Economy

First published 7/7/2010

So, what is going on in the economy?

I want to see if I can think through this thing.

First of all there is Adam Smith and his invisible hand. In this model there is a certain demand for products, there are x number of buyers and the number of sellers will increase until it is not profitable for new sellers to come into the market. If more people demand a product there will be an incentive for more sellers or increased production.

What happens if buyers cannot afford a product? If there was no credit they would not buy it. What happens if buyers don't want something anymore? Sellers reduce there price, and some sellers quit the business.

So here is a couple of things that have happened in our economy. The government has had some favorite projects. Since the Great Depression, they have been subsidizing farmers. This is supposedly to help small struggling farmers cope with losses. (There could have been a different solution to this I think. There is an insurance product to help avoid losses, farmers pay there premium every year. Some years are good and some bad. When disasters strike the insurance pays out).

Anyway, here is partially what has happened because of government subsidizing. It's not really, small farmers that are helped (it is usually big agribusinesses). The government comes in and pays people to not farm this or that. You get half a million for not raising x crop, what a deal. The government also suggests crops, like corn, soy, wheat for the farmers to raise. Guess what? We've got a lot of corn, soy and to a lesser degree wheat (there has actually been problems with not having enough wheat this year, corn and soy are more profitable). These crops are highly genetically engineered, highly covered in pesticides and highly profitable. They use them as fillers in almost every food out there (making almost all processed foods contaminated and GMO).

They use corn to make ethinol to "suppliment" our gasoline (incredibly this does not work out as a benefit to the environment). They also use corn to make the lovely detrimental High Fructose Corn Syrup (which leads to people getting fat, sick, and actually easily controlled because they don't have enough energy to question what is going on. Do I sound like a lunatic? Maybe, but I have experienced the energy drain. Then vs. now? Now is much better, never again HFCS or GMO's) They use corn in a lot of other things as well.

Soy, lovely soy. Toted as a health food, incorporated into almost every food out there. Soy is one of China's 5 sacred foods. Guess what? That was because it was used as a nitrogen fix for their fields. They never even ate it for millenia until they figured out how to ferment it, alot. Then they only ate it in very small quantities. Why? Because it is a known toxin, it is highly indegestible, an accumulator plant that takes up all of the nasty chemicals that are sprayed on it. American's get a hold of soy and they run around toting it as a cure for womens menstural problems, heart disease, etc. . . Telling everyone of how healthy the Japanese and Chinese are because they eat it. Well, it's true they eat a little bit, but not nearly the quantity that Americans have been eating. I have also seen reports that Soy is contributing to the feminizing of American men (i.e. they are growing breasts, and there manhood is getting weaker). Look for the Weston A. Price foundation online for more info.

Wheat is also a problemetic crop, it is not that wheat is (or was) not nutritious. It used to be very nutritous. Yet wheat too has undergone many changes in not to short a time. It has been genetically altered (to increase the gluten content), it is highly sprayed (to keep away pests) and it is highly refined (to feed Americans obsession with white bread). As an interesting side note, the ancient egyptians were the only ones that could afford white bread in antiquity, because they had slaves that they forced to go through the tedious process of seperating the wheat germ from the berry. It is also interesting that the egyptian rulers had dental cavities and more problems with illness than there slaves. So Americans come along and figure out how to do the separating with a machine and then they make everything they can out of their "white" flour.

How does this all relate to the economy? Well the subsidized crops are not or were not in great demand until they became subsidized. Then because we had so much of this stuff we creatively put it everywhere. The subsidizing of corn has led partially to the world food shortage (because other crops have not been grown and there have been failures in wheat crops). There are other ways that this relates but I can't think of them off the top of my head.

Well actually, the failure in crops, the massive hunger, has led us to have to pay for food aid. Large scale farms, create a great demand for oil. Oil is a limited resource that is running out, we don't have very much so we help defend oil producing countries and go to war (Iraq and other wars) to defened and aquire oil. (See the movie A Crude Awakening). This leads to massive spending, which leads to massive deficits, which leads to inflation (the government prints money without gold to back it up), which leads to things being unaffordable.

In comes the white knight, the credit industry. If we can get a loan then we can "afford" a car, a house, in some cases food and clothing. How dare we save our money, it's UnAmerican. We need to buy more, that's what good ol' Pesident Bush told us to do after 9-11. BTW we were in big trouble, even then and they all knew it. So the subsidizing of our lifestyles has made the cost of everything to go up (partially, remember inflation from printing too much money?).

