Thanks to the Federal Reserve and our government for their chase for a strong dollar policy, middle income workers are now forced to become money managers. A strong dollar cannot come from government or the Feds, only from the private sector; although elected officials have unlimited power to destroy it. It used to be that you can work, get paid, then allocate your money to a bank and let it sit without worrying. But now, in addition to a career, we work harder preserving wealth than creating it. Since the inception of the Federal Reserve the dollar has lost in 97 years over 95% of its value. It is reasonably certain the next 95% won’t take as long, and is more likely to occur in our life time.
Middle income retirees, long before retirement have to risk handing their money over to “professional” money managers in order to preserve their lost purchasing power. The days of letting the money sit under the mattress are long over and it’s the race to at least stay even. They say that the moment you drive a newly purchased car off the lot is the moment the car starts losing its value. With that in mind, the moment you receive your paycheck it will have long before started losing its own value. Knowing this many will have to become money managers in order to preserve wealth for which they have already labored for.
The ripple effect coming from monetary policy reaches each and every one of us. It is the money nexus that allows for a complex economy to evolve and allows unfortunate men and women today to live in a better manner than historic kings. Without a sound medium of exchange, it is a one step digression to barbarism. This is what makes a sound, worthwhile, medium of exchange especially significant and allows us to step away from primitive economies.
If the markets were allowed to function those middle income retirees could have retired long before they originally planned. Instead, they are delayed from retirement or the already retired are now forced into an extremely competitive job market. A free market currency preserves wealth, and from this our elders would be allowed to retire, and can free up jobs for the jobless.
It’s a disgrace that a person who goes to college, gets a job, then gets paid will soon have to enter the stock market in order to keep up with inflation, as if life wasn’t already tough. With government and Fed central planning, inflation will only get worse and life with it. Once serious inflation gets underway, money managing will get only tougher to maintain, and for those who cannot manage to keep up will join an already large club.
Sound money is essential for free markets to become more efficient, productive and speedier than most can understand. Sound monies are a natural human process that comes as naturally as a plant from a seed. For those who are misguided into believing that only government can fix economic disasters that government created, they are in for a surprise. They will also be surprised to find that money, and law comes from individual men and not government. Sound money and free markets is the shortest path to inevitable progress.
Saturday, May 22, 2010
Raining On The Parade
The Lew Rockwell dot com and the Ludwig Von Mises institute have and continue to do a fabulous job at raining on the government’s parade and all the fallacies that are floating around in today’s world. They have time and time again become a place for minds to create great ideas, theories, articles, and books to show us just what this world has come to. Government has for far too long suppressed the best efforts of productive men and steals tax payer money to produce nothing productive for our end; all the while they tell us that they are working diligently for our best interest. One of these days that rain will turn into hail and a wrath the likes of hurricane Katrina will send a destructive backlash to all those “legalized” crooks and criminals living off the successful efforts of the productive minds.
Allow yourself to wonder if one can keep the four months of salary that you work hard for but instead have to pay in taxes involuntarily. Feel the amount of stress that will be lifted off one’s mind come April, imagine that you can reinvest it into your business and produce more efficiently to meet the consumers desires and of yours, or simply take a long needed vacation and you will just begin to envision what might be possible. Forced voluntary compliance is no friend of a man that wishes to be the most efficient and productive being that he can be and keep what is strictly his. Once taxes are implemented, man’s best efforts, become submarginal.
Boil it down to the simplest terms and you will get the idea. Man A has forced upon man B to pay him every year. Man A states he will insure that he will use that money to look out for the man B’s best interest. In a truly free market man B would be allowed to decide if he would gain from paying man A. If the results are no good, man B can stop anytime. Replace the “men” with “group”, hence if group A in a free market threatens group B to pay for the services, this would be called in modern language, government. It sounds harsh, but simply true. Ask any taxpayer why they pay their taxes and they will say “because you have to”. They “have to” because otherwise they will be charged with tax evasion and sent to jail for not forking up their money that they did all the work for.
