Six Counterintuitive Ways for Smart Entrepreneurs to Handle the Recession

re: Six Counterintuitive Ways for Smart Entrepreneurs to Handle the Recession

Don Fletcher — Sat, 18 Apr 2009 01:18:14 GMT

Now we do see spending by government as a bad strategy, but when government prints money for the sole purpose of paying down the national debt, (buying treasury bonds) I have to say I applaud this decision. OK, I know that printing money is always seen as bad. But selling bonds to take money out of circulation, while it preserves the value or the dollar, temporarily, also increases the national debt. Printing money to buy back those bonds does put money into circulation, and so is inflationary, but it pays down the national debt.

When we use sale of bonds to limit the increase in the effective money supply, and it is counter inflationary, buying those bonds back is counter-deflationary.

Eventually if we are to pay off the national debt we have to buy back those bonds. We have to put non-interest bearing currency into the hands of the people who are holding those interest bearing bonds.

We can do that by taxation in excess of spending, and we can do it by printing money. Both strategies take debt out of the equation, but when we print the money, that is inflationary, and before long the increased economic activity will increase tax revenue so that the printed money can be reclaimed.

What is good about printing the money to buy back the debt is that it works better in a deflationary period than increasing tax revenues or reducing spending, where the term works better is meant that the economy is stimulated rather than slowing down. But when the economy does swing from deflationary to inflationary, it is critical that first the use of that printed currency must stop, and the rising tax revenue must be used to continue buying back that national debt (bonds).

We will find a lot of resistance to paying off the national debt.

re: Six Counterintuitive Ways for Smart Entrepreneurs to Handle the Recession

Cierra — Fri, 17 Apr 2009 04:19:31 GMT

Seems to me this article is not about politics so much (even though many of the comments have led into that direction), but more like common sense. Perhaps I should just say "Sense" since "Common Sense" no longer seems to exist in America. Seems to me that people are getting all worked up over something that really isn't new-- change. Throughout all of history, not just American history, societies and civilizations have gone through changes-- sometimes minute changes, sometimes complete overhauls that may or may not lead to the death of a society/civilization. The human ability to survive this long resides in "common sense" (which even animals have) and in our intellect and ability to reason. It is my opinion that each person needs to be responsible and utilize the sense we have-- quit name-calling and blame-shifting, hold our heads high while we get busy working. "In all labor there is profit, but mere talk leads to poverty." Now there's some wisdom, both on a personal level, and as this article mentions, at a business level. As for me, back to my responsibilities.

re: Six Counterintuitive Ways for Smart Entrepreneurs to Handle the Recession

Chris Yorke — Thu, 16 Apr 2009 20:38:46 GMT

I am not afraid to publish my real name, though it would get lost in America. I'm Australian.

All of this would be plausible without recession. These 6 tenets are both ambiguous and hard to fault, but leave a lot of room for interpretation. Would have been better if the distinction between entrepreneur and business leader were clearer. I imagine the one vital distinction today is that an entrepreneur gets no access to government money, bail-outs, breaks, support, or whatever.

Liquidity is fine, but how do you improve it when you are raising salaries.?Cutting costs is an irresistible temptation, but applying brain power to business expenditure is far more important than penny-pinching. If that is the meaning, then I agree. Distinction between consumptive and productive liabilities is obvious, but reliably identifying them is not so easy. Do not fall for Peter Drucker's outdated misconception of a 'profit centre'. Personal experience is that half the time I spend at meetings is wasted, but until they happen, I never know which half .

re: Six Counterintuitive Ways for Smart Entrepreneurs to Handle the Recession

carrieon — Thu, 16 Apr 2009 11:10:03 GMT

6. Embrace Change Through Education

Recessions are times of great change and upheaval. Those who struggle often do so because they cling to the past. It's critical for you to stay on the cutting edge of innovation through a lifelong pursuit of education. The most successful entrepreneurs are those who are constantly reading, attending seminars, engaging with mentors, and exposing themselves to new adventures and ideas.

This point should be #1or the only piece of advise for success during changing times. As for the other five, I don't see where they apply to entrepreneurs. Also, on the title of point #6, I would replace the word "embrace" with the word "create". Otherwise, you are just following someone else's thought process.

re: Six Counterintuitive Ways for Smart Entrepreneurs to Handle the Recession

7skeeter — Thu, 16 Apr 2009 10:42:57 GMT

Didn't Dr. Mercola post something on this website ripping on Obama for his approach to the Depression? What does suggestion number 2 say? Spend more!!! He agrees with this but not with Obama. Typical hypocrite Republican. I love his health suggestions but his political stance is stuck in the past.

re: Six Counterintuitive Ways for Smart Entrepreneurs to Handle the Recession

alphafem2002 — Thu, 16 Apr 2009 10:32:49 GMT

Sometimes. Maaaybe.

When I really gave my staff a raise on these grounds in the 80's recession, they suddenly felt entitled and bullet proof since I obviously loved them so much and their productivitiy plummeted. One peron in particular was quite difficult after that and when I called Human Rights to discuss how to fire her, they said it would be a bit hard to explain since she had just had a raise.

Furthermore, if your business flops, you won't have either retirement savings OR a continuous cash stream, so keep stashing in your savings too!

I really don't agree with much of this at all. Empowering more only works if you have self-starting adults with a sense of responsibility. Choose carefully which empoyees you give such power to. For many, once you no longer look over their shoulder, they start reading magazines! Been there and I gotta say it has been the majority that I have to watch carefully.