A Concise Economic Treatise
Spend less than you make. Vote for tightwads. The End.
An Economic Treatise with a Brief History of United States Economics and Explanation of the Current Situation, OR Economics and Aunt Manie
Part I
I learned about economics from the following: Adam Smith, Milton Friedman, Frederick Hayek, Ludwig von Mises, Murray Rothbard, Ayn Rand, Richard Salsman and Aunt Manie.
Aunt Manie was born about 1890, the oldest of six children. Her father worked as a lumberjack and the children shared two unfinished attic bedrooms, five girls in one room, one son in the other. From their beds, they saw the wood shingles that covered the roof. Although this family doesn’t sound prosperous to us, living standards had improved dramatically in the 1800s, except during the Civil War period. Prior to the Civil War, the United States had enjoyed stable, gold-based money.
The founders of the United States had issued paper continentals during the Revolutionary War. These lost value and the founders wrote a constitution that allowed the government to only issue metallic money, no paper money. The government allowed private money printed or minted by banks until 1864. The Constitution mandated gold-based money until Supreme Court decisions allowed the government to issue fiat, paper money, called greenbacks, during the Civil War. These were eventually redeemed for gold and the United States returned to the gold standard until WWI.
After the Civil War, government controls on banks created money panics and currency shortages. Instead of repealing the restrictions, the government increased control, a pattern of government behavior that continues today.
The government established the Federal Reserve Bank in 1913 to stabilize the currency and prevent panics and recessions. The Fed has done neither, but exists to support government. The government acquired a monopoly on the issuance of money. When President Wilson unnecessarily involved the United States in WWI, the government abandoned the gold standard and devalued the currency to inflate the money supply and pay for the war. Congress established the Federal income tax in 1916. Recession followed. Instead of returning to the classical gold standard, the government conceived a gold exchanged standard managed by politicians rather than the market.
In 1925, Britain returned to a gold standard, but at an exchange rate that had prevailed before the war. Pound notes had expanded, exceeding the gold supply. To help the Bank of England return to gold, the United States Federal Reserve lowered interest rates and encouraged Americans to hold gold claims in pounds, not dollars, to offset the inflating increase in pounds.
Low interest rates stoked a speculative boom in United States stocks. In 1929, the Fed drastically raised rates leading to a market crash.
The United States defaulted on the gold exchange standard when public fear that President Franklin Roosevelt would abandon the gold standard led to the banking panic of 1933. The government nearly doubled income tax rates and supported artificially high wage rates by unions. Roosevelt ordered confiscation of all privately held gold coins and bullion, forcing unstable paper money on the United States.
After WWII, the Bretton Woods Agreement established a new gold exchange standard, defining a dollar as 1/35th ounce of gold. Central banks held gold, but private citizens were not allowed to own gold other than jewelry. Only foreign governments could redeem dollars for gold.
The Kennedy and Johnson administrations set the country on a course of unprecedented deficit spending and inflating. The last balanced budget was in 1969.
Part II
Aunt Manie had big, blue eyes, wavy black hair (a woman’s crowning glory) worn in a Gibson girl pouf, a fair complexion and a figure of a slender hourglass form. An early twentieth century knock-out. Manie’s striking beauty attracted a prosperous local farmer. They married, but Manie was unable to have children and folks said she dominated her husband. She loved children, however, including her sisters’ children. My grandmother was one of those sisters.
After Manie’s husband died in the 1950s, she lived alone in an old, two-story, T-shaped farm house. Manie occupied two downstairs rooms, a country kitchen and a small bedroom. An outhouse stood in the backyard between the garage, where her deceased husband’s car resided, and the hen house. Aunt Manie had running water in the kitchen. When the faucet leaked, she had the electric pump removed and replaced with a hand pump. She heated her two rooms with a coal stove. She didn’t use the rest of the house, including a living room with an old television and a pump organ, items purchased when her husband was alive.
Farmers didn’t qualify for Social Security benefits at the time. Although past her sixties, Aunt Manie raised broiler chickens and, sometimes, turkeys. She kept a few laying hens and feral cats roamed the yard. An empty barn fell into disrepair. The old lady, like her sisters, had never learned to drive, but she kept her husband’s car.
Aunt Manie grew a vegetable garden, saving seeds each year to replant. Mauve petunias self-seeded in her yard and she grew zinnias and cosmos from saved seed. She yanked up a handful of yellow sedum one day and gave it to me. “Just cover it with dirt and it will grow,” she said and it did. Like her sisters, she canned produce and made her own clothes, quilts and rag rugs.
