THE GREAT SWINDLE

Now, in order to better help us cut through the cloud of confusion that surrounds the subject of money, and its value, so that we might be better able to get at the essential questions, and your own answers to them, let's digress for a bit and try to dispel some of the confusion which our monetary system creates for us.

Money, itself, as we have already mentioned, is only supposed to be a medium of exchange. It should have no inherent value itself, and should only represent the relative value of items of wealth. And, that, in and of itself, if it were absolutely true, would be a complicated enough situation.

But, in addition, due to the nature of our monetary system (any monetary system), money does take on a certain value unto itself which it would not inherently possess simply as a result of representing wealth.

However, being a less than perfect mechanism, devised by less than perfect men, a monetary system, and the money it creates, are both subject to manipulation by men, which further distorts an already complicated situation.

And, that resultant distortion adds significantly to the confusion in our minds as to the relationship between wealth, and what the possession of wealth can do for us of a truly beneficial nature.

At this very moment there is a great deal of distress, confusion and uncertainty in our lives as a direct result of our monetary system.

The U.S. Government has created a national debt of astronomical proportions; inflation is threatening to break out into runaway; unemployment has become endemic; and interest rates, although we have resigned ourselves to them, are, in truth, extortionate.

Economists and politicians theorize and argue over the causes and cures for all this. But in trying to sort out all the complexities which our economic system has fallen into, too many of us continue to overlook the basic, simple facts which created those complexities, and allowed them to get as far out of hand as they have.

Although the consequences of inflation can appear very complex, its actual cause is painfully simple. It is a direct result of a direct manipulation, and thus distortion, of the monetary system. And, it is done by the very social institution that created the monetary system in the first place, ie., Government.

'Inflation' and 'currency devaluation' are exactly the same thing, only approached from a different angle.

In earlier centuries, when the monetary system was much simpler, and the only medium of exchange - money - was gold and silver coins, the King, who minted the coins, would sometimes 'cheat' and mix a little lead in with the gold in hopes that people wouldn't notice.

But people did notice, and they attached proportionately less value to the coins. Thus, the King had to mint even more of the now debased coins to make up for the difference.

In effect, the King 'devalued' (or 'debased') his coins, and the result was inflation - more money (coins).

Let's make this concept of 'inflation' as clear as we can.

There is a certain amount of wealth in existence in the world at any given point in time - so much land, and so many goods derived from the land.

Money is supposed to represent designated increments of that total wealth. As a very simple, yet accurate, example, let's say that $1.00 equals 1% of the total wealth.

So long as the ratio of 1:1 remains constant, the monetary system remains stable.

But, if, for whatever reason, (usually intentional manipulation of the monetary system), the quantity of dollars increases, while the quantity of wealth stays the same, the result is inflation.

Indeed, the very term 'inflation' originally referred, and still does, to this artificial 'inflation' of the money supply.

But, the total amount of wealth, and its intrinsic value to us, remains the same, no matter what the money supply does.

So, if the money supply (the number of dollar bills printed or coins minted) increases, then the percentage of the wealth that each dollar can represent must decrease accordingly.

Following our simple example again, if the number of dollars doubles, then $1.00 can no longer equal 1% of the total wealth, because there are now twice as many dollars as there were before.

So, $1.00 must now equal 1/2 of 1%, or to put it another way, 1% of the wealth no longer costs $1.00, but now costs $2.00.

And that is exactly, and only, what our current situation with inflation is all about. Nothing else.

The government has simply printed (or otherwise created) dollars at a faster rate than the quantity of produced wealth can keep up with.

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* At least this was the case throughout the 1970s, 80s, and into the 1990s. As to the reactive de flation which began at the turn of the century, see update below.

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So, all the various arguments about how industry raising its prices, or labor raising its rates, are somehow the cause of inflation, and if they would just not do that inflation would stop, are well off the mark. Although price and wage increases do contribute to and aggravate inflation (and are sometimes extortionate in themselves, which is another issue entirely), they are not  the cause  of inflation. When they are not just the result of an outright and greedy profit grab, they are actually the result  of inflation, in an effort to keep up with it.

To insist that either or both labor and industry be forced into not changing in response to inflation, is to insist that one segment of society bear the burden for the inflation that neither of them caused.

Because, the true cause is still, at base, what it always is. An increase in the quantity of money without an equal increase in the quantity of wealth.

