This model “works” fairly well, as long as the economy is growing fast enough–population continues to grow and resource extraction continues to grow as planned. In a finite world, we know that this model cannot work forever. At some point, we can expect to start reaching limits.
What do these limits look like? I would argue that in the case of resource extraction, these limits look like increasingly high cost of extraction.
~ Gail Tverberg
You should also read “Quantitative Easing (QE)” (the first three, short paragraphs on WikiPedia summarize it neatly.)
My opinion: We need to start seriously talking about a STEADY STATE ECONOMY. What would that look like? How would it work? How do we get to that? Seriously. We simply CANNOT have a growing and expanding economy forever on a finite planet with finite room and finite resources. What part of “finite” don’t you understand?