Trillions Of Dollars Didn’t Just Evaporate

The other day I was sitting at my desk overhearing a conversation between a couple of coworkers.  One person was making a comment about being thankful that he didn’t own any General Motors stock.  The other coworker started getting philosophical.  He said that over the past few weeks, months even, trillions and trillions of dollars have evaporated from the economy.  Where did all that money go?  It wasn’t destroyed.  Nobody took it out into the backyard and set fire to it.  Where did all that money evaporate to and what do we have to do to condense it back?

I thought about what the guy was saying and my immediate thought that I kept to myself was, what makes you think that the trillions of dollars were there in the first place?  The evolution of currency has gotten to a point that we actually value something that doesn’t even exist.

The natural way of exchanging value is the barter system.  I trade something of value to you and you trade something of equal value to me.  If I raised chickens I might trade a few to the guy that grows wheat or the woman that makes clothing depending on what my needs were.  Not quite a convenient way of exchange.  How many people would be willing to walk around with a few chickens in their pocket?  But I could exchange my chickens for gold coins or silver or something else of value and use that valuable metal to buy whatever I wanted whenever I wanted.

But while coins may be better than carrying chickens it isn’t really all that convenient because it weighs a ton.  So instead of carrying around metal to exchange for goods I could carry around a piece of paper that said I had access to X amount of whatever precious metal.  Paper money is even more convenient.  But paper money tied to only so much gold and silver is rather limited.  In order to create more wealth, one would have to drive up the price of precious metal or find some more.  Not all that convenient.

Take that paper money off of the gold standard and tying it to something of intangible value, like the gross domestic product of an entire country’s worth, and the sky can literally become the limit.  Now, the government can print money and create value where none existed before.  A house that used to sell for twenty thousand dollars a few decades ago is now worth a million dollars because there’s so much printed money floating around that really has no value other than what somebody somewhere says it does.

If I drew a doodle on a napkin and tried to sell it on ebay as a Brother Peacemaker original I would be surprised if I got fifty cents for it.  But the other day I heard that a doodle from the President-elect sold for six figures.  Why?  Obviously somebody felt that it had that much value that they were willing to pay six figures for it.  But what is that doodled napkin really worth?  Somebody might say that the soon to be President created wealth with his impromptu artwork.  But a few minutes of chicken scratch, it wasn’t all that great at all, does not make for collectible art status unless a buyer and a seller agrees that it does.

By printing money and giving everybody so much of it to spend, our government has given people the impression that our purchasing power is constantly growing and getting stronger when nothing could be further from the truth.  The average annual income back in the day was a few thousand dollars. Now, the average annual income is a factor of twenty over that. Not a problem! Just inflate the cost of everything. Need a raise? Not a problem! Here’s a two percent raise while the cost of living goes up forty percent!

And the economy is bringing this fact into tangible terms right before our very eyes.  House prices, like so many goods recently, have been reevaluated and put in their proper perspective.  Some people have been slapped awake by the sudden realization of their true worth in the marketplace.  The value that they thought they had in their home, in their job, in their savings, in their investments, etcetera, turned out to be little more than a sophisticated scam of bait and switch.

Trillions of dollars haven’t evaporated.  They were never there in the first place.  The only thing we have to say how much we are worth sits on a giant database on a giant computer somewhere.  It is nothing but a series of numbers represented by bits and bytes on a magnetic disk platter.  There is nothing tangible about it.  And when the computer says the house you bought yesterday for X amount of dollars is only worth half of X you have no choice but to sit back and obey when someone tells you that your worth has evaporated.  But in all honesty you were never worth all that in the first place.

Quick Notes 200812

Wednesday, December 31, 2008
Blogojevish Names Burris

Illinois Governor Rod Blagojevich introduced former attorney general Roland Burris to fill the United States Senate seat vacated by President-elect Barack Obama. Why anyone would allow themselves to be tied to Mr. Blagojevich is truly sad.

Tuesday, December 30, 2008
Kwanzmiss or Christzaa

Is it just me or does this symbol of Kwanzaa looks amazingly like a black Santa Claus?

Monday, December 29, 2008
Israel Bombs Gaza

Israel bombs Gaza.

Sunday, December 28, 2008
The Kwanzaa Santa

The Kwanzaa Santa giving away Kwanzaa gifts.

Saturday, December 27, 2008
The Kwanzaa Tree

Cowry shells for the Kwanzaa Tree.

Friday, December 26, 2008
Eartha Kitt Passes

Eartha Kitt passed away on Christmas Day after struggling with colon cancer. However, the impact to the black community is minimal.

