Gain economic and financial awareness.
Gain economic and financial awareness.
We’re living in an interesting time, aren’t we? The past two decades have been a rollercoaster, economically speaking. (And emotionally, socially, and politically speaking too! But that’s another letter…) We’ve seen the cost of money remain low, which, in many ways, has been great for investments and the stock market. This environment has allowed businesses to thrive in a way that seemed almost easy. However, as we’ve all noticed, this ease comes with its own set of challenges.
The inflation we’re currently experiencing is a prime example. It’s impossible to ignore, as any trip to the grocery store will show you. This inflationary cycle we’re in is likely to be with us for the rest of the decade, shaped by factors that have been brewing for years. The impact on businesses and families is significant. It’s more than just a financial challenge — it’s a test of resilience.
For businesses, navigating this cycle means facing a continuous loop where prices and wages keep escalating. The wage-price spiral isn’t just a theoretical economic concept. It’s a real-world issue affecting every aspect of business operations. As prices increase, so does the demand for higher wages, which in turn pushes prices up even further. It’s a cycle that’s hard to break.
But here’s where resilience comes into play. The key to weathering this storm is not just about having solid financial foundations but also about having robust business processes. These processes need to be adaptable, able to withstand external pressures like high inflation and shifting market demands. The products or services we offer are of course essential components, but I’m emphasizing the importance of how we manage and execute those components as well as every other aspect of our operations.
The role of family and shared values cannot be understated during times like these. Our families, or those we consider as such, provide not just emotional support but also practical wisdom that can guide us through tough times. This cohesion is vital for making sound decisions, whether in business or our personal lives.
As we look forward, it’s essential to prepare for what’s to come. We might not be able to predict every twist and turn of the economy, but we can build systems within our businesses and lives that are resilient and adaptable. This might mean embracing new technologies, automating where we can to reduce errors, or simply ensuring that our business processes are as efficient and robust as possible.
I want to encourage you to view these challenging times not just as a period of hardship but as an opportunity for growth and innovation. Let’s use this time to strengthen our businesses, solidify our family bonds, and prepare ourselves for a brighter future.
I’m excited to hear what you think of the latest podcast episode below.
What economic and financial awareness exactly?
In this video, I discuss the importance of economic and financial awareness and how it can help us make informed decisions. I share my personal journey of curiosity and self-education in this field, despite not doing well in economics in college. I highlight the impact of low-cost money, quantitative easing, inflationary cycles, and the need for resilience in businesses. I emphasize the importance of well-established processes, continual improvement, and lasting decision-making. My hope is to have conversations and foster innovation in order to navigate the changing economic landscape.
Improving prediction and goals…
Similarly, let’s talk about the importance of prediction and how it can enhance our approach to setting goals. I highlight the limitations of our current goal-setting methods and propose incorporating prediction as a key element. By asking ourselves when we will know if our predictions are false and how we will prove our theories, we can improve our processes and achieve better results. I also emphasize the significance of learning from our predictions and continuously improving our capabilities.
Resources
What is a “beautiful deleveraging”?
Ray Dalio is a really smart guy. He has much wisdom! But I wonder... Hmmm… Is our government and those people running it capable of a beautiful deleveraging? Hmmm… But if you haven’t seen his videos “How the Economic Machine Works” and “The Changing World Order,” take a look!
What is deleveraging?
For those of you who seek more understanding and wish to grok whenever possible, you’ll like this. If you do not even understand what I just said then just skip it.
Public Debt: Four Ways to Deleverage
“There are these people who think we don’t have to take all these tough decisions to deal with our debt. . . . It’s as if they think there’s some magic money tree. Well, let me tell you a plain truth: there isn’t.” — David Cameron, UK Prime Minister, 2010 to 2016
It’s also completely reasonable if this is where you are with all of this :)
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