by Bill Sardi: The
Curse of the Coffee, Tea and Beer Drinkers
In dollar terms,
what does Presidential Candidate Ron Paul mean when he says: "The
of living is going down for a lot of people on fixed incomes."
What does Mr. Paul mean when he says this is what happens when "a
country destroys its money" and "destroys or eliminates
the middle class." What does that mean in dollars and cents?
It means the
American people are aggregately losing the value of their banked
money at the rate of $16,881 per second, $970,904 per minute, $58,254,253
per hour, $1.398 billion per day, or $510,304,260,000 per year (thatís
$510 billion!). That is the most conservative figure, based upon
a 7% rate of inflation. The erosion of American wealth could be
as high as $780 billion/year if a higher 10% inflation rate is employed.
How did I come
up with these numbers? Americans have $8.505 trillion on deposit
in American banks (FDIC numbers: includes $6.410 trillion in interest-bearing
accounts, $1.848 trillion in time deposits like CDs, with an additional
$2.094 trillion in non-interest bearing accounts).
yield (interest) on that banked money is less than 1% today. Letís
say Americans are getting 1% interest on $8.505 trillion. That would
amount to $85.05 billion. Now take away ~18% of $85.05 billion the
federal government would be in taxes, or $15.3 billion, and this
actually amounts to $69.78 billion gained that must be balanced
against inflationary losses.
government says the rate of inflation is around 3%. However, the
real rate of inflation is not the 3% figure government provides
(government calculations donít include the cost of fuel or food,
for example). According to ShadowStats economist John Williams (www.shadowstats.com),
who reverts back to ways the government calculated the rate of inflation
in 1990 and 1980, Americans
are losing 7% to 10% of purchasing power of their banked money annually.
Using the 7%
figure, that comes to a $510 billion erosion of saved money per
year. Using the 10% inflation rate, Americans are losing $780 billion
of their banked money via inflation per year.
In just 5 years
$8.505 trillion in aggregate banked wealth will diminish to as little
as $4.250 trillion in purchasing power using the 10% inflation estimate.
shows savers who deposited $100 in banked money in 2006 would need
$160 today to buy the same amount of goods and services as 5 years
insult: bankrupt banks offer dividends to stockholders
To make matters
worse, American banks, which were imprudent in offering home loans,
temporarily creating a false demand and a crashing real estate bubble,
have been delivering small dividends to bank stockholders since
the crash. Itís a wonder why the Federal Reserve allows these insolvent
institutions to declare dividends at all. But Americans banks are
being allowed to cook their books and dream up profits.
Reserve is now unleashing
American banks from restrictions on dividends. This means Americans
are essentially capitalizing Americans banks at a loss while banks
are divvying out dividends to make it falsely appear they are solvent.
Bank stockholders, including many bank executives, will now reap
even larger rewards at the expense of the savings class.
do? (Itís not pretty)
Dwight D. Eisenhower or John F. Kennedy were President during these
trying times, and they realized Americansí personal wealth is being
wiped out, they would take some strong action. Itís obvious what
must be done.
Federal Reserve Bank which currently supplies banks with cheap money
(0.25% interest) needs to increase its interest rate to lender banks
so that home mortgage rates go back up to around 10% and bank depositors
would be rewarded with ~7% interest, and bankers with the remaining
3%. The stealth robbery of the peopleís money would cease.
But the real
estate industry is going to cry foul as it has been using low interest
rates (now as low as 3.9%) to jump start sales again. But that is
the very manner in which the real estate bubble was created, with
low teaser interest rates. Lenders have driven the real estate industry
into a box canyon. Who could afford a home mortgage at 10% interest
these days? But to realize that 3.9% mortgage interest rates arenít
revitalizing the real estate industry and the low interest rates
on banked money are eroding Americans of their savings, is a double
whammy. Let the real estate industry wallow in the mud but spare
the savers before the wealth of Americans vanishes.
future home buyers are being subsidized by savers. Itís a miserable
state of affairs.
inflation erodes personal wealth
the chieftain at the Federal Reserve, unashamedly says the nationís
central bank, fearing deflation more than inflation, has established
a buffer rate of inflation, which appears to be around 3% officially
(but recall John Williamsí 7-10% inflation rate).
So letís consider
an example of a single-mom who gave birth to a child in 1990 and
was making $36,000 at that time, and whose salary has not subsequently
risen. And letís say today, 21 years later, that child is ready
to enter the work force for the first time. And that motherís goal
has been to try and make sure her child will do financially better
than she did.
Thanks to Mr.
Bernankeís planned inflation, that child, now entering the work
force, will have to make $62,317/year beginning salary just to equal
the purchasing power of his/her mother 21 years ago. This is what
the Federal Reserve has done to the value of American money. Does
anybody wonder why Ron Paul says the Federal Reserve must be taken
stamps for all
not keeping up with inflation and more and more Americans are slipping
into poverty. The Census
Bureau now says nearly 1 in 2 Americans are living near the
poverty line and food stamps are at an all-time high. An estimated
million Americans are now living on food stamps. Five more years
of this insanity and the majority of Americans will be on food stamps.
When Mr. Paul
says he wants to derail the Federal Reserve Bank and put it out
of business it is because it has failed to live up to its objective
Ė to stabilize the value of money.
