An Explanation of 'Why Inflation?'
Government corruption and price inflation go hand-in-hand.
Inflate (v.)
The word “inflate” originated in Latin in the early 15th century. It means “to cause to swell” and comes from the Latin root words en (in) and floe (to blow).
Why Are Things More Expensive
Why are groceries so much more expensive today?
Why is your restaurant bill so much more than last time?
Why is the price of a hamburger double what it was a few weeks ago?
Answer: Inflation happens when too much money is “blown into” a society.
Prison and Noodles
A simple definition of money:
“Any object generally accepted as payment for goods and services or repayment of debts.”
Cigarettes used to be money in prison. Today, noodles have taken their place.
Suppose prison guards start “blowing more noodles” into the prison system. What used to cost you ONE bowl of noodles to get something done by a fellow prisoner will now cost you FIVE bowls of noodles.
Too many noodles blown into the system reduces the value of money (noodles).
That’s inflation.
Government politicians who don’t understand how "blowing money” into the economy causes “inflation” everywhere continue to promise “money” (dollars) to everyone.
In the name of progressive equality:
Illegal immigrants are handed cash and phones.
The U.S. gives foreign nations billions of dollars in the name of “world justice.”
Trillions of dollars of entitlements are given to those who pay no taxes.
Billions of dollars in student loans are “forgiven” by the government.
The U.S. Pentagon can’t account for trillions of dollars of assets.
The United States sends “free money” to citizens in the name of “the economy.”
Officials never vote no for “spending programs” in their political districts.
Politicians have turned the United States into a debtor nation (120 trillion in debt).
Banks take your deposits and “loan out,” and through fractional banking, 10 times, 50 times, 100 times more than they have assets on hand.
Too much money makes dollars less precious and everything else more expensive.
When the United States declared independence from England in 1776, our Founding Fathers wrote a Constitution that guaranteed this nation would be ruled by law, not the whims of men.
In the Constitution, our Founding Fathers wrote that only silver and gold could be money in the United States. If the state wished to issue “paper money,” all citizens must be allowed to “exchange” that paper money, called silver certificates and gold certificates, for real silver and gold. Checkout out Article 1, Sects. 8-10 (see below).
According to our Founding Fathers, silver and gold were God’s money, made by God, and when mined by a nation and used to “back the currency,” a guarantee against wreckless spending and inflation.
What Happened?
In hindsight, Franklin Delano Roosevelt (1882-1945) was the worst President economically, except for our current President, that this nation has ever had. Neither FDR nor Biden understand basic economics and the source of inflation.
The progressive notion of “social justice” began with FDR’s administration and has reached its apex under Biden. Handing out money to illegals, other nations, and so-called “entitled” citizens is only possible when a government wrongly believes in and promotes communist equal outcomes for all instead of the Constitutional-mandated capitalistic equal opportunity for all.
The United States was founded on economic meritocracy and personal responsibility.
It used to be that the United States government could only print dollar bills equal to the reserve amount of gold (and silver) that the U.S. Treasury held in Fort Knox, an amount mandated (by law) as the “reserve” for the United States paper money.
The distribution of money in direct proportion to precious metals held in reserve prevented the government from reckless spending and the public from hyperinflation.
Government Fiat (Decrees)
However, when FDR took the oath of office in 1933, one of his first acts was to issue Executive Order 6102, removing the government's promise that a citizen could take silver and gold certificate dollars to local banks and exchange them for silver or gold.
The President confiscated everyone’s gold. “But,” said the President and the progressive politicians who backed him, “Don’t worry! We’ll give you $20.00 for every oz of gold you bring to the bank!”
FDR made it illegal for a U.S. citizen to own or store gold by threatening ten years in jail and a $10,000 fine if people didn’t comply. U.S. citizens complied with Executive Order 6102.
Two weeks after May 1, the U.S. government changed the set value of gold from $20.00 to $35.00 an oz. The government almost doubled its wealth in two weeks on the backs of its citizens.
FDR was like the prison warden, ordering the collection of all the cigarettes (gold) and the distribution of noodles (dollars).
