I make my living by coming up with ideas. It’s a great way to pay the bills. And I’ve been doing it now for so long that the ideas come easily – on walks, in the shower, while reading, etc.  

Many of them seem brilliant all the way up to the moment I write them down. Then things can get complicated.

 Sometimes, while putting my idea into an essay, a related “great idea” pops into my head. Happy about that, I work it in. But often, when researching facts or examples to support my revised thesis… what I’m finding doesn’t exactly fit. Not wanting to abandon the essay, I plunge on.

Normally, I write at a pace of about 15 words a minute. (Ten for the first draft. Five for the second.) But when this sort of thing happens, it can take me three or four times that long. I used to think that was a good thing. I was wrong.

 In fact, as I’ll explain in a moment, working harder on a great idea is usually a sign that it is incomplete, fragmentary, or even specious.

How to Know If Your Great Idea Actually Sucks 

“If you can’t explain it simply, you don’t understand it well enough.” – Albert Einstein

You’ve got a brilliant idea. It’s the E=MC squared of whatever you’ve been pondering lately. You rush to memorialize it, to write it down. As you write, your one excellent idea leads to another. And then to a contrary insight – which you include, since it’s relevant. It gets complicated. But you persist. Hours later, you’ve completed a 3000-word essay or memo or proposal. You are exhausted. You save it.

You wake up eager to fine-tune your brilliant idea and send it off to your boss, your colleagues, or your publisher.

So you grab a cup of coffee and begin with enthusiasm. But as you move along, you notice small problems and contradictions. You push on. Hours later, you stop again. “It’s ready to go,” you tell yourself. “I’ll just take one more look tomorrow.”

The next morning, you give it a final read. And when you do, you find more problems and contradictions. You can’t believe how this once-brilliant idea had mutated into a verbal mess. You send it off anyway.

It lands with a thud.

You don’t want to get lost in this depressing, self-flagellating maze. And you don’t have to. There is an easy, one-step way to make sure your brilliant idea is truly brilliant: After you’ve written the first draft, check the FK score.

The FK is a measurement of readability – how easy or difficult it is to understand what’s being said. A higher score means greater difficulty. And, unfortunately, some people believe that greater difficulty means “smarter” or “more technical” or “more profound.”

It means none of those things. What it means is that your brilliant idea is not brilliant. It may have the patina of brilliance. But it’s not brilliant unless it scores 7.5 or below.

Those that haven’t used or aren’t familiar with the FK may doubt my thesis. But those that have successfully brought a first draft that was rated 11.5 down to 7.5 or below understand what I’m saying.

When I’m writing passionately about some new idea, I feel like I’m onto something big and important. I feel that my life has purpose, and this essay is going to prove it. But if I check the FK and it is above 7.5, I know immediately and for sure that my brilliant idea sucks.

It sucks because my idea, however amazing I felt it was, is not brilliant at all. It may very well have a kernel of brilliance. But as expressed, it’s complicated and confounding. It’s a burden to read. It doesn’t inspire. It doesn’t enlighten.

In the Poetics, Aristotle argued that the most important element in a play is not diction or character or even action. It is plot. That usually surprises people. It seems like plot should be the easiest part of writing any work of fiction. But if you’ve ever tried to write a play or a short story or a novel, you know that plot ain’t easy. That’s why writers that can write good plots are so rare. And that’s why they make a lot of money.

Aristotle didn’t say anything about nonfiction – which, of course, includes business memos/proposals and essays. But if he had, I’d bet he would have said that the most important element of nonfiction is the idea behind it… followed closely by how clearly the idea is expressed.

In other words, there is a direct relationship between the quality of the idea and the complexity of its expression. That relationship is an inverse one.

And that’s where the FK comes in.

The best ideas, as Einstein repeatedly reminded us, are simple. Simple ideas are better than complex ideas for two reasons: They are easier to understand and appreciate. And – and this is the wonderful irony that Einstein, among many great thinkers, pointed out – they are also, usually, more profound.

I have found this to be true for the dozens of books and thousands of essays that I’ve written. I’ve also found it to be true of the ideas I have introduced to my business clients over the years.

And that is why whenever one of my “great ideas” gets a high FK score (above 7.5), I don’t send or publish it. I think it through again to see if there might be a simpler way to explain it that is also true. If I can’t find that simpler expression, I conclude that my “great idea” only felt great.

(Note to clever readers: You don’t have to run this essay through your readability program. I just did it for you. It has an FK of 6.2.)

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Every day, more people are walking the sidewalk alongside the beach across the street from my house. A month ago, someone would pass by every three or four minutes. A week ago, it was a steady trickle. Now, it’s a light but continuous stream.

The rules haven’t changed. The shelter-in-place mandate is still active. But as each day passes, more and more of my little city’s self- imprisoned population have decided to ignore the extremes of social distancing and get back out into the sunshine and fresh air.

I’ve not been interviewing them, so I can’t say why. But from the way they walk and even greet one another, I’m thinking they just don’t believe we are in the midst of a plague. Some no doubt think we’ve passed the peak and the threat of the virus is no longer serious. Others, like yours truly,  probably never thought it was that serious to begin with. Still others, probably don’t think at all.

