Friday, December 26, 2008

Fellow citizens of the world, I hope and pray that the future is brighter than I can see what it might be for now.

The economy is slowing down. This means that more people are holding onto their money and not spending it in the economy. Therefore sales are decreasing and firms are having to cut costs. Laying off employees is a very common way of doing so, except it might make more sense for the "down time" for the employee to be employed in promoting the services the company provides and emphasizing the value of the service, product, etc. This can increase cash flow.

The economy is slowing down. This also means that people are not willing to lend money to others as there is a greater risk they will not get it back. The receiver of the loan could go bankrupt, or spend the money on things that do not result in valuable, salable product. So there is a cautious atmosphere in the loans markets.

The above two factors are in themselves creating the pre-requisites for a "Great Depression". The more uncertainty there is in the market place, the more the brakes are applied to the flow of money. It is the lack of confidence in getting value for you money that creates the Economic Meltdown and the Great Depression.

So how do we engineer an economic recover? By providing items people have to have, at the highest price they can bear and by pumping the profit from your transactions into your business (more employees, materials, and promotion). This puts money into the economy in a constructive way. Money spent on TVs, cars, clothes, toys and gadgets is money lost to the economy as it does not directly provide jobs that create more value. it is not easy to think it through all the way to see how your product will create more value in the economy, but it does need to be worked out. In my next post, I will put in some examples of what could be good examples of ways to create more value in the economy.

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