Perhaps the best example is the greatest investor of the lost decade, Bernard Madoff. This man ran a multi-billion dollar Ponzi scheme (PS) and got caught. To clarify, this man was supposed to have been caught years before, but due to our efficiently working tax (thanks to Group B for their taxes) funded Securities and Exchange Commission, they seem to have fumbled when they received a tip about Madoff years before. Now let’s see, if all Madoff wanted was to steal money he could just as easily gotten a government job, or better yet, if he loved PS’s so much he could have applied for a managerial position at the Social Security Administration and he would have been amongst people of his kind. To sum up PS’s: run a PS privately and you will, if caught go to jail, but run a publicly funded PS and you will, if caught, keep your job. If you run an “inefficient” PS privately, you will fail and go to jail; if you run an “inefficient” PS publicly, you will fail and receive more taxpayer dollars.
Allow yourself to wonder if one can keep the four months of salary that you work hard for but instead have to pay in taxes involuntarily. Feel the amount of stress that will be lifted off one’s mind come April, imagine that you can reinvest it into your business and produce more efficiently to meet the consumers desires and of yours, or simply take a long needed vacation and you will just begin to envision what might be possible. Forced voluntary compliance is no friend of a man that wishes to be the most efficient and productive being that he can be and keep what is strictly his. Once taxes are implemented, man’s best efforts, become submarginal.
Boil it down to the simplest terms and you will get the idea. Man A has forced upon man B to pay him every year. Man A states he will insure that he will use that money to look out for the man B’s best interest. In a truly free market man B would be allowed to decide if he would gain from paying man A. If the results are no good, man B can stop anytime. Replace the “men” with “group”, hence if group A in a free market threatens group B to pay for the services, this would be called in modern language, government. It sounds harsh, but simply true. Ask any taxpayer why they pay their taxes and they will say “because you have to”. They “have to” because otherwise they will be charged with tax evasion and sent to jail for not forking up their money that they did all the work for.
Perhaps the best example is the greatest investor of the lost decade, Bernard Madoff. This man ran a multi-billion dollar Ponzi scheme (PS) and got caught. To clarify, this man was supposed to have been caught years before, but due to our efficiently working tax (thanks to Group B for their taxes) funded Securities and Exchange Commission, they seem to have fumbled when they received a tip about Madoff years before. Now let’s see, if all Madoff wanted was to steal money he could just as easily gotten a government job, or better yet, if he loved PS’s so much he could have applied for a managerial position at the Social Security Administration and he would have been amongst people of his kind. To sum up PS’s: run a PS privately and you will, if caught go to jail, but run a publicly funded PS and you will, if caught, keep your job. If you run an “inefficient” PS privately, you will fail and go to jail; if you run an “inefficient” PS publicly, you will fail and receive more taxpayer dollars.
Revisionist History: Great Depression
Lets take a look at what happens when economic laws are violated. Revisionist history is a useful, potent tool. The cats out of the bag and everyone knows Obama is a closet socialist, but lets take a look at a American favorite, Franklin D. Roosevelt.
Despite all his spending programs, public works, quick fix legislations, radio talks, etc., it solved nothing. Years after his programs were in full swing even his Treasury Secretary, Henry Morgenthau admitted, "We have tried spending money. We are spending more than we have ever spent before and it does not work ... After eight years of this Administration we have just as much unemployment as when we started ... And an enormous debt to boot!". To wit - at least back then a high government official payed lip service to the truth.
The problem is government not us. Small government would be a delight, but only if it can stay that way. That could possibly be a oxymoron.
Now if you take a look at Herbert Hoover, that supposed "did nothing to help the economy" president, you will find the opposite. Hoover actually was a active president, and intervened more than those history books in school tell us. In fact, FDR expanded many programs from the Hoover Administration and created some disastrous ones of his own. Hoover started the government coercion, and FDR expanded it. Price fixing, credit expansion, central banking, fractional reserve banking, monopolizing in legal tender, socialism, re distributive wealth, any taxation, public works, subsidies, etc.; it's all the different products of the government, and all are unproductive and work against us. The government needs us, not the other way around.
The Great Depression became "Great" because of those spending programs. In comparison we can take a look at the fortunately, not-so-great Depression of 1920-21. The first year of this depression was worse unemployment wise and yet despite no quick fix spending programs, we were out of it in about a years time. In fact, the government drastically cut spending and lowered taxes. This 1920-21 depression alone can be used to show the paradox of government intervention.
