It’s Not Too Late to Fix the United States

Current Scene

The economy is in the toilet with real unemployment the highest since the depression.

Consumer and business confidence in the economy are low, far lower than might be expected. People will give their hops in a survey, but they don’t spend on hope. Business confidence can be gauged by looking at hiring, which isn’t happening. Capital expenditures can also figure in, but these depend because the purpose. For example, new equipment which will eliminate jobs by switching production to a cheaper machine is not a vote of confidence for the economy. Consumer confidence can be measured by the debt people are willing to take on, that is getting less and less.

The federal government has extended unemployment benefits to 90 weeks, which tells you that the government’s confidence is really bad. This also tells the consumer and businesses that to expect no work. To the criminally inclined it means work for one or two weeks, get yourself fired and collect payments for 90 weeks.

The government is putting the American people into more and more debt and is covertly monetizing that debt by using banks as a go between, where banks stand to make gigantic ship loads of money by lending money that isn’t theirs and was just created out of thin air by the Federal Reserve. This is how President Obama has been funding the national deficit and he intends to continue this as long as he can.

The US Government debt is unknown by the general public. The public numbers are $11-12 trillion. But this doesn’t count the debt owed to those who have paid into Social Security and Medicare, which is everyone working in the US. The Social Security and Medicare debt is believed to be between 30 and 40 trillion dollars. In addition to this there is the liability of Fat Fannie Mae and Farting Freddie Mac, which hold huge bad debts that the American people are borrowing to cover.

The youth of America have been educated to believe that one is entitled, thus there is no or little need to work. If you don’t believe this just go into a poor neighborhood and watch the attitude you see.

The number of illiterate youth who know not the value of being able to read and write has steadily increased, cutting them off from further education, learning and career opportunities. An illiterate child cannot learn other subjects and any hope or dreams they may are squashed by their own inability to grasp and understand the world around them. This makes them perfect targets for corrupt politicians and unethical business practices.

America’s poor have multiplied many times despite the trillions of dollars being spent to remedy the problem. The gap between earned incomes between the rich and the poor has expanded.

The above are observable facts. For those who deny these condition exist I will only nudge you to go look for yourself. For those who think the country is on the right path I will nudge you to go look for yourself.

I am a firm believe that situations are created and don’t just happen out of some sort of fate. Our youth are uneducated on purpose. Our youth are illiterate on purpose. Our country has a staggering debt that few can contemplate and this was done on purpose. The increasing deficit is increasing on purpose. The unemployment is getting worse on purpose.

None of these thing just happened.

Under the George Bush Presidency, the Republicans bought into the idea of increasing entitlements where they allowed massive handouts to continue and escalate. The Democrats are even worse in that they have come up with crazy programs to in debt our children and the Democrats have had a virtual lock on education that has led us to increased poverty.

Where Does It End?

It ends with us! It ends with us saying No to the illiterate and corrupted education our children are getting. It ends with us saying No to jumping into wars we don’t need to be in. It ends with us voting for honest people and removing the lock the Democrats and Republicans have on our government. It ends with us being able to say No to more government handouts. It ends with us saying No to more government debt.

It ends with us saying No!

If we said no to the following things, the country would right itself:

1. No to federal government control of education. This gets returned to the parents.
2. No to federal debt. We must live within our means and that’s it. No Exceptions. If war is an exception then someone will figure out how to keep us in wars continuously.
3. No to government sponsored companies, each of which has become corrupted by the dollar and political favors.
4. No to increased taxes.
5. No to increased spending.
6. No to deficit spending.
7. No to sending our military abroad to tell others how they should live. Our military is to defend our borders, not invade other countries (no matter how justified we might think it be) that we then have to defend. We are currently defending a number of nations from the neighbors. There are smarter ways of ridding oneself of an enemy than invading.
8. No to any federal government program not specifically covered in the constitute. (This would eliminate half of of the federal government, at least. A savings we could pay off the debt with.)
9. No to Federal Government mandates on States.
10. No to Federal Government interference with States.
11. No to dishonest politicians. Currently there are large numbers of politicians under investigation, yet the investigations are hampered and stopped by corrupt bureaucrats. There is no ethical reason for these investigations to not go forward.

Just doing those things would boom the economy. It would enable us to have a surplus budgets and pay off the national debt. We’d have children who would grow up and could work and earn a living rather than living off the work of others.

If keep going the way we are going we will leave our children indebted with a valueless currency. The deficit spending and monetization of debt is breeding a future of inflation and worthless money.

There are those who would say that the above would cause economic trouble or collapse, but those individuals are profiting from a bad economy, whether they are politicians or not.

Obama’s New Budget Spells Trouble for the US Dollar and Jobs

The President’s Budget

President Obama’s budget was released yesterday morning. It includes $1.56 trillion in deficit spending. That’s $1,560,000,000,000.00 for those who don’t know how much it is.

Assuming there are 300,000,000 people living the US, that’s a new debt of $5,200 per person. A family of 4 will see its portion of the national debt rise by $20,800.00, if the Obama budget is passed.

Can you afford $5,200 more in debt per person in your family?

Do you not think that you will have to pay this back?

Valuing the US Dollar

2010 will mark a pivotal point in the US economy. The Obama Administration and the ultra-left power base of the Democratic party will need a rising US economy to have any chance of maintaining a majority in both the house and the senate come November.

The US Dollar is largely valued by the US Dollar Index. This index measures the value of the dollar compared to six other major world currencies. This index, however, only measures the relative value of the dollar. During times like now when all other currencies are also being devalued the US Dollar Index has to be taken with a grain of salt.

A dropping dollar against other currencies which are also being devalued means the dollar is losing more value than people realize.

