OK CORNELIUS, SAM THE SNOWMAN SAYS EVERYONE WISHES FOR SILVER AND GOLD, NOT SILVER OR GOLD

The gold-to-silver ratio is the amount of silver in ounces one ounce of gold will buy. Said another way, the ratio is the amount of silver in ounces it takes to sell for cash to buy one ounce of gold. Many believe a high ratio means it is a signal to buy silver and thus conversely, a low ratio means it is a signal to buy gold. To calculate the ratio, divide the price of gold by the price of silver.



As can be seen above, there isn't correlation between the ratio and the True Dollars™ price of gold. From 1983 to 1991, the ratio rose and gold fell. From 1991 through 1997, the ratio fell and gold still fell.









Silver and Gold
Silver and Gold
Everyone wishes for Silver and Gold
How do you measure its worth?
Just by the pleasure it gives here on Earth
Silver and Gold
Silver and Gold means so much more when I see
Silver and Gold decorations on every Christmas tree
Silver and Gold
Silver and Gold
Everyone wishes for Silver and Gold
Silver and Gold
Silver and Gold means so much more when I see
Silver and Gold decorations on every Christmas tree

Read more ...

YOU WANT US TO PAY MORE BECAUSE WE LIVE IN THE GREAT WHITE NORTH? TAKE OFF, EH!

Today, the CBC published a work by Chris Hall who reports the Canadian federal government wants to give new powers to the Competition Bureau because Canadian politicians have told voters that voters suffer from geographic price discrimination.


Like their Australian brethren Canadians believe they pay more than Americans for the same products. Back in September, in DO YOU COME FROM A LAND DOWN UNDER WHERE PRICES GROW AND MEN PLUNDER?, I showed that Australians likely pay the same prices.

So, I decided to find out for myself. I looked at products made in Canada as well as products made elsewhere. Canadians pay much more for products made in Canada than they do for products made elsewhere.

Canadians pay much less for all kinds of cool products like the Microsoft Surface Pro 3, the iPad Air 2 and even a Fender Stratocaster!

Canadians pay much more for cars and tires.




Of course, my random selection of products cannot be construed as scientific.

Sadly, Chris Hall perpetuates the Ricadian myth that costs producers outlay to make things has anything to do with the prices they can fetch in actual sales by having written, "While higher labour costs, tariffs and the cost of transporting goods to Canada are some of the reasons goods can cost more here than in the U.S..." 

Heed my dictum: Costs have nothing to do with prices. Costs have everything to do with profitability.

Regular readers of Bizarro Theater will have learned by now the reality of prices. All prices get governed by the one, true, infrangible law for all of trade — the Law of Prices. The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer sets the price. 

It's the actual buyers of things who set prices. Whether those prices are high enough so the sum of sales on those prices lets a seller at least break even is another matter.

The whole trick of business is producing so that one can adhere to the Axiom of Profit on given prices set by winning bidders. The Axiom of Profit holds the sum of sales on prices set by winning bidders must at least equal the cost of production, otherwise the seller goes to ruin.

Costs of Production arise in the production and manufacture of a thing. Producers incur expenses.

Sellers can reduce their offering prices when they acquire their products at lower-to-them prices. As long as the sum of their sales at least equals their outlays, such sellers offering alike products can remain in business. If their competitors cannot do so, in short order, their competitors go to ruin. The Axiom of Profit prevails.

Any right-minded thinker can envision a producer who incurs $10,000 in costs to produce collapsible pick-up truck racks. Lets say he produced 100 racks. The costs distributed over 100 racks is $100 for each rack.

Such a producer could offer one rack for $400. Let's say that no one buys one rack at $400. Reluctantly, the producer reduces the price to $300 a rack. Again, let's say no one buys at $300, worriedly, the producer reduces the price to $100.

At at $100, the producer sells one rack. He earned $100. Yet, his costs of production remained at $10,000. Owing to the great Axiom of Profit, he goes to ruin precisely because the sum of his sales did not equal his cost of production.

The producer needed to sell all 100 at $100 to stay in business. The producer could have sold 50 racks at $200 to stay in business.

It is winning bidders of purchase and sale in the face of what is on offer — in our example the customer who paid $100 — who set the price.

Costs relate with profit. Costs fall under the great Science of Profit. 

Costs are a factor of production. Costs and sales govern whether or not a producer can stay in business. If something cost more to produce, that means there is less profit and if costs exceed the sum of sales, in short order, the producer goes to ruin.

Prices relate with winning bids of purchase and sale. Prices fall under the great Science of Wealth. Prices arise from trade.

The idea that costs have anything to do with prices is laughable on its face and comes from a huge fallacy pushed by David Ricardo and perpetuated by Karl Marx.

Two producers could face the same material costs, but one producer renders a superior design. When both producers offer for purchase and sale their products to those with cash and credit, the one with the superior design could capture the lion's share of sales. If the inferior design producer fails capture enough sales to cover his cost of production, in short order that producer will go to ruin.

Read more ...

OIL STILL PRICED 29% HIGHER THAN THE LONG RUN

All too often, many get fooled by numbers. Take the recent drop in the price in West Texas Intermediate.




Far too many believe the price of oil is plunging because OPEC ministers decided to do nothing about production output. However, reality looks different.

In true terms, oil is up a bit more than 1% month to month (GW$6.08 vs GW$6.00). True oil still trades at 1.29 times the true price average ($4.73) excluding manias over the last 29 years.

However, West Texas hit an interim low of GW$5.70 on February 1, 2009. Since then WTI has gained 6.3% in true terms growing at the yearly rate of 1.1% a year.

Read more ...

RESIDENTIAL REALTY REALITY. IT LOOKS LIKE NOW IS THE TIME TO BUY.

Earlier today, in AIN'T THAT AMERICA FOR YOU AND ME. TRUE PRICES OF RESIDENTIAL REALTY OFF ALMOST 50% FROM PEAK CREDIT, I revealed to you the true median price for new and used houses sold has fallen a whopping -48.6% falling at an annual rate of -9.1% a year over the last seven years. As well, the true median price for new houses sold has fallen an eye-blackening -47.1% falling at an annual rate of -7.9% a year over the last seven and three-fourths years.


Here are what prices have looked like during the reign of presidents beginning with Kennedy.




No one can say how long a price rise shall run nor how long a price fall shall run before either trends start. That said here are yearly growth or shrink rates and the time of the trend.



The average annual median price growth for low to peak periods is 5.9%. The average annual median price decline for peak to low periods is -6.5%.




Back in May, 2014, I shared with you the Homeless ratio. The Homeless ratio looks at net charge-offs in relation to delinquencies for all single-family residential mortgages secured by real estate and booked in domestic offices of all commercial banks. Back in May, the Homeless ratio signaled the residential realty mess as over.

