EDITOR:
According to an article in The Dispatch (Nov. 3, 2003), Congress
approved an expenditure of $87.2 billion for the cost of the war in
Iraq, supposedly a war against terrorism.
EDITOR:
According to an article in The Dispatch (Nov. 3, 2003), Congress approved an expenditure of $87.2 billion for the cost of the war in Iraq, supposedly a war against terrorism.
Terrorism is a threat to us, but there is a greater threat to our society than Al Qaeda or any other extremist group. This is INFLATION.
I’d like to quote John Manyard Keynes, President Roosevelt’s major economic advisor in the 1930s. He recommended deficit spending to pull the nation out of the depression. i.e. you spend yourself out of debt!
To comprehend the threat of inflation, look at the government’s figures in our national debt over the years. In 1901 the national debt was less that $1 billion (after the Spanish American War). In 1940 the total national debt was $50 billion(FDR’s New Deal) and in 1994 the debt was $4.2 trillion and in 2002 it was $7.4 trillion. That is the admitted debt, there is really a much great debt not accounted for in the budget, such cost as CIA. appropriations, Social Security borrowing and off budget expenditures. ON this debt the interest (paid for by the tax payer) is $300 billion per year, the third largest item in the U.S. budget.
When taxes and tariffs do not produce enough money to meet the needs of Congressional spending they make up the difference by borrowing . Borrowing is mainly through the Federal Reserve a private banking system. (Nineteen out of 20 people believe the Federal Reserve is part of the U.S. government.) The Federal Reserve gets the money from the printing press to buy bonds that the Treasury issues to raise the needed money for congress.
Those printing press dollars have no intrinsic value, put into circulation they dilute (or debase) the dollars in circulation. This increase in money in circulation is Inflation. It is inflation that causes prices to rise,, not vice versa.
Now if you understand it is an increase in the money supply that increases prices then you will understand why a $50,000 Gilroy home of 1970 now costs $500,000 in 2003. The house is the same house of 1970, no change, it is just that the dollar has lost value due to inflation.
If the spending habits of Congress continue as of today, that is spending borrowed money, inflation will continue unchecked. That $7.4 trillion dollar debt will soar to $10 trillion, and that $500,000 house will be close to $1 million dollars in a few years.
I do not think much can be done about Congressional spending habits – the future looks bleak. It is similar to being on the good ship “Titanic”– it has hit the iceberg, the ship is going down, best just go to the bar, order a double martini and relax.
J. G. McCormack, Gilroy
Submitted Thursday, Nov. 13
