By David Hayden, webmaster March 07, 2010 at 07:46 PM EST 2 commentsMy mother and father would hark back to the days when a loaf of bread was only 8 cents. “Mom”, I would say, “things just cost more.”Could I have been more wrong?
Things don’t cost more, it is a hidden tax!How Inflation is Created
Contrary to common thought, inflation is not the normal order of things. It will all become very clear when you read this short analogy.
There are 10 people in a community.Abe makes tractorsBill makes gasCharlie builds housesDarin is a developerEdward makes tractor partsFrank is a produce farmerGeorge raises cattleHank is a tractor mechanicIan owns and drives a delivery vanJasper is a laborerThese hardworking folks soon learned a simple barter system would not work. When Charlie built a house for Hank, he wanted to be paid, but did not need tractor parts.
They needed something else of value to trade. Everyone knew this was a problem for them too. So they all got together and created an advanced barter system called money.They created the “DayCredit” or as it became known the DC.
A DayCredit was equal to exactly (1) 12 hour day of work. Since it takes Charlie 3600 hours to build a house, the house is worth 300 DC’s. That means Hank is going to have to labor as a mechanic for 300 days to pay for the house.
With DC currency, it does not matter for whom Hank works, as long as they pay him in equivalent DC currency. Charlie knows that the money he receives can be used to buy goods or services from anyone else in their group.So far; so good.One day, the Fedrev family moves into town. The whole town is excited and welcome the Fedrev’s with open arms. They explain to them how their barter system works and the Fedrevs agree to accept and use the DC currency.Up until this point, everyone printed their own currency based on integrity and full guarantee of their 12 hr work day per DC.Fedrev was a printer and supplied printing services. Then one day they offered to be the sole printer of the DC currency. A reasonable idea but unfortunately Fedrev was lazy and dishonest.Fedrev wanted to have the nicest house in the community but did not have enough DCs to purchase the house from Charlie. So they very quietly printed a little extra money and gave it to themselves as a 10% interest bonus. They then used that money to buy the most expensive house Charlie could build.Everyone knew there were more DCs in the system than there were labor hours to back them up. So when Frank went to buy a tractor, Edward would no longer accept 1 DC per 12 hr day. Edward now wanted 1.1 DCs for each labor day he needed to build a tractor.Jasper the laborer could no longer afford to buy produce because Frank had to raise his prices to cover the cost of the tractor. So he demanded a cost of living adjustment from George the Cattle farmer.Upon learning that George’s beef prices went up by 10% Bill raised his gas prices to cover his family expenses.And so on.Sadly, due to dishonest money policy, 10% of the value of the money simply disappeared. A day’s work is still a days work, but for this community, a day’s work is only worth 91% of what it used to be.For those that could raise their prices, it was a wash.But for those who could not raise their prices, their money now buys less. A day of delivery for Ian is no longer worth a 12 hours of Bill’s gas production.Rising prices are absolute proof that too much money is being pumped into the system!I get inflation, but how is this a hidden tax?
Great Question.Who benefited in the community of 10?The Fedrev’s. They immediately got 10% more value out of their DCs than anyone else. The few that could raise their prices accordingly and immediately maintained the value of their products and services but those that could not lost out.Professional politicians, like the rest of us want to keep their jobs. But in order to even get the job they have to make unrealistic promises like “a chicken in every pot, a car in every garage” or better yet “Health Care for Everyone!”However, there is a finite amount of money available for them to use to pay for this pandering. If they campaign on the promise that “Universal Health Care will only cost you an additional 25% in taxes” no one will elect them.Since politicians know the truth will not work, but will say anything to get or keep their jobs, they need to tax you with out you knowing it.Politicians, like the Fedrevs know that if they ask the Federal Reserve to pump a bunch of money in the system their dollars buy a lot more than your dollars.
The important part of this is knowing how the Federal Reserve creates the money they pump into the system.
Basically they have a book of blank checks. That’s it.The checks are NOT attached to any accounts, any reserve of gold or silver, it is just a check book.The Federal Reserve writes a check to the US Government for billions of dollars and presto chango, money is created out of thin air by the stroke of a pen and the miracle of the printing press.Politicians get billions of dollars to spend (In Obama’s case trillions).The secret is, when politicians use the dollars they get current value.Unfortunately, by time you get your dollar, it is now worth far less than it was when you earned it.The really sick part is that the private bankers, affectionately known as the Federal Reserve, charge the citizens interest on the money they created out of thin air!Through the Federal Reserve Act, the politicians guaranteed the private bankers that the interest would be paid by a direct tax on the income of the us citizens.By devaluing Your dollar, but not the government’s, you get hit with a hidden tax. To keep the illusion alive, the government and media quickly shift all the blame to companies raising prices.Can anything be done to stop this train wreck?
I wish I were more optimistic on this subject. To put an end to this would require a few actions that I just do not see happening.Citizens must take time to fully understand the Federal Reserve. A good place to start is by reading The Creature from Jekyll Island: A Second Look at the Federal Reserve., watching these videos and watching The Money Masters Video.Remove from office all politicians that embrace the Federal Reserve.
Demand and fight for a complete audit of the Federal Reserve.
Demand a list of names of the actual owners of the Federal Reserve.
Insist the politicians fire the Federal Reserve and retake the Constitutional right of our Government to print its own money. (Lincoln did and Kennedy wanted to.)
Cowboy up and realize there is no free ride. It is pay as you go,regardless of what politicians promise.
Demand the elimination of the Federal Reserve Note and insist that currency be backed by gold or some other commodity. (definitely not something stupid like carbon credits)
Ok let’s wrap this up
Inflation is NOT caused by rising prices based or evil profits.
Inflation is direct evidence politicians have intentionally mismanaged money for job security.
The Federal Reserve prints money out of thin air at the behest of the politicians.
The Federal Reserve is gauranteed your income will be taxed to pay them interest on the money they created out of thin air.
The politicians get to spend uninflated dollars that have far more value than the dollars that trickle down to you.Inflation is just secret code for taxation without representation.Ok, maybe we will not be able to return to the days (1935) when milk was 8 cents a gallon or the average cost of a new house was $3450.Focus on value, not dollars. In 1935, based on the average annual income of $1600, an hour of labor would buy 7.6 gallons of gas.In 2009, based on an average annual income of $55,000, an hour of labor will buy 8.8 gallons of gas. Remember, a good percentage of current gas prices are TAXES, so the price of gas, in terms of our direct labor to acquire it, is far less than in 1935.Things do not cost more in effort than they did in the past, in fact, they are often less expensive in terms bartering labor for goods.Politicians are happy to pump too much money into the monetary system to buy their votes becasue it is easy to hide the tax behind slipery words like inflation and pass the blame to the corporations that provide the lifestyle we enjoy.