How is your life impacted by the FIAT money system

[targus]

"Between 1880 and 1914, the period when the United States was on the “classical gold standard,” inflation averaged only 0.1 percent per year."

- www.econlib.org/library/Enc/GoldStandard.html

From your article...

"Persistent U.S. balance-of-payments deficits steadily reduced U.S. gold reserves, however, reducing confidence in the ability of the United States to redeem its currency in gold. "

How do you overcome this little problem?

As the economy grows you need more gold and more gold and more gold.

 

[Bob Alkire]

Money inflation is a false measurement. Only thing matters to people who work for a living is job availability and how many hours they need to work to pay the bills.

For once I agree with you. I had an economics professor in college who put that in my mind.

He would break down the cost of something and the price and put that against pay and see how long one must work to pay for things. It is a real eye opener when you look across the board.

 

[KenH]

Money inflation is a false measurement.

I totally disagree.

Social and Economic Effects of Inflation

The first fact that needs to be noted in answering such questions is that inflation is detrimental to all creditors. The higher prices rise, the lower will fall the purchasing power of the principal and interest payments due. The dollar which was loaned out had a higher purchasing ability, could provide more goods, than the dollar which is paid back.

And who is a creditor? Does inflation touch only businessmen and financiers? Nothing of the sort. You who read these lines are certainly a creditor. Every person who has a legal claim to deferred payments of any kind is a creditor. If you have a savings account with a bank, if you own bonds, if you are entitled to a pension, if you have paid for an insurance policy, you are a creditor, and are, hence, directly hit by inflation.

Professional men, civil servants, commissioned officers of the armed forces, teachers, most white-collar workers, salaried employees, skilled specialists, mechanics, and engineers normally provide for their own old age and for their dependents in ways that make them creditors, that is through savings, insurance, pensions, and annuities. Moreover, Social Security has brought the great masses of ordinary workers into the ranks of creditors. For all these millions of people, every further step towards inflation means a further decline in the real value of the claims or credits they have saved up by years of toil and sacrifice. They will collect the number of dollars to which they are entitled?but each of those dollars will be thinner than it used to be, capable of providing less food, clothing, and shelter.

The loss of the creditor, of course, is the profit of the debtor. The man who borrowed a thousand or a million full-sized dollars repays his lender with a thousand or a million depreciated dollars. The mortgages on farms and on real estate, the debts owed by industrial enterprises, all shrink as inflation proceeds. Thus, a comparatively small group of debtors is favored at the expense of the teeming groups of creditors.

The most fateful results of inflation derive from the fact that the rise of prices and wages which it causes occurs at different times and in a different measure for various kinds of commodities and labor. Some classes of prices and wages rise more quickly and rise higher than others. Not merely inflation itself, but its unevenness, works havoc.

While inflation is under way, some people enjoy the benefit of higher prices for the goods or services they sell, while the prices for goods and services they buy have not yet risen or have not risen to the same extent. These people profit from their fortunate position. Inflation seems to them "good business," a "boom." But their gains are always derived from the losses of other sections of the population. The losers are those in the unhappy situation of selling services or commodities whose prices have not yet risen to the same degree as have prices of the things they buy for daily consumption.

These victims, by and large, are the same kind of people?roughly, the middle classes?who are injured as creditors through the depreciation of their bank savings, insurance policies, pensions, etc. The salaries of teachers and ministers, the fees of doctors, go up only slowly as compared to the tempo with which prices of food, rent, clothing, and so on, go up. There is always a considerable time lag between the increase in the money income of the white-collar workers and professional people and the increase in costs of food, clothing, and other necessities.

- more at http://mises.org/efandi/ch18.asp

 

[KenH]

How do you overcome this little problem?

Converting to the gold standard does not solve all problems and we all live happily ever after.

However, it would keep inflation in check and, this is very important, restrict drastically the federal government's ability to run deficits year and year after year after year...

