Seeking feedback on assumptions and theories I have regarding economics.

[richardhutnik]

I found this site through the Money as Debt video.  I had been pondering the nature of money, and have had certain theories on it.  One of them is an alternative to debt based currency (I have been arguing that money is a form of IOU).  Please provide feedback on this:

POOR AND RICH:
* Real economic activity starts from individual have a surplus of good and services (value surplus) that they have to offer other people with their own value surplus.  The surplus of value is then exchanged.  Without this surplus, no economic activity would occur.  This is why poor nations and regions remain poor.  Poor nations, and areas, remain poor, due to the lack of the ability to produce goods and/or services in sufficient quantities.  The way to address the issue of poverty in a poor nation is to equip its citizens with the ability to perform work that would of value to the world.  Hyperinflation can happen in such nations when mere injecting of money into a poor nation happens, without sufficient goods and services are produced to absorb the money.

CURRENCY:
* Blindness to economic issues is caused by a lack of modeling economic activity without the use of currency and prices.  Currency and prices mask actual economic activity, by creating a level of abstraction that doesn't map exactly to what is currently going on.  The fact that bubbles exist, is an example of a failure to properly model real economic activity and properly value resources in an economy.
* Excess money flowing into an economy can not only produce an increase in malinvestment, but also malconsumption (pointless consumption that serves no useful purposes and is manufactured by means of marketing and advertising).  It is possible that consumers in an economy can adopt malconsumption as part of their lifestyles, and the end result is unsustainable economic activity which can the collapse and cause a cascade effect that impacts other industries.
* Currency only can be said to be one answer to the problems of barter.  It needs to be shown that it is the only solution, if not the best solution, to the problems with barter.  Currency is an effective solution, but may not be the best one.
* A paradox with money is that the best form of money needs to have no intrinsic value, so individuals willing to part with it (and not hoard or consume it), but in demand by everyone.  This demand apparently is based off the belief that everyone wants something that has no intrinsic value.
* Money is a form of a "IOU" that floats and is not tied to any particularly good or service, that is accepted by everyone an economy. 

BUBBLES:
* Bubbles often result as a byproduct of too much money flowing into a potentially legitimate investment opportunity.  The end result is an overinflating of prices, resulting in a bubble.  When an economy has insufficient areas for investors to invest money, because economic activity lacks sufficient areas to invest in, bubbles will become more likely.
* Bubbles cause the normal supply and demand curve to be turned on its head. In a bubble situation, increase in prices causes an increase in demand, rather than a decrease in demand.
* Boom, and particularly bust, cycles can permanently impact the fundamentals of an economy. Areas that have permanently lost the ability to compete in the marketplace in certain areas may never get it back.
* Increased demand can result in decreased prices.  Economies of scale can result by increased demand, thus the more demand, the lower prices can become.  In addition, the increased number of suppliers to a given market with large demand drives down prices further.  If there is then contraction that happens, this contraction could accelerate and costs to produce increase by less demand, and the cost to produce increase as the amount of goods decrease (fixed cost of operations gets spread across fewer items).  Producers are then stuck in a situation where costs require them to raise prices, but supply puts downward pressure prices.

LABOR AND EMPLOYMENT:
* Uncertainty in growth opportunities can result in workers failing to retrain themselves, and unemployment remain high as a result.
* It may be possible that the normal unemployment rate can perpetually increase as increases in productivity manifest themselves.  Workers are unable to be reassigned except to areas which are based on malconsumption.
* Economic growth causes increases specialization.  As an economy contracts specialization can become reduced.  Increases in specialization can result in the training time for workers to increase.  As an economy contracts, individuals trained in certain areas will then face increasingly prolonged states of unemployment.  As this state becomes the norm, confidence of individuals to pursue increased specialization will be at risk.
* Employment has gone from lifetime employment to increasingly shorter periods of employment.  The last area connected to barter system, that of labor, where companies would acquire excess resources in exchange for a set amount of currency, has shown to being forced to happen.  Labor shifting to a just in time model, without individuals be able to be in an environment where they have continued employment, will undermine the housing market, and put at risk the maintaining of a middle class lifestyle.
* The shift from lifetime employment to one of non-lifetime employment (complete with an abolition of pentions and retirement), and households dependent upon two households instead of one, will cause the unemployment rate, during "full" employment  to permanently grow higher.  Another pressure of increased productivity will result in people working less hours, but failing to be paid sufficiently to live on the less hours they work.
* There is risks of the middle class disappearing, as globalization will lead to a scaling of skils that will result in winners and losers, with winners accumulating wealth as a far faster rate than everyone else.  This disappear of the  middle class, will result in an economy which is one of an increasingly like a casino, without knowable odds and an ability to predict winners and losers.
* Businesses hiring new employees predicated upon a plan for expeansion dependent upon the need for new employees in order to be executed.  If a business fails to see that a certain course of action would be profitable by hiring new employees, or perform such activities without the need of hiring new employees, they won't hire new employees.  Drive to hire new employees is the same as with any other activity in a business, to incvrease profitability.  If an economy shows no indications of where future profitability can occur, in a sustainable manner, business won't hire, irregardless of tax cuts or other attempts to stimulate.
* Increased need for specialization can lead to increasingly longer periods of time for sectors of the workforce to become employable.  This combined with increasings in efficiency and shorter lifespan for techology people specialize in can produce a state of an ever-growing pool of workers that are not able to get assimilated back into the economy.  This is particularly true when employer require work experience connected to newer technology, and refuse to pay for training costs for their current workers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

OTHER AREAS:
* While Say's Law is generally accurate, it fails to take into account the utility of good and services.  If merely produced an item created demand and had value, then no one would have to pay for garbage collection.  Supply no more produces demand then demand produces supply as those of the Keynesian school of economic would advocate.  What is true about Say's Law is that products are paid for with products.
* To contradict Say's Law, it is theoretically possible for there to be a global glut under a number of conditions.  Below is one set of conditions:
- It is possible for the entire set of goods and services in a market to reach a satiation  point where for individuals to acquire more of that which is offered, it would have a negative utility value and have a cost incurred, such as the consumption of free space.
- A new product and/or service could be added into a satiated market, but individuals who offer this product really don't desire what is being offered.
- In the case of labor, if there is a drive to reduce demand on the labor pool, through increased efficiencies, a surplus glut of labor could develop that cannot be absorbed. 
- It is possible, in a modern consumer drive economy to drive up discontent so that people perpetually attempt to buy answers to their problems.  In case of where such individuals believe they need to simplify, this mechanism would end up breaking down.
- A marketspace could price individuals out of it, resulting in a surplus of goods and services being built up by every supplier in that market space. Natural abilities to produce may be such that individuals are not in a position to ever produce enough on their own end to be able to supply sufficient output to acquire the goods and services.