With apologies to graphic artists in our readership, we offer this model of our economy, funky, but instructive. We won’t get a Ph.D., grant, academic post, tenure or garden club, Kiwanis, or Dell Webb luncheon honorarium for giving you a snow job that only people like Ben Bernanke, Robert B. Reich and John Maynard Keynes can do. There is more fame, power and money in making it complicated.
If we begin at the top with a corn crop we see that it moves from the field to a “Supplier,” the grain storage facility that validates the quantity and quality of crop which is divided into 5,000 bushel lots and offered on the Chicago Board of Trade for future delivery. On sale it moves to the “Producer” which for corn can be animal feed, breakfast food, corn syrup and fructose makers who all use the grain and now ethanol makers who waste it making bad motor fuel, starving millions of people who need it while driving the price up.
The Chicago Board of Trade folks make these markets with contracts of future supply based on Supplier’s documents, which they trade as “Future Delivery Contracts.” It is a frantic business I once thought I wanted to be in, but after two weeks in the trading pits realized I had no place there: I saw men who had an etherial connection to the markets that I did not have.
Farmer Brown establishes a line of credit for the estimated value of his crop and that is the birth of cash for all of us. This simple fact is the source of all our money, but that printed falsely and the reason the latter always fails. Cash has to stand for something; mean something or we get into trouble of the kind we are in today thanks to all the “smart fellers” in Washington, DC.
Meanwhile back at the model, the “Marketers” come to bear in several forms: They are jobbers of the raw product in convenient forms and not the 5,000 bushel lots traded on the Chicago Board of Trade. They include people who create new products in collaboration with the producers as conduits of what people want or information about it.
When products exist Advertisers come into the picture to sell them, but there are overlaps in Marketing and Advertising depending on the business. There is much communication between those requiring skilled people and equipment.
“Retailing” is the final step and this is yet another level of business it takes to put corn flakes on your table or the corn syrup in your Ketchup and so on. There is a chain like this for every product you use and that chain is “the economy.” It is an engine that is magnificent, monumental and malevolent simultaneously. How can that be?
You will notice “Bank” is the center, bearing or pivot point of the model. It is the component that makes it all work and saves us from a barter economy where you’d have to trade what you make or lift for what you need. Without a currency to represent all this stuff life would be a mess and missing everything we enjoy today, but it all relies on the fact that every Dollar must stand for something.
Gold has been that item, but not a very good idea as gold has very little use other than being pretty and valid in time. It is impervious to all acids, save one, “aqua regia,” one part fuming nitric acid and three of concentrated hydrochloric acid. Atomic chlorine produced dissolves gold, which can then be recovered as a smoke-like powder for application.
It makes far more sense to evaluate money by comparing what it will buy in the market, or markets. These negotiations go on 24/5 in the Forex world currency market, but this is of no consequence to us if we isolate our economy per the diagram. The bank can be the arbitrator and set standards on which the currency is validated and it works well most of the time.
Our problem has been trading internationally with people who undercut our producers. This produces huge profits initially for producers, who become marketers of foreign products, advertisers and retailers, but it first destroys producers and suppliers with a cascading, domino effect that eventually destroys the whole system unless our producers find broader markets in the process. That has been our great failure.
Corn, for example, was our largest export until the “biofuel” movement came out of the “global warming,” now “climate change.” They claim a trace gas controls the atmosphere when the science of meteorology had discounted it entirely knowing water vapor is in far greater amounts and has much higher infrared energy absorption and controls atmospheric heating! Now we burn 40% of our annual corn crop as millions go hungry! This in itself is a current cause of instability and war.
As well, international commerce has produced more corruption of our government than anything but the “Defense” industry the full title of which should be the “Defense of Scumbag Profits and Payoffs.” When we let Japanese cars come into America duty free they have had 100% duties on our cars and require any new American car entering Japan be completely disassembled, inspected by their government engineers and reassembled by Japanese workers. Frozen Chinese chickens enter America duty free, but American chickens and products have a 100% duty. The people we vote for call this fair trade! Every one is a “damn liar,” in the words of Mark Twain.
Meanwhile banks in 120 countries see number accounts opened with “maintenance fees” of $5,000 per year and many could be traced to US Senators and Representatives if our FBI were not corrupt. All these people can talk about is how wonderful is “free trade” while the citizens of America get shafted once again.
The basic inner workings of an economy are very simple. The manipulation of ours would be, but for the elected scumbags we have in charge of ours who are stealing us blind and screwing up the world. Millions of people are hungry because of these evil people and the reason I pray for an asteroid to take out Washington, DC for having violated our simple economy.