How History & Logic Create Riches, and Emotion Creates Poverty
January 29th, 2009
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by JP Micek · Filed Under: Political Impact · Wealth thru Logic · economy
As entrepreneurs and business owners we all know emotion is the key to successful marketing. But when it comes to making financial and governing decisions in running your business — emotion will make you poor. Knowledge of history and logical analysis of your current situation compared to history is what creates riches.
A perfect example of how a lack of logic and ignorance of history will generate disastrous decisions is the current spending bill “The American Recovery & Reinvestment Act of 2009″ being paraded before the American public as a “stimulus” package.
Here’s a quick clip from today’s Wall Street Journal in case you’ve missed what’s going on:
$819 Billion Jolt to Economy Aims to Reshape Education, Health Care; Deficit to Soar
The House bill is one of the largest single stimulus packages in history, almost equal to the entire cost of annual federal spending under Congress’s discretion. A parallel Senate measure, which is expected to come to a vote next week, is now valued at nearly $900 billion.
Either bill, if enacted, would push the federal debt toward levels not seen since the second World War.
Also tucked inside is $335 million for programs that help prevent sexually transmitted diseases, and $50 million for the National Endowment for the Arts. The Senate version includes $70 million for a supercomputer at the National Oceanic and Atmospheric Administration and $75 million for smoking-cessation programs.
“The strategy under this bill is to throw billions of dollars in every bureaucratic direction, and cross our fingers and hope for the best,” said Rep. Ken Calvert (R., Calif.) Wednesday during debate on the House floor.
![[Chart]](http://content7.clipmarks.com/blog_cache/online.wsj.com/img/10A7CC1A-6EEB-45ED-A41A-7077ABA86BB2)
![[stimulus]](http://content8.clipmarks.com/blog_cache/online.wsj.com/img/20D586BE-6F2A-4BDC-9DB3-C632E9CDA073)
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Now only in government is a measure shown twice to be a failure in the last 6-months & politicians shout “Double down!” Bailout #1 passed months ago in Fall 08′ has been a failure. (And don’t forget the $700billion funneled into the economy during the Summer of 08″, but not labeled “bailout” by the media.)
All this bailout funding has done is cause otherwise healthy businesses (and investors in those businesses) to hold back and wait to see what (if any) help in the form of handouts they’ll get from the government. (For an example of this impact on the business market, see how JP Morgan says “stop talking about damn nationalization.”
The 1st bailout was doomed from a lack of historical perspective. And how can ANY logic have been used when the 2nd bailout bill was rammed through both houses and up to President Bush in less than 30-days? Ron Paul explained dangerous ignorance of history and lack of logic in the 1st bailout in 2min in this YouTube video:
History proves that economic cycles interrupted by gov’t intervention deepen & unleash stored energy on the public. For an example of the impact of interruption you need look no further than the last 8yrs. Alan Greenspan broke the 01′ recession by turning on money supply (printing money) & value of the dollar has dropped 50% in the last 8yrs. 50% devaluation of the US dollar to create a “soft landing”!
Now we have a 3rd bailout bill “The American Recovery & Reinvestment Act of 2009″ positioned to the hurting and unsuspecting public as a “stimulus” package. Yet the Congressional Budget Office (Democrat controlled) admits “approximately 12-cents of every $ in the 2009 Reinvestment Act will have stimulative effect.” As an entrepreneur and business owner, does that sound logical to you?
Use this current political and economic situation as a training ground to reinforce your Mogulogic.
1. Stand guard at the door of your mind. Watch your language (how you speak to yourself) and don’t let the media’s prognostications into your head.
2. Keep one eye on history and one eye on today, and both through the lens of logic. All around you, including other entrepreneurs and business owners, will be people controlled by emotion. Remember that you yourself use emotion in your marketing and sales to motivate people to action. Don’t let the media or the mob pull you into their emotional flow. Their path leads to poverty.
3. Take some action to try and stem the tide of destructive emotion sweeping the land. This Pork Bill masqueraded as stimulus passed house but still needs to pass the senate. There are many points of contention between the house and senate versions. And there is a lot of discord even among the Democrats themselves with the way the money is to be allocated (hurting more rural Democratic states take the back seat to blue cities.)
So you can still take steps 1 & 2 here in just 5-minutes to get your voice heard. And even though the House has already voted, I would still take 2-minutes on step 3 and let your representative know your disappointment with their vote for the bill. (No need 2 look up how your Representative voted. If they are a (D) they voted yes. All (R) voted no.)
Your success depends on your attitude and actions
Benjamin Franklin said “They that give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.” Never has that quote been more true.
The masses pay for control even when they can’t get it. They want security even when security eliminates the possibility of their own success. Leaders use history and logic to analyze the present and make decisions that create the successful future they desire.
Which will you be?
Somnium~Intentium~Partum
(Dream~Design~Create)
This article is well written and Ron Paul is hitting the nail on the head. Big Government is Rearing it’s ugly head and the value of the dollar will drop to nothing.
The unmentioned item here is that from an economics standpoint if the bailout doesn’t have an effect on the recession then it is the start of the depression. Unfortunately we won’t see any medium to long term results with the so called bail outs.