And back in May 2014, I said from a house price perspective, this has been the best time to buy since 1980 though not the best time to buy relative to income. If you have the a solid income and have wanted to become a mortgage payer rather than a renter, the window is open for a once-in-a-34-year opportunity.

However, if you are looking to speculate in realty expecting the same kind of return you would get from buying the S&P 500 for price, think again.

As I showed in IS THERE EVER REASON TO BUY GOLD, had someone bought the True S&P 500 at $86.50 at the end of Q1 1994 and rode that until Q3 2000, that lucky one would have enjoyed a yearly growth of 22.3%, double the return of the great gold rush of the 2000s, with the total growth coming in at 251.4%. In the long bull run between Q3 1974 and Q3 2000, True S&P 500 grew at a yearly rate of 7%, growing a full 484.3%.

So even in the best runs for true median price of new sold houses, buying at the low of residential realty can't compete with buying at the low of the S&P 500.

Read more ...

DO YOU COME FROM A LAND DOWN UNDER WHERE PRICES GROW AND MEN PLUNDER?

So today, I came across a story by Emma Reynolds published by news.com.au in which Ms. Reynolds goes Mad Max over prices Australians pay "on almost all goods, from cars to clothes to gadgets." Ms. Reynolds believes conspiracy is afoot, which forces Australians to pay higher prices for the same goods than others of the world, notably Americans. Ms. Reynolds cherry-picked a handful of products to buttress her claims —
Razer Blade laptop, Lancome lip gloss, Honda Accord V6, Burberry trench coat, current-release song from iTunes.



Right now, one Australian dollar buys 89 cents U.S., which is 11% short of a whole U.S. dollar.  Australian politicians levy a goods and services tax (GST) of 10% on most goods, services and other items sold or consumed in Australia.

Microsoft sells the Surface Pro 3 tablet for US$799.00 to Americans. Microsoft sells the same Surface Pro 3 tablet for AU$979.00 to Australians, which includes the GST. Here is what happens when accounting for the lower buying power of the Australian dollar and the GST.

(1) US$799 × 1.11 = AU$886.89
(2) AU$886.89 × 1.10 = AU$975.58

So it appears that Microsoft offers their Surface Pro 3 at a $3.42 premium. Maybe Microsoft execs hope to gain that premium to offset regulatory compliance costs. Perhaps Microsoftians seek a few extra dollars to offset foreign exchange costs.

As always, in trade, or commerce, or real economics, there is but one law and one axiom, the Law of Prices and the Axiom of Profit. The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer sets the price. The Axiom of Profit holds the sum of sales must at least equal the cost of production otherwise a producer goes to ruin.

So for products for which Australians pay much higher prices than Americans, it is more than likely the Australians who buy such products outbid their fellow Australians, especially for luxury goods on offer to Australians. These winning bidders push prices beyond exchange rate differences and the GST.

No one works at a loss. At less than break even, anyone would stop trying to produce property, which is the right of ownership and is what gets bought and sold in purchases and sales of trade.

American sellers must at least break even and likely must gain a higher return to capital relative to what can be gained in the USA where 313 million Americans live to make the effort worth it to sell to 23 million isolated Australians who live at least 12,087 km (7510.6 miles) away from Los Angeles.



On a lark, I looked at the price for jar of Vegemite (400g). Woolworths sells a jar for AU$5.56. I can buy Vegemite down the street at Cost Plus World Market for US$8.99. That US$8.99 price is US$7.96 cheaper than the typical Amazon.com price.

US$8.99 exchanges to AUD$10.07. So, the price I would pay is a whopping 81.1% more than your typical g'day mate!

Australians should ask themselves why is an Aussie dollar only worth 89% of a U.S. dollar. Aussies should ask themselves why their pols levy a 10% tax on everything bought and sold.

Aussies might discover that central bankers at the Reserve Bank of Australia buy bonds Aussie pols float to pay for welfare when foreigners fail to buy all the bonds for sale. Aussies might discover that pols need to levy that GST to pay interest on all of those bonds sold to pay for political welfare.

It looks like the News of Australia pings this "prices are high" story once a year.

Read more ...

CONTEMPORARY AGE SUPERSTITION. THOSE SUFFERING FROM IT CLAIM WE'RE EATING OIL WHILE DROWNING IN INFLATION.

A well-known blogger, Mr. X,  claims food prices are high because mankind eats oil. In fact, he says, "...regardless of what we eat, we're actually eating oil." His beliefs are fraught with fallacy and superstition.

First, Mr. X says "the cost of basic foods keeps rising" when he should have written price instead of cost. Cost is outlay. Cost is the sum of purchases.

However, Mr. X's claim is not true. Prices have been falling for years.

Sure, the denominational price of food has been rising, you know, in dollars. However, stripping out  the effects of inflation of Federal Reserve Bank Units, the bank credit that consists of the dollar, true prices for food have been falling. Food prices have been falling even before massive deflation of bank credit since the Banking Crisis of 2008.

When you stop and then start to think about it, food prices should be falling. Owing to technological advances, food producers have become more efficient. Owing to NAFTA and CAFTA trade agreements, there is more output of crops to markets. Because food producers have become more efficient, food sellers can accept winning bids and still maintain profit margins.

So why does it hurt when spending wages for food in denominational prices? Well, along with food prices, wage rates are prices too. True wages have been falling right along with food prices (to learn why, check out the chart socialists and politicians don't want you to see).



So back to Mr. X. Mr. X claims food prices move "in virtual lockstep with the one master commodity in an industrialized global economy," that is with oil prices. Thus Mr. X  concludes that cost of oil sets the price of food. Mr. X falls for the long discredited fallacy of David Ricardo that the price of something is set by the cost.

There is one, true, infrangible law for the whole of trade and one great axiom — the Law of Prices and the Axiom of Profit. The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer sets the price. The Axiom of Profit holds the sum of sales on extant prices must at least equal the cost of production otherwise the producer goes to ruin.

It's winning bidders for food who set prices. Once prices are set, those farmers whose marginal cost of production exceed winning prices get pushed into loss and ruin. Those farmers who can at least break even on costs stay in the game. So winning farmers take prices that have them break even on their largest cost components — oil-based diesel to run tractors.

Let's let the pictures of reality tell us the truth. First, let's look at food prices versus diesel with expressed in True Dollars™.



Diesel prices (fat black line) rose a whopping 133.21% during the Greenspan-Bernanke Bubble, the greatest inflation of bank credit in the history of mankind. As always bank credit inflation is the only kind of inflation that ever has existed.

As you can see, even in the face of rising diesel prices, food prices fell. Only steak and burgers saw a slight rise in prices during the Greenspan-Bernanke Bubble. Even with those rises, prices were lower during the Greenspan-Bernanke Bubble than compared to the late 1980s.

Now, let's look at food prices versus potash with expressed in True Dollars™. Of course, potash is fertilizer derived from mined potassium salts.


