The following video clip was taken from a documentary called Fiat Empire. It discusses, among other things, the Federal Reserve and its relationship with the federal government, as well as inflation (or how the monetary base keeps increasing) and why prices rise.
I think we can all agree money is very important. Hence why the level of ignorance amongst the general population regarding money is astounding. Such ignorance is not surprising given the appalling state of public education in the United States, but luckily the internet exists for anyone seeking information and knowledge.
Fear of economic collapse has allowed massive money printing to take place. As the video makes clear, flooding the system with money artificially stimulates demand. As we know, goods in this world are finite. Therefore, with more money chasing a finite amount of goods, the prices of those goods will inevitably increase. Those who receive the new money first will benefit the most, as they will be able to purchase goods at today’s prices. Those who receive the money later, after the prices of goods begin to rise, will suffer the most as they will have to spend more of their money on the same amount of goods (all other things being equal).
Here are a few charts:
The above graph simply shows how much new money has been created in the last few years. It is one of the only graphs needed to explain the general explosion in the price of most everything; food, energy, etc. As explained above, the new money enters the economic system, stimulating demand. The new demand drives up the price of goods. There’s no real mystery here.
The real question is where does it end? We are told that massive bailouts and QE (quantitative easing) are necessary to keep the system from collapsing.
And by system I mean the stock market. As long as prices of stocks are up, everyone feels wealthier, regardless of whether it is true or not. The chart above shows where much of the new money has ended up. The only reason the stock market has seen gains in the face of weak fundamentals is because of the unprecedented monetary stimulus. What happens when this comes to an end?
Furthermore, we are told that QE is working. How can it be working if the Fed has gone from pumping roughly $50 billion a month into the market (in 2008) to roughly $200 billion a month (today)! If QE is working, why do they need to pump ever more money into the system to keep it from collapsing? A healthy economy does not need billions of dollars of new money pumped into it in order to stay afloat. Ergo, we do not have a healthy economy. There is no real recovery and what we have experienced since 2008 is simply a new bubble. The government and Federal Reserve are so afraid to be seen to be doing nothing and to allow the painful, but necessary, recessionary correction to take place that they instead opt for inflationary oblivion. When QEII ceases in a few months, what will happen?
People seem unable to grasp the concept of inflation. They have seemingly been conditioned to believe rising nominal prices are the normal state of affairs in an economy. Furthermore, we are inclined to believe that when certain prices rise (homes, stocks) it is a good thing, whereas when other prices rise (food, energy) it is a bad thing. In reality, the rising prices of all goods is a result of constant monetary expansion. In a healthy economy, increases in productivity (based on savings and investment and with all else being equal) result in falling prices and rising wages. In a healthy economy we really do become wealthier. In an unhealthy economy, based on debt and consumption, the benefits of an increase in productivity (if they occur at all) are wiped out by monetary inflation. We are literally poorer in a system of monetary inflation.
It’s no secret (at least not anymore) that the reason for our economic misfortune lies on the doorsteps of central banks and their controlling members. Members of this elite banking cartel assume a pretense of knowledge. In other words, a few people (albeit very intelligent people) believe they have all of the information necessary to set interest rates and the amount of money needed in the system.
This is a great and dangerous fallacy. No one person, or even group of people (no matter how many Harvard degrees they may have) could possibly attain this level of knowledge. It reminds me of Leonard E. Read’s classic essay I, Pencil. In it, he shows how not one single person knows how to make something as simple as the pencil. Yet, we are expected to believe that a select few people know where interest rates need to be for the entire economy? We have all been hoodwinked.
What can be done? People must be made aware. Educating as many people as possible of the ills of central banking is the only way anything will ever change. No one can force anyone to understand, it has to come organically. The internet is very important in this endeavour. It is waking people up left and right. We are asking fundamental questions; questions that the mainstream media, most politicians and academicians are loathe to answer (if they even understand it at all!).
Questions like: If central banking is supposed to reduce the number of economic crises, why have there been so many since its inception?
If central banking is necessary for sustaining stable prices, why have prices soared in so many segments of the market?
Fundamental question like these are being asked and, to date, we have not received any suitable answers from the mainstream. The facade of central banking is being stripped away. Like an old house, the many layers of poisonous lead paint need to be removed before it is safe to dwell in once more.