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Friday, October 23, 2015

Money & Politics

I kind of like Bernie. Several people I know speak well of him. But it doesn't really make any difference what I think, or what you think, or what 99% of the voting public thinks. He might even get elected, but even that won't make any difference because politics is just entertainment to keep the kiddies amused.
    One thing I've heard Bernie say, and I've been trying not to listen to any of the crap that passes for Presidential campaigning, is that one of the big problems we have is that rich people are making a zillion times more money than poor people. That kind of sound bite might be good for getting people stirred up, but it doesn't do anything for me. How big is a zillion? Really big, so big it might as well be infinite. Well, that's nothing new, the poor stay poor, the rich get rich. Everybody knows that. Bitching about the rich is worse than useless.
    What makes a difference to me, and to most everybody else, is how much money I have coming in. Is it enough to cover my bills? Is there any left over to set aside for the coming rainy day / shit storm? How much money I have coming in depends on how much money other people are spending. Likewise how much other people have coming in depends on how much I am spending. In economic windbag speak, it's called the Velocity of Money.

Gross Domestic Product (Annual?) / (St. Louis) Adjusted Monetary Base, Not Seasonally adjusted
    When times are good and money is flowing, the velocity of money is high. When things go sour, the velocity drops. When it drops everybody suffers, well, everyone who depends on an income to stay afloat.

Velocity of M2 Money Stock (M2V)
   I found these two graphs. I like them because the line is red and easy to see. They are both supposed to be graphs of the velocity of money. The first one goes back about 30 years farther than the second. They are very different except for the end point. That's pretty low in both cases. Why is it so low? Because robots and computers are cheaper than people.

    Capitalists (businessmen) are in business to make money. They are not going to invest in a business unless it looks like it will make money. And businesses that use robots cost less to operate than businesses that employ people. Since businesses are employing robots instead of people, more people are out of work. More people out of work means more people NOT spending money, which means the projections that forecast whether a particular venture is going to make any money are looking ever grimmer, which means fewer new businesses are being started. We are in a downward spiral. More money is being concentrated in fewer and fewer areas, more people are being cast off of the great carousel of commerce and flung into the outer darkness. Eventually that concentration of wealth and power will become a giant pillar of light rising out the center. It will be great, for about three seconds, and then it will collapse and we will all go back to being dirt poor.

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