Economics

=**Economics**=

**Booms, Busts, and Balderdash - Inflationary Business Cycles:**
Money cannot be created out of thin air by government fiat and increase in value. Governments print money (including America), but if it's not backed by something of value, then it has no real value. A government that would run the paper presses and double their money supply without any real wealth increase from the people has effectively cut the value of all the existing dollars in half.

Imaging owning one unit of stock in a company that has 100 shares and has a net worth of $1,000. You own 1% of the value of the company for a $10 stake. Now imagine that the owner prints another 100 shares and sells them on the open market. Someone may pay close to $10 per share through ignorance that the owner produced 100 more shares early in the cycle, but eventually the market will realize that the shares are watered down. The true wealth of the company has not changed overnight, but there are now 200 shares of stock on the market representing the company of a total net worth of $1,000. This means the effective value of the stock has been cut in half. Your $10 stock has dropped o $5 after all the buyers learn the full information, in other words, once the market does what markets do. Wealth cannot be created without providing something of value and printing paper is not providing real value. There are real life protections to keep this from happening to stock, but no protections from this happening to the money supply.

Printing money to cover the yearly deficits is hurting more and more. Have you felt the pinch of the dollar being less valuable? Have you noticed that in most fields costs are rising precipitously? Today, we rely on the Federal Reserve, a cartel of banks that can determine our money supply with a Chairman of the Federal Reserve who can choose to produce more money at a whim.

**The Curse of Wealth Unearned:**
In the late 1400s, explorations for gold and passage to the east produced the discovery of what became known as the New World. Spain would outdo Portugal as the dominant player in the game throughout much of the 1500s, and literally tons of gold and silver made its way across the Atlantic. There were many unfortunate effects of this, such as the near total decimation of the Incan and Mayan native populations, as well as the instigation of the African slave trade. First, the natives and increasingly Africans were brought in to work the mines. It would be logical to deduce that Spain became one of the richest nations in the world as a result of the massive influx of stolen treasure. However, this was not the case. As the gold came in, Spain became far more proficient at spending than at producing. They came to think the flow of gold would never stop and kings of Spain began to think they had power through wealth to bend the world as they wanted. It's almost like a wealthy man's son inheriting and squandering the inheritance because it wasn't earned through the principles of success. Current U.S. is similar in its printing of money through the Federal Reserve. The government prints money as it runs up crippling debt and average Americans have to endure inflation as if the printing can simply continue without consequences. Too many Americans are like the Inca and Maya Indians - too trustworthy of the government and belief that certain politicians will get America out of the mess. Wealth unearned bears with it a curse.

**Austrian Economics, Peter Schiff, and the Bailouts:**
If we observe our economy today we will see major violations of economic law. Unfortunately, when the government violates economic law and it fails, free enterprise is blamed. This allows the government to step in and "do something" so solve the economic situation. Socialist/Communist economies have never worked. The Austrian school of economics recognizes that all economies rise and fall on the economic calculations and predictions of the entrepreneur. If you kill the entrepreneur then you kill the catalyst for the entire economy. Communist China has transformed itself into more of a free enterprise system by allowing entrepreneurialism. China's totalitarian rulers saw the writing on the wall and changed in order to maintain power.

Peter Schiff was the president of Euro Pacific Capital Inc., a brokerage firm based in Darien, CT. He is a follower of the Austrian school of economics and predicted the current economic crisis (that began in 2008) years in advance. By economic analysis, he predicted the credit crisis, the housing devaluations, and many more of the economic maladies we are seeing as reality today. Schiff was mocked for his economic views on a news program (before the crisis). However, a person with the facts will always come out on top of the person with just an opinion.

**Unsound Money System Needed by Governments That Want Wealth Confiscation:**
As America grew in terms of the welfare state, sound money became less and less desirable. Our government does not want a sound money system because it would not allow them to get away with deficit spending. Inflation and deficit spending are a hidden way the government can take from the productive and give to the free-loaders. Our nation is in an ideological war between those who want to ride in the cart and those who are pulling it. What is amazing is the that the original rebellion in the American colonies (Boston Tea Party) was instigated by a less than 2% tax! Average Americans are paying close to or over 50% of their income in taxes when counting federal income tax, state income tax, local income tax (depending on which U.S. city you live in), sales tax, Social Security tax, Medicare tax, school tax, property tax, gas tax, licenses and fees, and other state and local taxes and fees. As government spending increases (federal and states), government officials are continually looking for different ways to increase revenue and often the suggestion is higher taxes or new taxes.

