We live among over 7 billion people on our small planet.
- Over 23% of all the goods and services made since 1AD were produced from 2001 to 2010.
- Measured in years lived, the present century, which is only ten years old, is already “longer” than the whole of the 17th century, which means more people are living longer.
- These two points combined means more goods and services produced by more people are consumed over a shorter period of time by more people. This is logical … however, when graphed this fact becomes dramatic (the 2000 years graphic).
Economics is about how to effectively and efficiently use limited resources. When you plan for higher education or for your retirement, you are making a choice between how to use your resources (spend money) today, versus defer that use so you can spend it tomorrow. The “good times” deluded many into thinking that they could both spend a dollar today and also spend that same dollar tomorrow.
In truth, when a dollar is spent today it is gone. Not only is that dollar gone, but all the future dollars that dollar might have earned are also spent and gone. This fact has always been true, but often forgotten.
The current global economic situation is really the tension being played out between
— those who realize that a dollar (and it’s future earnings) can only be spent once (and thus wise choices should be made), and
— those who still try to operate under the old thinking I mention above.
Hopefully, once “good times” return, the lessons learned from this economic correction are remembered.