Tuesday, February 24, 2009

Investing Wisely

In truth, our domestic economic health can be determined by looking at a few key points:

What are we investing in?
The we in this question refers to all United States citizens with spare cash. If you purchase a lottery ticket, you are investing in the government. If you purchase a glass of lemonade from your neighbor's kid, you are investing in their lemonade stand. Any time you voluntarily spend money on something other than a good or service, you are investing in something.

It is important to look at how we all invest. Some kinds of investments have a direct negative effect on our shared economy by reducing the amount of cash in healthy circulation.

Symptoms of an Economy Killing Investment:
-The invested capital will be spent in another country.
-The invested capital will not be used to create goods or services.
-The invested capital will not create or sustain jobs in the United States.

Symptoms of an Economy Building Investment:
-The invested capital will be spent in the United States.
-The invested capital will be used to create goods or services, particularly if those goods or services are likely to be popular in other countries.
-The invested capital will be used to create sustaining and sustainable jobs in the United States.

How efficiently are we producing goods?
Wasteful practices in production equates to wasted capital. If a company uses twice the amount of capital to produce a product than is necessary to create that product at that quality level, then the company is absorbing capital out of the economy that might otherwise be invested in ways which would build the economy - such as a more efficient businesses.

What quality level are the goods we're producing?
If the goods we are producing are not of a high enough quality to appeal to consumers in the global market then they are of limited value to the economy.

Are we obtaining the components and resources to produce our goods domestically?
Any time a business is reliant on components or resources that cannot be obtained in the United States, they are leaking capital out of the economy and leaving themselves vulnerable to political fluctuations elsewhere.

How popular are our goods and services internationally?
It is important to remember that appealing to international consumers is the only way to achieve a thriving economy. While businesses which create jobs, products, and services that have appeal within the United States are in no way a drain on the economy (provided that they are efficient), they are also not bringing any new money into the economy.

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