It is time to wake up and realize that the "Fiat Currency Experiment" is truly and experiment where the elite of this world are the scientists and the rest are simply the laboratory mice. Contrary to popular opinion, the experiment has worked. It has succeeded beyond the wildest imagination of the scientists controlling the experiment.

There is only one more phase to the experiment. The final phase will create an environment where the lab mice use every last ounce of effort to pay back the debt they have been made to believe they have created. And then, when they realize the goal is impossible to accomplish, they will reluctantly trade their Life, Liberty, and Pursuit of Happiness in exchange for whatever kind of life the scientists generously give to them having realized they have failed the experiment.

There is a small tunnel in the far dark corner that leads to freedom from the laboratory. Only a few have dared venture through the tunnel, for what awaits them on the other side is uncertain, and uncertainty breeds fear.

Most of the lab mice were born in the laboratory. Even though a few mice have returned to tell a tale of financial freedom, the wide blue sky, and oh yes, the sweat of the brow that must accompany true freedom of the outside world, few lab mice see the benefit of leaving the comfort of the air-conditioned, automatic food dispensing gadgetry within the laboratory. Few even realize they are living on life support at all.

A few brave mice have infiltrated the scientists' environment and have brought back news of the plans to turn off the air-conditioning and automatic food dispensers. Again, there is no concept of heat in the laboratory, so lack of air-conditioning is meaningless as well.

Overheard in the area of the laboratory labeled USA, one very wise mouse that has been on the outside is overheard saying,

"Based on the prices received by companies in the producing sector of the economy during the 12 months leading up through April 30, 2000, a very long and dark shadow has been cast over the US economy. However, the scientists are eliminating the shadow by using very strong artificial lighting.

The analysis of the economic future is so bleak that when the lights go out, and the shadow appears, the USA's economy will certainly be thrown into a tailspin that will make the last several years of prosperity seem like a dream, which has turned into a nightmare. It will spread to the rest of the laboratory as well.

The FED and the US Treasury have become involved in areas that have helped intensify the light to hide the shadow. But the electricity powering the artificial lights is extremely low; the gauge is reading DANGER. Perhaps a worst-case scenario would be further politically motivated, misguided FED and Treasury intervention.

The Bureau of Labor Statistics has just published the Producer Price Indexes through April 30, 2000.

It can be seen via the numbers that companies which provide Crude (or Raw) Materials to downstream producers in the "Producer Chain" have been paid 21.4% more for their products over the past twelve months.

The next group of companies that sells Intermediate Materials, Supplies, and Components to producers further downstream have been paid 5.3% more for their products over the past twelve months.

The final group of companies that makes up the Producer Chain sells Finished Goods to Wholesalers and/or Retailers. They have been paid 3.9% more for their products over the past twelve months."

"Not only that," explains the wise mouse, "April 2000 saw retail sales move into the negative territory."

One inquisitive mouse in the small group of persistent listeners asks, "What does all this mean?"

"Well, it means that Retailers are bound to have to raise their prices because they had to pay companies that sell them Finished Goods 3.9% more.

And later on, Retailers can see that they will have to charge even higher prices because the companies that sold Intermediate Materials, Supplies, and Components to their Finished Goods suppliers have raised their prices by 5.3%.

And later, Retailers are bound to have to raise their prices EVEN MORE because the Intermediate companies have had to pay 21.4% more for Crude (Raw) Materials.

"This is very grim indeed," explains the wise mouse, "because retail sales are turning downward. Higher prices will certainly drive more customers away…unless the companies absorb all the higher costs internally so the prices can stay low. That might attract more buyers. Of course the companies will not be able to earn as much, and some may even be forced out of business."

"Hmmm," the inquiring mouse ponders, "how can I help?"

"Well," the wise mouse explains," you can't do anything about it. But you see that tunnel over there in the corner of the laboratory? Take your family and head for that tunnel. Pay off your debts, and when you get on the outside, work as hard as you can to store up things that will sustain you, just like our friend the squirrel stores up nuts for the winter. Only mice like us need things like gold and raw land to sustain us when the scientists turn off the lights."

Donald A. Smith

14 May 2000

Back to Editorials

     Copyright  ©  1997 - 2000  vronsky  and  westerman