The price of potash (fat green line) for each ton shot up an eye-gouging 163.7% during the crazed Greenspan-Bernanke Bubble!

Mr. X laments over Fed Res central bankers, blaming their policies for fueling oil prices higher. However, what does the picture of reality say about oil prices using West Texas Intermediate as the global oil surrogate?


Like everything else, during the Greenspan-Bernanke Bubble, the greatest inflation of bank credit in the history of mankind, the price of WTI shot up 55%! With the 42% deflation since, prices have fallen. 

As Mr. X sees higher prices for food expressed in current dollars, so too does he see higher oil prices expressed in dollars. Mr. X offers two reasons why.

First he blames evil speculators in futures contracts. Blaming speculators is an ace-in-the-hole move. Next he blames Fed Res bankers for purported credit creation that allegedly has "weakened" the dollar.

If food prices were really rising while wages really falling, there would have been riots on the streets by now. Americans would have experienced their own "Arab Spring."

Mr. X doesn't understand the reality of trade. He sees conspiracy around every corner and thus seeks to lay blame on purported evils.

Mr. X lives by what I call contemporary-age superstition. Mr. X has been educated and thus he believes he is modern, contemporary, in-the-know, not like the peasants of the Middle Ages or even early modern times.

Yet, Mr. X is little different than those of the past likely he would ridicule.

Unless you are willing to accept these facts of reality, you cannot know reality, Instead, you too shall be living like Mr. X by contemporary-age superstition. 

When you believe in things you don't understand ... ♪♫

Read more ...

GETTING PUMPED SINCE 2002. TRUE GASOLINE PRICES IN FRBUs.

In INFLATION REVEALED! "REAL GDP" AND FEDERAL RESERVE BANK UNITS, I introduced FRBUs. FRBUs give the best measure of inflation since Nixon closed the gold window.

Federal Reserve Bank Units (FRBUs), or if you like better, Federal Reserve Buying Units are what circulate goods and services in the U.S.A. and elsewhere on earth.

In PARTY OVER OOPS OUT OF TIME. YOU SHOULD HAVE PARTIED LIKE IT WAS 1999, I introduced the concept of the Reagan-Clinton Prosperity vs the Bush(2)-Obama Hard Times.

The average true price of NY Harbor Conventional is 1.86 times higher during the Bush(2)-Obama Hard Times than the Reagan-Clinton Prosperity.


The data comes from the EIA and the Federal Reserve.

LA Harbor RBOB, NY Harbor Conventional, Gulf Coast Conventional Spot Prices in GWDs

Read more ...

ELECTRICITY PRICES. SHOCKING, ISN'T IT? THANKS, NIXON.

On August 15, 1971, Tricky Dick Nixon took to American airwaves, ranted about evil speculators and then decreed the gold window closed.

"Accordingly, I have directed the Secretary of the Treasury to take the action necessary to defend the dollar against the speculators."

Along with closing the gold window, through Executive Order 11615, now known as the Nixon shock, Nixon also decreed a crazed 10% tax on imports, hurting American consumers.

The real shock from Richard "I'm not a crook" Nixon can be seen in price of electricity Americans pay since Nixon removed gold as the means of trade settlement between countries. 

The picture comes from CNS News.

As I explained in FALLACY FRAUGHT FORBES TRIES TO STOKE FEARS OF HYPERINFLATION and elsewhere on Bizarro Theater, today, no one has money. 

Money doesn't exist and hasn't for many decades.

Money is coined metal by weight and fineness. The Romans said so. It's their word.

Rather, Americans have cash. Cash is centralized bank notes circulating in perpetuity.

Specifically, Americans have legal tender cash. So too do Canadians have legal tender cash, the Brits, all those of the Eurozone, the Japanese, and so on. Seemingly, legal tender cash does the work of money, but never is cash actual money.

How can anyone be sure of this truth? Always, money can exist without banking and government. Cash only can exist with banking and banks. Never can cash exist without banking and banks. Not only does legal tender cash need banking, but also legal tender cash needs government.

That bank credit exists in the form of cash and deposits along with Americans no longer having money is why Americans shall suffer never-ending inflation. Inflation is the growth of credit that outstrips the growth of output owing to credit being priced too cheap. 

As I explained in WHY FUTURES MARKETS SHOULD SET THE FEDS FUNDS RATE RATHER THAN THE FEDERAL RESERVE BOARD OF GOVERNORS, as long as Fed Res bankers can tinker with rates, the natural correction on inflation won't happen.

So what was the natural correction for inflation? Bank runs! 

During bank runs, Americans would enforce their property in right of action against bankers as evidenced by deposits to trade deposits for gold on sight. Bankers would keep reserves for when customers would take gold coins rather than cash bank notes. 

Yet, during bank runs, reserves would prove insufficient to cover everyone seeking money (gold coins). In a scramble, those bankers who could not borrow from other bankers enough gold, would go to ruin and along with them, their bank notes in circulation would become worthless.


Here is the full speech the Trickster gave:

Good evening:

