Lessons In Economics

All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit, and circulation.

— John Adams

Our founders believed that educating the common citizen about the principles of sound money was essential to the maintenance of a free and self-governing society.  Is it any wonder this is one of the most neglected subjects in all of public education?

I will readily admit that economics is not one of my strongest points – which is why I have started paying attention to what those who have a proven track record have to say about our current economic situation.  I have also started to read Sowell, Williams, Hayek, Freidman and Hazlet.  I favor the Austrian economic model simply because real world events have demonstrated it is closer to reality than the Keynesian model favored by the political Left.  A case in point: the Keynesian model says, in times of economic trouble, government can “fix” the economy by spending in place of the free market.  Typically, this requires deficit spending or printing of money.  On the other hand, the Austrian model looks to history and says the Keynesian model has never worked in the long term.  Nowhere is this point any more clear than where the printing of money is concerned.  Every time this has been done, hyperinflation has followed.

First, you need to understand what hyperinflation is and how it affects a nation.  The most typical example people use is that o the Weimar Republic (post WW I Germany):

WEIMAR: Here’s What We Know About The Hyperinflation Horror Story That Haunts Europe Today

A close and honest reading of the article above will show that – though it manifests in different forms – the United States has or is currently experiencing many of the same things that led to hyperinflation in Weimar Germany.  But first, we need to acknowledge that critics have claimed hyperinflation cannot happen in the United States for several reasons.  The following post does a decent job of explaining the reasons that supposedly prevent hyperinflation from hitting the United States:

The Hyperinflation Hype: Why the U.S. Can Never Be Weimar

The critics claim that there are several reasons the U.S. is insulated from hyperinflation.  Basically, before we can experience hyperinflation, the following things must happen:

1 – We must experience an economic implosion (like the one we experienced in 2007 and from which we have yet to recover)

2 – We have to have a collapse in the taxes being collected (like we experienced after the economic collapse in 2007)

3 – We have to see a rise in taxes being collected to replace the lost tax revenues (like we have seen in Obamacare — which is why we had the spike in taxes collected: the taxes went into effect immediately while the rest of the law is still being implemented.  Then there is the way the Post Office retirement fund is being exploited for the purposes of general revenues, and the ‘fee’ increases on our energy rates and services such as cell phones and cable TV)

4 – We have to experience an unwillingness on the part of lenders to lend to America (like we have been experiencing for several years now, which led to the Federal Reserve buying our Treasury notes – something that was promised the Fed would never do because it undermines our currency)

5 – Finally, we have to face a choice between Austerity or printing money (which we obviously are not doing…because we are digitizing it.  In other words, we are not printing it; we are just making electronic deposits into selected accounts instead.  Oh, and the Fed is buying our treasuries.  Both of these have the same effect as printing money)

As you can see, none of the things necessary to cause hyperinflation can happen in America (they already have).  It is better explained in this link – especially in the video inside the story:

How Long Do We Have Before Seeing Hyperinflation? One Expert’s Answer May Frighten You

There are other concerns, too.  Instead of trying to sure up the value of our dollar, the people running our economy are trying to devalue it – which makes the situation even worse:

China and Russia, along with some interest from India have all showed a desire to move away from the U.S. dollar as the world reserve currency (note: if this happens, the U.S. economy totally collapses within 2 weeks to 3 months):

China offers next step in removing dollar from reserve currency status

Finally, there is a growing threat the oil will be un-pegged from the dollar (which would have the same effect as the dollar being removed as the global reserve currency):

Iran presses ahead with dollar attack

Last week, the Tehran Times noted that the Iranian oil bourse will start trading oil in currencies other than the dollar from March 20. This long-planned move is part of President Mahmoud Ahmadinejad’s vision of economic war with the west.

Our leaders know all of this, which leads to the next question: so why are they doing it?  Well, if you read my past posts on The OYL, you will note that I argue our world is dominated by people who wish to control it and that the Communist (i.e. borderless) camp in the cabal of Statist ideologies appears to have prevailed.  I have also explained that these people believe they must first tear things down before they can rebuild them to suit their utopian ideas.  Well, in the case of the Communists, this means they have to engineer a global financial collapse – which is what a collapse of the U.S. dollar may well create.  And that gives us the key to why our government appears to be trying to engineer a collapse through taxation and inflation.  It goes back to something Lenin said:

The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.

When you see the word ‘bourgeoisie, think Capitalist: more accurately, think middle class – because that’s what he meant.  And then remember why the middle class must be destroyed before the masses can be controlled:

People who can support themselves can never be made into willing slaves of the State

[NOTE: There are two major religions in the world whose end times prophecy both foretell of a global economic collapse.  Theologically, they are opposites of each other: one negates the other — even in their prophecy.  One warns of the collapse, the other advocates causing it to hasten the return of their messiah.  Indications of both versions of this prophecy are starting to show themselves in world events — to those who have eyes to see and ears to hear, anyway.]