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Guest Commentary -
AG Economics 101
By
John Holden |
My
business plan over the years has always been to buy high and
sell low. Needless to say, it hasn’t worked out too well. I
slept through my economic classes in college, when I should have
been paying attention. I did learn one thing. Money is just a
medium of exchange and a way of keeping score of who owes whom
for whatever. I have always wondered about our national debt and
foreign trade deficits, and how they would be paid off. I pay my
own debts so why shouldn’t our government pay theirs?
Then I had a revelation and realized the U.S. dollar is not
backed by gold or silver any more. Bankers are just transferring
credits electronically. Which means the government could wipe
all that debt out just like clearing the scoreboard at a
basketball game. This would cause repercussions, of course.
Massive inflation and devaluation of the U.S. dollar against
foreign currencies would be one. Argentina is a good example of
what happens when a country’s currency fails. They’ve had
massive inflation and financial instability for years.
I don’t know how the value of foreign currency one against
another is calculated. I can’t see why the Canadian dollar has
recently fallen so low. There are not too many countries besides
the U.S. where foreign investors feel their money is safe. The
recent stock market crash wiped out a lot of foreign capital
that was invested in home mortgage securities and commodities
like oil and grains. The money was invested there because the
investors felt they had real and tangible value for security.
Evidently, the bankers don’t trust each other when it comes to
lending money because of no collateral for security.
The American public, including me has lost faith in the stock
market. People have lost thirty to 50% of their IRA’s. Some lost
their whole life savings, plus their houses. It will be hard to
get them back. You can burn somebody once, but not as easily
twice. I don’t think we have to worry about our kids and
grandkids paying off the national debt. The government will just
keep printing money and eventually have to wipe the debt out and
start over.
One reason I think the Federal Reserve Bank keeps interest rates
down is not to stimulate the economy, but to keep the cost of
interest on the national debt down. If my math is right, even 5
percent interest on 10 trillion dollars is 500 billion dollars a
year. That is a considerable portion of our national annual
budget. It is also the reason banks are not paying any interest
on CD’s. They can get the money cheaper from the Federal
Reserve. That forces investors to put money into the stock
market instead of a safe CD at 4 or 5 percent interest.
So, where do you put your money? Under the mattress is probably
not an option if we get inflation. Real estate and real property
maybe works. People have to eat, they get sick, and they die.
Anything to do with food, medicine, and even morticians might be
all right. I had a relative who was a mortician. I told him I
was hoping not to need his services. He said, “Just remember,
I’ll get you in the end.”
I think anything to do with energy might be all right. I doubt
if we can cut our energy usage back too much, even if we switch
to renewable energy such as wind, solar and bio fuels. A new
emerging technology should be purification of seawater. We are
running short of fresh water for metropolitan areas. The answer
to CO2 green house gases should be obvious. Grow more plants.
They use CO2 and emit oxygen. There is potential for a lot of
agronomic production on deserts if you have purified seawater
available.
The exciting part coming down the road is the changes we will
see in agriculture. The world population is currently over 6
billion people and heading higher with each new baby born. Just
think how much agriculture production it would take to give
every person in the word one slice of bread, or one egg a day.
The point is that we won’t have grain available to feed
livestock like we used to. It will go straight to human
consumption. Couple this with the fact that we are running short
of wood pulp for paper products. We will have to grow crops like
kenaf or industrial hemp for paper pulp on farms. Either that,
or we’ll run out of toilet paper and computer forms for the
government. Chickens and pigs need some cereal grains, but
ruminant animals (cattle, sheep, and wild ungulates) can convert
grass to edible protein.
With the recession and coming high unemployment we will see more
consumption of cheaper meats like hamburger. The days of the
traditional packer feed lot consortiums with vertical
integration are numbered. Our forests and lumber industry is
limited right now by our environmentalist’s let burn, don’t use
it policy. Have you noticed the stone and concrete buildings in
Gaza and the Middle East? They used up the ‘Cedars of Lebanon’ a
long time ago. The only vegetative growth you see on their
mountains are willow like bushes. This is a great example of why
we need to continue to protect our own wilderness and wild land
areas.
Last but not least, a warning to all politicians in either
political party. If you don’t continue to provide your
constituents with the standard of living they are accustomed to,
you will be out of a job. Unless you are a dictator like in the
communist countries and just shoot the dissidents.
Ours is a society of instant gratification that expects
immediate solutions to all of our problems. President Obama will
only have a ninety-nine day honeymoon before the media forgets
about the Bush-Cheney administration and lands on him.
Our problems in this country were caused by our own greed and
over indulgence, plus the greed of big banks and multi-national
corporations. The banks and moneychangers have controlled
governments down through history. The monarchs in Europe had to
borrow money to finance their wars. Crooked bankers have been a
part of society since the idea of money as a medium of exchange
was conceived. The only thing is that they haven’t realized that
they can’t take their wealth with them when they go. I don’t see
any U-hauls full of money behind hearses at funerals. I doubt if
who ever is in charge when they get where they are going will
cash a check for them. It is too bad there are not more Bill
Gates, Warren Buffets and Oprah Winfrey who have used their
wealth for charitable programs.
This ends my lecture on economics. It is probably worth what it
cost you. Not much! Remember to buy low, sell high, and keep
your head down. Whatever is coming down the pike in the future
is sure to be interesting, maybe too interesting. |
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