Monday, November 12, 2012

Economics and the downfall of greed.

I just read an article that made my skin crawl.
http://www.foxnews.com/us/2012/11/11/ceo-papa-john-says-employees-hours-will-likely-be-cut-due-to-obamacare/
This is the type of article that infuriates me. It is big business using an excuse to act like they are the victims of the legislature that impacts small business. I did the math people. Papa John's had a profit in excess of 1 billion in 2011. So basically, they lost .5% of their profits. Never mind the fact that they are growing and average of 4% per quarter. Wake up people. Big business has been doing this for the last 20 years. Specifically, the food and retail industry. The food industry has been exploiting immigrant labor for years. Listen, Im not anti immigration. Whoever has a dream should be allowed in this country. However, you should treat them like an human . It is what is killing the jobs in this country. It is people too worried about penny pinching and not making an investment. A good employee may cost more in the beggining, but he pays off fifty fold. People are your most important asset. An investment is something for the future, not for now. If you want a great insight to how big businesses are run, I suggest you read The Midas Touch by Donald Trump and Robert Kiyosaki. It is the Donald and the dude who wrote Rich Dad, Poor Dad. I actually learned about what money is.
I will give you a quick synopsis of what actually is our system of economics is.See, we are taught the wrong things in school about economics. We learn way to much about supply and demand. This actually is not what our economic system is based on. This is just a common sense business principle. Humans want what they perceive to need. Actually, this is just a psychological fact. We learn more the psychological principles of business rather than what business actually is. The basics of our economics is based on debt. We have good debt and we have bad debt. Good debt is debt you can pay off. All the big business men such as Richard Branson and Donald Trump talk about financial backing. Big businesses need debt to operate. Early in our country, the rich used debt to acquire wealth. This is where he gets into the 4 quadrants of business. There are employees, small business owners, big business owners, and investors. The first sector, employee, focused purely on credit until the 1970's when credit cards took off. Small businesses focus on obtaining liabilities aka  the big house, the fancy car, and the lifestyle. They never become wealthy until they cross over into the third quadrant, big business. Basically, what they do is get a huge loan and try to get handouts until they can pay it off. When they pay it off, the profit is all theirs. See, alot of people try to invest money they earned and that decreases the actual profits. They earn money they never had in the first place.
 Let us fast forward into the 1980's and 1990's. This was the period of living large. We artificially enhanced our lifestyle by living off of credit. The problem is that we had nothing backing our dollar bill because of Richard Nixon in 1971. The real reason the dollar keeps getting devalued is something called the reserve ratio which noone ever talks about. Right now, it is 10:1. For every one dollar you put in the bank, they can loan out ten. It adds up real fast when you are talking thousands of dollars over millions of people. Thats up to billions of dollars real quick. The reserve just keeps creating more money.This is just one piece to the economic puzzle. And this brings us to our last quadrant, the investor. Because cash is a liability.it does not generate value, in fact it loses quite a bit of it. Investors buy into assets, or things you own that generate constant income. The example he used is apartment complexes. Assets is not land. An asset would be a track of land you lease out to deer hunters during the season, or farm a subsidized crops on. A car is not an asset. A limousine that you rent out is. See what I am getting at. They are basically using cash to get more cash. They are not saving, they are constantly spending.
 Here is the second piece of the puzzle. It is the lack of manufacturing in America. The fact is that we hardly have anything made in America. This does not bring any additional income in. This is why increasing spending or raising taxes does not stimulate the economy. It basically makes the money change hands. An example is lowering taxes to increase spending. Alot of stores have bonuses tied to sales. If the store had great sales, the employee and the company gets more money. Tax hikes just put the money back in the hands of the government. The problem is that we are become a service oriented society. It is very hard to export a service. Until we realize that maybe we can spend a little more for things that will help us. The reason why manufacturing in America is so expensive is our standard of living. This is the basis to why we are having trouble getting out of this recession.
The problem is that the downside of capitalism is the early bird gets the worm. The wealthy have purposely kept us in the dark to what the true nature of economics is. I am not endorsing socialism but our system of economics system needs to change. You cannot have currency worth negative nine dollars. It also affects how much of imports we can buy. It is a complex circle. If we want to prosper, we need a ratio of 5:1. we can loan one dollar for every five we invest. The problem is that big banks would never agree to that. This would essentially shut them out of business. These days, our economics are more or less wealth wars to who gets the money we invest. I hope I can educate you on what really is going on here. Please pick up The Midas Touch. No I am not paid to endorse it, but it did educate me to the true money of nature and business.
Have a wonderful day.

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