The best measure of the value of the US Dollar should be the price of gold, as gold cannot be created out of thin air like other forms of money are.

A Case for Gold Becoming Money Once Again

Gold is the oldest form of money still in use today. You can exchange it for fiat money virtually anywhere in world, save communist countries, which ban the ownership of gold and other valuable assets.

The US Government cannot keep this debt pace up and each year it goes up is increasing the burden on our youth, who will be called upon to pay this debt back.

When the money runs out and no one is willing to lend to the US Government anymore the game being played with the US Dollar will come to a sudden halt.

Simply put, you don’t want to be holding US Dollars when that happens. You want a form of money that governments cannot create out of thin air.

Gold and metals are the logical choice, however, who said governments and people do what is logical? People in power and with power can devalue gold by dumping large quantities of it on the market. They can artificially hold the value of the US Dollar up.

But they can’t play this game forever. At some point the US is going to have to pay this debt off, and that day will come as sure as the earth rotates bring the the sun into view each day.

Buyers of US Treasuries

Recently the US Dollar has gained in value because of the troubles in the European Union where two countries are near bankrupt dragging the Euro down.

This has created an environment where investors have purchased US Dollars because there is little else rising in value. But when one sees that the dollar was rising against other currencies only because those were being devalued more than the dollar it makes the dollar not that appealling after all.

However, as happened last year in 2009, Central Banks have shown a willingness to shift some of their reserves into gold. If this budgets passes and is signed into law, expect more countries to look at replacing more of their US Dollar reserves with gold, other metals and commodities, such as oil.

Also, remember that the US Government has $2 trillion in short term treasuries coming due in 2010. These are largely treasuries that President Obama sold last year.

Where’s the money to pay those treasuries off coming from? Certainly not from the government’s tax revenue.

If the Obama Budget is passed as is, which is unlikely, the Obama Administration is going to have to sell $1.56 trillion in treasuries and another $2 trillion in treasuries to cover the short term ones he sold last year, all during 2010.

That’s laughable. Who’s going to buy that many treasuries?

Well, the answer is our banks, who borrow from the Federal Reserve at zero percent interest, then lend that money back to the US Government by purchasing treasuries with it. This will ensure that little money is available to lend to businesses and individuals.

Hence, we have more monetization of government debt, more deficits, less people working, less tax revenues, a formula we should call the Barrack Economic Formula of Fairness.

What Would it Take to have a Strong US Dollar?

It would take a much, much smaller deficit. Even if the US had a balanced budget for the year, it would still need to borrow $2 trillion to pay off the treasuries coming due this year.

A balanced budget would strengthen the dollar, but is that what the government wants? Unlikely.

Tax Increases

The Republicans, if they ever want my vote again, are going to need to atone for their involvement in the passing of all the past spending by voting No on all tax increases, and rest assured the Obama Administration and the Democrats have a long list of taxes they want to punish the working people with.

What About Jobs?

Jobs are the biggest thing in need at the moment and the Obama Administration has done nothing effective about unemployment.

As I wrote last week, the government’s deficit is consuming credit that would otherwise be available to businesses and individuals, and is a big reason why unemployment has continued to decline.

This new budget only magnifies the problem. So don’t expect any real economic growth in 2010. There might be periods of minor growth, but Obama still has not realized that it is businesses which actually employ people in worthwhile endeavours.

Why I Don’t Carry Health Insurance

I don’t care carry health insurance and this is intentional on my part.

A few years ago we looked at what it would take to offer health card insurance to our employees. We ran into many issues that we had not expected. First off, the employees had to vote on what plan they wanted. Most of them wanted only catastrophic health insurance and didn’t want doctor visits and medication covered. However, we did have a couple who adamantly wanted everything under the sun, moon and stars covered.

When we got quotes from insurance companies it became quite apparent to us that the cost was easily double our estimates.

For my wife and my one son who was still living with us the cost would have been $24,000 per year between our half and the company’s half.

To justify such an expenditure we totalled all of our health care costs for the previous 3 years and averaged them out. Our average was around $2000 per year. Except this $2000 was largely for vitamins and Chiropractic and Physical Therapy care, neither of which were easily covered under the health insurance.

So we gave it a close, hard look and came to the conclusion that we would never get value from health insurance.

One must remember that the cost of health insurance for a year only covers you for that year. If you don’t use it in that year, it is gone and no longer has any value to you whatsoever.

In the end we decided that health care insurance was a waste of money. The only people who gain any benefit from it are those who are sick far more often than the average. Those who are healthy gain no benefit from it at all.

I spoke with my brother about what he does and he pays $30,000 a year for health insurance for him and his wife, they have no children. In the past 3 years they have used $10,000. However, their deductible is $4000 per year and they actually got a $2000 benefit from the insurance, while paying $90,000 for it over those 3 years. That’s an $88,000 waste.

Even if he needed to pay out $30,000 for in a single year for some emergency, he would save much more than that by simply choosing to pay with cash rather than annual insurance fees.

There is an estimated 40 million Americans not covered by health insurance. This number does not include the old, because they are covered by Medicare. This number does not include the poor because they are covered by Medicaid.

This number includes those people who work, yet can’t afford the $10,000, $15,000 or $20,000 per year for insurance.

This number also includes people like us who consider health insurance to be a waste of money and we choose to not purchase it.

A Very Interesting Answer to Healthcare Costs

To do something about the high health care costs, one must first understand why health care costs are so high. Many people think its to pay the doctors. This is demonstrably not true.

There are two primary reasons for high health care costs. These are:

1. Out of control fraud in terms of unnecessary claims, doctor fraud and fraudulent malpractice suits. Fraudulent malpractice suits are estimated to be at least 40% of all such suits. Malpractice suits also add unnecessary procedures and checks.
2. The cost of health insurance doesn’t just include healthcare costs. It also includes the cost of administering the insurance. Insurance companies pocket the unused premiums each year as profit. So the cost of healthcare is the medical costs plus insurance companies expenses and profits.

