Lately all this talk about Obama lowering taxes doesn't mean shit so long as the fed keeps that money printing press going...which is where the real problem is IMO.
Funny how easily the hidden tax through inflation is forgotten. "Inflation" means one thing to an economist and another to the Joe Public. Economist talk about how inflation is an increase in the money supply. We "inflate" the money supply by creating money, either through a printing press, through the fractional reserve banking system, or the actions of the federal reserve, or a combination of all three. Only 3-5% of the dollars are minted, printed and coined(And no, it's not a conspiracy). The rest exists in cyberspace
Personally that is one of the things I like about the gold standard...granted no system is perfect but I think it's better than what we have now. When a country's money supply is fully redeemable in gold, there is a built in discipline as to how much money can be created. If a govt. knows it might lose its gold by redeeming too much paper money, the politicians should(in theory) be very careful how much money they spend and paper they print. Eventually it becomes the goal in all paper money systems to get rid of the gold standard and establish a fiat money so that more money can be created and more and more "benefits" can be "given" to its citizens to earn the gratitude of the voters. It's amazing how you always hear about what politicians wanna do for ya, but never what they DON'T wanna do for ya. There was only one candidate who mentioned what he didn't wanna do for us but I'll leave that for another thread..
I remember one of my teachers telling me that free and open societies fail when "the majority of the people discover they can vote themselves benefits from the public treasury. That's the truth behind democracy and why it's never mentioned in The Constitution." This is not likely as long as there is the discipline of gold-backing. Gold...that "old relic of barbarism" is shunned by big spenders and politicians because it's their enemy.
Hell, it was no surprise as to why Nixon closed the gold window in 71 because by that time it had become apparent that our govt had put too much frikkin money into they system and foreigners were draining Fort Knox! Once that window was shut it was party time for the govt. and guess who's gonna be stuck with the clean up bill?
Here's a simple analogy...If we all went to an antique auction and we all had $1k to bid, the highest price for which the antiques could be sold is $1k. But let's say You, ActiveAero and Johnny were somehow able to get your hands on additional $100 in cash or credit... then the price of the antiques would go up because you'd now have more money to bid with. You three guys would be the successful bidders because you had access to the extra cash. In the meantime the purchasing power of all the money in the room goes down as the prices for the items would "rise." The antiques didn't change, but our ability to buy them had decreased.
So in effect, when any govt creates money outta thin air and spends it into existence by bestowing it upon its favored groupies, their purchasing power is increased for a little while but mine and Joe Public's is diminished, because this new money "trickling" into the free market auction place creates buying demand and bids up the price of everything. And people wonder why prices are going up!? Prices aren't going up...your purchasing power is going down.
So people can go on and on about how Obama wants to give the lower and middle class a "tax break" and "raise the minimum wage" but the truth is it doesn't mean shit so long as he backs a bullshit monetary policy...all controlled by The Federal Reserve. Even those of us who have a cost of living escalator clause in our work contracts are getting that big red white and blue dick shoved up our asses because of the runaway inflation. We can't even put our money away in savings anymore because the value of it is being chewed away faster than it can build interest! Inflation transfers your purchasing power to the govt..no different than if it were to literally steal money from your wallet and spent it in front of your face. . . but we're so stupid we actually buy the bullshit and as for the govt... it's business as usual.
This is a big issue for me because it directly effects how I live and what I can do with my money. We already know that we don't have any money as a nation. We're broke. Will you at least acknowledge that?
There are people on this board who believe we need inflation and that the economy is just too damn complicated to understand and that it's an imperfect science that needs to be closely monitored and controlled. So instead of the govt taxing us, they inflate the **** outta the currency and rob us.. and the best part is that we don't even realize it.
Why would the govt secretly wanna rob you of your wealth, which is what it does when the fed expands the supply of money = creating inflation and diminishing your purchasing power? "Oh NO! Not the govt! They'd never steal from the people!" Right?
In 1966 Alan Greenspan said in an essay called "Gold and Economic Freedom" said that inflation was "a scheme for the hidden confiscation of wealth." On August 16th, 2006 Fed Reserve Governor Richard Fisher, in a speech titled "An Update on The Status of the Economy and It's Implications of Monetary Policy" said "Inflation is a sinister force that has the capacity to charm and romance the heck out of you, but in the end only wreaks havoc"
It's easy to see why politicians love inflation.
1. It makes the national debt more manageable because it can be repaid with cheaper dollars.
2. In a democracy(supposed to be republic)full of personally indebted voters, the government will pursue monetary policies hospitable to debtors even as it accomodates the special interests that lend to them.
3. Inflation finances social programs that voters demand but avoids the politically unpopular alternative of higher taxes, allowing uncle sam to play santa clause or messiah.
4. Inflationary spending is confused with economic growth, which is confused with economic health.
5. Inflation causes nominal asset prices to rise, such as those of stocks and real estate, instilling in the minds of voters the illusion of wealth creation even as the purchasing power of their assets fall.
So you can understand why I am so bothered at the idea of cutting taxes, yet there's no sign of cutting departments we don't need and programs that are totally flawed and exploited.
Many economists(among them Milton Friedman and Arthur Burns) say that money supply should be expanded at the same rate of the expansion of goods and services, so these 2 factors will balance out and it would not be inflationary...right?? That's theoretically very sound. However in the real world, and human nature being what it is is, and politicians being what they are, govt cannot resist the temptation to buy votes and with their encouragement, the citizens vote themselves benefits from the public treasury.
The politicians are unwilling to take the heat of voting to directly tax you to pay for all of it, so they create budget deficits, and Uncle Sam creates the needed money through the Federal Reserve, and the money supply increases at a rate faster than the real wealth. The net effect is an increase in the prices, or more properly, a decrease in the purchasing power of each dollar. The net result is that you have been taxed to pay for the deficit. The inflation tax is hidden and not understood, which makes it the favorite of govt.
The avg person doesn't have the slightest idea who causes inflation, so the govt can blame big business and big labor when they respond to the govt created inflationary spiral by trying to keep their purchasing power or profits up to snuff. Wages rise, then prices are boosted to cover wages, and higher wages are demanded to keep up with increased prices, and they play a game of leapfrog that no one can win because there is no damn finish line.
But it's our fault because 1. Our ignorance. The people in general don't understand it so we turn a blind eye and let them get away with it.
2. Even if we understood the process we would still like our personal benefits because they give us money to spend we didn't have before, especially if you fall into one of the govt groupies upon which govt bestows it's "generosity." And because your increased income gives you more borrowing power , you can increase your debt and spend more. And then you are one of the Joneses, living on borrowed money and borrowed time...of course you're not about to give back your benefits.
I find it kinda funny how everyone talks about real change but when real change is proposed right away people are like "Well, yeah...but not THAT kinda change. We need the kinda change that won't change things too much." Talk about gridlock and buck passing
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Originally Posted by DrivenMind
