The Sky is Falling, But Don't Worry, Be Happy

In my previous post I said that economics is related to the question, "Why is the answer why?" This question seems to make no sense whatsoever unless you actually stop and think about it. Let me give you an example of why we need to ask ourselves the question, "Why?". Have you ever met a person who simply did something so retarded you began to wonder if they had a brain or not?

I have. In fact, I met quite a few over my lifetime, but the one that stands out fresh in my mind is the cashier lady I had the unfortunate pleasure of meeting on a really bad day. A friend of mine had a similar experience with yet another seemingly brainless person. Here's what happened. 

My friend was buying some food at a grocery store and he took out a credit card that he had forgotten to sign the back of and handed it over to the cashier lady. The cashier looked on the back side of the credit card where there is a white stripe and said to my friend, "Sorry sir, I can not accept your credit card. " My friend was surprised and asked, "Why not?"

"There is no signature on your credit card," said the cashier lady. "I need you to sign your card so I can verify your signature."

Ye-ah. My friend was thinking, "What the @#$%!!?" too, but he signed the card anyways so that the cashier lady could "verify" that the card was his by looking at the signature that she asked him to write on the card. Sigh. Now in the cashier lady's defense, I'm pretty sure the she actually does have a brain although whether or not she actually uses it is questionable.

Speaking of questions, we simply don’t ask ourselves the question “Why?” often enough in economics. We don’t ask, “Why do we need money?” because we think the answer is obvious. Instead, we are constantly asking ourselves, "How can I make more money?" and then we worry ourselves to death every time things don't go as expected in whatever economy we are living in.

Worrywarts usually think that having tons of money will buy you security and happiness. These people aren’t stupid and know that money is not the answer to everything, especially not happiness but yet they look like they are always chasing wealth either in the form of bigger houses, material things, and ultimately the almighty dollar. Why is that?

I think it’s because people have forgotten that money or currency is simply a concept. The pieces of paper money (US dollar, a yen, a renminbi, etc..) sitting in their wallets are actually worthless. The only reason why it’s valuable is because the people with goods that other people want are willing to trade their goods for paper money only because they believe that in the future someone else will accept their paper money for goods that they want. Take for example bread.

When you really think about it, bread is worth more than all the money in the world because you can eat it and that allows you to live. That is not true with money. You can’t eat money. Well, I guess you could but it wouldn’t be very tasty. Plus, you’d be eating all the grime, sweat, and extra stuff that gets rubbed on to paper money when people don't wash their hands after using the toilet. Anyways, so does that mean you go around and buy boatloads of bread just because it's ultimately more valuable than money?

No, because bread is fairly infinite most of the time and has a very short shelf life. The only time it is not finite and extremely valuable is during times of high demand, such as during a famine. Right now, the world trades on the US dollar for majority of international trades and within the United States we obviously do all trades in USD. However, as most investors know, the US dollar is only as valuable as the trust put in it. There isn't much trust in the USD right now if you look at the rise in gold prices since 2005.

I've noticed that the people who aren’t constantly worrying about money are generally happier than those who are. If you've been reading the financial newsletters from all the talking heads, you'd think that the sky was falling and the world as we now know it will come to an end. In a sense, I do agree that there is definitely a big change coming in the financial world. Some people see it as an Armageddon of sorts, but I see it as an expected change that has been in the making for a long time. So even though I see the wave coming, I'm not going to bother running from it because I know I can't. Other investors can go run around like chickens with their heads cut off, but not me. I will be putting on my swimsuit, hopping on my inner tube with my ice tea in hand and wait for the tide to come in so I can go with the flow. I'm just going to do as the song says, "Don't worry. Be happy" because in the end I know that you never really needed all that money in the first place.