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alstry (35.98)

In The Digital Age...You Must Reverse Your Thinking

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February 12, 2011 – Comments (1)

Many Fools will have a difficult time adjusting to the new reality.....and the reality is the Digital Age will simply contract most areas of our economy.  We simply don't need hundreds of thousands of postal workers as we adopt eMail.  We will need far less teachers as we apply digital learning techniques like virtual classes.

Dallas Independent School District - up to 4,000 Possible

And this is just one school district in one city.  Another easy example is the elimination of tens of thousands of book stores and video stores, and hundreds of thousands of employees with digital delivery of books and movies such as NetFlix and Amazon Kindle.  Things that were once concepts are presently being implemented.

Borders Nearing Bankruptcy Filing

This will be convulsive because currrent investing models and laws make direct or implied assumptions of growth....as a matter of fact, the concept of charging interest REQUIRES growth or it is mathematically impossible to collectively pay back debt.  From a practical perspective, charging any interest becomes usurious in a contracting environment. 

By infecting a system with massive amounts of debt....and cutting off credit to that system.....you guarantee failure of the system.....and right now small business is a perfect example as banks continue to cut credit to small business in America and tens of thousands of small businesses are failing as this is written.

Banks Slashed Small Business Lending by $43 Billion

At the present, we are barely keeping our Industrial system functioning by government borrowing about $2 Trillion dollars per year.  Without such borrowing and spending....much of what we currently do would collapse. 

Imagine what is about to happen to Finland when its primary employer, Nokia, is about to layoff most of its workers......simply to drive efficiency.

The Biggest Structural Change Finland Has Ever Seen

As we continue to drive efficiency and shut down many of our Industrial Age systems.....many will have a difficult time with the adjustment....especially because our legal and financial systems are not structured for the Digital Age.

Imagine....a Washington government worker gets a paycheck because Washington borrows money...but millions of government workers around the country are about to lose jobs and incomes because their employer can't borrow money.....or tens of millions of private workers that have lost jobs for the same reason?

Do you think Consitutional questions are at issue here?....or practically, common sense fairness and legitmacy question.  Because in order for government to effectively function, it must operate with the consent of the citzens...and do you think the citzens will continue to consent Washington borrowing/spending on themselves and bankers while NOT the rest of the nation?

If we keep moving in the current direction, we will reach a boil----probably not too different than just witness in Egypt over the past few weeks....and when it does, the outcome will be very convulsive for all involved....one way or another.

So, for all of you building in growth into your models...you will have to adjust them going forward we we Digitize our lives.  It will be not be easy because America, and much of the Industrialized world, has been in a growth model for the past 100 years....and with so much debt hanging overhead depending on growth to be serviced....and so many depending on that debt to function....making the transition from the Industrial Age to the Digital Age will not be easy....but in the end, it will be a more sustainable system than what we presently have.....

1 Comments – Post Your Own

#1) On February 12, 2011 at 6:49 PM, alstry (35.98) wrote:

In an economy that is primarily contracting by advancing....what kind of new valuation models will need to be invented?

Why do you think I call it an Udder World.....

 

 

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