More demand for a product, clothes, cars, houses, makes people want to get in to sell the product. So more clothes are made (as cheaply as possible, since they are meant to be used a short time and then thrown away), more cars are made (as cheaply as possible as well), more houses are made (also a lot of times poor quality).

How is this bad? Well think of it, everyone is not satisfied with what they have, they need new clothes, new cars, a new house. They don't want to save there money, so they are given loans. As long as they are working this is alright, right? Not really. They are now beholden to others, they are virtually slaves. But they are willing to do this, they get to drive their nice car, live in their nice house, wear their nice clothes. (Unfortunantly a lot of these people will be driving no car, have no house or clothes, sad).

Then what happens? It all starts to fall, the price of gas increases, the price of food the price of clothes. The demand for houses keeps going up, so people keep building. There are so many people building, the price of materials increases. The price of existing homes increases. What about those people who want to save their money 20% down and then an affordable mortgage? They want a home they can expand and put their own labor into for extra equity. Well too bad, the competition has forced contractors to build homes with all the extras, with finished basements, and a spa out back (please come buy my home). Guess what, the price of everything has increased (incredible how can this be happening). Very few people can afford to save 20% down and they can't even find a home with an affordable mortgage (houses cost to darn much). So "hero" loan officers come in and offer you a chance to get into your home, take out a loan for the principle and a loan for the down payment. Now you know and I know that something feels quite wrong here, but everyone is doing it, it seems to be working for them.

Now BOOM, it all explodes. We have too many homes, that cost too much (builders are dying here they put so much money into the homes they built, should have built smaller and more affordable). They file bankruptcy, they cant build anymore, they are out of work. Everyone out there who decided to buy their dream home they can't afford has been working two or three jobs. Maybe both mommy and daddy both, but guess what they can't do it anymore and they lose their home. This adds to the amount of homes for sale on the market. People cant afford their new clothes so retailers can't sell their clothes. People are putting money on credit cards to buy food, guess what they are still going to have to pay the piper. Banks are in trouble, because they have lent money to people who have overextended themselves and are going bankrupt. So guess what? We have banks going bankrupt. Where does it end?

Here comes the government, they are going to "Bail" out the banks. In all seriousness, and I am scratching my head here, do they really think that this is going to be a long term solution? Bail out the banks, what a joke. Everyone in America is suffering. Even those that lived on a budget, saved their money and didn't buy a home they couldn't afford. Some of them are reaping the benefits of their thrift and are now getting affordable homes. Some of them, still are not able to buy a home. Why? Because they have lost their jobs, they have used their savings and feel like they are getting no where (That's us). So what would bailing out the banks do? Perhaps temporarily this would calm the stock markets. It would also, reward people, executives, for there poor behavior. It would create 700 billion dollars more of inflation, this is an indirect tax on all of us. As if the war and spending on all of the natural disastors of the last couple of years has not hurt us already. Inflation, means the cost of living (everything) will continue to rise. Is this bailout a solution, NOT AT ALL. I don't know what the solution is, but I know that the underlying instability of the economy right now is scary and it leads me to my solution.

To be happy with what I have and grateful, to make a garden, to walk if I can to buy my food. To take care of the environment (I haven't even gone into how all of this is indirectly related to how poorly we have been treating the environment). I also haven't gone into a diatribe about how the GMO's and poor eating habits of Americans are increasing the cost of health care creating the big demand for the health care industry (health care, I think it should be sick care). Which also strains our economy and makes the big guy's rich and the rest of us poor and sick. That triad can wait for another day, there is a lot to say about that.

Anyway, I am sure I have left out a lot, and that there are other perspectives out there (one which my neighbor holds is that this crises is from the cost of foreign oil, give me a break). If anyone can expound on this futher please comment, it would be interesting to see other perspectives.

~Strawberry Girl

The Age of Innocence Lost?

I have been thinking about the global economic crises and about how things have been in this country, in the world, for the past 100+ years.

America has been a land of freedom, a land of people searching for that freedom. Freedom has been an expanding, vague desire that has been sought after throughout the ages.

Children seek it when they are growing up, adults seek vacations and the freedom to do what they want with their time. The desire for freedom is a powerful motivator. Yet it can lead to an undesirable end.

Frontiers men seeking freedom left the company of people and wandered off into the wild to hunt and be on their own. Did they end up lonely and unfulfilled? One might think so, but can we be sure about that. My idea and your idea about what makes us happy are intrinsically different.