**Government Spending, Keynesian Economics, and Political Responsibility:**
Since WWII, Keynesian economics (from the economic theories of John Maynard Keynes) has been the main current in American economic thought. Since WWII, deficit spending has skyrocketed, savings for Americans are at all-time low numbers, and government spending make up more than 25% of the economy. Keynesian economics promotes government spending (even deficit spending) in order to help an economy. Keynesian economics has allowed political irresponsibility as politicians can run on promising spending in the way of stuff or programs. Many in America are pushing for a balanced budget amendment to the Constitution to require the federal government to balance the budget (not spend more than they bring in), return to the gold standard or a type of system that only produces money when real value is produced, and reduce the influence of special interests in the voting process.

**Confiscation or Incentive:**
Many Americans have misplaced compassion wanting the government to take care of whoever the government can possibly take care of. However, this misplaced compassion taxes the engine of initiative and gives to the unproductive. This sounds good on its face to many and it works very well at the voting booth. All that a candidate has to do is appeal to some group by using the power of either envy or greed, promising something for nothing, taking from others for their benefit, and explained under the banners of "unfair," "equality of results," and "windfall profits." Those that propose such programs are either extremely ignorant of the truth of how economics work, or they know very well how things work but are willing to destroy the productive for the sake of their own power. In other words, they are either ignorant idealists with misplaced compassion, or cold-hearted power brokers rising on the destruction of the contributors. Either the government is in charge of handling the wealth of a nation and distributing to whom it pleases at the moment, or the productive people and business owners who actually create the wealth in the first place are to be left in charge of the fruits of their own production. The more a nation moves in the first direction, the less freedom people have. Governments that seize assets and distribute them to those who didn't have an initiative to produce them tend to grab more and more power over time, until the groups that were initially served by its redistribution are its next victim. On the other hand, when a government leaves its productive creators free to own their own first-fruits, incentive is increased and even more brilliant output results.

Once upon a time there was a little red hen who scratched about the barnyard until she uncovered some grains of wheat. She called her neighbors and said //'If we plant this wheat, we shall have bread to eat. Who will help me plant it?'// //"Not I, "said the cow.// //"Not I," said the duck.// //"Not I," said the pig.// //"Not I," said the goose.// //"Then I will," said the little red hen. And she did. The wheat grew tall and ripened into golden grain. "Who will help me reap my wheat?" asked the little red hen.// //"Not I," said the duck.// //"Out of my classification," said the pig.// //"I'd lose my seniority," said the cow.// //"I'd lose my unemployment compensation," said the goose.// //"Then I will," said the little red hen, and she did.// //At last the time came to bake the bread. "Who will help me bake bread?" asked the little red hen.// //"That would be overtime for me," said the cow.// //"I'd lose my welfare benefits," said the duck.// //"I'm a dropout and never learned how," said the pig.// //"If I'm to be the only helper, that's discrimination," said the goose.// //"Then I will," said the little red hen.// //She baked five loaves and held them up for the neighbors to see.// //They all wanted some and, in fact, demanded a share. But the little red hen said, "No, I can eat the five loaves myself."// //"Excess profits," cried the cow.// //"Capitalist leech," screamed the duck.// //"I demand equal rights," yelled the goose.// //And the pig just grunted.// //And they painted "unfair" picket signs and marched round and around the little red hen shouting obscenities.// //When the government agent came, he said to the little red hen, "You must not be greedy."// //"But I earned the bread," said the little red hen.// //"Exactly," said the agent. "That's the wonderful free enterprise system. Anyone in the barnyard can earn as much as he wants. But under our modern government regulations productive workers must divide their products with the idle."// And they lived happily ever after, including the little red hen, who smiled and clucked, "I am grateful, I am grateful." But her neighbors wondered why she never again baked any more bread.

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