Once upon a time, there was a neighborhood. This neighborhood, like most, had residents with a wide variety of talents, incomes and standards of living. One day, the richest residents of this neighborhood (Frank and Jerry) looked around and said. “Hey! why aren’t our neighbors buying our products?”
The poorer neighbors replied, “It’s not that we don’t like your fine products, it’s just that we have a lower standard of living and don’t have the money to purchase them.” A wise observation. “Further, though we like the looks of your expensive products, we are mostly quite content to sit on our porches and watch the sea in the evenings with our lovely families, who we can easily keep at home and support thanks to the sale of our products to you.”
“Well that doesn’t seem fair,” said rich Frank. “We would also like to sell our products to you.”
“I’m sorry,” said the poor Greg. “It costs very little for us to produce anything and because you buy our products in your own stores, the money generated is enough for us to live on. It’s tough sometimes, but life is simple in our house and we like supporting our family.”
“What if we stop buying your products? What if we make it harder for you to sell your products?” Rich Jerry asked. “What would you do then?”
“Well we would have to cut back. It would be very uncomfortable for us…our margins are quite narrow.”
“But if you don’t buy our products, we will have to make it harder for you to sell yours…it’s only fair.”
“How do you propose we fix this impasse?” Poor Greg asked
“I’m glad you asked,” Rich Jerry said. “Here’s what we can do:
1. We will put you on our currency.
2. We will bring your standard of living up to our own.
3. We will give you money to build the infrastructure allowing you to do business on our level
4. We will give you very cheap loans to help you on the road to wealth
5. If you ever get into trouble, you have us, your rich neighbors to give you a boost
6. You will be able to sell your products EVERYWHERE in the neighborhood without extra fees.
Your people will be rich like us, your products will have global reach and you will be part of the strongest neighborhood in the world.”
“WOW!” Said poor Greg. “That sounds great! Sign us up.”
So the poor neighbor signed the contract with the rich neighbors and as promised, they were given money for infrastructure, raising the standard of living for the poor neighbor. The people of the poor household loved the sudden flow of funds to make their lives better.
It didn’t take long, though, for the poor neighbor to see some problems.
“Hey!” Said poor Greg one day after paying the household bills and coming up short. “Since we switched to your currency, we are no longer able to support the whole house on what we receive in exchange for our products and services.”
“Well, that was to be expected,” replied rich neighbor Frank. “You had a very weak and puny currency before. You made a great deal of money based on your household averages when you sold something to us. But NOW, you have the privilege of participating in the same great currency that we do! so instead of a 1 to 5 ratio for your house revenue, you are getting a more “honest” 1 to 1.”
“Well that sucks! We are making LESS than we were before!” Said poor neighbor Greg. “You said we’d be rich like you!”
“Pish posh,” Said rich neighbor Jerry. “Just grow your economy as we have! Here, we’ll loan you the money at ridiculously low rates so you can pay your bills until that happens.”
“I don’t know.”
“Come on…you don’t want to be seen as a spoiled child that no one can take seriously, do you?” Rich Frank said. “Go on, take the money. At your inflation rate, the interest is lower than what you’ll be making. It’s almost like we are paying you to take the loan.”
Greg shrugged. “Okay…you are the experts on wealth. I’ll take your word for it.”
More time went on and Greg got deeper and deeper into debt, trying to not only pay for the higher standard of living that Frank and Jerry had “given” him, but also trying to pay the bills with shrinking value of their local economy. In the old days, if Frank went slumming for vacation, sitting on the beautiful beaches that Greg had on his doorstep, Frank would pay hundreds of dollars just for the privilege. Though the vactions were cheap for rich Frank and rich Jerry, the poor Greg thought it was a fortune and supported his entire family for a whole month on what Frank and Jerry paid for their visit. But now that rich Frank and poor Greg used the same currency and the exchange rate was even, Greg couldn’t even afford to feed himself on what Frank paid for visiting the beach, much less the whole family.
So Greg had to send his adult kids away, out of the house. Of course, that meant he no longer had free labor for his small business so his productivity shrank. And the kids who left home couldn’t find the sort of work they were good at, or that could even support them in the new world of a higher cost of living. So they went to poor Greg.
“Hey dad! We are broke, there are few jobs and the ones there are can’t support us…we need money for food and housing.”
Greg, being a good father goes next door to Frank and Jerry. “My kids are starving and they have no home. The jobs are gone because with equal currency, the businesses can no longer make enough money by selling to you. Help…you said you’d help if we got into trouble.”
“And so we will,” Frank and Jerry said together. “Here is some more low interest money. PLUS! we will tell you the secrets of being rich like us. 1. Stop supporting your kids. 2. Stop spending so much–”
“But I’m spending more on paying back the loans than I am on anything else!”
“You made some bad financial decisions…but if you cut back all of your expenses, let your kids starve, stop producing products no one wants and lower your prices when we visit you, then you should be fine.”
Greg shrugged and nodded…after all, what choice did he have?
If Greg had sat on his porch and watched the water, instead of signing that contract with Frank and Jerry, he would be much happier now. Sure things would still be tough, they always are for the poor. But he wouldn’t have been subjected to the get-rich-quick scheme that Frank and Jerry were pedaling. And we know who ends up rich in a get-rich-quick scheme…the one who thinks it up in the first place. Everyone else just subsidizes it.
What about Frank and Jerry? Well, after an initial tightening of the belt among their own households, they are now richer than they were before, having opened up an entire neighborhood of new consumers for their products. Lets face it, even if in debt, the buyers still get the product and the seller still gets the cash.
S.L. Shelton is not an expert on policy or politics. He is a Goldwater/Eisenhower Conservative … by today’s GOP standards, that makes him a RINO or worse, a liberal. He cares not. He is the author of an Amazon Bestselling Political Thriller Action Espionage Series, (The Scott Wolfe Series). Check him out on Twitter @SLSheltonAuthor or Facebook