THE DISAPPEARING MIDDLE CLASS
By Attorney Jack
July 19, 2013
It is a matter of regular note in the Main Stream Media (MSM) that the so-called “middle class” is shrinking and disappearing. The rich are getting very much richer and the ranks of the poverty-ridden are swelling which should tell one where the middle class is headed. Also, in the MSM, the reason is always a mystery. This is because sensitivities for political correctness will not allow the MSM to critically appraise certain sacred cows. The culprit killing the middle class is inflation. And inflation is the direct result of two very sacrosanct governmental cows.
In economics, wealth is defined as the capacity to acquire things and services. Money, in turn, is the vehicle by which we transfer wealth. Accordingly, the value of money is a matter of critical concern to the general public which is why the founders conferred upon the Congress the duty to regulate the production of money. Unfortunately, Congress has made a mess of that which is why we have a disappearing middle class.
Money, is a commodity much like everything else. It is the fuel of barter and exchange. Like all commodities it is subject to the law of supply and demand: the more there is of it, the less the value of the individual unit or piece.
To regulate the supply of money, Congress has engaged the Federal Reserve System which is sacred cow number one in our inquiry. The Federal Reserve, in turn, is committed to creating a 2% inflation in the money supply each and every year. If the demand for money remains equal, a 2% increase in the supply must translate to a 2% decrease in its value. Just based on its fundamental policy, the Fed must necessarily destroy the purchasing power of money. The Fed is committed to devaluing our money. Why would Congress tolerate such a policy in view of its Constitutional mandate? Because Congress borrows money on a long term basis. Doing so in combination with intentional devaluation allows Congress to borrow good money today and pay it back with devalued money over ten, twenty and thirty years. So what’s wrong with that?
When the Fed or the government chooses to issue a bunch of new money into the market, it is indistinguishable from the money that is already in circulation. Those who receive it first - typically the member banks of the Federal Reserve and their owners - enjoy full value. It is only when the money begins to move through the economy that supply and demand reacts with devaluation. Those who receive it last get devalued currency. What is worse, the money they happen to already have is also devalued proportionately. Think this might tend to make the rich richer and the poor poorer? Unfortunately, that is but one end of the attack.
The second sacred cow is the war on poverty and its primary weapon of choice: food stamps. It has been said that “Helicopter Ben” at the Fed could fly around the country in a helicopter throwing new money out the window and thereby make everybody rich. Of course, that would likely induce hyperinflation once everyone knew what he was doing. On the other hand, Congress could do the same thing and get away with it for a time if they would simply change the name.
Congress gives away billions of food stamps every month to the poverty stricken. What are food stamps but an alternative currency? The recipient utilizes them to acquire goods and services. In result, they are nothing more than another inflationary injection into the currency of the market. Wonder why the cost of food keeps going up while Bernanke tells us there is no inflation?
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Again, noting the rule that the first recipients of inflationary money enjoy full value, it follows that the poor do not find themselves shorted, and of course, they, by definition, have no other money to be devalued.
Who is left to suffer the loss of their devalued money and what wealth they might enjoy?
Not the rich. Not the poor. The disappearing middle class is purely and simply the result of Congressional monetary policy and short of a balanced budget amendment, I don’t see what anyone can do about it.
© 2013 Jack Swift - All Rights Reserved
Jack Swift is an retired attorney.
Actively involved in the Republican Party and local politics, Jack would
love to see honest Constitution following representatives in local Josephine
County government. Jack believes if we are to save America from the grip
of evil, people must get involved on the local level and expose wrongdoers
at every opportunity. He is putting that belief in practice.