 I have addressed the Nation a number of times over the past 2 years on the problems of ending a war. Because of the progress we have made toward achieving that goal, this Sunday evening is an appropriate time for us to turn our attention to the challenges of peace. America today has the best opportunity in this century to achieve two of its greatest ideals: to bring about a full generation of peace, and to create a new prosperity without war. This not only requires bold leadership ready to take bold action – it calls forth the greatness in a great people. Prosperity without war requires action on three fronts: We must create more and better jobs; we must stop the rise in the cost of living; we must protect the dollar from the attacks of international money speculators. We are going to take that action – not timidly, not half-heartedly, and not in piecemeal fashion. We are going to move forward to the new prosperity without war as befits a great people – all together, and along a broad front. The time has come for a new economic policy for the United States. Its targets are unemployment, inflation, and international speculation. And this is how we are going to attack those targets. First, on the subject of jobs. We all know why we have an unemployment problem. Two million workers have been released from the Armed Forces and defense plants because of our success in winding down the war in Vietnam. Putting those people back to work is one of the challenges of peace, and we have begun to make progress. Our unemployment rate today is below the average of the 4 peacetime years of the 1960’s. But we can and we must do better than that. The time has come for American industry, which has produced more jobs at higher real wages than any other industrial system in history, to embark on a bold program of new investment in production for peace. To give that system a powerful new stimulus, I shall ask the Congress, when it reconvenes after its summer recess, to consider as its first priority the enactment of the Job Development Act of 1971. I will propose to provide the strongest short-term incentive in our history to invest in new machinery and equipment that will create new jobs for Americans: a 10 percent Job Development Credit for 1 year, effective as of today, with a 5 percent credit after August 15, 1972. This tax credit for investment in new equipment will not only generate new jobs; it will raise productivity; it will make our goods more competitive in the years ahead. Second, I will propose to repeal the 7 percent excise tax on automobiles, effective today. This will mean a reduction in price of about $200 per car. I shall insist that the American auto industry pass this tax reduction on to the nearly 8 million customers who are buying automobiles this year. Lower prices will mean that more people will be able to afford new cars, and every additional 100,000 cars sold means 25,000 new jobs. Third, I propose to speed up the personal income tax exemptions scheduled for January 1, 1973, to January 1, 1972 – so that taxpayers can deduct an extra $50 for each exemption 1 year earlier than planned. This increase in consumer spending power will provide a strong boost to the economy in general and to employment in particular. The tax reductions I am recommending, together with this broad upturn of the economy which has taken place in the first half of this year, will move us strongly forward toward a goal this Nation has not reached since 1956, 15 years ago: prosperity with full employment in peacetime. Looking to the future, I have directed the Secretary of the Treasury to recommend to the Congress in January new tax proposals for stimulating research and development of new industries and new techniques to help provide the 20 million new jobs that America needs for the young people who will be coming into the job market in the next decade. To offset the loss of revenue from these tax cuts which directly stimulate new jobs, I have ordered today a $4.7 billion cut in Federal spending. Tax cuts to stimulate employment must be matched by spending cuts to restrain inflation. To check the rise in the cost of Government, I have ordered a postponement of pay raises and a 5 percent cut in Government personnel. I have ordered a 10 percent cut in foreign economic aid. In addition, since the Congress has already delayed action on two of the great initiatives of this Administration, I will ask Congress to amend my proposals to postpone the implementation of revenue sharing for 3 months and welfare reform for 1 year. In this way, I am reordering our budget priorities so as to concentrate more on achieving our goal of full employment. The second indispensable element of the new prosperity is to stop the rise in the cost of living. One of the cruelest legacies of the artificial prosperity produced by war is inflation. Inflation robs every American, every one of you. The 20 million who are retired and living on fixed incomes – they are particularly hard hit. Homemakers find it harder than ever to balance the family budget. And 80 million American wage earners have been on a treadmill. For example, in the 4 war years between 1965 and 1969, your wage increases were completely eaten up by price increases. Your paychecks were higher, but you were no better off. We have made progress against the rise in the cost of living. From the high point of 6 percent a year in 1969, the rise in consumer prices has been cut to 4 percent in the first half of 1971. But just as is the case in our fight against unemployment, we can and must do better than that. The time has come for decisive action – action that will break the vicious circle of spiraling prices and costs. I am today ordering a freeze on all prices and wages throughout the United States for a period of 90 days. In addition, I call upon corporations to extend the wage-price freeze to all dividends. I have today appointed a Cost of Living Council within the Government. I have directed this Council to work with leaders of labor and business to set up the proper mechanism for achieving continued price and wage stability after the 90-day freeze is over.  Let me emphasize two characteristics of this action: First, it is temporary. To put the strong, vigorous American economy into a permanent straitjacket would lock in unfairness; it would stifle the expansion of our free enterprise system. And second, while the wage-price freeze will be backed by Government sanctions, if necessary, it will not be accompanied by the establishment of a huge price control bureaucracy. I am relying on the voluntary cooperation of all Americans – each one of you: workers, employers, consumers – to make this freeze work. Working together, we will break the back of inflation, and we will do it without the mandatory wage and price controls that crush economic and personal freedom. The third indispensable element in building the new prosperity is closely related to creating new jobs and halting inflation. We must protect the position of the American dollar as a pillar of monetary stability around the world. In the past 7 years, there has been an average of one international monetary crisis every year. Now who gains from these crises? Not the workingman; not the investor; not the real producers of wealth. The gainers are the international money speculators. Because they thrive on crises, they help to create them. In recent weeks, the speculators have been waging an all-out war on the American dollar. The strength of a nation’s currency is based on the strength of that nation’s economy – and the American economy is by far the strongest in the world. Accordingly, I have directed the Secretary of the Treasury to take the action necessary to defend the dollar against the speculators. I have directed Secretary Connally to suspend temporarily the convertibility of the American dollar except in amounts and conditions determined to be in the interest of monetary stability and in the best interests of the United States. Now, what is this action – which is very technical – what does it mean for you? Let me lay to rest the bugaboo of what is called devaluation. If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today. The effect of this action, in other words, will be to stabilize the dollar. Now, this action will not win us any friends among the international money traders. But our primary concern is with the American workers, and with fair competition around the world. To our friends abroad, including the many responsible members of the international banking community who are dedicated to stability and the flow of trade, I give this assurance: The United States has always been, and will continue to be, a forward-looking and trustworthy trading partner. In full cooperation with the International Monetary Fund and those who trade with us, we will press for the necessary reforms to set up an urgently needed new international monetary system. Stability and equal treatment is in everybody’s best interest. I am determined that the American dollar must never again be a hostage in the hands of international speculators. I am taking one further step to protect the dollar, to improve our balance of payments, and to increase jobs for Americans. As a temporary measure, I am today imposing an additional tax of 10 percent on goods imported into the United States. This is a better solution for international trade than direct controls on the amount of imports. This import tax is a temporary action. It isn’t directed against any other country. It is an action to make certain that American products will not be at a disadvantage because of unfair exchange rates. When the unfair treatment is ended, the import tax will end as well. As a result of these actions, the product of American labor will be more competitive, and the unfair edge that some of our foreign competition has will be removed. This is a major reason why our trade balance has eroded over the past 15 years. At the end of World War II the economies of the major industrial nations of Europe and Asia were shattered. To help them get on their feet and to protect their freedom, the United States has provided over the past 25 years $143 billion in foreign aid. That was the right thing for us to do. Today, largely with our help, they have regained their vitality. They have become our strong competitors, and we welcome their success. But now that other nations are economically strong, the time has come for them to bear their fair share of the burden of defending freedom around the world. The time has come for exchange rates to be set straight and for the major nations to compete as equals. There is no longer any need for the United States to compete with one hand tied beyond her back. The range of actions I have taken and proposed tonight – on the job front, on the inflation front, on the monetary front – is the most comprehensive new economic policy to be undertaken in this Nation in four decades. We are fortunate to live in a nation with an economic system capable of producing for its people the highest standard of living in the world; a system flexible enough to change its ways dramatically when circumstances call for change; and, most important, a system resourceful enough to produce prosperity with freedom and opportunity unmatched in the history of nations. The purposes of the Government actions I have announced tonight are to lay the basis for renewed confidence, to make it possible for us to compete fairly with the rest of the world, to open the door to new prosperity. But government, with all of its powers, does not hold the key to the success of a people. That key, my fellow Americans, is in your hands. A nation, like a person, has to have a certain inner drive in order to succeed. In economic affairs, that inner drive is called the competitive spirit. Every action I have taken tonight is designed to nurture and stimulate that competitive spirit, to help us snap out of the self-doubt, the self-disparagement that saps our energy and erodes our confidence in ourselves. Whether this Nation stays number one in the world’s economy or resigns itself to second, third, or fourth place; whether we as a people have faith in ourselves, or lose that faith; whether we hold fast to the strength that makes peace and freedom possible in this world, or lose our grip – all that depends on you, on your competitive spirit, your sense of personal destiny, your pride in your country and in yourself. We can be certain of this: As the threat of war recedes, the challenge of peaceful competition in the world will greatly increase. We welcome competition, because America is at her greatest when she is called on to compete. As there always have been in our history, there will be voices urging us to shrink from that challenge of competition, to build a protective wall around ourselves, to crawl into a shell as the rest of the world moves ahead. Two hundred years ago a man wrote in his diary these words: “Many thinking people believe America has seen its best days.” That was written in 1775, just before the American Revolution – the dawn of the most exciting era in the history of man. And today we hear the echoes of those voices, preaching a gospel of gloom and defeat, saying the same thing: “We have seen our best days.” I say, let Americans reply: “Our best days lie ahead.” As we move into a generation of peace, as we blaze the trail toward the new prosperity, I say to every American: Let us raise our spirits. Let us raise our sights. Let all of us contribute all we can to this great and good country that has contributed so much to the progress of mankind. Let us invest in our Nation’s future, and let us revitalize that faith in ourselves that built a great nation in the past and that will shape the world of the future. Thank you and good evening.

