Dollars and Sense – Inflationary Spending and Fiscal Insanity

Bobblehead DollThese articles have discussed money, monetary policy, fiscal sanity, and government spending several times this year.  Some have called me alarmist for raising fiscal sanity during a “Global Health Crisis.”  While COVID-19 (Sars-COV-2) is undoubtedly a viral disease with a 98%+ survival rate, I cannot in good conscience call this a “Global Health Crisis.”  The pandemic declaration was a political move, the mask mandating, business closures, and every other hysterical move have been carefully formulated to present a problem where none exists.  Has Sars-COV-2 mutated; absolutely, but the emotional hysteria has mutated far faster.

Dollars and SenseApathy

When you pass paper to a store clerk, are you spending money; no, you are spending confidence.  Your confidence in the dollar’s strength, as represented by a check, cash, money order, credit card, etc., is what is being spent.  Why was the Great Depression so lasting and detrimental; a lack of confidence in the US Dollar.  People who saved their money formed sane fiscal policies personally and acted logically lost their confidence in the US Dollar, and the dollar went into a great depression.

Since President Clinton, the US Government has been on a drunken spending spree and does not appear to be stopping unless the citizens demand they cease and desist!  What does this mean for you and me; everything costs more for two reasons inflation and interest.  When the government prints money, too much money increases prices, and too few goods chase too much money, resulting in people suffering.  When the government borrows money, the interest must be serviced; the interest will increase prices and usually absorb some of the extra capital on the market to bring down inflation.Lemmings 2

Except, Quantitative Easing (QE) is hindering the absorption of money on the market.  Hence America is witnessing something truly remarkable for the first time in financial history, the debt (principal), the interest, and the extra capital, all of these storms are combining into a major conflagration economically speaking.  Usually, at this point, a country begins to look for a place to go to war, which explains China and its expansionist policies in Southeast Asia and the Pacific Ocean.  Too much debt, too much interest, a military needing worked, and assets need to be stolen from other countries.  Typical historical thinking, war truly is grand larceny on a massive scale!

Where are America and China headed; let’s ask Czarist Russia, USSR, Nazi Germany, East Germany, China, North Korea, Italy, Venezuela, Greece, France, and who knows how many other economically unstable countries historically and presently.  Going to war will not solve this economic crisis, though some may try that solution.  The only solution worth advancing at this critical juncture economically is reducing the size of government, placing a firm halt on all government spending, and refusing the politicians to get into debt for at least two decades!  Yes, this means changing Social Security, Welfare, Medicaid and Medicare, and every other government benefit program to fit a reduced budget and smaller government model.  Failure to tighten belts for the next two decades will bankrupt America, and most of the world, making the Great Depression look like a summer picnic.Lemmings 4

Gold and Oil, real estate, Gross Domestic Products (the goods manufactured in America for sale), trade, all of these wealth tools and more cannot support the debt incurred, the money printed, nor the size of the government from the city and county to the White House.  As this trend continues, Wall Street will continue to be tumultuous, at best, and the confidence in the US Dollar will continue to slide.  But, as the dollar slides, which global currency will begin to take up the slack?

The Euro has discredited itself and is not worth the paper it is printed on.  China thinks they will step into the void and take up the slack with the Yuan, except their financial situation is almost as bad as Venezuela’s and Cuba’s, but their size and government type keep this hidden from the public.  Even though the Yuan is in junk status, the Communist government hides these facts; the truth is leaking out in higher trade tariffs and other global trade and finance costs.  Russia’s economic situation still has not stabilized with the fall of the USSR and will probably need another two to three decades until it can compete on the global economy again.Gravy Train 2

I heard a postulation that the Arabian Oil Rich nations of the Middle East would produce an OPEC-backed currency if the US Dollar fails.  I highly doubt this as a solution, but the potential is there.  Another person claimed the lack of confidence in the US Dollar would lead to the World Bank/International Monetary Fund (IMF) issuing currency for the world; boy, would that be a significant problem!  Yet, the American Dollar is being purposefully destroyed by the current crop of politicians, and nobody is standing up and declaring ENOUGH!