The budget deficits of the U.S. Government, by the early 1990s, have reached a point where the National Debt is not only absurd, it is a monster. It is an economic time bomb just waiting to go off.

And, despite the obfuscations of many politicians, its cause, and potential consequences, are really quite simple to understand.

It is tied in directly with inflation.

In the 1980s, inflation was so severe that it was in a 'runaway' mode.

But, Government didn't want to do that.

Because, the whole reason for printing up (or otherwise creating) those additional dollars, was so that Government could spend more dollars, and thereby create the illusion  of more wealth by so doing.

In the early stages of such manipulative legerdemain, the illusion usually works. But only for awhile.

Because, as with the King's debasement of his coins, the people eventually recognize the subterfuge, and they attach proportionately less value to each dollar as more dollars are created.

And, the result, of course, is the ever higher and higher prices of inflation.

This was the situation in the early 1980s, and it had become so severe as to be a crisis.

Something had to be done to correct the problem, and only Government, being the cause of the problem in the first place, could do it.

But, Government did not want to quit spending. The people were used to it; they demanded it; and any politician honest - or foolish - enough to propose cutting back on such spending, was likely to find himself out of office (eg., Walter Mondale in his loss to Ronald Reagan).

So, Government decided upon yet another manipulation, so as to be able to continue spending ever more dollars, and maintain the illusion of ever greater wealth thereby. Instead of printing up so many extra dollars, it began to borrow dollars.

It borrowed them from other countries; it borrowed them from the public; it even borrowed from itself (by way of continued, albeit reduced, inflation).

But, when looked at honestly and clearly, the most deceptive (and potentially catastrophic) aspect of all this borrowing, was (and still is) that all of it was (and is) borrowing from future generations of American citizens. Because ultimately, it is they  who are going to have to pay it all back. Money borrowed by the government will have to be repaid by the government. And where will the government get the money to repay all these loans? From the American taxpayers.

And this is where it gets seriously complex, confusing and Swindlous.

Will our children and grandchildren be able to pay it all back?

Maybe. But much of the answer to that question will depend on who ends up paying who back, and how. A certain portion of the population (both foreigners and Americans) will be the creditors, and a much larger portion of the American population will be the debtors. Some will even be both creditor and debtor.

Will this lead to an even further widening of the economic income gap between the 'haves' and 'have nots'? Most definitely.

Will it do this in a complicated, convoluted, Swindlous manner? Absolutely.

How well will all that work out?

Well, at a minimum there will be major economic dislocation and pain for many (debtors), and corresponding significant economic gain for a few (creditors).

And if the situation gets bad enough, when a certain point is reached, the whole monetary and economic system, being the house of mirrors and illusion it has become, will collapse, resulting in a major economic, and potentially social, upheaval.

That is what the National Debt is all about, and what its potential consequences are.

And this is as clear an example of just how significant this Grand Distractor of the Value of Money/Power/Status is within the Great Swindle, how it works, and just how devastating its results can be.

Because, explaining how governmental manipulation of the monetary system has created this monster, does not  explain why  we allowed, and even encouraged, our government to create it.

Why  would the American public vote for and support Ronald Reagan's policies of 'voo-doo' economics (as George Bush at one time so concisely termed it), as though oblivious to their inevitable, and potentially disastrous, consequences?

Because, there is a swindle going on!

The Great Swindle!

Reagan's swindle of the American public, as real as it was, was paltry compared to the Great Swindle by which we all, with Reagan's help, Swindled ourselves.

Were it not for the Great Swindle, and this Grand Distractor in particular, we would not have encouraged, or been sucked in by, the illusions which have brought us to this pass.

Had it not been for our fundamental misconceptions of the value of money and wealth, and thus our infatuation with it, we would have seen through, and not encouraged, all the 'smoke' and 'mirrors' of illusory monetary policies.

We would not have blinded ourselves to the FACT that if Government is going to spend more money on 'us', it must get it from 'them', and if 'they' are like 'us', and would rather get than give, then there is no place for government to obtain it.

And, if all the 'us's still insist on more government spending on 'us', and vote for politicians and policies on that basis, the politicians who make up our government have no choice but to provide us with the illusions we demand from them.

And, if in acceding to our demand for illusion, they do so contemptuously, and to their own financial profit, can we really judge them as being more Swindlous than we, ourselves, were being all along?

One of the themes Reagan averred to in drumming up support for his economic policies, was that of economic growth.

