I have devoted some time to the subject of inflation, and its effects on America’s finances, in my SubStack, “Christian Americanism.” I implore my fellow Americans to educate themselves on the dangers that face us as individuals, families, and a nation.
This essay is a compilation of the various SubStack essays that I have offered, arranged with the goal of offering a more thorough view of inflation, its causes, and its effects on the victims.
I hope that you will take the time to read this essay, and research it for yourself. I invite debate. If I am in error on points, feel free to engage me by commenting to this post. Where I am wrong, I simply need to be shown the pertinent facts to prove it.
God bless you with wisdom, and compassion as you embark on this journey into the subject of financial depravity.
What is inflation?
Most Americans are well acquainted with the general topic of inflation, but do they know what it is? Do they know what they even think it is? Should we care what it is?
Milton Freedman is famous for his definition, or description of what inflation is. Freedman was a brilliant debater and a brilliant economist, but like the rest of us, I believe he had limitations and blind spots. While I firmly believe that his understanding of fiat currency and its relationship to inflation was in error, I don’t believe that it was malicious.
“The death of Milton Friedman on November 16, 2006, led Federal Reserve Chairman Ben Bernanke to remark that the “direct and indirect influences of his thinking on contemporary monetary economics would be difficult to overstate” and President Bush to note that “his writings laid the groundwork that transformed many of the world’s central banks.” Undoubtedly a major factor underpinning these assessments is the overwhelming influence that Friedman’s work has had on the way that economists and policymakers look at inflation.”
As Friedman emphasized, “Inflation is an old, old disease. We’ve had thousands of years of experience with it. There is nothing simpler than stopping inflation—from the technical point of view.” That remedy took a specific form: “The only cure for inflation is to reduce the rate at which total spending is growing.” From, “Milton Friedman on Inflation,” by Edward Nelson
“Things go sour in monetarily speaking, either when the rate of spending is excessive, so there's too much money chasing after too few goods in the famous formulation of Milton Friedman, or when the opposite happens when spending declines rapidly.” https://www.libertarianism.org/media/free-thoughts/how-federal-reserve-works.
It is obvious that Friedman had a monumental effect on modern monetary philosophy. The question is, regardless of whether you respect his influence, was it the truth, the whole truth, and nothing but the truth?
Friedman’s formula definitely has an effect on the trade value of a currency, but does it really have an effect on the raw value of a currency? Let’s think for a minute. I’ll propose an example that may help you see through the clouds that have been inflated around the principles of monetary economics, and inflation specifically.
Let’s pretend that one entity has earned, and has in its possession 1/5 of all the money in America. In this example, the numerator is one, and the denominator is five. This means that the whole is divided into five parts, and some person or entity is in possession of each of those five parts of the whole.
Then let’s posit that someone has, or assumes the right, and authority to change the denominator from a five to a ten. Now our entities still have one part, but instead of one-fifth, they have one-tenth. Surely you can understand that one-fifth is of much greater value than one-tenth.
Every time the number of “dollars” in circulation is increased, the denominator, (as in our illustration,) is increased by a mathematical amount, and the value of the numerator, (that currency which each holder possesses, representing the time, and resources that they’ve expended,) decreases in a systematic way, and at mathematical rate. How many items, or resources available, have no bearing on the value of the currency in our possession? The Friedman formula only confuses the issue and makes the perpetration of the crime more easily accepted.
The field of economics is merely a means by which intelligent people might manipulate data so that the victims of the fraud might be too confused to understand what has happened, much like a shell game.
SHOULD WE BE CONCERNED ABOUT INFLATION?
How is inflation defined, how much power does it exorcise over our wealth, and is it the most important factor in our prosperity?
Inflation;
The Webster definition, refers to the simple principle of relative values, as described, and often explained by Milton Friedman, and his followers. It makes no reference to the actual value of a currency, only the currency’s value in relation to goods and services.
In the Investopedia definition, and in the very first line, we see a reference to the “purchasing power,” of that currency. On the surface, this seems to agree with Webster’s definition, but on closer scrutiny, we can see that currency’s relationship to what it can secure is only a part of the full equation.
For instance, if you are able to earn, and save an amount of currency in order to purchase a particular item, let’s say, a car. If the amount of currency that you’ve saved is equal to, or greater than the value of that car, and you believe the values to be equitable, you might be inclined to purchase it. The relative value is of less importance than your inclination, and ability to purchase.
On the other hand, if someone has stolen all or part of the currency that you’ve saved, you will not be able to make that purchase, regardless of the relative value of your currency, to the goods.
We are trained by economists, including Friedman, to focus on the relationship between the amount of currency in existence, to the number of goods, and services available. I contend that this is, though partially relevant, it ignores the more important consideration, ie, the intrinsic value of your currency. It vails the fact that every time the quantity of currency is increased, it devalues each, and every unit of currency in circulation, essentially extracting value right out of our medium of exchange. Similar to a shell game, the relative exchange rate keeps our attention engaged while the purchasing power is removed from that which we have earned.
Have you ever wondered how it might even be possible, not to have inflation while so much money is being created out of thin air?
Let us consider that before the Federal Reserve began when only gold and silver were constitutionally deemed, “money,” one ounce of gold equaled $20 in US currency. As of this writing, one ounce of gold, “is worth,” $1,784.50, US currency.
This means that a 1917 dollar was worth 89.225 times more than a US dollar is right now. That’s pretty significant.
Many believe that it is the value of gold that fluctuates, but gold has intrinsic value, or worth, people value gold because it is gold. It is the value of a currency that fluctuates in relation to the value of gold. That is why the framers of our US Constitution stipulated that only gold and silver were to be used as a medium of exchange. These were not ignorant, and unlearned men, (as is often implied,) but wise men that sought to protect later generations from the exploitation of masterminds.
The term inflation is a product of the science of economics, and it is the science of economics that confuses the fact of intentional theft of wealth by the Federal Reserve.
While I do not believe that Adam Smith and Milton Friedman intended to facilitate the theft of wealth, I wonder if their education and their pursuit of knowledge may have clouded their wisdom. They may have been unable to, “see the forest for the trees.”
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Inflation;
2. ( pertains to its use regarding economics.) A continuing rise in the general price level is usually attributed to an increase in the volume of money and credit relative to available goods and services.
[Merriam-Webster]
What Is Inflation?
Inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time. The rise in the general level of prices often expressed as a percentage, means that a unit of currency effectively buys less than it did in prior periods.
Inflation can be contrasted with deflation, which occurs when the purchasing power of money increases and prices decline.
[Investopedia]
KEY TAKEAWAYS
Inflation is the rate at which the value of a currency is falling and consequently the general level of prices for goods and services is rising.
Inflation is sometimes classified into three types: Demand-Pull inflation, Cost-Push inflation, and Built-In inflation.
The most commonly used inflation indexes are the Consumer Price Index (CPI) and the Wholesale Price Index (WPI).
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Today, Scottish thinker Adam Smith is widely credited for creating the field of economics. However, he was inspired by French writers who shared his hatred of mercantilism. In fact, the first methodical study of how economies work was undertaken by these French physiocrats. Smith took many of their ideas and expanded them into a thesis about how economies should work, as opposed to how they do work.
Smith believed that competition was self-regulating and governments should take no part in business through tariffs, taxes, or other means unless it was to protect free market competition. Many economic theories today are, at least in part, a reaction to Smith's pivotal work in the field, namely his 1776 masterpiece The Wealth of Nations. In this book, Smith laid out several of the mechanisms of capitalist production, free markets, and value. Smith showed that individuals acting in their own self-interest could, as if guided by an "invisible hand," create social and economic stability and prosperity for all.
https://www.investopedia.com/articles/economics/08/economic-thought.asp
Milton Friedman, (born July 31, 1912, Brooklyn, New York, U.S.—died November 16, 2006, San Francisco, California), American economist and educator, one of the leading proponents of monetarism in the second half of the 20th century. He was awarded the Nobel Prize for Economics in 1976.
