Wednesday, March 30, 2016

Carlinomics

"It's all about stuff." -- George Carlin

   What's an easy way to think about economics? Take away all the abstract notions and mathematical models, and you get to the George Carlin School of Economics.  It's all about stuff.
   Put it this way: I've got stuff. You've got stuff. I have more stuff than I need, and you have some stuff that I want. So we'll trade. But sometimes I don't have the stuff that you want or need so we can't trade, unless we find someone else who also has stuff, who would be willing to trade some of his stuff for some of your stuff, which would mean you still have more stuff than you need, but some of the extra stuff is stuff that I want. So we arrange a three-way trade.
   But that can get complicated when there are more than three people involved in trading stuff. After all, how many different kinds of stuff are there? Really, there's stuff and there's stuff. Good stuff, not so good stuff, really good stuff, and maybe even some bad stuff, or stuff that nobody wants.
   Anyway, how do we arrange to trade stuff when there are so many different kinds of stuff?
   Here's an idea. Let's invent money. That way, we can trade stuff for money, which we take to the next person who may not want my stuff but is willing to take money for stuff that I need, and then he can use the money to buy stuff that he needs.
   And just to make it sound technical when we put it in a textbook on economics, we'll call money a "medium of exchange."
   But what if we don't want to trade stuff right away, but we still want to have some money stuff that we can use for trading later? That's easy. We just call our money stuff "a store of value." Not like it's a shop, but it's just a way to keep stuff we think is valuable so we can trade it for stuff we need later.
   So what about this money stuff? Does it have any value of its own? Sometimes, yes. Like gold or silver. But it doesn't have to.
   Look at it this way. You have a job, right? So you go to work and at the end of the week, the boss gives you a piece of paper called a paycheck, which you take to the bank and trade it for more pieces of paper called money. You then take some of those pieces of paper to a grocery store and you trade those pieces of paper for food.
   That's quite a system, when you think about it. No real stuff is being traded. Just pieces of paper.
  Take it a step further, and many jobs don't even give you a paycheck. Instead, your salary is sent directly to a money store called a bank, which gives you a piece of plastic that shows you have some money stuff.
   So instead of bringing pieces of paper money stuff to the grocery store, you just bring the plastic card, wave it at a machine after you select your food stuff, and everybody's happy.
   We have even eliminated money stuff.
   It's quite a system, when you think of it.
   As long as we trust each other. And the banks. And the people who print the pieces of paper called money stuff.
   Of course, when there are too many pieces of paper money stuff and not enough food stuff or clothing stuff, then people need more pieces of paper to trade for their stuff.
   That's called inflation.
   And if people can't get a job to earn money stuff so they can buy food stuff, that's called a Recession. When they don't have money stuff and they're hungry, sometimes they steal stuff so they can eat. That's called crime.
   Unless a government hires them to make stuff and do stuff so they can have money stuff to buy food stuff. That's called "economic stimulus."
  On the other hand, there are some folks who have lots and lots of money stuff but don't want to share it, or they won't hire other folks to do stuff for them so the worker folks can have money stuff too. That's called greed, and is common among folks who want to keep all the money stuff. It's also known as "mercantilism," which means that "who ever has all the money stuff at the end, wins."
   The problem there, of course, is that the people with all the money stuff must use it to trade for food stuff and clothing stuff, so that the folks who grow the food stuff can use the money stuff to buy clothing stuff.
   That's called a market system.
   And the bottom line is that it's all about stuff.

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