“All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation.”
In 2016 Governor Gerry Brown signed into law SB-3 which would phase in a series of increases in California’s minimum wage until it finally reaches the goal of $15 per hour in 2023. This was done to provide a ‘living wage’ for those working minimum wage jobs. I’m telling you right now, you may as well start stuffing little squares of toilet paper in your wallets and purses, because if you don’t learn about the nature of coin, credit and circulation it will have about the same value as the money you currently use to purchase goods and services.
How about we drop the minimum wage down to $1.25 per hour like it was back in 1964? Before you say I must be out of my mind let me add a little caveat to that; and while we’re at it, why don’t we restore the integrity of our monetary system? Allow me to explain.
Are you aware that back in 1964 the average annual salary of a working American was $4,576; yet people got by. Today that would be considered poverty level and make those receiving that amount eligible for all manner of government subsidies.
Did you know that in 194 you could buy a brand new Chevy Camero, right off the lot, for around $2,588? Today that same car will run you ten times as much, with basic models starting around $25,000 MSRP. Did you know that in 1964 you could buy a brand new home for around $21,000, yet today that same home would cost you over $147,000? What else has gone up? Well, the price of a gallon of milk used to be less than a dollar, now it’s around $3; a dozen eggs used to be $.54 and gas was $.30 a gallon.
Much of that can be attributed to inflation; something people mistakenly believe to be the rising cost of goods and services. Inflation is not, I repeat NOT the rising cost of goods; it is the loss of purchasing power of your money.
1964 was the last year our government minted silver coins for circulation; and had they continued doing so, today $1.25 in silver would be worth $15.35. Hmmm, that’s right about where they want to raise the minimum wage to in California.
Our money used to be worth something; it was backed by either silver or gold and could be redeemed for either at any Federal Reserve Bank. That’s right, at any time you could waltz right into a branch of the Federal Reserve and turn in your paper money and walk out with the equivalent in gold. The last year you were able to do that was 1971; before President Nixon took America off the gold standard.
There was a time when, for every dollar printed, there was an equivalent amount of gold backing it up in Fort Knox. Now whether there is any gold left in Fort Knox is the stuff of conspiracy theories right and left, but the point is that those paper, (well actually they are clothe) bills you carry around are no longer backed by gold; therefore the government can produce as many of them as they want to fund their operations and keep the economy floating. Remember all that Quantative Easing in 2008 when the FED purchased $800 billion in bonds and treasury notes to boost a lagging economy? Well, that’s a perfect example of flooding the economy with paper money; which is the root cause of inflation.
What people don’t seem to realize is that the FED, just like any other bank, is there to make a profit for their shareholders. They don’t actually have any reserve currency, or at least they didn’t when they were first established back in 1913. So how could a bank without any cash reserves fund our country unless it pulled money out of thin air?
So, if the FED is purchasing billions of dollars in T-Bonds and Treasury Notes, what’s in it for them? Well, how many of you have heard of, or ever purchased a U.S. Savings Bond? If you have you know that you pay, say $50 for a bond, then wait a certain amount of time and then redeem it for $100. Where does that profit come from if not from the government? And where does the government get their money? Well they either get it from your pay in the form of income taxes, or they borrow it.
When I was stationed in Spain I knew a guy who came from Arizona and he had a checking account back there with just enough to keep it open. When he got to Spain he opened another checking account at the bank on base. He would write a check from his account in Arizona and deposit it into his account in Spain. Then he would turn around and write a check from his account in Spain and mail it back to his bank in Arizona to be deposited. At the same time he was spending money right and left; far beyond what was being deposited into his account by the Air Force.
Eventually his house of cards came crashing down around him. First he bounced one check, then another. Then he’d start getting two or three per week, until suddenly he was bouncing them every day. Finally our commander called him in to his office and he was demoted and sent to a financial management class. Luckily he wasn’t booted out of the Air Force, but it goes to show you what happens when you try and spend more than you take in, and cover your tracks by trying to shift non-existent funds around.
In a way that is exactly what your government has been doing since we went off the gold standard in 1971, but instead of trying to fool the banks they just borrow the money with the promise of paying it back at a later date. You see, paper money has always been just a means of purchasing goods or services; it is real estate; or property that has true value. If you own all the land in a country then you own the country pretty much. Well, the United States, and the labor of those living in it, are the collateral on the debt your government accumulates…and you fools keep asking your government to keep doing more and more for you, when at the same time you beg to keep your taxes low.
You can’t have it both ways people; at least while expecting your government to remain solvent. One of three things must happen; your government will have to either cut its spending, it will have to raise your taxes, or it will have to keep borrowing money until it goes bankrupt.
Do you know what the GDP, or Gross Domestic Product is? The GDP is the total value of all goods produced by a country; it is a measure of the economic strength of a country. Well the GDP for the U.S. last year was $19.39 billion. It is expected to go even higher under President Trump, and should be cause for celebration among all Trump supporters; right?
Well hold your horses pardners, there’s a downside to all this. Economists estimate that under Trump our national debt will go up by $5.6 trillion; which far exceeds our GDP. That’s not taking into consideration that our national debt is already an astronomical $21.7 trillion.
I constantly hear that we just have to raise taxes on the rich and all will be just hunky dory. That tells me that people have absolutely no idea the amount of money our nation owes to its debtors. As I said, the national debt stands at $21 trillion, plus change. The combined wealth of the ten richest men in America is $523 billion…NOT EVEN A TRILLION DOLLARS! You see a trillion is a thousand billion; so the combined wealth of the ten richest men in America is only 1/2 trillion; not even a dent in the national debt.
Even if we were, somehow, able to pay off our national debt, how long do you think it would be before it begins to climb again with the way your government spends money today? So they would just start borrowing non-existent money, (it’s all done via computers now with entries into columns without any actual funds being transferred), then the government uses that non-existent money to deposit into the accounts of its employees, (government workers, the military, and those on social services) and then that money makes its way into the economy…CAUSING INFLATION; which means that the money you hold in your hands is worth less.
As I write this the value of a troy ounce of silver is $14.19 and the value of a troy ounce of gold is $1,210. That stuff you carry in your wallets and purses is money that only has any purchasing power because you have faith in it; you trust that if you pull it out of your wallet and hand it to someone in a store that you can receive a certain amount of goods or services in return for it.
Yet since the FED was created in 1913 the value of that paper you call money has dropped astronomically. Today it would take $2,549 to buy the same amount of goods or services that $100 would have paid for in 1913 when the FED was first established; that’s how much inflation they have caused by their monetary policies and our governments continued borrowing.
Yet people think that the answer to their economic woes is just to raise the minimum wage until people can afford to live the American Dream. That’s why I began this piece with that quote from John Adams, because things haven’t changed; most of our problems of an economic nature are due to “…the downright ignorance of the nature of coin, credit and circulation.”
People also believe that they can change things at the polls by switching back and forth between Republican and Democratic control of their government. Well, this national debt has been growing steadily for decades under both Republican and Democratic administrations; so I have but one question for y’all; how’s that voting thing working out for you.
Wasn’t it Einstein who said that the definition of insanity was repeating the same thing over and over expecting different results? Well, no matter, for that is what I see, an insane belief that people are going to Make America Great Again by voting for new masters once every so often.
The President who signed into law the Federal Reserve Act once said, “Liberty has never come from the government. Liberty has always come from the subjects of the government. The history of government is a history of resistance. The history of liberty is the history of the limitation of government, not the increase of it.”
I suppose Morpheus was right when he told Neo, “Fate, it seems, is not without a sense of irony.”