Friedman’s best-known contributions are in the realm of monetary economics, where he is regarded as the founder of monetarism and as one of the successors of the “Chicago school” tradition of economics. In the 1950s macroeconomics was dominated by scholars who adhered to theories promoted by John Maynard Keynes. Keynesians believed in using government-sponsored policy to counteract the business cycle, and they held that fiscal policy was more effective than monetary policy in neutralizing, for example, the effects of a recession. Friedman opposed the Keynesian view that “money does not matter,” instead promoting the theory that changes in the money supply affect real economic activity in the short run and the price level in the long run. He stated his case in his introduction to Studies in the Quantity of Money (1956), a collection of articles that had been contributed by participants in the Money and Banking Workshop. That work was followed by an article, “The Relative Stability of Monetary Velocity and the Investment Multiplier in the United States, 1897–1958” (1963), coauthored with David Meiselman, in which the stability and importance of the Keynesian multiplier was questioned. The multiplier, forming a link between changes in autonomous expenditure and subsequent changes in national income, is a key element in the Keynesian case for effective and predictable fiscal policy.
https://www.britannica.com/biography/Milton-Friedman
Thomas Sowell
is a modern economist whose knowledge, and wisdom on economics are illuminating. While I believe that Sowell acquiesces to Friedman’s outlook on money management, his piercing observations are vital.
“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.” THOMAS SOWELL
The leadership of both the Republican, and Democrat Parties, as well as the “Experts,” that they empower through bureaucratic appointments, expect us to ignore the results of their disastrous policies, and judge them solely on their stated intentions, as the great Rush Limbaugh so often pointed out.
Our intellectual, and academic “leaders” believe that we should trust them implicitly. We are considered fools if we believe that we have the intellectual capacity to rationalize logically, weighing facts and data. We are expected to trust our, “betters,” those, “experts,” who have studied, and have been “educated” to have excelled at the heights of academics.
These “experts” issue recommendations, and edicts, qualified only by their academic credentials, which when enacted, produce results. Those results either support their premises, or refute them. Acknowledging, and accepting the scientific results of these experiments gives us wisdom. We learn what produces favorable results, and thereby is profitable, and what produces unfavorable results, or is unprofitable. Far too many Americans ignore these results in favor of the fiction that is offered by “learned experts” in the field of economics.
“Well, if you come up with a lot of wrong ideas and pay a price for it, you’re forced to think about it and to change your ways or else get eliminated. But there is no such test. The only test for most intellectuals is whether other intellectuals go along with them. And if they all have a wrong idea, then it becomes invincible.” THOMAS SOWELL
Those that teach in our public, and elite education systems, or are respected in our political hierarchy by academics, are exalted, and respected, because of their status. Not because the products of their logic deliver good fruit, but simply based on who they are, and the credentials they hold. As they pay NO PRICE for disastrous results, they have no incentive to repent of their folly, rather they are further exalted, as they continually blame their failures on those that disagree with them.
We, who may resist these exercises in futility, and/or destruction, are demonized by the “elite class,” and their disciples, while those that are continually proven wrong by history and reality, are exalted. Rush Limbaugh used to call this, “failing upward,” and this is the single most obvious trait of modern political parties.
Do we authorize our government to extract the purchasing power from our currency?
I have written about inflation, and the insistence of some to refer to, “the free market,” as, “capitalism.” Many just don’t understand my point. They see no danger in accepting inaccurate, deceptive, misapplications of words, that have REAL MEANINGS.
What do I mean? Well, how would you feel if someone confiscated 100% of the silver dollar coins that you had been able to save over a lifetime, and replaced them with quarters? They would not have given you four times as many coins, rather they removed your dollars, and replaced them with an identical number of quarters. Would you feel that you had been respected? Would you consider this a fair trade? Would you have equal buying power as you applied the use of these, “quarters,” to take part in commerce?
My point is, the printing, or the digitization of, “money,” does not, “lead to inflation,” it IS INFLATION. It does not lead to the devaluation of your currency, it is the very act of devaluation of a currency, and it is through ignoring this fact that we enable our, “public servants,” to rob us blind.
Though Milton Friedman was a brilliant man, and a talented debater, as he communicated, his illustrations of free market principles, (dollars chasing goods,) is not an accurate depiction of inflation. True, in a free market system, prices can be determined best by the principle of, “supply & demand,” but this has nothing to do with inflation or the value of a currency. The value of a currency is a matter of math. One quarter is 25% of a dollar, it doesn’t matter how many quarters, or dollars you have, or how many goods and services are available to trade them for.
Another smokescreen used by intellectuals to cloud the theft of resources from those that work to provide goods & services, those that would rather that you work, and receive the wealth, is the use of the word, “CAPITALISM.”
Such brilliant, and studious conservative Americans as, Milton Friedman, Thomas Sowell, Dan Bongino, Glenn Beck, Rush Limbaugh, Mark Levin, (among many others,) insist upon replacing the term, “the free market,” with, “capitalism,” as though they are synonyms. This is a subtle distinction in terms, but I believe that the ramifications are much greater than many recognize.
The primary focus of, “capitalism,” is on capital. What is capital? Capital is the physical representation of wealth. It is either the wealth created by production or the currency that represents that wealth. It is not a principal. The principle upon which, “capitalism,” relies, is the “free market system.” The free market provides for the use of capital, but it is not reliant upon the existence of currency. The free market can easily be exercised by the use of barter. Currency merely makes transactions more convenient.
You may ask why I am so exercised over the inaccurate use of the terms, “inflation,” and, “capitalism.” It is because of my affection for truth, and my fellow man, especially those that also revere truth, and honesty. I have a disdain for theft, and those that use the gifts, and talents, given to them by God, to trick others out of the fruits of their own physical, and/or intellectual labor.
One of my goals is to inspire clearer thinking in my fellow Americans, and recognition of ploys, and deceptions, being used against them. I hope to see a time when my fellow Americans resist those that seek to steal the fruit of their labor and using the correct terms is a good place to start. Ambiguity is deceptive, and the best defense against deception is the use of clear, accurate language. Marxists thrive on plundering the unobservant. Their goal is to steal power, and resources from those that earn it, and the use of deceptive language is a chief component of their strategy. By redefining terms, and constant repetition of inaccurate terminology, they often achieve their goal, of getting their victims to assist in their own victimology.
Fundamentals of economics
Is it the increase in units of currency that causes inflation, (as we are so often told,) or is the increase in currency indeed the real problem?
I believe there is a misconception prevalent in America these days. It is predicated on the belief that “the printing of new money,” or increasing the number of dollars in circulation, “may cause inflation.” Whether this misconception is deliberate, or incidental, is debatable. My belief is that a majority of people that hold this belief are products of the scheme, but the perpetrators of the scheme are malicious in their desire to plunder their fellow humans.
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I know that a whole realm of study has been developed, called “The field of economics,” and that it revolves around principles of monetary manipulation. I recognize that many are fascinated by the field of economics. They are educated in the various economic theories, and I believe that it is this “education” in economic theory, that limits their understanding in this arena, or their ability to see monetary causes and effects.
Most of us have heard the phrase, “they cannot see the forest for the trees.”
I, lovingly, and respectfully, challenge anyone to a debate on inflation. I believe that training in the instruments of economic management has caused many to lose track of basic, fundamental facts. The field of economics is built on a foundation. That foundation is the reality of wealth. Wealth is the fruit of physical, and intellectual labor.
Why might I be proposing this challenge? I assure you that it is not to demean or criticize anyone. I am making this challenge in hopes that it will be brought to the realm of public discourse, and I hope that you, the reader, will intellectually participate in this debate.
So if it is not for criticism, there must be another reason. It is because I believe that many intelligent, resourceful, well-meaning, and patriotic people have likewise been deceived and that the deception is furthered daily as they share their misunderstanding of economics with others. Often, as “economic theory” is explained publicly, incomplete, and flawed concepts of economic management are communicated, allowing public deception to be furthered.
