You might think to yourself (or even worse, out loud) that we do need more money! That’s not true. While we could always use more money for things like a 100 square inch t.v., helicopters, video games, cable and eating out for every meal of every day, but we do not have a real need for that money. The actual demand for money in an economy is limited. For example, if you can live off from $10.00 a day and survive, then that is all that the demand is for the total supply of money for that day (obviously on a larger scale when talking about a whole country, but it boils down to the same end result). If you go to the bank and withdraw more than $10.00 than you have just increased the demand for money for that day. But, at the same time Larry down the street has deposited some of his $10.00 for the day and thus off sets your withdrawal. Can we agree that withdrawals and deposits are opposite of each other? Well then, the net result of deposits and withdrawals at any given time is equal to the demand for money at that moment. So if more deposits are made than withdrawls then the demand is less. And if more withdrawals are made than deposits then the demand is… Good you’re getting it.
So, if an economy is doing well and expanding then there would be a need for more money. More people, business, more manufacturing and production = the need for a bigger money supply to equal the growing economy. Which by the way are all great things. Do you remember when we had economic growth? Sense we do not have any of this, then we do not have the need for more money being printed into our economy. We do not have a growing economy. We do not require more base money (that $10 you need to live). But, the government still prints it faster than it is demanded. Because of this banks have higher reserves. Why? Well, you guessed it, because there is more money on hand because there is no demand of it from the people. So they are forced to lower their interest rates to appeal to consumers to borrow. Then the borrower takes the money and spends it right? Throwing it back into the economy. This is where some people are confused(congress?) , “Well we need the money in the economy to help stimulate it again.” And boy does that money make its way back into the economy alright, but to the dismay of the masses. Now there is more money than is needed (more than before),thus now there are more dollars fighting for the same products as before. If you are a business man than this is a no brainer. More money in the economy means you can raise your prices. My ho ho’s go to the highest bidder. The result is a huge price increase, and that is not inflation, but a direct result from inflation. Remember, inflation is the expansion of the money supply beyond what is needed or demanded at the moment by the economy.
Now that we have a raise in prices for the same products and services, not new ones, we have just plain “Higher Prices”. The reason for this again is…more money than is demanded in the economy. Everyone has more money now, so they can pay more. Now sense there is more money floating around the value of the dollar has decreased. I used to pay a $1.00 for a bag of potato chips, now I pay $1.30 for the exact same bag of chips. Or, maybe you’ve noticed products that have gone up just a fraction, yet the serving size or amount that you used to get has shrunk.
Now that the dollar has been devalued because of prices going up. This means the spending power of the dollar has decreased. Sense the establishment of the Federal Reserve in 1913 our dollar has inflated 25 times. For those of you who don’t get it, let me explain. Our dollar today is worth only $.04 (four cents) compared to the dollar in 1913. Ouch. Where’s the other $.96? The government stole it brothas and sistas. They made it, issued it and stole it back.
“Nah Ha, not my government.” Yes your government. Your government that has always had a nack for spending money uncontrollably. More than it brings in. As did you and I. But, we go bankrupt, the government has their own printing press! They just print more money to pay their bills. When we do that it’s called counterfeiting. When they do it they call it “Monetary Policy”.
So now that they have gone and devalued our dollar their debts are actually smaller. When they borrowed a gazillion dollars from China our dollar was worth X. Now when we pay it back it is worth Y. You think that you can play this game friend? Well you can’t. Wages are the last thing to go up. Prices go up way faster and you lose buying power. Tough break.
So when I say that the government has access to your 401k, IRA, savings and checking accounts and even that wad of cash under your mattress I’m not kidding. I just hope that some of you start paying a bit more attention to whats really going on, and stop thinking that government is any type of “Good” answer to your problems, because in all reality their mostly the reason behind them.
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