Simple math problem - needs resolving, but how?

[Sgt_Kickaxe]

The Acme widget company is pulling in 4 billion dollars per year, from all sources. Obligations, however, are 7 billion dollars a year. The company is running a 3 billion deficit, is tapped out on credit, and has future obligations that will continue to increase the deficit. It is also already 31 billion in debt.

Increasing sales is not an option, the number of possible customers has been reached. How would you solve this problem?

[Marshall]

Have Musk buy it :)

[tangor]

Get declared an essential industry, then qualify for a government bailout.

[topr8]

who are you? on the board of directors, a shareholder, an employee, a creditor, a customer?

what are the obligations?

what are the sources of income?

is the 'product' unique?

... i guess this is a trick question, but if not, there is a lack of info to give an informed/amusing/sensible/thoughtful answer.

[jimji]

Well, that term "widget" leaves a lot of room for speculation, but in this digital age it is easy to take from the playbook of so many companies and simply upgrade to Widget Model Two and double the price and that starts you partly down the road to some sanity. But I seem to remember there is also something related to borrowing on debt, as strange as that may seem. I had a financial officer many years ago that pulled some weird stunt so our organization could purchase a bunch of new equipment, but it was too long ago and I forget how she did that.

But I agree that we don't have enough information to be able to properly answer the question, if I am even understanding the question.

By the way, there are ways to declare bankruptcy but not lose the company. I seem to remember there are also ways to do a reset by moving all shares to another entity. But ownership of AWC isn't identified, either. Might simply be a private entity that can sell stock, yes?

By the way, there is always a way to increase sales - - - sell into the future with a government contract, most likely to a branch of the military. Or all branches of the military. Military sales for something as basic as toilet paper can be amazingly huge. I'm always amazed at people who don't realize how much of a military budget goes to all the basics of life, like food and boots and paper and on and on and on. Billions go into the most basic of things. People think we only spend billions on fancy new aircraft and such. And there I go sliding off-topic.

By the way, on that topic of "sliding" I hope all are safe from that nasty storm Mother Nature decided to visit upon some of you.

[tangor]

It is a trick question, of course, OR it is an example of FTX economics at work---and the angel investors are obviously infected with financial brain damage.

[jimji]

Actually, when you really start studying how finance systems work it is amazing that everyone trusts so few people not to mess things up. When President Nixon took the U.S. off the gold standard he opened the door to all sorts of weirdness. The entire system is built on trust. It is so weird.

Well, I think (brain doesn't work so well, if I'm in error) it was about the U.S. civil war days when somebody in the federal government came up with using paper to represent gold, or something like that. That was rather weird, too. I've not studied much about economics because that's worse than studying physics.

Yep, I figure it is a trick question of a sort, because we haven't a clue what the product is. But fun to play along and maybe one of us can come up with a trick question ourselves. I remember those two auto guys on Armed Forces Network had a really neat trick question, but I can't remember it right now. I am sure I logged it someplace, though. I can't even remember the name of their show as I type this.

This chemo stuff is so weird. I actually couldn't remember the name for my "mouse" for about two days. That was so weird. I looked at that thing and looked at it and simply couldn't remember what it was called. But after dealing with this chemo stuff for a number of years I am getting better at handling the angry part and just waiting for my brain to kick in and give me the answer or I go looking, if I need the answer fast. But it is way different than simple forgetfulness. And there is no pattern.

[tangor]

Hang in there and keep on truckin'!

Paper script has been around centuries, even as far back as the discovery of the "New World". The only problem was cashing it in when it was time for the payoff. :)

[Martin Potter]

worse than studying physics

Perhaps your point of view is caused by the chemo effect. Ah, well. When it wears off, I am hoping that you will discover physics is quite beautiful to study. There is so much of it and it all makes so much sense. Unless of course you get too close to the cutting edges where there is a lot of uncertainty, hopefully resolvable within our lifetimes.

There really are only three disciplines of study in the whole universe. The first is theology in the broadest sense, including things like psychology, superstition, sociology, economics, marketing, etc. The second is pure mathematics including those branches that have not yet found an application. The third is everything else -- that's physics! The interactions between the forces of nature and the different forms of matter in nature -- gravity, electromagnetic radiation, sub-atomic particles, atoms, molecules, arms and legs, big buildings, the atmosphere, planets, stars, galaxies, and who knows what else that we don't know about yet. (Leaving out a lot here ... )

Well, the above is just a model, but it works for me. Mind you, I'm not on chemo yet. ;-)
Take care and all the Best for the New Year.

[Sgt_Kickaxe]

Have musk buy it!

financial brain damage!

lol

[jimji]

"... caused by the chemo effect." is insulting, but thank you very much for the insight into your own character.

[jimji]

You triggered my memory, tangor, and I remember that odd group that got all kicked out of France once started that paper stuff during the crusades, right? But I think I also remember the paper wasn't issued as money by the U.S. government until the 19th Century. I thought it was around the time of the Civil War, but I could have that wrong. It's still odd how folks trust the whole financial system will work and don't hoard gold and silver. In fact, hoarding gold in Japan is illegal, I seem to remember. We have a small amount that doesn't seem to be a problem, but I am rather sure they have limits on that for private stocks. I save lots of 500yen coins because I figure if something super bad happens and a shop owner has to choose between one person with paper and another with solid coin, the solid coin might win the day. But I keep stocked up on a lot of food and basics because earthquakes can kick our butt here and that bad one in 2011 was bad for about two weeks when getting anything from a store was almost impossible. Had to rely on the base commissary and the PX at Zama.

