Monday, August 24, 2015

Stock Market: Real Or Not Real?

As I write this, I'm watching reports about the falling stock markets all over the world. After a bad week last week, the markets are going down even worse. Everyone is wondering if they will miraculously stabilize or will we see another big bubble? At this point, it's pretty much anyone's guess, although I believe the powers that be still control what happens to a very large degree.

I want to play a little game: Real or Not Real, but first I need to give you a little background. What is the stock market? If you go back in history, wealthy men put their money into manufacturing businesses that could use common workers to mass produce goods more cheaply than ever before. Somewhere along the way, these rich men came up with the idea they could attract more money for investments by opening their businesses up to other people with money and selling "shares". They would then pay the shareholders dividends based on profits created by the business.

The idea began to take off. This was because there was a middle class with dreams of making their hard earned cash pay in ways they didn't have to work for. They too could make money off the backs of others like rich men did. Some of these middle class people did very well with their investments and became much more wealthy as a result.

The Great Depression changed many people's fortunes overnight. Suicides were common as people literally lost everything they thought they had "earned" with their investments. Ironically, most of the ultra wealthy people had managed to sell off their investments before the fall came (NOT coincidence). After the fall, they were able to buy huge businesses for pennies on the dollar and made even more money!!!

There have been many more recessions since then. The 2008 "recession" I have always called a depression because the effect was in many ways similar to the 1929 collapse. Huge numbers of people lost good paying jobs. Many lost their life savings. The ultra rich banks were given more investment money they could gamble with and lose. Today, we once again seem to be flirting with financial disaster as the markets once again take dangerous tumbles.

Now to the game!

Real or Not Real? 

  1. Are the manufacturing plants real? Yes! They produce real goods to be used by real people!
  2. Is the stock market real? Quite simply, no. Stocks are a bet that those in charge are going to make decisions that will make the company more profitable. There are no guarantees. While these bets are believed to be based on tangible goods, they are really based on money only. 
  3. Is money real? That depends on how it is created. If it is created because you have some physical good that it represents (like gold or lumber or oil) it is somewhat real. It is still just a representation of the goods designed to make trading the actual goods easier. If it is created from thin air (like most of our currencies in recent years) it is not real. Fake money is called fiat money.
Now that we've played the Real Or Not Real Game, what do we need to understand about our lives as we know them?

The stock market is a tool of rich people to siphon money off of poorer people. While people are made to believe they are investing in real goods and services, these "investments" come with inherent risks. Investors don't get physical pieces of the company. They don't even get whatever product or service the company produces unless they buy it. Their "shares" have a monetary value that is pretty much always based on fiat money. Winning or losing often comes down to convincing other people you have something of real value to sell.

What We Need To Remember

All around the world, real goods and services are produced every day by people just like us. These can be traded and used by everyone so that we all have food, clothing, shelter, etc. The supply chains are already in place. We do not need company chairs and CEO's to provide ourselves with what we need to live on. The structure is there.

When our world economy collapses (and there is no doubt in my mind it will), understand the solutions require new ways of looking at the world. We do not need rich men to live. We need cooperation. We need each other. We are real!!! We are what matters!!!

Allow the illusions of the world to fall aside so we can create a new, real world together!!!



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