But their numbers are increasing, and I don’t think it will stop. For whatever reason, we haven’t seen the body counts the media teased us with in January and February. Most of us haven’t seen any dead bodies at all.

As of today, I’ve finished my two-month-long exploration into the virus and the shutdown and its economic repercussions. I’m looking forward to resuming my morning walks and thinking about other things.

The Corona Economy, Part V

What Will America Look Like in 2021? 

“Unemployment is sky-rocketing; deflation is [here] for the first time since the Great Depression. I don’t care whose fault it is. It’s the truth.” – John Mellencamp

As I said on Wednesday, US fiscal history is a history of borrowing money to fight wars.

During the country’s first eight decades of existence, our wars were relatively small and inexpensive. That was chiefly because the Treasury’s income was small then – restricted to what it could get from sales taxes and import duties.

To finance the Civil War, which cost $2.7 billion ($42 billion in today’s dollars), Lincoln introduced the income tax – which made increasing debt and fighting expensive future wars that much easier.

WWII cost us more than 10 times as much as the Civil War ($323 billion or $5.8 trillion in today’s money). It also gave birth to the wealth- and life-destroying machine that Eisenhower warned us against: the military-industrial complex.

The atomic bomb deprived that machine of the ability to produce carnage on a global scale, so it fed on proxy wars (Korea, Vietnam, Afghanistan, and Iraq).

Then, in 1964, President Johnson launched the first of a succession of social and ideological battles – the wars on poverty, drugs, and terrorism.

And now we have the War on COVID-19.

Like the spectral enemies we fought before it, COVID-19 is a formidable killer of human beings. And like the wars against poverty, drugs, and terrorism, the cost of the War on COVID-19 is immense and will be ongoing. What irks me is that most of the perfectly intelligent people I speak with have no idea how expensive it will be. The fact is, it will likely eclipse the cost of all previous wars.

Let’s add up the damage so far:

* $10 trillion in lost production (GDP) – that can never be recovered

* $4 trillion to $6 trillion in “bailout” distributions – that will produce no sustained benefit to anyone

* $5 trillion in stock losses – that may take years to recoup

* And some trillions more in pork barrel legislation that will likely follow in the next few years

With that kind of damage on the country’s P&L statement, it’s inevitable that  the Treasury’s balance sheet will soon be in the red by more than $30 trillion. That would be 150% of our GDP – the highest debt-to-GDP ratio in our nation’s history. (Higher even than the previous WWII record of 119% in 1946.)

You might be wondering: How is it possible for an economy to get into that much debt without collapsing? How is it possible for the US to escape the fate that felled the Romans, the Germans, the Chinese and – most recently – the Venezuelans?

In those cases, the mechanism for economic collapse was hyperinflation. Gradually at first, and then accelerating as the national debt mounted, the world’s faith in the solvency of each of these countries eroded.

That is what many of my historically attuned colleagues believe is going to happen again here in the US. And to be fair to their viewpoint, all the markings are there.

So how is inflation an answer to excessive debt?

It’s because inflation reduces the onus of debt by making each owed dollar less valuable. At an inflation rate of 10% a year, each trillion dollars of debt is effectively reduced by $100 billion. At an inflation rate of 50%, the debt would effectively shrink to next to nothing in just a few years.

And if you think an inflation rate of 50% is unlikely, you need to spend 15 minutes researching inflation in the countries mentioned above. There have been plenty of times in the past when over-indebted economies saw annual inflation rates of 50%, 100%, and even 200%. In Germany, Zimbabwe, and Venezuela, inflation rose to 1000% and even more!

An inflation-diminished dollar would be good news for the Treasury’s balance sheet, but it would be terrible news for the rest of the country. It would mean the purchasing power of every dollar earned would decrease by that amount. At 50%, the loaf of bread that costs $2 today would cost $10 in 2021, $50 in 2022, and so on.

Likewise, the cost of tools and raw materials and energy typically rises and falls alongside inflation. And those costs make it more expensive for businesses to produce the goods and services they provide. But they can’t increase their fees at the same rate and, thus, take a beating, with many of them going out of business permanently.

I don’t think we have an immediate threat of hyperinflation. In fact, what we’ve been seeing so far is deflation (a reduction in prices) of oil and gasoline and most commodities and equities, and most bonds. But deflation cannot cure the debt disease, which is why it’s normally short-lived (and followed by inflation).

The Great Recession of 2008 was caused, as all recessions are, by debt and speculation. Banks, brokerages, and insurance companies had leveraged up with sub-prime real estate debt and were on the verge of bankruptcy when the Fed, under Ben Bernanke, descended from the skies and attempted to save the economy with quantitative easing (flooding the bond markets with fake dollars).

That effort, from 2009 to 2014, saved most of America’s largest financial institutions (that irresponsibly created the debt), but it did not save the economy.

The economy entered into a period in which many middle- and working-class Americans lost their homes and got considerably poorer. At the same time the Wall Street was getting richer – much ricer – and awarding multimillion-dollar bonuses to its brokers. When all was said and done, the US economy had experienced the largest transfer of wealth in its history – with $10 trillion passing from Main Street to Wall Street.