If you pay cash at the doctor or hospital you can ask for a cash discount and you’ll likely get it.

Malpractice claims should be limited to 3, 4 or 5 times what the person paid for the procedure or doctors visit. By leaving malpractice amounts open-ended, a person can profit from being ill and it give the individual no incentive to take responsibility for themselves.

A pedestrian friend of my wife’s use to have his normal practice and he also opened a second practice for poor mothers and saw them for free. He really wanted to help these mothers have healthy babies. He ended up closing that practice because those mothers were the most likely to sue and refused to take care of themselves.

By actual empirical observation it is cheaper to eat healthy than it is to eat poorly. There are people who will dispute this, but I doubt that they actually have observed the eating habits of the unhealthy.

Have you ever been behind a person in the grocery store line who is paying with food stamps? I have, many times. They buy loads of soda pop, sugared cereals, crappy bread and sweats. I make it a note to observe these things and have done so many on many occasions. Rarely do I see vegetables, fruits and raw foods.

Children need protein and fiber at breakfast, such as bacon and eggs and real cereal, not massively sugared coated cereal and soda pop or Nutella on bread.

I actually saw a Nutella commercial on TV the other day showing this mother spreading Nutella on bread to get her children to eat breakfast. Here’s the text of the commercial.

As a mom, I’m a great believer in Nutella, a delicious hazelnut spread that I can use to get my kids to eat healthy foods. I spread a little on all kinds of healthy things, like multi-grain toast. Every jar has wholesome, quality ingredients, like hazelnuts, skim milk, and a hint of delicious cocoa. And Nutella has no artificial colors or preservatives. It’s quick. It’s easy. And at breakfast, I can’t use all the help I can get.

Nutella’s top ingredient is sugar. Of course, they don’t mention that at all.

If the leftist want to go after corporate greed, then they should start with the commercializing of horrible so called foods that result in malnutrition. I was very upset about the commercial.

Here’s some links to some of their commercials. They are disgusting.

Current Nutella commercial playing right from their website

TheNakedLabel.com

Obesity Panacea

A Radical Cure for High Healthcare Costs

A radical cure for high healthcare costs would be to ban health insurance altogether. This, coupled with restrictions on malpractice amounts, would force doctors and hospitals to charge amounts people are willing and able to pay. It would cut out insurance company overhead and profits, which actually have nothing to do with healthcare at all.

With insurance, the costs are severally over inflated.

I’m not recommending this solution at all, because I feel people have the right to choose for themselves. I choose not to pay for it because I consider it a waste. Other people don’t feel that way and I’m not one to force my opinion on them.

However, I also insist that their opinions not be forced upon me either.

SJ Christie

Why is the US Dollar on the Rise?

You might be wondering why the US Dollar is rising in value compared with other currencies.

A look at the deficit spending and zero percent interest rates would tend to cause one to expect the US Dollar to be declining in value, and this is true.

However, the US Dollar Index, which is what you hear about on the news when it is said the US Dollar gained or lost, is merely a measure of the perceived value of the dollar compared with six other currencies.

When investors perceive those six other currencies are less valuable than the dollar the dollar rises. This does not mean that there is a fundamental shift.

The real value of a currency is the assets, goods and services the currency represents.

There are a number of factors in play at the moment. Amongst these are:

1. The election of Scott Brown in Massachusetts will make it harder for Obama and the Democrats to keep their spending up.
2. Greece and Portugal, both members of the European Union are near bankruptcy and this is pulling down the Euro.
3. The Chinese economy expanded by 5% in 2009 and the Chinese placed limits on the credit it was going to be made available in 2010.
4. The stock market is taking a fairly large hit and is actually still in the same range it was in back in October of 2009. This is not a surprise as the unemployment remain high and is still getting higher, no matter what the cooked numbers of the government say.
5. The above four are working together and people aren’t sure what to put their money into. The Euro? Nope. The stock market? Nope. Gold? Declining at moment as people still don’t see it as money, so not buying at the moment.

Note that none of these points warrant  a real value increase in the US Dollar, with the exception of perceived lower deficit spending by the election of Scott Brown, but even that won’t have a real effect for some time.

The government is still shattering all previous deficit records with no end in sight, which will hurt the dollar in the long run.

For the moment the dollar could continue up, but remember this is not based on fundamental production by the American economy, so its phony. Phony doesn’t mean people won’t buy it and buy a lot of it. After all, look at how many people bought Obamanomics.

 SJ Christie

Why Banks are Not Lending

With the economy sinking further into the toilet you might be wondering where is all the the Federal Reserve easy zero percent interest credit has gone.

Businesses are finding it more and more difficult to get loans and many, like mine, has seen its credit lines shrunken or frozen by their banks.

My Personal Experience

While I’m not the typical and make no claims to be, I do run two businesses and for one of them I’ve had two long time credit lines which I use to make large capital purchases. Generally, when making such purchases, I’d pay the balance down to $0 before I ever received a statement from the bank.

With this bank I have a total of four credit lines. Two of them for one corporation and the other two are backed by real property I own. The only credit lines with balances on them are the ones back by property.

This is a bank that I have a long 19 year history with. I control no less than 16 bank accounts in this bank.

One would tend to think that I’d be an ideal customer for my bank. I have good credit and I pay on time or early.

Well, one day last year I received this nasty letter from my long time bank telling me that I have lots of late payments and that I have too high a credit usage, and that my corporate credit line was being reduced to $1000.00. It wasn’t even a big credit line to begin with as the limit was $26,000 before and I had no current balance on it.