Read more ...

BUT I SPENT 150 HOURS HANDCRAFTING THAT OIL ON CANVAS! OR THE LABORER'S SILLY THEORY OF VALUE.

The story shown in the picture below is typical of most who, though, constrained by reality, fail to see reality. Thus, they suffer. Their faces emote their anguish much like the old woman painted by the Dutch master, Rembrandt.

Though the story is touching, it's fallacy. The fallacy is Ricardo's labor causes value theory, which foolish socialists like Marx took up. The fallacy was put to bed more than 160 years ago.

Labor has nothing to do with prices. Prices get set by winning bidders. 

Take two people. One can spend one million dollars buying equipment and mining rights to mine for gold and after all that effort only find an ounce of gold. Another could find gold while walking spending exactly nothing. 

Is the ounce of gold worth a million because that is what the miner paid, what it cost him to get? No!

Right now, both the miner and the finder could get $1242.80 (as of 2014.Jan.30) for selling that ounce and that much alone. Why? The price gets set by winning bidders against all gold on offer for sale right now.

The miner put in time, effort, dedication, smarts, training, and much more. The finder put in nothing.

Or say someone has inherited purported fine-crafted gold jewelry from a dear lost relative and melted that jewelry down to support a meth habit, the gold in that jewelry would fetch at the same rate of all gold, $1242.80 an ounce. Once again, no outlay was made for that gold coming into the methhead's possession as property.

All prices adhere to the one and only true law of trade, the Law of Price — the winning bids of purchase and sale in the face of what is on offer sets the price. Prices get set by winning bidders who possess the means — these days legal tender cash or credit — in the face of what is on offer.

If no one bids for anything made, no matter how skillfully done, it's worthless. If bids are below cost, oh well. That is an signal that most everyone in a society of property deem the work worthless and a waste of resources. The artist should find other work.

Labor is the poor man's capital. The expression of skills through time, which is called work, is a product.  Labor is the outlay to turn something into property and nothing more. Only things of property can be bought and sold in purchase and sale for cash or credit.

Trade is predicated on property and profits and not effort and skill. Anyone must gain property, which is the right of ownership and never the thing owned, before enjoying or possessing a thing. If anyone fails to buy something to gain property in it, but instead takes it, that is called stealing. 

Anyone can buy stuff because that one has produced profit (earnings) in past and has been rewarded or others expect another shall produce profit in future, which we call confidence, and thus give credit to another. 

Profit arises because of property others want to possess under the constraint of the great Axiom of Profit —  the sum of sales must at least equal the cost of production, otherwise the producer goes to ruin. And of course, the sum of sales arises from the quantity of things sold times price. And price gets set by winning bidders of purchase and sale in the face of what is on offer.

So the whole trick of producing property in pursuit of profits is to produce what others want, to be in service to others. And that is what being in society of property is all about,  the only society in which strangers can live, even when government has grown to take control of that society and has distorted all relationships of man with man in society of property.

If labor were what caused price, then why can Apple earn a premium on iPhones relative to all other touch screen phones? Why aren't Apple execs accepting bids ( charging ) for what it cost them to get the phones made? 

If labor set prices because cost were to be the cause of price, then why does anyone go out of business? Labor has nothing to with price. Prices get set by winning bidders who must first gain property in something before they can use it.

No one works at a loss (Wages - Living Expenses or Sales - Outlay) unless politicians swoop in and subsidize that one with Section 8, SNAP and the like. When politicians give  workers welfare to subsidize their living, in effect, politicians subsidize firms that can pay wages precisely because of welfare given to workers (see: GREEDY CAPITALIST COMPLAINS ABOUT UNEMPLOYMENT INSURANCE EXPENSE AND QUITS HIS BUSINESS and Wile E. Coyote, Campground Businessman Super Genius).

Any worker gets paid to produce. His or her wage arises against the lack of willingness of another slightly better and smarter, who absent what she or he is doing, could bid lower than the worker being more efficient at living or could bid higher than the worker being able to produce more in any time span.

All the same, prices get set by those willing to cough up the cash or credit to buy. Sellers must accept those bids to get sales. Would-be sellers can refuse those bids and earn nothing. They can hold back inventory in hopes of future bidders bidding up prices.

People fail to appreciate the role of marketers and those in advertising who help to present products to those who most willingly can appreciate how a product can fit within their lives.

Marketers are quite like commodities speculators in the respect of pushing prices along to keep prices high enough so that manufacturers, be that automated or hand-crafted, can live to make another day, and yet against each other, low enough so that many can enjoy the fruits of others.

It's too bad that many perceive, wrongly, that marketers are "middlemen" who are little more than tricksters and knaves. Marketers keep people in business.

The successful stick to their knitting as it were and hire marketers to get them the best price possible. The reward for doing so is a share of the increase.

To savages, a Rembrandt likely would be worthless compared to spears. The savage wouldn't know he could sell the Rembrandt to someone who would esteem it and buy thousands of spears.

Yet, where art gets esteemed by others, it is the winning bidder who sets the price for a Rembrandt as nothing in trade ever can violate the Law of Price, the same as nothing can violate the Laws of Thermodynamics or the Law of Gravity. So even a one-off like a famous artwork sells, not because of purported scarcity, but because someone else has property (right of ownership) in it.

The price of a Rembrandt arises not because it is rare (scarce), but because of rivalry of bidders, only one of whom can win with the highest bid precisely because that one has the most cash or credit, which he is willing to sell in a purchase and sale, to buy a Rembrandt. 