Milton Friedman was indeed a brilliant man and a talented communicator. He understood the cause-and-effect nature of economic management well and was able to communicate it masterfully. But, that does not mean that he was always correct in his reasoning and assessments.
True, the formula for his understanding of, “inflation,” is accurate, and it may be true that the relationship of currency to goods and services available, maybe the actual definition of the word, “inflation,” but that is all insufficient to explain the drastic, and destructive effect of the, (printing of money without reference to its relationship to actual wealth.)
Currency is not wealth, it is merely a medium of exchange used to represent wealth for the purpose of exchanging it.
Most people find illustrations helpful, so I’ll present a couple of what I believe to be pertinent illustrations.
Inflation, as Friedman has explained it, is indeed affected by the creation of fiat currency, but it is only a byproduct and a symptom of the real problem. It is true that as the value of our money is decreased, it will trigger a long line of deleterious consequences, but they simply exacerbate the true problem, that wealth has been stolen. These principal factors are only dominos standing in line. The creation of unvalued currency is the finger that knocks over the 1st domino. All other dominos fall as the result of the push of that finger.
Let’s say that you and I both have $1,000. We each have the equal purchasing power of $1,000 dollars, and can freely exercise that purchasing power according to free market trade principles. The ratio of currency to available goods and services does indeed affect the cost of these items in a free market environment.
If you do not desire a certain item as much as I do, for whatever reason, you will not be as willing to expend your finite resources on it, thus affecting the price.
However, if someone, let’s say the US government were to steal 30% of your $1,000 dollars, leaving you with only $700, you would not be able to match my ability to pay for that which you desire. In this illustration, the most important factor in the affordability of goods, and services would not be scarcity, but the lack of wealth and the reason for that lack would be the theft committed against you.
Let me try something else. Consider this equation, 1/x. In this example,
“1” equals your share of the total wealth represented by US currency in circulation, or the numerator in this fraction.
“X” equals the total wealth represented by the US currency in circulation or the denominator.
When the denominator or the “x” is increased, the value of the numerator or “1” is decreased. For instance, 1/2 is greater than 1/4. Just like that, every time the quantity of currency in circulation is increased, the value of each denomination of that currency is devalued. The worth of each dollar is not dependent upon any trade value factors, the numerator in the fraction, 1/2, is twice as large, twice as valuable as the numerator in, 1/4th, regardless of any other factors. It is a mathematical law.
Therefore, each time that the Federal Reserve increases the number of dollars in circulation, the wealth of every American who has labored to produce, has had the purchasing power of their dollars diminished by a mathematically exact factor. The US government, by the instrument of the Federal Reserve, extracts that stolen value and divides it up amongst themselves. They spend the stolen wealth as THEY see fit, with impunity, and you and I do without it.
The ingenuity of the free market and especially American enterprise looks for new ways to overcome the stolen wealth problem, (and that’s a good thing,) but it does not change the fact that millions, billions, and now even trillions of dollars of legitimate American wealth have been outright stolen, and the Milton Friedman formula for “inflation” does not account for it, rather it has enabled it to go unnoticed.
I hope to be instrumental in shining light on this devious mechanism, used by dishonest politicians and bankers, to extricate enormous amounts of wealth from the American people.
This is so simple it is constantly overlooked by many millions of Americans, and for generations. They have, in many cases, been “educated” to overlook the simplest principle of economics. I liken it to a shell game. “Economics” scholars keep us so busy learning to understand the relativity of currency to wealth, that we lose track of the other hand removing ever-increasing percentages of our wealth. This constant removal of wealth from the playing board amounts to trillions of dollars of stolen wealth from unsuspecting Americans.
As intelligent, resourceful, “doers,” I hope the reader will be helpful in informing multitudes of Americans that they are participating in the theft of their own resources by ignorantly allowing this fraud to continue.
I would love to see this discussed in public fora, so we can all work together to educate Americans on this manipulation of currency, and theft of their wealth by bankers, and our own elected politicians.
We all have opinions, and our opinions are usually based on some reasoning. If that reasoning is based on reliable things, like mathematical laws, those opinions will produce reliable results. If our opinions are based on faulty data or incomplete assumptions, the results will be unreliable. Milton Friedman’s formula takes into account many contributing factors of economic stimuli and reactions to those stimuli, but it ignores the root cause, and the most influential ingredient in the economic “pie,” the systematic theft of American wealth, by those that have been chosen to protect it. This is a total miscarriage of justice, and I believe the most egregious offense upon the American citizen’s economic wealth.
I believe that Americans could effect a great awareness of this existential threat to the financial future of this great nation, by directly addressing this systematic theft of American wealth. It is a goal of mine to squeak loud enough to inspire a little oil.
Wealth
Is this subject, “What is wealth?” a matter of fact, or a matter of perspective? In my recent newsletter named, “DO WE KNOW WHAT CAUSES INFLATION,” I submitted that wealth equals goods and services. There are some that would reject this concept, believing that some inanimate object “IS” wealth. My perspective maintains that NO inanimate object can have worth unless it is used to produce a marketable item, ie. Goods, or services.
Let’s consider for a moment that for many thousands of years the ground in Louisiana probably contained crude oil. The properties of that oil were essentially the same as it is today. When my ancestors migrated to the bayou region of Louisiana, that oil was plentiful, yet few of those citizens of Louisiana were wealthy. Why not? Many of them found their wealth in the alligators, crawfish, catfish, ducks, and other game of the region. They built their personal empires on these resources, those that could be used to produce food, clothing, and other essentials. The more of these natural resources that could be harvested, the wealthier any particular citizen of this region could be.
Other citizens of the region amassed huge fortunes farming sugarcane, or cotton on plantations. Was the sugarcane, or cotton the wealth, or was it merely a resource that could be used to produce wealth?
The oil that abounded in this region was utterly useless until someone discovered how it might be used to produce fuel, plastic, and other marketable items. One man sees natural resources, such as gold, silver, oil, uranium, copper, etc. as the wealth of a particular region, but is this the whole story? If no one uses their efforts, and ingenuity to convert these natural resources into marketable goods, or to provide marketable services, will the region be wealthy?
I maintain as I have previously, that it is the goods, and services, made possible by the efforts of people to utilize natural resources to serve the needs of themselves, or others that is wealth. Natural resources are an important ingredient of wealth, but so is the imagination, and gumption of people to properly utilize those resources.
These ingredients, (among others,) combine to produce marketable goods and services. Therefore I maintain that goods, and services “ARE WEALTH”. If no one needs, or wants a particular natural resource, it is worthless. It is the ability to convert resources into marketable items that have worth and is thereby wealth. Currency is only a medium with which to exchange that wealth.
HOW MUCH PIE IS ENOUGH?
I have compared the expansion of currency to a fraction. I believe that this is an accurate illustration, though it may be elusive for many.
I am not criticizing anyone whose eyes glaze over when fractions are invoked, we all have subjects that allude our full understanding and interest, and those that fascinate us. Fractions don’t fall into the category of fascinating subjects for most people.
Pie, on the other hand, is often able to grab our attention. There are those who have talents in the kitchen that mesmerize them that are able to sample the fruit of their labor. My friend, Paula Lipker is a pure artist with an oven and a pie plate. The fruit of her labor, as pertains to pies, is both inspiring, and delicious.
With that said, let us replace the fraction illustration with a pie. Let’s say that we are talking about a particular pie that is your favorite. You have labored intently to acquire a number of pieces of this extremely desirable pie, and your mouth is watering in anticipation of its consumption. You have envisioned the lustrous texture of the perfectly browned upper crust, and the luscious fruit filling beneath as you labored to earn the right to a prescribed number of pieces of this pie. You have counted the coupons as you have collected them, in anticipation of the enjoyment you intend to experience once you have redeemed them for the actual slices of this work of culinary art.
