Monday, July 7, 2008

Labels matter

Why are so many American’s worried about the economy? Simply because the price of the things they buy every day are going up faster than their salaries. And all the talk by the “experts” about if it is a true recession or not is immaterial.

The accepted definition for a recession (according to wikipedia) is “a recession occurs when real growth is negative for two or more successive quarters of a year”. The street definition is “a recession is when your next door neighbor looses his job, a depression is when you loose yours”.

One of my favorite quotes is “If you call a tail a leg, how many legs does a Tiger have? Four, calling a tail a leg doesn’t make it one!”

The experts can create all the complex descriptions they want to, the truth is what is happening on the street to real people. Inflation is when I can’t buy the same thing today with the same amount of labor that I did yesterday.

If that sounds confusing, look at it this way. You make a dollar an hour and a gallon of gas costs thirty five cents. The next day you still make a dollar an hour and a gallon of gas costs fifty cents. That’s inflation, no matter what the dictionary says.

A recession is when people are getting laid off and can’t find a new job. Doesn’t matter how many legs the experts say the tiger has, real people know it has four!

As I write this, CNN TV is reporting that there is mild economic growth. If a lot of people are not able to buy the same things for the same amount of work; that’s not anyones definition of growth!

If you think I’m wrong, remember we got to where we are by following the advice of the highly trained experts! So if their advice is not producing the results we want, we need to look at that advice and see why it didn’t work. I submit that a big part of the reason is the inaccurate descriptions they use for real world events.

Just as calling a tail a leg and stating that a tiger has five legs confuses you when you see a real tiger with only four legs, the “experts” are now lost by their inaccurate descriptions of recession and inflation.

Are you sure you want to keep listening to the experts who got us where we are?

No comments: