No irreverence intended, good people of ZK & CFN, but the money really is all gone, and all they’re doing in Washingtoon is little but hastily rearranging the stage pieces so things look sufficiently different from just a little while ago. It is not working. Err, it’s not so much money as it is “real value” that cannot be endlessly generated and spent. As we have seen, the government can print (and sometimes does print) as much money as it wants. It gives out whole pallets of the stuff to anyone who shows up at the Treasury loading dock purporting to be a bank. (Maybe someone will try this with a Ryder truck and a few hundred dollars worth of printed large-format signs pasted onto the truck. How about “Berkshire Hathaway First Savings Bank of Boise, ID”?)
Don’t get me wrong: the government is free to print as much devalued paper money as it wants and distribute the stuff as it sees fit. It will most certainly continue along in this “spending” pattern as long as it can. Even now Obama is calling for a “larger economic stimulus” than the one Bush did last year. At the time Bush did it, it was called a giant payday loan, since the money would have to come from next year’s taxes, plus interest of course. If the plan amounts to the $700Bn Obama is talking about, and it goes to the people and not companies, it will work out to be something like $3,000 per household on average. I feel it will end up being in the $1,200~$1,800 range, due to the inevitable compromises that will be worked out in Congress, but that’s just a guess. It will be just as ineffective as the last one.
Anyone with two or three brain cells to rub together knows that you cannot simply /manufacture/ money and expect it to be worth the same as money that was earned. In fact, it is widely known that the only way to make money for real is to earn it by selling goods or services that others will pay for, then save some of it and plow it back into operational investments. By denominating that honestly-earned money in the same units as freshly-printed phoney money (US dollars, for the time being) the powers-that-be are effectively pulling the same kind of stunt done by all those bond-rating agencies that took in bags of subprime dog-crap loans, sprayed Febreeze all over them (thanks DanaJ), and resold them as AAA-rated investment securities. They are calling it the same kind of money even though it is not really the same kind of money.
We are in a phase of the game which may be later called “values reverting to norm”, that is, if anyone can still look at that time in history without revulsion or feelings of awful shock. There are whole classes of items that are getting more expensive and harder-to-get now (or steadily holding their values) and it’s not too hard to connect the dots and group these things together. For instance, anyone manufacturing stuff like woodstoves, weapons, ammunition, basic tools, etc is probably sitting on a gold mine ~ and probably knows it as well.
Woodstoves used to be plentiful at the local flea markets, but in by midsummer 2006 they had all disappeared after getting pricier very quickly.
There are other things that hold their value well: cigarettes by the carton; heirloom seeds; quality gardening implements; new and used weapons; land close to town that’s good for gardening; well-built houses situated in convenient locations for them who don’t want to own motor vehicles; alt-e implements like water- and wind-turbines, solar panels, charge controllers & regulators, etc; quality bicycles and other transport not requiring fossil fuel; and so on.
These things may hold their values well even if (or especially if?) things get to the point where local currencies, hard-money currencies (silver & gold coin), or barter systems replace the soon-to-be-worthless green pieces of paper we now use for value markers.
The big point that the Washingtoon idiots are attempting to disguise (thus far almost successfully) is that they are attempting to fill a quadrillion-dollar-sized hole (adequately represented in size by any of the world’s oceans) with a few small bucketfuls of hastily-ginned-up printed money ~ these few hundred billion dollar bailout plans here and there.
The Japanese have begun to wake up to the scam, as was evidenced by the way they suggested last week that the US government issue bonds denominated in some stabler currency, like the yen.
In the category of companies that compromise the customer base at the place where I work, it is very interesting to note that some of our customers are operating flat out, at full capacity, while others are closing their satellite sales office and running their plants at half shifts or even shutting down a few days per week. It is not too hard to figure out what the successful companies seem to have in common. The key ingredients seem to be flexibility-of-operation, business smarts, and nimble organization. That last ingredient is possibly the most important of them. It has only a little to do with the sheer size of the organization in question, but everything to do with /how/ the organization is structured. Is it smart enough to see something coming, perceive it for what it is, and react accordingly in time?
The customers hurting the most (and this is echoed in the larger business world as well) are the dinosaurs organized as badly as the old Soviet Union was. GM and Ford are fine examples of this type of company. When they perceived gasoline getting expensive, they simply made more SUVs and kept telling themselves, delusionally, at golf courses and in business meetings and over cocktails, that Duhmericans really did want all those overpriced gas-guzzling ugly Big Fooking Trucks for use as passenger vehicles. Toyota, on the other hand, saw gasoline getting more expensive and put more resources into production of its hybrid sedan, and later switched some of its manufacturing lines from Tundra pickups to Prius hybrids. Incidentally, the CEO at Ford gets $22Mn per year, while his counterpart at Toyota gets $1Mn per year. Ford needs billions in free money handouts just to keep the lights on and stay in business; Toyota & Honda do not. Could the hint be any more obvious?
The coming organizational shakeout is apt to be impressive. Could not think of a better way to take down the zombified vampire that is globalism. When there is no advantage to be gained by being especially large, the competitive field between businesses will be radically different as smaller and smarter and better-organized businesses make themselves felt. Provided that we maintain the communicability of the internet as it now is (or something even better) we will continue to see more self-organizing business activity perhaps modeled on the same distributed development model used in the Linux world.
As Jim hinted in this week’s post, enterprising people should be looking ahead and imagining what they could make/provide/distribute/sell/trade if they did not have to deal with the Scylla & Charybdis of the modern post-industrial small-business world: bizarre, extensive government regulations on the one hand, and on the other hand competition from businesses so large that they can warp the playing field in their favor ~ like GM or Blue*Box*Mart.
Just imagine what the business opportunities would be like if nearly everything needed locally had to come from within a 5- or 10-town radius of where you are located. What can you and your neighbors make? Where is your market? How can you get your goods to market, and who will sell them? What will you accept as payment, and what do people have to pay with?
In that vein, I am trying to stock up on skills and other things I feel may be of use in a world where the scale of business is smaller and more local. I already know how to custom-make clothing to fit, and have a machine that can do everything from mid-weight fabrics up through heavy leather/canvas. Perhaps there will be some local need for good work clothing made of leather. For sure there will be a lot of rough work that’ll need doing. Even if you can make rails locally (melting down SUVs sounds perfectly poetic) setting up a railbed and laying track are hard work. Double ditto for digging canals and their feeder lakes/streams.
Got future? :)