About a week later I received a similar letter regarding the line of credit on my house. The bank froze that one, which gave me a sudden 100% use of my credit on it. #^%*

Of course, both letters were mailed after the shrinkage of the credit line had been done. And both stated that the bank would not honor any checks I may have written against my available credit. Wow! Fortunately I hadn’t made any large purchases and there were no checks outstanding on either account.

I quickly obtained a copy of my credit report wondering what on Earth. There was nothing wrong with my credit, but I did find one mistake on it, which was easily corrected, and it was minor and hardly could be considered lots, since it was only one, and even it was a mistake the creditor happily corrected.

Another week or so goes by and a third letter arrives, stating exactly what the first letter said, except this one was with regards to the second corporate credit line I had. This one also was reduced to $1000.00 limit. I had no balance on it at all. #$%^

I showed my credit report to another bank, as I was considering finding a new bank. The person there noted something very interesting about my credit. While I have good credit, I don’t use it particularly. I don’t have any car payments. I have a mortgage and line of credit on my home. I have a lot of credit with $0 balance on them. I spend cash and rarely ever purchase on credit. She was explaining to me that this is why my credit score wasn’t much higher than it was. Say what?

Stunned and shocked that a bank I have a 19 year excellent history with and loads of accounts with would suddenly give me the cold shoulder like this. I took the letters and stopped in to pay the bank manager a visit. I wasn’t a happy camper. Now I know local bank managers aren’t one’s making these decisions and I know this gentleman personally [this is not a big town], so the conversation was civil.

He looked at the letters and was genuinely shocked himself. But he did tell me that the bank was removing unused credit from its books. When he noticed that two of the credit lines were corporate, he asked me how I got them because they have not be doing corporate credit lines for small business since before he came to work there. I said bluntly, “I’ve had them for years!”

While I haven’t switch banks yet, the move is coming as soon as I complete the renovations on the house we bought a couple of months ago.

The above story is not unusual, just ask any business person with a credit line.

Why Credit is Not Flowing?

Obama, in one of his hate speeches about banks recently, was attacking banks for not lending. Yet he seems unable to do anything about it except give hate speeches.

Today I went home for lunch. I left too early this morning and lunches were not yet prepared for the day. While I was eating I decided to turn on ESPN and see what’s up in the world of sports. Nothing. I hit the channel clicker and noticed a replay of the Bernanke confirmation hearings from 3 Dec 2009 were playing on CSPAN. Bernanke was being asked questions by Senators.

One Senator asked about the zero percent interest and why banks weren’t lending.

Bernanke answered the question honest, obviously without realizing what he said. He said, and this is paraphrased as I wasn’t recording it, that banks were borrowing from the Fed at zero percent interest, then purchase US Treasuries with it, and that they were doing this because they felt the Treasuries were a better investment than lending to individuals and businesses.

No one in the Senate hearings seemed to pick up on this at all.

What he said is that the Federal Government is consuming much of the available credit and is paying higher rates than businesses and individuals.

Yes, the government deficit is what is using up the available credit and is why the banks are not lending. The government is offering decent returns, plus inflation adjustment on bonds. Now compare that to a 30 year fixed rate mortgage. You don’t stand a chance. The bonds are 5 and 10 year notes and your mortgage is 15 or 30 years. The banks are borrowing the money at 0%, then lending it right back to the Obama Administration for pure profit. Doesn’t Obama know he’s the one using up this money?

But even more ire is that this is really the Federal Reserve buying US Treasuries, except they are going through a middleman, the banks, would will reap decent profits from you and me in our future taxes.

When Banks Buy US Treasuries

When banks borrow from the Federal Reserve at zero percent interest, then lend that money right to the government it sets up a covert monetization of the government’s debt. With the exception that the banks pocket the difference as profit.

So the current situation results in the banks, which helped cause our current economic troubles, are now profiting by lending the government money that the government is giving them access to. Seem a bit corrupt to you?

When a government begins to monetize its debt that government’s currency generally devalues markedly. If a government can covertly monetize its debt, then its money is overvalued because it isn’t taking the large hit one would normally expect it to take.

Monetization of debt is another way of saying that it is adding money to its own bank accounts for no production.

Obama and Bernanke Haven’t a Clue

The Obama Administration and the current Congress are consuming the credit needed to get business going again and spending it on useless programs, none of which produce a single thing or create a single worthwhile job. Then they have the gull to point fingers, pretending that someone else is causing the job loses.

It is unlikely that the Obama Administration and Congress do not know that the high federal deficit is what is using up the credit being made available by the Federal Reserve. Of course, there is the chance that they don’t understand this, which would mean that they are inept.

And Bush was no better with the spending either. Wars are expensive and largely unnecessary.

If You are Jobless

If you are jobless at the moment and are wondering where the jobs have gone, just tell the government to stop this deficit spending. In 2010 nearly $1.5 trillion is going to be borrowed by the federal government. That money could just as easily be lent to businesses and individuals, which will do something productive with it.

If you’d like to expand your business and hire, but wonder where all the money went, now you know. Bernanke said it clear as day.

Would you rather have a job, where you can do with your earnings as you wish, or would you like to be paid by Uncle Obama to sit in front of the boob tube and be told how to spend the nice man’s money?

 SJ Christie

Economic Basics, Part 3 – The Advent of Money

Economic Basics, Part 1 – Economics as a Science

Economic Basics, Part 2 – The Fundamental Principles

A Return to the First and Second Economic Principles

Economics is the study of the manufacturing and flow of goods and services in exchange for goods and services.

This could be rewritten as follows: Economics is the study of creating and exchanging goods and services one produces for goods and services one wishes to consume.

This clearly gave us the next: In order for goods or services to be consumed they must first be created and brought into existence.

