glgormanBackground - or "why you need a money bomb", part one:
If we remove fraud and exploitation from a business model and focus primarily on strategies that have strong ethics as a part of their core values, and if we also assume a large scale competitive free market situation, then it should follow that, in further consequence of laws of supply and demand, etc., that it must also follow that as economic efficiencies increase; it ought to become more difficult to achieve large gains through arbitrage. This would seem to imply that because of efficient markets, societies will, in general, need to move toward a more transparent value-added perception with respect to the prerequisites for sustainable economic growth.
Yet, the notion of “achieving a critical mass” is usually understood in the context of bringing together an assemblage of enough fissile nuclear material, which having a sufficient quantity, density, and purity, as should enable the initiation and continuation of a self-sustaining nuclear reaction, and for such matters as producing useful energy, like in a nuclear power plant; or else – for the purpose of causing an explosion, e.g., as in an atomic bomb. Hence, with respect to economics, one might by a similar line of analysis be inclined to introspect the various branches of relevant mathematics.
There are other areas of important inquiry; wherein the notion of “achieving a critical mass” might bear fruit. Some of these will therefore be discussed in greater depth, according to this author’s means of providing such subject matter for further discourse. There might be effects of turbulence or the so-called Nash equilibrium, yet let’s get back to ‘nuking the economy, or else trying not to if you know what I mean.
A critical mass of uranium, or plutonium for that matter, is achieved when on the average each fission event produces more than one subsequent fission event. The main factors that limit that process are when neutrons escape from the fissile core, or when neutrons are absorbed by non-fissile materials within the core, which might include daughter products of the principal reaction.
By now, it should be clear what we are hinting at – when we mention “critical mass” and “greater than unity” in the context of building one’s personal wealth. Now you have heard it said that “money doesn’t grow on trees”, or “there is no free lunch”, and all the rest; but just imagine if you did have a money tree that bore golden fruit; season after season. What would you do? Sell the fruit, and live off of the proceeds of each harvest? Or plant more trees, until you have an orchard?
The doubling time is often what comes to mind to most people, and in economics; there are a few good rules of thumb to remember – such as the fact that at 7.2% interest you can double your investments in just over ten years; or curiously enough, at 10% interest; you can double your money in just under 7.2 years. This is called the “rule of 72”, and it works fairly well; even all the way down to 1% interest, where after 72 years can expect to yield a total of 204.7% of your original investment. Thus, if you can get your hands on, let’s say $1000.00, and invest it at 1%; you would only need to wait about 720 years, or actually “only” 694.2 years to build that little nest egg of yours. And hopefully, there won’t be any inflation … ha ha ha ha ha ha hah!
Of course, if you could achieve 1% net growth per day; you could turn that same little nest egg into your own money orchard in less than two years! That’s right, and since there are 365*2=730 days in those two years; it looks like you just might also get an extra 35 days, over and above the previously mentioned 694.2 days (or rather investment periods) that it was earlier determined that one would need.
Now perhaps you already have a couple of hundred thousand saved up; maybe in your IRA, or it is the equity in your home; in which case you would only need two or three “doublings” to make it into the millionaire’s club, and if that applies to you great! Now all you need to do is to learn to think differently about money; because until now you have probably not been thinking along the lines of looking at money as something that is both precious, and powerful; or maybe you have always thought that way; but what you haven’t been thinking is that you can, if you are quite careful in how you plan and act; that is to say; yes – you can build your own “money bomb” that will release unimaginable potentials in your life.
Yet there are limits to growth, and sometimes even large stalwart companies fail. Why does the bomb stop? What if it is not because it runs out of fuel; but rather because it either blows itself apart; or else the reaction poisons out. One impetus for economic growth is increased economic efficiency. One method for increasing economic efficiency is by increasing economic density.
Some case studies, of various historical successes and failures, might be in order. It is as if I am saying, by way of the metaphor – that the Apple II, and therefore MS-DOS were like atomic bombs; in that they were rapidly initiating; self-propagating money bombs for their creators; yet each; like many other products of their era, had a finite economic lifespan; and an ultimate effective extinction; yet they each gave off enough “light” as it were; to light the paths that paved the way for the Macintoshes and the iPhones, and Windows, and the XBOX, etc., that continue to shine on, at least for now, like stars in the sky.
Why did Apple Computer seem to go thermonuclear with the iPhone? And why did Microsoft go “thermonuclear” with Windows? Why does a crude atomic bomb “pre-detonate”, and thus fail to produce the prescribed yield; that is to say, if there is any yield at all?
A pivotal concept, that ought to be developed; therefore, which is relevant across all domains; thusly is the notion of “greater than unity.” Life is filled with examples of potential wealth-building strategies that are in and of themselves – inherently “less than unity.” Consider the game of roulette, for example. With a house advantage of 5.26% on every wager, it is generally understood why there are other broad concepts in gaming theory, regarding such notions as “the gambler’s fallacy”, or “the road to ruin.”
Now, do you see where this is leading? With a negative 5.29% expectation on every spin, you will most likely lose all that you have saved up in life if you just play roulette with your savings; and most other forms of gambling produce similar results.
Imagine ten people living in one house. Now, what would happen if each of those people could save up a ten percent down payment toward their own home. Then, instead of actually buying that second house and living there; they buy it and turn it into a rental. Paradoxically, some large families might become very wealthy not only as a group; but as individuals within that group; if they, as a group “delay their respective personal gratifications” just long enough to maintain the concept of “greater than unity.”
History is filled with examples, and there are many examples where the truth is not very pretty, to say the very least. Some large Italian “families” in history started what became known as “the Mafia.” Then there was also Hitler, who blamed the Jews, and he murdered six million, but what were the Jews in post-World War I Germany really doing? It is possible that they were simply being more efficient in their own day to day business practices, and thus they were able to maintain “greater than unity” in their collective economic affairs, even if the rest of Germany seemed to have to shoulder an unbearable economic burden because of the terms and conditions of the treaty of Versailles?
What really went wrong, in those cases, that is to say, as we might try to understand it, that is, within the context of our model? The answer is not always so simple. There is of course our first principle of assembling a critical mass, but there is also that second principle of “containment.” This can be broken down further into notional aspects of “refinement”, “initiation”, “containment”, and “propagation”, that is to say – for the initial process of detonating a simple atomic bomb. More fully addressing the root causes of corruption and their consequences is of course another matter, which will eventually be another matter for further discourse. Rest assured that this is not something that I am just somehow unaware of.
Yet there is that other special glorious outcome to behold; thermonuclear fusion – that very process that makes the stars shine – which can be initiated only by bringing together the right elements, at the right temperature, and with the right pressures; and so on – so as to take the whole process to the next level.