The news media loves to banter around the word inflation in their 30-second monologues. The reality of this word that found its prominence in the 20th century is that it is a little-understood economic term that the powerful use to control its citizenry. Experts and economists will speak statistically about what inflation is, its impact percentage, and why it is a normal and acceptable aspect of life in a free market economy. They always sound erudite, and filled with credibility, add the letters behind their names, and most people glaze over the word, without a second thought to its impact upon their daily lives.
Money is a store of value...everything else is a currency. The reason that people for thousands of years have used a medium of exchange like money is that the value of it is assigned not by the central power, but by market forces. 1 ounce of gold or silver, had an agreed-upon value based upon market dynamics, not from a government agency. The amount of work it took to create a coin that was 1 ounce of gold, was assignable to how many chickens, horses, or leather goods that someone needed. It was fixed upon the labor of a person. They understood how much work it took to earn an ounce of gold, and how much work it took to create a product or service equitable to that ounce of gold. Metals, land, or assets, are much more tangible, and people generally have the opportunity to know their value based upon their weight or its size relative to the work they put in.
In December of 1913, the Federal Reserve was created. This institution was dreamed up by the largest banks and with the blessings of a few powerful in government to regulate the money supply and craft a system where liquidity of money was easier to obtain. In the American economy, prior to the creation of this system, there had been what was described as a panic in the economy that might be conflated today with a recession. People would feel the headwinds of circumstance and then retract their spending, sending waves through the economic institutions and government. The experts in economics at the time felt that the issues in a panic were always caused by the lack of supply of money. Liquidity they claimed, would fix the future away from these dramatic moments and it could be smoothed out over the course of time. Banks could lend at lower rates that were centrally controlled and the government would have access to funds for public works and employment. The idea first gained a great deal of momentum in the panic of 1883 when J.P. Morgan actually bailed out the federal government with his own personal treasure.
The 1883 panic was the beginning of the end of the gold standard in the US - the entire panic was a reaction to the lack of supply of gold and the subsequent runs on the banks. The bankers and powerful saw the outcome of that panic and began their press toward a centralized system of monetary control.
Early in the republic Central banks had a rough go of it. Alexander Hamilton's first central bank was undone by Andrew Jackson’s Bank war in his second term as president. The Founders always had an uneasy relationship with central banking, and the people of the southern states had felt that the tariffs and centralization of power in the north were becoming an issue for the southern economy. Jackson refused to renew the charter and the United States went away from central banking from 1836 to 1862. Lincoln created a set of national banks in the National Banking Act for the funding of the Civil War in 1863. This system of regional banks that had agreed upon reserve standards lasted until the creation of the Federal Reserve System. This type of money management in the National Banking Act relied on the backing of bank reserves in US treasury bonds. The banks were required by the act to hold a supply of treasuries that were backed by gold and silver, these bonds were to match the supply of gold and silver. When banks overleverage or lend out too much of their money to keep their reserves healthy, a retraction in the value of treasury bonds would cause a run on the bank in a panic. Each bank was judged for its balance sheet and when they were too risky with their reserves, the people would demand their money back from the bank causing a downward cycle and a panic that was infectious through the economy. The worst of these was the panic of 1907, which finally broke the national banks, and centralized all money management into the Federal Reserve system.
Sold as a method of stability, the reality of the Federal Reserve system, was that it too had issues keeping Gold and Silver on hand at the rate necessary to back the bonds that were sold. The Roaring 20s were a result of the oversupply in money that was caused by the influx of money to fight the First World War. Once the war was over, the money dried up or had been converted to longer-held assets like land or stocks and the economy retracted. There was not enough gold or silver to increase the money supply again when the Great Depression hit. Add to it that the Treaty of Versailles required the repayment of the costs of the war by the Germans, but the debt to the allied countries was so high that the payments could not be made, and the value of the treasury bonds that had been used to finance the war crashed, causing a fleeing to gold and silver. As people wisely held on to those monetary assets during the depression, the economy stayed stagnant.
In 1932 FDR was elected president and his use of executive power, which he described he would use in his inaugural speech, was in full force. One of his first acts was to outlaw the hoarding of gold coins, bullion, or gold certificates. This forbade any ownership of gold of more than 100 dollars or 5 ounces. The government in turn repaid the owner of that gold in federal reserve dollars for about 67 cents over the face value of the coin. This was the end of stable money and the beginning of the fiat currency supply that was controlled and managed by a shadowy system that has never been audited, and never shows its balance sheet to the public.