Now that you have attained these coupons, (represented by Federal Reserve notes,) unbeknownst to you, the Federal Reserve has continued to cut the pie into more and more, smaller, and smaller pieces. Your coupons,(or dollars,) only entitle you to a prescribed number of pieces of this pie. It makes no mention of the size of the pieces. Now that you have come to redeem these coupons for the actual pie for which you labored, you find that they are not what you had envisioned. These slices of pie are much smaller than you had expected. You protest this is not what I paid for, I expected to enjoy much more pie than this!
The Federal Reserve says that this is what we agreed to. They insist that they gave you this certain number of notes in exchange for your labor, that you had agreed to.
Do you accept this miscarriage of justice? Do you walk away satisfied, or do you become intent on overcoming this injustice?
The only reason that Americans are not better acquainted with this truth is that seemingly well-intentioned, brilliant, and well-spoken people have convinced many Americans that this situation is equitable. They have introduced myriad ingredients into the conversation, many of which seem plausible in isolated illustrations, and have thereby convinced the plurality, if not majority of Americans, of the equitability, yea even righteousness of this systematic theft.
Many Americans are so intent on playing by the rules, as directed by the Federal Reserve, that we barely notice that our pieces of the pie have become smaller.
The ingenuity of the American people is such that almost without even recognizing the forces opposed to them, Americans expend much physical and intellectual effort toward overcoming these evil forces. This, and the blessings of God on His disciples, are the only reasons that America has not yet experienced the fate of Venezuela, Zimbabwe, and the Weimar Republic.
I am including a link to a blog on the Weimar Republic, and the hyperinflation that resulted from the very progression that America is experiencing early stages of today.
http://scihi.org/hyperinflation-weimar-republic/
INFLATION PIE
There are many versions of, “X = inflation.” Many Americans are sure that they understand the nature of inflation. Many believe they have reasoned out the causes, and effects of the phenomenon, of “inflation,” based on input received through one source or another.
The fact is that each of these Americans is likely correct about the damaging economic effects of inflation, as they understand it. They are often reluctant to accept another definition, or consider another view, being focused on the traits, and features of inflation as they understand it. They tend to ignore the point that I have proposed. This does not hurt my feelings. I believe that these other elements of economic bastardization are ALL detrimental to a healthy economy, destructive of our civil society, and worthy of disdain.
My goal is not to recruit a large quantity of Americans to join me in my belief about the definition of “inflation,” rather I want my fellow citizens to recognize the destructive nature of fiat currency, as created by the Federal Reserve.
It is true that interest rate manipulation is a huge danger to our economy, and as the ratio of currency to goods & services is a real concern, these factors only exacerbate the problems created by the production of fiat currency. They multiply its destructive effects but are actually caused by its fabrication. The problem is that many don’t even realize that the most powerful effect is that our government uses this instrument to extract value from the currency that represents our wealth. Then as prices, and wages increase, we are taxed on the higher amounts. These increased taxes, along with the stolen, created currency, are often used to fund efforts contrary to the will of those who originally created the wealth. Our own wealth is used to confound the will of the people who created that wealth.
It is through a dereliction of duty that economics education has been allowed to distract Americans from the dangers of fiat currency. My hope is to inspire my fellow Americans to reassess these factors, educate themselves more thoroughly, and resist.
The Tea Party was formed in the 2010 election cycle in response to the over-spending of the Federal Government. Somehow the attention of Americans has been drawn away from this very real danger. We must bring our attention back to profligate spending, as well as fiat currency, or we may revisit the experiences of the Weimar Republic.
Remember, it is the fabrication of fiat currency that enables federal overspending.
FRACTIONS, AND PIE
Can thieves, and the federal government, be satiated?
I have received 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.
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“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 my wife & 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?”
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I believe that the field of economics is intentionally difficult to understand. I have said often that it is like 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 principles.
I have previously recognized the ingenuity of the American people, and their ability to, through trust in God, and their imagination, overcome many of the obstacles presented by the Federal Reserve, and other tyrants. This is what enlarges the pie. This is called economic expansion, but it is in spite of money printing, not because of it.
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, they will only take what they originally intended to steal, or will they simply 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 current debt of the United States of America. Then, what would our “leaders” do next year? Not only would the vast majority of wealth have been extinguished, but the economic engines of production will also have been crippled, or destroyed.
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 choke 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 new ways to satisfy this shortfall, increasing taxes, and ultimately exacerbating the problem. For example, (the Jimmy Carter administration.)
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(More from the email)
“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?”
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This is an excellent question, and it is why I have 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. This interview can be accessed through Prager U’s podcast.
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2010, The Tea Party
In the year 2010, there was an outcry based on the profligate spending of the Obama administration. Many Americans recognized that it is impossible to spend money that one does not possess. Many Americans, who have their own family economies, recognized that their spending must be limited by their ability to earn. This limitation can be temporarily overcome by borrowing, but that borrowed money must be repaid, and often, at a cost, (or, “interest.”)
The Tea Party revolution rose to confront this impending danger to our American economy. This revolution was not established by an academic force. It was not the result of an elite group of economists sounding the alarm, it was the result of a large number of Americans, alarmed that their nation’s economy was being imperiled by irresponsible currency creation, and spending by collusion between the FED, and our elected officials.
This movement grew, as more, and more citizens realized the danger and joined efforts to reject the present financial path of those at the reigns of the American economy. The effectiveness of this movement uprooted many established politicians responsible for this economic disaster. It was not economics experts that sounded the alarm, it was the average American taxpayer.
“Tea Party Republicans,” were elected all over our nation, promising to rectify this dangerous situation. Some of those in this group were either wolves in sheep’s clothing or once elected, they were enticed to abandon their goals in favor of the receipt of material gain and political power. Some of these imposters have since been removed from office, though some remain, and with the Democrats at the leadership of this Presidency, and both houses of Congress, all of the stops have been pulled out.
There is an article entitled, “Almost a fifth of ALL US dollars were created this year,” dated 10/8/2020, https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were-created-this-year/
I don’t know if all of the details of this article are correct, but in general, the assertion in the title is very close to accurate. Let’s think about this for a moment, this is saying that 20% of all American currency that existed from the year 1787, till 10/8/2020 was created in the first ten months of 2020. If you don’t find this alarming, your logic is corrupted.
There is a mathematical axiom at play here. There are no gray areas, math works with scientific precision. The principles of math can be obscured, but they cannot be altered.
We are bombarded with formulas of “inflation.” We are told that “too much money, chasing to few goods,” is the problem with, and the definition of inflation. I steadfastly maintain that this is a smoke screen. The expansion of currency is the real problem. It is the THEFT OF YOUR WEALTH, BY YOUR GOVERNMENT!
If indeed 20% of all American currency had been created in the first ten months of 2020, then each, and every American dollar in circulation, at the time of this article, had been devalued by at least 20%. That means that every dollar that you earned before the year 2020, bought 20% less on Oct 8th, than it did on Jan 1st. THIS IS CALLED MATH!
Keep in mind that this is not the apex of this problem, our present administration has already made this ridiculous financial situation many times worse. Where are the “Tea Party” activists? Have many of them become like frogs in water, with a flame under the pot?
Like the ten virgins of the parable in Matthew, chapter 25, there will be a moment when the bridegroom arrives. There will be a moment when debts are repaid. Will we be waiting for the “wisdom” of intellectual economists to explain why what we thought would be, just cannot be? Will we be responsible, and understand math, or will we be expecting to “hit the jackpot?”
Let me be clear, I am not a mathematician, and I am no genius. This may be a blessing, as I am not compelled by an intelligence-motivated tendency to get into the numbers. The numbers are not significant. Paying attention to the numbers is like ignoring the forest, preferring to focus attention on the trees.
