And I never have. I know absolutely nothing about anything. ...which is an excellent starting point from which to learn a thing.
You know that I used to be a cable television technician. I serviced cable TV systems in hotels. Big hotels. Four- and five-star hotels. Nice joints. Hotels lose big money comping rooms if the pictures are snowy. And they lose their ratings if it happens often enough.
I was a troubleshooter. I'd get called out when no other technician could fix the problem. I was the go-to guy. I was the best. Trust me on that. When your boss tells you to be somewhere at nine and you counter with an offer of noon and he says "Okay, great! See you then!" you know you're the best. Arrogant? Maybe. Arrogance in service to oneself is a sin. Arrogance in service to others, well, that's just good form, isn't it?
I was the best because I walked into every situation operating from the assumption that I had no idea what I was talking about. No preconceived notions. It is my personal experience that technicians sabotage their own troubleshooting by making unwarranted assumptions. "These amplifiers on this wall over here are forty-p's."
"So, Fred, are we sure they're 40P's? Because if they're 40J's, they need to come out. There was a tech bulletin about a defective circuit inside."
"Chris, I surveyed this whole place. All the amps are 40P's."
"Did you open them up or just read the label?"
"Why would I look inside? Just read the cover."
"You would open it up because some 40J's were mismanufactured with 40P covers. Did you read the tech bulletin?"
"No. Why would I do that? The bulletin only covered 40J's. These are 40P's."
So we'd throw our tool bags in our golf cart and check each of the two dozen amplifiers in that hundred-acre property and --lo and behold!-- we'd find some 40Js masquerading as 40Ps! ...40J's, by the way, that had been recalled. Why were they recalled? They were recalled because they had a propensity to fail in precisely the manner that would cause the very symptoms he had described to me on the phone two days earlier.
So the man had spent who knows how much money "fixing" things that had nothing to do with anything, and the hotel had been comping rooms left and right, all because of an erroneous assumption.
One, little, lonely erroneous assumption.
See what a genius I am? I am a complete genius because I walk into every new situation with my hand extended for a handshake and offering my stock salutation: "Hi. My name is Stupid. My name is Stupid because that's what I am. I am stupid because I have no idea what's going on here. That's my story and I'm stickin' to it. So let's find out what's going on."
.
I know nothing about economics. And that is why I understand the field perfectly. Economics and physics, by the way, are essentially the same discipline. They both describe the movement of energy and, thus, information.
There is a stream by my house. I like to sit by it now and again and watch the water move. I take note of how a thing like a leaf flows around obstructions like sticks or a rotted tree stump. I am especially fascinated by eddies. "Why does that do that? How did that leaf get stuck there?"
A leaf upstream started out with what is called "potential energy." If you lift a bag of sugar from a table, that bag of sugar now possesses potential energy. The kinetic energy of your arm was imparted to the bag of sugar. Energy imbalances always seek to equalize. So that bag of sugar does not "like" having that potential energy. It "wants" to return to the table. And if you let go of it, it will fall to the table with a thud. That thud is acoustic energy. The kinetic energy of your lifting action imparted potential energy to that bag of sugar, and that bag of sugar imparted acoustic energy to the air when it fell to the table.
Things want to release their energy. They want to move. Imbalances equalize themselves. No one has to encourage the process. Indeed, it is theoretically impossible to improve upon the process.
Say that I am standing on the top of a mountain, at the beginning of a stream, and I say to a scientist friend, "I shall now remove from my pocket an eyedropper. I will release into this stream one drop of colored water. I want you to use all your topographical maps and GPS units and most technologically advanced measuring and computing equipment and predict for me the path by which this drop of water will reach the bottom of the mountain."
After two weeks' worth of work, he will produce a result that describes the path of the very stream that I could have spent five minutes mapping out just by looking at it.
I mean to say that economic systems possess an inherent genius. A drop of water will figure out the most energy-efficient means of moving from its present location to its proper resting place. No one can improve upon the process.
