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Congress Funds Government with More Funny Money- Pt 2

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Congress Funds Government with More Funny Money- Pt 2

As noted and not really fleshed out by the media or ballyhooed, Congress was supplied with more “funny money” (fiat money from the Federal Reserve created out of nothing) from the Federal Reserve to the tune of $1.1 Trillion.

Very few paid attention to this move and simply passed it off as what should happen to keep our government humming along and our country smoothly operating. Few see the more insidious red flags that this move points to and fewer still understand the system and what it actually is doing here.

Our Built In Normalcy Bias

The fact is this is more major than the public cares to acknowledge, understand and prepare for. Practically all of us have a built in normalcy bias carefully cultivated by our educational systems and the media. So just what is a “normalcy bias”? Definition.net gives a good overview of this term I believe:

In short, a normalcy bias, refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects.
The assumption that is made in the case of the normalcy bias is that since a disaster never has occurred then it never will occur. It also results in the inability of people to cope with a disaster once it occurs.
People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.

The key in the above definition is the assumption that because a disaster has never occurred during their lifetimes, it will never occur. The reality is that our current prosperity is an illusion produced by a system of modern money mechanics and inevitably destined to fail.

The Signs of Collapse Are Gathering

My son said to me recently.” Yeah Dad, you’ve been talking about this stuff [currency collapse] since I was a kid.” And yes, that is true. I have been following this issue of our money supply for over a decade now. Frankly, I am surprised that we haven’t progressed faster towards collapse than we have. After all, the Federal Reserve has been manipulating our economy for over a century now.

But there are signs that the storm is gathering clouds quickly now.

Pay attention for example to the prices of food and goods in our society. Prices are rising and rising more steadily these days. Meals that cost $4 in local Chinese restaurants less than a decade ago are now up above $8 and higher. A doubling in under a decade. Other doublings have occurred in many other foods.

I recently traveled on the turnpike and noticed that tolls which had just been bumped up significantly less than a year ago were going up again. The notice was posted for another increase on January 1st. Gas costs are going down. Why the increase I wondered?

I asked the toll taker what the increase was going to be. After he claimed ignorance, I researched it a bit myself and discovered that it was going to be 25% more! That amounts to a doubling of tolls in under 7 years.

Inflation is a Hidden Tax and Sign of Declining Currency

When more dollars are pumped into the economy and production of goods and services does not produce those dollars, the value of the currency declines. As noted in Modern Money Mechanics put out by the Federal Reserve Bank of Chicago in the first post on this topic, control of the money supply is essential to keep the value stable.

Our government just increased the money supply with no subsequent increase in goods and services to the tune of $1.1 Trillion. The value of our money will decline further because the same amount of goods and services are in the economy but now there are more dollars chasing them. It will take time to filter through the economy but our purchasing power from money earned has been further compromised.

This means you will work for the same amount of money but it will buy less. This is what G. Edward Griffin refers to as a hidden tax. The value of your earnings has been removed with nary a whimper or protest. The government won’t feel it with the new money but by the time it reaches us, it will be expanded further through our fractional reserve banking system and worth even less, far less.

Watch this video on YouTube for some education on our debt based money set up and where it is heading.

So, I would also suggest reading or listening to The Creature from Jekyll Island by Edward G. Griffin for a more complete view of the Federal Reserve and solution. The most current version is recommended as it contains important updates.

[vsw id=”OQWMd_NPSBA” source=”youtube” width=”425″ height=”344″ autoplay=”no”]

The Economy is Running on Empty

What the latest move by our government tells us is that our political and economic system is running out of options. Taxes are reaching breaking points so borrowing has been growing as an option for our politicians. With the amount of debt our government has however, even that option is getting risky.

You see, our economy is no longer a production based economy. Our capacities to produce goods have been transferred overseas. We are a credit based economy rather than a export based economy. Our production of goods capacities have been reduced to a shell of what they were during the 50’s and early 60’s by transferring our manufacturing out of the country. (A quick search on our retail shelves for American made goods will clearly validate that last statement.) Consequently, we cannot produce goods to sell to other nations to take in money.

Now, every round of borrowing is driving the value of our currency further down in value. This means that in order to equal what was required previously even more money has to be borrowed since the money is now worth less because of what was previously pumped into the economy without a rise in tangible goods or even services. This has created more dollars but not more goods. This makes the tangible goods and services which come from people’s labor that much more valuable than the money which came from nothing.

A Diamond Analogy

You can think of it this way. Diamonds are valuable not only because they are pretty but also because they are rare. Suppose a beach were discovered that was made up of diamonds rather than sand. What do you suppose would happen to the value of diamonds? Of course, since there are now more diamonds and no more increase in buyers, the diamonds would go down in value.

The same thing happens to our money when there is an increase in money supply but not in the goods and services that money purchases. Money is now less rare or scarce than the goods or services produced by actual labor. So the goods in relation to the money are more scarce. Therefore their prices rise to make up for the cheap money.

This is what we are watching now. Rising prices.

At some point a critical mass is reached. When this happens inflation reaches a hyper inflationary stage. The value of the currency drops markedly and quickly. Money becomes far less valuable and it takes significantly more money to purchase the same goods. Zimbabwe and Chile are modern day examples of this phenomena. The Wiemar Republic is a common example which was the state of Germany after WWI.

One Last Thing…

On top of the decrease in manufacturing and increased borrowing and debt there is another insidious little action that is continuing- War. War is one of the best ways to fuel inflation. War is first of all, expensive. It produces massive and continuous debt.

Secondly, the goods produced get destroyed. Instead of generating new goods or services that could generate more production, they end up being eliminated. As they are eliminated, what is left behind is more debt and no means to pay for it with the sale of more goods. There is simply more demand for more goods that are destined to get destroyed leaving behind even more debt.

Can you detect the vicious cycle war creates? I hope so because if you do a little investigation of history you will note that over time the most common accompanying reason for the collapse of an empire was war and the debt it created that came along with it.

It doesn’t bode well for the direction of our nation. Empire ultimately results in collapse. It always has and it always will. For as Jesus said to Peter when he cut the servants ear off in Matthew 26:52 “Put up again thy sword into its place: for all they that take the sword shall perish with the sword.”

So, while our Corporate controlled media who are controlled by their money masters that keep them supplied with loans and cash flow use its mouthpieces to continuously endorse the value of war, our economy is further eroded by the subsequent produced.

What Can Be Done?

First of all, education on how our system is leading us in the wrong direction is essential. Then, keeping in mind this wrong direction take some precautions to protect yourself.

If paper money collapses, all assets based on it will collapse as well. Investments based on inflation will become worthless. Think: paper money and paper assets like stocks or paper based assets. That is where tangible assets will become valuable including universally accepted exchangeable assets like gold and silver. (Silver may be even more valuable because of its useful commercial values.)

If inflation strikes hard, necessities like food will skyrocket in price. You may want to take some steps to prepare for that real possibility by storing some basics with long term intent in mind. Since that is a whole other can of worms I will not cover much on that here but will recommend a few resources below to get you started.

At any rate, the worst thing you can do is nothing. As the saying goes, the dumbest thing to do is to continue to sit in the middle of the tracks with an onrushing train bearing down on you. The handwriting is on the wall as King Belshazzar in Daniel Chapter 5 discovered to his dismay predicting downfall. We don’t need a prophet to interpret it. Simply logic and a little patient study of history and honest money.