In antiquity the primary goods and services were agricultural where people grew crops, raised animals, made pottery, provided doctoring, weaved clothes, made leather, serviced horses, smithed metals into useful items, etc. If you want a first hand look at what this was like I recommend visiting some Amish communities like those in Lancaster Country, PA or Berlin, Holmes County, Ohio. Both areas have a high population of Amish people who live life in simple terms. In my youth I visited Lancaster many times and I must say there was something very non-hectic and calming about the environment there.

In ancient days, items were traded for other items directly. Trading done in this manner is called a barter system. Barter systems are still in use today in virtually all parts of the world. Governments tend to look down upon these because it’s nearly impossible to tax, after all if I help Joe and he helps me in return the value of the transaction cannot be measured in terms of money.

The trading post and bazaar are an extension of the barter system in that these brought people together for the purpose of trading goods and services.

If one wanted to purchase food one needed to produce something that people wanted so that an exchange could occur. After all Joe isn’t going to just give you some eggs and bacon that he had to work hard to produce. This was probably one of the most honest systems around in that it rewarded production and required that one do something of value to receive goods and services.

The Advent of Money (Ninth Economic Principle)

A pure barter system requires two or more people to have common wanted and produced goods and services. To facilitate improved economics money was devised to make this exchange easier and as a store of production.

By that is mean that one produces a good or service and accepts money instead of other goods and services. One then uses that money to trade for goods and services as one wishes. The use of money does not change our definition of economics because the money is a medium of exchange.

One can spend all or part of the money they have received. Money is a store of production because one doesn’t have to trade (spend) it all at one time.

This brought about the concept of savings. When a person produces more than they spend (or consume) the left over money is called savings.

For money to have value one must have confidence that it can be exchanged for goods and services one desires to consume.

Money essentially is confidence that one can exchange it for goods and services.

Benefits of Money

The benefits of money are largely convience for the average person. They can save it, they can travel with it, they can hide it, its easy to store and its easier to trade with than the goods and services one produces.

For long distance purchases and trade having money is important because of its ease of transport.

Savings allows one to save up their production for a future time. Some people keep their savings under the mattice, others keep it in a savings account at a bank. Others might put it into what is called a retirement account. It can be use to purchase parts of companies (stocks) or invested in other ways, like lending it to the government by purchasing bonds.

That pretty much sums up the benefits of money and these benefits exist as long as the value of money remains stable and does devalue.

Downside of Money

Unfortunately, it has been a long time since money retained its value over long periods.

In fact this is the downside to money: Governments have made an art form out of the manipulation of their own currencies.

Today corrupt, dishonest government officials continue to devalue money by issuing more and more of it for no production, which makes each piece of the same money worth less and less over time.

Most people work for the money they have. By work is meant they produce some asset, item, good or service for someone else who then gives them money in exchange.

There are the small percentage of people who produce nothing, yet receive money. This is done through inheritance, theft, manipulation of stocks, manipulation of money, welfare of various forms, etc. All government welfare programs, whether for an individual or corporation is the giving of money for no production. All such programs devalue money and the savings of people who do the actual production. The cost of welfare programs is not just the tax money spent, but also the lost value in savings of people who do the real production.

When governments borrow and promise to pay back the debt with their own paper money, they can devalue their own money so that when they pay it back it’s worth less than when they borrowed it.

Inflation = Devaluing Money (Tenth Economic Principle)

Money use to have a fixed value in terms of real asset, like gold. Each ounce of gold was worth so much of that money or each piece of a money could buy a certain amount of gold. This was called the Gold Standard and it enabled one to have confidence in how much one’s money would buy in the future.

The Gold Standard works so long as the amount of money in circulation matches the amount of gold the issuing country holds.

Today there is no gold standard and money is compared to other money to get an idea of its value, as with the US Dollar Index. The problem with this sort of thing is that comparing money to other money is that it doesn’t indicate the value of that money in terms of real assets, goods and services.

Therefore, money is only worth what one can buy with it. When prices rise it buys less.

The value of money is the amount of money versus what it represents in produced assets, items, goods and services.

Inflation is the devaluation of money.

Deflation is a devaluation of assets, items, goods and services in terms of money.

When money is added to the supply without a corresponding increase in production of actual assets, items, goods and services inflation is the result. Inflation does not show up in prices right away and it sometimes can take years or decades before it shows up. [This is discussed in much more detail in the Manipulation of Money section.]

Today there is no government on the planet which is not devaluing its currency and making it worth less and less.

Money represents actual production and produced things. Inflation can be caused in a number of ways.

1. To increase the supply of money without increasing the producted assets, items, goods and services. This is done through government debt, bank loans or just plain adding more to the government’s bank accounts as was done 2008 (under Bush) and 2009 (under Obama).
2. To decrease the produced assets, items, goods and services without correspondingly decreasing the supply of money. Any method which restricts or limits production, curtails goods and services or directs money to unwanted goods and services will result in a devaluation of money. One example of this that has been occuring in the US for several decades is the making it more and more expensive to employ people. This is the direct cause of jobs moving overseas. This results in less production by the US, yet the money supply has been expanding. This directly devalues the US Dollar. [Note: the shifting of production to other countries does make goods and services cost less in the US, however, this also ships US money overseas and there are trillions of US Dollars held overseas which are not in circulation. If this money were ever to be sold rapidly then the value of the US Dollar would collapse overnight. This will be discussed later in the series.]
3. Giving away money for no production devalue the money. Take a person on welfare. They’ll spend money on wasteful things and the money has little value to them. After all, more is coming next month and it will be free. However, ask this person to do some work and they’ll consider that just showing up is production, yet they’ve produced no goods and services, or if they have the product is of no use to anyone. They over-value their work and time, and undervalue the money received. They’ve been educated by years of hand outs to think this way.

