Not Our Fault (Part-2)

Look at the mechanics of it. It's easy to blame the politicians for their reckless spending, and the blame does rest there, except for one tiny detail. That detail is that if they didn't "produce" the incredible spending, they'd possibly or even probably be defeated at the next election by a candidate who promised virtually unlimited largess from the public treasury. If one Congressman or Senator voted NO on nonsensical spending, or even a handful, the rest would vote yes, and the dollar supply (inflation) would continue. Currently, the Republicans and Democrats are all very anxious to vote another hundred billion dollars to continue the lost war in Iraq. A hundred billion printing press, un-backed, paper dollars is eleven zeros. If they vote 'yes' on the hundred billion, that's $3,000 for every man, woman, and child in America. The war, so far, has probably cost every man, woman, and child a hefty $15,000 each. You haven't paid for it? Oh yes you have, because every one of those individual fifteen thousand dollars for every one of us was printed, and added to the money supply, which decreased the value of each and every dollar. Each dollar, thanks to the Iraq mess, buys less. Each dollar, thanks to Vietnam and Korea, bought less, thanks to those wars' costs, fought with printing press money. Examples are easy to see in just the automotive sector.

Before Korea started in 1950, a brand new, fully equipped Ford V-8 cost in the neighborhood of $1500. This was double what one would have cost before WW II. Today? You know, I don't have to parade umpteen figures before your eyes. I was sixteen in 1950, and bought new tires for $9.95, and filled my car for 19 cents a gallon. I made a phone call for a nickel, stamps were two cents, etc. ALSO, a well paid worker made under a dollar an hour. We were competitive then with other nations. Not only competitive, but we outshone them many times over, and were exporting just about everything we made, as fast as we could make it. We sent machinery, food stuffs, cars, gadgets, tractors, revolving doors, elevators, trolley cars, locomotives, lumber, and anything you could possibly think of, overseas. We were a grand nation, even after WW II. Partially because factories in Europe and Japan were demolished in the war, it is true, but here we go again with a major welfare program which debased the dollar.

Ever hear of a nation paying the nation it defeated? Germany was forced to do so, and their currency went to zero. In America, after millions wounded, and 362,000 dead, we decided, thanks to the politicians, to pay our former enemies to rebuild! Known as the Marshall Plan, it cost hundreds of billions of dollars. Printing press dollars, which gave Japan brand new, state of the art steel mills, while ours were worn out after the war effort, for just one example. The dollar presses and checkbooks were turning out record numbers of dollars for the Marshall Plan, and prices were going up, thanks to it. The war had doubled prices, and the Marshall Plan did dollars in additionally. Still though, we made it, and didn't collapse as did Germany after WW I. We were strong. Our coins were made of silver, dollars at least partially backed by gold, and we weren't physically wrecked by the war.

The welfare system got really re-invigorated after the war. There was no un-employment during the war, and after the war there was a lot of catching up to do with consumer goods for home and export. By 1960, things had calmed down a bit, and prices were on the rise, thanks to the buck printing, authorized by the politicos. Gas was 31 cents a gallon, a new home $16,500, stamps three cents, a dozen eggs 57 cents, and a gallon of milk 49cents. The national debt was $290 billion, and Washington was spending $92 billion a year. Sound crazy? Compared to today, it was wonderful!

In 1970, the printing press dollars were on the move, with prices doing the same. The average home was up $10,000 to $26,500, stamps four cents, a gallon of milk $1.15, a dozen eggs 62 cents and gas 36 cents a gallon. The national debt was $196 billion, seemingly down a bit, but prices were up because the dollar was being printed. Welfare had really gotten going, with hundreds of public housing projects being built, and the FHA giving no money down, no qualification home purchases, which was beginning the destruction of our major cities. Vietnam was in full swing, as well.

By 1980, under Jimmy Carter, we had 14% inflation, and a new home had jumped to $76,400, a $50,000 increase in ten years. Gas was $1.25, a dozen eggs 91 cents, and a gallon of milk $2.16. The federal debt was $990 billion. A lot of things happened from 1970 to 1980. The costs of Vietnam were obvious in prices, weren't they? We then had Medicare and food stamps, which cost billions of printing press dollars, and whose cost will forever increase.

In 1990, a new home cost an average of $149,800, a dozen eggs a buck, a gallon of gas $1.16, and a gallon of milk $2.78. The national debt had zoomed to $3,206,000,000! The presses were merrily rolling along, and Washington was spending for all they were worth.

1995's prices were, of course, higher than five years previous. The average new home was going for $158,700, a gallon of milk for $2.96, a dozen eggs for $1.16, a gallon of gas was $1.15 (remember the oil glut?), a stamp was 32 cents, and the national debt was then $4,921,000,000. Officially the debt was that, but who really knew or knows. Washington was spending $1,500,000,000 a year, and taking in a lot less, so inflation continued.

Another factor which must be brought into a study of inflation are the average wages for each year. In 1999, the average wage was $39,973, and in 1960, it was $4068. In 192 it was $30,636, in 1980, $17,710, 1975, $11,800, and in 1970 - $8734. In 1970, if one had placed one's entire average salary in a bank at 2% interest, compounded, by 1975, you would have $9643, but the average wage in 1975 was $11,800. If, in 1970, you had placed the full cost of the average home ($26,500), in the same bank at 2% interest compounded, by 1980, you would have had $32,303, but by 1980 the average home price had jumped to $76,400. Your dollars lost twice more than savings, plus interest paid, plus you would have been paying income tax every year on that 2% interest. One can go on and on about how it is foolish to save in dollars, but the official figures show it, with no doctoring or supposition. Dollars are death, and it isn't our fault.

In 10 years, from 1989 to 1999 the average wage had gone from $29,943 to $39,973, but that 30% increase in wages over ten years was met with huge increases in the income tax rate, and increases in every single item consumed or used during that time period of more than 30%. Dollar savings was silly then as now. The above figures are official figures as released by the Washington, and does anyone really believe statistics provided by a government which hides everything it can to make itself look good, including no longer publishing the M3 figures? The off-budget items, including Iraq and Afghanistan, plus lots of others, aren't included in the 'official' huge dollar increases, but are certainly reflected in prices. The buck is proliferating like so many bunny rabbits in spring time. The prices are reflected in dollar increases, regardless of 'official' inflation and dollar amounts.

Politicians can't stop spending, because if they did, they would be defeated and replaced by more spenders. The non spenders will never outvote the spenders, because politicians love adulation and re-election. Were I in D.C. as an office holder, I would vote NO on every spending issue. Could I be elected? Of course, not, because I couldn't promise to bring home the bacon. The system is self defeating, self proliferating, and self destructing, and it isn't our fault. The majority, in every civilization is always wrong, the voters always vote for the candidate promising the most largess from the public treasury; the public treasury always goes broke and takes the nation down with it. We are in the final stages I am afraid, and it is not our fault. We can only protect ourselves. More next week.