Get What You Want By Altering Your Thoughts

Jeff in thought

It is an interesting twist on reality.  Some believe that you create your world with the things you think and believe.  That you can bring wealth by believing you are a wealthy person.  That you can get your dream house by believing you already possess it.  I am here to tell you that it is true.  But how is that possible?

Some would say that the universe bends to your thoughts.  I am a little more pragmatic than that.  I believe magic exists in reality.  Not that magic is real, but sometimes reality can look magical, and sometimes it can be interpreted as magic.  Or perhaps as the universe giving you what you really want.

I do not see this as religion.  I just believe that your thought life can have a real impact on your real life.  That the things you think show up on your face.  That the way you deal with problems is impacted by the negative outcomes you think about.  Having a positive attitude in your thoughts shows outwardly to other people, and makes you more attractive.  People help people they like more than people they do not.  It could just be little things like making an introduction, or it could be bigger things like offering you your dream job.

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The Root Of All Evil

The love of money is the root of all evil.  I hope that doesn’t mean my coin collection.  I kinda like it.  As far as the saying goes, it feels like we are supposed to be poor.  Like we aren’t supposed to want things in our life.  Like going into business is the worst evil we can do.  I am here to tell you that wanting to be in business and make money is not evil.  Wanting to have things is not evil.  But to want at all costs probably is.  If you’re hurting people, your community, or the world to make money, then you are probably not doing the right things.

We go into business to make a profit.  If you’re not making a profit you are what we call a not-for-profit, as in a charity.  Businesses must make a profit otherwise they are losing money, which is not a good thing.  You can keep your profit low if you like, but then you’re not serving your shareholders’ best interests.  If you’re a one owner company and that owner is you, you can keep your profit to a minimum and not hurt anyone, sure.  But if you are creating value for your customers and are not scalping them, having a profit is just fine.

Going into business is a noble thing.  You are generally serving your customers, paying your employees a paycheck, and giving your shareholders dividends.  So you are helping many people, including yourself.  Having an abundance is ok.  It is also nice to turn around and help others with your abundance.  If your only aim in life, though, is money and the things it can buy then you may find yourself in bad situations.  And I think that is what the saying is referring to: That money is not evil, but some of the things that people do for money is evil.

Is greed really a good thing?  How would we define greed?  I would say that somebody is greedy if they are never thankful for what they have and they want more and more all the time.  Being an unhappy person no matter what you have is not a good thing.  Sometimes you have to stop and consider how fortunate you are.  There also has to be a point where enough is enough.  Nobody needs more than one or two places to live, more than one or two cars, a closet full of shoes, or multitudes of adult toys.  There has to be a point where what you have is enough.

Personally I am happy with what I have and I’m sure I’ll be just fine, but I like the independence that my own business gives me.  I want it to grow so I can take care of a few debts and leave something to my children.  But if I lived at the same lifestyle for the rest of my life I would be just fine with that.

Theoretical Implications Of The U.S. National Debt

As we begin flying missions with the UN in Libya this week, I am reminded of our national debt and how it isn’t getting any smaller with each bomb we drop.  And while this could be a very positive development for our security, I don’t see why our country has to bear the burden of policing Libya when we can’t afford it.  We are the spendthrift with the maxed out credit cards with one more emergency so we break open the new credit card.  And I can imagine that we are also going to provide financial help to Japan, and we should.  Yes I said it… we should help out Japan after this massive disaster that continues to unfold to historic proportions.  Well, I guess it was already historic, but this is truly unprecedented.  So we help out Japan and protect the people of Libya, then how about Iran and North Korea?  Where do we draw the line?

What is our national debt?

Let’s start with money.  The country prints a dollar bill, how does it get into circulation?  It either replaces a dollar bill or it is spent.

So let’s say we have a government of 10 people and we print $1000 each to pay them for gold that they dug out of the ground.  Now there are $10000 in IOU’s from the government and the government has $10,000 worth of gold.  The only reason the gold is worth $10,000 is because that is what we paid for it.  Because the government is holding gold to back the currency, we could be said to be on the gold standard or that the currency is backed with gold.  What if we took our printed money and bought food to give away to starving children in Africa (instead of gold)?  We then have currency outstanding with a face value of $10,000 and what is it backed with?  It’s backed with the holder’s confidence in the government.  You could probably understand what happens if the currency holders lose faith in the currency…

The other portion of our national debt is loans to the government, typically bonds and notes.  These are sold in return for currency and the government pays out interest payments to the holders of treasury bonds and notes.  Why does the government sell this debt really?  To take currency out of circulation so that it is worth more.  Government debt has an inherent value because of it’s interest payments, but is also somewhat backed by the holder’s faith in the U.S. government.  Government debt becomes worth much less if people become concerned that the government will default on its debt: when it is unable to pay its interest payments or unable to pay the face value of the debt when it becomes due.