The idea, put in its most ironic formulation, is, to 'spend' our way out of debt.

That economies, and the U.S. economy in particular, can grow, has so far been proven by history. That is to say, the quantity of wealth can increase, and has in fact done so in the past.

So, some economists say, if the total quantity of wealth can keep increasing at a rate which keeps up with the rate of the increase in the number of dollars being printed and borrowed, then the whole system will stay in balance, and there will be no inflation or deficits.

By the same token, goes the theory, if we are already in trouble with inflation and deficits, if we can spur the economy into growing fast enough to outpace the rates of inflation and borrowing, the growth in the quantity of wealth will catch up with the excess dollars printed and borrowed, and make everything alright again.

In other words, if we just continue printing and borrowing dollars, so as to be able to continue spending them, that spending will somehow create more things for us to buy, and everything will even itself out.

It's an interesting theory.

When government does something like this, it's called an economic strategy, and paid homage to.

If an individual citizen were to do exactly the same thing, it would be called a 'ponzi' or 'pyramid' scheme, and he would go to prison for fraud.

President Roosevelt was the first American President to suggest such a concept, which he called 'priming the pump', during the Great Depression of the 1930s. And, although it did alleviate some of the worst aspects of that depression, it really didn't accomplish what had been predicted it would - end the depression. The only circumstance that finally ended the Great Depression was the even greater tragedy of World War II.

But those were desperate times, calling for desperate measures. Had the Depression not been so severe, the idea wouldn't have even been thought of, let alone attempted.

To continue trying to rely on such an approach now , in these far from 'desperate' times is nothing less than a 'frivolous and deceptive' measure in what, as a result, can be fairly called nothing other than 'frivolous and deceptive' times.

To increase the quantity of wealth by improving the methods, and motivating the human will, for the production of that wealth, is one thing. To try to increase wealth by deceptive manipulation of the monetary system, is something else entirely.

During the early stages of the development and expansion of the United States, the rate of economic growth was substantial, and a lot of governmental and business miscalculations were swallowed up and forgotten in its swell.

Of course, we had to kill a lot of Indians, destroy a lot of forest areas, decimate a lot of acres in 'strip' mines, and pollute a lot of rivers and the air in the process, but it 'worked'. The quantity of wealth increased, and that increase covered up a lot of errors.

As to who  it 'worked' for, well, let's not ask the Indians, or the broken-bodied miners, or the displaced fishermen. They never 'got with the program' anyway, and can't appreciate the beauty of it.

But, we are now running out of Indians to kill.

And, we are running out of 'virgin' land to strip and waste, and then leave behind as we move on to even newer horizons to exploit.

To continue relying on the increase in economic wealth to 'bail' us out of the results of our manipulations of the monetary system, is like a man digging a tunnel through ground in which the sides and top cave in within seconds after he digs into it. So long as he can stay ahead of the collapsing earth behind him, he's okay. But if he tires and slows down, or, worse yet, if he encounters a large boulder in his path, well...

Is there a victim who is being defrauded by such a governmental 'ponzi' scheme?

Absolutely. A lot  of them. Our children, our grandchildren, and ourselves.

Why would we defraud ourselves and our own children?

That is  what the Great Swindle causes us to do.

As for interest rates, the whole concept of interest can only come about based upon a view that the mere possession of money causes that money to take on some independent value of its own, merely because it is possessed by one person.

For example, if $1.00 is all I need in order to provide for my basic needs, and yet I have accumulated $2.00, that extra dollar takes on a value of more than $1.00 simply because I have it. If I loan it to you, I can require you to pay me back more than $1.00, simply because I had it and you wanted it.

There was a time in our history when the charging of any interest whatsoever was considered 'usury', and outlawed. But, of course, in these more 'progressive' times, that is no longer true.

However, given the elemental basis for charging interest, is it any surprise that a monetary system which validates the charging of interest can become subject to manipulation?

And, after enough manipulation, is it any wonder that interest rates will eventually get out of hand?

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* 2003 update:

Right around the time of the new millenium, the economic and monetary situation underwent a significant reversal, which it is still in the midst of at the time of this update. The money supply has shrunk even to the point of relative deflation (rather than inflation) and interest rates have dropped substantially. The previous economic 'boom' of the mid to latter 1990s has now become a significant recession.

