Our entire economy feels like an elaborate and illegal PONZI scheme, where we systematically pay ourselves by passing on debt to the kids and the poor. Who is going to stop us?
No one can stop it since it is how the world runs. The whole premise of trade is that I will make myself richer by selling something for more than it is worth. Seen from the Let the buyer beware side, I will make you poorer by getting you to pay more than something is worth.
This picture snapped into view when I saw a house listed at 10% under the price we had sold it for years earlier. I was initially elated that we had been so shrewd and lucky to sell it so high. Then I realized the hardship that $15,000 loss meant to the young couple selling it. How long would it take them to recover that loss? A decade? They will be paying for my winter holidays for years to come.
It doesn't take an economist to see the connection between Melamin poisoned food and the 12th Jaguar in some guy's garage.
It would take an economist to pinpoint the economic lubricant that connects all the dots. But I will attempt a simple caricature from my point of view.
If you make enough bad trades, you end up with no cash. Make enough good trades, you end up with more cash. But making someone poor is as bad.
I noticed that most people have an aversion to arithmetic in general. Simple math may be the cause of any bad decisions. Also, bad contracts either by choice or imposed lead to long term poverty (choosing to work for slightly higher pay but without benefits, for example). Myopic economic views seems to cause many a downfall, trading short term gain for long term pain ( I really must buy those Christmas presents I can't afford).
Examples of bad trades:
- buying services from a hospital
- spend with wild abandon, impulse purchases, spending while drunk, etc.
- renting a home for life
Examples of good trades: (the idea being that these make no-one poor in the process)
- Using free services (Google mail, drive, maps, etc)
They are converted into value by Google and sold to advertisers - Buying clothes at the second hand store
Support the ones that hire job reinsertion programs, or not for profit organizations. - Buy a house below market for some reason
- Sell a house at market value
Is it better to live then die leaving a huge debt or balance your books before you die? Logic says let debt be our legacy.
