Saturday, June 23, 2018

Today's Financial System is Unsustainable

There has been much talk in the media about trade wars, immigration, business monopolies and bad business practices. All of these talking points are related because they are all the end result of the current economic system. Many people believe that the Western civilizations operate under a "free market" principle, but in reality, it is neither free nor a market. It is today a monopoly run by big business and government. Because it is neither free nor a market, it cannot continue to operate under the ideals of free market because the fundamental problem is the structure itself.

All businesses exist to create goods and services to be consumed. If it was not consumed, then it would have no reason to exist. That is why many businesses fail due to lack of customers. Economics and government leaders all talk about business growth and economic power, but if you notice, the current trend of world-wide financial systems is to attempt to create business growth through inflation. This may be good for business, but it will be the downfall of the system because the root of the system is not the business or business idea. It is the people. People create businesses, people run the businesses, and people consume the businesses.

In the United States, many laws exist that create a closed, limited business environment. The most affecting of these laws are the labor laws. The reason why these laws affect business more than anything else is because it is a constant expense for all businesses. Again, all businesses only operate with people involved. How people act with coworkers and customers, how they are treated, are compensated, etc. all affect the business in many ways. Because the people in a business determine the existence and success of that business, laws that control or manage the people have strong effects, especially when it comes to compensation. For example, a manufacturer has to pay its workers to build goods, miners have to pay people to extract raw materials, processing plants have to pay workers to refine raw materials, middlemen have to pay workers to store and fulfill goods, retailers have to pay workers to sell goods, etc. There is a chain of people who are involved in many businesses, and each layer adds to the total cost of a good or service. Any minor change at one level ripples to the other levels in both directions. If the middleman has to pay for more workers or higher wages, that additional cost is either compensated by raising prices or renegotiating costs (finding new suppliers, changing terms, etc.). This cost is incurred for the life of the business because there will be one or more persons that make up that business, including the owner.

Because of this constant expense, the only way a business can survive is to produce enough revenue to sustain this expense. What expense am I referring to? Wages, which encompasses more fixed costs than just salary. All wages are a fixed cost because you need people to run the business. A business cannot run by itself, or it would not exist. Even a sole proprietorship has at lease 1 employee that must be paid. This is the financial system that was created by the money makers a long time ago. People make money to spend money, and thus keep the system operating in a type of perpetual motion.

Before the advent of the money system, which is the root problem, you had a system of barter. This prevents any one person from having a fixed expense because all costs are limited to time and energy of the workers. If you did not work, you did not eat. But in a monetary system, especially today's with all of the labor laws "protecting" workers, you no longer need to work to get paid. Thus, a fixed expense exists for any business, regardless of output by the workers.

In many countries, there are limited labor laws unlike in the Western countries. This allows for both a "floating" expense, but it also introduces corruption and bad business practices. This isn't because of the lack of labor laws. Instead, it is caused by a system based on money. Again, when you have something that represents work, but is in itself valueless, you no longer have a way to establish real output. The amount of money does not reflect real output and thus true value. It only reflects an exchange value. Labor is always of the highest value, but money distorts this fact.

Because of labor laws tied to the money system, you have all sorts of manipulation and control through governmental entities. Without governmental entities, you would not have winners and losers. Without the money system, you would not have individuals and minority groups controlling the majority population. Again, with a money system, you do not have to actually do work to own the output of work. Someone else is doing the work in exchange for money. The real goods and services are then transferred to the owner of worthless money, without having to do anything themselves.

When everyone accepts and works to be part of this money system, they are now enslaved by the money makers. They no longer understand how goods and services are created. That is why the "rich" use money and government to maintain control over the population. Laws are created to continue this control mechanism.

In a free market, wages are not a fixed cost. It is the basis for free market, not the cost of goods and services. The end product should equal the cost of wages. But what do we see today? We have some goods that are cheaper than the cost of wages (meaning it is made at a lower wage, but is sold to a location with higher wage), and there are goods that are more expensive than wages can support. This happens because of wage disparity. When something is made using cheaper labor and sold to those with higher wages, you have the illusion of low-inflation (low cost goods, not monetary inflation).

Wage disparity is why this financial system will collapse. This is why trade imbalances exist. This is why immigration issues exist. Goods produced in the same region as the wage earner is not affordable to all in that region. Thus, poorer countries must export their products to have consumers (customers) or business fails. Richer countries cannot export as much because the other countries have lower wages, and thus cannot afford these goods in the same quantities and must increase prices to offset the lower volumes, which creates more wage disparity.

Why is wage disparity the cause of the collapse of the financial system? Because, the money makers (the wealthy) will avoid creating any depreciation and will always influence the market towards inflation. Inflation occurs in two ways: creating more money, which dilutes the buying power but increases money supply (debt), and price control (tariffs, price regulation, limiting competition, minimum wage laws, etc.). Because of this, costs of goods that must be produced locally will become less affordable to everyone, and thus requires more government assistance, while other countries cannot live because they cannot afford goods and services. Corruption is created through poverty, which is the result of limited resources.

As much as people in the United States who are considered "poor" are pushing for higher and higher minimum wage laws, this will only speed up the collapse of the entire financial system, because it will create more trade imbalance, more poverty, and more corruption.

There are other factors to the economic system in place throughout the world that contribute to this problem, including central bank's manipulation of the monetary system (they create credit, which is debt), government spending, monopolistic lobbying, etc. But they alone could not cause a collapse. It is the act of wanting and needing to get more money by each individual, whether rich or poor, that people use systems such as the central banks/federal reserve, governments, and big business. The drive to increase wages is the cause of the collapse because this need motivates all financial decisions, governmental laws, and interpersonal actions. They are tools created by greed for more. It's not about how much one gets, but the need to get so they can spend what they get. Out of the creativity of people, comes all ways and means to one-up another individual.

Even though this may seem outside the purview of spirituality, it is directly tied to conscious awareness of self and the world. The bible is often quoted as saying "Money is the root of all evil", but rather than label it "evil", it's better to call it "problems" as it is not inherently evil. Knowing that money is a problem isn't about being generous, or giving, or anything like that. It is about being aware of the cause of the current conditions to avoid looking for scapegoats and who to direct their anger to. The cause is each individual, because they are unaware of how they themselves are propagating the system towards its demise. This is not negative. This is actually positive, in the sense that the people are pushing behind the scenes, so to speak, towards a true free market, which is devoid of money. Trade is not money. Trade is work. Work is just action. It has no negative meaning to it, except what people connote.