Punchinello’s Chronicles

June 1, 2009

What’s the Solution?

Today, General Motors (GM) declared bankruptcy. It’s the end of an era. There used to be a saying that what’s good for GM is good for America. Not any more! GM was one of the largest privately owned business systems in history, and although it likely should have gone bankrupt, the current government bailout (a.k.a. takeover) is simply stunning!

So where does this all stop? What’s the solution to our historic financial collapse? Where is all this going?

We can generally say that in any society there are individuals and families, small businesses and town governments. There are state and national governments, schools and universities, and religious institutions. And there are international corporations, multinational banks, and massive enterprise businesses.

At the small level, EVERYone has to follow certain basic rules. When you can’t pay for something, you don’t buy it. When you can’t afford something, you don’t buy it. If you borrow money, you have to pay it back. When you can’t pay it back, you lose your assets.

Another basic rule is that if you want more things in your life, you earn more money to pay for them. You might ask your employer for a salary increase, or you may produce more things in your business. You work more to get more money. With more money, you can then get more things.

Everyone knows these basic rules. And yet all of that’s been thrown out the window over the past 50 years. The introduction of consumer credit cards will turn out to be one of the most catastrophic events in modern history! Instant gratification, greed, envy, avarice, and pride all come into play when people can get easy credit. And credit cards are exactly that: instant money. Everyone forgets that credit cards also mean instant debt!

When we get past the individuals and families, and we get past the small businesses and mom-and-pop companies, things begin to change.

Modern accounting has told us for decades that “macro economics” are entirely different from micro economics. It means that large-scale business doesn’t have to follow the rules the everyone else in reality has to follow. Nobel prize winners, scholars and politicians have wonderfully complicated arguments and “proofs” that all this is true.

On top of that, all the major business schools and highly educated executives tell us that the best (and perhaps only) way to increase income is to cut costs. NOBODY is telling us that increased income is a result of selling more, expanding markets, adding new products, developing new inventions, and producing more goods and services!

Well, okay, there are some people who are telling us this, but not many. For decades, ever since the 1980s when companies went “lean and mean” in order to compete with the Japanese economy, cutting costs was the big deal. Operational profits were the slogan of the day. America had to cut costs, cut costs, cut costs. And then, cut costs.

The Japanese were held up as the miracle of modern economics. Today, Japan has been living with 15 years of an absolutely dead economy! Nobody there has any money, nothing is selling, nothing is growing, nothing is moving, and nobody is going anywhere. Exactly what we want, here in America, apparently.

How come? Why are we trying to replicate not only the catastrophe of Japan’s economy, but the even worse disaster of failed Marxism and the collapsed Soviet Union?

It’s because individuals have abandoned principles and values. Individuals have walked away from the core foundation of basic life and survival. We, the people, have said for years that we shouldn’t talk about politics and religion! It’s always controversial, so we should ignore it.

It’s because we haven’t yet been slammed in the face by the results of our own actions. You may think you’re having some trouble, but the truth is we haven’t even begun to face real trouble! People think that televisions and iPods are “necessary” for survival. People think that political correctness, so-called compassion, and altruism are all viable systems for surviving.

The American culture is completely tied up with instant solutions. When there’s a major problem, people “suddenly” notice it, then want an immediate fix. Throw money at it, and it’ll all go away. Then we can get back to “normal.” This economic collapse has taken generations to develop. It’s taken more than 50 years to put into place. It’s taken a fundamental view of reality that tells us unlimited spending, unlimited debt, unlimited financing, and unlimited profits are all workable in some kind of fantastic “real” world.

The solution begins when we realize that the prices for EVERYthing over the past few decades has been so inflated that it’s a total fantasy. People say we’ve suddenly lost billions of dollars in value. No we haven’t! We’ve simply come to the end of the road for wildly over-priced goods and services!

Gold was selling for $35 per ounce, back in the 1970s. Today it’s selling for $930 per ounce! How is that possible without insane delusions that prices mean nothing, money means nothing, and nothing has any kind of real and objective value?

The solution will begin when every single person living in this country is faced with the difference between “want” and “need.” Life isn’t fair. Life isn’t unfair, either. Life is just life. We can’t legislate peace and happiness into existence. But we can step out of the way and allow individual people to create things. To produce things.

The best way to instantly discover what matters and what doesn’t matter is to face dire consequences and real threat conditions. When you have to make very hard choices, that’s when you begin to think about the real world. That’s when people begin to desperately look around at what can they produce. What can they sell, build, teach, or do that will bring in new money!

Our grandfathers fought for a free country, where anyone with a desire to work and build things could make a good life for themselves and their family. For 80 years, we’ve had the rewards of traditional American values: hard work, everyday freedoms, and a fair and just legal system. And so we’ve taken it all for granted.

It’s easy to destroy things that exist. It’s not so easy to create something from nothing. To have the will and the energy to create, we have to feel an urgency and necessity toward those things. To have the will to shut down the current destruction of the Constitution, we have to feel an urgency toward political and economic activism.

Before that urgency comes into play, each and every one of us is going to have to face real and serious threat conditions. At the moment, only a small percentage of the American population has come to that point in life. It’s coming soon, to a theater near you, and that’s when we’ll begin to look at real solutions.

The bankruptcy of GM means nothing if the government believes that the company must continue to be given free money. Instead of creating, building, expanding, and selling new cars that people actually want, GM did nothing. They should have gone out of business, because if that had been allowed to happen, millions of people would have had to really do something about creating and producing things that make money.

The American dollar has lost 97% of its value since 1917. We’ve gotten rid of most of our manufacturing, development, invention, and creative production. Instead, we’ve all lived on credit cards and bought cheap (or expensive) things from the rest of the world. Now that we’re broke, we’re going to have to start from scratch again. We’re going to have to create businesses from nothing.

That takes real effort, real work, real inspiration and a sense of real urgency. We don’t have that sense of urgency yet. What’s even worse is that capitalism created all that we’ve taken for granted. And the sad tragedy is that a majority of American citizens today believe that capitalism is the cause of our problems!

Now we’ll have socialism and see how that works. And when everyone faces the disaster directly, maybe that’s when we’ll start looking for real solutions.

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1 Comment »

  1. […] See the rest here: What’s the Solution? […]

    Pingback by What’s the Solution? « acc3ss.info — June 1, 2009 @ 8:28 pm | Reply


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