Where does the money go?

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Okay, so were in a recession. The economy is in a bind and things are looking bleak. The stock market falls farther each day. What does it all mean?

Think about it this way. There is only so much money in the world. Countries don't just print more when times get tough, it weakens their currency, you know, supply and demand. But the population grows each year, and things cost more each year. So how does it all balance out. You hear about people losing money in the stock market, but where does that money go? It doesn't just disappear.

I'll tell you. It just changes hands. For every stock bought there is one sold. For every dollar lost, there is one made. The amount of money hasn't gotten smaller. Its just been changing hands. When it starts to become scarce, we as Americans make changes in our lifestyles. Take gas prices for example. When gas shot up to $4 a gallon, what happened. Money went from our hands (the consumers) to the oil tycoons (whether they be here or in the Mid-East). So we started travelling less, which means our money stopped going to the airlines and tourist industry locations. This includes all the hotels and restaurants, etc. They didn't have the money coming in, so they might have had to lay people off. The unemployment rate climbs, people start to fear for their own jobs, prices of consumables go up along with the gas prices, and things start to get worse from there.

But remember, there is still the same amount of money available. The stock market is crashing, but for every dollar someone loses, someone has to make. It doesn't just vanish.

So here we are, hanging on to what we have (which you should), but that in turn starts to shorten the amount others bring in (which is bad) so we are in a catch 22. The auto industry is in shambles. No one is buying new cars, which means they are slowing tanking. No cars, no loans, (same is happening to homes). Then the government has to start bailing big companies out. I don't like it any more than you, but if they don't bail them out, those big companies are going to bring down you and me with them. My philosophy... bail them out, clean house of their ineptness, then punish them once their stable. Its the only way they'll learn.

So where does that leave us now. Well, we aren't throwing our money around like we might have used to. I know I'm not going out to buy a new truck anytime soon. We have to spend it wisely and make sure we get something of value in return.

Remember when I said that the money doesn't just vanish. Well if we aren't buying new cars, that means we have to be keeping our older ones running longer. That means the money will be making its way to the mechanic soon (hopefully soon enough to keep those in business now up and running). When that money starts flowing that direction, what do you suppose will begin to happen. Yep, supply and demand. Others will start to try and capitalize on that flow of money. And when they do, they may not be up to the standards you are looking for. A way to protect yourself is to make sure you invest in someone you can trust. If your car is in need of repair, make sure you take it to someone who has been around for a while. Someone who is certified, and will guarantee the work they do. How do you find someone like that. Easy, visit http://www.transmissionrepairreferral.com/ and we'll find them for you.

Thanks for listening, and check back soon when I'll talk about the Economic Spedulus package.