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Are you an Idiot?
By John | June 5, 2010
In 1960, I would work all week for $50 – about 50 hours. Back then, before the US Gestapo became so powerful and intrusive, I could work for cash, with no taxes withheld or paid. I worked 50 hours, earned $50, and received $50.
In 1960, I was pretty frugal. I needed money to live on, but not much. As I earned $50 each week, and spent less than $50 per week, I generated some “savings”. Think of it this way: Every few weeks, rather than spend the $50 I made that week, I put it aside – I “saved” it.
What was it I was “saving”?
Each week I created value with my labor. The direct value I created benefitted my employer, who received the output of my labor. Why would I create value for my employer? Because, in exchange, my employer gave me a derivative of my labor – an instrument that stored the value of my labor for future use – a promise to deliver back to me at some future date value equivalent to that I had provided for my employer when I had worked for him for one week.
What did that derivative; that instrument; that “promise” look like? I am sure you have seen one. It is a fifty dollar Federal Reserve Note.
Now, that fifty dollar Federal Reserve Note I would have received in 1960 would be no different than the fifty dollar Federal Reserve Note anyone else would have received in 1960. They all looked the same. They all had the same value. Others were not storing that same labor that I had provided, but they were storing something of comparable value – perhaps their own labor.
It is now 2010 – fifty years after I saved my one-week’s labor from 1960. Now, I am retired. I would like to “spend” that one-week’s labor from 1960 that I saved.
I look around me in 2010 and realize how shrewd I was to have saved my one-week’s labor from 1960. Since 1960 there have been impressive advances in technology and productivity. The purchasing power of a week’s labor is now much greater than it was in 1960. I expect to be able to purchase a lot with that fifty dollar Federal Reserve Note.
But when I take my fifty dollar Federal Reserve Note shopping, I am shocked! Instead of being able to purchase much more in 2010 than I could in 1960, as I expected, I find I can now only purchase a small fraction of what I could have bought in 1960. My purchasing power that I had carefully saved and put aside, is now almost gone!
What haappened to that derivative of my labor that I had stored in 1960, thinking it would retain value over time? Who stole my labor? What happened?
My labor was stolen, along with the labor of many others like me that thought they were storing value in U.S. dollars, dollars that became worth less and less over time.
The process whereby that labor was stolen was slow and gradual over a period of years. But, nevertheless, the value stored in dollars was stolen from me as much as if someone had held a gun to my head.
Who took it?
Beginning 100 years ago, but accelerating in the 1960s, politicians learned they could get elected by promising to give voters things they did not earn. Where did they get those “things” ? They stole them from me, and other like me!
How did that work? First, the Government creates a give-away program – welfare – agricultural subsidies – grants for research projects – scholarships – bridges to nowhere – you get the picture. But, because the public would resist higher taxes to pay for all this, the Government must find other sources of funds. That’s where that fifty dollar Federal Reserve Note comes in.
Working in colaboration with the Federal Reserve Bank, an entity created by the U.S. Government in 1913, additional Federal Reserve Notes are created, but without any stored labor to back them up. In fact, these Federal Reserve Notes were created and distributed in exchange for NOTHING!
Now those new Federal Reserve Notes, that are storing nothing of value, look the same as the one I received in 1960 as a store of one-week’s labor. As these new notes get intermingled with the old notes, no one can tell the difference. There is no difference, except some were created to store real value, and others were counterfeit, not storing any new value, but capturing some of the value of those that had stored real value.
After fifty years of this counterfeiting, that real stored value has become so diluted by the printing of notes without stored value that they are all rapidly becoming worthless.
It woud be like having a store that sold milk. At first, everyone buying milk from the store receives pure milk. But the proprietor discovers he can add a little water to the milk, diluting it a little and creating a little more volume, so he can sell a little more – at the same price. He continues to dilute his milk a little more each year. No one notices. Every day the milk looks and tastes like it did yesterday. After a while the “milk” is 90% water. Some may vaguely remember that milk used to taste better years ago, but that’s probably just nostalgia. As long as it happens gradually, dilution works.
The U.S. Government is now rapidly “creating” trillions of dollars of more Federal Reserve Notes in response to a ‘financial crisis”. The theft is accelerating.
If you think “inflation” is an increase in free-market prices, you are an idiot!
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