In our example we have $10,000 worth of currency outstanding.  How can the government spend $10,000 more without increasing the amount of currency outstanding?  They issue $10,000 worth of treasury bonds, collecting the $10,000 outstanding, then spend $10,000 more.  They must now fork up $400 per year to their bond holders but there is still only $10,000 worth of currency outstanding.  They can collect taxes to pay the $400 per year to avoid adding currency into circulation.  What if there is a business person looking to borrow $10,000 to start a business?  Well, unless he can guarantee $400 in dividends, he is likely to lose out to the government that is guaranteeing $400 in interest.  That is one potential implication of national debt: that it takes away the incentive to invest in new businesses or in other more risky investments.

The effect on the individual

There are three ways for the government to fund it’s spending: Taxes, currency, and debt.  There may be more than this but for this discussion let’s just assume that these are the only ways.  So what happens when the government does not want to increase the amount of currency in circulation and nobody wants to buy its debt?  That’s right, taxes go up.  And as we know here in Illinois, taxes don’t go up just a bit when things are bad, they go up a lot.  Our state taxes went up by two thirds to cover the shortfall in the state’s budget as the state is trying to avoid new debt.  It hurts but not as much as it would hurt at the federal level.

Let’s say that your federal taxes went up by half.  That would be pretty big.  It would have a significant effect on your lifestyle.  Now extend that to the country.  People would spend much less than they do today, creating severe economic hardship within the economy.  I’m also thinking that would reduce income taxes the government takes in.  A vicious cycle begins.  But what does the government do instead of raising taxes this time?  Printing more money to improve the economy before it sinks into a depression.  This sounds familiar right?  The Federal Reserve buys government debt to put more cash into the system.  Then buys more and more to prevent the double-dip recession.  So life goes back to normal then what?  You have to take cash out of the system before it becomes inflation.

The China factor

China is a little wildcard that makes things interesting.  China holds a ton of our currency and debt.  Many Chinese businesses also hold our currency because the value is greater than their own currency.  That is on purpose.  The Chinese government depresses their own currency against the dollar by stockpiling dollars and U.S. debt.  As more dollars flow to China for the products they produce, the usual thing that should happen is that they should buy U.S. products.  Makes sense right?  You have U.S. dollars, you buy U.S. goods with them.  Or you trade them with other companies.  Or you sell them on the forex market for your own currency.  That would mean that somebody else wants to trade Chinese currency for U.S. currency.  That would be either the Chinese government or a foreign entity with Chinese currency because of something they sold to China.

What if you’re China and you want to grow your domestic businesses but want to keep foreign businesses out?  I know you’re thinking cheap labor, but eventually with enough wealth, local labor prices go up.  Another way to keep the goods flowing out and not flowing in is to keep your currency value low against foreign currencies.  You sell your currency for dollars, propping up the dollar because you are taking dollars out of circulation.  You can also use your dollars to buy U.S. government debt, transferring even more dollars overseas.  Eventually, though, China is going to want to do something with their dollars.  Buy the Euro?  Buy gold?  Spend money on social programs or military?  Regardless of the scenario, dollars come back into circulation.  Or U.S. government debt is sold, decreasing the value of the debt on the open market.  This would increase the interest rates of outstanding debt and of any new debt issued.  It would also rob from business investment because people could get a pretty good interest rate from U.S. Government debt.

I am not sure how much cash and how much debt China holds, but it’s a bunch.  It could easily depreciate our dollar creating inflation or increase interest rates dramatically.  The U.S. might be forced into cutting important programs and dramatically increasing taxes.

Hyperinflation

Hyperinflation is a situation where people lose confidence in the currency so they stop using it.  People with products to sell won’t trade for paper money, they require gold or another good to trade for.  Could hyperinflation happen in the United States?  While certainly possible, it is somewhat unlikely.  It is more likely to see double-digit inflation, but people will continue to have faith in the currency.  We have never experienced the fear and panic of hyperinflation, I am not sure people would really know what to do.  What do you do when money has no value?

What can be done?

With so much debt outstanding, the U.S. government is limiting it’s options.  It’s important for our national security to pay down our debts.  Just as important to our national security as a stable Libya.