Monthly Archives: February 2009

How soon will the dollar be worth a Continental?

More commentary with graphs of the increase in the money supply.

If you want a simple explanation of why this is bad, it is: The more money there is, the less it is worth. It’s simple supply and demand, but where you’re used to seeing it applied to things you’d buy, like apples and #2 pencils, it’s the same with money. Except that when the supply of apples goes up and the price goes down, when the supply of money goes up, its value goes down, and the price of everything goes up.

This is what caused the housing bubble: cheap loans made billions of dollars available with which to buy houses, meaning more people could buy those houses (at prices they could not otherwise afford, with money they otherwise could not have gotten), which caused the prices of houses to increase until it met the amount of money available. It’s just like a game of Monopoly. At the beginning of the game, there is very little money available, so property prices are face value, but as the game progresses and everyone empties out the bank, prices for board properties skyrocket.

Back in the days when you could buy a phone call for ten cents, ten cents was actually worth something, and was somewhat hard to come buy – you actually had to earn it. Now, dimes are a dime a dozen. The face value of a nickle is worth less than the metal it is minted from.

It is staggeringly backward — our money used to be worth what it was made out of, but now the Mint struggles to find metal as worthless as the face value from which to mint the money.

Which is exactly why our Constitution prohibited that anything but gold and silver coin be used for currency. They had just themselves fooled around with a fiat currency, and the government printed so much of it that it became worthless. In fact, every government does that every time they are able to switch to a worthless currency.

And yet, here we are again, doing the exact same thing all over again, repeating the history of the Continental of the Revolutionary War, and the Greenback of the Civil War.

ECONOMIC STIMULUS PLAN EXPLAINED

from many sources on the Internet, 2009 Jan 30

Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers.

Q. Where will the government get this money?
A. From taxpayers.

Q. So the government is giving me back my own money?
A. Only a smidgen.

Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition
TV set, a analog to digital converter box, or a new computer, thus
stimulating the economy.

Q. But isn’t that stimulating the economy of China?
A. Shut up.