I Dream Awake

My losses are no longer character building. They are in the Willy Loman realm, and I am starting to have dark doubts about the benign nature of American capitalism…..An awful lot of modern life, and not just finance, is based on a Ponzi scheme. If, as sometimes happens, you have an asthma attack and join fifty other acute asthmatics in the ER, you have a good chance of not being intubated in time. If most investors think that the market will go belly up, the market will go belly up. The most fundamental of fundamentals is that people have to believe in the worth of their currency, the liquidity of their bank and money market deposits, and the viability of the markets. If these basic beliefs are violated, then no one wishes to be the last man out of a pyramid scheme… The wise men are going to knock heads together this week-end and re-engineer the American economy. What could possibly go wrong?……Over the past two hundred years, particularly in the anglosphere, capitalism has drastically improved life on earth. There have been frequent panics and crises but in my lifetime they have occurred with less frequency and severity. Still, there’s always that last sabre toothed tiger in the woods.

Someone in the comments section on an Ann Althouse entry.

How do we chart a course out of this? How do we create when severly limited in our resources, abilities, and even in our own certainty of what we are doing? Innovate (create something from nothing — hint: use math). Start small (micro-finance). Build value with every interaction (social capital). Build strong ties with a wide network of people with diverse skills and interests (social networking is loose connectivity — what is strong?). Maintain sound monetary and fiscal discipline (once an an investment in work has become an income stream, secure it through paying ahead towards savings, investments, further education, and physical assets)(or on the national scale strengthen the dollar, reduce budgetary spending, reduce taxes, reward innovation, inspire entrepreneurship, and reduce debt).

The problem is that it’s much easier said than done. Many of us have ideas. Many follow through with all we can to work to make those ideas a reality… But it’s still very tough going when everywhere you turn it’s tight, tight, tight. We all need liquidity again, just as we all need discipline in building products with actual value.