$6 Billion A Week!

November 14, 2001

What is $6 billion a week, you ask? $6 billion a week, is the number of dollars that are currently being inserted into America's money supply, not counting the actual deficit of billions per year over taxes collected. "Added liquidity," in Greenspanese. Just imagine the figure of $35 million per hour being added in "liquidity." Does the treasury print $35 million per hour in paper currency, and drop it from an airplane, letting whoever may get it, be that much richer? No. Does the Government Printing Office (GPO) down on 14th St, N.W. in D.C., truck it to various cities, and hand it out to the needy? No, but you're getting close. Does the federal government constantly enlarge its size, adding bureaucrat on top of bureaucrat, agency on top of agency, and thereby add "liquidity" by hiring more and more, buying more and more, and paying more and more salaries to federal employees? You're getting warmer.

On Tuesday, November 12th, American Airlines Flight 587 crashed into Rockaway, New York, after being airborne for two minutes. There were so many bureaucrats bumping into other bureaucrats, that they actually had to exchange cards with each other, because none of them knew each other, but they were all there, having various "official" capacities. Lots of "liquidity" consumed there. (The two engines landed far from each other, the fuselage was broken in two in mid air, and landed in separate places. The media says it is an "accident," meaning the fix is in.)

The NTSB (National Transportation Safety Board) has grown like Topsy, and has thousands of federal employees, which guzzle hundreds of millions of "liquidity." What on earth did we ever do before the NTSB, when there were railroad, truck, and airplane mishaps? We did just fine. Now there are "Air Marshals" on flights that drink "liquidity" by $60,000 each, per year, when simply arming pilots and stews would do the same thing at no cost. We will undoubtedly have federal baggage inspectors, and already do have federal air space controllers, federally subsidized airports, and in general the airline industry devours a tremendous amount of "liquidity."

There is the Securities and Exchange Commission (SEC) which has never even slowed insider trading or fraud, but only added cost to every transaction. Lots of "liquidity" used there. The list is endless it seems, but "liquidity" is munched weekly, by $6 billion. There is the "liquidity" used for benefits to the bereaved and victims of the World Trade Center collapse. Enormous "liquidity" wasted on the CIA, who should have known about it in advance, and prevented it. Had the CIA been efficient, the WTC terrorism wouldn't have happened, and the victim's heirs wouldn't need the "liquidity."

There is the "Homeland" protection, or whatever Governor Ridge is calling it. That outfit has been formed without Congressional approval, and will indeed gulp much "liquidity," while at the same time further decreasing our freedoms. "Liquidity" is inserted into the economy when ignorant investors buy treasury bills and bonds, which pay less in taxable interest than is the actual inflation rate. Sorry, no more 30 year bonds, the Greenspaners have abolished them. We have lots of "liquidity" consumed by the National Forest Service, Bureau of Land Management, Fish and Wildlife, et al. These agencies miss-manage millions of acres of land that they have no deed to, nor Constitutional permission to own, and who pay microscopic PILT's (payment in lieu of taxes) to the western states they occupy. Locally, where I live, they pay my county $1.02 per acre per year. Lots of "liquidity" slurped there.

There is the FRA, (Federal Railroad Administration) which tells the railroads what to do, and the Surface Transportation Board, which tells the railroads what they can't do. There are commissions and regulatory bodies by the thousands, which eat "liquidity" by the billions each year. None of them are Constitutional, as the US Constitution does not authorize subsidy and regulation.

With all this "liquidity" used each year, adding to the supply of what most erroneously call "money," what effect does this have on our daily lives? A lot, and none of it for our benefit. Government has power, but not principle. With the supply of dollars and federal employees constantly being increased, the old Stott rule comes into play, and that is, "The More Of Anything There Is, The Less They Will Be Worth." This rule applies to items not usually thought of in an economic sense. Water in the desert, antiques, rare stamps, oxygen in space, air in underground mines, labor, oil, electricity, and anything the mind can comprehend…is governed by this rule. Dollars will buy less, and prices of everything purchased with dollars, will go up in dollar prices, when the supply of dollars is increased. Not only is this rule inflexible and unarguable, but it also applies to varying degrees in different parts of America. I live in a town of 13,000, that has little crime, debt, bad weather, humidity, or poor neighborhoods. The taxes on my 3350 square foot, 1887, brick, Victorian are under $1,000 per year. The taxes on the same house in the east, would be four to five times that, because the increased "liquidity" consumption has reached there with far more velocity than here. There are far more over-paid federal employees and unionized workers that swill "liquidity" in New York, as an example, than is used here. The result of this high velocity "liquidity," is that prices, taxes, fares, and every facet of life is more expensive in dollars than in a small western Colorado town.

