Jubilee

I mentioned before that I was reading the Bible with my wife.  The current economic problems have brought to mind the part about the year of Jubilee.  In case you are unfamiliar with it the Biblical year of jubilee it worked out that every 49 years or so everyone's debts were forgiven.  Now, this was well published so all the lenders would figure up the years left till jubilee for any loans they would give.  I wondered out loud how that would look in today's world.  The first thing my wife said is that it would destroy the economy.


I agree.  It would destroy the economy.  It would do so reliably every 49 years.  On a schedule.  One that you could plan on.  In an organized fashion which in my mind beats what we are looking at now.

The economy seems to be following something called a Kondratiev wave.  I find it really interesting that these waves follow roughly the same time period as the years of jubilee.

This is something that would be simple to write into law, but nearly impossible to follow through on.  Politicians in office when jubilee approached would have levels of resolve not normally found in democratic societies.

Open letter to the Federal Reserve

Dear Sirs,
     I am very interested in your zero interest rate.  I would like to borrow $3 billion to start an investment group.  I intend to repay you with bailout money after I'm too big to fail.  Due to my previous post the NSA, CIA, Secret Service and FBI all have any further information you might need about me to process this loan request.  Thank you.

P. S.  I've already had swine flu so I wont need the shots.  Of course, one of the groups listed above probably told you that already.

Economic Crisis

In the midst of economic uncertainty I would like to say that on some basic levels our economy is somewhat safe. At a very basic level the economy is still based on a farmer planting seed and harvesting more than what was planted. All the other facets of the economy are extensions of that in some way.




Ok so where does the crisis come from? Years ago I got into a situation where I had too much month left at the end of the money. I went to one of the payday advance places and wrote a check. The problem was that they charged interest. This put me in a worse situation the next month so I ended up going back. This cycle kept going for several months until I cut something somewhere to break the cycle.



Great budget story, but what does this have to do with the economy? What I was doing was basically getting a loan against my accounts receivable. This is a common business practice which becomes the same problem. Eventually you end up with your whole AR tied up in financing.



A big problem with this, aside from the interest, is that accounts receivable are not always received. Sometimes you don’t get paid at all. Then you are out that plus interest. When you realize the problem you have to cut back somewhere to fix it, but with a business this can mean peoples jobs. The best way out of this is to never get into it.



I know that this is a simplified version of the economy, but it explains why things cycle. It also explains how things are tied together. Once a financing place can’t get it’s money back from one business it’s less likely to loan out to others even if it has money from the government to do so.