Addie, Manie’s widowed sister, lived in similar circumstances on a nearby farm. A couple of miles down another dirt road lived my widowed grandmother, who had an indoor bathroom my father had installed. On another road, the youngest sister, a spinster, Hettie, lived with the bachelor brother, John. All farmed. A fifth sister had died young. Only John drove. None had ever received government benefits and all were thrifty.
Manie beat them all for thrift. Relatives complained she was tight, miserly, stingy and parsimonious. They said she had money and should live up to it.
Aunt Manie walked to my grandmother’s house when I stayed there. The old ladies shelled peas or beans or sewed, while rocking by the iron, coal stove and listening to crop prices on the radio. Evenings, they moved into the living room, turned on the oil stove and watched television. They loved Laurence Welk’s music and Oral Roberts’ preaching.
When the nearest country store closed and delivery men stopped coming by with bread and meat, my mother drove the old ladies to a grocery store. Aunt Manie always gave me a quarter and smiled when my mother told her I put them in my piggy bank. These were the genuine silver, pre-1965 quarters. I wish I’d kept them in the piggy bank instead of depositing them in a commercial bank, but most adults didn’t know the government would devalue our coins and I was only a child.
A doctor told Aunt Manie she didn’t eat right. In winter, she lived on melted cheese and jelly sandwiches and probably skimped on the cheese. When she needed cataract surgery on both eyes, she only had one done to save money. Aunt Manie had to stay in the hospital a few days. She said the food was good, the first time I’d ever heard anyone say that about hospital food. She wasn’t a complainer.
When antique dealers roamed the countryside looking for farmers willing to sell their heirlooms, Aunt Manie sold old furniture and glass ware, old stuff she’d inherited and didn’t need. When she died, her relatives found a broken glass oil lamp, the pump organ and other stuff that the dealers didn’t want. Aunt Manie’s nieces and nephews didn’t complain about her frugality when they inherited shares of her small estate. She produced food for others most of her life and never used anyone’s money but her own.
Part III
By 1970, nearly half the gold confiscated from American citizens in the 1930s was in foreign central banks. When France continued to exchange dollars for gold, Nixon defaulted on foreign gold payments, ending the dollar’s connection with gold.
By 1980, gold sold for over $800 an ounce. Inflation and interest rates soared over ten percent. Savers lost millions. During the 80s, despite President Reagan’s battles with congress to rein in spending and balance the budget, government spending, taxes and debts increased.
The Federal Reserve Bank serves the purpose of financing government and has no place in a free economy. The Fed underwrites federal loans, controls money supply, manipulates interest rates and regulates banks. This central planning creates instability and economic inefficiency.
“When we assign the production of money to government, we should expect inferior money.” –Laurence White
The Fed enables government to spend more than it can take in taxes, creating inflation. After 9/11, Alan Greenspan lowered interest rates to revive the economy. Lower rates and government policies encouraging home ownership increased housing demand, inflating prices. Real estate speculation and development increased. Lower interest rates encouraged the purchase of larger homes and goods to fill them. Low rates led to purchases of more and bigger vehicles to drive greater distances to work and shop.
Government borrowing and spending increased to finance war, homeland security and new government programs such as No Child Left Behind and senior prescription drugs. An increased money supply devalued the dollar. Expanding economies in Asia, fed by United States consumer spending, increased demand for fuel. Demand, the devalued dollar and speculation increased the price of fuel. That created more inflation and people found it harder to pay off their debts. The Fed exacerbated the problem by increasing interest rates to control inflation. The results: default, foreclosure, tight credit, recession and deflation in home prices, leaving financial institutions and homeowners with homes worth less than the prices paid for them.
Politicians believe they can create jobs with public works programs, industry bailouts and subsidies to new industries. Public works programs prolonged the Great Depression. Government money comes from inflation and taxes.
Politicians and the media condemn CEOs and Wall Street. The uninformed demand more regulation. Regulation won’t cure a problem caused by government control of money and the resulting profligacy. Americans will experience booms and busts, fluctuating speculations in commodities, real estate, stocks and production as long as the government controls the money. We need to get rid of government’s drunken sailor economic policies and replace them with tightfisted Aunt Manie policies.
Spend less than you make. Vote for tightwads. The End.