Egghead Ph.D. academicians, who call themselves economists, long ago realized the error of Ricardo. Rightly, they came to see that labor is not the source of value (price). Yet, the next round of economists decided to commit their own fallacy and from which they base their entire myth of economics, that of scarcity and utility cause value (price). See my work WHY IS THE ECONOMY SO HORRIBLE? BECAUSE ACADEMIA ECONOMICS IS FAKE to discover in less than 3 minutes, why economics is bogus, a myth, a b.s. story.

Utility as a source of price (value) is quite false as it imbues into things intrinsic value. Scarcity as a source of price also is quite false. 

The earth is awash in water, but men are successful sellers of bottled water right next to giant lakes and rivers. Why can do they do so? Bottling creates property. 

Many would believe that a Rembrandt is worth much because he is dead and thus can not make any more. So any Rembrandt is a one-off. Yet, millions have watched and learn to paint from Bob Ross, each creating their own one-offs. Each one being unique makes each one scarce. Each Joe Blow also is a one-off. 

Yet, no one trawls garage sales bidding outrageous sums for the one-offs of the Joe Blows of our world. 

And so, because economists believe from false premises, their conclusions are false, necessarily so, even when remaining logically consistent from false premises to false conclusions. It doesn't matter if that neoclassical school is the Keynesian school or the Austrian school. 

There is no escaping reality. Anyone can only deny reality. 

Enjoy some Rembrandt!

Read more ...

GREEDY CAPITALIST COMPLAINS ABOUT UNEMPLOYMENT INSURANCE EXPENSE AND QUITS HIS BUSINESS

So someone brought to me a story about a guy shuttering his business in Ventura County, California (see: A Milestone to Celebrate: I Have Closed All My Businesses in Ventura County, California)

What caught my eye is this complaint of his:

In most states we pay a percent or two of wages for unemployment insurance.  In California we pay almost 7%.  Our summer seasonal employees often take the winter off, working only in the summer, but claim unemployment insurance anyway.  They are supposed to be looking for work, but they seldom are and California refuses to police the matter.  Several couples spend the whole winter in Mexico, collecting unemployment all the while.  So I have to pay a fortune to support these folks' winter vacations.

While anyone can be sympathetic to this guy's sob story about suffering at the hands of Agent Smiths of the government matrix, some of which is true, the man himself fails to see reality.

The Coyote has been gaining unearned profits for all the years he operated his business, beggaring other businessmen as well as workers. In the absence of UI, the Coyote would have faced a lower profit margin on much higher expenses.

It is an unassailable fact of trade, that absent UI, wages would rise. No one would work at a loss (wages - living expenses). Market forces would force employers to pay more.

A wage is a price and conforms to the one, true, infrangible and only law of trade, the Law of Prices. The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer set the price.

All producers get constrained by the great Axiom of Profit. The Axiom of Profit holds the sum of sales must at least equal the cost of production or the producer goes to ruin.

All laborers also are capitalists as labor is the poor man's capital. Labor is the sale of work through time.

As the Coyote, his laborers must get a price (wage) so the sum of the sales (work) must at least equal their living expenses (cost of production) otherwise, there is no incentive to work.

The unemployment insurance program in California as in any state, lets any business operator engage in beggar-thy-neighbor action both upon all employees who have taxes levied against them for this program but never who collect benefits at least equal to taxes they have paid as well as all other business operators who have paid more in UI taxes than have accrued net terminated employees.

Absent unemployment insurance, even if hands would remain idle, employers would need to pay for idle hands in the form of higher wages to induce workers to at least break-even (wages equaling cost of living). It would matter not that higher paychecks would come during the work season with none coming off-season or if paychecks would be spread out over a 12-month period.

With the presence of UI, business operators pay less than full, free-market wages into a fund, as UI is a percentage levied against active payroll. UI compensation lets a seasonal, laid-off worker break-even because UI as welfare subsidizes the laborer revenue (wages) against living expenses to achieve break even.

Absent UI, it would have been the decision of the Coyote to deploy his efforts and capital elsewhere if not wanting to earn less.

So, too, then without the subsidy to the Coyote and his workers, perhaps his product never would have come to market, which is what should happen in a system where people's profits (excess earnings) let them hold referendums on what everyone else should make and thus inhibition of anything not brought to market owing to efficiency under the constraint of the Axiom of Profit in the face of the Law of Prices.

The true meaning of greed is wanting to get something without honest exchange. So wanting to gain property (right of ownership) in something (excess profits) without paying for it (higher wages absent external subsidy) is the picture perfect definition of greed.

The right move is the end UI and all political interference in commerce. That idea frightens more businessmen to a greater degree than it does the people as too many businessmen fear authentic, manly competition.

This is why Americans suffer from crony politics, crony governance and crony regulatory capture. UI is expression of that cronyism.

Beggaring-thy-neighbors is the same whether done by politicians on behalf of government bureaucrats as the means to maintain power or by self-deceived capitalist-entrepreneurs shafting everyone else for their inefficiency and greedy quest for unearned profits.

Read more ...

THERE IS NO SUCH THING AS INCOME INEQUALITY

There is no such thing as income inequality. Income inequality is a faux concept conjured by academicians. 

 Income means wages through time. Any wage is a price.

Anyone working sells skills through time and buys wages. Robert Downey Jr. has a higher income than you because his skills expressed through time — his acting — are in much higher demand than yours. People are willing to pay winning bids for his skills at a much higher rate than yours.

There are skills inequality — Downey can act on a global scale — and you can not.

The true cancers killing the tree of goodness are Crony Politics, Crony Governance and Crony Regulatory Capture.

Read more ...

TRY CRONY POLITICS, CRONY GOVERNANCE AND CRONY REGULATORY CAPTURE BECAUSE THERE IS NO SUCH THING AS CRONY CAPITALISM.

Capitalism means living by using products that yield goods during production to produce a surplus of another product and hoping to sell that surplus for a price such that the sum of sales exceeds the cost to gain those sales. Said another way, capitalism means living by using capital in pursuit of ongoing exchange of buying power.

Capitalists pursue profits through production surplus derived from efficiency, producing what others want.

All of trade, or commerce or authentic economics is governed by one true, great, infrangible law, the Law of Prices. The Law of Prices holds the winning bidders of purchase and sale in the face of what is on offer set the price. In every market, always, the winning bidders of demand set the price. The Law of Prices holds regardless of whether political intervention of subsidy or buying power transference exists or not.

All producers are held in check by the great Axiom of Profit. The sum of sales must at least equal the cost of production, otherwise a producer goes to ruin. Those sum of sales derive from the prices set by winning bidders.

If politicians subsidize producers, politicians let inefficient producers operate, producers who would otherwise go to ruin at the prices set by winning bidders.

If politicians give economic quantities of purchasing to buyers, prices get buttressed higher than otherwise would be. That either yields unearned profits for producers or pushes prices high enough for inefficient producers to break even.

