slimviews: Investing

Showing posts with label Investing. Show all posts

Tuesday, July 5, 2011

Will $1 Billion Create 7000 Jobs? Yes and No

Joe the Barber. One man shop.

Customer: Sam

Sam gets his haircut every week.

If Joe hires another barber, will Sam get his hair cut twice a week? No.

If Jack starts going to Sam’s barber, Joe the Barber will hire another barber.

Because Sam is vain, Joe the Barber uses up a can of hairspray doing Sam’s hair. Will he buy two cans of hairspray to do Sam’s hair? No.

However, if Jack is also vain, Joe the Barber now will buy two cans of hairspray. One to do Sam’s hair, one to do Jack’s hair.

Since Joe the Barber doubled his order of hairspray, Willie the hairspray salesman will order more hairspray from the River City Hairspray Company.

The River City Hairspray Company now must order more spray cans for their hairspray. The River City Spray Can Company now must order more steel to make spray cans.

Because Joe the Barber’s business has picked up, the money, please forgive the expression, trickles up. This is trickle up economics.

Those who believe that this is supply side economics are only half-right.

We are not offering major tax cuts to make products cheaper so more consumers can buy them.

We are offering major tax cuts to those people who get haircuts, buy shoe-laces, Q-tips, detergent, cat food, newspapers, aluminum foil, Pizza, M&M’s, potato chips, oatmeal cookies, caffeine- free diet Pepsi, Chinese takeaway, candles, CD’s, DVD’s, ketchup, key-chains with their names on them, and so on.

Can A Billion Dollars create 7,000 jobs? That depends. Where does this money come from? The vaults of the wealthy that are hoarding their ill-gotten gains while the world suffers? The people whose hoarding is purported to be causing all this misery? If they spend their billions, will that create the 7,000 jobs? Only if the rich guy gets 7,000 haircuts a week.

You know that idea floating around that those big corporations must spend their money to create jobs. That is trickle down economics.

What this country needs is trickle up economics. Money put into the economy by people who spend the money on Main Street.

Addendæ:

Two ways to put money into the economy and create jobs.

Number 1.

Tax Peter $5,000.

Give $5,000 to Paul to create a job.

Number 2.

Don't tax Peter $5,000.

Tell Paul, "When you calculate your taxes, knock off $5,000 from what you owe Uncle Sam--If you created a job."

There is a vast, but fathomable difference between methods one and two.

Sincerest regards,

Slim

Please Read, the Multiplier Effect. My ppt. presentation on SlideShare.

http://www.slideshare.net/slimfairview/the-multiplier-effect-4962273

However, to understand this even further, please read Economic Stimulus by Metaphor

http://slimviews.blogspot.com/2011/06/economic-stimulus-by-metaphor.html

Sincerest regards.

slimfairview@yahoo.com

Thursday, January 27, 2011

The Business of Wisdom in Global Affairs -- A Fable

The Business of Wisdom in Global Affairs—A Fable

About 50 years ago, my father told me a fable. I don’t know its origin. I believe it may have originated in Turkey or in the Middle East.

No doubt, he’d heard it from someone much older than he was when he heard it. And older and wiser when he shared it with me. Thank you, Dad.

A long time ago, there lived a powerful king. He ruled vast lands with firmness and fairness. However, the many city-states and principalities were ruled by selfish and greedy men. They were constantly fighting wars over petty grievances to disguise their true motive—greed. Therefore, the king issued an edict banning such unjust wars. If they defied the edict, he would send his troops in to vanquish the offender and seize his lands.

In one of the small countries, the young people had gathered to come up with a plan to better the lives of the people. They concluded that the old people were a burden and that they should all be put to death.

One young man, unable to allow his father to be killed, led him from the city in the dead of night and hid him in a cave on the outskirts of the city.

The word spread to a neighboring land where a greedy prince called his advisors together to discuss a plot to wage a war against the other land to grab their wealth. They wrote the following letter:

Five generations ago, our people lent to your people 25 units of rope woven from sand which you promised to return. Yet with each passing generation, your promise has gone unfulfilled. Therefore, we must demand return of this rope or we will be forced to send our armies to your land to retrieve it along with just restitution.

When the leaders of the council received and read this letter, they panicked. None had ever heard of the rope woven from sand nor knew anything about it.

The man who’d hid his father in the cave outside of town asked for the letter and said he would return with a solution to the problem. He went to see his father.

His father said, “Write back. Say to them, we have many coils of rope. Some are woven from sand but each is different. Send us a sample of your rope so we may match it up with the rope that is yours and do justice by returning your rope.”

The young man returned to the council and they sent just such a letter.

When the evil prince received the reply, he turned to his advisers and said, “There is still one old man left in their land. We will wait until he dies and try again.”

Regards,

Slim

Mail: slimfairview@yahoo.com

Copyright (c) 2010 Slim Fairview

Thursday, January 20, 2011

Frank Investment Strategies

Investing?

Here's the metaphor.

Two friends stop off at a hot dog stand. Ahead of them, they see a man order a hot dog. One says to the other, “I bet he has mustard.” His friend says, “Ketchup.” The man puts mustard on his hot dog. The first friend wins.

They follow him down the street to a pretzel stand. The first man bets that he buys a pretzel with no salt. The second says with salt. The man buys it with salt. The second man wins.

Down the street, the man stops for ice cream. The first man says, “Chocolate”. The second man says, “Vanilla”. The first man wins when the guy in front of them buys a chocolate ice cream cone.

You know all this because you are following the two men and listening in as they make their wagers.

The next thing you know, you are calling your friend on the phone and inviting him to meet you for lunch at the hot dog stand.

When you get there, you see the same two men you saw the day before. They make the same wager. You turn to your friend and say, “I bet the man on the left wins the bet.” Your friend says, “You’re on.”

You bet that the man on the left will win the wager each time.

You win two out of three bets. You come out ahead.

Do you now have some idea of how our investment industry is changing?

Regards,