Some Simple Rules of Economics

Posted on August 30, 2008 by bill

It seems few people have any economic sense these days, so I thought I would tell you a few rules I have learned in my lifetime. They probably are things you never thought about.

1) The total amount of money in circulation is the exact amount needed to buy all the goods and services available. This is important to know because the Federal Reserve Bank (Fed) has the ability to increase the amount of money in circulation. If they increase the money supply by 10%, expect prices to go up by 10%.

2) Businesses do not pay any taxes. They merely collect taxes for the government. Any tax a business pays is a business expense, and must be passed along to the consumer or the business will go under. The consumer pays all the taxes in an economy. The effect of this is to hide a large portion of the tax burden the consumer pays. Now, knowing this, what would be the effect of the Federal Government increasing the taxes on the oil companies?

3) Ok, most everyone knows this one, its call the law of supply and demand. When the demand for something goes up, without an increase in supply, the price of that item will increase. Conversely, if the supply goes up with the same demand, the price will drop.

4) Fiat currency (the American Dollar) is actually an IOU. When you pay for something at Wally World, the debt is not yet paid. It is not paid until the other party trades the fiat currency for something real, like a screwdriver or pound of pork. This means that our huge trade deficit is a debt we must pay at sometime in the future with our real wealth, like our factories, our real estate, or our gold reserves. Can you speak Mandarin?

I believe if people understood these 4 rules, our politicians would have to be more honest with our budgets. Maybe thats the reason we are not taught these simple ideas in school.

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Everyone should learn Spanish?

Posted on August 28, 2008 by bill

No, they should not.  Now I am not saying no one should learn a foreign language, but to say everyone should learn Spanish is just plain insulting and foolish.

America is significantly different than Europe.  Here, Maryland speaks the same language as Delaware, as Virginia, as Pennsylvania, as the rest of the states.  In Europe, people speak different languages, and people travel between them more like we travel among states.  So there is no real advantage in daily life for most Americans to speak any foreign language let alone Spanish unless you happen to live in a predominately Spanish neighborhood.  If you do, learn Spanish by all means.

I studied Spanish for four years in high school and college, as well as French.  In the 40 years I have been out of school, never once have I said “Wow, I’m really glad I learned to speak Spanish”.   For me, it was a total waste of time and energy.

If you want an edge in the high tech sector though, a foreign language can be very beneficial.  Having been in that situation most of my life, I know that speaking either  Mandarin, Hindi, or both would have been very helpful, and would have been an advantage for me in the technology fields since those are the languages most spoken by the foreigners who come here to work in the high tech industries.

English is spoken over most of the world.  Why is that?  It is because America has been  a world leader for the last century and it is always an advantage to speak the language of those who hold power.  In the coming decades that might well be China.

So, if you don’t speak a foreign language, do not put yourself down about it.  If you are considering learning a new language, look into one which can help your career.

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Lymerix, HLA-DR4, and arthritis

Posted on July 2, 2008 by bill

I am hoping someone who knows about the relationship between the Lymes vaccine, tissue type DR4, and arthritis will read this and contact me.

I took the three Lymerix shots in 1999 after living in a tick infested region.  My neighbors children all contracted Lymes, and several neighborhood dogs also were stricken.  I myself was bitten at least four times by deer ticks that I know of, and probably several more that I don’t.  For this reason, I took the vaccine.

About a year later, I started having pain in my hands, knees, and hips.  I was tested for rheumatoid arthritis, and was found negative.  I was also tested for Lymes disease itself, and that test was also negative.  

As time progressed, so did the pain in my joints; slowly at first, but increasing as time went by.  3 years after the shots, I had to give up riding my motorcycle because the pain in my fingers made it way less than pleasurable.  I had to sell my two story home because I could not go up and down the steps.  I had to give up my profession because it required climbing, lifting, and strength in my hands.

My cardiologist told me about several articles which implicated the Lymes vaccine with arthritis in patients who had the tissue type HLA-DR4.  So, I had myself tested, and like %30 of the population, I had this tissue type.  Unfortuneatly, no one seems to know what to do about it.

I am now to the point where I cannot open a soda bottle, put my socks on myself, take care of my property, and a thousand other things most of us take for granted and do without thinking how much it is going to hurt.

The only thing which gives me any relief at all seems to be gold nanoparticles, (colloidal gold).  I have tried everything I know of, including glucosamine/chondroitin, CMO, raisins soaked in gin, OTC pain relievers, hot wax treatments, physical therapy, and DMSO.  None of these helped, and the destruction of my joints goes unchecked.

