Monday, March 23, 2009

The Banana Republic and the Counterfeiting Government

"Peter Schiff, who has correctly predicted much of the present financial calamity that is destroying the wealth of millions of Americans, now says that with the Federal Reserve's decision to print money by the truckload, "America has now become a banana republic." [link]

"Now US Federal Reserve chairman Ben Bernanke has revealed part of the answer: the central bank itself will buy $US300 billion of US Treasury bonds and pay for them by electronically printing the money." [link]

Now, I understand that more often than not economics is a very tricky subject, so I will simplify the above in layman's terms. What the Fed will now do (they like to make it sound technical by using the term "electronically printing money") is change the way that they calculate intake, expenditure, overhead, etc... Actually it really doesn't matter, they are doing two very simple things that if a private citizen or a business were to do they would wind up doing time in a federal pen. They are quite simply "cooking the books" or changing the numbers in however they feel will best serve their purpose, and they are counterfeiting.

What I would like to focus on for a moment is the counterfeiting part. There are several reasons why "counterfeiting" is bad, especially when done by the government. If we realize that Federal Reserve Notes (FRN's) are a means of measuring a persons work output, then we can really start to get upset at what the government has been doing. What I mean by this is, if you work, sale items, do something for "money" your work is rewarded by being paid something. More often than not this is symbolized by a paycheck which you can exchange for FRN's. Now, the more FRN's that are in circulation without being backed by someones work the more the value goes down. In other words if out of the blue the government printed enough FRN's to give everyone in America $1million the price of everything would go up drastically, because the value of the FRN has been diluted. This is why the government is always after those pesky citizen counterfeiters, they don't like competition in the FRN market.

So in reality every time the government prints money because it feels like it, it is actually stealing from every hard working American by devaluing their work, ideas, productivity, industriousness, etc...

Make sure when they come out you take at least a large wheelbarrow full to the store it will probably take that many at least to buy a loaf of bread and a gallon of milk.