What does cause inflation?

You've probably been taught that inflation is something that "just happens" to the economy.  I shall prove to you that inflation is something governments do to the economy.  That has been true for the last 52 centuries and it will be even more true tomorrow.  It is also true that every government entity seeks ever more monetary donations from its citizens. I call it: "The Ransoms of War!" or --

Another Way To Steal

It is believed by many that Germany lost the first World War in the first place because the country ran out of allies and its economic resources were running out. Support for the war among the population had dropped dangerously low as early as 1916. By mid-1918 the Kaiser retained support for his war only among the die-hard monarchists – and the conservatives.

The one thing that overwhelmed the German economy was the entry of the United into the conflict. This provided vast industrial resources to the poor allies that were just about as broke as Germany was at that point. Despite an army vastly superior to what the allies fielded Germany foundered for a lack of financing. Without funds or credit it could not replenish artillery shells or ammunition, nor could it pay the military or even provide it with adequate food for a proper diet.

With an inflation of 3,500% per month raging in the 1920s, the Weimar government of Germany became notorious for its uncontrollable hyper-inflation. For example, a 1923-issue of the 50 million mark banknote that would have been worth about $12 million only 9 years earlier was worth approximately $1 when it was printed, but the note was practically worthless just a few weeks later because of even more inflation.

Germany's galloping spiral of vicious inflation was brought to a halt in a matter of days, though. How? Well, actually it was pretty simple. The government stopped printing new money. Second, the deutsche mark was again backed by gold and agricultural parity.  The debacle was immediately over, and Germany found itself on solid financial footing once again.  It was still broke from losing the war, but its inflation was reined in and genuine wealth could be created and maintained by the German people once more.

In an effort to end the Depression, Roosevelt claimed all the gold certificates and demanded all the actual gold Americans had.  Then he sold the gold.  

8 years later Americans were still so poor they were picking through garbage dumps for rejects.  The only thing Americans still had was faith in FDR. 

Franklin would save them.

***

Down in Texas recently a cattle rustler received 99 years for his rustling enterprise.  Really now, I asked, 99 years for rustling a few cows?  It seemed grossly unfair because I was thinking of how hard it is to rustle a few cows from a ranch. But our gentleman rustler wasn't cutting fences and rushing Texas cattle off over the owlhoot trail to New Mexico. 

No,, Sir! Our gentleman rustler was rustling his cows with a few strokes of the pen, just like governments do.  He made ranchers do the rounding up, and the shipping out and he simply "promised to pay" when the cattle were delivered.  Most of the ranchers never collected a dime in compensation for their efforts. 

The only difference between nations that rob their fellow citizens and the gentleman rustler that got 99 years is that nations can't be sent to prison.  By the stroke of a pen the nations of our world can coin money they don't have, and the bigger the nation is, the bigger the crooks behind the pen can be. 

We know that Alan Greenspan has said: "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value." 

Adam Smith, author of the still much studied book The Wealth of Nations published in 1776 says that historically "the avarice and injustice of princes and sovereign states, abusing the confidence of their subjects, have by degrees diminished the real quantity of metal, which had been originally contained in their coins."

He then mentions that the English coins (at that time) were only worth 1/3 what they had been, and that the French government had reduced theirs to 1/66 of its original value, all in order that the rulers could pay off their debts with money worth far less than it had been when they borrowed it. 

Avarice has woken up since then.  What a king could buy with £200 in 1784 would require £250,000 in today's money.  A yearly grant of £24,000 in 1814 was made to the exiled French Royal family by the British Government, out of which a hundred and forty persons were supported for  one   whole    year!

Richard Nixon took US off the gold standard when an ounce of our gold could be bought with 35 of our dollars.  He took US off the gold standard because too many people were turning our dollars in for our gold.  The reason so many people were asking for our gold was that our U.S. currency was, and still is, the currency of choice around the world.  There is this myth that our credit is still good.  Therefore twice as many people outside the United States still hoard their money in U.S. currency.

