Economic Outlook: Government Created Inflation

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Photo By Fotolia/Maksym Yemelyanov
Government created inflation keep our earning wages down.

This government created inflation hits working folk hard, a good reason to strive for economic self-sufficiency.

By late 1977 the Consumer Price Index — stated in 1967 dollars — was 184. Which means that your take-home pay hadn’t even kept pace with the government created inflation if you weren’t earning at least $184 in late 1977 for every $100 you earned in 1967 (only ten years before).

Of course, those are just the official figures . . . which, somehow, always seem to make things appear better than they really are. And which completely disregard all the additional taxes you paid in 1977 that you didn’t pay in 1967. And which conveniently glosses over the fact that handling more dollars (even if those dollars represented less real wealth) kicked you into a higher tax bracket in 1977 than you were in In 1967 . . . even If the overall income taxes had stayed the same. And which in no way reflects all the other devious little manners in which government created inflation has hurt you during the past decade.

MORAL: There ain’t no free lunch and there’s no such thing as “federal money”. As long as we all maintain the polite fiction that our President and Congress can “vote” money for this multi-billion-dollar program and that trillion-dollar giveaway — as long as we continue to allow our politicians to “pay” for grandiose social schemes with printing press currency — inflation will continue right on eating away at the real value of the dollars in your pocket.

Would you like to stop that robbery? Would you like — once again — to be able to trust the U.S. dollar . . . to know that a dollar laid away today will still buy the same amount of goods In 10 or 20 or 100 years as it buys now? Easy. Make it impossible for our politicians to spend money the government doesn’t have. Shut down the printing press economy and put this country back on the gold standard. That’s all It’ll take to make the criminals in Washington honest once again . . . which, of course, is why they’re all so dead set against it.

Many times, over the past two and a half years, this column has stated that — good times or bad, through inflations or deflations — you’re far better off putting your trust in real wealth that you can have and hold, instead of paper promises (printing press “money”, Insurance policies, annuities, pensions, stocks, bonds, etc.); issued by a government or some large corporation. Unlike so many others who comment on the passing financial scene, however, this column has never advised anyone to put all of his or her excess purchasing power into just gold and/or silver. Rather, MOTHER has always suggested a somewhat more sophisticated (though very easily obtainable) investment in real wealth:

If you haven’t already done so, as we advised in MOTHER NO. 45 and in many other Issues of this magazine, learn to become as food and energy self-sufficient as possible . . . and do it. Convert to wood heat. Build or buy a solar collector and use it to supply your household with hot water. Convert the whole dwelling to solar heat! And it it won’t convert, move your family into another residence that will. Build a greenhouse, and use it. Plant a garden. Can your produce, dry it, or keep it in a root collar. Start a backyard mini-flock of chickens. Feed your leftovers to a pig. Raise rabbits. Got yourself a cow or a couple of milk goats.

Strive, also, for economic self-sufficiency. Learn a basic trade or set up a home business that will always be in demand and which you or your family can control. Put yourself on a pay-as-you-go basis. Invest your excess funds in real wealth: land, how-to books, quality tools, and trade goods (liquor, tobacco, salt, ammunition, toilet paper, silver coins, coffee, etc.) that will always have a value no matter whet our addled economists and politicians do with their paper promises of future security.

And what if the worst never comes to pass? What if our “leaders” really do work a miracle and dampen inflation before it plunges us all into a depression? What it they actually work their magic so well that times (as promised) do nothing but got better and better from now until eternity?

Wonderful! But keep right on tending that garden and converting yourself to solar energy anyway. At the very least, you’ll still be ahead of the game. It’s hard to beat the satisfactions of self-sufficiency and independence. Even in “normal” times, economic virtue is its own reward.

Now that sounds pretty good . . . but how does such a policy work in real life? Believe it or not, It works great. Infact, there are a good many times when “commonplace” trade goods — such as the salt, liquor, etc., mentioned above-more worth far more than even gold and silver . . . as Robert Lichello points out in a new paperback (How to Make $1,000,000 in the Stock Market Automatically!, Signet, $1.75).

In Chapter 9 of that book, Bob documents how — as a serviceman in Japan in 1947 — he sold a gold ring for one-third of what he’d paid for it because, as a jeweler told him, “Plenty gold. Everybody want to sell. Nobody want to buy.” Soap and cigarettes, however, were another story: Nobody in the war-torn civilian populace had any and everybody wanted some. As a result Lichello and a sergeant enjoyed a whole day of high living in Tokyo . . . in exchange for a couple of bartered cigarettes and a bar or two of soap.

So much for Japan in 1947. But what would have happened to you right here in the U.S. during the past 10 years if you’d invested your extra 1967 dollars in, say, soap . . . instead of putting them in a savings account (where history has shown us they earned less in interest than the following decade ate up Inflation)?

Well, according to the Bureau of Labor Statistics’ Consumer Price Index, the average retail price of a standard-sized bar of hard-milled toilet soap was 11¢ back in 1967. And the same bar of soap sold for 23¢ In 1977. Which means that the price of soap not only held Its own against inflation during the decade . . . it actually “earned some interest” in real terms over the 10 years. And, if we have a depression tomorrow, that soap will still wash just as clean as it does today. Which means that — unlike the counterfeit paper money our government now issues in ever-larger quantities — that modest little bar of soap has held, and will continue to hold, Its basic value through good times and bad.

It’s no fun trying to put together a realistic economic outlook these days. Because any realistic and levelheaded appraisal of the world’s current and future economic prospects is filled with cold, hard facts about rising government-created inflation, failing employment, dramatic tax increases (frequently masquerading as energy and social security “plans”), breathtaking shifts in currency exchange rates, roller coaster climbs and plunges in the cost of commodities, stock market investments that lose even while they seem to win, and other assorted nasties.

Naturally, this whole picture (while very, very realistic) is — in the main — quite dismal and depressing. Which explains why the “establishment” politicians and economists love Herman Kahn (director of the Hudson Research Institute) so much. Because no matter what the facts say, good ole chubby Herman just keeps on smilin’ and poppin’ corny jokes and tellin’ everyone that the next 200 years are going to be simply fantastic… with unlimited everything for everybody and all kinds of other good things.

That’s what Kahn says in his books and on the TV talk shows, anyway. In more private company, however, even ole Herman occasionally admits that the future — especially the very immediate future-might not be quite as rosy as he tends to paint it. The October 20, 1977 Arizona Republic, for instance, quoted Kahn as telling a group of more than 80 Arizona executives and state officials that held like to “partially retract” his optimistic burblings about this country’s future. “The U.S. will be in for a rather dismal (Yes! Kahn actually said “dismal”!) future in the next four or five years, including a severe depression,” ole Herman predicted. “The system is no longer as robust as it was. Money has become too loose and most of the country’s financial institutions are insolvent.”

Let’s see now. If that sounds familiar . . . maybe it’s because you’ve already read it several times in this magazine and in the pages of the handful of other publications which make honest efforts to report the news as it is . . . rather than as vested interests wish it to be.