I am smart enough to understand the basics of math. Fractions are a fundamental tool in math. I know beyond a doubt that EVERY TIME you increase the denominator of a fraction, you decrease the value of the numerator in the fraction, EVERY SINGLE TIME. This is a FACT. There is no ambiguity. There can be no mitigating circumstances that change this reality. Every time a denominator is increased, (for example, x/2 is changed to x/4,) the value of the numerator is diminished. It doesn’t matter what the numerator is, its value is diminished. If 1/2 becomes 1/4, one-half becomes one-fourth, and likewise, one half trillion becomes one fourth of a trillion. As everyone knows, one-fourth is half the value of one-half. This is true every time, there can be no exceptions. Two-fourths are half the value of two-halfs, and so on.
When the number of dollars in circulation is increased, like with our fraction, the value of each, and every dollar, those preexisting, as well as those that were added, is diminished mathematically. It’s not guesswork, it is mathematically exact, with scientific precision. We do ourselves a disservice if we ignore this fact, and allow for the theft of trillions of dollars, (at this point.) In many cases, wealth has not even been created, and will never be compensated for.
FRACTIONS?
You may ask, “ why does Dave keep writing about inflation, and why does he insist on referring to fractions?”
If you don’t understand it, this is a legitimate question, so I will try to address it in a way that will make sense to you.
First, let us consider what exactly is a fraction. We will define fractions, at the risk of insulting your intelligence. Webster’s Dictionary defines it as such.
Definition of fraction;
1a : a numerical representation (such as ³/₄, ⁵/₈, or 3.234) indicating the quotient of two numbers
b (1) : a piece broken off : FRAGMENT
(2) : a discrete unit : PORTION
In order for us to understand definition 1a, we must understand the definition of quotient.
: the number resulting from the division of one number by another.
In other words, a fraction is designed to help us understand the relationship of one item to the group to which it belongs.
How does this relate to inflation? Inflation, at its core element, is the degradation of the relationship of each dollar, (a unit of measurement of worth,) to the value of the item, (goods, or service.) Dollars are currency, and currency is meant to provide a medium for the equitable exchange of one item of value for another. In order to accomplish this, this medium, or dollar, must have worth, or value.
In the case of the modern dollar, its “worth” is mostly imaginary, or arbitrarily assigned on its face, but the individual unit of measure’s worth is determined by its relationship to the whole. This is not an opinion, it is, once again, a mathematical fact. If we consider that there were one hundred and fifty trillion American dollars in circulation, then each dollar’s worth would be one/one hundred and fifty trillionths of all the value available, (imaginary example.)
With this understanding, what happens, when out of the blue, another fifty trillion dollars is introduced to circulation?
Each dollar that you have previously earned, is now worth one/two hundred trillionth of all the value available, or 30% less. You can now trade that currency for one-third fewer goods, or services, than you could before the fifty trillion was added.
Now, think about how many trillions of American dollars have been introduced into the market since 2008. That should give you a better understanding of just how much of the value that you have produced has been stolen from you by our government and divided up between bankers, politicians, and “social services.”
I hope that this will help those that are struggling with my compositions on “INFLATION.”
Why should we be concerned about inflation?
Many patriotic Americans are confused about inflation. They don’t understand why they should be concerned. After all, haven’t we had inflation “forever,” and hasn’t America prospered through it all?
Might I remind you of the “Great Depression,” of the 1930’s, and the “Great Recession,” of 2008? Hundreds, if not thousands of Americans lost everything in these avoidable events, and they were both greatly exacerbated by “INFLATION,” (fiat currency, mass-produced by our Federal Reserve.)
Let me assure you, the inflation of these historical events pales in comparison to the inflation of today. There will be a time, in the not-too-distant future, when, in the words of one of Barak Obama’s friends, “America’s chickens (will come) home to roost.”
This is not a threat, it is a fact. Mathematical certainties are not to be trifled with. On October 25th, 1929, most Americans were certain that prosperity was all that was in store for America and Americans. That all changed, at the drop of a hat, America’s chickens came home to roost, and it was a decade, and a World War, before America was restored. It is important to pay attention to danger while there is still time to correct for it.
It may already be too late, only God knows for sure, but it is never too late to embrace truth, and it is never too late to draw near to God.
If my previous illustrations have not communicated these points sufficiently to you, please indulge me in a couple more.
At the signing of our Constitution, in Article I, Section 8, and Clause 5;
“The Congress shall have Power . . . ] To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; . . ,” and Article 1, Section 10, Clause 1 says, “No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;..”
So with the Coinage Act of April, 1792, gold and silver, by weight was made our American currency. One dollar was one-twentieth of an ounce of gold. That was the definition of, and the practical reality of the term, “dollar.” For the most part, silver was used for the production of “dollars,” and the value of silver being unequal to gold, their exchange rate necessitated that a silver dollar weighed 26.73 grams.
Have you ever noticed the mention of a, “20 dollar gold piece,” in western movies? This is because of a gold coil, from the US Mint, weighing one ounce. It took twenty silver “dollar” coins to equal the value of one $20 gold piece.
When we consider the “cost of gold,” it is common for the average American to believe that it is gold whose value fluctuates. This is not the case, it is gold that has value, and that is why the US Constitution requires that only gold and silver can be deemed money. When the “cost of gold,” increases, or is decreased, it is largely because the value of our currency has either diminished or been strengthened.
We own a house that was built in 1973. I don’t know the value at the time of its completion, but I do know that we purchased it in 2004, for 90 thousand dollars. It was a “repossession,” (meaning that the bank was trying to recover as much of the outstanding investment they’d lost, as possible, but it was not the market value.)
At the time we bought it, the house was an unlivable shell. It needed many hours of demolition, and reconstruction in order to be occupied. I assure you that this house was not valued at 90 thousand dollars in 1973, even though it was in perfect, “new house,” condition. Why, what changed to “increase the value,” of this house?
It was not the value of the house that changed, it was the value of the currency that changed.
This house was probably valued at nearly $30,000, at the time of its completion, yet in 2004, it was valued at more than $90,000 in its, “unlivable,” condition.
If you were to, “save,” $90,000 for the next ten years, without investing it in an interest-bearing utility, it would be worth a fraction of, $90,000.
You may have noticed my repeated references to the Weimar Republic, Venezuela, and Zimbabwe. These are not fiction, they are modern-day, historical references to the tyrannical use of fiat currency to destroy vibrant societies, and they can be researched quite easily with the use of digital searches.
For those who have ears to hear, we are being robbed by the Federal Reserve, with the help of the US Congress.
Is it possible to correct inflation by raising interest rates?
It is commonly believed by students of economics that inflation can be mitigated by raising interest rates. Is this really possible? Should we just believe this at face value, or shouldn’t we look a little closer?
1) What happens when the supply of money is increased? If you have read this far, you at least understand that I believe that ALL currency is devalued. The effects of this devaluation are exacerbated by the fact that “more money will be chasing the same amount of goods and services.” You now have a bad situation made worse, and this situation will likely make it so that more money will eventually be chasing even fewer goods, and services, as the economy deteriorates.
2) We should then ask ourselves if interest rates are increased, what will be the resulting effects? Will this increase the goods, and/or services being chased by all this increased currency, or will it simply make it even more expensive, and thereby more difficult to do business? Does this increase in difficulty to execute trade increase the affordability of goods and services, or make them less affordable?
The most reliable effect of rising interest rates is to retard economic growth, and thereby the generation of wealth.
If we compare the increase of government spending as it relates to increased currency, (inflation,) with high-interest credit card activity, we find another ill-effect. That ill effect is the snowball effect.
If anyone, by taking advantage of credit opportunities, becomes encumbered by insurmountable debt, they will find themselves in a situation that seems irreversible. Their debt increases as the interest on their spending make the payment of the principal of these debts unobtainable. Therefore, only minimum payments can be made, and the rate of increase on the outstanding debt multiplies.