As long as they continued to hoard it our money it did not have to be redeemed; therefore the government could print more dollar bills and no one really noticed that the figures weren't stacking up right.  But, the less secure our money became, the less people wanted to hang onto it; they wanted to redeem the value they had invested in it before it became worth less.  Nixon convinced Americans that the wise course would be to let the value of a dollar skid with reality.  The reality is that the value of our dollarskidded downhill to the garbage dump and floated away.  Kids could still buy a nickel candy bar for five cents in 1976; today you'd better give them $2 for that candy bar, and don't expect any change back.

Now, I'm no smarter than you are, but here's how I see the future shaping up if people aren't any smarter than I am.. As American inflation continues to accelerate and the value of our currency crashes, more and more people from outside the United States can be expected to begin cashing in their paper dollars.  When the oil-rich Arabs convert their American dollars into Chinese Yuan there will be a stunning blow to our economy. 

When our economy falters and faith is lost here so that some other currency is preferred, the yuan, or the Euro perhaps, at that point ALL those people will be demanding fair value for the money they bought, which is our money.  Not counting the $232.5 billion that we owe Red China $300,000,000,000 will be cashed in for the Euro and suddenly US will have 3-4 times as many dollars flooding the market.  Our floating money value will slink down the drain overnight.  A run on OUR banks will devastate the economy our very lives depend on.

Compared to just fifty years ago, right now all the money you have is worthless.

Now, I'm no smarter than you are, but here's how I see the future shaping up if people aren't any smarter than I am.. Our Money is not backed up by gold any more.

It is not backed up by silver any more.

The only thing backing our money up is inflation. 
Inflation has our poor dollar backed up to the wall.

"Supposed to be?  Why there were people starving to death, freezing to death, working themselves to death for a silver dime."

 Yes.  All that really happened. But it did not happen because the United States went broke!

"A conspiracy then?"

Actually it was probably just the reaction of natural law.  As John D. Rockefeller said, "These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again." 

About the only thing all economists do agree on is that Americans must quit borrowing money.  In 1928 the newly rich had been borrowing money to buy stocks they hoped would rise in price, delivering a profit big enough to pay off their loans and make them rich.  They quit, letting the last spin of the roulette wheel of luck spin out what fate their luck would have them live with.   They quit borrowing money to buy cars, quit borrowing money to move into town, quit borrowing money to buy homes and -- as a last straw -- poor people were losing the right to borrow money to buy groceries with.  Times were getting hard, but only for some people. 

To explore the Great Depression let's invent some definitions of money and explain the origin of money. 

1. Money is a means of exchanging one form of value for another.  Clams are said to have served the purpose at one time, horses another, and gold for an extremely long time.
2. Hauling gold was more convenient than hauling horses, a pile of silver was prettier than a pile of clams.  You can't get blood out of a turnip, but there have been times when a pile of turnips would buy a pot of gold.
3. Paper isn't gold. Scrip is more than paper.  Scrip can buy gold.  Stock certificates look prettier than scrip.  Banks will loan out scrip if certain popular stock certificates are put up as collateral.
4. Even after Archimedes leaped out of his bath tub, gold is easier to counterfeit than scrip is, therefore scrip is more valuable than gold is.  Way back in the Middle Ages pawn brokers would issue scrip for gold.  The promise was that their scrip could be converted back to gold a thousand miles away, therefore people began to believe scrip was as good as gold; and they called it money. 
   The same delusion grows through the use of MPC.  Military Payment Certificates look like scrip.  Outside certain circles MPC aren't worth the paper they are printed on.  But then, neither is scrip; Both of them are just convenient little lies that keep a big smile growing on the face of the Federal Reserve. 
   As long as your grocer will accept your dollar bills for his turnips you will believe you've got genuine wealth in your pocket.  As a young man I bought 39 cent bags of potato chips that had 10 ounces of edibles inside.  Today I shopped the price of potato chips in the lowest price store in town.  10 ounces of potato chips cost $3.90 
5. As your grocer loses faith in your dollar bills his turnips are priced a little higher; eventually your grocer will expect a big pile of your dollar bills for a little bunch of his turnips.  You, being hungry, will think you've found a bargain.

