Each bill has a stated value -- one dollar, five dollars, ten dollars, twenty, fifty, a hundred . . . whatever.
In fact though, none of the pieces of paper has any intrinsic value. Each of them is worth only what you can purchase with it. And your ability to purchase anything is absolutely dependent on the acceptance and valuation of your pieces of paper by the seller of anything you wish to purchase.
Suppose that the baker from whom you are want to buy a loaf of bread were to demand gold in exchange for his bread. In that case you would have to exchange currency with a face value in excess of $800 for an ounce of gold that you could have purchased for less than $400 in the same currency just a few years ago.
The change in the price of gold -- which is quite stable in terms of the real things for which a given quantity of it can be exchanged -- reflects the diminishing value of the American dollar.
American currency once had a real value because it was backed by gold. That is no longer true. The American dollar now is a fiat currency -- a currency valued solely by, and in accordance with governmental decree. Throughout human human history fiat currencies always have eventually collapsed and become valueless. The U.S. has dressed up its fiat currency by proclaiming that it is backed by the "full faith and credit" of the federal government. However, it is becoming increasingly clear that out government is faithless and not worthy of either credit or credibility. Hence the value of our currency is plummeting . . . and on its way to collapse.
To understand this, one must realize that anything the government spends must -- because the government produces nothing -- first be taken by it from the productive economy. It takes what it pleases, at the expense of the productive economy and productive citizens -- either through taxes, by borrowing, or by simply printing as much currency as it wishes -- a process called monetization that diminishes the value, the buying power, of dollars held by private individuals and entities.
Tax revenues are falling sharply with the economy in shambles and cannot be raised without deepening and lengthening the decline. Our major financial institutions were "rescued" from the brink of ruin by government bailouts. But except for paying huge executive bonuses, the institutions are hoarding the proceeds of the bailouts instead of pumping them into the economy. Other segments of the economy -- everything large enough to pay five and six figure bribes -- called campaign contributions in polite company -- also are on the way to being kept afloat with government bailouts.
Ordinary people of coarse share in the bailouts only in that they pay for them . . . and their children, their grandchildren, and their great grandchildren also will be paying for them.
Spending and the resulting debt on the scale that has been established by the government in recent decades is unsustainable. Citing the nation's $66 trillion deficit has almost no impact on most individuals because a trillion dollars is an amount so enormous that it is beyond the comprehension, or even the imagination of most people.
Thanks are due to the Cambridge Forum for providing the following fascinating illustration:
A $1 million stack of thousand dollar bills would be four inches high.
A $1 billion stack of thousand dollar bills would be 350 feet high.
A $1 trillion stack of thousand dollar bills would be 65 miles high.
A $1 billion stack of thousand dollar bills would be 350 feet high.
A $1 trillion stack of thousand dollar bills would be 65 miles high.
Understanding that something has gone very wrong, Americans are looking for ways to save what they have. They are cutting back on spending for, and consuming anything other than basic essentials. The inability or unwillingness to buy and consume obviously makes the effort of the government to prop up failing enterprises futile.
The most forward looking people are converting their savings into essential things that will retain their value and be useful, both practically and for bartering, when the house of cards that the government has created comes tumbling down, as it inevitably must. They are stocking up on things like nonperishable foods, gold, tools, firearms, and large quantities of ammunition
Meanwhile, the foreign lenders that have viewed the dollar as a safe haven and financed our extravagances are becoming skittish about further advances to our profligate government.
They and forward looking Americans anticipate that in the coming years the nominally independent Federal Reserve will continue to act as it has in the recent bailout programs as an adjunct to the rest of the federal government. It probably will accelerate the printing of additional currency, inflation, and the consequent debasement of the dollar to enable the government to meet its obligations with currency worth far less than it is today.
But the problem is far too big for that to work. The biggest Ponzi scheme in history -- Madoff was peanuts by comparison -- is going to come apart as baby boomers retire and begin drawing social security benefits. To pay these benefits we would have to print so many dollars that the value of the monthly benefit would barely meet the inflated cost of a loaf of bread.
So, what is to be done?
Fear not. The government is ready with a solution. One of them, as is indicated in this report, is that it is preparing to use our armed forces, the military, to keep citizens under control.
The other, which has not yet surfaced, will be to encourage older people -- those who might remember things like the Constitution, limited government, individual freedom, government accountability, and other such pesky ideas from better days -- to die. This will begin by rationing, then by withholding medical care for them, and ultimately by euthanasia. It will be done with feel-good phrases like "death with dignity," and "not wanting to be a burden," and "merciful release from suffering," all of which will seek to obscure that we will be killing people without their consent for the "greater good."
The most forward looking people are converting their savings into essential things that will retain their value and be useful, both practically and for bartering, when the house of cards that the government has created comes tumbling down, as it inevitably must. They are stocking up on things like nonperishable foods, gold, tools, firearms, and large quantities of ammunition
Meanwhile, the foreign lenders that have viewed the dollar as a safe haven and financed our extravagances are becoming skittish about further advances to our profligate government.
They and forward looking Americans anticipate that in the coming years the nominally independent Federal Reserve will continue to act as it has in the recent bailout programs as an adjunct to the rest of the federal government. It probably will accelerate the printing of additional currency, inflation, and the consequent debasement of the dollar to enable the government to meet its obligations with currency worth far less than it is today.
But the problem is far too big for that to work. The biggest Ponzi scheme in history -- Madoff was peanuts by comparison -- is going to come apart as baby boomers retire and begin drawing social security benefits. To pay these benefits we would have to print so many dollars that the value of the monthly benefit would barely meet the inflated cost of a loaf of bread.
So, what is to be done?
Fear not. The government is ready with a solution. One of them, as is indicated in this report, is that it is preparing to use our armed forces, the military, to keep citizens under control.
The other, which has not yet surfaced, will be to encourage older people -- those who might remember things like the Constitution, limited government, individual freedom, government accountability, and other such pesky ideas from better days -- to die. This will begin by rationing, then by withholding medical care for them, and ultimately by euthanasia. It will be done with feel-good phrases like "death with dignity," and "not wanting to be a burden," and "merciful release from suffering," all of which will seek to obscure that we will be killing people without their consent for the "greater good."
No comments:
Post a Comment