Ultimately, I have a bit of a contrarian view that in the current system, I think additional debt is needed to be taken on. It’s a very wild view because essentially the system will break down at some point. The debt can never really be paid off because only the principal of the loans are created, and over time, eventually more debt will cause the payment for the interest on the debt will be so large that expansion will not be possible. Because of this it is required that there are booms and bust cycles, and that foreclosure, bank seizure of assets, and inflation over time, with major deflationary period will occur. The system is broken, designed so that the banks win. Given that we are in a broken system, we need people taking on risks and going into debt. Why?
Consider a world with 0 debt, 0 leverage 0 risk takers, and 0 innovation. This is a world were people have to catch fish and hunt with their bare hands just to make a meal regardless of the amount of paper currency in existance, or lack of currency. On the other hand, an innovation full of risk takers would at least yield innovation. I don’t think it should be neccesary that debt be the vehicle needed to get innovation working, but in a leveraged system, it is the norm for doing business. 9/10 businesses fail, and many that succeed may not even do that great, but those that really are a successs improve society to make up for all of the use of the resources that the failures wasted. It’s like a primitive island with thousands of people fighting for every meal by hand, and someone risking starving to craft a tool that can allow them to hunt twice as much food. For all the people trying to craft a tool and failed may have starved. They may have even borrowed the food from the others and required them to starve as well. They may have made great sacrifices, and society as a whole may have to endure greater sacrifices. They may even have a period of starvation in which half the population starved to death. However, even with that insane amount of sacrifice, it still would more than be worth it, because it is needed for society to advance, and the future of humanity survive. If they didn’t take on that risk there could be no complex invention, no ability to provide a better life for dogs and cats, and no means to protect other endangered species, no ability to use computers, to travel in outerspace, to build monuments, to craft music, arts, to provide humanity with such a high quality of life that it’s possible to reach a point in which humans can sustain long lasting life while only having to work 40 hours a week and at some point not have to work at all for the remaining years of life.
You may need to have several people attempt to fly and waste not only resources that could be used on other things, but also the work and people that could be effectively used to produce more for humanity. Ultimately it is because one of those will succeed, that it’s worth the failures. Travel can be worldwide with ease and commercially available for all because of it. I think that the ability to raise capital through loans, and selling of stock, through private and public investors, is ultimately neccesary to compete in an environment where the financial system is based on a currency that’s meant to lose value over time. Unfortunately all currencies eventually go to zero and the nations that build empires based on the manipulation of phony wealth without the material means to provide such wealth in tangile assets will ultimately collapse, or at least that’s the way it’s been. However, america has thrived on such a currency because it’s been able to innovate.
Despite the federal reserve allowing market manipulation in the 20s, and Kenney’s assassination resulting in a response in which war was declared on poverty and vietnam and other things resulting in huge amounts of unfunded liabilities through social security and medicare that’s nothing more than a giant ponzi scheme, along with the war spending that resulted in the only political acceptible means to take the country off the gold standard entirely. Despite the fact that america was potentially on the verge of very rough times if not for major innovative aggressive action by paul volker to hike interest rates, and fortunately the baby boomer generation was able to start up companies and work in jobs and become the most productive generation we’ve seen which was able to buy homes and keep real estate prices soaring despite the inflation and rate hikes. Despite the fact that the country was almost certainly going to go bankrupt in the late 90s if not for the innovation of the internet boom.
America has battled through both world wars, other major wars, huge costs, yet still were a part of industrial revolution, internet revolution, innovation. We’ve been behind the invention of many of the goods in the entire 20th century thanks in large part to major innovators. Tesla, Edison, Henry Ford and the list goes on.
There is a concern that many of the titans of industry are gone as the bankers don’t produce anything but paper from which to do trade, and some of them make more money from computer transactions than anything else, basically just getting money like a bookie at a racetrack, or from gambling themselves on market direction.
