Economic ramblings

The economy is collapsing because it needs continuous outward growth, perpetual further development to be “healthy”. In most business, they’ll tell you that a cessation of growth is the same as a loss. A failure to make money is the same as losing money, which means that apparently there’s no such thing as breaking even. (Businesses have apparently reverted to the Roman system of numbers, where the concept of zero does not exist – that was the major impetus for switching from the Roman numeral system to the Arabic numerals we use now.)

With the foreclosure rate skyrocketing, and more and more people having less and less money (due in no small part to the ever-increasing cost of oil), we’re obviously headed for a recession at best, likely worse. And there’s only so far that the Fed can trim interest rates.

Side note: For those even more clueless than me, every time the Federal Reserve Board, cuts the prime interest rate lower, what they’re actually doing is trying to encourage people to borrow money from banks. That’s what that interest rate refers to, what you pay the bank on a loan you take out from them. The idea goes that if you borrow money, you’ve got more to spend, which will then provide a boost to the economy, by putting more money into circulation, rather than just languishing in a bank’s vaults. Or computers, since money isn’t real anymore anyway, it’s all virtual, it’s all just bits of information in somebody’s computer system. Let’s see how many digressions I can nest together…

Anyway, back to interest rates. There’s only so far down they can go, before that buffer is tapped out. And it appears to be done at this point. This article was written a little over two months ago, and obviously things haven’t gotten that bad, that quickly, but the way things have been going, it’s only a matter of time. And he’s got a much better handle on the large-scale stuff that’s happening now than I do.

According to that, we’re going to see prices of imported goods go through the roof because our money is worthless abroad. Add to that that the cost of actually transporting the junk is climbing, and local goods are going to be more and more affordable.

Over the longer term, as costs of transportation become more and more exorbitant, the Wal-Marts and such will fold, because they won’t be able to ship their junk from China and distribute it to all of their stores cheaply anymore, forcing their prices up and allowing local businesses to be more competitive. And people will have to do something, as those major chains will be closing, meaning a spike in unemployment, and even less money available to spend..

Many fruits are likely to drop in available quantity and quality, because they can’t be produced in the immediate area. Books are likely to become disgustingly expensive, because they all have to be shipped in from their respective publishing houses. As if people really needed less reason to read. Use your imagination.


Another side note: Ron Paul wants to eliminate the IRS, and make government revenue based entirely on a 23% sales tax. The only down side I see to this is all the people who work at the IRS being unceremoniously dumped out of jobs. Also out of work will be everyone at H&R Block and similar companies that are entirely based on doing people’s taxes.

In its favor, the people who have the money to spend will be taxed more than those who don’t. Granted, that means that prices will spike, because of the high tax rate, but paychecks will dramatically increase as well, because you’ll get a hell of a lot more of what you actually earn. It will take a period of adjustment, but I do believe that this will be a good way to prevent the rich from wrangling tax breaks, while the poor get fucked, because they can’t afford people to do their taxes for them.

The other positive aspect I see from that is that it will indirectly contribute to the fall of the major corporations. As prices go up, rather than paying the exorbitant tax on commercial goods, local cottage industries will spring up, based on barter. If you can go to the local farmer’s market or swap meet and trade a bushel of fruit for a blanket, basic staples everyone needs, why would you go to the huge store and pay out the nose for it? Wal-Mart, McDonalds, Pepsi, Starbucks, are all so large and cumbersome that they have to work on cash, for standardization purposes. They won’t be able to stand up to a fleeing customer base who would rather trade with others who are willing to eschew money as well.