Now that we understand what money is and why scrip was invented we're almost ready to revisit the Great Depression.  The Great Depression did not start in 1929; it started in 1913 when the personal income tax was invented and the Federal Reserve was born. 

1. The Federal Reserve took our gold as collateral for the scrip (dollar bills) it printed for US. 
2. The scrip we borrowed from the Federal Reserve had to be paid back, with interest.  Scrip was traded for other values more easily than gold was therefore it was better than gold and was expected to work harder than gold, therefore creating the buzz of wealth in the land.  It was hoped that when people had more scrip they would spend more money.  But that only works with poor people.  After all, you will only be invited out to dinner with a rich man if he knows you can pay the bill and give a munificent tip with a flourish.
3. Each year US couldn't pay the Fed what US owed.  Therefore, US borrowed money from the Fed to pay the Fed what US owed it.  This amount of indebtedness was called "The National Debt."  The income tax was supposed to provide US with a cushion of hard currency to operate the Government on until the National Debt was paid off.
4. Unfortunately, rich people - being smart - began devising ways they could lose money instead of earning it.  Issuing various kinds and grades of stock certificates was the most convenient method of doing that.  It became common practice for rich people to let corporations buy their dinners, tip the waiter, and provide them a place to live in as well. 
5. Rich people would invest in corporations, send business its way so that the perceived stock values rose to dizzying heights, then extract their investment from the increase.  Thousands of people were making millions of dollars and millions of people were making thousands of dollars and billions of people around the world were wondering what had happened to their money. This created a fantastic bubble that did the jitterbug in a bath tub full of gin all the way up to 1929 -- when the bubble got so thin it busted.  It was like looking at poor old Al Capone's bank vault; There was nothing left inside but dust.  Who would have believed it?  In 1929 America had run out of fools!
6. Instantly a cry went up in every corner of the land that the Government had to "do something" to keep all these newly rich people from jumping out of tall buildings - or else the country would fall apart.  Just like in our last spell of bailout-madness, nothing was done for the poor people on the excuse that by the time it was their turn America was broke by then.  Actually America was still immensely wealthy and far from broke, as I'll explain -- and prove -- in a moment.
7. Euromericans were given the jobs they qualified for -- at wages much reduced but still almost enough to live on, if they were glad to eat turnips.
8. Your Negro and your Native Americans were left to starve.  But, so what?  They were used to it.  At least the Negro could sell his vote and eat high on the hog once every year or so; Native Americans had no vote to sell and therefore they had to feed cactus to their children all year long.

Before proving that America was still wealthy and far from broke I want to acquaint you with two "facts" of financial history.

1. MONEY can instantly be made out of nothing, but
2. WEALTH is always made out of something.
   There is a third corollary to this that you should be interested in noting..
3. The only way to become rich is to have something that other people (burdened with wealth) would like to have.
   Right now all you have to remember is the first two corollaries.

New York's upper crust is now paying 52% of its income for taxes
and not a public murmur escapes sagging lips.

But that's not the sad part.  The sad part is that every cent of their money is wasted because the government will have to borrow nearly 50 cents for every dollar it spends this year, thus exploding the record federal deficit past $1.8 trillion under new White House estimates to $3.73 trillion. Budget office figures released Monday would add $89 billion to the 2009 red ink — increasing it to more than four times last year's all-time high as the government hands out billions more than expected for people who have lost jobs -- and takes in less tax revenue from people and companies making less money.

According to the television, the unprecedented deficit figures flow from the deep recession, the Wall Street bailout and the cost of President Barack Obama's economic stimulus bill — not to mention hiring 3,000 new staff members for "I'm going to save you billions of dollars" Obama -- as well as a seemingly embedded structural imbalance between what the government spends and what taxes take in. 