An Economic Treatise with a Brief History of United States Economics and Explanation of the Current Situation, OR Economics and Aunt Manie
Part I
I learned about economics from the following: Adam Smith, Milton Friedman, Frederick Hayek, Ludwig von Mises, Murray Rothbard, Ayn Rand, Richard Salsman and Aunt Manie.
Aunt Manie was born about 1890, the oldest of six children. Her father worked as a lumberjack and the children shared two unfinished attic bedrooms, five girls in one room, one son in the other. From their beds, they saw the wood shingles that covered the roof. Although this family doesn’t sound prosperous to us, living standards had improved dramatically in the 1800s, except during the Civil War period. Prior to the Civil War, the United States had enjoyed stable, gold-based money.
The founders of the United States had issued paper continentals during the Revolutionary War. These lost value and the founders wrote a constitution that allowed the government to only issue metallic money, no paper money. The government allowed private money printed or minted by banks until 1864. The Constitution mandated gold-based money until Supreme Court decisions allowed the government to issue fiat, paper money, called greenbacks, during the Civil War. These were eventually redeemed for gold and the United States returned to the gold standard until WWI.
After the Civil War, government controls on banks created money panics and currency shortages. Instead of repealing the restrictions, the government increased control, a pattern of government behavior that continues today.
The government established the Federal Reserve Bank in 1913 to stabilize the currency and prevent panics and recessions. The Fed has done neither, but exists to support government. The government acquired a monopoly on the issuance of money. When President Wilson unnecessarily involved the United States in WWI, the government abandoned the gold standard and devalued the currency to inflate the money supply and pay for the war. Congress established the Federal income tax in 1916. Recession followed. Instead of returning to the classical gold standard, the government conceived a gold exchanged standard managed by politicians rather than the market.
In 1925, Britain returned to a gold standard, but at an exchange rate that had prevailed before the war. Pound notes had expanded, exceeding the gold supply. To help the Bank of England return to gold, the United States Federal Reserve lowered interest rates and encouraged Americans to hold gold claims in pounds, not dollars, to offset the inflating increase in pounds.
Low interest rates stoked a speculative boom in United States stocks. In 1929, the Fed drastically raised rates leading to a market crash.
The United States defaulted on the gold exchange standard when public fear that President Franklin Roosevelt would abandon the gold standard led to the banking panic of 1933. The government nearly doubled income tax rates and supported artificially high wage rates by unions. Roosevelt ordered confiscation of all privately held gold coins and bullion, forcing unstable paper money on the United States.
After WWII, the Bretton Woods Agreement established a new gold exchange standard, defining a dollar as 1/35th ounce of gold. Central banks held gold, but private citizens were not allowed to own gold other than jewelry. Only foreign governments could redeem dollars for gold.
The Kennedy and Johnson administrations set the country on a course of unprecedented deficit spending and inflating. The last balanced budget was in 1969.
Part II
Aunt Manie had big, blue eyes, wavy black hair (a woman’s crowning glory) worn in a Gibson girl pouf, a fair complexion and a figure of a slender hourglass form. An early twentieth century knock-out. Manie’s striking beauty attracted a prosperous local farmer. They married, but Manie was unable to have children and folks said she dominated her husband. She loved children, however, including her sisters’ children. My grandmother was one of those sisters.
After Manie’s husband died in the 1950s, she lived alone in an old, two-story, T-shaped farm house. Manie occupied two downstairs rooms, a country kitchen and a small bedroom. An outhouse stood in the backyard between the garage, where her deceased husband’s car resided, and the hen house. Aunt Manie had running water in the kitchen. When the faucet leaked, she had the electric pump removed and replaced with a hand pump. She heated her two rooms with a coal stove. She didn’t use the rest of the house, including a living room with an old television and a pump organ, items purchased when her husband was alive.
Farmers didn’t qualify for Social Security benefits at the time. Although past her sixties, Aunt Manie raised broiler chickens and, sometimes, turkeys. She kept a few laying hens and feral cats roamed the yard. An empty barn fell into disrepair. The old lady, like her sisters, had never learned to drive, but she kept her husband’s car.
Aunt Manie grew a vegetable garden, saving seeds each year to replant. Mauve petunias self-seeded in her yard and she grew zinnias and cosmos from saved seed. She yanked up a handful of yellow sedum one day and gave it to me. “Just cover it with dirt and it will grow,” she said and it did. Like her sisters, she canned produce and made her own clothes, quilts and rag rugs.
