-By Dan Scott
The wild spending policies of Barack Obama and his allies in Congress give one pause to consider if anyone with a half a brain could not foresee-ably know such deficit spending will not end well for the country. This pattern has played itself out many times in countries such as Zimbabwe. No matter how insular a demagogue is he has to face reality at some point and at least have considered the issue of hyperinflation because his critics warned him about it. Given that liberals like Barack Obama operate under the principle of Equality of Outcome, it has become very clear that such policies are designed to LOWER the living standard of the wealthy via taxes and regulations BUT NOT increase the living standard of the poor by maintaining their cost of living. Or have you not noticed that liberals constantly harp on the issue of income inequality and the widening gap between the richest person and the poorest? What easier way is there to wipe out income inequality but to inflate the dollars in the hands of the poor while making the dollars in the hands of the rich worth less?
Inflation while decreasing the buying power and accumulated wealth of the rich gives the illusion to the poor that their increased wages or subsidies have made them richer while not advancing at all. The initial economic growth with inflation as its base is insidiously deceptive at first since everyone defines “growth” or “increased” economic output in terms of currency usage. The GDP is defined and counted in Dollars. At first the economy seems to be moving again however, what’s really happening is investors are liquidating their cash equivalent positions in a move to harder assets like stocks, land or durable goods. Once inflation takes hold, an inflation psychology develops discouraging saving and investment. The flight from cash is in reality the draining of liquidity preventing the finance system from making loans for future expansion killing off a real recovery such as experienced under President Carter.
Inflation is introduced into the economy via the purchase of foreign goods like oil because other measures of value, i.e. foreign currencies will in relative fashion be rising in value of dollar equivalents. A one percent increase in GDP may in reality only be an increase in the amount of money used to purchase a lesser quantity of goods and services versus real growth. Supposedly, the percent of inflation is subtracted from the economic figures to arrive at real growth, however, if the government is NOT properly counting inflation, then the correction factor used will be lower than it should be. Core inflation in the US calculations excludes the “volatile” components of food and energy. Only one problem with that approach, energy costs ripple through the economy via a time lag raising the costs of all goods forcing employers to find any means possible to cap expenses like laying off workers (a jobless recovery). Increases in food costs act as a zero sum game against the purchase of other goods and services. The upshot is you buy less with more money but under count inflation. Watch for the MSM praising the increase in prices and the apparent reduction of upside-down mortgages.
This brings us to an important point, why are liberals so enamored by Equality of Outcome if their policies never increase the standard of living of the poor? It should be obvious to anyone that no poor person on the government dole will ever get rich or attain middle class status. The purpose of the government dole then is to maintain a loyal base of support of those who will gladly sacrifice their potential future success via independence for today’s loaf of bread and roof over their heads. This leads me to believe there is an ulterior motive in separating the rich from their assets even though it will make the country as a whole poorer. Money is power and many of the leaders of the liberal establishment are wealthy. They attained their status through wealth and then gained popularity by claiming to be for the poor through government give-away programs (e.g. Ted Kennedy). It would seem in the liberal mindset that wealth equals power and therefore others who are equally wealthy would demand an equal share of that power. The rub occurs though with the concept of sharing in that only one can be in charge at any given time with a cast of supporting actors (accomplices and collaborators) who vicariously enjoy the limelight and through mutual exclusivity must prevent and keep out all would-be sharers of power. Thus we see that politics is merely a ruse, a sales pitch to hide behind to achieve or maintain power.
Whether it is Robert Mugabe’s Zimbabwe or Hugo Chavez’s Venezuela, their MO is the same, reduce the wealth of the rich to limit any competition for power and placate the masses with the wealth stolen from the competition via taxes. We see this also with the current triumvirate in the US, Barack Obama, Nancy Pelosi and Harry Reid. While Obama was not initially rich, he was a useful figurehead (a ruse) to gain power. Now that ObamaCare has been passed, the triumvirate uses this sop to placate the masses that they will be taken care of if they continue to keep these three in power. Hence the new drive to legalize 13 to 20 million illegal aliens, a significant potential voting block to help fend off all would-be threats to their power. All of the illegals will vote for Democrats since it will only be Democrats that will get them free medical care via citizenship. The rest of the country will resist since in their minds all this spending is unsustainable. The illegals don’t care since they will be on the receiving end, not the giving end.
Those who support the current triumvirate must be rewarded and in any hierarchy there are tiers or steps toward the power center. Hence the closer to the top one is, the greater the financial reward for their support in a mutual self-enriching scheme. Again we see this in places like Zimbabwe and North Korea. In the US these self-enriching schemes are granted to supporters via subsidies and mandates upon various commercial interests or through employment in various government agencies. GE stands to make hundreds of millions of dollars through various schemes like wind power via the EPA declaring Carbon Dioxide a pollutant. The Chicago Carbon Exchange (whose owners are close friends of Obama) stands to make billions of dollars through government mandates upon all business activity. Thousands of lower echelon supporters will be sitting on all those committees created by ObamaCare or other government created positions. The supporters and collaborators will have income and those who don’t actively support the regime won’t have income in short order. If the government is your only source of food and shelter, you will do as you are told otherwise you will be eliminated or marginalized through poverty. A supporter is someone who believes they will benefit from the regime and actively encourages it. A collaborator is someone who cooperates under the belief there is nothing they can do to oppose the regime, they do as they are told because of fear.