Hitler needed an entire army of brown shirts before he cowed the sissified German people into submission.  Over here in the land of the free and home of the brave all it took was the Internal Revenue Service.  Hitler's Storm Troopers didn't even come close to making goosebumps as big as the IRS does.  Armed with the THREAT of their nine million page manual, friendly little, beady-eyed Internal Revenue Agents can bust into your home and steal all the money tucked away under your mattress and make you testify against yourself just as if the Constitution had never -- ever -- been written. 

 Every pre-war German still alive will testify under oath that THEY resisted.  Over here even tough guys like Al Capone folded under the pressure of IRS agents.

If you haven't captured the moral of that story yet, here it is in plain English.. The ONLY PURPOSE of individual taxation is simply to intimidate the American citizen.  It's kind of like the purpose of Boot Camp in the military.  "We tear men apart so we can rebuild them into soldiers," is how the recruiting sergeant said it to my grandson the other day.

The ONLY reason we have 9 million pages of tax opportunities is to create confusion in the tax payer's mind.  Here's the proof.. Individual taxation is not necessary when the Gov discovered it can simply print new money at will, or raise taxes on alcohol, tobacco, firearms or gasoline. 

In 1848 Abraham Lincoln noted that a good man could earn $10 per month.  President Lincoln invented the federal income tax in 1861 in order to finance the Civil War.  Being a very wise man, his plan only taxed the rich and wealthy.  That made everyone feel safe and secure from having to contribute.  Remember, anyone that could claim $90 per year in earnings back then was one of the big buck earners.  Lincoln's bill called for a 3% tax on any resident with an annual income exceeding $600  -- Taxing rich people has been all the rage ever since. 

But, our government was too efficient.  Acting independently of party dogma, Chester A. Arthur, our 21st President, tried to lower tariff rates so the Government would not be constantly embarrassed by annual surpluses of revenue. This Federal budget surplus had been accumulating since the end of the Civil War.

The income tax law was voted out in 1872.  It was tried again in 1894, but declared unconstitutional in 1895  President Taft proposed a new constitutional amendment on June 16, 1909 in an address to Congress that resurrected both on individual taxes and an excise tax "upon the privilege of doing business as an artificial entity and of freedom from a general partnership liability enjoyed by those who own the stock"

On February 25, 1913, the Secretary of State, Philander Knox, proclaimed that the amendment had been ratified by the necessary three- -fourths of the states, and thus had become part of the Constitution. Subsequently, the Revenue Act of 1913, an income tax of just 1%, was passed by the Congress.  BUT, ONLY THE RICHEST PEOPLE HAD TO PAY IT.

US was promised that only an innocuous 1% tax on the rich was to be collected.  Furthermore, US was GUARANTEED IN WRITING that income taxes would never rise any higher than 7%even on the rich.  You know what?  A few of our treaties with the American Indians lasted longer than that!  Once it was realized that Americans had no backbone, taxes began to rise by leaps and bounds.  Just eighteen years later that tax stood tinkering and tottering on 25% -- I'm not any smarter than you are but that looks like Americans were being taxed at least 25 times as much.

At least?  Well, yes.  US was now throwing tax shackles on the wealthy citizens of the United States, not just the rich. 

Here's how it unfolded.  The government tried a measly little 1% income tax only on the rich and yet Congress was uneasy about possible reactions to the new fangled method of deteriorating our money.  When no sign of an honest rebellion ensued, the tax was quickly doubled and a confiscation of 2% became standard fare, and even then, only on the rich.

I'd be a lot richer if 2% was all they took from me today, wouldn't you?  2% instead of whatever you are paying, what? 40, 54%?  I have 6 daughters and one of them is paying 62%!