The Conditions for Stable Money

There really is only three conditions necessary to have stable money.

1. A politically stable issuing country.
2. The amount of money in circulation represents actual production of assets, items, goods and services that have been delivered.
3. All money is earned and is received through actual worthwhile production of assets, items, goods and services by those receiving the money.

Today there are no highly stable currencies in the world. There is not a single government that has not devalued its money over the past 30 years. This has far wider and more dire consequences, like recessions and depressions, which we all have first hand experience with now. At least one part of this series will be devoted to economic depressions and their cause. For there is a cause. Economic collapses and depressions don’t just happen.

Fiat Money

Fiat money or fiat currency is where the money is not backed by something tangible. Fiat means by order. Fiat money is money by government order and its inherent value is one’s confidence that the money can be used to purchase goods and services. Strip a fiat currency of that confidence and you get financial ruin.

When the Gold Standard was in effect, the US Dollar was considered to be As good as Gold.

Today all government issued currencies throughout the world are fiat currencies and they depend on people having confidence in the issuing government.

An unstable government will cause people to have less confidence in that government’s money.

When a government is unable to pay its debts, its money decreases in value dramatically because those governments tend to just print and print and print more and more money, making paying off their debt easy. However, in terms of real produced goods and services, they are really paying back only a faction of what they borrowed. Such actions by governments lead to what is called hyper-inflation.

Gold as Money

Historically gold has been a form of money itself. Since there is no government which can produce gold out of thin air, it is a good form of money to have when the country you live in is devaluing its currency.

There are other ways to protect one’s savings than gold. This would include real goods and services which can be stored or sold later. One example is property. You can sell your money by exchanging it for money from another country. People buy and sell currencies and gold each day on the open market.

What is the US Constitution?

What the US Constitution Is?

The US Constitution is essentially an agreement between the American people and their States, and the Federal Government. The constitution stipulates what the federal government is authorized to do and limits it to those functions only.

The Constitution grants authority to an elected President, an elected Congress and Judges elected by the President and Congress.

Here’s the Constitution.

What if the Constitution were Null and Void?

If the US Constitution were null and void, by any means, then the President would have no authority to be president, Congress would have no authority to pass laws and the Supreme Court would have no authority to rule opinions on laws and people’s rights.

The reason for this is that it is the Constitution and people’s agreement in the Constitution which grant these authorities.

If the agreement no longer exists, neither do the authorities.

The Constitution is an All or Nothing Document and Agreement

In no part of the Constitution does it allow for partial application or unequal inclusion of some and not others.

The Congress, the President, the Supreme Court and the government must operate within all of the Constitution. If one part is disallowed, ignored, overwritten, pretended to not exist, altered or in anyway done away with, either by direct action or indirect action, then they have broken their vows by changing the constitution without following the amendment process.

The part of the Constitution which gives us this is Article V – Amendment

The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments, which, in either Case, shall be valid to all Intents and Purposes, as part of this Constitution, when ratified by the Legislatures of three fourths of the several States, or by Conventions in three fourths thereof, as the one or the other Mode of Ratification may be proposed by the Congress; Provided that no Amendment which may be made prior to the Year One thousand eight hundred and eight shall in any Manner affect the first and fourth Clauses in the Ninth Section of the first Article; and that no State, without its Consent, shall be deprived of its equal Suffrage in the Senate.

In other words, only final approval by three-fourths of the states can amend the constitution.

So what if a Congress, a President or a Supreme Court decided to ignore the Constitution? That would be tantamount to changing or amending the Constitution without going through the states and would automatically mean the government is acting illegally to usurp the rights of states and the people.

Altering the Constitution Without Amendment

The clever redefinition of words, the court opinion which misinterprets, the Congressional law that ignores, the Presidential Executive Order that violates rights or the government educating people to believe the constitution is old or outdated are all attempts to alter the constitution without going through the amendment process and each such act is the act of an enemy. For who else would contrive such devious schemes but an enemy?

I make no accusations here about specific people. I judge people by their actions, not their supposed intentions. The intentions of an enemy toward one is never good intentions.

An honest friend, if changes were needed, would openly discuss those changes and offer honest and fair assessments of the situations they felt dictate those changes. An enemy would, of course, use subterfuge, deceit, trickery and dishonest, underhanded methods to obtain their goals. The honest have no need for such tactics, for they argue their points on the basis of merit and reason.

S J Christie

The US Constitutional Series

For those with graying hair such as myself, we were taught the constitution and were taught that it represented something few people had been allowed to experience during the history planet Earth. Some people understood it, some clearly didn’t.

Without going into the history of the deteriorization of the constitution, which I could do, but will save for another day, I am going to point out that the deterioration began with people’s ignorance.

The constitution, as a basic set principles by which our government is to operate, is in fact senior to and above all opinions written about its meanings. It is senior to and above all laws passed by whatever governing body within the United States. It is senior to and above any Presidential Executive Order.

Any court opinion which diverts from and counters the constitution is an illegal opinion. This would include reinterpreting the constitution to mean something different than what is says or what it meant at the time it was written.

Any law passed, regardless of how many people voted for it, which violates the constitution is an illegal law.

To understand the constitution it is first important and vital that one understand the circumstances under which it was written. It is also important to understand the circumstances under which each of the amendments was passed.

Beyond the circumstances, one must also understand the English language at the time the constitution was written. New and altered definitions of words cannot be applied to original document and expect to achieve understanding. Therefore, it is vital that old dictionaries of those times be retained in circulation and, at the very least, a complete glossary for all words used in the constitution from that time be assembled and taught along with the constitution.

