CAN’T WE JUST INCREASE THE SIZE OF THE PIE?
Are thieves, and the federal government, able to be satiated?
I received some feedback from a friend, and I’d like to use this time to respond to his questions, and help others that may have similar questions. Below is his email.
“Dave,
Economics and the Federal Reserve can be difficult for me to understand, whether you write about fractions or pie slices.
What about the size of the total pie? I understand how increasing the supply of money reduces the size of the pie slices(value of the currency) but can you increase the pie and not continue to make more and smaller slices?
If the Fed raises interest rates, would that help to slow inflation? But how to STOP inflation? Every cost keeps rising. When I was working in service stations in the summers in the early 60’s while in college, super premium gas was only 27 cents a gallon. When Cindy & I were dating in the 70’s, Cafe Du Monde coffee was only 10 cents and the NOPSI bus was 7 cents. How much can inflation expand? Surely, it can’t expand forever, can it?
What can be done to deflate the economy and increase the size of the slices?
Can we ever end the Federal Reserve?
My state retirement gets smaller and smaller and smaller. Brother, can you spare $10.00 for a cup of coffee?”
I believe that the field of economics is intentionally difficult to understand. It is a shell game. The more a person studies it, the more they are obscured from the underlying, fundamentals, and convinced of factors that are only parasitical to those fundamental principals.
I have previously recognized the ingenuity of the American people, and there ability, through trust in God, their imagination, and hard work, to overcome many of the obstacles presented by the Federal Reserve, and other tyrants. The problem with increasing the size of the pie is that there becomes more to steal. Is it likely that when a thief finds that there is more booty than they expected, that they will only take what they originally intended to steal, or will they consider themself fortunate?
We are told that the problem is the rich, but it is a fact that if every ounce of wealth were taken from every billionaire in America, there would not be enough to satisfy the debt of the United States of America. Ok, what would our “leaders” do next year?
Interest rates do play a part in the management of the economy, but as Sir Isaac Newton proved, for every action, there is an equal, and opposite reaction.
Rising interest rates chokes off resources that would have been used to provide goods and services. This slows down the engine of industry, decreasing the size of the pie. As the pie shrinks, our “masterminds” look for ways to satisfy this shortfall, increasing taxes, and ultimately exacerbating the problem. Example, the Jimmy Carter administration.
“When I was working in service stations in the summers in the early 60’s while in college, super premium gas was only 27 cents a gallon. When Cindy & I were dating in the 70’s, Cafe Du Monde coffee was only 10 cents and the NOPSI bus was 7 cents. How much can inflation expand? Surely, it can’t expand forever, can it?”
This is an excellent question, and it is why I previously referenced the Weimar Republic. There are other, very poignant examples too, Venezuela, and Zimbabwe.
Venezuela sits on one of the richest oil reserves in the world, and was once a thriving commercial Mecca, yet today millions of Venezuelans are starving, because of their government.
Candice Owens interviewed Melissa Tate, who grew up in Zimbabwe. Her testimony is very informative. You can access this interview at the following link.
I hope that these comments, and the Candice Owens interview will help you all.
God bless you, Dave