Life has both positive and negative. Both are needed to help understand the other. How will we know what is positive without experiencing the negative? Although negative is part of life, it doesn’t mean we should dwell in it. Use that negative experience as follows: It is a time to learn, reflect, think, and strategize.
If one dwells in it too long, “stinking thinking” creeps in..
Let it Flow: Robert Downey, Jr
A fantastic video snippet from an interesting interview with Robert Downey Jr; describing his journey, his struggles, and his meteoric rise to success.
Burning Desire that Turns into Obsession: Neil Peart
The music of the legendary the rock band Rush resonates with millions. Fans, over the years, can connect to the deep lyrical meanings featured in their songs. Many of the songs feature philosophical themes. The man behind the lyrics, the late drummer Neil Peart. His drumming skills were beyond reproach.
Neil, not only was a successful musician with Rush, he also wrote many books; these books chronicled some of his adventures in his life. Being obsessed with developing a deeper understanding of various aspects of life, along with his intrepid drive for excellence, made him a legend in the music world. Rest In Peace, Neil.
Success Mindset: Kobe Bryant
As the world still mourns the loss of Kobe Bryant, his daughter, and the others who were onboard the Sikorsky helicopter, it is time to reflect on what made him successful. Kobe’s success, on the basketball court, is well documented: Five Championship rings, MVP, a Finals MVP, and so much more. What was the secret to his success? In this video clip, he discusses some of the things that made him a great basketball player, on of the best to ever play the game. Rest In Peace, Kobe.
Creative Destruction: A By-Product of Entrepreneurship
Key excerpt from “A World Without Entrepreneurs”
“Reading Per Bylund’s interview ‘How Entrepreneurs Build the World’ inspired a thought: what would the world be like without entrepreneurs? Given that entrepreneurs are central to the market system, a world without entrepreneurs—or with only a few of them—would be a grim situation. Without entrepreneurs, we’d see few new products, little innovation, and few gains in the standard of living.
And without entrepreneurs, we would still be using archaic technology and services. The consumer would have no expectation of regularly find new and improved products available to him. Innovation might exist in a scientific sense, but the benefits would not be reaped in the marketplace, because no entrepreneurs would seek to find a way to make scientific innovations profitable.
Consider how our world was built by entrepreneurs. Most of what we purchase and use daily started in the minds of entrepreneurs, with their energy and capital. They thought of consumers’ needs and wants, and brought products into existence with continually more reasonable and affordable prices, making these products available to almost all people.”
My Two or Three Cents
Entrepreneurs are vital to the marketplace. A successful enterprise has the ability to improve the lives of many. When a successful firm, one who makes a profit, improves the lives of people, it’s not just about the products that it creates. Consider all the ancillary firms and businesses that are spawned from a strong business. Other firms can act as suppliers to the main enterprise, more jobs are created, the local financial institutions are able to take in the deposits from the business’ transactions, and on and on. This is just a fraction of the benefit of that the successful business owner brings to society. The successful business owner is able to gather up the factors of production(land, labor, and capital), generate a product/service that individuals desire, and make a profit. Note: The profit is simply a return on the capital investment into the enterprise. He pours his blood, sweat, and tears into the enterprise, and takes on the entire risk of the success or failure of the business. He is also compensated last, as expenditures, wages, and everything else is paid before him. Of course, we benefit from the innovation that the business owner brings to the marketplace. Apple, SAS Institute, WalMart, Target, Amazon, and etc have developed products and systems that make our lives more efficient, which enriches our lives. This benefit is difficult to even quantify.
Consider the contrast: The Unsuccessful business owner. The marketplace, on average, does not accept the goods being provided by this enterprise. Over time, this owner loses money, which does not give him a return on his initial investment. His inability to optimize the factors of production is one of the reasons he isn’t successful. It is not the only reason. Since humans are not omniscient, the decision to open up a business is highly speculative and risky. Unforeseen Macroeconomic issues could wipe out a business, or other things that are out of the business owner’s control. Nonetheless, the collapse of the non efficient business does benefit society. It allows space for another person to utilize the factors of production and attempt at building a successful business. This is what the legendary economist Joseph Schumpeter labels as “creative destruction”.
