22
Dec
08

Economy 2.0

For me 2008 was the year that I realized I know zip about economy.

I used to think that companies that failed would be out of business to give space to new and better companies.

I used to think that companies used resources to generate value and after that they gave a portion of the profit to governments. But I was wrong, society has to pay some companies because they give society the privilege of using a lot of their human resources.

I used to think that governments could not have as main focus the marketing and selling of computers. I thought that in market economy the government could not be at the same time the customer, the policy maker, the marketing machine, the export partner, and everything else related to the kids computer supply chain.

I used to think that governments were focused in protecting the weak. I thought that "being too small" could be a reason to help not fail. I never thought that "being too big to fail" could be a strong argument to get help.

I thought that creating new money was something serious.

I used to think that companies were prepared to have good and bad years. But apparently a 25% drop in sales is able to make all auto industry bankrupt. That won't happen because governments will create money to save the industry. Which was already done to save the banking system.

I used to think there were limits to money creation.

The same politicians that will use billions to save the auto industry, will use billions to fight global warming. But not saving the car makers would reduce carbon emissions and that would avoid spending on global warming. That seems a good idea, right?

Wrong. That only shows that I know absolutely nothing about economy. Because spending is good, saving is bad. And the in the above case, saving twice is catastrophic.

I used to think that governments should advise banks to be responsible with lending money. I never thought that governments could be worried by the fact that families and companies are not being able to increase their debts. I never thought I would see governments pushing banks to lend more money fast.

I used to think I had basic understanding about economy rules. I used to think those rules would be the same throughout my life.

Now I know how much I don't know. Should I try to learn it? Nahh, I will wait for economy 2.0, this one is obviously phasing out.




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