Historically, recessions have come and gone.
I, personally, have experienced at least ten recessions in my short seven decades of life. Some recessions lasted just a few months, others went on for years. One recession resulted in a 25% unemployment rate where I was living. I gained different economic 
insights from each of those recessions.
The value of a recession is what a person learns, or what a person becomes, as a result of the recession.
Those who comfortably weathered recessions in the past had one thing in common … they had cash savings, sometimes called “rainy day” money. In order to save “rainy day” money, they had to spend less than they earned. In order to make the sacrifices necessary to save money, they had to believe in saving money. Today, too many people, particularly analytical engineering types like me, have lost faith in saving money. Our reasons for not saving money … are quite logical.
If we put money in a saving account, our money grows slower than inflation, so we wind up losing money, not making money.
If we put it in the stock market … well we know what happens to stock markets. In my dictionary, the definition of “speculation” is on the same page with “gambling,” and Las Vegas is an alternate spelling for Wall Street.
Logically, we all sense that something about the economy is not working the way it should. Don’t you agree that … that which did work … no longer works … at least not to the same degree?
Our logical minds complain that we should have been able to build a “rainy day” reserve using savings accounts and stock market investments. Unfortunately, saving accounts and stock markets are not working the way they have done in the past.
Stock markets and savings accounts used to work in the Industrial Age because they were economic tools of the Industrial Age. They are not working now because we have transitioned into the Information Age (or at least we have stuck the tip of our toe into that vast ocean). Because of the Information Age, the economy has changed.
We need economic tools that reflect our new economic conditions.
Rather than growing savings accounts by not spending money, we need to learn to create secondary income streams using time and money we are already spending. Secondary income streams function similar to the “script” programs that schools have been using for decades. In “script” programs, profits from sales are returned to a school. In “secondary income stream” programs, profits from sales are returned to the individual.
Could “secondary income streams” be the new “rainy day” money to replace the “rainy day” money that dried up due to inflation and economic changes? You decide. You can read the first two chapters on my eBook on this subject by clicking on this link www.symbiosis4u.us/eBooks/EntrepreneurDNA-2EZ.pdf (The first two chapters should only take about twenty minutes if you read 400 words per minute.)
Rather than speculating in the stock market, should we consider learning how to make money from the “back side” of the stock market? Perhaps we should learn more about producing dividend like income based on actual product volume for a group of companies rather than analyzing the speculative value of a stock portfolio for the same group of companies.
The “Back Side” of the stock market is similar to the way Warren Buffet invests. Warren Buffet doesn’t buy stock, he buys companies. He is not concerned with the increase in stock prices so much as the long term dividends (profits) produced by the companies he purchases. For example, he bought Mrs. Fields’ Cookies stock (all of it) in order to make money in the form of dividends, not increased stock prices. While we do not have Warren Buffet’s buying power, we can benefit from a similar process. That process is what I call the “Back Side” of the stock market.
On April 2nd, I will be speaking on how to make money from the “Back Side Of The Stock Market.” Stay tuned for more information as April 2nd gets closer.
Recessions come and recessions go. At least, that is what has always happened in the last century. Will that be what happens in this century? I don’t know. I do know that every recession has caused some changes, in some areas of the country, that became permanent. What will be the permanent changes resulting from this recession?
The answer to that question will make some people wealthy … and others paupers.
Turn on the radio or TV, pick up a newspaper or a magazine, all you see is doom and gloom … bail out, recession, bankruptcy, mergers … nothing but doom and gloom.
Yet the talking heads that rattle incessantly about all the problems never discuss the “source” of their stress inducing information. Who tells the commentators what to say? Where do they get those facts they disperse into the ether with such alacrity?
Economists.
Economists are a strange breed of intellectuals. They arrange huge numbers called statistics to explain a concept and then create definitions to explain what the statistics just explained. I am not convinced that economics should be considered a science. Consider this.
Economists assume that what has happened in the past will continue into the future. To economists, the forces that existed last year are the only forces which can effect our future.
Isn’t that rather like purposefully creating a future we do not want?
New forces, unknown forces, creative forces, are not part of the equation because new, unknown, or creative forces are part of the future, not the past. With such a pessimistic attitude, it is no wonder that the study of economics has been called the “Dismal Science.”