This “creative destruction” is necessary. It is needed to ensure that the marketplace optimizes the available resources. A business that isn’t successful hinders this process, and the marketplace is impaired by this.
Read the article here: https://mises.org/wire/world-without-entrepreneurs
Impacts of Rent Control
With the mounting concern about homelessness and affordable housing, the implementation of public policies to help thwart these issues are on the forefront. From an economist perspective, the analysis of those aforementioned issues should be done in a scientific means.
A question must be asked: If homelessness is an issue, along with affordable housing, how does one address this problem? What type of policies should be implemented by public servants in order to help resolve this issue? A very popular method is the implementation of rent controls.
Rent controls policies may contain all sorts of regulations and items that are required by land lords to ensure affordable housing, which should curb the homeless problem. Let’s do a brief review of an economic analysis of how this works.
Rent control regulations force a form of price control(fixing) onto the real estate marketplace. Landlords have a ceiling in which they can charge for rents, regardless of the underlying costs to bring those rental units to market. If the price to rent is pushed over the rent control price limit, the land lord must charge below that rental control price limit. An excerpt from the study listed below:
“Rent Control in San Francisco began in 1979, when acting Mayor Dianne Feinstein signed SanFrancisco’s first rent-control law. Pressure to pass rent control measures was mounting due to high inflation rates nationwide, strong housing demand in San Francisco, and recently passed.. This law capped annual nominal rent increases to 7% and covered all rental units or less.”
Since the costs, to bring the rental unit to market, must be recouped by the landlord, and the price controls discourage landlords charging a price over the rent control limit, this creates to incentive for land lords to not rent out the buildings, or seek out other means to avoid the rent control regulations. This leaves a glut of rental units, and more individuals seeking for units to live. It has the inverse impact than the original intention of the rental control law.
This topic will be explored in greater detail with another write up, but this leads into the featured research paper discussing rental controls, and using empirical evidence to support the claim.
Read more here: https://www.nber.org/papers/w24181.pdf
Gold: The Protection Against Inflation?
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods.”—Alan Greenspan “Gold and Economic Freedom
As I scan the various media outlets and listen to the financial experts discuss personal finance; the message is similar. The message of needing to beat inflation is a common theme. While on the surface this seems to be a sage and insightful thing to address, however, one must understand why inflation occurs in order to beat it.
When the monetary base is expanded, via the central bank, it is done mainly based upon deficit spending by the central government. The central government deficit spending occurs due to the fictional the tax revenues are unable to meet the expenses for a certain budgetary time period. When this short fall occurs, the central bank purchases government securities, primarily debt instruments, which gives the central government the cash to balance the budget. Over time, this process expands the money supply and causing inflation. Of course, the interest on the deb continues to grow, adding more of an expense to the citizens.
How does gold factor into this model? How is gold the solution in mitigating the effects of inflation? The answer can be found from an essay written by Alan Greenspan “Gold and Economic Freedom”(1966). The use of gold, as a medium of exchange, helps reduce the impact of governments overspending.Read more here: https://www.constitution.org/mon/greenspan_gold.htm
Establishing A Family Bank
Who Are the Current Main Players in the Federal Funds Market?
When the Federal Reserve conducts monetary policy, it announces a target for the “federal funds” interest rate. The implication is that if this specific rate rises or falls, it will affect other interest rates throughout the US economy; for example, like federal funds interest rate moves closely together with other key benchmark interest rates, like the interest rate for overnight borrowing on AA-rated commercial paper. However, the identity of the parties borrowing and lending in the “federal funds” market has changed dramatically since the Great Recession.
Read more here: http://conversableeconomist.blogspot.com/2020/01/who-are-current-main-players-in-federal.html
How Do We Calculate Value?
All human action, so far as it is rational, appears as the exchange of one condition for another. Men apply economic goods and personal time and labour in the direction which, under the given circumstances, promises the highest degree of satisfaction, and they forego the satisfaction of lesser needs so as to satisfy the more urgent needs. This is the essence of economic activity — the carrying out of acts of exchange.
Read more: https://mises.org/library/how-do-we-calculate-value
