(Economics In a Nutshell)
The United States Mint is printing out more and more dollars. Stacks and stacks of those fibrous green things that everybody wants. Yet our economy is low. People don't have enough money to be prosperous, let alone pay all the bills. Huh? Where's all the money?
Truth is, it's still there. And there's more and more of it everyday. Then why aren't business making enough money to raise salaries for their workers? Politicians will tell you it's because customers don't have enough money to spend it willy-nilly. They have bills to pay too. But that's circular reasoning. Where do you think the customers get their money? From working at another business (or getting government subsidies or food stamps but that's a discussion for another day).
You see, the problem is all-encompassing. But a good chunk of it has been an ever growing problem since the 1960's. (Why the '60's? Because that's when the last of the silver coins and certificates went out of circulation.) The beginning of the money problem (not the people problem - which is also for another discussion) was when the Silver Certificates (one dollar that could be traded for an ounce of silver) were replaced with the Federal Reserve Notes (what we call dollars today). Why were they replaced? Because the government had printed too many. The Reserve did not have enough gold and silver to back the certificates if everybody suddenly decided to trade in their dollars for the silver they represented. The government had made too many IOU's. The government was in debt and needed more money. But the solution they chose was no solution at all. They put out the Federal Reserve Notes to replace the certificates and printed even more of them.
Stupid idea. Why? Because of the fact that there is only so much gold and silver in the world and because gold and silver are precious metals, they will never lose their value. Dollars, on the other hand, are not precious. They do not even carry the promise of receiving that valuable gold or silver anymore. They have lost value. And the more and more there are, the more and more it takes to buy something.
So. The problem is not about workers, customers, businesses. The problem is the fancy word of inflation. Too much currency in the system. Inflation is not rising prices or more expensive items. Inflation causes rising prices. The items we buy and sell have not lost value, the paper we use to purchase them has.
Every year, the oak trees grow their acorns. If the old acorns did not grow into new trees or decompose, there would be more and more acorns every year. The squirrel community would get fat and lazy from all those extra acorns they would eat. But what if the squirrels used them for currency? What if they traded acorns for other things? Well, if the acorns died every year like they do, the acorns would be valuable because there would only be so many every year. But if the acorns were preserved somehow, then inflation would begin. There would be more and more acorns. The squirrels would feel very rich indeed. They would spend more. And spend more. But eventually the not-so-rich squirrels and the squirrel business owners would see this and raise the prices on things. The rich squirrels are willing to spend more so why not get more? But the wealth is an illusion. There are more acorns now. They're not worth as much anymore.
But the acorns will just keep coming right? The trees will continue to "print" more. Hmm, sounds familiar. That's right: the U.S. printing presses and the Federal Reserve Notes. The bunches of government acorns. What do you know, money does grow on trees.
You don't have to be an economist to understand this: if you have a lot of something (and I mean A LOT), it's not as valuable as when you only have a little of it. That goes for anything - collectibles, gold, other precious metals (silver, uranium, etc.), precious stones, old books, artifacts, acorns...
So why doesn't the government stop printing money? Isn't that easy enough? Not exactly. Every time the government cuts it off, businesses and people no longer get their subsidies and food stamps and handouts. The "flow" of money stops coming from the government and flows only from the markets. People "have to get that dough" elsewhere. Stocks plummet. Businesses fire workers. Why? To get that cash they have because the money is no longer "building." Money becomes harder to get, more valuable, more precious.
But isn't that what we want? Yes. But when the government is willing to pay for it by making more money...well, some people (individuals, businesses, corporations) had developed the habit of spending. Yet now with the inflation halted, they have to correct that habit. So they cut salaries, jobs, the TV he wanted, those shoes she liked, etc. When this happens, it is called a recession - or a depression - depending on how soon people start complaining to the government and it starts printing money again.
Perhaps we can learn from the truth about acorns. They don't last. They decompose and get replaced the next year. Eventually the inflation, recession, inflation, recession circle will get worse enough that something is going to bust. We will face a depression again. But what we choose to do will affect everything. Either the re-inflation will become so bad that it takes a million dollars to buy a loaf of bread and the whole country will turn on its head and we'll have a revolution. (I'm sure that's a few years away, but such things have happened rapidly in other countries before.) Or we tighten our belts during the depression and watch our acorns, er, dollars and we'll come out okay if the government does not inflate again.
But the country has a lot of whiners. If we're going to get through this, some of us have to tell the government NO MORE PRINTING MONEY more loudly than the whiners crying GIVE ME MORE.
You know, it just might be time to observe the natural order of things and go back to gold and silver currency. Or maybe acorns.
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