Gold Investment

Arlington Heights, IL

By A.B. Dada
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It has almost been a year since the Global Unanimocracy Network was created when I coined the phrase unanimocracy. While the term hasn’t taken off, I do use it to explain my political beliefs — no law passes without unanimous consent. If EVERYONE agrees, a law is made. All laws fall away (sunset clause) after a short period (3 years).

Since the anniversary is coming up, I figured it is time to coin another phrase for another term that likely won’t happen, but it is good to have the word out there. Maybe some pundit will realize the thinking behind the word and use it. Probably not.

Inflation is one of those words that most people think they understand, but don’t. We look at inflation as prices going up. This is not the right definition of inflation. True inflation means that some prices in some markets go up, because the available money within that market is higher. If there are 2 people who want to buy 2 oranges, and I have 2 oranges and they have $1 each, the price per orange will likely be $1 each. But if 10 people show up for those 2 oranges, and 5 of them have $1, but 5 of them have $2 (a total of $15 in the orange mini-market), the price will be bid up until the oranges are sold. They might sell for $1, but the new money within that mini-market will allow people with more than $1 to bid more. Oranges might sell for $2, they might sell for $1.05. The new money within the market allows prices to be bid up based on the supply of oranges (2) and the demand for oranges (10 people). This is how inflation operates. The opposite can happen, too, within a given market. We might have 10 people with $1 each, and I may have 50 oranges that I really want to sell. Since I have an over-supply of oranges, and an under-supply of people (demand), the oranges might sell for a quarter each just so I can get rid of them. That is deflation: less money in a given market versus the supply of goods to sell.

Inflation happens because money comes into a market, deflation happens because money leaves a market. It is a pretty simple definition. The problem gets messed up because the Federal Reserve Bank of the United States has, in almost its entire history, a record of creating more and more money. There have been a few years here and there when the Federal Reserve hasn’t created more money, but in general it has been a printing press monster. If you look at prices over the 93 years of its existence, you’ll see that inflation has gotten worse and worse — more and more money was flooded into all the markets, so more and more people bid up prices of everything, sometimes beyond levels necessary.

The dotcom boom and bust was created by the Federal Reserve making too much money which flooded into the stock market. When the stock market crashed, it left a lot of middle class people hurting, but the original money that was created was still out there — the early sellers made huge gains. That money found its way back into banks and other investments, and the money eventually found its way into the housing market: where we saw another 4 year boom and now we’re seeing a bust. We call this the housing bubble. While all that old money from the dotcom market flooded the housing market, the Federal Reserve continued to make MORE new money, which made the problem worse.

One side effect of inflation is that we see our wages go up — the government loves this because people feel they are richer. The problem is that raising wages from $10 per hour to $20 per hour might not really be a gain for the employee. If an item cost $1 when you made $10 an hour, but now that item costs $3 and you make $20 per hour, you’re poorer, not wealthier. Inflation can be terrible for the average family, since the average family doesn’t look back more than a few months to gauge the rise of prices. Have you seen the prices of toilet paper, or vegetables or gas lately? Even if you earn more per hour this year over a decade ago, you’re poorer.

There’s a solution to government inflation, though, one that makes it easier to hide all the creation of money: increase supply and demand! If we have 5 oranges and 5 people buying oranges, and they have $1 each, you’ll see oranges sell for $1 each. But if the Federal Reserve creatd $5 more and those 5 people buying oranges received the extra money, orange prices can go up, severely. But if you increase the demand (bring more people into the market) and increase the supply (the new people can make more items), inflation is masked with a settling of prices. If 5 people with $5 and 5 oranges turns into 10 people with $10 and 10 oranges, the prices virtually stay the same.

For 6+ years, the solution was considered terrible: bring in more people into the country. The new conservatives were against immigration, in fear that immigrants hurt wages and jobs. This is untrue: for every job they took cheaper than a citizen, they also increased the demand for housing, food, gas, electricity, consumer goods, clothing and entertainment. Immigrants don’t just sit in a lightless closet without clothing, bed, or food. They consume, so they’re a net positive for any economy. While they may bring down wages in one market, this gives everyone better prices, and the immigrant still needs to buy items from other markets. The net benefit is that inflation is masked by immigration — the increased demand and increased supply of production helps everyone.

Conservatives generally dislike immigration, especially illegal immigration. I believe that the Democrats love it — immigrants generally come from socialist or neoliberal countries, so they are more likely to vote for government that gives them “benefits” without cost. Democrats will take over the Presidency likely in 2008 (Obama, or Warner, probably), so a total control of the Federal Government is something they need to take over the Federal Reserve Bank, too. Clinton’s time in office went crazy with monetary creation: they made more money than in decades before his terms. Americans FELT richer, even though they may have been poorer. Easy money creation means easy credit, so the credit boom began. Yet if the population doesn’t grow to match the money creation, the money has to go somewhere — and usually goes oversees where foreign banks hold on to it. Eventually they’ll see the money isn’t worth very much, which can cause an instant destruction of a currency.

The Democrats have a great solution ahead of them: immigflation. Don’t be surprised if the Democrats find a way to give amnesty to the millions of illegal aliens in the country (allowing them to come into the banking system with a social security number) and also find a way to increase the caps on legal migrations.

I looked at some old data and charts from earlier in 2006¹, and it seems that the new conservatives were really pressured in the area of immigration and the economy. The economic destruction we’re facing was not unique to the Bush administration — most of the problems started decades ago when the dollar was removed from gold (1971) and continued to get worse through Clinton, too. The immigration problems have more to do with becoming a police state than an economic side benefit. Yet the Democrats see these charts, too, and they will definitely take advantage of the idea of immigflation.

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