(At the height of that transitory 'boom' there was much talk of how the economy had 'grown' its way out of the problem with 'deficits' and was then beginning a long and blissful phase of government 'surplusage'. Suffice it to say such talk is no more and didn't last long.)

This reversal yet again underscores and reinforces our contention in this writing as to the impact and operation of the Great Swindle in its 'Sting' at both the Institutional and Personal levels with respect to this Grand Distractor.

The drop in the money supply and interest rates is, once again, the result of direct governmental manipulation of both (by way of the Federal Reserve Board), in an attempt to correct for not only the resulting excesses of its previous manipulations of both, but also the inevitable manipulation of its manipulations by Big-Business as it pursues its own "self"ish interests as a player within the overall Swindle.

And yet once again, self-styled 'experts' are calling for yet more manipulation of the money supply, interest rates (and tax policies), and deficit spending so as to spur 'economic growth' as being the sole means for correcting for the current problems. (Sound familiar?).

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The reason for going into the subjects of inflation, deficits, economic growth and interest rates, is not to try to deny the complexity of what they have become. At this stage of the game they are, indeed, very complex problems.

Rather, the reason for going into them here is to show why  they have become so complex, and to show that they will remain forever complex so long as we are as distant as we are in our thinking, each of us, from the true REALITIES of what wealth and money really mean to us in our personal lives.

If we didn't overly value wealth and money in our lives, inflation, deficits and interest rates would not only not be a problem for us, they wouldn't even exist at all.

Now on to the last two legs of the trilogy of this Grand Distractor of the value of Money/Power/Status.

Two things that money and wealth can provide in this world, when possessed in super-abundant quantities, are power and status.

By this, of course, we mean social  power and status; a relatively higher level in the pecking order in the 'game' of society; the ability to manipulate and dominate others, socially, and to cause others to defer to us in a social setting.

But, just as with money and wealth themselves, we need to take a hard and clear look at just how worthwhile and beneficial such power and status truly are.

There are certain benefits and pleasures to be derived from having social power and status. We won't go into them here, because we all know what they are.

But, as with the steak vs. the ground beef, there is a personal price one must pay in order to be able to afford to buy power and status.

And, once again, the real question is, are the benefits to be found in power and status worth the price one must pay in order to be able to afford them, taking into account the overall elements of personal, human happiness?

In summary on this Grand Distractor, if you find all this confusing and mind boggling, don't be intimidated by that fact. The crucial thing to take from this whole discussion is the FACT that the subject of money is so mind boggling only because we have complicated it for ourselves as a result of this Grand Distractor.

You needn't remain caught up in the trap any longer.

Consider for yourself the basics about wealth and Money/Power/Status as we have discussed them here.

Of what TRUE worth and value are they to you?

What can they REALLY do for you in your own, personal life?

What personal price are you willing to pay in order to accumulate wealth and Money/Power/Status for whatever benefit you feel they might bring you?

Such questions as these can only be answered by each individual for himself, alone. There are no right or wrong answer to these questions in any absolute sense. We are each subject to so many variables in our personal make up, goals and desires, that how we balance out all these variables in arriving at our own answers for ourselves is unique and highly personal to each of us.

And this brings us to the essence  of this Grand Distractor. What makes this mode of thinking the Grand Distractor it is, is its tendency to cause us to adopt a preconceived answer to the questions we have posed here, and to distract our attention away from the fact that the questions were there for us to ponder in the first place. It causes us to answer the questions for ourselves without ever having asked them.

Our purpose here is not so much to answer the basic questions involved here for anyone.

Rather, our purpose is to try to make sure that each of us at least recognizes that the questions are there to be asked, and that we give them the full and fair consideration they, and we, deserve, before arriving at any answers.

If, for the sake of your own personal happiness, and if for no other reason, you will give these questions the consideration they deserve, you will find the right answers for yourself, and be much happier for having done so.

If you will consider these questions for yourself, and answer them for yourself, all the confusion and complexity caused by this Grand Distractor will become irrelevant for you.

The complexity of the monetary system will still remain for those who wish to remain enmired in, or don't know how to get out of, its complexities.

But for you, unless you choose to continue participating in the Money/Power/Status game, all the complexity of the 'game' need not be a problem.

You will have planted and nurtured your own 'seed' of happiness, and, at the same time, have escaped the vicious circle of trying to find happiness in the accumulation of wealth, which it cannot truly provide for you.

If for the sake of your own spiritual growth you were to reconsider these questions, you might be very surprised at the results.