Why can I clearly see the impending economic depression and economists can’t? I’m not smarter, I don’t have better information, but I am using a better tool.
Imagine a world where everyone had to dig holes using just their bare hands but you processed the only shovel in existence. The shovel would allow you to dig holes at seemingly a super-human rate. In fact you’re not stronger or faster, you just have a better tool.
The tool I’m using is a powerful conceptual device called the Complex-Systems Theory of Culture (Gehlsen, 2009 - Amazon Books). This theory scientifically explains cultures and cultural behavior from the perspective of complex evolving information systems. From this perspective economic systems are fundamentally evolving information systems.
Economic systems are just one aspect of a culture, and they can now be understood scientifically. Evolving systems are open systems that are dependent on a flow. At a practical level our modern economy can be understood from the perspective of the flow of money and goods.
The foundation of the American economic system is based on the flow of money that is produced by consumer spending. The financial institutions that economists are typically focused on are not the foundation of our economic system - they are the emergent properties that are produced by the flow of money.
I can see the impending advance of the next devastating depression because I am standing on the shoulders of giants and using their tools. I stand alone, and use this powerful tool. The power of science is that all of you have access to this tool, and you can also learn to use it to see what I see.
Showing posts with label cultural evolution. Show all posts
Showing posts with label cultural evolution. Show all posts
Saturday, September 19, 2009
Friday, September 18, 2009
Blowing the Next Economic Bubble
Another disastrous “economic bubble” grows unsuspected by political leaders and economic experts.
A typical “bubble” represents a condition where the economy grows to an artificially high level. The current bubble is caused by unemployment insurance holding the declining economy at an artificially high level.
The American workforce lost more than 6.5 million jobs since the beginning of 2008. Consumer spending would have declined “naturally” without the unemployment payments, and our current economy would have spiraled down to a much lower level. Unemployment funds have maintained consumer spending at an artificially high level, which keeps the economy artificially elevated.
The pressure on unemployment insurance increases each month as hundreds of thousands of additional jobs are lost from the workforce. The national debt is already a sickening burden, and the government is rapidly approaching bankruptcy.
Eventually the demand for unemployment funds will exceed the available resources, and the dispersal of checks will abruptly stop. The “unemployment bubble” will burst, and the economy will once again “correct” by plummeting into free-fall.
When this bubble bursts the “economic correction” will result in millions of additional jobs lost from the workforce with a corresponding decline in consumer spending. We can avoid this painful experience by implementing a plan for immediate economic recovery. Economic recovery can be achieved by restructuring consumer debt, as stated in an earlier post. Consumer spending would increase because less money would go to payments on existing debt each month, leaving more money for consumers to spend on goods and services. This increase in consumer spending would create a positive feedback process, which would result in economic growth and more jobs.
This bubble hasn’t been caused by reckless risk-taking, corporate mismanagement, or even unbridled greed, but it is going to be just as catastrophic. This is a good example of how aspects of a complex system that were intended to benefit the system can actually contribute to its destruction.
A typical “bubble” represents a condition where the economy grows to an artificially high level. The current bubble is caused by unemployment insurance holding the declining economy at an artificially high level.
The American workforce lost more than 6.5 million jobs since the beginning of 2008. Consumer spending would have declined “naturally” without the unemployment payments, and our current economy would have spiraled down to a much lower level. Unemployment funds have maintained consumer spending at an artificially high level, which keeps the economy artificially elevated.
The pressure on unemployment insurance increases each month as hundreds of thousands of additional jobs are lost from the workforce. The national debt is already a sickening burden, and the government is rapidly approaching bankruptcy.
Eventually the demand for unemployment funds will exceed the available resources, and the dispersal of checks will abruptly stop. The “unemployment bubble” will burst, and the economy will once again “correct” by plummeting into free-fall.
When this bubble bursts the “economic correction” will result in millions of additional jobs lost from the workforce with a corresponding decline in consumer spending. We can avoid this painful experience by implementing a plan for immediate economic recovery. Economic recovery can be achieved by restructuring consumer debt, as stated in an earlier post. Consumer spending would increase because less money would go to payments on existing debt each month, leaving more money for consumers to spend on goods and services. This increase in consumer spending would create a positive feedback process, which would result in economic growth and more jobs.
This bubble hasn’t been caused by reckless risk-taking, corporate mismanagement, or even unbridled greed, but it is going to be just as catastrophic. This is a good example of how aspects of a complex system that were intended to benefit the system can actually contribute to its destruction.
Wednesday, September 16, 2009
The Deceptive Decent into Economic Depression
“Things don’t seem so bad.” I hear this every time I talk about the impending economic depression. Its like falling off the Empire State Building, things don’t look bad until you hit bottom. The approaching catastrophe becomes obvious once you know what to look for.
Gravity is a positive feedback mechanism that makes you fall faster and faster until you strike the ground. The hundreds of thousands of jobs lost from our workforce every month represent a positive feedback that forces the American economy to continue to diminish. It doesn’t seem bad yet, but it is obvious where we are headed.
One of the difficulties of perceiving this process is because it is a delayed feedback. The effects of lost jobs are difficult to see because consumers don’t stop spending money the day they lose their jobs. For example, nearly 2 million people lost their jobs in the first quarter of 2009. This caused a slight immediate decrease in consumer spending, but the full effect of these lost jobs will not be felt until their unemployment checks run out and their personal assets are exhausted. We can expect another significant decrease in the American economy some time in the first or second quarter of 2010.
Our economy continues to slowly collapse because every month the workforce decreases, which leads to a decrease in consumer spending. Each month more jobs are lost because the flow of money can’t sustain the workforce. The first wave of people to lose their jobs in 2008 are still spending assets and unemployment funds. The slow slide towards another Great Depression will begin to accelerate when these resources are exhausted.
Things don’t look so bad – unless you are among the 6.5 million people who have lost their jobs or the 4.0 million families who have lost their homes since the beginning of 2008.
The storm is coming! We can still turn the economy around and achieve immediate recovery, but it isn’t going to be easy and it isn’t going to be simple.
Gravity is a positive feedback mechanism that makes you fall faster and faster until you strike the ground. The hundreds of thousands of jobs lost from our workforce every month represent a positive feedback that forces the American economy to continue to diminish. It doesn’t seem bad yet, but it is obvious where we are headed.
One of the difficulties of perceiving this process is because it is a delayed feedback. The effects of lost jobs are difficult to see because consumers don’t stop spending money the day they lose their jobs. For example, nearly 2 million people lost their jobs in the first quarter of 2009. This caused a slight immediate decrease in consumer spending, but the full effect of these lost jobs will not be felt until their unemployment checks run out and their personal assets are exhausted. We can expect another significant decrease in the American economy some time in the first or second quarter of 2010.
Our economy continues to slowly collapse because every month the workforce decreases, which leads to a decrease in consumer spending. Each month more jobs are lost because the flow of money can’t sustain the workforce. The first wave of people to lose their jobs in 2008 are still spending assets and unemployment funds. The slow slide towards another Great Depression will begin to accelerate when these resources are exhausted.
Things don’t look so bad – unless you are among the 6.5 million people who have lost their jobs or the 4.0 million families who have lost their homes since the beginning of 2008.
The storm is coming! We can still turn the economy around and achieve immediate recovery, but it isn’t going to be easy and it isn’t going to be simple.
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