Many people, who are sick of the big cities with their high crime, bureaucracy, and taxes, are migrating to low tax, low crime areas, where the flow of added "liquidity" has not affected basic living costs. Since most of the "liquidity" is being used in Washington D.C., New York, Detroit, Philadelphia, and other large cities, prices are higher there in dollars, causing us small-towners not to travel there.

"Liquidity" is added, and at the same time consumed, by increases in federal employees, increased federal expenditures of all kinds, sales of federal debt instruments, and federal handouts of all kinds. This added "liquidity," and consumption, causes the dollar to lose its purchasing power. The dollar numbers are increasing faster than are the goods and services available for them to purchase. They always have, and always will. Prices go up, and the dollar has but perhaps 5% of its purchasing power of a half century ago. They look virtually the same, even though they are close to being valueless. Most are fooled.

Inflation, by definition, is an increase in the supply of currency. With the currency supply increasing by $6 billion a week, why do not prices go up immediately? The answer is, because there is a lag time between currency supplies increasing, and prices going up. It takes time for the new, overpaid, federal employee or agency to spend their dollars. With the new large income or budget, they will buy more than they bought before, causing the producers of what they are buying, to have to increase their manufacturing, or importing capability, which causes prices to rise. The increased size of the bureaucracy, adds to the federal government's purchases of paper, office machines, space, telephones, faxes, guns, and other bric-a-brac needed for harassing us to death. The federal government is the largest buyer of stuff in America, remember that. After the fed hires people, starts agencies, and sells debt, it buys endlessly, at high prices, causing prices to go up for everyone.

If the World Trade Center victim's descendents or mates receive their salary for life, without having to work, they will be able to buy more, and engage in more amusement than before, causing the prices of such to increase in dollars. Every single facet of the economy is affected by an increase in the currency supply, or "liquidity." Retailers increase their prices as a result of an increase in the supply of currency, because of increased business or required increase in plant, due to increased volume. Savers close their savings accounts when interest rates decline so much, there is no point in saving dollars any longer. This increases the volume of "liquidity," and more purchases occur, hopefully in gold or silver to hedge themselves, but usually not. Closed savings accounts may be used for increased purchases, further increasing prices. Price and wage controls never have, and never will work to defeat inflation's irrefutable laws. The delay time between deluging the economy with monsoons of bucks, cannot be avoided, any more than can the resultant increases in dollar prices for everything we buy.

Oil is currently low priced in dollars, because of the decrease in consumption, and resultant over-supplies. Air traffic is down by 30%, as is driving. The rule applies once again. More oil, lower prices. (Silver I can't explain, other than it is a huge bargain now. It costs three times its current price to mine it.)

An interesting comparison is the "freeway." The more freeways that are built, the more cars that are purchased, and the further away from work and shopping people move, resulting in destroyed cities, and increased fuel, repairs, and mileage costs. The freeways then become "parking lots," and more freeways are built, causing more pollution, more cars, more gas consumption, more car dealerships, etc. The delay time between the opening of a new freeway and its becoming bumper to bumper, is similar to price increases, when the currency supply is increased. The city planners will never learn, nor will the Greenspaners. That's another reason I live in a small town. The nearest freeway is over 300 miles away, in Denver.

Added "liquidity" to make a "stimulus package" is a fraud of the highest magnitude. $35 million per hour inserted into the economy, concentrated in handouts, federal employees and subsidies, is nothing but theft from the citizenry. The fraud is compounded, when the perpetrating government issues statistics telling us we have 1% inflation, never saying that the figures do not count food, fuel, or housing. We have been hamstrung, barbecued, and hung out to dry. We can vote till the cows come home, and nothing will change. We must protect ourselves, because when government does it, there is no protection…only more bureaucrats.

China is poised to become world's biggest gold consumer.

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