Inflation

The US Government, and many others globally, have increased their drunken spending since Jan/Feb 2020 to incredibly extensive levels and used a “Global Health Crisis” as the excuse.  Except when Ebola was sweeping the world, we did not have this level of insane spending and government intrusion.  Ebola is far deadlier, easier to spread, and yet the Ebola disaster is barely remembered.  Bird Flu, Swine Flu, SARS, MERS, all these viruses have had their time in the media hysterical spotlight, every single one of them is deadlier than Sars-COV-2, easier to spread, and they were never a cause for a global pandemic.Gravy Train

Inflation is caused by poor economic policy, where the government grants itself the ability to print money.  Inflation is not just money and monetary policy; inflation is also confidence, faith, and trust.  Inflation is how the government acts, thinks, and behaves.  Inflation is as real as COVID-19 and just as deadly as Ebola while being more problematic for everyone.  From Dec 2020 to the end of July 2021, inflation has increased the price of goods and services by 3.8%, seasonally adjusted, or 5.4% non-seasonally adjusted, which means that prices go up as a seasonal adjustment in the summer.

Fiscal Insanity

Consider with me an analogy; you live in a community of houses and pay a Homeowners Association (HOA) Fee.  Your neighbor has decided they can write checks on your checking account, and the HOA has granted them legal protection to write checks on your bank accounts.  Because your neighbor has legal protection, you sell off assets to provide the funds for your neighbor.  You sell to other neighbors letters of credit that you promise to pay interest on, provided your other neighbors hold those letters of credit for specific amounts of time.  Except, your neighbors stop buying those letters of credit over time because they do not like how your neighbor keeps writing checks and spending your money.  How do you keep this house of cards from blowing over and losing everything?

Tax BurdenAmerica is in this position right now!  Trend lines show a steady downward trend in the value of the US Dollar.  Inflation will keep increasing prices as too much money is chasing too few products on the market.  Debt needs to be serviced and interest paid.  But, when the interest payment is the only thing being paid, and the principal will also need to be serviced, where and how does the principal get serviced when the interest is absorbing all the monthly payments?  Simple economics, money once created and put into the money market, cannot just be absorbed or disappeared.  Just like food doesn’t disappear once consumed, the offal must come out and be handled responsibly.  Well, the dollar is in an offal position and needs responsibly handled!

© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.

NO MORE BS: Hope, Faith, Confidence, and Your Money

Life ValuedImagine you are going about your daily duties and visit the grocery store.  Where for a specific amount of confidence and hope, you complete an exchange for a product groceries.  Another trip sees you investing hope and faith in retirement using confidence to help protect against the vagaries of the future.  April 15th is fast approaching, where confidence in the government is measured through tax revenue, and government officials then spend your confidence on various projects where you hope the investment will be rewarded by improved roads, better economic conditions, and safety inside defensible and sovereign boundaries.

What is Hope?

Hope, according to Webster, is a feeling of trust, as an extension of an expectation, and desire, that something will occur.  For example, I hope for my diet to work, as I desire to lose weight, an expectation that exercise will aid in losing weight, and trust that my weight will reduce over time.  Does this make sense?

Wasting TimeI ask, because too often, when hope is mentioned, people immediately tie religious expectations and connotations to the word, then plasticize hope into being something it is not.  Hope is not an end goal but the journey to an expectation born of desire and bounded by trust in a system that supports a person’s hope.

What is Faith?

As detailed by Webster, Faith is both an expression of religion’s doctrines and complete trust or an expression of confidence.  Faith is the launch process of hope.  Going back to my desire and expectation to lose weight, I have trust that the doctor was correct in ordering me to lose weight.  Hence, my conviction in the doctor’s words is an expression of faith, and my action is putting faith and hope to work actually to lose weight.

Never Give Up!Complete trust is observable all around us daily, from inserting the key into the car ignition to start a car to the hours spent working where we trade our time (a precious resource) for a tangible item (paycheck) and in so many other ways and means.  Consider grocery shopping; we make selections using our best judgment, with complete trust that the products purchased will not make us sick from food-borne illness or the ignorant or malicious actions of other people.  Why does spitting in a police officer’s cup of coffee make us mad; because it breaks that complete trust that the same will not happen to us.

What is Confidence?

Detective 4Confidence is a unique term, and Webster spends an inordinate amount of time trying to capture the power of, and reality is confidence.  Confidence is “a feeling of self-assurance arising from one’s appreciation of one’s own abilities or qualities; firm trust, a specific feeling  regarding the truth of something, a feeling or belief upon the reliance of someone or something.”  The key to confidence is your own self-assurance.  For example, you are assured through past transactions that your employer is not kiting paychecks.  Your confidence in receiving a salary drives you to be motivated and return to work each day.  When that trust is broken, you will leave and find new employment.  Hence, people do not work for companies, but for managers and leaders, they like.