"But, Chris, we could dig a trench over here and help that drop of water along. Sure we can improve upon it."
No you can't, because digging the trench takes energy. You have now spent the energy contained in a gallon of gasoline to run your excavator to dig a trench to get that drop of water another fifty feet. Who cares? Let the drop of water go where it may. If the drop of water never makes it down the mountain, that's okay. Its being shunted over into some crack in a rock over here may cause another drop of water to be rebuffed around it and chart a continued course down the mountain.
That drop of water is part of a larger energetic system. Don't get hung up on any particular drop of water.
The point is this: Energy equalizes along a path that is the most efficient. No man can improve upon the process.
...and the man who says he can is a thief. He wants to get your permission to run his excavator so that he can divert that stream for his own purposes.
Have I told you that I do not care for thieves?
.
That stream by my house that I sit by now and again is an energetic system. It is an energy transport system. That stream is comprised of two things: all the physical matter contained in whatever is flowing down that stream --water, sticks, leaves, whatever-- and also a purely informational description of the route those objects take through space, as well as how those sticks and leaves and water droplets interact with each other.
That stream is an economy. It is truly a live movie of economic interaction. All you have to do is sit there and watch it. You will learn more about economics by watching a stream for ten minutes than you will in some mind-numbing, eight-year economics program.
A human is very much like a drop of water. A drop of water has potential energy that it wishes to rid itself of by flowing downhill. A human has potential energy in the form of labor that he wishes to rid himself of by exchanging it for a new TV. He has the desire to trade his labor for a new TV. He possesses the demand to have a new TV.
DEMAND IS NOT THE ISSUE.
The issue --that is, why this man wants a new TV but does not have one and why the TV factory has plenty of them in the warehouse but no one to buy one-- is not a lack of demand. (And it's certainly not a lack of supply because, as I just said, the warehouse has plenty of TVs.)
So if the man has a supply of labor --he's just sitting around unemployed, after all-- and he has a demand for a new TV... and if the factory has a supply of TVs and a demand for money from the man... then where's the demand problem? Both parties have both supply and demand.
There is no shortage of demand.
The problem here is matching the demand of one with the supply of the other. The issue is not demand. The issue is demand satisfaction.
The argument advanced by those in favor of some government economic stimulus is that there is a lack of "aggregate demand." The argument goes something like this: "Factories have too many TVs and washing machines. As a result, they lay off workers. Those workers have no money to buy TVs and washing machines. So the solution is for government to create its own demand, thus breaking the logjam. Government creates its own demand by commissioning public works projects and the like."
It sounds perfectly reasonable and it would be the correct prescription. ...if the diagnosis were correct. ...which it's not; there is no shortage of demand. There has never, ever, ever been a shortage of demand in this world. Every drop of water wishes to release its potential energy, as does every lifted bag of sugar. And every man wishes to rid himself of his unused labor in exchange for desired goods.
DEMAND IS NOT THE ISSUE.
Keynesian economics is voodoo, plain and simple. It is the shaking of bones at the moon.
The proponents of this stimulus package would be right if their assumption were correct. That assumption is that there is a lack of aggregate demand. But there is no lack of demand; everyone has a desire to get rid of his unused labor, as I have just shown you. No one enjoys being unemployed. He wishes to rid himself of his unused labor. His has a demand to convert it into goods.
DEMAND IS NOT THE ISSUE.
The issue in a dysfunctional economy is matching demand with supply. GET OF THE WAY OF THIS MAN AS HE TRIES TO RID HIMSELF OF HIS POTENTIAL ENERGY, HIS UNUSED LABOR. LET HIM SATISFY HIS DEMAND.
In that stream, sometimes water doesn't move. It gets stuck in eddies behind some log. That water just swirls around endlessly and the leaf gets stuck there. That leaf never rids itself of its potential energy. That leaf is never able to "communicate" its demand (its potential energy) to the supply (of whatever it is that leaf desires, which is to get as low as possible down the mountain, to release all of its potential energy in its travels.)
