Don't Be Fooled by The Inflation Strategy

We are taught from early on that more is better. The more we have of anything, the better off we are. More may, in fact, be better, but we have to be careful how we define more. Sometimes more is actually less.

Take the case of gold. Today, it is at or near a "record high" in terms of its value against the dollar. People are scurrying to "invest" in gold with the hope and anticipation that it will go up even higher. At first this seems like good investment strategy, because gold is certain to become more expensive over the long and short haul. This is because, since President Richard M. Nixon released the dollar from its marriage to gold, the bottom has fallen out. Since that fateful day in 1971, we have seen the dollar lose 96.2% of its buying power. What was a dollar in 1971 is now 3.8 cents, when compared to gold.

Many economists are trying to justify or rationalize this by indexing supply the supplies of dollars and gold to explain the situation in some sort of technical terms that are neither here nor there. The truth is that gold is complete in and of itself. Nothing can be added to or subtracted from an ounce of gold. Either it is or it isn't. That holds true for both the ounce and the gold. If it IS an ounce of gold, that ounce has been the same since time immemorial. As such, gold can neither increase nor decrease in value, in and of itself. Even its relative rarity or scarcity cannot really affect its intrinsic value. Therefore, when it was fixed to the dollar at the rate of first $20.67 in 1933, and subsequently at $35.00 per ounce, that relationship became a standard, like an inch or a pound. It should never have been adjusted in value according to supply or any other factor. Why? Because an ounce of gold placed in a vault on October 17, 1934 is exactly the same ounce of gold we would find if we decided to open the vault today. Nothing could have been added to or subtracted from it.

The problem is that Americans have been taught to want more, as a way of life. This is not a bad thing, but the way we actually wind up with more may be less than good. First, let's recognize one simple truth. We don't need a whole lot of technical jargon and theory to explain it away, either. It is what it is, and what it is is simple: WHENEVER SOMETHING INCREASES IN VALUE WITH NO VALUE BEING ADDED TO IT, THE ENTIRE INCREASE IN VALUE IS INFLATION. Read it again so you can help get yourself out of denial. Any other explanation is hogwash. Inflation, and inflation alone is responsible for the increases in the price of gold, and if it goes "higher" it will only mean more inflation. Period.

The same goes for your house, which is where this story was headed in the first place. Remember: WHENEVER SOMETHING INCREASES IN VALUE WITH NO VALUE BEING ADDED TO IT, THE ENTIRE INCREASE IN VALUE IS INFLATION. Now lets look at the housing market, and specifically at home prices. How on earth could a house in Englewood, NJ, purchased in 1955 for $11,500 be "worth" $375,000 in 2006? The house is virtually the same except it has been maintained fairly well during the 51 years of its existence. Nothing added. Just maintained. Same number of 2x4s, shingles, windows, doors, electrical outlets, and everything else. WINDOW air conditioners. Everything the same. Why the increase, then? Don't lie to yourself or anyone else... You already know why. INFLATION. That house is a testimonial to a failed conservative policy -one of many such failed policies that threaten the very fiber of the existence of the United States of America. The result of this policy has been the demise of the dollar. Since 1933, when the dollar bought an ounce of gold for t $20.67, 99% of the value has slipped from the dollar. And, even worse than that, conservatives have secretly relied upon The Inflation Strategy to create fictitious wealth in this country. In the process, they have converted the almighty dollar to mere monopoly money status.

What is The Inflation Strategy, and why was it adopted?

The purpose of The Inflation Strategy was to create fictitious wealth. The purpose of creating false wealth was to maintain the status quo after the passage of Brown -vs- Board of Education. "All deliberate speed" had moved just slowly enough up until Dr. Martin Luther King and his contemporaries began to demand equality more forcefully during the mid -to late 1960's. Lyndon Johnson had signed several bills into law, granting more and greater access to America for blacks than conservatives were willing to concede. After Johnson, Nixon came into office representing himself in part as a Goldwater Republican, one who patterned himself after Barry Goldwater, the father of modern conservatism. Goldwater was dead set against integration, with the proof being that his state (Arizona) was the last to adopt Dr. King's birthday as a holiday. News articles from the era will dispel any attempts to revise Mr. Goldwater into something other than what he was... But the issue of integration was seen as a threat to the stability of the country by many arch conservatives in that era.

After the debacle in the South, which exposed the racist underbelly of this nation in a most disturbing way, new strategies had to be invented to uphold the racist status quo. Hurling the word "*BLEEP*" around, lynchings, and violent police confrontations would not go over big throughout the United States of the 1960s and '70s. The country did not have the stomach for such blatantly unjust and ugly events playing out on the news every night. So racism began to morph itself into classism. Two things happened, and inflation lent itself to the resulting situation almost perfectly. The first of these was Johnson's signing of equal housing legislation. This stroke of the pen gave blacks the right to better housing as a matter of law. This legislation was designed to bring about, or help bring about change in the housing stock in urban America, and it became the most effective tool for white flight we could have ever imagined. Metropolitan areas went from tall to sprawl almost overnight.

The next thing that happened was affirmative action. Although passed into law in 1964 and reaffirmed in 1968, the real thrust of this program didn't begin to build any real momentum until the early 1970s. The timing couldn't have been better. The first wave of suburbs, built just after World War II, were beginning to show signs of age. The Inflation Strategy was born out of the need to keep building new homes as a means of maintaining a strong peacetime economy, as the public outcry to end the war in Vietnam reached a fever pitch. Equal housing laws helped make the case for The Inflation Strategy, and the mercurial rise of credit money in our society. Here's what happened:

1. The idea of Polly going the the same school as Jayquan was repulisve to many whites.
2. Openly citing race as a reason for resisting integration had become impossible to justify.
3. A new barrier had to be created to replace race.
4. The barrier had to appear to be race-neutral.
5. At the same time the barrier had to effectively exclude blacks from certain communities, and thus the ommunities' schools.
6. The Inflation Strategy was born.
7. Blacks moved into aging suburbs, creating media attention, and stoking fear among whites who occupied those suburbs, originally.
8. Whites began to realize they could "profit" from sales to blacks, who traditionally pay more for less than whites do.
9. Inflation had created a 2-3x premium in the value of suburban homes, and were encouraged to use the proceeds to move into newer more elaborate and luxurious suburbs.
10. Continued inflation made the new mortgages easier to repay, as they called for constant dollar amounts from month to month.

Continued inflation has brought us here, where we are today. A day when $35.00 gets away with masquerading itself as $910.50! Mo layta.

 

 

 

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Nice, I didnt think I was going to read it all, but it got me hooked, now I know what inflation is... lol. I dont think anyone could have explained it to me as simple as you did. I congratulate you for it.

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Thanks. Stay tuned.

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Yeah, inflation is really terrible, and even as the price of gold goes up, it really isn't worth any more. The dollar is a failing currency and it's gonna be ugly when people finally start realizing it.

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