An example of this is “welfare of the people.” Welfare at that time did not refer to government programs of handing out money to those who don’t or won’t earn because we all are suppose to feel sorry for them. Yet, how many people today feel that our welfare program is part of the constitution?

A second example would be the 2008 attempt to ban guns by redefining “the people” as the government which represents the people. Fortunately, the Supreme Court agreed with the correct definition, but by a 5 to 4 vote, meaning that 4 judges were ready to abandon the real meaning and render an opinion which countered the original constitution.

Such opinions are illegal and should be treated as sabotage of the operation of our government and be worthy of impeachment and arrest.

This new series is a look at a set of new constitutional amendments to reverse the decline of our government. I expect to release one new article every week or so.

Inflation Beginning to Show its Ugliness

If you look you’ll begin to see the charges increasing in certain industries.

Here’s two examples from just today:

1.  I spoke with the person I that is in charge of all of our shipping today. He’s purchasing shipping boxes for us. Now being in software we do more and more delivery via the internet and download and less and less shipping of boxes. However, we do still ship boxes of software.

The cost of having boxes shipped to us has doubled in cost from just one year ago.

I asked him what about our costs for shipping to customers. A DVD cases costs us between $6 and $7 to ship UPS today. A year ago is costs between $4 and $5. That’s a 50% increase in just a year.

2.  Our local power company, Progress Energy, was recently rewarded a $132 million rate increase by the state public utilities commission. With oil prices high, but nowhere near where they were 18 months ago, there is actually no justification for a rate increase except to cover increasing costs, which, of course, is inflation.

Don’t believe the government’s CPI (Consumer Price Index) numbers. The government fudges these to hold down inflation adjusted bonds that need to be paid back and to make the GDP (Gross Domestic Product) numbers look better. Just start comparing your bills now to last year and the year before to see if and how inflation is affecting you.

With unemployment still getting worse, not better, the Obama Administration and the Federal Reserve will stay under pressure to keep rates near zero. This will bring on more inflation as these low rates continue to devalue the US Dollar.

I wouldn’t sell that gold or other metals just yet. The US Dollar Index is being artificially held up because the Euro is presently devaluing more than the dollar is. This does not mean that the dollar is maintaining its value. On the contrary, when all currencies the US dollar is being measured against are devaluing the US Dollar Index would need to rise in order for the dollar to maintain its value.

Instead, we see the US Dollar Index remaining flat, which means it’s being devalued more. It is for this reason that the US Dollar Index is not a good measure when one is attempting to value gold or commodities, such as oil.

Economic Basics, Part 2 – The Fundamental Principles

Economic Basics, Part 1 – Economics as a Science

The following are the first eight principles to be discussed in this series. Each will be covered from a number of angles throughout the series.

These first principles are the most basic and other principles, such as money, supply and demand, and banking can only be understood after these principles have been grasped.

I’d like to note up front the when the word production or product or producing is used I am only referring to quality items and services. Defective products and services hardly count as acceptable production and should be considered as waste.

First Economic Principle

Economics is the study of the manufacturing and flow of goods and services in exchange for goods and services.

This could be rewritten as follows: Economics is the study of creating and exchanging goods and services one produces for goods and services one wishes to consume.

This is the oldest and most basic description of economics and all sound economic principles have this as their roots. Pretty much without exception, all dishonest and corrupt philosophies of economics involve a perversion of the production, exchange, then consume cycle.

This definition of economics has been called a barter system in modern text where it is discredited by calling it old, out dated and no longer used. Yet, it is the most fundamental principle our entire global economy is based on. And, if one cared to look, you will find many barter systems still in existence today.

From this definition of economics one can derive a definition of honest, ethical, criminal, dishonest and unethical.

The honest will exchange goods and services of their own production for goods and services they wish to consume and at an exchange rate acceptable to both sides of the exchange. The teacher who teaches children who are now successful productive adults would be honest. An engineer who designs a quality bridge at a fair price is honest. A parent who raises their children to be productive individuals would be honest, at least as far as parenting went. A union which creates workers which produce quality products at a fair price would also be honest.

The criminal consumes while exchanging nothing or something of less value. Here’s the theft. Here’s the bribed official. Here’s the corrupt corporation. Here’s the vandal who consumes (damages) the property of others without paying for it. Teachers who teach distorted history, opinions disguised as real science, and who’s children are set up to fail in life, is delivering a perverted product of negative value, yet she or he is accepting a pay check and consuming. That teacher would be dishonest, unethical and would be destroying the lives of children. The welfare recipient who only consumes and produces only children who know how to consumes, and produces nothing of value that anyone wants, is another clear cut example of the dishonest. A union which creates lazy workers who produce poor quality products at inflated prices would be dishonest.

I believe this is fairly easy to see and you likely will be able to come up with many more examples.

If you want an exercise of value to yourself, examine your own production and consumption. Are you producing quality products at a fair price? Are you consuming more than your produce?

Second Economic Principle

This leads us to the second principle, which is: In order for goods or services to be consumed they must first be created and brought into existence.

This is a rather obvious principle, yet one will not find it economics text. Try to consume (purchase and use) a clothes dryer that has not been manufactured, or try to eat food that hasn’t been grown. Yet, we have people who consume far more than ever produce and such people give no thought to the fact that someone else had to produce the items they consume.

This principle has some reaching application when it comes to managing raw materials and natural resources. Taking the fishing industry as an example, wild Cod is now virtually extinct in our oceans. The fishermen were busy consuming all Cod and never bothered to realize that Cod had to be grown in the ocean before they could be fished. Now we are left with farm raised Cod, which may or may not be raised ethically.

Third Economic Principle

Debt is owing future production of goods and services that one has promised into order to obtain goods and services one has either already consumed or is consuming.