Crony Politics determine whether or not unearned profits can get gained or whether a producer can stay in production, inefficiently producing what not enough winning bidders would be willing to pay to acquire absent intervention.

There is no such thing as Crony Capitalism. It is always Crony Politics, Crony Governance and Crony Regulatory Capture rather than “crony capitalism”, which not only does not exist but never could exist.

Read more ...

ON CREDIT, MONEY, CURRENCY, INFLATION, PRICES, AND THE FEDERAL RESERVE

It is counterproductive to use wrong definition to discuss anything. The current misuse of the word inflation leads to all kinds of mischief and false beliefs.

Rising prices are not inflation. Regardless of how many times however many persons make the false claim that inflation means a rise in prices, logically, this can never be. Every economist who utters that false belief reveals himself to suffer from intense indoctrination, revealing that he or she lacks knowing the nature of money, credit, banking and central banking. Many believe, falsely, inflation and deflation are changes in prices rather than causal to such.

Concepts are invariant. The authentic concept of inflation that the word inflation once labeled has not changed, ever. And it means today what it has meant always, whether the monetary system is specie money based or fiduciary money based.

WHAT IS CREDIT?

Credit isn’t money. That should be obvious to all, at once. If credit were money, we would have but one word in our language and not two words, each which label separate concepts.

In past, Credit was a postponed payment of money; a promise to pay money at a time in the future.

Today, credit is postponed payment of cash or bank credits.

Credit is a right of action to demand the price of goods, which is given in exchange for goods, that is, a right of action against a person to pay or do something; itself is a property, an exchangeable right; produces the same effects as money or cash until paid off and extinguished; a right to collect on a promise to deliver a thing of goods or money or cash; is a right of action a man makes against himself when he promises to pay at a time in a future; the right to demand money.

Credit is auxiliary to money; supplemental to money; can get exchanged against goods; can get exchanged against other credit. Credit is a vendible commodity and thus can get sold or exchanged any number of times, like any material chattel until it gets paid off and extinguished.

Credit can become currency — that which has bearer negotiability and circulates goods — if title can get transferred, hand-to-hand. Credit is worthy as property in trade only to the extent to which another will take it for property in something else.

HOW DO WE KNOW THAT CREDIT IS NOT MONEY?

Credit has the power of purchasing, but is not money. Credit instruments can mediate trade. However, not always is someone willing to accept offered credit. Credit can collapse as persons can refuse to pay or lack the means to pay.

Always, though, a possessor of money has the power of purchasing, always.

WHAT IS MONEY AND WHAT IS CREDIT?

Money is coined metal by weight and fineness. The Romans said so. It's their word. When money existed, money had these qualities.

When it existed, money rested upon the belief that any man would take it in a swap. Money made value (a ratio, a trade rate) because property in money could trade for property in something else.

When it existed, money was a good that has greater exchangeability than all others. When it existed, money would get offered for goods other than money. In short, money had one use — to be spent.

Money gave its holder bearer negotiability. One's property in money (right of ownership) passed along with honest possession in every purchase and sale. There was no need to inquire if the one offering money had title before trying to buy a thing. Because of bearer negotiability, property and the possession in money were inseparable.

Money was that commodity that anyone can receive freely in exchange for what he or she has but does not want to keep for himself or herself, taken in trust, that with it he or she can, at any time, get from others what they have but do not want to keep for themselves.

A banking system can have money or fiduciary cash. Without going into great detail, fiduciary cash depends partly or wholly on the confidence that the owner can trade it for other goods.

Today, you live with fiduciary cash of negotiable bank credits. You do not have money whatsoever.

Under a specie money system, money is only gold or silver coins. Under a fiduciary money system like we have today, money does not exist. Federal Reserve banknotes and U.S. Treasury token coins — half-dollars, quarters, dimes, nickels, pennies — have taken the place of money.

There is money and then there is credit. Money were to exist could settle credit, always. Yet, in the final settlement, money could extinguished credit.

Money can exist without banking or lawgivers. Cash must have bankers to exist. For it to exist, legal tender cash must have lawgivers and their agents of enforcement as well as bankers.

WHAT ARE ECONOMIC QUANTITIES OF PURCHASING?

A quantity is anything that can get measured and an economic quantity is anything that can get measured by wealth (property of trade).

Because negotiable credit and cash are measurable quantities and because both get used in trade, credit and cash are an economic quantities; and because both get used in exchange, credit and cash are economic quantities of purchasing.


WHAT IS CURRENCY?

Currency is the circulating medium — that which someone holds in the middle ground. The key to coming to see and then to understand what is currency is to know what has bearer negotiability.

Bearer negotiability is an aspect embodied in money as well as negotiable debt instruments. In essence, bearer negotiability means the right of ownership in a thing gets passed along with honest possession in every sale or every exchange. The property and the possession are inseparable. Typically, bearer negotiability gets recorded on those things that could be lost, stolen, or sold and then used by another.

No need exists to inquire as to the title of ownership to money or negotiable debt instruments offered by anyone in exchange for goods. That is bearer negotiability.

Today, currency consists solely of cash, which is bank credit circulating in perpetuity. In practice, cash has bearer negotiability.

In our fiduciary monetary system, only Federal Reserve banknotes and U.S. Treasury token coins are currency. Most often, ATM debit cards, credit cards, and bank checks have bearer negotiability. Rare are the times when these instruments lack bearer negotiability, but it happens.

Thus, currency is that which has the power of purchasing and resembles money, sometimes called money substitutes, although far too many include far too many things as so-called money substitutes. In short, currency consists of cash and checkable deposits.

In the U.S., the St. Louis Federal Reserve tracks these, which constitute currency:

1. Currency Component of M1 (aka cash money, aka money — Fed Res banknotes + U.S. Treasury token coins)
2. Total Checkable Deposits

FROM WHENCE DOES CURRENCY COME? 

Bank credit becomes extant through currency accretion — the addition of new Federal Reserve banknotes and U.S. token coins along with negotiable bank credits joining in circulation with existing ones.

It is banking customers themselves who call for currency accretion in the form of notes and coins. When the Wednesday through Saturday average of cash withdrawals from ATMs and bank tellers rise, central bankers of the Federal Reserve order the U.S. Treasury to mint more notes and coins.

WHAT IS INFLATION?

Inflation arises from purpose-driven process undertaken by central bankers — Federal Reserve bankers in America — to increase the number of products sold by their member commercial bankers — opened contracts of credit.

Inflation is a rise in bank credit over deposits subsequent to acts undertaken by central bankers that attempt to increase credit outstanding.


INFLATION AND MONETARY SYSTEMS

In the days of specie money, inflation was the word use to label an increase in banknotes issued over specie money deposited.

When central bankers reduce the inter-bank lending rate or reserve requirement ratio in hopes of its member commercial bankers selling more of their products — opened contracts of bank credit — that is attempt at inflation. Whether or not that an actual increase in sales arise — a rise in non-revolving credit outstanding or a rise in revolving credit outstanding — remains to be seen.