Unfortunately for the middle class, Obama’s path to power is a zero sum game where wealth creation is muted thus limiting good paying private sector jobs. The object of power is to exercise it; it is immaterial whether such an exercise harms the country. In fact, the more harm inflicted, the more beholding the masses become for sustenance via government handouts. The reason so many dictatorships like Zimbabwe succeed is they define success (the achievement of power) completely differently than normal people (economic prosperity). A normal person refuses to imagine any leader would deliberately impoverish their people but when they finally realize what is happening, it’s too late. All government income comes from taking it from the private sector and any money taken is money that will no longer be used for wealth creation so a downward spiral begins. If you are of the middle class, your numbers will be declining since buying off the middle class with give-away programs is an expensive proposition that is far less cost effective than buying off the poor. It is easier to create poverty than to create wealth and therefore the more poor people you have, the more power you can amass inexpensively. The Communists always held the middle class as a threat as they have no interest in changing the status quo like the poor do. Because of this, economic policies are always geared to distribute wealth not increase it. If you increase wealth, you increase competition for power or hinder your assent to power; thus if you want to change the power structure you must destroy the base of that structure, the middle class. Whether you call it Fascism, Socialism or Communism, all of them employ the same methods to achieve and maintain power, redistribute wealth through force (such as taxes) to gain supporters and collaborators. Each has their own ruse or sales pitch to rationalize the redistribution.
Inflation leads to hyperinflation. Hyperinflation has rewards for those who wield power. All past debts are reduced in value as the currency it is denominated in declines in value. The $11 trillion national debt will only be half as much as the Dollar drops in value against other currencies. Debt is merely currency with an interest payment. The Weimar Republic of Germany tried to inflate away their war reparation debts until the victor governments decided those debts would be valued in a non-German currency, at that point the Mark became worthless since no exchange rate equals zero value. The Chinese and Japanese may own a substantial amount of US debt, however, as long as those bonds are denominated in dollars, it is in Obama’s interest to hyper-inflate that value away. Unfortunately for the Chinese and Japanese, they can’t re-denominate their bond holdings from dollars thus their only means of leverage is to threaten not to buy any more US bonds. Doing so however, only rips off the facade since the Federal Reserve will introduce more US dollars to fictionally buy more US bonds, which then floods the market with more US dollars. The facade in the first place was foreign governments buying US bonds with US dollars inadvertently sending back all their profits from their trade with the US and in the process flooding the market with fiat US dollars called US bonds. The problem for those who hold bonds is once the interest rates start going up; the principle value of their bond goes down in order to maintain the prevailing higher interest rate. Nor is holding a bond until maturity any means to preserve value when the currency it is denominated in is devaluing rapidly. The only solution for the Chinese and Japanese is to buy hard US assets and goods to swap out their US denominated currency and bring those assets back to their respective countries.
Hyperinflation has another purpose; it devalues the underground assets by those who operate outside the legally recognized system. Since with hyperinflation the means to value any object or service is constantly changing (increasing), the tendency is to undervalue the object or service via a time lag. What was worth $10 today will cost $20 next month any delay of payment and any valuation at a point in time will automatically reduce the actual amount really paid. This is why in countries like Zimbabwe, foreign currency is used to fix the value of a good while the cost in their currency continues to escalate. The object of hyperinflation is to control the flow of money, the larger the flow of money the harder it is to hide it from taxation and the prying eyes of the government. In order to preserve value one must either buy hard assets or buy foreign currency. Once your money is locked up in hard assets, which are easily detectable by the government, it becomes the object of a tax. Hyperinflation just like price controls make it economically unfeasible to invest in the future, thus the store shelves go bare and investment ceases. When inflation exceeds the percentage of profit margin, there is no point in engaging in business only to lose value.
Ask yourselves why is Robert Mugabe still in power in Zimbabwe. Poverty and economic distress are a winning formula for the accumulation and preservation of power. Having answered that question you will realize why Barack Obama, Nancy Pelosi and Harry Reid have no reason to change their course. By the time enough people realize their policies are not only failures but also contributors to recession, it’s simply too late to do anything about it in a peaceful manner. The people of Zimbabwe and Venezuela did not recognize things were going so bad until it was too late. Most people abhor violence and therefore give up unless they are backed into a corner. The MSM is a supporter of this policy since they see their only survival is with government subsidies just like the poor getting food stamps and other government handouts. It is no accident that the government wants to subsidize the MSM to the tune of $60 billion; this is their sop for collaboration and support through propagandizing for the government. The question for our time is will enough voters stop accepting the government excuses for failure and its attempt to cover them up to remove a substantial number of Democrat supporters in Congress in November to make a difference? Will the new Congress have the courage to undo all of the failures soon enough before the whole house of cards come tumbling down?
Sources:
Pray For Inflation — It’s Our Only Hope
Investing In High Unemployment And High Inflation
The Great Money Printing Cover Up
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Dan Scott calls himself a “Member of the Global Capitalist Cabal preaching Capitalism and personal responsibility as the economic solution to world poverty.” He is also a member of the 14th Amendment Society — victimhood is a liberal code word for denying the civil rights of others. He is also a proud member of the Global Warming Denier Cabal, insisting that facts not agendas determine the truth.
Dan can be reached for comments at dscott8186@yahoo.com.
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