Children want to grow up, to be able to make their own choices, to earn their own money. This desire isn't bad, it just is. The consequences of growing up though are deeper than they first appear.

Yet, I think that people are happier when they can make their own choice, in fact I think that no matter what the circumstance taking control of your own mindset and "choosing" brings us satisfaction.

Back to my original subject of the freedom that has been sought and is still sought. Think about this the choices of our ancestors have to a large part made us who we are today. Could they have foreseen that their excess has led to our deficiency? Can we see that today?

There was this illusion, that the great trials of human kind had been conquered, health, disease, economics, government. As I was growing up, we talked about these things in the past tense. People used to deal with plagues, people used to be enslaved, people used to die young from mysterious diseases. Antibiotics were the miracle cure, as well as immunizations.

Now it's kind of amusing, but not really, that we are worrying about these things again. People thought that poverty was on the decline and that someday soon we would solve the great dilemma of it. Homelessness was an anomaly, those homeless people, crazy right?

Well it's like someone opened a can of worms, and people are realizing that these assumptions are overly optimistic. The capitalistic economy is being questioned (although it's not really fair because it has never really been given a chance). The use of antibiotics and immunizations is questioned and even being called a folly. Even the very foundation of our government is being questioned.

It is not all fair (although I do wholeheartedly agree with the folly of overuse of antibiotics and immunizations). Why do I say that it is not all fair? Because it has not been a pure experiment, other determining factors have been introduced and continue to be introduced. In fact all of the recent tinkering with bailouts have been a deviation from the course, both of capitalism and free government.

I think it is partially an issue of control and trust. For capitalism to work without being too harsh, there has to be a measure of public charity, for when things go bad. Instead of the government stepping in to feed the poor and look after the public welfare. There has to be people who are willing to devote their time and talents (such as doctors and dentists donating their time and money) to the public welfare.

Has there ever been a group of people (politicians) who could hold back and let things work without jumping in even when they know they are going against principle? Is there any way to keep greed out of public service? Maybe we can't really expect that. Think about it, we hire these guy's to do something, what are they going to do? Something, which is make laws and tinker.

Maybe we should require a certain amount of volunteer time from the people making the laws. Give them a challenge to do something collaborative with a group of people that's really going to make a difference. Like a community garden, or health care institute.

Benjamin Franklin set up a school with a trust fund that is still in existence today. George Washington devoted his time and refused to be king. If our country could have been run by George Washington’s and Benjamin Franklins (who did have his vices), could things have turned out differently?

What if we all had the same kind of education, the same viewpoints, would things work well then? You know I think there is something to the idea of more public service minded politicians. What if, instead of thousand dollar a plate dinners to benefit campaigning, these guy's held help your neighbor nights where groups of people got together and talked about their concerns and came up with ways to meet each other's needs. . . Anyway, I guess I have gone on long enough, I didn't even know where I was going with this. What do you all think?

No More Doom and Gloom

OK

I am getting stressed out following what is happening with the stock market. But I can't let it keep affecting me like this, I havn't gone on a walk today, I have been running around trying to do things to keep my mind off of what is going on. So I am going to take a nap and then go on a walk (or vice versa). I am going to evoke my monthly period coming up as an excuse for the extreme emotion, because I am usually quite mellow and focused. Today however I am going nuts. Plus my husband has decided to join the SWAT team for the police (he has always been randomly interested in the police) and wants me to look up the price of a sniper rifle. (Yikes, I don't like this). I think I will write later if I get anything interesting to say.

~Annie

Different Thoughts of the day

I went up to my husbands former employer today to deal with our 401 K, scary hu? His boss is married to a really preety lady that has been intimidating to me in the past. But today I was ok, I think I am feeling secure enough with myself that I didn't feel intimidated.



One thing though that has been on my mind is the differance in the amount of money that we have. It's not really an envy thing, I really appreciate what I have, but it did cause me to rethink my priorities a bit.



For one thing, they have a lot more at stake than we do in their 401 K. That is good in some ways, and of course if the US economy grows and keeps going then they are better off. But what if there is the off chance that the US economy totally flops? What if inflation grows totally out of control and the value of peoples portfollios is completely wiped out. They having a lot more will feel a lot worse than I would. What if I lost everything? Well right now, I feel secure in the idea that I will be taken care of. I know it seems naieve but that is how things have worked out for me. about 6 years ago we did lose just about everything and I was scared stiff. We had no car, no jobs, no money. What did I do? I prayed my guts out and worked through our problems to find a solution. Things worked out.