In retrospect, it’s easy to see that the 2009 bailout was a bad idea. But the corona bailout could be worse.

The big difference is this: Back then, the bailout was optional – a “grand experiment,” as Tom Dyson put it. But the corona bailout is being done out of necessity. Because of everything we’ve talked about in the last few days, the government has no choice: Bail out the Treasury or risk going bust.

Nobody is against the current bailout. Not our trading partners, not our politicians, not the CEOs of big business, not the owners of mom-and-pop shops, nor the 26 million unemployed Americans. They are all depending on the US central bank to bail them out and, along with them, the entire world’s economy.

Think about it. For the first time since Obama was elected, Republicans and Democrats have come together to embrace a massive spending spree larger than any in our history. The only differences among these traditionally competing groups in this case is how much to overspend: whether the bailout should stop at $4 trillion or $6 trillion or $10 trillion or more.

The Problems With Free Money 

Free money, as I’ve said a hundred times, is never a good idea. And it’s an especially bad idea when it’s the federal government giving it out to foreign countries, domestic corporations, and to its populace through blanket giveaways like this one.

When money is given freely, it is often wasted. And it always creates dependency and entitlement. When fake money – dollars created out of thin air by an entry ledger in the Fed’s books – is given away freely, the net effect is reduced productivity, greater social and corporate dependency, and a weakening of faith in the US dollar. The first of these damages, reduced national productivity – has already happened on an enormous scale. The second is happening now. And the third is almost sure to follow. The only question is when.

I’ve no doubt that a portion of the productive sector of the economy will recover strongly after America opens up its economy next month. But I’m quite sure that it will not fully recover, as thousands – perhaps tens of thousands – of businesses will not be reopening and millions of Americans workers will remain unemployed.

How long the Corona Recession will last is anybody’s guess. Trump is hoping it will be short-lived and the economy will be firing on all cylinders by election time. His opponents would rather have America endure another bout or two of lockdown to ensure public discontent till then.

Nobody can possibly know what’s coming. We’ve never been in this sort of situation before. But it would be foolish to presume that we can replace the $10+ trillion we’ve lost these last three months by simply resuming our old work lives.

I’d say we enjoyed a good economy last year, but the fact is it wasn’t very good at all. The recovery after the crash of 2008 was a tepid one, with growth averaging a measly 3% a year. And the debt, as I explained Wednesday, mounted strongly during the Obama years and then skyrocketed once Trump took office. The $30 trillion of federal debt we’ve incurred will have to be dealt with sooner or later.

So how will America deal with this humongous debt?

Will we follow the historical pattern of inflation leading to hyperinflation leading to debasement of the currency and then total economic collapse?

Or is there another way?

A Bit More History 

From 1933 to 1939, President Franklin Roosevelt instituted the New Deal – a series of large-scale reforms and programs meant to stimulate the economy and end the Great Depression. (See “Did You Know,” below.)

The New Deal was popular. It put the Democrats into power for nine administrations, from 1937 to 1964. And it is credited with bringing the American economy back from near collapse to the strongest in the world.

Many good programs were launched through the New Deal, including the Reciprocal Tariff Act of 1934 (which opened up international trade) and the regulation of the worst practices of banks, insurance companies, and brokerage houses (which, till then, had been basically free to bamboozle and swindle their customers).

But one thing that wasn’t good about the New Deal was a series of executive orders that suspended the gold standard, unlinking the value of the dollar to the price of gold. This changed US monetary policy forever by allowing the amount of dollars in circulation to be a decision made by a handful of central bankers, rather than millions of businesses and consumers that make decisions by prices, which are controlled by supply and demand.

What some New Deal fans don’t talk about was that in 1937, during Roosevelt’s second term, there was a significant downturn in the economy. Production and profits declined sharply and unemployment jumped from 14.3% in May 1937 to 19.0% in June 1938. This proved to some the faults in the New Deal. (Maynard Keynes, for ones, was a doubter. He attributed the eventual recovery to the efforts of the private sector up to and through WWII.)

Whether it was the New Deal or private enterprise or both, there is no argument that what made America the leading economic power after WWII was the expansion of the gross national product.

The halcyon days of the 1950s and early 1960s were the consequence of the enormous expansion of capital enterprise that took place during those years. Growth in production eradicates debt and creates prosperity by virtue of added authentic economic value. That and the population explosion married to an expansion of consumer consumption were the true driving forces of America’s economic ascension.

Could it happen again?

Could America be first again? That’s a question that will be answered in the next 10 years. Can American enterprise innovate its businesses to lead the world? Or will faith in the US economy and its dollar crumble and send America down the path of the collapsed empires of the past?

You can ponder that question, if you will. But if your goal is to get yourself and your family into recovery mode, you’ll have to put your energies into building wealth the old-fashioned way: producing and selling value for a profit, and saving that profit for the future.

I’ll be talking about how you can do that in future blog posts as, after today, I’ll be back to talking about something I don’t need Wikipedia for – personal productivity, business growth strategies, personal finance, and the well-lived life.

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