You are spot-on James re: economic impact. Since only 12% of the nearly ONE-TRILLION DOLLARS is going toward actual stimulus, it is 88% probable that this Porkulus Bill will dampen or depress the market.
CEO confidence has already dropped below the levels seen in the 1979-80′ recession (the worst since the end of the depression.) I’ll be covering this and the impact it should have in your business planning in an upcoming post.
When a culture allows the media (newspaper, radio and television) to rewrite history before they disseminate it to the masses, it is a sign of pending doom.
The monetary points you make are dead on. We can’t keep giving away our money before we start to wonder why we are working so hard in the first place. Why not let the government hand me a stack of money that they took from the other guy?
The problem with that kind of logic is that we are trying to fund a huge Ponzi scheme on a scale that makes Bernie Madoff look like the operator of a “shell game” on a cardboard box!
We can’t keep throwing money away on a stimulus package that is being rammed down the American peoples’ collective throats, while the only thing being stimulated by the package is our gag reflex!
When we question the people doing the ramming, they tell us that they are in the middle of a crisis and that the package absolutely must be approved or the economy will die.
Sorry, but it is already dead. The economy as we knew it as far back as the 1990’s is long gone. We no longer manufacture like we once did and the service industry is farming out as much of its work to third world countries as is humanly possible.
When banks get $30 billion or more in bailout money, but charge their customers thousands in fees and still find a way to give their CEO’s nice fat bonuses and perks. Now mind you, I am all for CEO’s getting compensated for running a company well. But the fact that they are accepting bailout money tells me that they did not perform very well, so why are they getting a bonus?
Because they managed to con the US Government into a $30 Billion windfall for them.
The emergency will only get worse, with a crap filled package that does nothing to help the people who drive this economy: the small business owner! Why couldn’t the package be one filled with opportunities for businesses to expand into new markets, develop their existing markets or retool to be able to compete in a global economy? Small business loans and grants would stimulate businesses at the bottom of the food chain to expand and add new workers, adding to the number of working Americans and adding more money into the economy.
People cannot spend what they don’t have, and it is about damn time that they realize it. If I spend more than is in my bank account, I get service charges. If the government spends more than it has in its bank account it prints more money!
We are in a very scary time right now. People are afraid to spend money that may not be there the next day! The California man that killed his wife and five children before taking his own life last week was a stark reminder that we are all just a couple paychecks from bankruptcy when we are working for someone else.
I stepped away from my job with Sam’s Club in October of 2008 to run my own business. Money is a little tight, but it is 1000 times better than the man who loses his job and has to come home to his spouse and tell her that they are in trouble. I know that all I have to do to make the electric bill is to go find a person who needs a blog installation or wants to learn how to do something online.
My destiny is in my hands and I am glad that I do not have to rely on the handouts of the USA! After this latest economic stimulus has been spent and results not what anyone wanted to see, what is the next step going to be? Throw more money after that last batch?
Barack, where is the change? Where is the hope? After more than 100 billion dollars in new spending per day in office, he is looking more and more like the “old regime” that the campaign said they were going to replace!
Michael is 100% correct. The best way to stimulate the economy is to provide incentives and tax breaks – real stimulus – to the small business owner. Small business is the lifeblood of the economy. It is the largest employer, and it is the most agile – it can adapt to changing circumstances quickly, and therefore can prosper in a recession when big, slow business cannot.
The problem, however, is that Obama and his liberal media have brainwashed the American public into believing that small business owners are all multi-millionaires who live in mansions and drive Bentleys. Any tax cut or incentive for small business will be labeled as yet another “tax break for the wealthy.” In reality, nothing could be further from the truth. Many small business owners sacrifice for their employees. They go without health insurance so they can provide it to their employees. They don’t take salaries in down times, so they can continue paying salaries to their employees.
And what do the employees do? They drink the liberal kool-aid, believe their boss is one of the “rich,” and vote for a looter like Obama who promises to transfer even more of the boss’s money into their own pockets.
Sickening, disgusting, saddening, angering. And unless and until the biased media is reigned in, it’s just going to keep getting worse and worse until we collapse and “Atlas Shrugs.”
Micheal ~ Great points you made. Especially “People cannot spend what they don’t have, and it is about damn time that they realize it. If I spend more than is in my bank account, I get service charges. If the government spends more than it has in its bank account it prints more money!”
This is one of the problems of an educational system that barely teaches kids to read, never mind about basic economics. Manipulation of the money supply and it’s impact on the economy is one of the simplest concepts to grasp. Greenspan devalued the dollar 50% in 8yrs. What the printing to support this Porkulus package will do is scary. People have no idea what stagflation is, but they unfortunately will soon enough.
Frank ~ Spot on! INCENTIVES (NOT handouts) to small business owners is what will stimulate the economy if the politicians really wanted to do that. Small business is the engine that drives this economy (equally or greater than large corps) yet we are being put right in the cross-hairs of this plan. Time to put our heads down and push forward, until as you said, it’s time for Atlas to shrug.
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