http://www.brianrwright.com/index_files/feds_fear_liberty_dollar.htm
Monopoly Money: Feds fear Liberty Dollar alternative
01 December 2006
Brian Wright
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Live free and flourish!
Part of the noble equation of liberty is honest money. Fortunately the National Organization to Repeal the Federal Reserve Act (NORFED) has given us the Liberty Dollar system to help us achieve just that.
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With the monetary inflation rate being unknown due to the US Treasury no longer publishing the M3 number, one has to guess. To me, it “feels like” between 5 and 10%. My experience has been that the demand deposit rate is usually a smidge less that the inflation rate. During the Carter Inflation in the 70’s when the published rate was 21%, savings deposits were paying 17%. In the 90’s, when inflation was a “low” 4%, demand deposits paid 1%. The sad part is that inflation erodes the purchasing power of savings, “inflates” one into higher tax brackets, and when one sells assets “capital gains” tax is on inflation.
It hits the poor, those on fixed incomes, and the financially illiterate worst.
I like to tell the story of my now deceased Father-In-Law, who was always proud that he had a Fifty Dollar bill in his wallet. He put it there as a kid so that he’d never be broke. It was in there about 50 years. When he put it in, it was valuable. When his heirs took it out, it was worth about a penny in terms of the purchasing power it once had! In an inflationary economy, money fails in one of its key roles as a store of value. He’d have been better off to have used it and been broke. It was an illusion.
At 1% inflation today’s “dollar” is worth 74 cents in 30 years. 10% yields a 6 cent dollar in the same 30 years. I like to think of inflation like a balloon. Want a bigger balloon, just put more air into it. Until it pops!
Imagine playing on a football field, where each year the definition of a “yard” changed. It doesn’t change the same each year. One year the field is really 106 yards in “real yards” and the next it might be 116.1! Talk about nightmare. And what good would records be? Think it would be confusing. Why is it different when the gubamint prints more money? And, it’s not actually the gubamint printing money. It’s the Federal Reserve Bank, which isn’t federal, doesn’t reserve anything, and isn’t a bank. It’s just a private club with a license to steal.
Economists like to reference Robinson Carusoe’s island, Caruso and Friday are on the island. Caruso fishes and Friday picks bananas. They work out an exchange. But put some more people on the island and you need money to have an easy exchange between fish, bananas, and coconuts. So one day a “Federal Reserve Banker” comes along and prints some paper “dollars”. The marketplace finds the right price for fish in terms of bananas, coconuts, or “dollars”. Now suppose our Federal Reserve Banker prints double the dollars. Just lots more “dollars”. Twice as many in fact. Now just printing more “dollars” doesn’t do anything to increase the wealth of the islanders. There are not twice the fish, bananas, or coconuts. Rather quickly the market price will double the price of fish, bananas, and coconuts. Increasing the money supply doesn’t make everyone rich. It just increases prices.
Why do it? Because the printer are unjustly enriched. He gets to spend those dollars before the prices adapt. Money that has nothing backing it of value (i.e., gold; silver; or even tiki lamps) is just paper. Worthless the minute that the fraud is discovered.
Read about John Law, the South Sea Bubble, the post WW1 german hyper inflation, the south american hyper inflation, and the Carter Inflation in the 70s.
So, sooner or later, the Arabs will get tired of getting pictures of dead presidents for oil. Ditto the Japanese for Toyotas. And the Chinese for plastics.
One needs to NOT hold paper money! But what should one “hold”. Things that appreciate in value (i.e., collectables). Real estate. Things that earn value (i.e., stocks that are recession / depression proof). Commodities. And precious metals. Debt in a recession is bad.
That brings us to NorFed and their alternative currency.
I think the jury is still out on that.
Here’s my thinking. The NorFed Twenty “dollar” coin is an ounce of silver that costs $20 FRB. Silver’s volatile. It varies currently from 12 to 18 Federal Reserve Banknote “dollars”. So, why pay a premium for basically an ounce of silver. I’d just buy (i.e., have bought and will buy more) bullion coins from reputable dealers. Is the paper NORFEB warehouse receipt worth that premium? Maybe? It’s better than a Federal Reserve Banknote. Called a FRBbie (pronounced FUR-BE!) by its detractors.
Note: Gold bullion 1 OZ American Eagle coins trade at Kitco who buys at 630.10 and sells at 667.92
Reinke Faces Life 
Printing… Printing ….FED and ECB are PRINTING MONEY IN THREE SHIFTS DAILY
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We are presently enjoying a most exceptional advance of productivity thanks to both unprecedented technological innovation and economic progress resulting from globalisation.
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Under a gold standard such massive productivity gains would result in rapid increase of buying power. Under the present system without any gold backing our real living standard is on the contrary declining despite this most exceptional progress.
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Why is there still inflation when it is presently costing only half the price to produce it did cost 10 years ago for products like electric and household equipment, textiles and air travel, down even to 10% only for items such as or picture prints, computers, mobiles, printers….?
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The reason is that the monetary policy of the FED (as well as the ECB) are deliberately targeting an inflation rate of about 2% and thereby deliberately prevent the average price level from declining and people’s buying power from rising. For the purpose of the matter central banks keep interest rates at an inflationary low level, generating excessive credit demand an (asset) inflation. By targeting inflation at 2% central banks prevent increased productivity benefiting to the average consumer.
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As long as the gold-backed money standard is not restored only a money supply rate near to the growth rhythm of the real economy could prevent inflation and allow purchase power to keep up with productivity. Any growth rate above this rhythm is inflationary in the true sense. Inflation targeting therefore in practice means nothing less than institutionalised confiscation of all prosperity gains resulting from progress.
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The FED’s August M3 money supply rate is not at the growth rate of the real economy of some 2%, but has just reached its fastest rate in 35-years (about 14%). This means that for the moment a 14% larger amount of money is chasing a quantity goods and services that is hardly 2% larger than twelve months ago.
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Consumer Price Indices are not representative for real inflation. By definition they cover consumption items only as asset prices are unaccounted for. The CPI also does not ponder the lowering quality of goods as it compares today’s low quality import stuff with the top quality domestic produce we were used to a few years ago. In Europe the fastest rising items such as oil or cigarettes and MOST IMPORTANTLY TAXES do not even figure on the CPI list just as if these were unimportant details in the family budget….
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The exorbitant money growth rates both of the FED (14% /yr) and the ECB (12%/yr) are the only cause of the credit and housing bubble. The present rate cut is fighting fire with fire and is paving the road for the next bubble in raw materials and run away inflation very soon…
. IntraLect
Read more at …
here at Workforall.net
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Paul V.
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