Thursday, October 09, 2008

Capitalism. Must buy!

The current credit crisis have got me thinking about how crazy our current financial systems are:

Here are a lay man's observations about how it works.

Why do we have to work? So that we can buy things

Why do we buy things? So that we feel happier

Why don't we stop buying things when we are happy? Because we are never happy / satisfied with what we have got and always strive to get the new "better" thing.

As a result we have to work more and more so that we have the money to buy the things we want.

This is the premise on which our economy is based.

So what happens if we can't buy things? First we will not be happy because we cannot buy things. Secondly people who make things that we normally buy won't be able to sell so they will be out of a job.

If people lose their jobs they will have less disposable income so they will not be able to buy things... and so the cycle continues.

So the whole economy will collapse if people stop buying. scary don't you think?

American National Debt Clock - A sign of the times

I was just reading a story on the the bbc website about how the US national debt clock couldn't cope with the size of the US's national debt. The electronic board had to be modified with the dollar sign ($) replaced with a (1).

The Debt Clock problem has a few similarities with the Credit Crunch problem...

1. People could see that the debt clock was reaching it's limit but they didn't do anything about it. Similarly a lot of people could see the problems leading up to the credit crunch but no one did anything about it.

2. Once the Debt clock ran out of digits the fix was a short term fix of replacing the $ with a 1.
Similarly the initial fix for problems of the credit crunch was to throw money at the problem rather than looking at the root of the problem.