Congress has scudded up to 67% off the time-honored pledge that it was only going to SOAK THE RICH.  At first, only 00.7% of the population was part of that RICH portion.  Then in rapid succession the back rooms of Congress designated "rich" to mean 3% of the population, then 10, 17, 25, 30, and 70, and now it's all the way up to 92% of US are singled out as being rich enough to afford the privilege of paying taxes.  Where will it end?

Little Brother, it will not EVER end.  You should have seen it coming when ditchdiggers found out they were wealthy enough to pay taxes.  Just 2 years ago Congress was publicly threatening to raise the tax to 75% on a certain few individuals if they didn't behave!  Little Brother, you just give Congress 15 more years and ALL OF US WILL BE PAYING UP TO 75% of our income in taxes if we don't behave!  However, in order to keep some money in circulation you will see citizens being taxed only half as much, but having to pay it twice a year.

Money History

After 1913 the canny rich began migrating their wealth out of visible means of support.  Because of taxes there was a wave of tremendous opportunities for the "middle class" to scoop up bargains left behind in stock. Unfortunately, the reason people are only middle class or poor is that they don't know how to handle their money.  To wit, they spend it on unnecessary products and foolish pursuits.  One know-it-all in college told a grandson of John D. Rockefeller.. "If my grandfather was that rich I'd be buying everything in sight."  The grandson responded, "No you wouldn't." Then he went right back to waiting on tables.  Rich people KNOW better than to spend their money!

Not only did poor people spend their money unwisely, but newly headed corporations began throwing money around and the biggest bubble of wealth in the history of mankind unfolded around the world.  There was a big boom, and the inevitable little gentle bust converted millionaires into apple peddlers overnight, if they lived that long.

During the Great Depression that "Indomitable Citizen of the United States" meekly put his face down deep into the mud and kissed the hand that bit him until private assessments of up to 60% are now meekly accepted with gratitude; "At least I'm not rich enough for it to be me!" 

Little Brother;
it soon will be you, and me.

The point is, 106 years ago US could pay for everything US had a legitimate need for with only 2% coming out of the pockets of ONLY our richest citizens. 

For 102 years now any of the grumbling about high taxes was done in dark shadows of withered tea bags and came from lips that trembled in terror that they might be singled out as heirs of their great American Patriot forefathers that protested long and hard. 

I want you to take a good look at what's been happening --

As recently as 1950, all the individual income taxes collected by the Feds only came to $17 billion.
With a population of 150 million, that means that every man, woman and child in the U.S. would have been paying an equal share of $113 per person, per annum. Just 38 years later the Feds collected about $400 billion in individual income taxes from a population of only 250 million. Get your calculator out because that means that our equal share came to 14.159292 times as much, or $1,600 each. Now I ask you this question: Why then aren't workers earning 14.159292 times as much as they did in 1950?

Remember too, during this same period, states sales taxes have gone up an average of 70X -- from 1/10 of a cent on the dollar to 7 cents on the dollar.  Yes, I know more than one state now has 14% going for them, but that is just letting US know what the future will taste like, let's continue.

So here we go over the mountain top and nothing in view but a steep, downhill slide. Every level of government known to Americans is reeling in a death dance with impossible debt.  Ever since 1913 US has been told to donate more, and more and more.  But ask yourself this,

Has it helped us poor people any?
  Has the price of license plates gone up? 
        Are you now contributing more to that social security fund that's always "going broke" --  until they need to borrow more money from it.
          Have property taxes risen slightly?
                  Are you paying more than fifty cents a gallon for gas?  Isn't it time to admit there is a conspiracy going on, a conspiracy against the poor man?  As one great man said, "Put two or three men in positions of conflicting authority. This will force them to work at loggerheads, allowing you to be the ultimate arbiter." ~ Franklin D. Roosevelt  

He also said something even more profound..   "In politics, nothing happens by accident. If it happens, you can bet it was planned that way. ~ Franklin D. Roosevelt. 

The Minimum Wage Myth

The easiest way to pry more of our money from our pockets was to persuade US that we had more money for them to steal, therefore Presidents and Congress keep shouting about the necessity of raising the minimum wage -- as if that were going to help US poor people get over what the Government is doing to US.

