Tni LeBlanc wrote an excellent posted entitled, "Getting the Fluff Out of Here. . . Why Cash Should Be King Again". I highly recommend it! In writing a comment on her post, I offered some thoughts about the root problem that creates our painful inflationary "fluff"- a fluff the drives the American consumer to credit rather than cash in both our largest and smallest transactions.
Here's my comment on Tni's post:
The propensity of the federal government in the last century to massively inflate the dollar and increase the percentage of credit available has been the fountainhead of our devalued currency and rising costs. The Federal Reserve Bank creates money and credit without capital reserves to fund government excess- and yet there is nothing "Federal" (this is a private bank, folks!) or "Reserve" (what do they back their paper and credit with?) about this entity.
Housing, farming, healthcare, education, military resources... all are subsidized by the Feds, and all grow exponentially more costly as the years pass. Now consider a few things that are going down in cost: computers and technology, contact lenses, digital books and music, movie rentals (like Netflix!). What do they share in common? They are not subsidized by government, paid for by insurance, or produced by the public sector.
It is no coincidence that every federally subsidized, bureaucratically governed consumer market is full of fluff. Washington D.C. needs to step aside and let folks at the local level build this country into something stronger and better than any politician can devise.
[For more insights I recommend reading the short article "Fed and Inflation" by Congressman Ron Paul.]
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