If one wants limited, constitutional government restored, then supporting returning to a gold standard is a great way to do so.

 

[KenH]

Price Stability Not a Fed Priority

A related article:

www.lewrockwell.com/daughty/mogambo58.1.html

 

[billwald]

>The loss of the creditor, of course, is the profit of the debtor.

Yup! Most working people are paying off a mortgage for most of their lives and most every month they make their payment with cheaper money. For most working people the inflation produces a net gain.

Cash savings, annuities, and insurance policies are not investments. SS and government pensions are adjusted for inflation. Inflation increases faster than the cost of living which helps me and many retired people.

 

[Bob Alkire]

I totally disagree.

Social and Economic Effects of Inflation

Ken, I think you missed his point. Only thing matters to most people who work for a living is job availability and how many hours they need to work to pay the bills. I added the most.

Most people look at what they are being paid and how many other things they can get their employer to pay for.

I've lived most of my life looking at time. How many working hours did it take to pay for blank or how many hours will it take. Time is all I have to sell, so it is what I use to make purchase or to save or whatever.

I've worked for self or pastored churches, and the churches were like being self employed, I paid my taxes, SS, and for medical care and laid a side for retirement, the churches gave me a 1099 at the end of the year.

I know what you are saying but many if not most people would count differents things, some count money some time, some eggs, some hogs, ever what it takes them to get through today and be ready for tomorrow ( Bill Anderson said he counts songs).

Inflation as well as deflation will hurt many folks, but not always the same.

 

[Earth Wind and Fire]

A related article:

www.lewrockwell.com/daughty/mogambo58.1.html

Life's no bargain

 

[billwald]

Lew Rockwell is a gold fanatic but a decent person who answers his email.

>Even the Bureau of Labor Statistics calculator shows that $1 in 1980, 30 years ago, had the buying power of $2.65 today! That’s 3.3% a year, compounding for 30 years, for crying out loud!

Big Deal! see http://www.ssa.gov/OACT/COLA/AWI.html

National wage index in 1980 was $12,513.46 and in 2008, the last year available, $41,334.97. $12.513 * 2.65 = $33,159 thus the median worker is way ahead of the game.

 

[poncho]

While an increase in the money supply relative to goods and services does result in inflation - it is not the only cause of inflation.

There has been no significant change in the annual rate of inflation since the U.S went off the gold standard.

Frankly, I am hoping for a response to the OP from Poncho since the fiat money system is a big issue with him - and I do not understand why.

Maybe this will help.

http://video.google.com/videoplay?docid=-1656880303867390173#

But probably not. If you think that having a group of private international bankers running our economy is how it's supposed to be then most likely you'll never understand why I have a problem with this system.

It's plain to see how dumbed down people are about the Federal Reserve and fiat money. Look at the replies in this thread. Half of em would rather make fun and talk about cars than discuss the private central banking system.

Or they rely on the very people that are ruining our economy and nation to get their "information" from.

Creature from Jekyll Island 1 of 12

Evidently the truth doesn't interest these people as much as sports teams and celebrity hijinks. Sad state of affairs, really.

 

[targus]

Maybe this will help.

http://video.google.com/videoplay?docid=-1656880303867390173#

Thanks, Poncho.

But I am looking for personal life examples.

How is your personal day to day life impacted by the fiat money system?

What would be different in your personal day to day life if we were on some other system - like the gold standard?

I'm looking for concrete examples - not generalizations.

 

[poncho]

Thanks, Poncho.

But I am looking for personal life examples.

How is your personal day to day life impacted by the fiat money system?

What would be different in your personal day to day life if we were on some other system - like the gold standard?

I'm looking for concrete examples - not generalizations.

No problem. Look at your paystub. See those "income tax" deductions?

They wouldn't be there if it weren't for a private banking cartel known as the Federal Reserve, which is neither "federal" or a "reserve".

You'd be able to keep what you earn in a constitutional system the founders believed a man's labor was his own. The international banking cartel (FR) on the other hand believe a man's labor belongs to them.

