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Bringing About a New Economic Reality Demands Vigilance and Hard Work Many factors led to our current economic state.

By Michael Mamas Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.


How could things have gotten so out of hand? Was someone -- everyone -- asleep at the wheel? What were we thinking? Of course, innumerable factors led to the state of our economy today. Let's take a quick look at a few and explore where it all might lead us.

The Federal Reserve's secrecy.

The Federal Reserve has an integral role in managing the money supply by printing paper money, setting interest rates and helping monitor the banking system. It's important to note the Federal Reserve is privately owned. Its owners' names aren't revealed to anyone -- not even the president. This is a scary situation, to say the least. We have absolutely no idea whose hands hold the purse strings of our economy.

A lack of CEO accountability.

Up to and including the Great Depression, if a company went bankrupt, so did the president and CEO. After the Depression, that changed. The CEO can now bankrupt a company and walk away rich. We see this all the time. It has created a very ugly scenario for investors and employee retirement funds. The impact this can have on the health of the economy cannot be overstated. It can contribute to unemployment, decreased consumer spending and, in the long run, economic crisis. CEOs must have a strong financial incentive to ensure their company does not go under.

Abandonment of the gold standard.

President Richard Nixon took us off the gold standard. Prior to that, the government couldn't print all the money it wanted. There needed to be a certain amount of physical gold in storage for every dollar bill that was produced. The inevitable result of being taken off the gold standard is what we have today: massive printing of money whose only value is what people psychologically place upon it.

Embracing the derivative market.

Lastly, the computer revolution exploded more rapidly than the federal government (S.E.C.) could keep up with. Trading on Wall Street has become an unmanageable gambling casino. People no longer have to buy stocks -- they just bet on what the stock will do. There is no limit to how much money (up to billions) can be bet on a million-dollar company.

In addition, there is now an unlimited amount of gambling done on the price of gold. This creates the illusion that there is far more gold available than is actually the case. Due to its finite amount, gold used to provide stability to the financial markets. With all the "virtual" gold floating around, that is no longer the case.

The complexity of this computerized gambling system is easily manipulated internationally, yielding mind-boggling profits to major financial institutions. Of course, these institutions can afford to pay the best minds to evade the government regulations. At the same time, these regulations strangle small businesses.

Respecting the mentality of the people.

If people can be prompted to become more aware, look deeper into economic and societal issues, and tap into their innate wisdom and common sense, the economic crisis that is upon us can still be reversed. It seems this is already beginning to take place.

Michael Mamas

Founder of The Center of Rational Spirituality

Dr. Michael Mamas is the founder of The Center of Rational Spirituality, a nonprofit organization dedicated to the betterment of humanity through the integration of ancient spiritual wisdom with modern rational thought. From personal issues to global trends, Mamas helps individuals and organizations develop a deeper understanding and more comprehensive outlook by providing a "bridge" between the abstract and concrete, the eastern and western, and the ancient and modern. Mamas has been teaching for 35 years and writes on a variety of subjects on his blog, MichaelMamas.net.

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