The only way to stop this downhill plunge is to STOP all spending not necessary, and affordable to the spender. In other words, the credit card must be retired, and only cash payments can be made for essential goods and services, as the debt is whittled down by faithful payments toward the outstanding interest, and principal. If we compare this scenario to our Federal debt/economic situation, we find that our government’s spending vastly out-paces even the creation of fiat currency.
Here’s my question for you. If our government, with the help of the Federal Reserve, continues to spend trillions of dollars, not yet earned, on every conceivable line item, while not able to recover any ground on even the interest on the debt, (let alone that existing principal value of US debt,) How can this exploding debt EVER be paid?
If there is no hope of ever paying down our national debt, what will the end result be? Will our massive debt diminish, or will it overwhelm us, (or our children, and our children’s children?) How can raising interest possibly have a positive effect on the US economy?
Is it possible for the American people to consider these matters honestly, or will we continue to accept the lies of those that tell us that debt, and “printing money” is not a problem? Let’s remember that this is not the first time similar situations have existed.
In 1929, the bill came due in America for a huge misrepresentation of financial, and economic facts. Many Americans suffered terribly, losing their livelihoods, and many, even their lives as a result. There are many other historical examples. I believe that it is high time that we stop listening to “the experts,” and begin to rely on common sense and axiomatic truths.
HOW ARE PIECES OF PIE LIKE FINANCIAL WEAPONS?
While discussing inflation with my dad last night, I think I realized one reason many people may have trouble relating to my analogy of a pie, ( see my 12/14/21 essay, “How Much Pie Is enough,” and subsequent essays,
With the example of cutting a pie into smaller, and smaller, yet more plentiful pieces it seems an imperfect comparison. When cutting a pie, if you have obtained one piece while it was cut into four pieces, you still have that one-fourth of the pie, even if the remaining pie is cut into smaller pieces. When fiat currency is manufactured out of thin air, this is not the case. Instead, every single dollar in circulation receives the same mathematically devaluing effect.
With monetary manipulation, the numbers are so vast, and the portion available for anyone’s scrutiny so small, that these scientific, and mathematical causes of the resulting effects are imperceptible, making the manipulation almost impossible to detect. The more one scrutinizes the observable factors, the less perceptible the causes of the problem becomes. This is by design and has nothing to do with what the promoters of currency manipulation contend. It’s much like a forest, from afar one can observe it for what it is. You can not know just how many trees make up the forest, but you can see that it is a large group of trees. Trees can be planted, or removed without affecting the overall perception of the forest. No one can know exactly what has been added, or subtracted unless they were eyewitnesses to the occurrences. The overall impression of the size and shape of the forest remains seemingly constant, and reliable.
The truth, however, is that the composition of the forest may well have been significantly altered. This is how devious capitalizers are enabled to use the manipulation of our currency’s value to their unprincipled benefit.
This is not a new concept. Among the many virtues of the great Alexander Hamilton was a less than admirable desire to control a federal banking system. (He was the founder of, “The Bank Of New York.”)
https://blogs.shu.edu/nyc-history/2017/12/06/the-bank-of-new-york/
While He tried to convince other founders to establish a federal banking system, there was enough opposition to block its establishment at the onset of our constitutional republic. Due to his prominence, and important influence to the cause of liberty, he was able to inject a foothold into our founding document to allow for the later building upon by future banking profiteers. During the administrations of Woodrow Wilson, and FDR these foundation cracks began being exploited by the “Federal Reserve Act,” and subsequent legislation.
I hope that you will further explore these concepts. Many documents exist that confirm what I am saying, and they are not hard to find, (if you have the desire to know.)
God bless you, Dave
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3/31/2022
The following links will bring you to interesting podcasts on inflation. You may appreciate these gentlemen’s observations on the subject.
1) Denis Prager
“Fireside Chat” episode 231
“Inflation Is a Thief”
https://www.prageru.com/video/ep-231-inflation-is-a-thief
2) Dan Bongino
The Dan Bongino Show episode 1737
“The Real Reason Behind The Media’s Hunter Biden Coverage”
https://bongino.com/ep-1737-the-real-reason-behind-the-medias-hunter-biden-coverage
(Inflation is only one topic that Dan covers on this podcast. I recommend listening to the whole podcast, but the section on inflation begins near the 48:34 minute mark.)
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PLUG THE HOLE, OR STOP DIGGING!
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Should we keep printing trillions while we fight inflation?
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Many conservatives are aware of the dangerous fiscal situation we face, and the importance of immediate action, but are they right about how to address it?
Dan Bongino, Mark Levin, and Glenn Beck keep talking about the dismal fiscal situation of the Biden Administration. I am thankful for their warnings, but I am disturbed by their constant references to, “too much money chasing too few goods.”
This is a dishonest representation of the dangers of fiat currency. While the fact that the diminishing value of our currency will result in layoffs, rising unemployment, higher prices, and the destruction of small businesses, these are only byproducts of the real problem.
This formula/definition of “inflation,” is not representative of the problem we face.
80% of all US currency in circulation was created in the last two years. Did you understand what you just read? What do you think it means? I will admit that the calculation is above my pay grade, I am not able to calculate it, but I do realize that IT IS BAD! The constant focus on free market principles of trade is not applicable.
Our government has stolen an insane amount of the wealth that we have earned and spent it on a panoply of items, and issues that we have not authorized them to spend our money on.
When water is found to be streaming into our boat from a hole, we have no effective choice to save ourselves, other than to plug the hole. No amount of bailing will be sufficient for our salvation if the hole, (the source of our problem,) is not addressed.
When we find ourselves in a hole, as it gets deeper, and deeper, with a shovel in our hand, it is important that we stop digging if we hope to get out of the hole.
I have noticed that Levin has quit referring to the relationship of currency to goods, but Bongino, and Beck are relentless in their references to this farce.
Don’t get me wrong, I love these men and value their opinions on many matters, and it is important that they keep reminding us of this enormous problem, but their diagnosis falls short of sufficient effectiveness. Their relentless pursuit of truth is priceless. They have simply been deceived in this area, indoctrinated by higher education to pay too much attention to less important things. Whenever anyone follows the mention of inflation with references to the relationship of currency to goods, it serves to blunt the impact. This is the hope of the creators, and spenders of the stolen money.
Any effective solution to our inflation problem must begin with the stabilizing of our currency, and that relies upon the termination of money creation.
When someone has a gambling problem, and they find themself sitting at the poker table, with no money, and surrounded by players holding IOUs with their name on them, the first step to correcting the problem is to put down the cards and leave the table. It is stupid for them to say, “just one more hand.”
If we choose to be ignorant, we will help to seal our fate.
The tactics used during the Reagan administration, to correct the Carter stagflation, will not be sufficient. Tax cuts and higher interest rates will never keep pace with the problem. What is needed is to STOP the creation of currency altogether. Force the Federal government to balance its budget, and live within our means. It will be painful, but it is necessary. There can be no other route to fiscal soundness. The longer we wait, the more perilous, and painful it will become.
STOP THE PRESSES!
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How can the destructive power of inflation be terminated?
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Almost daily I hear someone pontificating on the danger of inflation, and what can be done to rescue America from its grip. Radio hosts discuss this very real threat, and they have guests on their program to share their insight into the many facets of inflation. Many of these guests have backgrounds in high finance, and from varying professional positions, and they share their knowledge of the problem, from their own personal vantage points. One of these people is Carol Roth, the author of, “The War on Small Business: How the Government Used the Pandemic to Crush the Backbone of America,” Hardcover – June 29, 2021, and other writings on economics.
I Recognize the expertise of these people and respect their knowledge and insight, but one thing that stands out to me as they pontificate on the way inflation might be addressed. One thing stands out to me, in every case, and with every expert. They never address the cause of inflation, and they never suggest that the answer is to correct the problem at the source. They never state that the Federal Reserve must be either eliminated or at least be forced to QUIT PRINTING MONEY!