If you know of any way to reverse the effects of Lymerix, please contact me using the Send A Comment link on this webpage.

Thanks…

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What is eBay thinking?

Posted on May 23, 2008 by bill

eBay recently announced a policy change concerning feedback. They have mandated that buyers can only receive positive feedback, while sellers can still receive negative, neutral and positive feedback.

As both an eBay buyer, and a seller, this certainly does not make any kind of sense to me. Feedback is a central part of doing business on eBay. It is a person’s reputation. This outrageous change has opened the door to buyer scamming with such mechanisms as threatening a seller with negative feedback if they don’t acquiesce to buyers demands, like free shipping, or a discounted price.

As a seller, I think I will follow a new policy of not leaving any feedback at all. Since the new eBay rules make feedback meaningless anyway, there is no point. Further, as a seller, I will bar all bidders with less than a 98% positive seller feedback. Although doing so will limit my buyers, it is also the only way to have any meaningful use out of the eBay policy.

One of my friends who also sells on eBay recently left a positive feedback for a problematic buyer that said: “Positively the worst buyer on eBay — Don’t sell to this person”. I guess that’s one way to handle it.

It is my hope that eBay reconsider this policy and recognize the error of their ways. I have always had issues with eBay feedback in the past because feedback carries the same weight whether a transaction was for a $1.00 item, or for a $1000 item. Because of this lack of weighting, people could essentially buy their eBay reputation by purchasing trinkets for a few pennies. Again, such policies make feedback inaccurate at best. I would rather do business with a person who has 98% positive feedback on large ticket items than with a person who has 100% feedback on low cost items.

Wake up eBay!

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The Limit of Growth

Posted on February 4, 2008 by bill

It seems it is ever our goal to grow. We want our business to grow. We want our income to grow. We want our authority and our power to grow. It seems we believe we must either grow or die. But what if the very growth we seek will inevitably cause our death?

Economists are ever after the 3% or 4% yearly growth in the economy. What does that mean exactly? Well, it means that we would have a 3 to 4% increase in the amount of goods and services the economy produces. This is good right? Well, not necessarily.

Lets look at the longer term. A given growth rate produces a doubling of something in a given number of years. Just as a 6% interest or growth rate produces a doubling of your savings account in about 11 years, a 4% growth rate of the economy means the total amount of goods and services will double in 17 years. The approximate formula is 70 divided by the growth rate equals the number of years to double something. Therefore the doubling time at 4% growth is 70/4 or 17.5, and at 3% it would take a little over 23 years to double the economy.

For the rest of this discussion, I will just talk about the more modest 3% rate of growth, and a doubling time of 23 years.

To grow the economy means that we have to use more resources. Its not possible to make twice as much of something without using twice as much materials to do so. Further, there is no point in producing twice as much of something unless we also consume twice as much of that something.

Growth is ultimately about consumption.

If we look at an economy for a 1 doubling period, lets say that it will consume 1 unit of resources, and create 1 unit of production for that 1 period. During the next doubling period, it will use twice as much of everything to produce twice as much. That is, it will consume 2 units of resources. Note that at the end of the second period, we have consumed a total of 3 units of resources.

During the next doubling period, we again use and produce twice as much as the previous doubling period, which means that we consume 4 units and produce 4 units. Notice that during this period, we used more units than in the previous periods combined. Notice that every time the economy doubles, we have used more resources in that one period than in all the combined previous periods, assuming a relatively constant growth rate for each period.

Therefore, to grow at the modest rate of only 3% for the next 23 years means that we would consume more resources in that time than we have in our entire history! Is this even possible? 100 years ago, the answer was yes, but today, the answer is most likely not. At this point, we have almost depleted our supplies of natural resources, including coal, oil, fresh water, and uranium.

Resource production is already faltering. For example, Africa is already experiencing electricity shortages to the point where some of its mines have had to shut down or drastically reduce operations. Energy will no doubt be the limiting factor to growth, as I have alread discussed in my articles regarding peak oil. The signs of the coming crash between civilization and the limit of growth are already upon us, and its foolish to base our existence on growth. However, there is little evidence that we as a civilization are smart enough to change our paradigms in time to avert a major disaster.

Of course, I am not saying anything new. It has been known for decades. Only the exact date of the crash is unknown. Will it be tomorrow, or will it be in 10 years? I cannot say for sure; I can only say that it is close.

