Wednesday, August 6, 2008

The Economy is Stalin

Actually, it's Lenin'. Lending way too much money into the system. We keep producing and producing and producing new money. This is a great problem, and Lenin himself knew it. He (supposedly) said:
"The best way to destroy a Capitalistic System is to debase the currency."
How do you debase a currency? By dropping more units of currency into circulation-- more money without increasing value. And what are we doing now? Printing more money, coining more money. Over the last fifteen years we've dropped exponentially more money into the system (an internal boost) than ever before. This drops the value per unit; and in our case this is magnified by the fact that our dollar value is not only not increasing, but it's dropping by itself.

This is similar to a body trying to find nutrition from within it's own system--sure, for a time there might be some fat to burn, but burning more and more fat to create energy has serious long term effects. Pretty soon muscle is eaten away. Then selective organs fail, then death. What is needed for the growth and perpetuation of any organic system is to add energy from external sources, not internal. What do you do when you get sick? Take medicine. You don't sit around waiting for your own body to produce it! This is what would create more value in the dollar as well.

How can we so flippantly do this? Because after 1965 our dollar was no longer based on gold or silver. It's made of and based on non-precious metals and paper. Thus, we could just say: Poof! There's more money!- and no one would be the wiser. To the common guy, he had his 'legal tender'. He didn't care whether it was based on gold or seashells or tulips or cow dung. So long as he could buy his stuff, it didn't matter. Oh, but it does. And we're going to start seeing this really soon. Why do you think that gold always shoots up in times like this? Because it (and silver) are the two things that have always retained value and stably stood the fluctuations of political change. And gold is reaching the stratosphere as investors realize the dollar is, at the least for now, and at the worst for a long time, collapsing.

And now they're going to print even more to 'help' get out of THIS.

Brace yourselves, people. If any of you, or your families, have more than $100,000 in any one bank, move the excess to another bank. Get every penny of your deposit FDIC insured. Do it now.

1 comment:

Ignoramus said...

I can't help but agree that run-away money printing is a bad thing. However, an economist I know once gave me a two-part argument that I'm still chewing on.

1) Some inflation is necessary, because everyone needs some dollars to spend. If you keep exactly the same number of dollars in circulation indefinitely while the population continues to grow, eventually somebody just won't have a dollar no matter what property he owns. So a gold or silver standard is not practical in the long term.

2) The Fed is not actually directly answerable to the rest of the government, not even to the President. So it is not correct to say that "the government" decided to print more money, if by that you mean congress or the president; they have no power to force that. Because of their relative autonomy, the Fed is able to pursue the good of the economy rather than political aims, and so in fact they generally aim to keep inflation at a moderate rate to satisfy the needs of argument #1 above.

What think ye?