Economics should be simple.
Consider the definition of a recession.
To an economist, a recession is when the Gross Domestic Product, which is a measure of the nation’s productivity, declines for two quarters in a row. Unfortunately for the economists, that information is not available until at least a month AFTERWARDS. Therefore, economists only work with the PAST, not the future, and … not even the present.
A recession can be over and the economists, and therefore the talking heads, will not know about it. We (as a nation, not we, as meaning you and I) may no longer be in a recession, but the economists will not know it for weeks or months.
So why do we listen to the talking heads telling us what the economists are saying happened in the past? Does it really make sense to create a state of emotional depression, which reduces productivity, which reduces profits, which produces a recession, which produces pink slips? Surely there has to be an easier way for the common man to interpret economics than what the talking heads say.
Cubicle economics use different metrics.
According to “cubicle economics,” a recession is when the person in the next cubicle gets a pink slip. A depression is when you get a pink slip.
When the person in the next cubicle gets a pink slip, you know there is a recession now, not next month. In contrast, when the vacant cubicle becomes inhabited by a new worker bee, then the recession is over (particularly for the new worker bee). Cubicle economics are simple but do not include elements of the future, only the present.
Functional economics should be both simple and include an element of the unknown, or the future, otherwise all we get is more of the past. We cannot create a functional future by only using facts from the past or focusing only on those things that are happening now.
So, how do we bring the future into our economic model?
Wouldn’t an economic model make more sense if it were to integrate current trends that are not being effected by the bail outs, bankruptcies, and other interruptions to the functioning of a normal market place?
For example, how do the economists factor in the growth of the internet into their statements of doom and gloom? My new eBook, “Entrepreneurial DNA” addresses some of these issues, and has some rather unusual conclusions … conclusions you will not hear the talking heads discussing. Why? Because the talking heads are just mouthing what economists say and economists only look at the past. Economists do not factor in potential mitigating factors that are in nascent stages of development … like the growth of the internet.
Listen to ex-banker and global business strategist Frank Feather describe future oriented economics. www.symbiosis4u.us/MP3/Webolution.mp3
If economists only look at the static economic past, who looks at the economic potential of the future?
Entrepreneurs.
Most people think of an entrepreneur as the “start a business on a shoe string” kind of person. My think tank humorously refers to an entrepreneur as a person who finds a pile of horse manure and immediately begins looking for the pony that made the mess. My think tank, all of whom are entrepreneurs, know that being an entrepreneur is not determined by historical facts as much as by an optimistic predisposition to take action in order to create a more desirable future.
In the introduction to my new eBook, “Entrepreneurial DNA,” I define an entrepreneur as any person who takes action today to purposefully cause changes in the future. Rather than look at the past, as the talking heads would want us to do, entrepreneurs use the past and present to make meaningful changes to the future.
Here’s the fascinating part. Based on my think tank’s definition, everyone is, to varying degrees, an entrepreneur. In fact, the first chapter of “Entrepreneurial DNA” defines why you really are an entrepreneur, even if you work as an employee and have never started a business.
While everyone is an entrepreneur because everyone is capable of creating a new future, few do so. This dearth of action is partially due to the doom and gloom from the talking heads, but mostly due to a lack of training, direction, and purpose. Our schools did not teach us how to think like entrepreneurs.
How does a person who doesn’t believe they are an entrepreneur find out what would be an appropriate venue for them to pursue? How does a person awaken their entrepreneurial spirit?
All it takes are two pieces of paper and a pencil. That’s what the first chapter of Entrepreneurial DNA is all about … really high tech stuff like paper and pencil. The second chapter defines how to evaluate an entrepreneurial opportunity.
The first two chapters, over fifty pages, of Entrepreneurial DNA are free for you to read. (This eBook is in the EZ format so you use the page up and page down keys on your keyboard to change pages like reading a book.) Just click here and go to the download page. www.symbiosis4u.us/eBooks/DNA.htm
insights from each of those recessions.
Logically, we all sense that something about the economy is not working the way it should. Don’t you agree that … that which did work … no longer works … at least not to the same degree?
