Monday, May 3, 2010


The Economy and EGGS
By: Matthew Stidham
Part 1: Recession
The economy is in trouble, there is not enough money flowing through the economy.

The eggs are in trouble, they need more salt.

The economy needs more money.

The eggs need salt to be added.

What Will Happen:

The eggs will get more salt.

The economy will not get the money it needs and will continue to slow down because people don't know how recessions work.

What Should Happen:

The eggs should get more salt.

The economy should get more money flowing which will speed it up getting it back to equilibrium.

Who will do it:
The people who eat the eggs will add salt.

The people who are part of the economy will not know how money flows. They won't understand that if everyone starts spending like they used to money will flow and everybody who works will get money back. That means that the problem of money not flowing will not be fixed. However, this requires a majority of the people in the economy to do this, which if they don't know how it works, won't be done.

If the people don't, assume the banks won't offer loans because they won't expect jobless people to be able to pay them back, or if they do will be at high interest rates, and companies won't expand because they won't expect people to buy their product. Those are 3 out of the 4 sectors of the economy. The only one left is government. If the government doesn't keep the economy running, no one else will because the people who do know how it works will be betting on most people not understanding, which will make them not spend, which will exacerbate the problem as happened from 1929 to 1933.

Part 2: Overgrowth
The economy is booming, people and businesses are overspending.

The eggs are too salty.

The economy has to slow down and have less money be transferred every day.

The eggs need to either have the salt be removed or the eggs remade.

What Will Happen:
People will through away the eggs and make new eggs.

The economy will get even more money flowing through it until so many people, banks, and businesses will have loaned money out that very few will get their money back, which will mean that everyone will all pull back which will slow down the economy dramatically, which will lower stock prices causing people to panic, which will continue to exacerbate the problem, causing a recession.

What Should Happen:

People will through away the eggs and make new eggs.

People should stop overspending which means the economy will slow down so that the problem of spinning out of control doesn't happen and people won't lose their life savings on debt. This would also mean that there wouldn't be a period of three months to four or more years where the economy isn't working how it should.

Who will do it:
Unless if the salt can be scraped off, the person eating the eggs will remake them.

The people will not slow down and stop borrowing and purchasing because they are making so much money per year. The businesses won't stop expanding because they are making record profits, which will mean that they will make too much product or have too many stores which means that they will have to drastically pull back or go bankrupt which in the case of a large company will put thousands of people out of work, exacerbating unemployment. Banks won't stop lending because they will be making billions of dollars of interest. 3 out of the 4 sectors will not be thinking in long term, as has happened at least twice before. Again, there is only one part of the economy to make sure that the economy doesn't spin out of control, and that is government, which can slow the economy down with sales taxes or temporary limits on borrowing, which will be unpopular, but necessary.

The Same Principles That Apply to Eggs Also Apply to the Economy.