Don’t you worry about inflation

Let’s say you haven’t been having a great year, financially. You loaned a lot of money to that nephew who never manages to stay the course in drug rehab, and your broker talked you into investing what you had left in one of those flashy Internet companies that’s doing great except it doesn’t have any profits, any income, or — so far as we laymen can determine — any real product.

You’d been looking forward to attending this weekend’s art auction, where a print by your favorite artist is estimated to go for $400. But you’re now left with only $350 in your pocket, and your $340 bid was just topped by that punk in the black leather jacket. It’s beginning to look like a frustrating end to a miserable summer.

But wait! Your loyal spouse slips two more crisp hundred-dollar bills into your palm, whispering that it’s an early birthday present! Up goes your arm. You bid $380, $420 … eventually you take home your prize for $500. Everything’s right with the world!

Well, yes and no. Let us all give thanks for loving helpmates. But two things just happened, largely unnoticed, which aren’t that good.

First, face it, you deserved to lose that prize collectible as due punishment for your recent fiscal irresponsibility. Suffering that minor pang of loss would have gone a long way toward bolstering your resolution to get your financial house in order. Such vows don’t hang nearly as heavy when someone keeps slipping money into your hand.

And second, everyone with a $400 print by your favorite artist just upped their selling price to $500. How much do you think the next one’s going to cost you?

Yes, the nitpickers will object that I’m oversimplifying. Prices in the art market — in any market — don’t move that decisively just because one bozo gets over-enthused and pays 25 percent more than the old going price.

But I’m going to stick with my little story as a fairly good representation of how our Federal Reserve bankers “solved” the burgeoning high-risk mortgage default “crisis” this summer. They “injected liquidity” by buying some of the bad debt of the overextended banks with new money they summoned up out of nowhere — like someone slipping hundred dollar bills into your palm, no questions asked.

But this is where inflation comes from. Not from greedy auctioneers or greedy auction bidders, certainly not from greedy oil companies or orange growers, who can be eaten alive by ruthless competitors if they fail to hold costs down — but from government agents with monopoly powers dumping a bunch of new fiat dollars, created out of nowhere, into an economy.

Most folks today assume inflation has always been with us. In fact, from the 1790s up through the 1920s, a dollar contained .77 ounces of silver and a $20 gold piece .968 ounces of gold. Except for a brief period when the tyrant Abraham Lincoln ordered people to accept worthless fiat paper money not redeemable in gold or silver — and except for the fact that private bank notes might be discounted in voluntary transactions at places far from their point of issue — there was no long-term inflation.

Then, in 1933, FDR confiscated Americans’ gold (declaring that an ounce would now be worth $35 instead of the old $20 — thus lowering the value of the paper dollar by 75 percent in one fell swoop). In 1965, FDR protege Lyndon Baines Johnson started making our coins out of pot metal; and a few years later, Dick Nixon told the foreign bankers we’d no longer give them any gold at all for their paper dollars.

I’m not 60 yet, but I can remember when gasoline was 29 cents a gallon. The reason gasoline and orange juice and most everything else have gone up by a factor of 10 to 20 in the past 40 years is government dumping intrinsically worthless new “dollars” into the economy. Those more numerous dollars then go bidding up the price of a relatively limited pile of available stuff. That’s why a steak dinner used to cost three bucks but you can now hide a $6 wedge of imported cheese in your palm.

Released from the bonds of convertibility to gold or silver, the private Federal Reserve bankers with their monopoly government contract generate so many new “dollars” they won’t even tell us how many, any more. Their pals in Congress then seize wads of this new loot from the productive and fiscally prudent (“tax the rich”) to buy the votes of the drunken, the drug-addled and the fiscally unwise (“programs for the unfortunate”), and proceed to wonder why we keep getting more drunkenness and fiscal irresponsibility.

Inflation steals away the value of savings. If we still read history, we’d know the role played by collapsing currencies in the fall of Rome and the rise of Adolf Hitler.

This is what I call a “real issue.” You can tell it’s an issue of actual importance by the fact that the only presidential candidate now talking about it is Texas Republican Rep. Ron Paul, who is rewarded by the national press for speaking seriously about such matters by being afforded treatment one step short of that usually reserved for Holocaust deniers and UFO conspiracy nuts.

Instead, while largely ignoring Rep. Paul, my media brethren apply their full-court press to such “issues” as U.S. Sen. Larry Craig, a fat cat, 27-year incumbent professional politician, a “Christian conservative” hypocrite who — according to his own guilty plea — trolls for sex in airport men’s rooms.

Is that a crime of sufficient stature to deprive the people of Idaho of the fellow they’ve repeatedly chosen to represent them? Of course not. I will admit, however, that Sen. Craig partially redeemed himself in my eyes by refusing to stand next to Barney Frank on the Capitol steps and say the words that would have allowed him to keep his office, at least for another year: “I am a gay man. It’s a relief to be out of the closet, and as of today I am joining NAMBLA and changing my party affiliation to Democrat. Give me a big hug, Barneykins.”

His new buddies, Harry Reid and Hillary Clinton, would doubtless have celebrated this Porcelain Palace conversion by showering Craig with cash from bags marked “Courtesy of Norman Hsu and the mail carriers of Daly City, Calif.”

It is worth noting as the latest measure of our current epidemic of weirdness, at least, that a member of the U.S. Congress has just resigned because he would not admit that he was gay, which would have granted him immediate immunity from criticism as a member of an oppressed minority.

As the Young Adults used to say, it’s a complex world.

Vin Suprynowicz is the Review-Journal’s assistant editorial page editor.