Posts Tagged ‘deflation’

To further summarize Howard Katz’s excellent article on unemployment:

– The term “unemployment” is a uniquely American term that came into use in the 1870’s. “Before that time there was not enough unemployment going on to invent a word for it. Why is that?”

– Every other good, besides human labor, does not experience unemployment.

– “Probably the most important cause of unemployment is the over valuation of human labor.”

– “When the Civil War started in 1861, the Union issued paper money (called greenbacks) to pay for troops and war supplies. From 1861 to 1865, the U.S. price level doubled.”

– “In early 1875, Congress voted resumption of hard money, effective 1879.”

– “Prices declined in the U.S. for 30 years, and an average $1.00 item in 1866 was down to 30¢ by 1896.” This period saw the greatest economic growth ever.

– Wages do not drop as fast as prices. Therefore even though the average man may make less in nominal terms, his real wages are actually higher during deflation.

– “This is the most important cause of unemployment. Government reduces the money supply. Prices go down. Wages also go down but not as much.”

– “Unemployment is caused by the fact that real wages rise above their fair market value, and employers cannot pay the high wage. This rise in real wages is caused by the fact that government shrinks the money supply. This causes a fall in prices.”

– “What caused the “depression” of the 1930s was that the U.S. money supply fell by about 30% from 1930-1932. There was a corresponding 30% fall in prices.”

– Due to government intervention “unemployment of the 1930s was not really reduced until the rise in prices of the 1940s led to a drop in real wages.”

– From 1940 to present government has been creating money. “In this case, the opposite occurs. (Nominal) wages do not rise as fast as prices, and real wages decline.”

– “In short, if the government increases the currency, [then real wages fall]. And if the government decreases the currency, then real wages rise.”

– “If we want a society where virtually everyone is employed making a fair wage (for the value they create), then the government should simply keep the (per capita) money supply stable. This is what was accomplished by the American gold standard”

Now for the juicy part:

– Since the end of the gold standard, unemployment is needed to sell massive inflation (increasing money supply, declining real wages) to a gullible public.

– Unemployment is deliberately created using unions, minimum wage laws and various other employer burdens.

The working class then elects politicians promising to end unemployment through government spending (inflation), not realizing the purchasing power of their wages is being destroyed as a result. They are victims of a huge fraud. Convenient for the banksters though.


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Ty Andros predicts:

The Tsunami of debt will begin to hit in the second half of this year and continue for quite some time (deflationary spiral as asset prices collapse due to no new lending to insolvent borrowers), at which point, the G7 financial systems will reach the ultimate destination of all fiat currency and credit systems in history: their DEMISE. Deflation will be met with the printing press until the public understands, then POOF, Zimbabwe and Argentina, here we come…

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