Taking Back America!
For a capitalist country, we sure don’t know very much about money.
It takes more dollars these days to buy the same amounts of oil, corn, wheat, copper, gold, silver, vacations, grapes, health care, timber, other currencies, ethanol and gasoline. And yet we forget about all that other stuff and blame the high gas prices on the oil companies instead of the money monopoly that forces us to use more of their dollars to buy a gallon of gas.
Any currency is simply a unit of measure. A dollar is like an inch, a pound, a gallon, or a calorie – it tells us how much of a particular characteristic something has so we can compare it against other things. In the case of a dollar, that particular thing is value.
We could just trade our labor for meat and our meat for axes, and our axes for a bag of coal, and so forth, but it is far more convenient to carry money; and using money as a medium of exchange works fine as long we all agree to use it. The amount of money we need is the based on the amount of tangible things we have, the amount of new things we will produce, and the amount of exchanging we intend to do.
Inflation is too much money chasing too few goods and services. While most of us think of inflation only in terms of its visible effect - the rising prices we see – its real cause is the oversupply of currency, as the value of money obeys the law of supply and demand and drops when there is too much of it sloshing around.
When the Federal Reserve creates too much money, prices rise as measured in dollars, just as everyone’s “height” would rise if the Fed was in charge of inches and created 10% too many of them. What now takes 71 inches to measure – my height - would require 78 of those 90% value Federal Reserve Inches, but I would not actually be the 6’ 6” tall that the new inflated money said I was. We are still digging out of the rubble caused by the crash of a housing bubble that fooled us into thinking our 5’ 6” homes had really turned into 6’ 6” ATMs.
And wealth, like height, cannot be equalized by redistributing the unit of its measure. If you grow 4 inches and I don’t, the government cannot make us equally tall by creating a bunch more inches and allocating 4 of them to me. The illusion of being equally tall exists only as long as we both agree to confuse the measuring of height with height itself.
The reality check comes when we come up against something of intrinsic height like a doorway or each other. When one of us clunks his noggin and the other is looking up to see what happened and the illusion of equality disappears and we lose our faith in inches as a measurement. We use the more reliable centimeters instead, and the inch becomes worthless. Change inches to dollars and centimeters to gold and the “rise” in gold prices in recent years becomes properly understood.
In our Constitution, Congress is charged with maintaining strict standards of uniformity for all units of measure, including currency. The Founding Fathers understood the need for reliable money and uniform legal tender to facilitate commerce. They also understood that sound money constrains government by making it difficult for it to take on debt; debt is how (and often why) countries prosecute foreign wars.
The Framers protected our speech, our religious expression, our security, and our wealth from the government; their Constitution was the written warning to government not to encroach upon the liberties granted to us by God. 9 of the 10 amendments in the Bill of Rights tell the government to back off; the 2nd Amendment says, “or else”.
I used the words protected and was – past tense. That Constitutional protection of our wealth was removed in 1913 with passage of the 16th amendment, which enabled the government to tax income, and the creation of the Federal Reserve. As it turns out, those were not very bright things to do.
The first Federal Reserve Note – the dollar – was redeemable on demand for one ounce of gold. Today it would take nearly 1,800 of those Federal Reserve Notes to buy that same ounce of gold. Our currency has been destroyed, the size of government has increased by over 500%, the debt has mushroomed to over $15 trillion, and we have fought eight major foreign wars plus numerous smaller interventions. This is not progress.
The phrase “throwing the baby out with the bathwater” has never been so appropriately used as when describing the progressive movement’s anti-Constitutionalist reforms initiated at the turn of the last century. Fearful of capitalism’s potentialfor uncomfortable excess, they surrendered our liberty to something guaranteed to be far more excessive - government.
The love of money is the root of all evil, and nobody loves money as much as a politician hell-bent to spend somebody else’s. Most people do not view personal liberty, economic liberty, limited government, sound money, prosperity, and peace as all one thing; it’s not taught that way any more in school. Most people believe – improperly – that our rights can be parsed and dealt away independently.
Currency inflation is not an accident of nature; the government intentionally monetizes its debt, so it can pay back dollars with dimes. Last week, Treasury Secretary Timothy Geithner testified to Congress that the Obama administration has no other plan to deal with the debt, something we all suspected for years.
That would be swell if America is its government. But it’s not; America is its people. Most Americans will retire on their own savings, and if you have been thrifty and have saved enough dollars upon which to retire comfortably, the idea of your own government turning your own dollars into dimes so it can go even deeper into debt should make you angry. Your government is stealing your money and it has been for years; Geithner finally ‘fessed up is all.
When the Federal Reserve arbitrarily sets interest rates at 3-4% under market, it has the same confiscatory effect as taxing interest at a rate of 80%. Did we vote for an 80% tax on interest? Did either party run on that – either Democrat or Republican? Actually they both did; they have been deficit spending for decades now. Not only does currency inflation diminish the size of our nest eggs, but zero interest rates force us to eat into the principle faster; inflation accelerates the date of destitution to those who live on a fixed income from their own savings.
42 cents of every dollar the U.S. Government spends is borrowed, and that debt will be “repaid” by devaluing your dollars. Now that you know, each department, each agency, each program, and each spending proposal from Washington, D.C has a new dimension; it now begs the question, “would I give up my retirement for that?”
Well, would you?
“Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D. Visit Tim’s website www.timnerenz.com to find your moment and order Tim’s new book, “BRING IT!”