Posts Tagged ‘inflation’

Think the Fed’s QE1 and QE2 will cause hyper-inflation? I did, until I read Jeffrey Rogers Hummel’s recent paper “Ben Bernanke Versus Milton Friedman”. Bernanke is simply shuffling paper around to bail out his bankster buddies and he is doing it without increasing the money supply – despite popular belief.

As impressive as that is, there is a severe downside. The Fed-manufactured crises of 2008 has literally made them the economy’s central planners. Here is an excerpt from Hummel’s paper:

Under the old central planning—which performed so poorly in the Soviet Union, Communist China, and other command economies—the government attempted to manage production and the supply of goods and services. Under the new central planning, the Fed attempts to manage the financial system and the supply and allocation of credit.


But now with Bernanke, the central planning aspect of central banking has become far more encompassing. As George Selgin put it in an interview, “the Fed . . . has morphed into a central planning agency with a corporate welfare department.”


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Will Helicopter Ben be given the boot, or will he stay to wreck more havoc on the economy?

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The old senile bastard Ronald Reagan understood basic economics better than today’s “economists” and definitely better than boobus. Via shtfplan.com:

“Let’s turn to your paycheck, because here’s where the government really profits from inflation. We have a progressive income tax. As your income increases you find the government takes a higher percentage, say, of the second $10,000 you earn than of the first. Now, let’s say you get a raise simply to keep even with the increased cost of living, to make you able to buy what you could before the raise. But you can’t, for that increase in the number of dollars puts you into a higher tax bracket. The government takes a greater share of those new dollars. And suddenly you find you haven’t kept up with inflation. After taxes your worse off than you were before the raise. Nine times out of ten, though, you blame high prices, not your taxes.” – Ronald Reagan

More on inflation here.

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“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.”Alan Greenspan

“It makes no difference to a widow with her savings in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation or pays no income tax during years of 5 percent inflation. Either way, she is ‘taxed’ in a manner that leaves her no real income whatsoever. Any money she spends comes right out of capital. She would find outrageous a 100 percent income tax but doesn’t seem to notice that 5 percent inflation is the economic equivalent.”Warren Buffett “How Inflation Swindles the Investor,” Fortune, May, 1977

Ironically Greenspan was directly responsible for inflation while serving as Fed chairman and Buffett now advocates, and profits from, inflationary bailouts.

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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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Erik Voorhees reports:

In other words, the value of the dollar remained extremely stable for 150 years, the Fed was created in order to “stabilize the value of the dollar,” and the result has been a 95% devaluation of the dollar in less than 100 years following its creation.


The Federal Reserve System is fraudulent. Whatever its stated purpose, its effect is to create a hidden mechanism of deficit spending by politicians, through the insidious invisible taxation of monetary debasement (inflation). With printed money, the Government can buy services for its voters before the effects of inflation are felt. The voters money buys less the following year, as the new money has raised prices, and they are often none the wiser.

Fraudulent, yet very effective.

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