Economy

Monitoring Change/Risk in the Economy

Four areas covered for change and risk within the economy

1. Money as a claim on energy and resources

2. Debt as a future claim on energy and resources

3. Currency and power conflict

4. Personal EROI - Customer and Employee ability to purchase goods and services

DETACHED OBSERVATION STATEMENT #1

> Money is a claim on Energy and Resources

Energy and resources are correlated to wealth. Money is a claim on these energy and resources. Since moving off the gold standard in the 1970s, the worlds currency is now fiat. It is not tied to a physical asset. As such, the growth of money (claims on energy and resources) has ballooned. There are other forms of money that can be used in transactions (with new additions like crypto), however, all forms of money need the resources to claim. A digital number in a bank account is at risk due to its value being based on perception of confidence within the markets of that value. As an example, if there is a rush to claim digital/fiat money, the value of its purchasing power would diminish quickly due to the overabundance of such fiat money and that prices would rise dramatically on a large claim of lower EROI energy and resources.

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IMPORTANT QUICK NOTE ON MONEY

There is a lot of discussion about government and their budgets in the news.

Two quick notes:

1. The US Federal Government is not like a household. The issuer of a currency has much more power than a user of the currency. The implications of debt on the US government is different than the debt of a state, a county, a city, a corporation, or an individual.

2. Money in circulation is in someone's pocket. To take away money from US government spending has implications. As does excessive spending.

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DETACHED OBSERVATION STATEMENT #2

> Debt is a future claim on energy and resources

With lower EROI on energy and resources combined with human pursuit of wealth, debt has increased dramatically over the last few decades. Debt allows future demand pulled forward and those who hold that debt have a future claim on energy and resources.

DETACHED OBSERVATION STATEMENT #3

> Competition/Cooperation of the US dollar - Other currencies

Conflict is not just on a battlefield, nations compete and cooperate for power/survival. The US dollar is the worlds reserve currency. The United States has additional power in that other nations have to use the US dollar in transactions which creates demand for the currency. It has allowed the US to have massive debts. The trend is away from the US dollar as nations seek to move up the hierarchy chain. This conflict is in full swing and the results of this conflict will impact organizations and individuals within the US and those that use both the US dollar worldwide along with the other currencies.

DETACHED OBSERVATION STATEMENT #4

Personal financial EROI impact on organizations

Within the energy section, we discussed EROI on a human wide scale. In this section, we will cover personal financial EROI. Humans need a certain amount of calories to survive. Surplus energy can then be spent on other activities. Financial EROI for this section is monitoring how customers and employees are surviving financially. What is there position in terms of affording life? How does this impact their approach-avoid towards your organization?

APPROACHAVOID.COM MONITORING

We will be monitoring the following changes and risk that will impact your organization:

As seen during the Financial Crisis of 2008 and 2009, when too many people wanted their money, it put the whole financial system at risk. Renewed confidence restored order and stopped the excess demand for cash from the banking system. However, the risk is still there on any given day.

Another risk to mention is the speed at which this can happen. During the depression in the 1930s when there was a run on banks, people had to physically go there. The speed at which institutions can demand money is at a level exponentially faster than 100 years ago. Like so many risks with current change, the speed at which change can happen cannot be overstated.

RISK

There is a lot of leverage in the system. This leverage brings advantages to society but also brings tremendous risk. A leveraged asset at 25 times will dramatically drop in value if the claim as seen as not worthy of its valuation. Multiply this downfall of one asset by many and you can see how a society leveraged is at risk.

Another important risk we are monitoring

As big money realizes the leverage of fiat extremes, they will seek assets away from fiat assets into more reliable assets. This is happening now and can possibly accelerate at higher speeds. Example - private equity buying up homes, food, water, etc. The basic necessities of customers and employees. This will impact the approach avoid behavior of individuals.

STATEMENT

> Fiat and other currencies like Crypto depend on confidence/positive perception

As mentioned within the Financial Crisis, confidence came back and saved the day. People are not trading gold coins. A paper US Dollar requires confidence of its worth. Add to that all the leverage of the banking system, corporate structures, and institutions. It all requires confidence.

RISK

To maintain fiat leverage, confidence in the system has to pushed up constantly. On its basic surface, that is a risk. When confidence is is not warranted, this provides a lot more risk.

STATEMENT

> The US Dollar is the Reserve Currency and its power comes from the world purchasing it and its continued use. Countries and businesses moving away from the US dollar will have large implications for people within the US and elsewhere

As will be discussed in Statecraft within the Global Village Section, the US will continue to use its resources to defend the use of the US Dollar around the world. This will continue to impact trade negotiations and businesses operating within and with businesses in the US.

RISK

Businesses in the United States benefit greatly from the position of the US on the global stage. The strength and use of its US currency over others allows the US to do more leverage (more activity, more wealth). As the math of the globe is changing and impacting the US currency, this will have implications on US businesses.

STATEMENT

> The increased demand for goods and services from a growing world population combined with higher extraction costs and other factors (supply chains, more money in the system, etc.), will make the relative costs of goods and services higher

Higher prices for goods will depend on where the buyer and sellers are at along with the type of good. In general, prices will continue to rise (in general to individual budgets) due to the math.

RISK

More people in the world wanting more things is a risk to the cost. This is especially the case when considering that EROI is getting lower, the cost of extracting resources rises, the leverage of debt where interest payments are becoming a larger part of budgets.

Putting all of the above together in risk analysis

All of this together impacts customers buying and employee performance. Inflation, interest rates, economic growth, future risk, etc. The brain predicts and attempts to understand all of these to survive both physically and within culture (thus, whether a person buys your product and/or services).

ECONOMY

Monitoring Change/Risk in the Economy

Economy News

ECONOMY

Monitoring Change/Risk in the Economy

Economy News

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