Here's the real trap of raising the minimum wage to artificially compensate for inflation.  Any time our wages go up we naturally pay more taxes. But that's only the trigger, beau.  Within 3 weeks of our last minimum wage raise, bags of cookies and candy that had been selling regularly for $1.00 a pound went up to $1.25 and some brands went up to $1.49  OR, the weight inside the bag was reduced along the same lines.  Who is this process hurting?  Not your Congressman!  Rich people seldom grumble about the little things for more than a few seconds: it's the poor boy -- like you and me -- that suffers.  Before the minimum wage went up, 52% of my income went for groceries.  After it went up, 67% of my income went for groceries.  Joe Blow down the street from me was only spending 27% of his income for groceries, and now he's spending 31%.  Who's hurting most because the minimum wage went up US poor people, that's who!

Raising the minimum wage is the exact same thing the French Royalty did when they removed the tax on salt because open rebellion was so imminent, and then quietly added double taxes on sugar -- or something else – so they still had just as much money coming in.  Are we going to go home and wait for a Napoleon dictator to take over our country -- like the French did?  There are demagogues trying to do just that, right now.

When the minimum wage is raised we get a check with bigger numbers on it for all the hours of work we do. Within just a few months the only difference a poor man can see is bigger frustration because the price of everything else has risen to keep pace with his artificially inflated pay check.    Then we have to pay more taxes because we have slid over into a higher tax bracket.  This lets the government grow accustomed to spending more.  What we end up with is we have less than ever, and have to work harder to catch up again.

On top of that, every time wages go up now,
politicians insist that the millage at which all
of our taxes are collected must go up as well
because THEY just can't cope with less.  

If that is true, then why do they expect US to cope with less?  Oh yeah, I forgot, US poor people are the servants of those Washington Bureaucrats and their cronies.

Stop the Sham!

We don't need higher wages.  If the government REALLY wanted to help us cope financially there is only one thing that really works:

They can REALLY Lower our taxes -- instead of playing games with our money.

It now takes TWO wage earners per family where one working used to earn enough to keep body and soul together.  Even worse, instead of solid money, we are being paid off with money subject to constant theft by the inflation caused by these very politicians that promised us the moon if we would just elect them to office.

Not only are we being taxed --- that dollar earned today will only buy 92 cents worth of goodies tomorrow, and 80 cents by year's end. Before the decade is gone, it won't be worth a plugged nickel -- leaving us to scramble for our own old age security.

General, common wages cannot go up excessively because people can have their money redeemed at one hour per dollar at any time. Our wages cannot fall below $1.00 per hour because the dollar is redeemed with labor. With our wages stabilized along with expenses, vendors will be compelled to maintain lower prices in order to remain competitive.
Consequently the bargains you see will be real bargains.
With this done, our money now has a solid redemption value which we can depend upon throughout our lives. A dollar earned in our youth cannot lose its value before our retirement. And if by our diligence, intelligence, wisdom, leverage, planning or training we have gathered more than those around us, then we shall reap more abundantly than they in our golden years. Inflation shall not rob us because inflation has been stopped dead in its tracks.
Naturally, each generic dollar is only worth one hour of general labor. It cannot therefore be redeemed for an hour of time from any specific person. Nor can it even be redeemed for the labor of a specific skill category. Since the dollar you own is generic, the laborer performing the redemption must be selected by chance.
This is in the redemptive sense only. The redemption of our currency is only desirable when its value is perceived as greater than available through normal spending habits. You can SPEND your money with anyone, or anywhere; it can only be REDEEMED from a labor pool selected by chance.
This precaution insures that there can never be an over abundance of currency put into circulation on us. And that in times of expansion the economy can be supplied with enough currency to fulfill the measure of its purpose. It therefore follows that to obtain that pool of labor a continuous supply of laborers must be generated.