Confidence is a reality when many people all have trust in the same thing, which creates societies, social standards, and governments.  Confidence in the government is expressed using the government’s monetary system to trade for products and services you would not have if you had less confidence in the government system.  Firm trust in the “value of the US Dollar (insert your own currency here)” leads to gains and losses in economic values.  Consider the events of the Christmas Holiday, which is fast approaching.  The individual expresses confidence, faith, and hope in holiday shopping.  The government uses the data of the volume of trades of confidence as a measuring stick in how well they are doing in government to improve a person’s return on investment.  Shopkeepers, stores, and others selling products and services represent a two-way street of faith, hope, and confidence as they trade with customers and with other suppliers, government, and stakeholders in conducting business.

ResilienceConfidence is never an unconscious decision!  One cannot have firm trust, faith, or hope, in something without being consciously aware and possessing experience and knowledge in that someone or something.  Hence, confidence is the conscious use of trust as a destination in the journey of hope, launched by faith.

What is spent when money exchanges hands?

Confidence, faith, and hope.  But, you claim, “That was my money.”  Really, what value does your money have?  The answer is nothing!  If I give you a piece of cloth/paper stamped with a 20 symbol on it, you interpret this as a $20 bill, having the value of 20 dollars, pounds, euros, etc.  That which we call money is nothing but faith, hope, and confidence in a governing system where products and services are exchanged for time and faith and hope through our individual confidence in the government.  But the reality is that the piece of paper/cloth is nothing, has no value, and can do nothing without the express faith, hope, and confidence of the one trading services or products for that value statement.

Dane-GeldBy removing the Gold Standard from money, we stopped trading in a fungible and tactile substance (Gold, Silver, Grain, Salt, Animal Hides, etc.).  We began trading in a measured system of confidence as provided by the government.  Your “money” is nothing but your faith and trust in the government sponsoring your system of confidence be that confidence called a US Dollar, a Rial, a Pound Sterling, a Euro, etc., you deal in nothing but confidence.  Raw products with tradable value, grain, precious metals, oil, etc., are all injected into the monetary system through investment and speculation markets, not the individual farmer, rancher, miner, etc.  Who receive their wages not through trading their products but by trading their efforts and time with their confidence in an employer-supported by a functioning government system.

Your Money!

I love this phrase!  Rather, I like asking the question, “What does ‘Your Money’ mean to you personally?”  The answers never cease to amaze and horrify me.  I asked a 20-something this question and was told it was what they spent on college.  So, I wondered does your education and academic success provide the value of the investment of money?  To which, the 20-something had no coherent answer.  Let me be clear, the value of an academic gamble is not found in the money made with an employer but in the power of changing how you think and approach the world. Educational costs have far exceeded the value of the academic experience.  The connection between the value and cost of education is warped and twisted, and the only people winning are governments, unions, and the controllers of educational experiences.

Detective 4If I hold a piece of paper/cloth with 100 stamped upon it, I could claim I have money.  Except, I do not have money; I have a bit of cloth/paper with ink declaring that piece of cloth/paper had value, but only if I trust that government.  Consider the trouble Venezuela is currently in, the thin ice of economic problems Mexico, Greece, France, and so many other countries exist presently.  The confidence in those government systems is shaken.  The value of that currency is weak compared to other currencies.  If a blacksmith in Ohio produces a sword, and similarly skilled blacksmiths create the same sword in Saudi Arabia, China, Vietnam, Peru, and Cuba, why does the value of that sword change?  Are the sweat and efforts of the blacksmiths different; no!  Does the value of experience change; no!  Did the cost of gaining that knowledge, experience, and talent change; no!  Is the steel cost to mine different; only because the governments’ currencies are different.  Does the value of the sword adequately represent the value of the currency exchanged; more than likely, No!

What is “Your Money?”  For when we lose confidence in the government, the value of the currency slips, which leads to expressions of fear, a lack of faith, and a refusal of the citizens to hope and trust.  Recently, I had a statement arrive declaring I had XX thousand dollars in a retirement account.  Is the value of those funds found in the report received; no!  The value of those “retirement funds” is located in the government system’s future, invested with faith, on a journey of hope to the time that I can remove those funds without being taxed to death.  If the value of the dollar goes down, those retirement funds are useless.  If the dollar’s value goes up, more faith, hope, and confidence are being invested in the government operations over time.

LinkedIn ImageA “Liberty FIRST Culture” understands their money relationships to government, is engaged in preventing government abuse as that leads to lower values of currency, and the lower the value of a currency, the more expensive products and services become.  Kate, the blacksmith from the (2001) movie “Knight’s Tale,” is absolutely correct, “Each drop of sweat has a price!”  But the price of that sweat is not always competitive with the currency used to remunerate that effort, all because of hope, faith, and confidence in the government managing the currency.  Think about that the next time you are asked to vote!

© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.