Busted and Coming Back

Had a delightful discussion with a fellow yesterday whose 15-some-year successful business folded last Fall, and all of his assets with it.  It failed the same way most people are failing:  he borrowed to finance expansion, did well during the boom, but the bust cut income lower than what was needed to finance the debt.

This is precisely what "loose money" policies engender: malinvestment and overinvestment.  By setting up a false economy, people invest based on the signals the contrived market sends out.  The signals are false because the underlying productivity is not there.  Such a false economy cannot go on forever, and at some point it stops, or gets too out of whack to continue.  As he described the last few months, debt mounting, income decreasing, I said "that's no fun..." to which he readily agreed.  Successful people do not start businesses for fun, it is for the joy of solving a problem.  But when money is short, it's no fun.  Time to quit, abandon the position, regroup, restart.  His business solved a problem, but it was overwhelmed by debt in a busting economy.

So, he is restarting, working out of his apartment, with a kid to support.  His kid will watch dad, and pick up cultural capital: never build a business on debt.

Of course, this seems silly since most of those who are super-wealthy did it with debt.  But remember, in a free market it is impossible to get extraordinarily wealthy, in terms of money.  In a free market, we all get wealthy, in terms of access to goods and services, in terms of opportunity.

Right now the USA government at all levels is destroying small business and opportunities in order to transfer wealth from the working to the wall street/banker cartel.  There is nothing you can do about it, part of the reason the powers that be ran Obama was to show you that you have no hope, no change.

The most radical thing you can do to fight back, is in spite of it all, start a business.  The powers that be fear nothing more.  Check out what kids in an apartment are doing with used equipment to make hundreds of thousands of dollars...  they do it because they love it.  Watch till the end, when the song is done, and watch another business get launched, by accident.  Love. That is where you start.

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