Can Anyone Make Sense of Why the Cost of Goods and Services are Continually Going Up?
The mainstream media has an agenda to report the news in such a way in order to get a controlled response. They study you and they know that most people are very passive and respond like sheep to instruction and information. They know that people either don’t care about what’s going on, ignore what’s going on, or they obey and do what is suggested on television by the fancy guy or gal with the nice smile and slick outfit.
Economics 101
You’re not going to believe how simple this is. When you finish reading and understanding this article, you should turn off your television and be upset that those silly politicians that convinced you to vote for them. Then you should be even more upset because of the lies that your school told you about real economics, and you should also be displeased with the minions on the news broadcasts who pulled a 365 day a year April Fool’s Day joke on you about economics. Oh well, at least you want to get informed or else you wouldn’t be reading this far. Let’s use a natural illustration to explain the money/pricing situation.
In your country, gold and silver are the valuable commodity of choice. Everyone recognizes it as a valuable medium of exchange but it’s too heavy and inconvenient to carry around. So in order to do commerce, it is agreed that paper bills will represent the proportionate amount of gold and silver in store. It is agreed that the gold and silver will be represented by twenty $1 bills. These 20 bills represent the entire wealth of the nation (the gold and silver in store). Commerce is conducted and everything is fine.
One day, some people in the community decide to create some duplicates of the paper bills and use them to do commerce, as well. The problem is that they didn’t add anymore gold or silver to the store. Remember, the bills represent the value of the commodity (gold and silver) in store. They added 20 new $1 bills and commerce continues as usual. What, in actuality, has happened to the economy? Where there were 20 bills, there are now 40 bills, and this means that the wealth of the nation has spread equally from the 20 bills to the 40 bills. The currency has been devalued (weakened) or each dollar is made to be worth less. To further illustrate the point, if you have a full glass of milk, you pour out half of it and replace the poured out milk with water, you have in essence weakened the integrity of the milk. When more dollars are added to the economy without a commodity to represent those new dollars, it weakens the other dollars. The 40 bills (20 original and 20 added by counterfeiting) may have $1 printed on them, but they are actually worth .50 cents now, instead of one dollar. By doubling the quantity of paper bills, the 40 bills equal the entire wealth of the nation, whereas before it was only 20 bills. Keep the milk illustration in mind. Understand? Remember, the dollars represent the available commodity (gold and silver) in store. Another example: What if you only had enough food prepared to feed 10 people, and then 10 more people came over? The 10 new people didn’t bring any food to cook; they just wanted to eat your prepared food. That means that if everyone is going to eat, then everyone is going to get ½ a serving when they originally expected to get 1 full serving. Understand? The point is that you get less quality when you add more quantity. More dollars, less value; more water, weak milk; more people, everyone gets less food.
Today’s Economics
If you need to re-read the above-mentioned illustrations again, please do so. But let’s move on to a topic with which we are all familiar: gas prices. Are gas prices high because of the war? Well, did peace make the value of the dollar go down in the above-mentioned illustration? No. The answer is simple. Let’s just follow the principle that dollars are supposed to represent a fixed amount of wealth. Today, big businesses watch M3, the money supply data. What is M3? The Federal Reserve tracks and publishes the money supply measured three different ways-- M1, M2, and M3.
These three money supply measures track slightly different views of the money supply.
The most restrictive, M1, only measures the most liquid forms of money; it is limited to currency actually in the hands of the public. This includes traveler’s checks, demand deposits (checking accounts), and other deposits against which checks can be written.
M2 includes all of M1, plus savings accounts, time deposits of under $100,000, and balances in retail money market mutual funds.
But that is all small potatoes, M3 includes all of M2 (which includes M1) plus large-denomination ($100,000 or more) time deposits, balances in institutional money funds, repurchase liabilities issued by depository institutions, and Eurodollars held by U.S. residents at foreign branches of U.S. banks and at all banks in the United Kingdom and Canada."
In other words, M3 tracks what the big boys are doing with the money. This includes US dollars held in banks in Canada and the UK (called Eurodollars) not to be confused with the Euro which is the standard currency of Europe.
I am going to keep this simple and short because in order to understand the bigger picture, you have to understand central banking, fiat money (which is as valuable as the confidence people have in it), the Bretton Woods Agreement, supply and demand, and the US Constitution for starters. The politicians, bankers and the mainstream media are all complicit in running a game on our economy and our standard of living, at our and our children’s expense. I am totally convinced that the national, insider politicians are very much aware of the real reason why things are the way they are. So don’t be a sheep and follow the news babble. Many people, Christians especially, get suckered into that sheep mentality because Jesus refers to His followers as sheep. But Jesus is a good and faithful shepherd who is worthy to have us follow Him in blind obedience. No one else deserves that type of honor, so WAKE UP!
OK, so big business pays attention to the money supply, and they know that if too much money is in supply that the value of each of the dollars is going to be worth less. So in order to keep up with inflation or a devalued currency, the seller has to require more dollars (increase prices) to offset his/her losses against the devalued currency. In other words, the seller will require more of that watered down milk. Understand? So if the seller requires more money, then you might have to go get another job in order to keep up with price increases or get a cheaper version of what you want to buy. In short, gas is high because the money supply is out of control and prices are going higher. As I am writing this article, oil is around $93 per barrel, but click the link below and look at this latest news headline:
CFR President: $200 Oil If War With Iran
Folks, what did we learn about higher prices? Now, fiat money is valued by the people’s confidence in it, but quite simply, wars don’t weaken your dollars purchasing power, but counterfeiting (adding more dollars to the economy without more assets) does. Again, supply and demand is also a factor in pricing, but this is not a full-fledged economics lesson. This is a short lesson to help you sift through this maze called our economic system. Please take advantage of the reading list below, it is very informative and worth your time.
BG’s Recommended Reading:
Billion for Bankers, Debt for the People
I Want The Earth Plus 5%
The Creature From Jekyll Island by G. Edward Griffin