My fellow Americans,
Today I address you on the sensitive subject of inflation, which you may have guessed when you clicked on the title of this article.
What is inflation, you may ask? Isn’t it when you pay more for the same jar of pickles that only cost $1.53 last year, but which now cost $2.76? No, indeed it is not.
Inflation is an increase in the quantity of money in circulation, without a corresponding increase in the quantity of goods and services for sale. An increase in prices is a symptom of inflation, because the more money there is in circulation, the more money is required to buy anything. Inflation happens every time the government or a bank is allowed to create money from thin air. Hyperinflation — the creation of so much money that it becomes preposterously worthless — happens every time a government realizes it can print as much money as it wants in order to fund wars and growth and corruption.
Lest you think hyperinflation is a rare occurance that happens only in the prehistoric past, back when everyone was ignorant of sound economic principles, Wikipedia lists 32 examples of hyperinflation happening in the last century, with many of those happening within the last 30 years! The 33rd example on that page happened here in the colonies during the Revolutionary War, when the Continental Congress started printing up paper money to pay for the war, and wound up printing so much that it spawned the saying: Not worth a Continental.
The founders of this nation quickly learned from that experience, and declared within the Constitution that nothing but gold and silver should be legal tender within the U.S. Coincidentally, gold and silver and copper and other precious metals and gems have traditionally been used as currency throughout the ages. It is easy to establish a common value of these items, they are difficult to counterfit, and in the case of metals, easy to coin into standard denominations, and they are durable. Gold coins 1000 years old are at least as valuable now as they were 1000 years ago.
And most importantly – the supply of precious metals is fairly constant and changes only based on what comes out of the ground, rather than what comes out of a government’s printing press. If a politician wants to spend it, he must first take it from a person, either by taxation or conquest. If a bank wants to make loans, it must first receive the express permission of a depositor, with the understanding that the person’s gold will not be available until — and if — it is repaid by the borrower, and the bank must pay interest to the depositor who’s funds were loaned out.
By contrast, with a worthless paper money, the government does not need to tax you directly to fund their expansions, and banks do not need your permission to loan out your money. They simply create new money out of thin air, and spread it around the economy, inflating the money supply, causing an increase in consumer prices, and economic booms in stocks, housing, etc etc. A bank simply calls any deposits “reserves,” and creates money out of thin air to loan out, up to the mandated reserve ratio, while still having all your money available for immediate withdrawal. Example: When you deposit $10, the bank can then loan out $9.50. There is now $19.50 in existence – inflation!
How is inflation taxation? Well, if the government increases the money supply 10%, causing a 10% increase in the price of a dozen eggs, you must now pay $1.10 for what used to cost $1.00. They just took $0.10 from you just as surely as if they’d had your employer withold it from your paycheck, or as if they’d applied a 10% sales tax on every item for sale everywhere. But what’s a gazllion times worse: that $1.10 you’ve been saving in the bank is now worth only $1.00. If you had $110,000 in the bank, you just lost $10,000 in purchasing power. In a few years, you’re using a ten-dollar bill for purchases formerly worth a one. Inflation is a tax on everything you’ve already earned, in addition to everything you will earn. Sure, the resale value of your home goes up (until the boom goes bust), but the worth of the money with with it is purchased is worth less. And you cannot save up to buy a house, because your money loses value while you save. It’s the most insidious and underhanded method available for governments to steal the wealth of its citizens to fund their corrupt plots.
Anyway, I bring this up today because of a recent article by The Mogambo Guru:
Mark J. Lundeen, market analyst, writes that Currency in Circulation (CinC) can also be an inflationary problem, as “The historical period where the US saw double digit CPI inflation occurred from the mid 1970s to about 1982” which was a time when, “CinC’s annual increase was pegged at 10% during this period. The CPI Index soon followed.” Yikes! Double-digit inflation!
But that was back in the 70′s and 80′s, when every nation on that Wikipedia article was going inflation-crazy, and nobody would be so stupid as to repeat the mistakes of such a recent past, right?
Mr. Lundeen [...] says, “CinC, after falling for almost 8 years, has just recently jumped up to this same 10% year over year increase line that caused so many inflationary problems 30 years ago.” Yikes!
And besides, he says, “How can any economist claim that the Fed is fighting inflation when the US Currency in Circulation has increased 20,000% in the past 95 years?”
What he refers to at the end there is one of the lies goals of the Federal Reserve System when it was created back in 1913 by bankers wanting to have a monolopy and cartel-control of the money supply:
- Fight inflation
- Prevent the boom-bust cycle
- Stabilize the money supply
Mogambo continues:
So with trembling fingers I quickly verify this, and I see that, as of April 27, 2009, currency in circulation was $903.3 billion, up $90.4 billion from this time last year! He’s right! An increase of MORE than 10%!
That’s 10% in one year! And that’s just currency in circulation, not counting the trillion or so dollars in electronic bank transfers thrown from helicopters during the last Congressional budget cycle and stimulus stuff!!! The central goal of the Federal Reserve system is constant inflation!
The Five quoted Fed chairman Ben Bernanke trying to reassure Congress that things are under control and maybe even on the rebound:
And inflation? The chairman says he’s on it: “I just want to assure the American people that we are very focused, like a laser beam . . . on this issue of the exit and of making sure that we have price stability in the medium term… we understand the necessity of winding this down in an orderly way at the appropriate moment so that we will not have inflation problems on the other side.
“Our forecast is still for inflation to remain quite contained for the next couple of years,” he assured Congress. There’s really no need to worry… until it becomes a crisis.
However, the Fed’s forecasts have been consistently been anywhere between Wrong and Way Off, such as when Bernanke forecast last year that subprime losses could hit $100 billion… and the current estimates are $7+ trillion.
They have no idea what they are doing. They follow Keynesian economic principles, and are consistently wrong, but they never give up! The basic premise of Keynesian economics is that one person can make smarter economic decisions for one million individuals, than those one million individuals could make for themselves in their own best interest. (It’s the ever-present desire of anti-Christs: I’ll make the decisions for you and save you.) However, Keynesians cannot account for the millions of variables and circumstances influencing the decisions of those million people, so the Keynesians always get it wrong, and wind up paying for the difference out of taxpayer pockets, and then turn to inflation when the cost is beyond what a taxpayer would knowingly allow.
And so Obama looks solemly at the TV cameras and reads teleprompters about having to make “tough decisions” and create trillions out of thin are to fund every cause they can think of that the free market would not in a million years fund for that cost, which is why the government has to do it, because the government does not care about supply or demand, the government only cares about keeping the bankers fat and happy and from going out of business, because that would stop the money-spigot.
By contrast, our divine Constitution and the Austrian school of economics believe in the free market, sound money, limited government, deflation (where your money increases in value while you sit on it without even needing a bank to pay you interest), and prosperity and freedom for every honest person.
It is time to return to sound Constitutional principles!