These many “experts,” (and I agree that each of these many experts has particular expert knowledge of the subject,) choose to ignore that the root of the problem is that more and more money is being created out of thin air and that every new dollar created diminishes the value of every single dollar in circulation. As long as this FACT is ignored, discussions about methods of corrections, center on the periphery. They avoid the real problem, allowing it to increase at an alarming rate. Eighty percent of all American currency in circulation was created in the last two years. This is alarming!
We can see many examples from the past, and even the recent past, of fiat currency ruining the economies of nations. A famous example is the Weimar Republic, But more recently there is Zimbabwe, and Venezuela. These societies destroyed their economies by ignoring the cause of their problems and doubling down on failed economic policies. Documentation of these economic destructions is easily found.
CAN AMERICA’S FATE BE ANY DIFFERENT? I have heard it said that insanity is repeating failed experiments and expecting different results. We seem to have an entire political hierarchy determined to prove this statement wrong. No one of authority, or who studies our political authorities, appears to be able to accept that Inflation IS fiat currency, and as long as it is multiplied, the problem WILL ALSO MULTIPLY.
Are these people too smart to consider something so basic? Are they really unable to understand fundamentals, or are they afraid to?
I will leave the answer to that question to your imagination. As I see it, the only way to correct the problem of inflation is to stop inflating our currency.
The supply and demand issues emanating from other bad policies, such as shutting down baby formula companies, crude oil pipelines, oil fields, and other important industries are not the root cause of skyrocketing prices. They simply exacerbate an already incredible problem. While these issues are dangerous on their own, it is important to remember that they don’t exist in a vacuum, they are made worse by the diminishing value of the currency itself. This diminishing of the value of our currency touches every single issue of our lives. They make every single financial transaction victim of political theft. The value of each dollar that we have earned, saved, and spent has been divided up, and the lion's share has been confiscated by a public/private alliance between our government, and bankers, (AKA The Federal Reserve.)
Feel free to call me names, and tell me how ignorant I am of economics, but it doesn’t matter how many trillions of dollars we discuss, fundamentals are what they are. Principals are principals, and laws of nature can not be violated. Every action will produce an equal, and opposite reaction, it may be masked by forms of deception, but the resulting reaction, while postponable, is undeniable.
STOP THE PRESSES!
Most discussions about inflation fall short of any achievable correction methods because they ignore the root, foundational cause of inflation, the continued multiplication of currency in circulation.
Proposals for correction usually center around the relationship between currency, and available goods and services, or money manipulation through the increase, or decrease of interest on borrowed money. These methods, while affecting the appearance of economics, only manipulate comparisons, and obscure the problem.
The only way to arrest inflation, and its crippling effects, is to stop the increase in currency. Every dollar introduced into the market must be accompanied by the removal of a damaged unit of currency of the same value. As long as the number of units of currency is allowed to increase, the value of each unit of measure, (dollar,) will continue to decrease with mathematical exactitude, and our Federal Government will continue to spend this stolen wealth on things that we may not approve of.
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As I’ve written in the past, between January 2020, and January 2022, “the United States has printed nearly 80% of all US dollars in existence.”
We all know that public education has not really taught math skills in recent times, but is there no one that still knows simple math?
I like illustrations that reduce the complex to its root components. Principals are principals, like “what goes up, must come down.” You can argue all day about the reasons why you might disagree with this principle, (or natural law,) but if you throw an item into the air, it will be laying on the ground in seconds.
Other principles, (or natural laws,) may take longer to prove themselves, but proof themselves, they will, if we will honestly observe.
In the 1920’s, Americans believed they were financially invincible. The US stock market had been growing at an astounding pace, encouraging many Americans to try for a piece of the pie. Many had borrowed against their own personal equity, and, ‘invested,” in ventures, including the stock market, making them incredibly vulnerable to volatility in the market.
It was simply a matter of time till fearful tendencies might appear. When they became appearant, many people panicked, causing a snowball effect that quickly plunged the economy into what devolved into the Great Depression.
This is a simplification, but it is a matter of demonstrable fact. The poverty, death, and destruction wrought upon the American public, and extending to global proportions was heartbreaking, and long-lived.
Today, this account is but a fiction to many Americans. They have no experience of such calamity. They see no connections between the cause, and effects of delinquent financial policies.
People are reluctant to think about what it means when they learn that the Federal Reserve increases the amount of US currency in circulation by 7 trillion dollars. We ignore the proportion of this fiat currency to that already in circulation, thus ignoring the devastating effect on the value of the money that we have already earned.
The money that we possess at any time is directly connected to the goods and services we have provided to others, but this new 7 trillion has been extracted from the American wealth created. It is not “new wealth” it is not wealth that has been created by the FED, but American wealth that has been stolen from Americans by economic sleight of hand, after it had been created.
All of the economic and fiscal policies that are taught in our institutions of higher learning are designed to, “hide the ball”
They are simply distractions of the right hand, while the left hand is extracting the wealth from under our noses.
As long as Americans entertain the deceptions perpetrated on us by, “economic experts,” the American economy is in danger.
There is an answer, and it is a simple answer. It will not be painless, but it will be effective. It will not make the recovery quick, but the recovery will be thorough.
Literally, stop the printing, and digitizing of currency, immediately, and permanently. That will eliminate future inflation. It will not correct for passed inflation, but neither will any other scheme.
Most of the financial instruments that so many studies in economics classes include a mixture of currency manipulation, and interest rate manipulation, applied to manipulate the free market. The bottom line is that they are not honest, they are not effective in their proclaimed objective, and they are destructive, to varying degrees. They often add to the damage caused by inflation, while providing cover.
As Jesse Kelly likes to say, “it might make you uncomfortable, but I’m right.”
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Can anyone do the math?
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I first challenged my readers to explain just how much inflation has been foisted upon us in the last few years in January, of 2022. I have been patiently waiting for some math wiz to show me exactly how much our money has been devalued by the fact that 80% of all US currency in circulation was created in just two years.
No one has chosen to engage me thus far, so I’ll do it. The fact is, according to the article I referenced, the amount of money has increased fourfold in just two years, leaving the buying power of each dollar at one-fourth of its value in 2020.
I know that this doesn’t seem possible, but math is math. It works with scientific precision, regardless of the numbers.
If someone thinks that I’m mistaken, feel free to correct me. If I can’t be proven to be mistaken, then the wise thing would be to face the facts.
This problem will not correct itself, and the first step toward correction is to accept the truth.
Don’t believe me? Let’s do a little calculating. First, we must clarify some things. For the purposes of this exercise, we will use round numbers. They are not the actual numbers, but mathematical equations work the same, no matter what the numbers are, and nice, round numbers are less confusing.
I look at our economy as a fraction, the amount of currency in circulation is represented by the denominator, while the numerator represents the portion of that denominator that we are considering.
For instance, if in January 2020, there was $50T, (or 50 trillion dollars,) in circulation, that $50T represented 100% of the goods, and services rendered by the US economy. That would be represented by the fraction, 50T/50T. Half of that currency would be represented by, 25T/50T, and reduced to least common denominators would be 1/2. Very simple.
If our 50T denominator was increased by fourfold in the following two years, the actual amount of US currency in circulation would have increased to $200T, regardless of any increase, or decrease in goods, & services, (AKA the US economy.)
The $50T owned, or possessed, by the American producers would now be 50T/200T. The Federal government has seized the remaining 150T, and distributed it through social services, and other expenditures, likely without America’s knowledge, or permission.
If we reduce this equation to its least common denominator, it becomes 1/4. Each and every dollar in your bank account will have decreased in value to one fourth of its original worth in January 2020.
One of the goals of the Convention of States movement is to reform federal spending. There are many schemes concocted with this goal, but isn’t the simplest method to refuse to allow the increase of currency?
If the only way for the federal government to spend money was to first tax Americans, wouldn’t the government be restrained by the amount of money they were able to collect or borrow?