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Peak Oil, and the case for rationing

Posted on March 31, 2007 by bill

The term Peak Oil refers to the condition where the amount of oil that can be pumped out of the ground worldwide can no longer be increased to meet increasing consumer demand. It does not mean that there is no more oil left in the ground, but means that for technical and socio-political reasons, the amount pumped daily can no longer be increased. The major technical reasons can be summed up as a lack of large new oil discoveries in over 30 years; and the pressure in the producing oil fields has fallen as the oil has been extracted. Reduced pressure means decreased flow rates from the wells.

Presently, the world consumes over 84 million barrels of oil each day with the US using 25% of that amount. Up until 2005, Saudi Arabia had been the swing producer for the world. That means that SA had excess capacity which allowed them to increase production when needed, or throttle it back when demand slumped. By doing that, SA was able to stabilize oil prices somewhat. SA apparently no longer has any spare capacity, which means that the world is now pumping oil as fast as possible. However, most of the major oil fields have a declining output. Saudi Arabia, Kuwait, Mexico, Russia, Europe, and the US fields are now declining in production by up to 20% per year, while demand from the US, China, and India are still increasing. The result of this condition will be gasoline shortages in the very near future unless something is done to lower demand. Those of us who were driving during the oil embargo in the early 70’s remember what happened then, with long lines at the gas pumps, odd-even days to buy gas etc. It wasn’t a pretty sight for sure. But then, we knew it would not last forever. This time, it will.

It seems obvious to me that we as a country should have an emergency plan, and policies in place to deal with the moment in time when demand is 1 gallon greater than available supply. Each of us relies on gasoline to get to work, buy our groceries, get to school, and basically live our lives. In short, the entire American way of life depends on oil; it is our life blood. Think about all the things you do that depend on your ability to travel. Think about all the goods and services you rely on for your very survival.

We have passed the point where we can hope that some new technology will save us. The time span to implement anything is too long to prevent what is coming. Already, the price of gasoline and other liquid fuels has reached the point where it is hurting a lot of people. If nothing is done, the market forces will drive up the cost of fuel to ever higher prices to bring supply and demand into balance. Ethanol and other bio-fuels cannot make up for the decline in oil production. Hydrogen is not an energy source, and therefore cannot make up the missing oil. What we need in the short term is conservation, and we need it now. We need time to come up with workable solutions, and that means decades, not years.

Here are some interesting facts about US oil consumption for the following discussion. Numbers are approximate.
Daily usage of oil: 21 million barrels or 880 million gallons (varies somewhat with seasons)
Daily gasoline usage about 9 million barrels or 380 million gallons
Number of licensed drivers: 200 million
Number of registered vehicles: 245 million (cars, light trucks, SUVs, and motorcycles)
Avg mileage of passenger fleet: 17 mpg
Avg distance driven per day per driver: 32 (based on 380m gals, 200m drivers, 17 mpg)
Median passenger vehicle age: 9 years

Since world oil supply is not likely to be increased, but rather decreased, we as a country desperately need to decrease our consumption of oil, especially gasoline. Decreasing demand by 1 million barrels of oil per day would immediately reduce the price of gasoline worldwide. There are two major ways to immediately decrease demand, neither one of which are pain free.

The first way to decrease gasoline demand is to make it more expensive. This will happen naturally by market forces if no other action is taken. The results of allowing this to happen are not very appealing.

1) The lowest income groups and those on fixed incomes will be hurt the most.
2) Oil prices worldwide will increase, hurting the US politically.
3) More of our wealth will be transferred to foreign countries (OPEC)
4) We become more dependant on foreign oil producing countries.
5) Demand will decrease only enough to bring supply/demand back into balance. IE: Oil production will still be at maximum.
6) Periodic shortages at the pumps will produce civil unrest while market equilibrium is reached.

Of course, another way to make gasoline more expensive is to increase the Federal tax on it. This is the method used in a lot of countries, and is the reason that gasoline is close to $6 a gallon in Britain even though they pay the same price for crude oil as the US. Of course, like most of the tax money we pay, there is no guarantee that the money will be used for our benefit, but the demand reduction would help and would mitigate numbers 3 and 4 above above. Taxation is of course preferred by government but is not necessarily the best answer.

