Major lesson from the great depression: move forward or perish.

I've often referred to the economic crash as a healing.  I'm not trying to be a phony "half full" person here even in the face of a plunging stock market (you ain't seen nuthin' yet.  Dow 6k will most likely be tested and broken before this situation is played out) and high unemployment.  I'm simply stating fact.  The great credit bubble is slowly healing itself despite government's best attempts to keep the Ponzi plate spinning.  They say they are doing it for you but believe me, they only have themselves in mind.  You and I are literally as dirt to most of them and if you don't get that then you don't get anything.  They know that if the economy crashes then they will blamed because they were stupid enough to make economic prosperity one of their promises (AKA "mandates") in the first place. 

But government cannot generate prosperity!  Only the labor of people can do that.  Was it more government or less government which made America strong after we broke away from the entrenched British bureaucracy?  Those lessons are now completely forgotten by Americans.  Each time the economy would get weak, the Fed has maneuvered for  itself a stronger mandate and the legal powers to try to carry it out.  In stark contrast, history always saw the concentration of power like this in the face of economic hardships as power grabs by those working to build fascists regimes, not steps designed to better the lives of the people.

The symptoms of the credit bubble were basically that some people got rich even though they didn't provide any economic value to society.  Con men and grifters ruled the day.  This was the give-away that a scam was taking place.  The con men legitimized and legalized and justified it all and protected themselves with selectively enforced laws and other ridiculously corrupt goings on by those who had installed themselves as our protectors. 

Stuff got built for which there was no need.  Wars got fought that didn't have to be fought.  Medical care that used to be reasonable is now out of reach unless you have a big corporate or government benefits package.  Sports players that used to play for peanuts because they loved the game now go on strike if they don't get more and more and more each year.  The stock market went up exponentially (can you say "massive bubble"?).  U.S. and other sovereign debt went out of control to the point where it is now un-payable and will have to be defaulted on one way or another.  Hard working labor became devalued even though it is the basis of any real economy.  The credit and debt which funded all of this stupidity is definitely on the decline.  It is global and it is structural. 

As the economy comes down off its credit high over the next several years all of these things will reverse themselves.  Deflation of the credit portion of the money supply will stay ahead of any government effort to reflate and a smaller money supply means that there is less money to go around.  Have you noticed lately that even big name Hollywood stars of yesteryear like Nick Cage (and many others) have filed for bankruptcy and have not been in any movies in quite some time?  Have you noticed that some big screen players have moved back into TV?  Those old Hollywood salaries were another beneficiary of the credit-infused money supply.  As the credit and un-payable debt evaporate back into the Ether from whence they came, all of these things that have been bid up by the bloated money supply will come back to Earth very quickly.

So it's a whole new ballgame and people should be thinking about it, especially those who draw fat salaries doing marginally important or minimally effective work.  At the top of that list sits government employees at the city, state, federal and military levels.  Sorry folks, we just don't need so many of you as there are.  It's not that we don't need as many because of the economy; it's that we never did need so many of you.  The economy is just making it more painfully obvious than it always was.  The economy is also going to shut that game down.  Nobody cared about bloated government payrolls as long as those salaries were getting paid for with debt instead of taxes.  But as government begins to raise taxes in order to avoid necessary cutbacks, the ire of the people will be made very, very clear.

So, changes are coming.  What can you do?  Sit and cry about it?  Go ahead but there will be little sympathy for self-pity going forward.  In fact, when the money runs thin, even those worthy of sympathy will get very little.  Hoping for a break or for sympathy is ridiculous.  But there are several things you can do to better position yourself:

·         Evaluate your current job (if you still have one).  Are you a meddling bureaucrat who hasn’t produced anything of real value in years or are you building things?  If so, it may be time to admit that you are economic road kill waiting to happen unless you find something to do that is of economic value.

·         If you are building something, is it something anyone really wants and needs or are you building second rate products to nowhere (the free market equivalent to building bridges to nowhere…)?

·         If you are actually building something that people want and need to live better lives, are you personally working on it or are you hiding in a team?  Can you stand up and say “I did this and that” without telling whoppers or do accounts of your contributions always begin with “we” or “the team”?  I have nothing against real teamwork but at least 25-30% of corporate Americans are just surviving within corporate teams, hoping that nobody will notice that they aren’t doing anything of value.  They would not be missed in the slightest if their jobs went away.  That is a losing strategy going forward.  Even those in high tech are not immune to the new reality.

·         Is your line of work dependent on lots of credit being available or upon government largess of some sort?  Does your corporate strategy require the government to be your biggest-or only- customer?  If so, it might be time to start looking for a real job.  The money that government has been using to pay you with was either stolen from the people or borrowed.  Both of these government activities will be greatly curtailed going forward because people are going to start becoming very vocal and very passionate about trying to keep what they earned.  Why do you think the price of gold has been going up for years?  It was driven by people’s simple desire to keep what they earned.

·         Are you a tenured education professional?  If so, please understand that your ability to negotiate that tenure crap was a direct result of a bloated money supply.  If you don’t understand that then no worries, the economy is giving lessons on this as I type.  Your tenure is a Wimpy Promise.  You wanted undue protections and privileges just for having hung around at a job long enough?  You will find that the market views this as increasingly preposterous with each passing year.  The concept of teacher tenure will be a bad memory within the coming decade.   

Some things you can do if you identify with any of the above:

·         Take online classes in up and coming fields.  Things that produce more real output with less direct human effort have the most economic value.  Think automation, tools, software and robotics.  Stanford is giving free classes on these technologies.  They are the skills that will be most sought after by the employers of the future.  Robots will be to tomorrow as the personal computer was to 1985.

·         Realize that deflation deflates the value of the old and commonplace, not of the new and value added.  It’s not that people are not willing to spend the little money they have but rather that they want to spend it more thoughtfully.  They want real value.  Commodity products and services and skills are marginalized under these circumstances.  Do something new and value added and useful and appropriate to the economic conditions and you can not only survive but also thrive.