008 and is now 20% above its pre-crisis peak. Leading the wealth increase is the United States, home to 34.7% of global wealth. Most of the world's ultra high net worth individuals can be found in the United States, followed by China, Germany and the United Kingdom (see chart below).

Own elaboration, data from Credit Suisse - Global Wealth Report 2014

However, Credit Suisse analysts also showed that overall wealth in the US has grown at a faster pace than incomes, warning that it is a trend that could point to recession. Stating that "For more than a century, the wealth income ratio has typically fallen in a narrow interval between 4 and 5. However, the ratiobriefly rose above 6 in 1999 during the dotcom bubble and broke that barrier again during 2005-2007. It dropped sharply into the "normal band" following the financial crisis, but the decline has since been reversed, and the ratio is now at a recent record high level of 6.5, matched previously only during the Great Depression. This is a worrying signal given that abnormally high wealth income ratio have always signalled recession in the past"