1) The lowest income groups will be still be hurt the most.
2) Oil prices worldwide will not increase as much with less US demand.
3) Less of our wealth will be transferred to OPEC.
4) We become less dependant on foreign producers.
5) Demand will decrease more (or less) according to the amount of extra taxation.
6) Less chance of spot shortages at the pumps.
7) More of our wealth will be transferred to the Federal Government. Whether this is a plus or a minus depends on how wisely the Feds spend the money.

The second major way to decrease demand is to force it lower by rationing. This has been successfully done in the US before, during WWII. If rationing were to be implemented:

1) World crude oil prices would decrease. A million barrel per day reduction cut in demand could have as much effect in lowering the price of oil as the supply destruction of hurricane Katrina had in raising it.
2) There would be a beneficial impact on the lower income and fixed income groups.
3) Less of our wealth would be transferred to OPEC.
4) We would be less dependant on foreign oil.
5) There would be less chance of shortages at the pumps.
6) Demand can be exactly controlled.

There are some other benefits to the rationing approach. Lets assume that the rationing is done on a per driver basis, and that the goal would be to decrease gasoline demand by 1 million barrels per day (about 11%). This target amount would be a ration of 50 gallons per month per driver. Lets also assume that the rationing is done by issuing coupons or some other method where the rations could be transferred easily. By doing this, people who do not consume their rationed amount could sell their coupons to the highest bidder. Not only would everyone enjoy a lower price for gasoline; those who conserve, and don’t use their entire allotment could gain from those who can’t or won’t.

At the same time, people would demand more efficient vehicles, and automakers would need to respond, thereby driving them to do what government CAFE standards haven’t. When a person has to bid for coupons to be able to drive a 7 mpg Lincoln or Hummer, that person is likely to start questioning his own choice in vehicles. A 50 gallon ration per month is slightly more than 10,000 miles per year for an average mpg vehicle, but is 30,000 miles for a Toyota Prius. There would definitely be pressure to retire the lower mpg vehicles in the fleet in favor of higher mpg vehicles, which would tend to increase the overall efficiency allowing a further cut in the ration in a few years. Trading ration coupons would even be an incentive for people to use mass transportation and leave the auto at home where possible.
A possible political benefit of rationing would be that other countries would see us in an entirely different light, where we would no longer be seen as the energy hogs we really have been. We might even be seen as leaders. Perhaps that would help heal our image problems with the rest of the world.

There is also the ecological benefits that using less oil brings, which everyone should be concerned about. We would not need to build any new refineries, pipelines, oil tankers, etc. We would not have to destroy our food production with the folly of ethanol production or other bio-fuels, and we would not have to destroy our water supply turning coal into diesel fuel with the Fischer-Tropsch method, or at least these things could be postponed for quite a while. Most importantly, rationing would instill in the populace the realization that the earth has limits as to what it can provide to us.
Digg!

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Whats wrong with healthcare insurance?

Posted on November 8, 2006 by bill

I have a medical problem, and its called sleep apnea. To manage this problem, I must sleep connected to a cpap machine which is basically a blower which blows air into my lungs and keeps me breathing while I sleep. This requires wearing a mask which fits tightly over my nose. These masks are made of plastic and some kind of gel, but the important thing about them is that they wear out.

Cpap masks are sold by medical supply houses, and they are covered by most insurance plans. They are also available from on-line internet supply stores, and that is where I usually buy mine. A typical mask from a cyber store costs $45 to $60.

Since a mask is covered by my insurance, I decided to get one through them. Sounds easy, right? Well, not exactly. First, I had to make an appointment with a pulmonologist. Then I had to pay my $30 copay to see him so he could write a prescription for the mask. The insurance company won’t cover it without a prescription. Ok, right there I am already paying $30 for a $45 mask. My doctor faxed the prescription to my local med supply company, who called me up to tell me I had to pay them a $22 copay also. So now I am up to $52 for a $45 mask. But wait, it gets better. The med supply clerk told me that I would then get a bill for $229 for the remainder of the cost since I hadn’t yet met my yearly deductible. At that point, I would be paying $281 for a cpap mask that sells for $45 from a cyber store. I guess you can figure out which route I took on that one.

Well that’s ok. I prefer to buy it online, and have it shipped to my house. However, thats not the bad part. The bad part about all this is that BlueCross is willing to pay out a grand total over $300 for a cpap mask that should only cost $45. They would pay $100 for the doctor visit, plus the $229 for the mask, and it would still cost me more than the cost of the mask to let them rip off every customer who buys their insurance. Thats right…. its a collossal ripoff, because every other person insured by BlueCross/BlueShield is paying for it.

