Cultural Capital

When governments arrogate control of banking and currency unto themselves, they gain the power to manipulate the economy to political ends. This power is profoundly subtle when exercised through the diffuse experience of the economy. And when trouble erupts, the powers that be can always blame it on, as we see here in USA today, immigrants, or some other outside group, often the Jews in the West.

When interest rates were manipulated down by the Federal Reserve Bank under Alan Greenspan, excessive consumption was precipitated and production capacity was expanded to meet the demand.

Since credit was cheap and easy (the regulators pushed for lower standards and some lenders broke the rules) people scrambled to borrow money to expand production. More store, bigger stores, mini-storage, more closets in bigger homes to store more, California Closets to organize and fit more in storage, companies installing garage storage bays for the home, home depot offering storage sheds for the yard, wine cellars in homes to store the wine. And huge landfills to store the packaging and older models soon discarded.

The debt was assumed to acquire capacity. The capacity was expected to serve markets or needs. The false premise that real estate never goes down, that we are in a new era of markets only go up, that business only expands proved to be inaccurate, in spite of the fact there was plenty of clear, available, articulate arguments to the contrary. People believe what they want to believe.

The debt remains constant, but the income is dropping fast. The value of means of production, the capacity itself is dropping fast.

The question when judging creditworthiness of customers is can the dwindling returns on the operations of the customer cover the debt obligations?. if no, they fold, If yes, they survive.

Learn this and you know who to do business with. There are other red flags to watch out for: big orders, slow pay and carriers who will not accept shipments to your customer on a “freight collect” basis.

There is a simple solution to these problems, and that is bankruptcy, the rule of law, under which people take responsibility for their actions. Falling prices, and the destruction of businesses, and bankruptcy means people who were foolish take the loss. The losers gain cultural capital. The loser’s children learn not to be foolish like the parents were.

Instead we have bailouts and stimulus packages. Now people learn there is no personal responsibility in business. People learn the wrong way to do business, and worse yet, they do not learn the right way.

Too many people believe war ends economic depression, I am afraid enough believe it make it an option.

Too few people will accept bankruptcy, too few will accept freedom and responsibility.
Freedom to test beef to export, freedom from regulations that break the small to serve big...

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