The man sitting unemployed on his couch is unable to communicate his demand to the supply of washing machines. He cannot communicate his demand because there is a break in the information linkage. There is some kind of obstruction in the stream that is the human economy.
There is a log in the way.
Sometimes people put logs in the stream on purpose. They may wish to divert energy their way for the purpose of running a mill.
You need to know that there are thieves in this world who hire witch doctors to examine human economies for the purpose of diverting energy their way.
Every last log in that stream needs to be removed. Stop putting logs into the stream. Stop trying to improve things. The more logs there are in that stream, the more eddies get created, the more guys sit around unemployed, and the more TVs go unsold.
The best you can hope to do is to remove those artificial logs and restrain yourselves. Get out of the way. IT IS NOT THEORETICALLY POSSIBLE FOR A THIRD MAN TO HELP TWO MEN ARRANGE AN EQUITABLE TRADE AMONG THEMSELVES. THE THIRD MAN IS NOT RELEVANT, EXCEPT TO THE EXTENT THAT HE WISHES TO STEAL FROM THEM.
Your economy is a complete mess. Over the course of decades, log after log has been thrown into the stream in the misguided belief that they will help matters. The economic distortions are so many that further tinkering yields only further unproductive eddies. These distortions were caused, for the most part, by an artificially low price of credit, made possible by fractional reserve lending.
Your one and only economic problem in this country is the Federal Reserve. (And, by extension, the cockamamie economic prescriptions of witch doctors in its employ.)
The solution to your problems is to let the logs clear themselves out. And don't put any more in.
Do not allow the government to create artificial demand with any stimulus package. If you do this, your economic future looks like this: Yes, everyone will be fully employed --at a factory that produces something that some beancounter thought was useful: razor blades and ballpoint pens and cruise missiles. Everyone will be fully employed, with a pocketful of money --with nothing to spend it on but razor blades, ballpoint pens, and cruise missiles.
That is not wealth. That is poverty. And worse, the man is impoverished while his labor goes to enrich another. "Where did my wealth go? Where did my labor go? I work all day and all I have to show for it is ballpoint pens and razor blades."
Worse than accomplishing nothing, any government stimulus consigns your children to a future of working in an economy that impoverishes them. Plain and simple.
Will your constituents hurt? Will they scream? Yup. They will shake their fists and demand that you do something and give them some money.
But like children, they are not to have a candy just because they want one.
My prescription is this: Do nothing. Let the distortions correct themselves. Get out of the way. That stream will start flowing properly.
Will people scream and cry and go hungry? Yes. Most certainly.
The choice is this: Fast for a week or go underfed for a lifetime. And not just you, but your children.
If you allow the government to create demand, your economy will look like the Soviet Union of the '70s. Nothing happens. Nothing moves. Nothing but eddies and people working at factories making box after box after box of razor blades. No shaving cream to be found in the land --no one thought of that-- but we've got plenty of razor blades.
Do what Ron Paul says. He understands the movement of human energy. He understands the Austrian school of economics. There are many people who do not care for the prescriptions of Austrian economics. You know why? Because the prescriptions of Austrian economics are not conducive to thievery.
The Keynesian has built his great, filigreed, ornate, towering spires upon one, little, lonely assumption: that there is a lack of demand.
But there isn't and there never has been. The man on the couch demands a new washing machine. The leaf demands to flow downstream.
DEMAND IS NOT THE ISSUE.
And if that's not the issue, then anything predicated upon it is not the solution, now is it?
---------------
I am moving on to other issues. I will not address this again. Don't be one of those people who takes the advice of the last person who whispered in your ear. Take the advice that makes the most sense and stick with it until you hear better.
If you allow government to get in the business of creating demand, you will never again have anything even remotely resembling a functioning economy. All you will have are eddies swirling around, accomplishing absolutely nothing.
