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of Economic Views - Flaws in the Financial
Standard Model There is an essential fault with the presently conducted Economic System. The flawed practice orients the overall corporate and financial practices goal to producing more cash. An espoused philosophy of late, commonly attributed to Milton Freeman, has been embraced with zeal and sans prudent review: that making money is good and all things therefore should devolve to "the bottom line". This ignores the basic reality of the value of cash and of economic health. The simple reality, and for which there is an equally simple correction, shows that cash is not wealth and the unmanaged pursuit for cash will be destructive to economic health for any nation. Our system is based on the following: The value of Cash = the value and health of production. Cash value = Production and goods. Sustainable wealth for individuals, companies and corporations must produce endeavor that supports production in the country. A strong US Dollar depends entirely on strong production within the United States. Endeavors that are not in support of production, reduce the value of the national currency - for everyone using that currency. If a company were to make ALL the MONEY; and put it in a room, each dollar would reduce to zero value. As well, if a company took half the cash from the economy, the value of each dollar would instantly reduce in half - for everyone and including the cash taken. All people would then need twice the cash to pay bills but at the same time employers would have to let half their employees go and reduce their production by half. Of course such would reduce the value of all cash - within and outside the country, then again, to about 20%. This cascade in the devaluation of the money-base would, of itself, slow the whole of the economy to below 20% of its original potential, reducing the value of cash further. The more they take, the less it's worth - for everyone. Not understanding money has been a root problem in money management. Money is not a specific asset and cannot be owned. -Money cannot be owned.- The total cash volume is the asset of the nation - where value depends on the healthy exchange of cash through the system. US Dollars are the cash assets of the US Citizens. Money belongs to everyone. Removing cash from the production of the country destroys the value of money itself and is also self-destructive to those who would engage in it. Such financial mismanagement has been based on the notion that cash has its own value, that cash is a possession somehow divorced from the economy of the country. Cash does not hold a free value. It's value is directly connected to its use by others and must be available in the country as a whole. OR its value drops for the country as a whole. US Dollars can be seen as the cash-holdings of the American family. Its our money. If one errant boy, in a family, behaves badly with of a piece of the family wealth, it hurts everyone, including the tinkerings of the boy. Mismanagement by one, drops value for all. Thinking cash has its own free value can be akin to thinking the blood in ones veins has the essence of health and one should then have more health by taking it out, bottling it or controlling it. But its just the opposite - it has to remain free-flowing and in the system. Or the system dies. Unfortunately for such notions, the country -and every dollar in it- shows most economic health when everyone has an easy free-flowing cash at hand - both producers and consumers. The key for economic health is not cash but investments that support production in the country. How can a corporation produce wealth if its actions are destroying the value of the cash it is trying to make? New Rule: Invest in Production and All Sins are Forgiven |
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