{"id":10927,"date":"2015-08-12T07:38:22","date_gmt":"2015-08-12T12:38:22","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10927"},"modified":"2015-08-12T07:38:22","modified_gmt":"2015-08-12T12:38:22","slug":"the-economy-is-in-liquidation-mode","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10927","title":{"rendered":"The Economy is in Liquidation Mode"},"content":{"rendered":"<h3 class=\"art-postheader\"><a title=\"Permanent Link to The Economy is in Liquidation Mode\" href=\"http:\/\/www.acting-man.com\/?p=39236\" rel=\"bookmark\">The Economy is in Liquidation Mode<\/a><\/h3>\n<p><strong>Capital Consumption<\/strong><\/p>\n<p>If you\u2019re an American over a certain age, you remember roller skating rinks (I have no idea if it caught on in other countries). This industry boomed in the 1970\u2019s disco era. However, by the mid 1980\u2019s, the fad was fading. Imagine running a rink company at the end of the craze. You know it is not going to survive for long. How do you operate your business?<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-39238\" src=\"http:\/\/www.acting-man.com\/blog\/media\/2015\/08\/roller-disco.jpg\" alt=\"roller disco\" width=\"640\" height=\"440\" \/>The birthplace of roller disco turned out to be edible, sort of<br \/>\nPhoto via realskatestories.com<\/p>\n<p>You milk it. You spend nothing on capital improvements, slash maintenance, and reduce operating expenses. There\u2019s no return on investment, so you cut to the bone and wring out as much cash as possible. When a business has no future, you operate in liquidation mode.<\/p>\n<p>Your rink generates cash flow, but this is no profit. It\u2019s simply the conversion of accumulated capital into present income. You are consuming capital, almost literally eating the business.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-39241\" src=\"http:\/\/www.acting-man.com\/blog\/media\/2015\/08\/roto.jpg\" alt=\"roto\" width=\"640\" height=\"472\" \/>A fad that went away\u2026 roller skating rink in the 70s<br \/>\nPhoto credit: Picnicface<\/p>\n<p>I have used a family farm as an\u00a0<a href=\"http:\/\/snbchf.com\/gold-standard\/falling-yield-rising-asset-rising-yield-falling-prices\/\">example<\/a>\u00a0to paint a clear picture of capital consumption. Imagine using your farm, not to grow food, but to swap for it. You tear down the barn to sell the oak beams for flooring, auction off the back 40 (acres), put the tractor on Craigslist, then finally sell the farm and house. All to buy the produce you can no longer harvest.<\/p>\n<p>Let this sink in. The farm\u2019s falling crop yield can\u2019t feed you any longer, but you still need to eat. You\u2019re liquidating the farm merely to buy groceries.<\/p>\n<p>The conventional view encourages you to be grateful that the\u00a0<em>purchasing power<\/em>\u00a0of the farm is high, that it trades for a big stash of food. While it may be true that you can eat for years on the proceeds, it\u2019s small consolation for the loss of what had been an evergreen income.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Economy is in Liquidation Mode Capital Consumption If you\u2019re an American over a certain age, you remember roller skating rinks (I have no idea if it caught on in other countries). This industry boomed in the 1970\u2019s disco era. However, by the mid 1980\u2019s, the fad was fading. Imagine running a rink company at [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[6275,109,421,2884,6170,659],"class_list":["post-10927","post","type-post","status-publish","format-standard","hentry","category-economics","tag-actingman","tag-capital","tag-income","tag-liquidation","tag-pater-tenebrarum","tag-purchasing-power"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10927","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10927"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10927\/revisions"}],"predecessor-version":[{"id":10928,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10927\/revisions\/10928"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}