[Martin Potter]

@jimji , I am very sorry. Please be assured that I intended no insult or any slight by my reference to "the chemo effect". I am aware (although not yet from personal experience) that chemo therapy causes many changes in the human brain, among them changes in taste, interests, general outlook, etc etc.

My suggestion that your negative view about studying physics was due to "chemo effect" was made in the hope that it might be only a temporary condition, and that your point of view (about physics) would become more positive after the treatment was completed. Please accept my apology for not expressing my intention more clearly.

[Sgt_Kickaxe]

Get declared an essential industry, then qualify for a government bailout.

The numbers in the OP were in billions, in reality they are in Trillions, the company is the gov.

How bad are things? I don't think regular folk are paying attention, yet. [wsj.com...]

Media is talking "market" this and "economy" that. It's not speaking common folk, yet. The way markets work is there is a delayed effect, and the delay is almost over before it starts getting felt and media starts having to explain better. You eat this year what was planted last year type of thing.

No doom and gloom, just current reality. Nobody can be held accountable, and bailouts are only for the rich. Brace yourselves...

[edited by: Sgt_Kickaxe at 3:44 pm (utc) on Jan 2, 2023]

[tangor]

87,000 auditors and a new form:

1. How much did you make last year? __________
2. Send it in.

[Sgt_Kickaxe]

I just wanted to know if any of the smart minds here would draw a comparison between the acme widget co and reality. I've concluded that raising awareness won't fix this.

I'm officially on holiday from the internet now, I'm enjoying life offline after years of running websites, and reality isn't a trick question. Happy 2023.

[Sgt_Kickaxe]

Besides...

87,000 auditors and a new form:

1. How much did you make last year? __________
2. Send it in.

That wouldn't even cover the interest.

[tangor]

^^^ True!

Makes one wonder why there are webmasters operating the same way, in deficit spending mode, in hopes of better days.

The way to change things is to stick around and play the game. Hope you have a good 2023!

[ronin]

What else you got?

Money isn't a real thing.

It's a measure of value.

Having tokens which symbolically represent value makes trade more efficient - no argument there.

So, yes, money is (kind of) a store of value too. But it only stores what it measures.

Frequently it's an inaccurate measure. Sometimes it fails completely.

Saying things like "We haven't got enough ounces, we haven't got enough inches" doesn't make much sense, does it?

"We haven't got enough money" doesn't make any sense either.

[Sgt_Kickaxe]

Money isn't a real thing.

Someone has lied to you, but hyperinflation doesn't care what anyone believes. [en.wikipedia.org...]

[ronin]

I can assure you it's absolutely right.

Here's a quick thought experiment:

If you do $100 worth of work and you are paid $100, it's probably not controversial to suggest that the work has (approximately) a value of $100.

If you do the same work again and you are not paid at all, through no fault of your own, is the work worth:

a) $100 (because nothing else has changed and it's still worth exactly what it was before)
b) $50 (halfway between what it was worth before and what you got paid for it)
c) $0 (it's worth exactly what you got paid for it)

Money is used (all the time) as an approximate measure of what things are worth - their inherent value.

Failing to measure a thing's value (however approximately), doesn't mean that thing lacks an inherent value.

[Sgt_Kickaxe]

I can assure you it's absolutely right.

Great, pay an employee nothing and let us know what happens. Pay your cable company 50% of your bill and let us know what happens.

The value of money isn't based on the value of work performed, or goods sold. It's based on how your gov pays their debts, prints new money, and keeps inflation under control.

[ronin]

The value of money

Money isn’t a measure of what money is worth. It’s a measure of what other things are worth.

You can tell me that $2 is worth $2. I wouldn’t doubt it. But what does $2 actually represent?

Perhaps $2 is enough tokens to represent the value of two pints of milk or for 10 minutes work? This then is what $2 is (currently) worth. But until the tokens are ascribed a representational value, they’re just arbitrary tokens.

A pint of milk is not of arbitrary value, however. Given the same population of cows and the same population of people in a given community for 1000 years, that pint of milk will consistently remain the same value, regardless of its dollar-price.

You can increase the price on the milk but it doesn’t change the value of it - it just means the tokens represent less value than they used to.

The value of the milk is real. Real-world real. The token-based representation of that value is convenient (certainly) but also a dynamic and sometimes unreliable proxy.

Great, pay an employee nothing and let us know what happens.

If I’m reading this correctly you’re saying: renege on a contract to pay for paid work and see what happens. I think we can both guess the fall-out.

I’m asking something essentially different: whether work which is paid for has any inherent value greater than identical work which isn’t paid for. I’d contend it does not. This shows that the monetary tokens exchanged for the work merely represent the value inherent in the work, they are not of inherent, real-world value themselves.

You mentioned giving 100% of your income to gov as a solution

Here’s where you’ve lost me. Did you mean me or someone else?