There are very real concerns that there isn’t a single television producer left in the US. There is a concern that there is no US enterprise. I highly disagree. I think innovative minds like the founders of google, yahoo, microsoft are very crucial. I think Apple and Google are going to do even greater things for us. I think Netflix has a tremendous proven model that they’ve adapted to the movie rental scene and in a unique way. I think Chipotle is a modern day McDonalds franchise. I think the greatest companies are yet to come. A lot of major innovation simply comes from taking an old model and applying it to a new business. Netflix applies the same model as federal express for being able to deliver videos. Blockbuster applied McDonald’s franchise idea to the rental business as well. There certainly are other nations that are innovating but that’s a good thing. Ultimately the important thing is not the financial system, it’s the assets and resources, the innovation and the businesses that are created regardless of the system, and the laws that allow them to compete.
Many of these game changers are long tale rare events. Some of them are very rare and would be “black swan events”.
Black swan events can be positive or negative. The US would have been broke in the late 90s if not for the dot com black swan of the internet boom. Then the black swan of 9/11/2001 set us on a course for destruction. Just like when Kennedy was shot and we leveraged ourselves like crazy to try to move back towards prosperity, we did the same after September 11th. We will have to have a positive black swan to get us out of this and it may need to be at least 10 times greater than the internet boom. Like cost free energy or flying cars. If history is any indication, things will actually get better in the long run in spite of the negative events that may be harmful in the short run. I am confident that there will be innovation there’s a tendency for human beings to find a way to come together and survive, thrive and improve life.
I don’t let the facts about some things influence my view on the human spirit. The idea that leverage could ruin us may be true, but behind the paper the risk, the leverage and the negatives are an incredible will for the human race to improve over time. That’s not to say that the very will won’t be tested. In fact, history shows that there will be major periods in which the human race is tested.
Although a black swan such as a terrorist attack in a moment when the financials were leveraged, and the dot come boom, the subprime crisis, the alt-A loan crisis and the coming option ARM crisis can certainly bring about some huge effects, we could see a black swan that absolutely transforms society in a positive way.
Personally, I think there throughout history will always be major breakthroughs and major tragedies. Eventually society will approach a point in which we will be able to share the risk collectively as well as share in the profits so that every person on the earth can enjoy all the luxuries that the richest man alive today can enjoy. Hopefully that comes sooner rather than later, but a black swan event such as a breakthrough in free energy, a breakthrough in our ability to produce fresh water from ocean water, our ability to use natural gas and other resources more effeciently, flying cars, an electric car revolution, a coal revolution, a breakthrough in extracting oil from algee, a huge boom in robotics and nanotechnology, and any major cure for resource depleating activities, or breakthroughs towards resource generation could absolutely keep america as a very wealthy union despite the amount of debt to GDP as wealth would flow into the country.
Certainly politically an abolishment of the federal reserve the CIA the FBI and american industrial military complex and resource draining activities along with a tax cut to 0 and more encouragement of charitable causes or other game changers could attract tons of wealth from other countries and tons of entreprenuers that could make our world better. However, the liklihood of that hapening is probably not as great, and in many ways, beyond our control. On the other hand, learning how to take an idea and raise capital and protect your personal assets and potect enough of your personal assets so that you can afford to fail as long as it takes until you can succeed is in fact within our control.
If you want more income, there’s plenty of jobs and freelancing tasks available on the internet. Sure they may be temporary and may require certain skills, but those skills can be learned in many ways through free information that’s available in the internet. Combined with delaying gratification, smart decisions and energy conservations and frugality, you certainly can save up enough money and learn enough to draft a business plan and do enough work to present it to enough people to make it work.
Recently there isn’t many excuses anymore. The handicap once could just blame their lack of success on their disability, but now there are plenty of people who can succeed anyways. The only disability is self-deprication of one’s situation. Enough desire to create something greater and enough work ethic is all that’s really needed along with the correct knowledge to impliment whatever idea it is that you have.
If we all are armed with more information than ever before and we are able to create a society from which we are able to advance from humanity. And out of neccessity and fear of hardships comes some of the greatest breakthroughs. As it has been said, neccessity is the mother of all invention. Well it’s time to take action now and to innovate. What are you personally going to do to profit from this. I would suggest owning some metals, stocks and commodities, I would suggest owning some bonds, cash, and foreign currency, specifically, yen, australian dollar and canadian dollar. But that’s more of a protection of your wealth and a sharing in the worlds growth. The real growth has to come from your own business in developing something or creating value.
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