Show Me the Money

This Naive American does not have to remind our fellow citizens that our country is experiencing economic issues.  As a matter of fact it is not only our beloved country, the crisis encompasses the entire world.  To learn more about it just read or watch the news.

It appears that the bailout for General Motors (GM) is being stalled by the US Senate.  The media immediately reacts suggesting that such action might cause a deeper recession.  Bad news travel fast and increases circulation and ratings.

I work for a small company in the Twin Cities of Minneapolis and St. Paul.  About a year ago our CEO asked me to look into some papers that attempted to model the economy using extremely complex mathematics and assumptions.  After a couple hours of reading I concluded that the ideas and concepts were ludicrous.  The economic events of the past few months proved that there is no way that mathematics is able to model human behavior.  As a matter of fact with all the time and resources (including super computers) the National Oceanic and Atmospheric Administration (NOAA) has not been able to accurately forecast such a simple thing as weather when compared to the complexity of human behavior.  What were Wall Street and investors thinking?

As usual, allow this Naive American to provide some simple facts.  When dealing with mathematics and physics we are able to define some simple to complex equations based on time.  Computers are able to run them over and over with or without modifications in an attempt to model or understand a behavior.  As far as we know, the universe we live in, time is a directed vector.  We are not able to go back or pause it.

Now for the specifics and simplicity, take the number of US Dollars in “existence” in an early month this year; lets say April 2008.  According to the Federal Reserves there were about $7.7 trillion Dollars.  Not all that money was currency.  To get a glimpse and a starting point to learn more about the money subject take a look at http://www.newyorkfed.org/aboutthefed/fedpoint/fed49.html or use your friendly web browser.

Not sure how much money there is in the entire world.  As a matter of fact it would be quite difficult to come up with such figure due to the different currencies and policies used by different countries.

I am not an economist but it would be safe to assume that Naive Americans and fellow humans in other countries have not decided in the past few month to take their cash and burn it or make it disappear (my wife is working on this challenge).  Another interesting fact is that the global population in the same period of time has not dramatically increased resulting in a shift in the ratio of US Dollars per human.  Please note that this ratio does not imply that every individual in the world has in his or her name or pocket the same exact amount of money.  As we all know the set of people that controls most of the wealth in the world is extremely reduced.  What is important is that the actual ratio has hardly changed in the past few months.

Take a look at the last report from the Federal Reserve http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt that was published yesterday December 11, 2008.  Read the bottom entry in the report.  It appears that in November 2008 we had about $7.9 trillion Dollars (up $200 billion from April).  It is a fact that our friendly US government has “printed” additional Dollars in the past few months slightly increasing the ratio and possibly contributing to devaluation (but that is a different blob).

Another interesting fact is the statistics published by the U.S. Census Bureau regarding world population (http://www.census.gov/ipc/www/popclockworld.html) some of which I am listing:

• 07/01/08    6,706,992,932 <— a few months ago
• 12/01/08    6,740,422,806 <— current
• 07/01/09    6,786,743,939 <— a few months ahead

On a side note, perhaps we need to reduce the number of commercials for Viagra and increase the ones for Sultan.

If the Naive American is more interested in only seeing the US population then visit http://www.census.gov/population/www/popclockus.html to get constantly changing numbers.  Last time I checked we have about 305 million people living in the USA.

In conclusion, the world and US population are both growing and either has experienced a dramatic change in the past few months.  The US government has “printed” a small amount of Dollars in the past few months but nothing out of the ordinary.  So the Naive American wants to know what changed in the economy in the past few months and why the “gift” ($700 billion) the Bush administration gave to the US Banking Industry (banking should never be considered an industry) did not make a difference?

Perhaps greedy companies, organizations and people have “stashed” the majority of the $7.9 billion Dollars and wish to hold them in order to make more during this economic crisis.

If you fall in this category think about the current and future implications this decision is having and the irreversible changes that might bring to the American Way of Life.  This Naive American is calling on companies, organizations and fellow Americans to invest the “stashed” capital on companies that develop and manufacture high quality goods entirely made in the US.  America is all about Capitalism and Competition.  I say let’s prove it.  Such action would provide desirable and challenging jobs so much needed.