Price Does Not = Value
Objects do not have value! They achieve their value through their utility or their ability to produce a return, present or future. As an example of what I am referring to; imagine that you go into a store to buy a new pair of pants for $100–. When you walk out of the store you decide that you don’t like those pants so you go down to the corner to try to sell those pants you would be lucky to sell them for $10–. Why were they worth $100—when you bought them but only $10– when you wanted to sell them? What you were paying for when you bought them was the service, selection, colour, size, style, overhead, staffing and other store costs rent, property tax and shipping. The merchant probably bought them in China for less than $10-.
The North American society functions on this inflated system of exchange. It is not only predicated on the fulfilment of actual needs but on artificial or created needs that are stimulated and purveyed by advertising and media. Not only are we buying things that we don’t really need, for more than their value. It is often with money that we don’t really have, i.e. on credit at usurious credit rates. We are racking up debt against future income that will be taxing you long after the useful life or the purchase has faded from our memory. Don’t confuse this with good debt such as mortgage debt as I described in what makes real estate go up in value
By avoiding or refusing to participate in this fools game, most of us would have at least 20% of our income as discretionary funds that we could use to build personal net worth (The remainder after we subtract the value of our assets from our debts). We could then accumulate assets that would generate cash flow to provide security for our retirement years.
Further the world is awash with stuff. Most anything that you really need can be had second hand for a tenth of the price or even for free but the market for used stuff has collapsed because most young people would rather go to the Brick and buy colour coordinated, no payments for two years. It seems they have no concept of the real cost/value relationship and will be destined for the train wreck of financial insolvency encouraged to do so by our financial institutions if reality doesn’t somehow intervene.
Throughout the world unrest is boiling over. Canada is but an island of peace in this melee but not immune to the disruptive impact of these forces and its own internal struggles of class/income inequity. The irony remains that with the level of potential disposable income that exists for each of us the solutions we seek are in our own hands if we can only see them before it is too late to turn the ship around.
Being that this is the New Year I shall offer a few predictions:
- In the spirit of “everything old is new again” thrift will once again be in fashion.
- Experiences will become more important than things.
- The commodities of greatest value will be food, water, and time.