January 7,
2011
MEMBER
EDITORIAL
The Solution is the Problem
By IVAN BELIVEAU |
The problem with problem solving is defining the problem. Most people spend an inordinate amount of time trying to correct the symptoms of some ailment without actually identifying the underlying condition. For instance, many people will spend a lot of money on various stimulants trying to overcome the symptoms of extreme fatigue without ever going to a doctor or taking action to see if there is a serious underlying medical problem. The same failure is true in the financial world. There are systemic financial problems that must be identified for a real cure.
There is a problem (for some) with rising prices. Rising food, fuel, road salt, paving materials and all kind of commodity item prices are going up. Many would like to see higher taxes, more government aid and “stimulus” to correct these problems. Is the solution the problem, however?
The video link below gives a hint as to the source of the problem. Two friendly redneck types have the audacity to ask about 3.3 trillion dollars. Where did that money come from? Never mind that the government/central bank is bailing out other international central banks.
VIDEO: http://www.thinkbigworksmall.com/mypage/archive/1/55002
Consider that the “government” is the problem. What if the government really doesn’t have the money to address these problems and the only thing that the government can do is borrow/print more paper money (no real intrinsic value?) Is the government borrowing/printing of more money going to devalue the money already in existence and raise prices some more? Is that the real problem in the first place? Will residents demand more government money/aid/stimulus as prices rise further? Kind of a “vicious circle” isn’t it? Where does it end? There are answers to that question that are beyond the scope of this article. It is sufficient to say that there are some serious problems with some rising prices. The underlying problems must be identified and fixed!
An obvious additional problem with rising prices is that workers want higher wages. That is understandable. Who wouldn’t? Most employee unions will jump right on that one…for better or worse. If much higher wages aren’t possible, then another family member must get a job! Two wage earners – more daycare, less parental supervision, more family problems even including extra stress that ends in divorce. It even gets worse if that can be believed.
As manufacturing/research/technical wages keep climbing higher, most companies that sell and compete internationally are forced to move to lower wage countries. Starting to sound familiar?
The whole exercise is like trying to help an alcoholic by giving them more alcohol. An alcoholic cannot be given another drink to ease the pain and discomfort of the withdrawal from alcohol. Likewise, if someone is consistently spending more money than they have, then giving them more money to spend is classic enabling behavior (to use the language of alcoholics anonymous.)
The only hope for the alcoholic (and the financial entity addicted to spending way too much money) is to stop the addiction…cold turkey! At all levels! Period! All else is wishful thinking!
Spendaholics and alcoholics share the same fate: They can’t return to their addictive behaviors!
There is a relationship between money supply and economic activity that must not be violated!
Rising prices and wages will eventually result in higher taxes, property taxes included. Beware!
I just thought that you had a right to know.
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