Kiln blog: Moral Economics

I rather like the boating metaphor in explaining economics. Your economic existence is rather like traveling on water. What do you have to have with you to do what you do? More stuff means a bigger boat. Your investments and borrowings are part of your cargo; some are fixed to the boat and some are easily moved. Either way, you have to keep that sucker afloat. Your cash flow is how much buoyancy you have to float it. The water level reflects how much liquidity exists in the economic system. It works the same for individuals and for any aggregate, like a business, that shares an economic reality. Get the picture?

Gross economic debt freezes liquidity; it lowers the liquid water level. The debts others hold most certainly affect you, just like shipping and navigation in an icy area. In global economic terms, we are passing through an ice age. Most available economic resources are frozen. There’s not much left so you need a shallow draft and good buoyancy. Your actions in economic terms would mean a preference for paying off debt and liquidating fixtures you don’t use. If at all possible, detach your primary economic activity from bigger ships, because you will grind to a halt when they do.

Read the rest at Kiln of the Soul.

Advertisements

About Ed Hurst

Disabled Veteran, prophet of God's Laws, Bible History teacher, wannabe writer, volunteer computer technician, cyclist, Social Science researcher
This entry was posted in social sciences and tagged , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s