The Hoover/FDR programs kicked the can down the road, and prevented businesses from adjusting to new reality or to put it another way, cleaning the system of mal-investments. Every boom must have a bust. We must embrace the bust, the problem is the boom. The 1920s boom started with credit expansion initiated from the Federal Reserve system (established 1914). The business cycle explanation can be summed up by Gary North:
"The Austrian theory of the business cycle, developed by Ludwig von Mises in 1912, teaches that when central banks inflate, in order to hold down interest rates, this creates false price signals. Specifically, it creates false signals regarding the price and availability of capital. This in turn leads entrepreneurs to borrow money and invest in new projects. When the central bank ceases to inflate, these projects are revealed as unprofitable ventures."
The bust was inevitable, but prolonged due to unnecessary government intervention. How can we all of a sudden in the 1920s have a boom, the likes never before seen in the history of the world? Businesses are popping up like never before. Then in the 1930s businesses are going bankrupt like never before. It's a simple answer: central banking, and a coercively powerful one at that.
Now, the Bush/Greenspan and Obama/Bernanke programs are huge compared to FDR's New Deal. One can only speculate as to how long it will take us to get out of this mess. Unfortunately the worst is not over.
To watch a video about the Depression of 1920: http://www.youtube.com/watch?v=czcUmnsprQI
To Learn More About The Great Depression: http://www.amazon.com/Americas-Great-Depression-Murray-Rothbard/dp/0945466056
Despite all his spending programs, public works, quick fix legislations, radio talks, etc., it solved nothing. Years after his programs were in full swing even his Treasury Secretary, Henry Morgenthau admitted, "We have tried spending money. We are spending more than we have ever spent before and it does not work ... After eight years of this Administration we have just as much unemployment as when we started ... And an enormous debt to boot!". To wit - at least back then a high government official payed lip service to the truth.
The problem is government not us. Small government would be a delight, but only if it can stay that way. That could possibly be a oxymoron.
Now if you take a look at Herbert Hoover, that supposed "did nothing to help the economy" president, you will find the opposite. Hoover actually was a active president, and intervened more than those history books in school tell us. In fact, FDR expanded many programs from the Hoover Administration and created some disastrous ones of his own. Hoover started the government coercion, and FDR expanded it. Price fixing, credit expansion, central banking, fractional reserve banking, monopolizing in legal tender, socialism, re distributive wealth, any taxation, public works, subsidies, etc.; it's all the different products of the government, and all are unproductive and work against us. The government needs us, not the other way around.
The Great Depression became "Great" because of those spending programs. In comparison we can take a look at the fortunately, not-so-great Depression of 1920-21. The first year of this depression was worse unemployment wise and yet despite no quick fix spending programs, we were out of it in about a years time. In fact, the government drastically cut spending and lowered taxes. This 1920-21 depression alone can be used to show the paradox of government intervention.
The Hoover/FDR programs kicked the can down the road, and prevented businesses from adjusting to new reality or to put it another way, cleaning the system of mal-investments. Every boom must have a bust. We must embrace the bust, the problem is the boom. The 1920s boom started with credit expansion initiated from the Federal Reserve system (established 1914). The business cycle explanation can be summed up by Gary North:
"The Austrian theory of the business cycle, developed by Ludwig von Mises in 1912, teaches that when central banks inflate, in order to hold down interest rates, this creates false price signals. Specifically, it creates false signals regarding the price and availability of capital. This in turn leads entrepreneurs to borrow money and invest in new projects. When the central bank ceases to inflate, these projects are revealed as unprofitable ventures."
The bust was inevitable, but prolonged due to unnecessary government intervention. How can we all of a sudden in the 1920s have a boom, the likes never before seen in the history of the world? Businesses are popping up like never before. Then in the 1930s businesses are going bankrupt like never before. It's a simple answer: central banking, and a coercively powerful one at that.
Now, the Bush/Greenspan and Obama/Bernanke programs are huge compared to FDR's New Deal. One can only speculate as to how long it will take us to get out of this mess. Unfortunately the worst is not over.
To watch a video about the Depression of 1920: http://www.youtube.com/watch?v=czcUmnsprQI
To Learn More About The Great Depression: http://www.amazon.com/Americas-Great-Depression-Murray-Rothbard/dp/0945466056
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