Yes Virginia, There Is an Economy

Magic- is it real? Do gods exist only when they have worshippers to give them power? Can belief make something from nothing?
Take a look at the news this week. Everywhere you look, economists are saying, “Don’t Panic!” Why? Because when stocks start acting wildly, people become afraid and want to get out. And when everyone gets out at once… well, that’s what caused the Great Depression.
Let’s take a look at money.
We go around every day purchasing things like bread and milk and clothes and cars and computers with pieces of paper. Are those papers actually worth the price of bread and milk? No, they aren’t. So why do we take a couple of pieces of paper for something that you can eat? Can the paper be eaten? Well, technically, I suppose yes, but it’s certainly not part of a nutritious diet. So why do we trade paper for everything we want?
It’s because we have a government which guarantees our money. At Fort Knox there are piles of solid gold that the US government uses as collateral for all the paper money it prints. Each bill is like a certificate of ownership for part of that gold stockpile. Can you cash it in for that gold? No.
So how much money do we really have? Well, that’s the hard part.
If you have a dollar and spend it on milk, you have a dollars worth of milk and the dairyman has a dollar. If the dairyman spends a dollar on feed, the farmer has a dollar and the dairyman has a dollar’s worth of feed. If the farmer buys a dollar’s worth of seed, the farmer get’s a dollar’s worth and the seed company gets a dollar and so on. The first dollar actually becomes four dollars, as everyone who uses this dollar gains a dollar’s worth of goods or services.
This is how an economy grows.
Conversely, if you hold on to that dollar and don’t spend it, the dairyman, farmer and seed company don’t get a dollar. That means the dollar remains only one dollar and everyone loses a dollar’s worth of goods or services. You can see how quickly that can add up.
When people are holding on to their money, no one starts new businesses, no new jobs are created and no money flows in the economy. If money isn’t spent, it can’t multiply. Besides, that’s how rich folks got rich in the first place: not spending their money.
Our economy is not a personal checking account with simple credits and debits that you can balance every week or month. No, our economy is a huge, interconnected, globally balanced financial network which has many more colors than just black and red. United States citizens need to understand that balancing the budget is not something you do overnight. The consequences of that kind of thinking effects the entire world. SInce our bankers cheated, lied and stole billions of dollars, entire countries have become bankrupt. There are riots and famines killing millions of people. We have to understand that ours is not a simple fix. It is a complicated, delicately balanced affair with dire, world wide consequences.
Now back to the stock market. This financial entity is very much like Tinkerbell. If enough people believe in it, it will be healthy. If not, the stock market will die. This is why we are hearing admonitions from financial pundits: “Don’t Panic!” “Buy Low, Buy Now!” It is belief, not actual monies, that will keep the New York Stock Exchange (NYSE) afloat.
In 1929 a panic sent Wall Street into the great depression. The situation today is very similar, but now there’s people on TV and other venues trying to reassure us these losses are “temporary” and “based on emotions”. Each time a market opens and closes around the world, there is a chance that the market will crash in, say, Japan or Europe, leaving us completely broke by the time the NYSE opens its doors the next morning.
So what do we do?
“Don’t Panic” “Buy Low” “Wait with your long-term investments.”
If you believe in the economy clap three times, everyone!


About Perry Tenitiss

I write on all sorts of subjects at various sites. Check the list below and enjoy!

Posted on August 10, 2011, in Uncategorized and tagged . Bookmark the permalink. Leave a comment.

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