So this line of thinking led me to think about my general attitude about things. I realized that I have a bit of a defense mechanizim for when things get out of my control, I just let go. I stop thinking about what is bothering me. Our money situation and our business have really been bothering me, I have no control over it and I have had to let go. But that leads to problems. I get really aimless about life. It is hard to figure out what to do with myself and I let other important things slide also. So today, I took a look at what was happening and grabbed a hold of the reigns and started doing something productive again. Just in the nick of time I hope. Of course I haven't let everything slide, but it feels good to be trying a bit harder again.

Well I think I had better get to sleep, I will write more on this line of thinking later.

~Strawberry Girl

Banks

American's

The propossed bailout for the banking industry cannot be allowed to pass without protest. Write your congressman. Here is a link to a website to oppose this bailout

http://stopthehousingbailout.com/

and here is a link to contact your congressmen

Economic Worries

Wow,



America is making the world mad, especially the middle east. More millitary action in Pakistan!! Of course I can see how we need to get rid of the threat of extreamist Al-Quaida and other militant groups, but this is not the way, is it?



What is disturbing is the amount of political and military involvement which our government continues to use in other countries. We elect people to go and help solve "Our" problems, not create more for us.

In my economics class I learned that since WWII the government has been using military spending as a regulatory force upon the economy. The theory is that this increase in spending will create new jobs. This theory has always sat uneasily with me. Sure more military spending, more jobs, who doesn't want more jobs? But why does it have to be military spending?

What is better for our economy is for people to responsibly work hard and be creative with their lives. Then for them to save and responsibly buy what they need.

President Bush encouraged Americans to be patriotic and to go out and "spend" after 9-11, what a bunch of malarkey.

Don't get me started on all of the companies that they "bailed" out. This has the effect of lowering interest rates (already being lowered by the fed) and encouraging more people to buy houses. Guess what? That's how we got into this mess in the first place, by people being unwilling to save and wait until they were responsible enough to own a home. That's how the price of houses increased so quickly over the past 10 or so years, that's why people have to work 15 jobs to pay their mortgages, that's partly why mommies are not home with their kids, why crime is on the rise, why the cost of everything is going up. Plus the bailouts and fiat money create more inflation and therefore a tax on every single person in America.



I am looking for ways to avoid being beholden to the government and to be responsible with my life. I am trying to reduce my carbon footprint by buying as much as possible used, buying local, buying organic, buying Certified Free Trade, plus I have a garden, sure this year it wasn't as good as it could be, I am a novice and don't know much about it, next years garden will be better. I am trying to learn about it as I go.

Plus the next time an opportunity arrises to get involved with the government I am going to find a way to contribute. If that means becoming a delegate, I will try to become one. If I had my choice right now for President it would be Ron Paul. I don't agree with everything that he say's but I agree with more of what he says than anyone else (give me a break McCain or Obama, woopie).

That's my rant for now.

~Annie

Having a good day!!

Wow, I feel so healthy today!!

It is ironic I guess that I feel so good, when there are so many terrible things happening today. The stock market is going crazy and it leads me to think again about what the smartest thing to do with your money is.

I think that people need to value more that which is life sustaining and that which leads to happiness. At the least a family should have a bit of land, they should make their home comfortable, but shouldn't get caught up trying to beat out the neighbors. Right now we are renting and fortunately our duplex is on a large plot. So I am trying to make use of what we have by planting a garden and utilizing the space inside to the best of my ability. I feel healthy because what I eat is absolutely uncompromising in the quality of the ingredients. That is best you know, to choose the best and stay completely away from junk.

Then after establishing where you are I think it is important to recognize and work towards where you need to be. I know that opportunities await those who are prepared to work hard for them.

I love the book The Richest Man in Babylon. The central ideal of the book is to save 10% of all you earn to be invested with people who know what they are doing. I think that despite what is happening with the housing market today, people should be investing in real property. Where everyone has gone wrong is that they bought without any money, bought too much and spent too much fixing up there property. You should work hard, save and then invest in my opinion.

I found out that it is ridiculous to spend almost any money on clothes because other people buy so many and then sell them at yard sales or give them away. I also know that not only is it cheaper to cook everything at home, but it is also more enjoyable and delicious.

That's my two cents worth for today

~Strawberry Girl