Thursday, December 25, 2008
Toyota Loses Money

I was surfing the net looking through images of a Christmas tree for today’s quick note. I found this gem billed as the world’s most expensive tree. A prime example of how material wealth has become synonymous with Christmas.

Monday, December 22, 2008
Toyota Loses Money

Toyota, the most successful car company on the planet, has announced that it will lose money for the first time in seventy one years!

Sunday, December 21, 2008
Palin’s Due Date

Any day now Bristol Palin and her new husband Levi Johnston are going to have their new baby. It looks like I may have been wrong about these two.

Friday, December 19, 2008
Blagojevich Promises To Fight

Illinois Governor Rod Blagojevich promises to stay in office and fight with every last breath or some rhetorical nonsense that sounds similar. Dude, they got you on tape! Plus, you are on tape inviting people to tape your conversations. What’s left to fight about?

Thursday, December 18, 2008
Obama and Warren

President-elect Barack Obama announces that the infamous bigot Pastor Rick Warren of the Saddleback Church will be giving the invocation during Mr. Obama’s inauguration. Mr. Warren has publicly campaigned for California’s proposition eight denying same sex marriages. Mr. Obama says that disagreement on issues is no reason to be excluded. I guess it’s just a matter of time before Mr. Obama calls his old pastor Reverend Jeremiah Wright.

Tuesday, December 16, 2008
Obama and Blagojevich

Steven Spielberg’s charitable foundation fell victim to the mammoth fifty billion dollar fraud allegedly carried out by Wall Street heavyweight Bernard Madoff. Guess he was doing research for his new movie Swindler’s List.

Monday, December 15, 2008
Obama and Blagojevich

The Republican National Committee (RNC) is bending over backwards trying to tie President-elect Barack Obama to Illinois Governor Rod Blagojevich. Even Mr. Obama’s Republican rival for the White House Arizona Senator John McCain calls the RNC’s effort distracting. Sore losers.

Sunday, December 14, 2008
Talk About A Shoe Bomber

That blur is President George Bush dodging a shoe from a disgruntled Iraqi man. The man screamed at Mr. Bush drawing the President’s attention and giving him a little extra time to respond. If only homey could have thrown that shoe a little more discretely it may have connected.

Saturday, December 13, 2008
Race To The Mall

Just what every little girl needs these days! A Polly Pocket Race To the Mall racing set. If boys can have dolls then girls having racing sets is long overdue.

Friday, December 12, 2008
Detroit’s Future Looks Cloudy

The future of Detroit automakers looks rather bleak and cloudy this morning. Last night, the Senate Republicans managed to kill the bill designed to help Detroit stay afloat.

Wednesday, December 10, 2008
Run, Jesse, Run

Illinois House Representative Jesse Jackson, Jr. is rumored to be senate candidate five in the Rod Blogajevich scandal, the highest bidder willing to buy the United States Senate seat vacated by President-elect Barack Obama.

Tuesday, December 9, 2008
Mr. Blagojevich Goes To Jail

Illinois Governor Rod Blagojevich was arrested on charges of conspiring to sell an appointment to President-elect Barack Obama’s vacated US senate seat! You can’t trust anybody these days!

Monday, December 8, 2008
Mr. Cao Goes To Washington

Republican Anh Joseph Cao holds his daughter Betsy at his victory party after becoming the first Vietnamese American to go to Congress by defeating corrupt Representative William Jefferson in the 2nd congressional district of Louisiana centered around New Orleans.

Sunday, December 7, 2008
De La Hoya Goes To School

Oscar De La Hoya gets manhandled by Manny Pacquiao. Time for the golden boy to take a seat.

Friday, December 5, 2008
OJ Goes To Jail

O.J. Simpson gets fifteen years for what he says was just him taking back property stolen f.rom him. Joe Horn shoots and kills two burglars that didn’t steal jack from him and he’s hailed as a hero. Go figure!

Thursday, December 4, 2008
Time Is Running Out For Ms. Clinton

Time is winding down for New York Senator Hillary Clinton to accept donations to help pay down her campaign expenses. Next thing you know she’ll be before the Congress asking for some kind of bailout.

Wednesday, December 3, 2008
The Economy Falls

Plaxico Burress arrives at court for his arraignment in New York for accidentally shooting himself at a Manhattan nightclub Friday evening. More proof that people too stupid to have guns shouldn’t be carrying guns.

Tuesday, December 2, 2008
The Economy Falls

This photo may look like a meteor. But it’s actually the economy. The Dow dropped something like a million points yesterday!

Monday, December 1, 2008
Oil Continues To Fall

The price of oil continues to fall like a rock! At less than $52 a barrel oil hasn’t been this cheap in what feels like centuries!