So they take it by force using "color of law". This is not what the founders had in mind when they rebeled against the English central bankers that wanted to do the same thing to the colonies that the private banking cartel (FR) is doing to us today.


In the mid-1700s the American Colonies were prospering, in part because they were issuing their own money called "Colonial Scrip," which was strictly regulated and did not require the payment of any interest. When the bankers in Great Britain heard this, they turned to the British Parliament, which passed a law prohibiting the Colonial Scrip, forcing the colonists to accept the "debt" or "fiat" money* issued by the Bank of England. Contrary to what history teaches, the American Revolution was not ignited by a tax on tea. According to Benjamin Franklin, it was because "the conditions [became] so reversed that the era of prosperity ended." He said:

"The Colonies would gladly have borne the little tax on tea and other matters had it not been the poverty caused by the bad influence of the English bankers on the Parliament, which has caused in the Colonies hatred of England and the Revolutionary War."

<snip>


The Republican Party establishment, led by Lincoln, was very clear on what it hoped to achieve with a central bank. Senator John Sherman, brother of General William T. Sherman and chairman of the U.S. Senate Finance Committee, declared,

"Nationalize as much as possible, even the currency, so as to make men love their country before their states. All private interests, all local interests, all banking interests, the interests of individuals, everything, should be subordinate now to the interest of the government."
​

SOURCE

Bottom line is that we now have a debt based monetary system that can be manipulated to benefit a few instead of a system based on sound money that would benefit the many. Basically the Federal Reserve is a mechanism that channels real wealth from "we the people" to a lucky handful at the top. Why do you think we now have 1 to 3% of our population controling 95% of the wealth in this country?

Now I understand that so long as most folks have a "relatively" comfortable lifestyle they don't worry about or even question the system but history shows that going along with or ignoring tyranny of this magnitude never ends in joy and happiness.
​

 

[AresMan]

For those who argue against the fiat money system...

How are you personally impacted?

I am looking for real day to day examples.

In 2008 I purchased some gold at $800 per oz. Today, it is nearly $1200 per oz. (a 50% increase in nominal value). I am thankful that I had enough sense to purchase some of this inflation hedge two years ago.

Does this help?

 

[poncho]

In 2008 I purchased some gold at $800 per oz. Today, it is nearly $1200 per oz. (a 50% increase in nominal value). I am thankful that I had enough sense to purchase some of this inflation hedge two years ago.

Does this help?

If you were to travel back in time 3,000 years you'd probably find that your gold would purchase the same amount of goods then as it does now.

Proving that,

The value of goods doesn't really go up, so much as the value of fiat currency goes down. Gold is an indicator of how much our fiat currency has been devalued.

Who benefits from this devaluation?

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.[SIZE=-1] If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard. Alan Greenspan [/SIZE]

 

[billwald]

If we were on a gold standard no working person would have any gold, there would be no credit cards, mortgages would require at least 20% cash down payment, only rich people would be buying new cars, and very few would be thinking of ever retiring. Most people would never have as much money in one place as the gold now in my teeth would cost.

 

[AresMan]

If we were on a gold standard no working person would have any gold,

Uh, right. And I'm sure that FDR's gold confiscation only affected a few people.

As things stand right now, paper money is not redeemable in gold. If it were redeemable in gold, gold would be more accessible.

Purchasing gold requires a fee above spot price for non-bank entities. People are not allowed to treat gold as money, and it is subject to sales tax.

International banks conduct large transactions with each other in gold. International banks have huge gold reserves that they withhold from the market and only leak some as they deem necessary to keep the spot price of gold from skyrocketing on the London Gold Exchange.

The situation, then, is that most of the world's gold is held captive by large banks as they try to keep people dependent on their fiat currencies. I really don't see how your argument bears any weight.

there would be no credit cards,

Maybe. Maybe not. Loans of some type have existed for many centuries. Credit cards are just one avenue for borrowing money. One thing is for sure, the saturation of credit cards and the artificially low interest rates foisted on us by the Fed has caused the housing and credit bubbles.

