Posted on 12/10/2002 6:00:32 PM PST by rohry
Wealth is created only by engaging in value-added activities. By the same token, Service sector activities do not create wealth, they merely transfer, redistribute and eventually dissipate wealth as consumption. Thus, as value-added activities move offshore and the U.S. labor force shifts to the Service Sector, wealth is dissipated, not created. And the U.S. standard of living declines as a result.WEALTH: The net ownership of material possessions and productive resources. In other words, the difference between physical and financial assets that you own and the liabilities that you owe. Wealth includes all of the tangible consumer stuff that you possess, like cars, houses, clothes, jewelry, etc.; any financial assets, like stocks, bonds, bank accounts, that you lay claim to; and your ownership of resources, including labor, capital, and natural resources. Of course, you must deduct any debts you owe.
VALUE ADDED: The increase in the value of a good at each stage of the production process. The value that's being increased is specifically the ability of a good to satisfy wants and needs either directly as a consumption good or indirectly as a capital good. A good that provides greater satisfaction has greater value. In essence, the whole purpose of production is to transform raw materials and natural resources that have relatively little value into goods and services that have greater value.
SERVICE: An activity that provides direct satisfaction of wants and needs without the production of a tangible product or good. Examples include information, entertainment, and education. This term good should be contrasted with the term good, which involves the satisfaction of wants and needs with tangible items. You're likely to see the plural combination of these two into a single phrase, "goods and services," to indicate the wide assortment of economic production from the economy's scarce resources.
The Road to Productive Wealth
The only true key to wealth lies in production. While you can increase your own wealth at the expense of others, we all become wealthier when productive resources are increased. Greater wealth for our economy lies in increasing the quantity or quality of productive resources -- labor, capital, and natural resources. This is done by investing in education, capital goods, research and development, and technology.
What works for our economy, can also work for each of us. You can acquire wealth by education, buying productive capital goods, inventing a new product, and assorted other improvements in productive resources.
That is a pretty bold prediction. How about we're going to be down for two weeks in a row?
Richard W.
That gobble-de-gook about the Fed "creating" wealth simply reflects the narcissism of the financial community, IMHO.
That would be positive. Weak downward movement would be positive too. But violent "bubble II" rallies are bad along with 10% drops in a week. The problem with both of those is they both delay the orderly bottoming of the market. The large drops end up causing technical rebounds which the press turn into "this is really the bottom" news stories which then cause more rallies in some overpriced stocks.
I believe we need a multi-year U-shaped bottom in the averages while at the same time the sectors realign themselves to more equivalent valuations. Anything that distracts from or delays that bottoming process is just delaying the return to market health. And an unhealthy market won't be able to absorb external shocks which would then drive the fed to even more market meddling.
I keep a roll of foil right here on my desk. I was wondering what or maybe who would be next after Iraq. Our economy was driven by consumerism and debt -- now, excessive consumerism and excessive debt-- and next it will be super fuel injected consumism and mind numbing exploding debt. The only way to keep the standard of living increasing to to exploit the world on a much grander scale than we have been.
If the muslim world really wanted to screw up the global financial system, all they would have to do is make it a requirement for every follower to buy 1oz of gold. They wouldn't need any airplanes, suicide bombers, dirty bombs or anything else. It would be game over for JPM and the fiat currency puppet masters on Wall Street and Washington.
Richard W.
What are these invisible gnomes, slinking craftily behind and between the trends and reversals that steal our gaze as we strain for answers? They are the long shadows of the news, the persistent pushes and pulls of the market and sectors of the market, the authoritative demands of underlying fundamentals. They are the ghosts of public mood and management fakery and fickle institutions and naïve investors and bungling media who never get it completely right. They swim in a flow of valid information and malarkey, wisdom and foolish tips, leaks and unfounded gossip - all dressed in the same garb, all claiming to be in the know.
The consummate technical analyst sees these invisible marks on a chart peeking out from the green price bars, and he uses them to rearrange his thoughts.
The experienced chart reader modifies every event with something hidden. He asks himself questions like: "Was this advance on good news, bad news, or no news - and which do I think would be best for the stock?" "Does this reporter know what he is talking about, or is he just filling in a reason to make a story?" "Can I expect the CEO of this company to give us an unbiased accounting of why he wants to merge?" "Why is this stock going sidewise despite what I read in the news?" "What is the conventional wisdom about this industry, and why do I suspect it is too pat and too easy?" "Why I am surprised by what I see on this chart?" "Why did the other two auto stocks go down today?" "I know this company issued an earnings warning today, but why has it already gone down so much?" "Why did the news program report that this stock was up ten points today without mentioning that it was down twenty points yesterday?" "After reading what they're saying about this stock, would I be able to guess, approximately, what the chart actually looks like?" "Is there hidden opportunity here?" "Is there hidden danger here?" "Am I ignoring the obvious?"
Buying stocks really doesn't take much brains at all and any reason under the sun is good enough not to buy a stock. Once one holds a security however, all that changes. Every second that one holds onto that stock requires an active decision not to sell. That's when brains really come into the picture. The results of selling after buying are indicative of how intelligent the stock trader is.
You also claim that "service sector activities do not create wealth".
Then you say that "the whole purpose of production is to transform raw materials and natural resources that have relatively little value into goods and services that have greater value".
So, in other words, services have "greater value" than "raw materials and natural resources that have relatively little value" and therefore constitute wealth since wealth is created by "engaging in value-added activities" but "service sector activities do not create wealth".
Your argument is pathetic word-shuffling and essentially meaningless.
The capacity to provide services is a valuable resource. A mechanic may or may not own a car. But if he has the knowledge to fix other people's cars (i.e. add value to cars) then his service directly adds value and is clearly a source of wealth.
If you told him he had a choice of either losing his bank account or forgetting all knowledge of how to perform his mechanic services he would choose the former. Why? Because he knows what wealth consists of - the ability to generate value.
Your Marxist distinction between production of tangible goods and intangible goods (like knowledge) is as bankrupt as the Soviet Union which adopted it.
I'm all for hard money - but a run on gold would be as successful for the Muslims as a run on silver was for the Hunt Brothers.
The Hunt Brothers proved that silver was less fungible than greenbacks. The same goes for gold.
The Fed does not create wealth. It creates liquidity.
There's a difference.
And there's no need for a Fed at all. The market can create its own liquidity.
That is what the government propagandists and the FED would like the public to believe, but gold has always been the reserve currency of choice. The dollar is nothing but a fiat currency and can be manipulated by the government and the bankers. It is doomed to fail. It is just a question of when.
Richard W.
I never thought much of technical analysis
and tend to dismiss it similar to Miss Cleo's numerology.
I'm more inclined to invest based on a specific company's fundamentals.
Services don't create wealth.
They merely transfer, redistribute and eventually dissipate wealth.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.