Addie, Manie’s widowed sister, lived in similar circumstances on a nearby farm. A couple of miles down another dirt road lived my widowed grandmother, who had an indoor bathroom my father had installed. On another road, the youngest sister, a spinster, Hettie, lived with the bachelor brother, John. All farmed. A fifth sister had died young. Only John drove. None had ever received government benefits and all were thrifty.
Manie beat them all for thrift. Relatives complained she was tight, miserly, stingy and parsimonious. They said she had money and should live up to it.
Aunt Manie walked to my grandmother’s house when I stayed there. The old ladies shelled peas or beans or sewed, while rocking by the iron, coal stove and listening to crop prices on the radio. Evenings, they moved into the living room, turned on the oil stove and watched television. They loved Laurence Welk’s music and Oral Roberts’ preaching.
When the nearest country store closed and delivery men stopped coming by with bread and meat, my mother drove the old ladies to a grocery store. Aunt Manie always gave me a quarter and smiled when my mother told her I put them in my piggy bank. These were the genuine silver, pre-1965 quarters. I wish I’d kept them in the piggy bank instead of depositing them in a commercial bank, but most adults didn’t know the government would devalue our coins and I was only a child.
A doctor told Aunt Manie she didn’t eat right. In winter, she lived on melted cheese and jelly sandwiches and probably skimped on the cheese. When she needed cataract surgery on both eyes, she only had one done to save money. Aunt Manie had to stay in the hospital a few days. She said the food was good, the first time I’d ever heard anyone say that about hospital food. She wasn’t a complainer.
When antique dealers roamed the countryside looking for farmers willing to sell their heirlooms, Aunt Manie sold old furniture and glass ware, old stuff she’d inherited and didn’t need. When she died, her relatives found a broken glass oil lamp, the pump organ and other stuff that the dealers didn’t want. Aunt Manie’s nieces and nephews didn’t complain about her frugality when they inherited shares of her small estate. She produced food for others most of her life and never used anyone’s money but her own.
Part III
By 1970, nearly half the gold confiscated from American citizens in the 1930s was in foreign central banks. When France continued to exchange dollars for gold, Nixon defaulted on foreign gold payments, ending the dollar’s connection with gold.
By 1980, gold sold for over $800 an ounce. Inflation and interest rates soared over ten percent. Savers lost millions. During the 80s, despite President Reagan’s battles with congress to rein in spending and balance the budget, government spending, taxes and debts increased.
The Federal Reserve Bank serves the purpose of financing government and has no place in a free economy. The Fed underwrites federal loans, controls money supply, manipulates interest rates and regulates banks. This central planning creates instability and economic inefficiency.
“When we assign the production of money to government, we should expect inferior money.” –Laurence White
The Fed enables government to spend more than it can take in taxes, creating inflation. After 9/11, Alan Greenspan lowered interest rates to revive the economy. Lower rates and government policies encouraging home ownership increased housing demand, inflating prices. Real estate speculation and development increased. Lower interest rates encouraged the purchase of larger homes and goods to fill them. Low rates led to purchases of more and bigger vehicles to drive greater distances to work and shop.
Government borrowing and spending increased to finance war, homeland security and new government programs such as No Child Left Behind and senior prescription drugs. An increased money supply devalued the dollar. Expanding economies in Asia, fed by United States consumer spending, increased demand for fuel. Demand, the devalued dollar and speculation increased the price of fuel. That created more inflation and people found it harder to pay off their debts. The Fed exacerbated the problem by increasing interest rates to control inflation. The results: default, foreclosure, tight credit, recession and deflation in home prices, leaving financial institutions and homeowners with homes worth less than the prices paid for them.
Politicians believe they can create jobs with public works programs, industry bailouts and subsidies to new industries. Public works programs prolonged the Great Depression. Government money comes from inflation and taxes.
Politicians and the media condemn CEOs and Wall Street. The uninformed demand more regulation. Regulation won’t cure a problem caused by government control of money and the resulting profligacy. Americans will experience booms and busts, fluctuating speculations in commodities, real estate, stocks and production as long as the government controls the money. We need to get rid of government’s drunken sailor economic policies and replace them with tightfisted Aunt Manie policies.
wow, whatta blog... great look... check out esspecially in your review of wet and wild...er hungry...
ReplyDeleteyour economic principles are sound... the constitution makes a case for a government overspending and is over looked... if the budget is exceeded, the difference is then made up by the states according to the population... instead of printing more moola, the people will have to pay the piper...
won't happen, cause we are all doomed...
this is human nature to get everything we can for as little as we have to...
it starts with the people and needs to rise up and nip this over spending.
tom t