One who owes debt has consumed more goods and services than they have produced.

The most common example would be a loan to purchase a car. Consumer Joe wants a car today and to obtain it Joe promises some of his future production. If Joe stops producing as an individual and cannot pay back the loan, then he is considered dishonest as he has consumed a good for which he has not exchange goods and services of comparable value.

Debt can be beneficial when it is used to enable one to produce more goods and services than would be able to otherwise. Such expenditures are commonly called capital expenses. Capital, for our purposes, is assets which can be used to produce or manufacture goods and services.

Debt used for luxury items, everyday consumables like food, would not be beneficial debt in that these things do not increase one’s ability to produce. Of course, for those who are in the habit of producing nothing everything they consume incurs a debt.

Here are some common examples. Debt to increase one’s production might be an upgraded factory that will produce more with better efficiency. A debt to purchase a car could be beneficial if that car enables one to produce or produce more. An expensive car does not fit in such a category. A car which gets one from A to B efficiently and safely would be. A new computer would be beneficial if it enabled one to produce more. A new computer that one doesn’t use to produce with would not be a worthy debt.

Savings is being owed future production of goods and services for goods and services one delivered in the past.

One who has savings or holds a debt of another has produced more goods and services than they have consumed. The person who sets a side a small amount of money each pay check is in fact consuming less than they are producing, and they therefore saving.

These two principles apply equally to individuals, groups, cities, corporations and countries. Those who are owed have produced more than they have consumed. Those who owe have consumed more than they have produced.

Fourth Economic Principle

This bring us to Interest, which could be defined as follows: Interest is the additional goods and services one gives in order to delay the delivery of the goods and services one has promised, or it is the additional goods and services one receives for having to wait for the goods and services one is owed.

Interest could be considered to be the price or penalty one pays for consuming before one produces over a given period of time. Or, from the other side, interest is the reward one receives producing and delivering before one consumes.

Fifth Economic Principle

The true state of the economics of any individual, family, group, city, corporation, region or country can be seen by examining the flows of goods and services it is consuming and producing.

This principle is relatively easily applied by examining factual and honest information. Finding factual and honest information is not always easy though.

As an exercise, examine your own flows of production and consumption. Are to sending more production out than the consumption you are taking in?

Sixth Economic Principle

We use natural resources in high quantities. Some of these have a practical maximum that can be used before they run out. Others are entirely renewable within limits.

Those with a practical maximum are those things that we don’t know how to grow or raise. Examples would include oil, gold, etc. Some of these have a maximum supply far exceeding what we will forseeably use, like water. These resources require management.

Renewable natural resources are things we can grow, raise or regenerate. Examples include trees, cattle, chickens, corn, wheat, fish, etc. Renewable resources do have limits. We have only so much land to raise cattle and grow crops and trees on. Fish populations can only procreate so fast. Renewable natural resources require management.

We can put natural resources into our production/consumption principle as follows:

The growing, raising and management of natural resources is a production.

The use of natural resources is a consumption.

Management of natural resources must be done by honest, ethical individuals. The dishonest and unethical will invariably generate artificial scarcities in order to exert undue control over people or will over consume the resource into extinction. Both are destructive.

Seventh Economic Principle

All production requires some consumption.

No matter what goods or services one produces there is some consumption involved. The farmer consumes land, water, seed and fertilizer to grow crops. The auto industry consumes steel, rubber, land, plastic, wires, etc. in order to produce a car.

Eighth Economic Principle

This brings us to the final principle for this part of the series.

One must produce in such a ways as to not over consume the raw materials one uses in production.

Failure to adhere to this principle can cause great economic troubles. It is the honest and ethical who will properly manage the raw materials they use. The farmer who over farms land ceases to have that land available for growing crops. A country that pollutes its waterways no longer has fresh water for the people it needs to work. The list of example could probably fill a volume.

While some resources have been over consumed, there are other resources which are abundant, yet rationed for the express purpose of population control. Water is a prime example of this. Abuse of laws by the EPA and other such organizations to prevent production is another example where the unethical have directly destroyed of land, forests, jobs and economies.

Part 2 Summary

The above principles are fairly simple, yet attempt to find them in an economics text. Sure you will find them mentions in certain ways or wordings, but never as fundamental principles which need to be adhered to in order to have a stable, expanding economy. While the above are far from all of the principles of economics the above are the most fundamentals.

The above principles are applicable to any individual, family, group, city, corporation, region, country, etc. The rest of this series is devoted to expanding these and examining how these can be used for beneficial results and how these are perverted and manipulated by the dishonest.

It matters not how much one might plead or beg or believe that one is entitled to consume without adequate production on one’s own part, one will become a slave to the degree one owes his future production to pay for his past and present consumption.

When one owes a lifetime of production to pay for past consumption, one might as well be a slave.

I write this article and the following series because these basic, and observably true, principles of economics are no longer taught as such. And, when they are taught, they are taught in a twisted manner to suit the purposes of individuals and groups who could easily pass for your worst ever enemy.

Those individuals and groups who prey on the ignorance people for their own profits, power and control are the same individuals and groups who ensure sufficient ignorance exists which can be preyed upon. After all, how can one prey on ignorance if there is none?

Such individuals and groups are the enemy of all mankind and no one can consider safe when we live on a planet populated by a majority of ignorance.

It is my duty to communicate and educate in real, practical and useful principles, that will give consistent and beneficial results for anyone who wishes to participate.

Of course, when one is born one is born a participant whether liked or not. The economy cares not of age, race, gender or religious beliefs, it exerts its pressures on one regardless. There is no far away place where one can escape economics on the planet Earth. The principles apply even to the self-sustaining hermit farmer living fifty miles outside of nowhere.

Economic Basics, Part 3 – The Advent of Money