A society overly dependent on credit and immediate gratification bids up consumer prices, feeding yet more dependency on credit because everything becomes more expensive. Without as much credit, people would have to save before purchasing things, but the effect would be to drive prices down so that things become more affordable and the wait would not be as long.

mortgages would require at least 20% cash down payment,

Is that really so bad? At that time people were more responsible. They practiced the thrift of saving to invest. Houses were less expensive; therefore, that 20% down payment was not as difficult.

During the fantasy of the housing boom when people thought that houses would increase in price perpetually, the corollary would be that, with houses continuing to become more and more expensive, people would have to be a slave to debt longer and longer to buy something that they could have paid and owned earlier. I would rather wait, set aside a lower amount per month, pay rent on a cheaper place in the mean time, then chunk a nice down payment on a house (that would be less expensive without the excessive credit availability bidding up prices), and actually own the place sometime earlier on in my life.

only rich people would be buying new cars,

Oh brother. Has this really ever been the case? See the credit argument above.

I have never financed a new car in my life. My current car, however, was three years old when I bought it. Instead of taking a loan from a bank and paying loads of interest on it, I waited a year. I carpooled with friends when I needed to go places and even paid them a little for their services. During this year I, worked, scrimped and saved, and then paid for most of the car with cash. I financed the car for three months directly with the dealer and paid only about $20 total in interest.

I am glad that I did that because I soon owned the deed to the car instead of being a slave to debt. I then had more of my earnings available afterward to spend on other things (and "help the economy").

and very few would be thinking of ever retiring.

Back before Social Security, most had the goal of retiring in their mind as they worked and saved for this.

Now, the mindset from many is that they should be able to spend all their earnings as it comes (for those that do work), and then be able to retire comfortably with government cheese when the time comes.

I don't expect Social Security to be around by the time I expect to be able to retire. When the baby boomers retire, there will be at most, one person working for every one person retiring. I expect that the burden of shouldering retirement during my working years will increase as the demand for such social funds will increase and become unsustainable. I'm an old-fashioned youngster believing that I should work and save for my own retirement.

Sound money helps retirement rather than hurts it because savings are not eaten away through inflation.

Most people would never have as much money in one place as the gold now in my teeth would cost.

They might not have has much nominally (as in dollar denomination) as they would, but their purchasing power would be greater.

You are entirely deluded if you think that creating "money" out of thin air actually creates real wealth.

 

[targus]

No problem. Look at your paystub. See those "income tax" deductions?

I don't follow your logic.

How would a monetary system in which a dollar is pegged to a unit of gold prevent the government from establishing the income tax?

 

[billwald]

>You are entirely deluded if you think that creating "money" out of thin air actually creates real wealth.

"Money" is not a store of value/wealth. MONEY functions as a govenment endorsed IOU that can be exchanged for goods and services.

 

[Twizzler]

Creature from Jekyll Island 1 of 12

Griffin wrote one monster of a book with this, Poncho. It was one of the scariest books I've ever read in my life... and it's all TRUE!

The scariest part to me was the Federal Reserve and how the banking system is intent on just lending more and more and more and not worried one bit about over-extending themselves because they know the bigger they are the more likely they are to be bailed out by our tax dollars.

If you've not read this book... take the few days that it'll take to read it and take the time to read it in the manner the author recommends. Amazing stuff.

I'm with you, Poncho. I was horrified to see folks poking fun at this and talking about the Fiat automobile. This is the reaction that the Fed wants us to have... ignorance and apathy. They want us to believe it's a story much too preposterous for us to even entertain it's truth.

 

[targus]

I don't follow your logic.

How would a monetary system in which a dollar is pegged to a unit of gold prevent the government from establishing the income tax?

Bumped for Poncho