How to rebuild our Economy

Money should not grow on trees

Knowing a fact of life, there is nothing in this world that last for ever. The reason for that is, nothing is perfect. Our modern economic system is not perfect. The proof of that is the current failures that have the potential to recapture the growth of our children.

In our world today, we are captured by the chains of economic growth and monetary well being. Nothing seems worth it, if it's not worth the money. That's the methodology adapted by us to choose. And since we have the power to choose, then lets choose a system that rewards hard work and increases the growth of true value.

The truth about our economic system lies in the fact that it fails to adequately reward value created. Abstract occupations today are more profitable than others. This leads to the increase in price of the output generated and causes inflation.

There should be a system that can reward value created with respect to the need it fulfils. 

As generic economics goes to explain the price of a product to be directly proportional and positivity related to the demand for it in the market, it fails to take into account the amount of money circulated in the market and also fails to account for the uneven distribution of income, and these factors warp the prices and product demand forecasts. Hence the new system must ensure a correct distribution of currency in-line with the economic growth, and also the rightful distribution of revenue generated from value creation.

To implement such an economic system, there must be a simple and effective measure put through the nation or nations.

There mustn't be any artificial sources of income including

• Interest rates
• Future Trading
• Stock Trading
• Option Trading
• Forward Trading ect..

Any form of income that is accrued without creating value is to be eliminated.

Trading physical stocks and assistance in distribution and sales of goods and services produced is equally productive an activity as production itself. 

The moment artificial income is eliminated, we must ensure accurate valuation of the economy size and monitor/control the currency flow into the system. Some may argue that in today's times currency flow controls are implemented to ensure effective international trade, and i agree with them. This should be a strategic move that can succeed only if there revenue distribution is of a higher quality. 

Revenue distribution cannot be equal. This is simply because no man is equal. Revenue distribution should be based on value creation. The price of the value shall be accurate only if there is no man with black money, which is a tall statement. Nevertheless, this situation is commendably possible if there is no artificial income floating in the economy.

Such an economy shall be free from inflation, depression, and stagflation of the economy. Such an economy can only be tow things, it's either stable, or in a growth phase and I feel that both situations are much more desirable than our current inflationary, and in a few other economies - depression like states.          

    

Basic Economic Structures

"Our current economy works on a system based on an upgraded barter system."

      Today, all men work to satisfy their wants and on the other hand no man works to satisfy all his wants. We don't need to grow food to eat it, sew cloth to wear it, or build a home for shelter.  We work on one of the human wants and exchange the surplus for the needful. 

      So in other terms this should be an ideal situation. This system will not overvalue or undervalue any human effort. All outcomes shall be valued based on the need or desire for it. Now, the element put in place to measure this value of human effort is MONEY. Currency is a beautiful system that eliminates the uncertainty of over or undervaluation present in the barter system.

     Money is the value we earn today for our efforts. The greater demand for the outcome of our effort, the higher we get paid. :) This is simple to comprehend. And most shall agree that this is exactly what is going on in the present economic system.

    How did the economic system end up in inflation and depression if the current system did not allow over or undervaluation of human efforts?

    The answer to this question is simple. Any individual or entity that gets paid without them contributing towards any one of the human needs will result in inflation. And any individual or entity whose efforts have been consumed and have not been reimbursed for it, has the potential to cause depression. This is how it works. Its a domino puzzle that triggers large scale problems but at the heart of it all, this is what starts it.

   So ask your-self. Have you been earning any money for doing a task that is not contributing to any materialistic human need? Each human need is fulfilled using a chain of tasks. If you are present in one of these chains then you are a contributing citizen.

   Business that allow you to earn money without having to work for it causes negative vibes through the economy. Money is the value of an effort, and if there is no effort and only money, then the true value of the money is degraded. This causes inflation.

Interest for example is an income that is recorded  officially by the World. I feel that this entire concept is flawed. Providing capital to a business is a good thing. Demanding a fixed return is a bad thing.

This is because there can never be fixed returns in a business. All business will face gains and losses. When a business gains, it means that it has successfully addressed important needs of a business. The efforts of that business has created good value for the economy.  This is a time where the investor can demand a return on his investment, and this is a correct proposition. On the other hand, when a Business faces a loss, it means that it failed to recognise a need and has put in efforts that have no value. If there is no value created, the investor can not demand a share. If a share is given to him is such a case, it shall injure not only the business owner, but the entire chain of individuals involved in the endeavour to create value.

Countries lend money to other economies and earn heavy interest rates. They reduce their in-house efforts to produce goods and services that cater to a particular need or want, and bank on the income on interest, and buy the products from another country. Now if the economy where this investment is done cannot pay the interest because it's value created is not great enough (like Dubai), everything will be screwed! 

Please refrain from collecting interest, no matter how small that amount may be. It's your money that gets played with. In other words it's your efforts that get played with. Stock Markets, Derivatives ect. are similar avenues used widely to make money. Such income is not a value creation but ensures the degradation of the economy. As said earlier, any money acquired without work harms the system, and we are all a part of it.