While I was talking to the clerk at my local med supply, I asked the question: “How much would this cost if I just paid cash and forgot the insurance?” The answer was $251. She told me that because of contracts with the insurance companies, they are not allowed to sell it for less. To me, this sounds illegal, as it amounts to price fixing. Some legal beagle should check that out.

So this is evidence that insurance companies cause the prices of medical equipment to a be whole lot higher than they should. Why do they do this? Probably because they make more money doing it. Insurance companies are money mills; they don’t actually produce anything, and they make money by keeping a portion of their premiums. The larger the amount of money they process, the more profit they make.

I already told you that a 15 minute visit with my doctor cost about $100. How much of that $100 went to pay insurance costs (malpractice) and how much paid for all the office staff it takes to bill the health insurance companies? When I was a lot younger than I am today, my family doctor had one employee: his nurse. He did not have to deal with insurance, and his nurse took the $3 charge for the office visit. (For $5, he would make a house call). Now, one doctor often has two or three staff people just to handle the billing and insurance. Guess who pays for that? You do, and its because of the insurance. If there was no health insurance, medical care would be substantially cheaper than it is. It would be much more affordable, and people would only need hospitalization coverage.

Instead, everyone wants to create another massive beaurocracy to handle nationalized health care. I wonder how much that will cost us, as its never cheap dealing with the government.

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Four Bars of Happiness

Posted on September 13, 2006 by bill

I have been having trouble with my cell phone, so I though it was time for a new one. I had gotten this one, a Nokia, over five years ago from Verizon. It had served me well over those years, and I had had no real issues with Verizon either. I really don’t use it much, just a few minutes a month. It is more for security on the road than anything else. So, I have never renewed my contract. I just left them bill me monthly for the past 3 years.

All was well until I went shopping for a new phone. I stopped at the Verizon booth in the local mall to check what was available. After looking at the phones, I chose a simple one… I don’t need mp3 players, cameras, video, or web browsers. I just want to be able to make and take phone calls. Then the clerk looks up my account, and this is when the trouble started. I was informed that they would not sell me a new phone unless I took out a new contract. I told the clerk that I didn’t want a new contract, and I was not looking for a discount on the phone. I just wanted a new phone, at my expense, and no new contract. No deal. Then I went to another Verizon dealer, and was told the same thing.

I emailed Verizon’s customer support, and received an answer about a week later. (A week wait for an answer is customer service?) Again, the story was the same, except that they would allow me to buy a used phone without taking out a new contract; so the policy seems to come from corporate, and not the local stores. My answer was thanks, but no thanks.

Now this seemed like a very strange and stupid business policy. Verizon would have made money on the new phone, and they would continue to make money on my monthly account. Why then would they have such a policy? I asked the other phone vendors, Cingular, Nextel, and Sprint. They have no such policy. Their policy is that a new contract is necessary to get a free or discounted phone, but it was perfectly acceptable to otherwise buy a new phone anytime.

Still I needed a new phone, and I would have to take out a contract with another vendor anyway. So why not just take out a new contract with Verizon? The answer to that is simple. I refuse to reward stupidity, and this issue could come up again. Obviously, Verizon did not value me as a customer.

Oh, I am now a Cingular customer with about 4 bars of happiness, and Verizon has lost a customer forever.

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Whats wrong with Ethanol from Sugar Cane

Posted on September 6, 2006 by bill

Much has been said about Brazil’s success in using ethanol made from sugar cane to help them become energy independent. They have been very successful in growing sugar cane and converting it ETOH (ethanol, ethyl alcohol). Does this mean though that the US could do the same and preserve our current wasteful lifestyle? Unfortunately, I doubt it.

Lets look at some energy consumption numbers (data from the year 2003).

In the US, we produce 11 barrels of oil per year per person. We use 27 barrels per year per person, so we need to make up the energy equivalent of 16 barrels per year per person if we are to achieve energy independance.

Brazil, produces 3.35 barrels of oil per year per person, and use 4.2. So in Brazil, they need to make up only .85 barrels. That is almost 20 times less per person than in the USA.

Their real success is in the fact that they use so much less energy per capita than we do. If we (in the US) used the same amount of energy per person as Brazilians, the US would be an oil exporting nation, and would be energy independent. In fact, we can use 3 times as much oil per person as Brazil, and still be energy independent. However, that would not support our present lifestyle.