THE TRUE CAUSE OF RISING PRICES

Prices rise or fall owing to the one, true, great infrangible law of economics — the Law of Prices. The Law of Prices holds that the winning bids of purchase and sale in the face of what is on offer sets the price.

Beliefs must arise from a logically consistent bedrock. The Law of Prices is that bedrock.

Often, the amount of the winning bids can increase if the economic quantities of purchasing increase. Today, that means an increase in currency. The true cause of price increases are winning bidders willing to spend more than previous winning bidders in the face of output.

When either the entire stock of currency or the flow (turnover) of currency increases relative to all output of the economy, that is, whenever there is a rise in economic quantities of purchasing relative to goods; then there shall be a tendency for all prices to rise.

Prices only rise if winning bids rise faster than output of products.

AGGREGATE PRICE LEVEL AND THE CPI: BOGUS CONCEPTS

No such thing as a monolithic price level exists. That is mere fantasy conjured by bad economists, notably, Irving Fisher. The price of any product sold fluctuates solely because of winning bidders.

According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services [see: Consumer Price Index Frequently Asked Questions (No. 1) ]

The rest of the CPI frequently asked questions gives a cursory overview of the index but fails to mention hedonics and exactly what are the products carried in the market basket [see:Consumer Price Index Frequently Asked Questions ].

In truth, the CPI is hypothetical and does not represent anything meaningful. The CPI makes for great persuasion in propaganda and thus great politics, but it's bogus with respect to authentic economics. Certainly, it does not measure inflation.

The payment method for some goods hinges on non-revolving credit, e.g., houses, college tuition. Thus when persons get less non-revolving credit or when fewer persons get such non-revolving credit, the amount of winning bids falls and in the face of supply, prices drop.

The payment method for some goods hinges on revolving credit, typically casual wear clothing, meals eaten out at sit down restaurants, tickets to attend sporting events, airline tickets. When persons get less revolving credit or when fewer persons get such revolving credit, the amount of winning bids falls and in the face of supply, prices drop.

The payment method for some goods hinges on money (cash) or credit that clears so amazingly fast that in all essence seems to function like cash. Such credit instruments are ATM debit cards and less so, checks drawn on checking accounts. The typical goods with prices dependent on cash include gasoline, groceries, cigarettes, booze, beer, wine, condoms, movie tickets. When persons get more cash because they increase their cash holdings in preference to credit that either they cannot get or do not want, the amount of winning bids rises and in the face of supply, prices rise.

HOW TO MEASURE THE EFFECTS OF INFLATION AND MONEY ACCRETION ON PRICES


When the rate of inflation rises faster than the rate of output of goods exchanged primarily for non-revolving credit, inflation leads to higher prices for those products bought with non-revolving credit, primarily.

When the rate of currency accretion rises faster than the rate of output of goods exchanged primarily for currency, currency accretion leads to higher prices for those products bought with currency, primarily.


WHAT IS AUTHENTIC PRICE INFLATION?

Price inflation does not mean a rise in prices. Fiscal policy is the source of price inflation. It is an attempt to get persons to rent cash from bankers by forcing up prices.

Prices get forced up by having the government become an even bigger bidder for goods, which leads to bank credits expansion — inflation — and currency accretion. Merely, central bankers become the highest bidders of new bond issuance by government. Today, this is known as quantitative easing.


WHO IS A COMMERCIAL BANKER?

Anyone who knows about Commercial Law today knows that a banker is a trader who buys cash and debt by selling bank credits. A depositor sells his cash or bank credits to a banker, which is a muutum that in law and commerce gets called a deposit and buys bank credits, which are rights of action against a banker, that is, the right to claim future cash.

Bank customers have rights of action to demand an amount of cash from bankers at a future date. Evidences of such rights include checking account bank statements and passbook savings books.

Of course, under U.S. Commercial Banking Law, bankers have up to 30 days to meet those obligations.

FEDERAL RESERVE BANKERS AND INFLATION

Federal Reserve central bankers do not hide this foregoing truth. Merely they do not explain it this way. It would become obvious to the woman and man on the street that the forever march of upward prices reflects increases in economic quantities of purchasing of which bankers and Congress are causal.

Mind you, bankers want output to grow at a faster rate than currency accretion and inflation rate because when that happens living standards rise wholly for many. Yet, the primary goal of commercial banking is to profit from the sale of revolving and non-revolving bank credits.

SHOULD YOU OPPOSE COMMERCIAL BANKING?

A banker is no different than a retailer who buys merchandise from a wholesaler or manufacturer by selling a 30-day net invoice, 60-day net invoice or whatever are the mutual terms between the parties.

Under Commercial Law, as the same for bankers, the retailer becomes the owner of the goods. The wholesaler or manufacturer relinquishes all title of ownership to said goods to the retailer. Likewise, the wholesaler or manufacturer gains a right of action against the retailer as evidenced by the invoice.

If your dads did not teach you this legal truth, now you know it. When you deposit cash, you are selling it for bank credits. You give up title of ownership to the cash you deposit.

Bank credits give you a right of action to the cash in a future of the same amount. This is a right, merely. You must assert your right. It is possible that even when your right gets upheld, you cannot collect any cash.

It is not true that bankers create cash from thin air; nor do bankers lend out other people's cash.

Now, if anyone has a beef, most likely it is that commercial bankers can whip up checking account credits from nothing, putting those on their accounting ledgers, selling those to depositors while buying cash from depositors.

Yet, if anyone opposes that, that one must oppose the concept of credit itself. And what the banker does, so too does the retailer who buys on credit, merchandise from the wholesaler; and so too does the wholesaler who buys on credit merchandise from the manufacturer.

Opposing commercial banking is tantamount to opposing credit. Credit is the great engine that has raised up mankind. It is the true source of human achievement and advancement.

Perhaps credit is the greatest invention from the minds of men, maybe even greater than potable water systems and sewer systems. For it is through credit that men call forth the future into the now.


FRACTIONAL RESERVE BANKING AND CONSPIRACY THEORISTS

Conspiracy theorists believe that double claims of ownership exist on money deposited with a banker and thus fractional reserve banking must be fraudulent. Of course it is not fraudulent. Men have crafted laws to make it legal. Rightly, a deposit is a sale for bank credit and a right of action against a banker.

Conspiracy theorists could say the fractional reserve banking has been designed wrong. Yet if they did so, they would get forced to say that all credit suffers from wrong design. Because what commercial bankers with depositors do is what retailers do with wholesalers, exactly.

If conspiracy theorists knew how central banking worked, they could render a great argument against central bankers over monetizing government debt by issuing bank credits to government agencies without first taking deposits.

This, of course, should be banned as it robs savers of cash of buying power through the effects of money accretion and of course, money accretion leads to unit buying power loss.

Read more ...