If our government borrowed money to spend, wouldn’t it then have to pay back what money was borrowed, and wouldn’t it be required to be returned with interest? In this case wouldn’t there be an incentive to spend within our means?
I believe that such a policy could reform our economy if our citizens resisted the urge to allow our government the benefit of the doubt.
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INFLATING AWAY OUR WEALTH
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As Americans, we have become very content and assuming ever-improving prosperity. This is not the first time in America’s history that its citizens have been lulled to sleep, ignoring fiscal dangers caused by our Federal government, and the Federal Reserve. “Experts” comfort investors that there is nothing to fear while our legislators double, and triple down on the spending of ever-increasing fiat currency.
When confronted by logical concerns for fiscal danger we are told, “that can’t happen in America.” How many of us pretend that this is a logical response?
Hoping to escape fearful challenges to our comfort and prosperity, many choose to ignore the obvious.
At the risk of boring my readers, and because of just how dangerous I believe inflation is, I am compelled to return to this issue over and over.
In a statement quoted from “Thank God For Bitcoin,” the authors state, “Since breaking its peg to gold in 1971, the US dollar has lost over 96% of its relative value. This is due to one of the disastrous effects of the prevailing financial system: inflation.”
I can’t help but wonder how my fellow Americans react to this statement. I picture them thinking that it would be impossible for the worth of our currency to evaporate so quickly, causing them to reject the notion that this statement could be true.
I completely understand this skepticism, while at the same time asserting that it is entirely true. What is easy to overlook is that this devaluation did not occur at once, but it did indeed occur.
Each time unbacked, (or fiat,) currency is created, that currency, as well as every single dollar in circulation, will have been devalued to a very specific, mathematical degree. There are no circumstances that can correct this devaluation. Raising interest rates only compounds the problems for the taxpayer by stifling commerce.
Only destroying fiat currency can increase the value of our money. Arresting its production can halt further devaluation, but continued creation can do nothing but further devalue our money.
The reason that we are less able to see the full extent of the devaluation of our money is that it has been incremental, and spread over decades. When a billion dollars of fiat money is created, it devaluates based on the current value of a dollar. It does not devalue based on the value of the dollar in 1913.
The quoted statement compares the purchasing power of the 2022 dollar to that of the 1913 dollar. However, while this means that the destructive power of this “new money” is not equal to 96% less value, it does allow our government to spend a large portion of the resources that we have created against our will, and to further goals that we may, or may not agree with.
Even many of the most conservative members of Congress seem ignorant of these destructive truths. They either are parties to the destruction or are going along, without an understanding of the dangers they face, ignorant of the forces they are enabling, which are opposed to the very principles of our founding.
While this devaluation of our money is far less than 96%, it is substantial, and if we were to pay attention to the spending level by our Congress, we should note that nearly every dollar of this spending is a direct result of inflationary theft.
Our Congress is spending money, trillions at a drop, and few members of Congress seem concerned about it. This is a big problem. What can the average American do to resist this institutionalized transfer of their wealth to what in most cases is destructive to the culture established by our founders, and founding documents?
The stated objectives of the Convention of States Action are to, “limit the power and jurisdiction of the federal government, impose fiscal restraints, and place term limits on federal officials.”
In the interest of both limiting the power and jurisdiction of the federal government, and imposing fiscal restraints, ending inflation should be an important objective.
Without fiat currency, many of our fiscal, and industrial restraints would be necessarily scaled back, and out-of-control spending would be nearly impossible.
We should ask if the Federal Reserve Act, of 1913 is constitutional. I think that this is an important question. Most Americans blithely accept its constitutionality simply because it was passed by Congress, and signed into law by President Wilson. But, was the act itself constitutional?
Our constitution was never meant to be out of reach of the average citizen. It was meant to document the existence, and preeminence of God-given rights, our government’s duty, and methods to protect them. It was meant to be known, and understood by every American, and, “we the people,” were authorized within that constitution to hold elected, and appointed political agents accountable to that purpose.
Inflation may be the single most important danger to our nation, and ignorance of that danger might be the second most important danger.
Returning to whether the Federal Reserve Act is a constitutional law, we should remember that constitutionally, “No state shall ….make anything but gold and silver coin a tender in payment of debt.” Article 1, section 10.
“The Congress shall have power to … coin money, regulate the value thereof, and of foreign coin, and fix the Standard of Weights and Measures;” Article 1, section 8.
The question is then, what can be done about it?
If we regard these two passages of sections 8, and 10 as law, in order for the Federal Reserve Act to be authorized by our constitution, the constitution would need to have been amended. That has never happened. There are only 27 amendments to the US Constitution, and none of them address American currency or the Federal Reserve.
If there is no constitutional amendment authorizing the Federal Reserve, its control of our monetary system, and the Federal Reserve Note are wholly unconstitutional. The fact that this has never been challenged is the largest fiscal problem that our nation faces. Many, if not all of our economic challenges originate with the violation of these two constitutional provisions.
The use of the Article V amendment process is paramount to correcting these problems. If our congress has no interest in correcting it, it would fall to the second process for amendments, a convention of states.
Could it be that the first step in restoring fiscal restraints is ending fiat currency? For many years there have been efforts to audit the Fed, but even if that were to happen, would that be sufficient, and is that really necessary? It is already quite evident that if the creation of fiat money were halted, a cascade of consequences would precipitate the appropriate corrections throughout our economy.
This could not happen without much resistance. Too many people are gaming the system as it currently exists, but what cannot continue, will not continue, regardless of how many, and who protest.
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Eds, Meds, & Feds
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If our foundation is faulty, everything built upon it is in danger of collapsing.
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On episode 1951 of the “Dan Bongino Show,” podcast, Dan spoke about a Wall Street Journal article by Andy Kessler, “One Puzzling Job Market.”
https://rumble.com/v29mxgc-its-all-a-big-distraction-ep.-1951-the-dan-bongino-show.html
He blames America’s lack of production on, eds, meds, and feds. He goes on to explain that our lack of production exacerbates inflation, using the Milton Friedman formula of dollars to widgets.
There is some relevance to his assessment, but it ignores a few important points.
First, this glosses over the fact that ALL THREE of these entities’ most dangerous concerns, and a major source of corruption, stem from tyrannical Federal Government control.
Our US Department of Education,
https://www.ed.gov
seeks to control how our youth are indoctrinated. The cost of education continues to increase, while the quantity and quality of graduates decrease. We receive, “less education for more money.” This can be recognized as, “reverse productivity.”
What is the “Meds?” He said that “40% of our healthcare business is government spending.” Government bureaucracy is crippling the healthcare industry.
When he gets to, “Feds,” he blames the Federal Reserve, or “FED,” for keeping interest rates too low, and thereby crippling our economy.
Raising interest rates could stifle free market industry, further exacerbating economic woes, (especially for the citizens.) It would do nothing to curb federal spending, and thereby nothing to reduce inflation or our ballooning Federal deficit.
His assessment is the direct result of the teaching, (or indoctrination,) of our higher education’s field of economics. This teaching sniffles the ability of students’ ability to recognize the simplest of facts.
Fiat currency is the whole of this unconstitutional problem. If our Constitution was adhered to on the matter of national currency, there could be no Federal Reserve or American fiat currency.
Our Constitution’s framers foresaw the dangers of a national fiat currency, and in Article 1, sections 8 & 10 provides security against these dangers.
In 1917, Woodrow Wilson’s administration bypassed these protections, (known as “The Creature From Jekyll Island,” resulting in the “Federal Reserve Act.” This act was made “law,” and has resulted in the economic disaster that went live with today.
The “Federal Reserve Act,” was clothed in secrecy, conceived in deception, and “made law” unconstitutionally, yet so many hope to rectify the damage produced without addressing the foundational cause.
The FED, and fiat currency must be eliminated if we hope to rescue the American economy from their resulting, “INFLATION!”
God bless you, Dave
“Duty is ours, results are God’s” John Quincy Adams
God bless you, Dave
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