It has funded wars and government programs and has created a world where each moment that passes the currency in anyone's pocket is being diminished by the overprinting of money. Most people believe that the federal government has some kind of backing held in the treasury for the money that is in the system, but nothing could be further from the truth. The value of the currency in our wallets is determined only by our good faith in using it. We assign the value to the paper based upon what we think it will buy - but ultimately it’s an impossible math equation to stabilize value, because one side of the equation, (the supply of currency) is changing by the millisecond.
So what does it actually mean for the average American?
The consequences have been nothing short of the most destructive force upon us.
This system funds the military-industrial complex.
Has the government ever turned down a war? Short of the Cuban missile crisis, every other war that has been offered up to the United States since the 1950s has been agreed to and embraced. The industries have accumulated wealth beyond understanding, and they always have a steady supply of contracts and money that they can use to buy more assets, and equipment and pad their portfolios. This insidious cancer degrades our civic institutions of government and military and causes a strange amalgamation of the two. Civilian leadership of the military is in name only. The powerful know how to keep their contracts so the money continues to flow.
This system destroys our health.
Because the value of currency is being degraded, our farmers have no choice but to consolidate their operations and either sell off their parcels to larger industrial farming operations or use the easiest and most efficient seeds and sprays to grow their crops. This devaluing of the money does not allow the consumer to pay what it rightfully costs to grow healthy food free of pesticides or genetically modified seeds, so the farmers are forced into a shotgun wedding to do what they all instinctively know is wrong and use these methods that are more chemical management than crop growing.
We end up with Round-Up ready wheat and corn, which can be made into mass-produced food, that has no nutritional value or benefit. Our populace gains weight, battles chronic illness, and becomes allergic to food that has always been a staple of the human diet. Everything we buy from the grocery store has been touched by this toxicity; and it all started with the fact that we couldn't afford it, because our wealth had been robbed by the degradation of our currency.
The system destroys our housing.
Every year the price of a home goes up. Price retractions in real estate are only temporary and homes "appreciate" year over year. What isn't being said, is that the rising price of a home is not because the house gets more valuable, but because our money buys less. If a home that you use and beat up, gains value in numbers that are more than your own years salary, it probably means something is off. An injection of money through the last 60 years into our economy has meant that there are people at the head of the line who get those funds and use them to buy up tangible assets and create home prices that the average person cannot afford. They drive the price up by gobbling up the supply and leaving the average American desperate to purchase a home while the numbers escalate beyond reach. Very few average workers can ever save up enough money in the time necessary to make a down payment. The appreciation of the home goes up faster than the wages allow for saving and this vicious cycle destroys the backbone of the American life and economy. If you don't own a home, you cannot use its value to start a business, borrow money for improvements, or build any kind of wealth.
The System destroys our working class.
No one earns enough in wages to be wealthy in the United States. No job pays what any worker is worth, and that is not always because of crooked employers. The root cause is the value of our money. The consumer cannot afford the price of goods that a manufacturer will need to charge to make a profitable product. The consequence is that the employer cannot pay his employees what they might ultimately be worth if the money were more stable. Everyone that works for a wage is in an uphill battle chasing currency against the headwinds of inflation. Every hour they work is worth less than the previous hour. It is demoralizing and leaves the average American frustrated and discouraged.
Everything in this inflationary system is a brutality upon the working and middle class. The assault has been intentional and the results are tragic. We are sicker, poorer, and less satisfied people because we have to work harder, eat worse, and struggle to build wealth. The government has 2 supposed levers to control this mysteriously made racket; spend less at the government, or raise interest rates. No current swamp politician wants to stop the spending in Washington, so the Federal Reserve is left to raise interest rates - another crushing tool against the average citizen.
There has to be a recognition that the people who are currently running in the uni-party system all have designs to keep this status quo. They have no interest in changing it. Listen to them as the fane for war and military spending or domestic programs that benefit the well-connected or corporate interests. I'm interested in political figures like Robert Kennedy, Thomas Massie, and Rand Paul, who all have said this collusional economy needs to change. We need people to understand what has been done to them as the ruled-over-class and flee this system to things like decentralized assets, placing their fiat currency into real money like gold, silver, or Bitcoin, that store value and keep central planners out of it. We have to resist things like a digital currency that will only exacerbate these issues, centralize their control, and perpetuate their ability to spend money. We have to be bold and courageous people who stand up and speak with our disobedience to power. This inflationary system has to end, but we have to be the ones willing to end it.
