This evolutionary cycle is not just for people but for countries, companies, economies—for everything. And it is naturally self-correcting as a whole, though not necessarily for its parts. (1/4)
For example, if there is too much supply and waste in a market, prices will go down, companies will go out of business, and capacity will be reduced until the supply falls in line with the demand, at which time the cycle will start to move in the opposite direction. (2/4)
Similarly, if an economy turns bad enough, those responsible for running it will make the political and policy changes that are needed—or they will not survive, making room for their replacements to come along. (3/4)
These cycles are continuous and play out in logical ways—and they tend to be self-reinforcing.
The key is to fail, learn, and improve quickly. If you’re constantly learning and improving, your evolutionary process will look like the one that’s ascending. (4/4)
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Write down what your one big thing is (such as identifying problems, designing solutions, pushing through to results) and why it exists (your emotions trip you up, you can’t visualize adequate possibilities). (1/4)
While you and most people probably have more than one major impediment, if you can remove or get around that one really big one, you will hugely improve your life. If you work on it, you will almost certainly be able to deal successfully with your one big thing. (2/4)
You can either fix it or you can get the help of others to deal with it well. There are two paths to success: 1) to have what you need yourself or 2) to get it from others. The second path requires you to have humility. (3/4)
I saw how these struggles happened in timeless and universal ways, and how these struggles had huge implications for all aspects of people’s lives... (1/5)
... starting with what happened with taxes, the economy, and how people were with each other through periods of boom and bust and peace and war, and how they unfolded in cyclical ways, like the tide coming in and out. (2/5)
I saw that when these struggles took the form of healthy competition that encouraged human energy to be put into productive activities, they produced productive internal orders and prosperous times... (3/5)
In fact, it seems good rather than bad to most people because:
- It helps to relieve debt squeezes.
- It’s tough to identify any harmed parties that the wealth was taken away from to provide this financial wealth (though they are the holders of money and debt assets). (1/5)
- In most cases it causes assets to go up in the depreciating currency that people measure their wealth in, so it appears that people are getting richer. (2/5)
This is what has been happening during the coronavirus crisis as central governments and banks send out large amounts of money and credit. Note that you don’t hear anyone complaining about the money and credit creation... (3/5)
That is because printing a lot of currency and devaluing debt is the most expedient way of reducing or wiping out debt burdens. When debt burdens are sufficiently reduced or eliminated, the credit/ debt expansion cycles can begin again. (1/4)
As I explained comprehensively in my book Principles for Navigating Big Debt Crises, there are four levers that policy makers can pull to bring debt and debt-service levels down relative to the income and cash flow levels required to service debts: ... (2/4)
1. Austerity (spending less) 2. Debt defaults and restructurings 3. Transfers of money and credit from those who have more than they need to those who have less than they need (e.g., raising taxes) 4. Printing money and devaluing it (3/4)
On the contrary, we should expect most governments to abuse their privileged positions as the creators and users of money and credit for the same reasons that you might commit those abuses if you were in their shoes. (1/4)
That is because no one policy maker owns the whole cycle. (2/4)
Each comes in at one or another part of it and does what is in their interest to do given their circumstances at the time and what they believe is best (including breaking promises, even though the way they collectively handle the whole cycle is bad). (3/4)
Central banks want to stretch the money and credit cycle to make it last for as long as it can because that is so much better than the alternative. (1/4)
So when the system of hard money and claims on hard money becomes too painfully constrictive, governments typically abandon it in favor of what is called “fiat money.” (2/4)
No hard money is involved in fiat systems; there is just paper money that the central bank can print without restriction. As a result, there is no risk that the central bank will have its stash of hard money drawn down and have to default on its promises to deliver it. (3/4)