An Old Man and His Gold
One man didn’t comply with FDR’s decree to turn over his gold
His name was Frederick Barber Campbell (b. 1868 - d. 1937). He was an attorney from Manhattan who was 65 years old in 1933, married with grown children, and recently retired.
Mr. Campbell’s gold was his retirement savings. The United States government prosecuted him for refusing to turn over the 27 bars of gold (10,800 oz) he held in storage at Chase Manhattan Bank in New York.
You can read about Mr. Campbell’s prosecution and conviction here.
Mr. Cambell lost his case. In 1934, the U.S. government gave him $200,000, the price of his gold in 1934 American dollars. Officials confiscated his gold from Chase Bank. Due to his age, he served no jail time. He died four years later at age 69.
Mr. Campbell’s Heirs
To conclude this explanation of inflation, let’s consider the $200,000 Mr. Campbell received from the U.S. government in 1934 when authorities confiscated his gold.
Suppose Mr. Campbell’s three grandkids inherited the key to his safety deposit box. On June 19, 1934, almost a century after their grandad lost his case with the U.S. government, the three grandkids opened their granddad’s deposit box.
The safety deposit box would contain $200,000 in paper money. Divided three ways, each grandchild would receive $66,350.
But suppose the government had not confiscated Mr. Campbell’s 10,800 oz. of gold and that Mr. Campbell had kept it stored at the bank. In 2024, Mr. Campbell’s gold sells for $2,400 an oz.
His gold would now be worth $24,960,000. That’s nearly $25 million. Each of Mr. Cambell’s grandchildren would receive $8,320,000 in 2024
If you were one of Mr. Campbell’s grandchildren, which would you rather have in 2024? Paper U.S. dollars worth $50,000 or gold worth $8,320,000.
I think we all know the answer.
Governments destroy their paper currencies by “blowing into” the system of paper dollars the government creates by “fiat” (decree) to fulfill its reckless spending and debt, thus raising prices everywhere.
Inflation is not caused by corporate greed.
Ignorant and corrupt government politicians cause it.
Inflation is a regressive tax on citizens, robbing us of our money by corrupt government officials who print too much money to meet unconstitutional promises for economic equality.
Since 1934, the United States dollar has lost 96% of its value due to inflation.
Equal outcomes don’t exist in nature and can't exist in sustainable economies.
People’s dependence on paper fiat money, economic equality in the name of social justice, and financial support via government promises violate the Laws of Nature and the Constitution of the United States.
A hungry lion will trounce an idle antelope.
An antelope must learn to protect itself using Nature’s gift of speed and ingenuity.
Idleness leads to death.
Where idle people depend on the government to borrow worthless dollars to forgive citizens of debts, give citizens free food and shelter, and pay for every citizen’s future, a national economic collapse is always on the horizon.
“For even when we were with you, we gave you this rule: “The one who is unwilling to work shall not eat. We hear that some among you are idle and disruptive.
They are not busy; they are busybodies.” II Thessalonians 3:10-11
The principle of equal opportunity leads to a country’s economic prosperity. Forced equal economic outcomes lead to destitution and economic collapse.
It’s the Law of Nature.
The United States government began its path to bankruptcy in the 1930s. Nearly a century later, politicians continue to see the need to force equal economic outcomes.
Our government is now bankrupt.
Government officials must perform a GREAT RESET to stave off complete collapse. The govenrment has no other option.
The Federal Reserve is frantically trying to “remove money” from public circulation through higher interest rates and convince the public that “all is fine.” But if rates go much higher, banks will collapse because they have been encouraged for the past decade to buy U.S. government bonds (debt) to bail out the government in its reckless spending.
Higher interest rates destroy the value of banking’s old bonds.
In a financial reset, the guards take the noodles (dollars) and replace them with something else.
We’ve been building toward this moment for a century.
Just ask Mr. Campbell’s grandkids.
.
Wade, it sounds like our government is the lion and we are its prey.
Unbelievably detailed explanation.
I honestly do not understand why the cause of inflation is so difficult for people to grasp.
Anyway, another great commentary.