Out of everything I have written and ever will write on this blog, this is probably the most important. I hope you understand this and I really hope you understand the ramifications of it.
Money was once upon a time connected to objective value (gold, silver) and was used in order to trade gods between people. Instead of exchanging crops for virgins or buying apples with the corresponding amount of fish, you had money that was accepted as currency by both parties. Naturally people choice something tangible and valuable as money namely precious metals. This was so for the reason that gold (for instance) could be melted down and made into jewellery but also because the commodity was in short supply. Gold was sought after not only for its ability to transform into other objects, it was also beautiful and it came in smaller supply, hence it has a direct value attached.
During time and with Guttenberg’s invention this gradually changed. Firstly banks created notes that in reality was I-owe-you‘s that corresponded to the amount of gold the bank held for you. Sometimes banks printed more IOU’s than they had gold for, which seldom worked out very well. But later on came government banks, central banks, and said; “we are in charge and we will decide how many notes there are in the economic system”. Still they kept to gold as a measurement though and consequently couldn’t print as many notes they wanted, they needed to stay within the confines of the gold standard. This is course was not doable for governments needed extra cash for wars and more money for those crying masses that had started shouting for more “free stuff”. So the gold standard was phased out and the government kept the gold… Politicians now had a very powerful tool in their hands; the printing press. This is probably the “greatest” political victory of all time and politicians everywhere are still rejoicing and celebrating having the power over money. Now day’s money is only notes, they are not even IOU’s anymore; they are just worthless pieces of paper not even suitable to wipe your ass with. The only thing attached to money now is the “good word” of the state. As long as the government doesn’t overstep its boundaries the notes can be used for exchanging gods, but there is no value in coins and bills.
What you need to know here is that the power to print money comes with subtle taxation. Let’s say that the general tax is 40% and the government prints a lot of more money. What happens? Since the amount of money increases in the system, the ‘value’ of each coin/bill goes down, but the tax stays the same. Do you see what happened? Your tax is suddenly higher! Nothing seemingly changing, the tax is still 40% but your money, your bills and coins, are worth less hence you have just got an increase in the ‘value’ you are paying to the government. This is why the enemy class love this! Everyone, even communists, knows that you cannot tax people over a certain level. But with a printing press (today pressing a key on a computer) you can increase taxes without anyone noticing it. This is why you can get higher salary and still get less for your money! This is why you can work harder, better, faster and more effectively but still cannot afford things!
The day people in general figure this out, big governments and representatives of the enemy class will have a much tougher time. And to bring back the gold standard or even real money in the form of gold-money and such, that would mean the end of government’s biggest and most malevolent weapons. Nothing (with one exception) would make these people cry harder than if this happened.
If this extra taxation was the only “negative” thing about this scam, we would still be pretty okay. It is bad and it keeps production and the willingness to work down a bit, however it is not the end of the world. But in steps the next fun chapter in this saga: The bubbles and the strange price signals! Basically you get strange high and lows on the market when more money becomes available and prices goes up seemingly without any real reason. In combination with peoples less willingness to work since their efforts don’t get them anywhere, this means that you create fictive values on some companies; stock markets may go up without an increase in productivity and so on. And when this happens again and again you inflate the bubble, just as you exhale into a balloon, and just as a balloon it can break.
I hope you now understand that increasing the money supply within an economic system this way, as described, is one of the most dangerous things a government can do, the more money and the shorter the timeframe until the money hits the market, the worse it gets. And what are governments all over the world doing to get us out of this current crisis we are in? Yeah, you guessed it…
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