Brazil produces 420 million tons of sugar cane each year compared to 25 million tons grown in the USA (including Hawaii)1. That is almost 17 times the amount the US produces. Under ideal conditions, 1 ton of sugar cane can be processed into 18+ gallons of ETOH2 , which is the energy equivalent of 13 gallons of gasoline. If we used the entire yearly US crop of sugarcane to make ETOH, it would make at most the equivalent of 325 million gallons of gasoline. Since we use 8 million barrels (336 million gallons) of gasoline per day, the entire sugar cane crop amounts to less than 1 days supply of fuel. Can we ramp up our sugar cane production by a factor of 400? Of course not. Sugar cane only grows well in a tropical climate. Most of the US is not tropical, and is not suitable for sugar cane production.

Outside of the geography issue itself, there is also an issue of water. Brazil is a tropical country, with plenty of rainfall. Sugar cane requires an annual rainfall of at least 2 feet, which means we would have to heavily irrigate the cane while Brazil does not. How much water is that exactly? Well, here are my calculations:

50 square yards will grow 2-3 tons of sugar cane per year so an acre will grow about 250 tons (3250 gallons of gas). Two acre-feet of water equals 650,000 gallons of water. So we are talking about using 650,000 gallons of fresh water to gain 3250 gallons of fuel, or about 200 gallons of water per gallon of fuel. Considering water is also a scarce resource, does that make sense?

For these reasons, I do not see how sugar cane is going to be a major energy source for the USA. Instead, the hype about ETOH from sugar cane, or worse, from corn does nothing except allow people to believe that they will be able to continue their present energy usage into the future. What we should be promoting instead of alcohol is conservation first.

References
1 Sugar Cane Production

2 Conversion to Ethanol in Brazil

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The value of money

Posted on September 1, 2006 by bill

I am sitting here looking at a twenty dollar bill. At the top, it says Federal Reserve Note. I’m sure you have seen that before, but did you ever really think what that meant?

According to my dictionary, a note is a debt, a promise to pay ‘on demand’. Federal Reserve Notes (FRNs) are not backed by anything tangible like gold or silver. The only thing that makes them valuable at all is the faith people have that they can be traded for something else that they want, like food, a power drill, a ticket to a movie, etc. To put it bluntly, it is the American people themselves who back the currency; the blood sweat and tears of each of us. The word for this kind of money is ‘fiat’ currency. Essentially, a FRN is an ‘IOU’. But what if there is nothing available to trade those FRNs for?

Everyday, people purchase foreign goods at their local stores, and pay with US currency. That US money then goes overseas and is quietly accumulating in some huge imaginary shoebox called China’s foreign reserve, or Japan’s foreign reserve. China now has a trillion American IOUs in their shoebox and sooner or later, they are going to want something real for all those IOUs. What exactly can they trade them for? By my calculations, China, Japan, Taiwan, and Russia are holding some 2.3 Trillion dollars. To get an idea how much that is, a trillion is roughly $3300 for each man, woman, and child living in the USA. So 2.3 Trillion comes just shy of $8,000 per person. So a family of 4 has $32,000 worth of IOUs outstanding against them. To me, that is very scary, as that also means that 99% of Americans would be technically bankrupt if those IOUs were called in.

Now this situation would not be nearly so bad if American’s still made anything real. But we have systematically destroyed our manufacturing sectors in favor of service industries. Foreign countries are not going to buy life insurance or window washing services, or pizza delivery from the USA. These are valueless to them. They will want something real, and the only thing we have real in quantity is real estate, or minerals, coal, and food products like grain.

This is the big danger when trade between countries is not balanced. If the US were exporting goods at the same rate as we import them, then a foreign country could simply buy back their own currency with their reserve of our currency. Instead, they must spend their reserve on hard tangible goods, which more and more means our real estate, our resources, our food supply, and our capital equipment. In doing so, the increase in the amount of circulating money will cause the price of all goods to rise. This new inflation then decreases the wealth of every citizen as inflation always does.

I know I have simplified a lot here, but the mechanism is what it is. When we go to Wally World and buy a pair of tennis shoes from China, we haven’t paid for them until China has spent the money we just paid on US goods. Since our trend is to make less and less goods here that are affordable, and desirable, they are likely just to keep stuffing our bucks in their shoebox, until they have enough to buy our entire country at fire sale prices.

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