The common man and the global economic crisis

Economic management is a simple thing made too complicated. In reality it is nothing more than keeping a great balance in producing and spending. The classic quadrant of high and low for producing and spending is the simplest tool on which lies the foundation of economic analysis. On a simple thinking, high production and low spending is the best form of economic stability for an economic unit, however putting all the units together we must realize that it must all boil down to the great balance of proportionate production and spending that must be managed in seasons. For one unit, indeed high production and low spending is preferrable but in totality high and high ratio makes a good economy and low / low is the one we call economic depression. Movement from one to another is what we call the downward and upward spiral. Plain and simple, in that way we understand what is happening.

The point of argument is that one should not have so much headache to think why the economy is currently in trouble and what kind of trouble we currently have in this height of technological and industrialization age. It can be simply put that we have reached the point we were too busy producing things that has become mostly not desirable for the needs of the time. When that happened, we began to consume less of those things we spent much to produce that the return of funds to produce more started to dwindle. Economic units big and small, enormous or tiny that failed to detect this trend early enough were doomed to bankruptcy.

Indeed the start of this kind of downward spiral is when collective production becomes more than spending in totality for a sustained period. This is quite a contrary to the other form that our ability to produce or our production fell down so low driving us to shortages. In this particular case, the tyrannical media catching the initial signs advertises the doom to come for the sake of running a sensational story line becomes the assurance that the downward spiral can be sustained for real. This is simply because sounding the alarm and making a loud call for austerity in all and even the most unreasonable form causes less spending while the natural instinct is to produce more, thinking it will save the future. Then collapses of individual economic units ensues, systematically pressing down side by side the collective ability to produce and desire to spend until we get to the point of low / low ratio. To fight back, the only way is to start spending more to encourage producing more in healthy exchange until we get to the point we are comfortable again towards the high / high ratio then we go back to the better problem of distributing the fruits of prosperity which is by the way a constant in the ways of the world.

Certainly, it's a great thing to analyze because history tells us it is inevitable. Understanding can make us to endure because we all know that systematic fall can easily go back to systematic rise and the modern time when we can easily share information can make it less stressful provided not a sector, say a country is too foolish to panic and draw us all into chaos, let us say another world war to fight for resources we thought running out due to little faith to law of abundance.

Availability of information is the strongest weapon and we are in the time when it can be easily shared, with due caution that it can also be easily distorted. Knowing which production must be lowered and which must be bolstered while on the otherhand promoting more spending rather than to stash and hide while managing the transitions in between can get us through this threat with historic ease and wonderful feats...but at the end of the day it has to be said - if and only if we are worthy enough...

To be continued.....