Gold - did you know?
Weights & Measures
Lately I have been majoring on the "What Inflation Is" subject. I am trying to help you think about this subject and possibly prompt you to think about it on a far deeper level from a multiple of perspectives than you ever have before.
Did you know that over the years the subject of inflation has always had many different slants put on it? Inflation is so deceptive by nature when dealing with local and global currencies, taxes, levies and welfare, and investments and trading from (and only from) a store of labor perspective.
Another way of putting it could be the fruit of your life’s work. For me it's like taking a freeze-frame photo of one's life at a particular age, looking at your financial status, and then maybe taking another freeze-frame shot say 25 years later to see a completely different financial status.
The way things can change from an earlier time period to the now or the future can really catch you off guard if you do not keep an eye on inflation's stealthy deception. Again, for me inflation needs to be viewed from a lifetime perspective in order to grasp passing down your life's wealth to your children let alone your grandchildren - if you even think on these things at all!
According to the Oxford English Dictionary (1982 edition), the word INFLATION means “Increase in available currency units of measure, resulting in INFLATION.” So literally INFLATION means to inflate the currency or create more!
How is that achieved?
First we must look at money itself. In the modern world money is paper currency, or FIAT CURRENCY as it is officially named. The word FIAT means “by Government decree.” Basically the Government passes a law that says these notes are exchangeable for goods or services/labor.
When currency is issued over and above the nation’s reserve, it is effectively creating wealth without the Labor/Gold behind it. This gives the nation a false sense of prosperity which is not sustainable over the long term - a point to think on here.
Loss of Purchasing Power
The more that currency is inflated into the system via the printing press or electronic creation through debt and government spending, the more it waters down the purchasing power of each monetary unit, e.g., in 1971 one US Dollar would buy 1/35th of an ounce of Gold, because in 1971 Gold was $35 per ounce. Today one USD$ will purchase approximately 1/1100th of an ounce of Gold, again because an ounce of Gold is now approximately $1,100 per ounce. Increased money supply is literally like adding water to paint. The more water you add to the paint, the more coats of paint it takes on any given surface to achieve the same coverage.
In all cases of inflation in the short to medium term, the general public is always deceived into thinking that their assets are becoming more valuable, yet it is only taking more fiat currency money to purchase the same goods and services. I find it interesting, because no one seems to complain about inflation when inflation of the currency is pushing the value of their assets up. The complaints only seem to flow when the cycle turns and they see their assets going down in value. Something for you to think on here!
Let's take a look at the fraud/deception of inflation.
The first panic for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists. - Ernest Hemingway.
Here is an example of the fraud. Remember I previously mentioned the Gold Standard keeping banks and governments honest, thereby minimizing the inflation rate to practically zero. In WWII, the debt of the United States government was $259 billion dollars by 1945, up from $43 billion in 1940. That's a $216 billion dollar increase in just five years! This was during the time when Gold was officially $35/oz. That's an equivalent of 7.4 billion ounces of Gold. Gold is usually quoted in tonnes, so that comes to approximately 230,000 tonnes. That's the value of the dollar debt of the U.S. government at the end of WWII in Gold which takes real labor to produce or real goods produced from labor to be exchanged for Gold.
According to the World Gold Council FAQs, all the Gold mined in the history of the world until 2001 was a mere 145,000 tonnes. That‟s all of human history - 5,000+ years - take note here!Therefore, it is impossible for the U.S. government to have borrowed anywhere near the 230,000 tonnes of Gold needed. The loan was a fiat inflationary paper currency fraud to begin with! The same is true for Germany before WWII. Their massive inflation called the Weimar Republic funded their Military arms buildup literally by fraud.
Standard of Living
What has this fraud and deception done to our standard of living and social well being?
World inflation is running between 7 and 8% on average (according to grossly under-quoted government statistics). In some countries it is as high as 60%! Yet wage inflation as far back as 1950 is only running at approximately 2.5%. The inflation has been skillfully masked by the manufacturing of efficiency and by formerly productive-based nations relocating their productive industries to developing world countries over the last 30 years. In the 1950s and 60s countries such as Britain, United States, Canada and Australia had 75%+ productive-based economies. They have now gone to less than 25% productive bases to predominantly service-based economies.Inflation‟s deception has made it difficult to keep up with the rising costs of living, e.g., the cost of electricity, food, beverages, petroleum, gas and medical care.
TAXATION is at all time highs! This is creating a situation where individuals are falling further behind, they are using more debt, they are borrowing or extracting more equity from their homes, both parents now work as the normal acceptance instead of from a choice to maintain the family‟s standard of living. Did both of your grandparents work?
In the Ancient World
Did you know that the word „inflation‟ was first used and recorded in a monetary sense in the year 1838 in American English? Until then, the term simply didn't exist in economics. Monetary inflation was termed with a phrase aptly recorded approximately 5,000 years ago in the Mosaic Law as „Unjust Weights and Measures.‟ "You shall have honest scales, honest weights, an honest ephah, and an honest hin: I am the LORD your God, who brought you out of the land of Egypt." – Leviticus 19:36 NKJV
Unjust Weights and Measures
Again, King Solomon records approximately 2,000 years later, "Dishonest scales are an abomination to the LORD, but a just weight is His delight." – Proverbs 11:1 NKJV.
In Solomon's account he uses the word ABOMINATION, a very strong word even today. Most dictionaries will use descriptive words such as "feeling of disgust, hatred, loathing." One of the word‟s derivatives is BAD OMEN, the word „omen"; meaning futuristic event. Therefore if the weights and measures are shifted (inflation), it might be very good for everyone in the beginning; yet the warning is that there will be a bad futuristic event which will come if it is not brought back into check. Something for you to think on here when viewing today's current inflationary environment!
The monetary aspect of Gold and Silver cannot be understood fully until you have studied its counterfeit. I am not finished when it comes to inflation, so you will read more from me on this subject in the not so distant future.
Until next time,
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