On America Inc., and Your Money

Commentary, Life Lessons Comments (1)

…corporations have been enthroned, … and the Money Power of the Country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic is destroyed.” – Abraham Lincoln

 

If you don’t know by now, the US economy is in serious trouble. Bank runs are causing banks to fail, housing sales continues to decline, and jobs are turning inside out. At this moment, Gas nearly $3.99 a Gallon and that’s because it went down. Mortgage companies Freddie Mac and Fannie Mae are teetering on the brink of collapse and the dollar is bottoming out against the Euro. One of the main problem is consumer trust, and how we treat money and assets. We don’t actually treat them the same way or the collapse of them.

Clearly, the general economic outlook is not good. However, acknowledging the economy is not good is a double edged sword. It causes more spending and credit tightening, and general panic which leads the economy into a further slump. However, pointing out the economy is rosy is misleading. But , mixed signals do the worst damage; they make people believe that the government has no idea what it’s talking about and they turn away from the government.

Here is testimony and a press conference given at the SAME time by President Bush (to reporters) and the Fed Chairman (to Congress).

President Bush: Despite the challenges we face, our economy has demonstrated remarkeable resilience. Productitivity is high. People are working. Retail sales were up in may and June. The economy is growing. There is allot of positive things for our economy.

Fed Chairman: The Economy continues to face numerous difficulties. The Unemployment rate has risen. [there is] Declining Wealth. Softening Labor Market and Rising food and energy prices. Increasing Foreclosures and tight credit

Reading the above quotes pretty much makes any sane person go “huh”. At this point who to believe doesn’t matter. People settle on “The government is incompetent” and go back to their own judgement.

Our pyramid scheme requires almost blind trust, and most importantly, spending. The moment people stop spending , the systems slows and grinds to a halt. If consumers don’t spend, stores, shops and corporations don’t make money, and have to lay off workers,who generally, stop spending more. People fall behind on bills which causes lending institutions to fail. The cycle generally cannot be broken out of unless someone or something with allot of assets can spend their way out of it, or the government can generate positive cash flow.

The current solution is a massive injection of cold hard cash -not by printing money- but thru extensive monetary policy and responsible fiscal policy. Unfortunately enough, large institutions should fail, however, they shouldn’t be allowed to take people’s money with them, people who really had no say how the institution was working. The argument against this of course is that people should pay attention and look at the bank records and see how it’s managed and pull money out when they see it is in trouble. The market (with perfect knowledge) can do that. The rest of us have lives, and staring at financial reports (which i daresay only few people have the talent to read) is just a waste of time and lowers productivity.

One other problem is of course how we treat money. Now, since we have started to use money as numbers not paper, the best thing to do is to keep the money cashless. Consider, if a bank fails i lose my money, but i still have to pay back the loan to that bank. That’s just back asswards. If i give my money to Bank One, that is real assets. I should be able to move those real assets somewhere else just like my loan was moved somewhere else. Why it has to suddenly be reverted back to REAL CASH (yet my debt stays as credit) is beyond me and stupid to boot.

We really need to have a better economic structure, again, one that’s consumer based. We have lowered the ability to go bankrupt, and yet increased the ability of corporations to continue to get their money. The normal American can’t get out of debt if the world collapses and they die (the debt goes to family) , but their money can disappear with an “i’m sorry.”

Welcome to America Inc.

 

 

 

 

OceansOfThought @ July 17, 2008