Reserve deceives your kids
Reserve Bank website posts the following
graphic which shows a $50/month savings plan adhered to for
30 years (an $18,000 investment) @4% interest (recall, the current
interest rate on banked money is less than 1%) would grow to around
$35,000. But the Federal Reserve does not calculate for inflation
or taxes here. Calculating for an 18% tax rate on $17,000 added
from interest would mean $3000 needs to be deducted from that the
gains. Then inflation, even using the governmentís own low rate
of inflation, would more than wipe out any remaining imagined gains.
Yet the Federal
Reserve continues to encourage Americans to save. Itís obvious why.
Savings provide free capital for American banks which the Federal
Reserve represents. This is simply masked government racketeering.
Under the flag of government, the masses are being plundered. The
only Presidential candidate who makes an issue out of this is Ron
Paul. It is because he knows the inside workings of government,
banking and lending. The masses are never taught any of this.
is that the Federal Reserve is bold enough to pull off this ruse
on young American children. The Federal Reserve website has an online
education section for American children which never mentions the
erosion of banked money via inflation.
of Ron Paul: Iíll take alleged bigotry over thievery any day
Today Iím hearing
critics allege Ron Paul is a bigot. Fine, Iíll take bigotry any
day compared to thievery.
that Ron Paul is a foreign policy isolationsist. Fine, the US is
simply bribing foreign leaders now with borrowed money, providing
military defense by treaty to foreign nations with borrowed money,
and maintaining military bases worldwide with borrowed money. The
whole mess will inevitably collapse and vindicate Mr. Paul anyway.
Like the collapse
of the British Empire, the Pax Americana will crumble and
the US may face a day when it canít even afford to bring its own
naval warships back to home port like the Russians who couldnít
maintain the missile silos or submarines as the Berlin Wall fell
The only hope
for America is to put the Federal Reserve Bank out of business.
It also siphons off about 6% of the profits it creates as an unnecessary
and ineffective middle-man.
with the $1.6 trillion idea
financial literacy has been recently taken to task. Yet it
appears other Presidential candidates were completely in the dark
when he said that the first thing we can do as a nation is to write
off the interest we owe ourselves. To wit, the other candidates
didnít even know what Mr. Paul was talking about. It's obvious they
are not familiar with the workings of government that Mr. Paul refers
Mr. Paul is
pointing to the $1.6 trillion in government bonds (IOUs) the Federal
Reserve Bank now holds. Dean Baker, co-director of the Center for
Economic and Policy Research, says
Mr. Paul "has produced a very creative plan that has two
enormously helpful outcomes. The first one is that the destruction
of the Fedís $1.6 trillion in bond holdings immediately gives us
plenty of borrowing capacity under the current debt ceiling. The
second benefit is that it will substantially reduce the governmentís
interest burden over the coming decades."
you cast your vote for a candidate that came up with a bona fide
$1.6 trillion idea?
The US is continually
going bankrupt and raising the national debt to meet its obligations.
This crisis management of government, where shutdowns in federal
government services loom every few months, could be averted for
some time if the nation forgave the money it owes to itself. And
imagine, all the other candidates missed a trillion-dollar idea.
Is Ron Paul
crazy when he says he wants to eliminate Social Security and Medicare?
When Ron Paul
says he wants to put an end to Social Security and Medicare (actually,
turn these programs over to the States), Americans look perplexed.
That is because they canít imagine these programs are on the verge
of complete collapse. Only when Medicare reimbursement checks and
pension checks bounce will the masses believe this.
You donít believe
this is going to happen? As reported by Associated
Press writer Stephen Ohlemacher, the cost of Social Security
benefits will exceed payroll tax revenue by approximately $29 billion
this year (2011). You can read about the whole Social Security fraud
And you thought the Bernie Madoff Ponzi scheme was bad?
If you still
donít believe this, read what the Congressional
Research Service says: "By law, if Social Security revenues
exceed expenditures, the "surplus" is credited to the
Social Security trust funds in the form of U.S. government securities.
The money itself, however, is used to pay for whatever other expenses
the government may have at the time. There is no separate pool of
money set aside for Social Security purposes."
in he Kansas City Star says the Social Security administration
has no "real
economic assets that can be drawn down in the future."
It's only a
matter of time before the Federal Government collapses. There
is no way it can meet its trillion-dollar obligations to provide
pension checks and medical care for retirees. Medicare and
Social Security face a predicted
$60 trillion shortfall in meeting their commission to pay for
the health care and retirement of pensioners.
US is a nation that questionably generates $14 trillion in annual
gross domestic product balanced against an accumulated debt of $14
trillion, collects $2.4 trillion in taxes and spends ~$3.8 trillion
annually, thus adding another $1.4 trillion to its debt load every
year and faces continual shutdowns and legislated increases in its
debt limit. This is against a future backdrop of multi-trillions
of dollars of obligations to provide health care and pension checks
to retirees with trust funds that only contain IOUs.
It's sad to
say, if Mr. Paul is not elected, he will be the Presidential candidate
that Americans most regretted not electing.
Ron Paul is
moving out of the Rodney Dangerfield (no respect) era of his candidacy.
Expect the news media to apply even more unfair tactics in his pursuit
of The White House. Comedian Jon
Stewart first alerted Americans to the shunning of Ron Paulís candidacy
by the news media. It is obvious the news is media attempting
to think for Americans by writing a script ("unelectable,"
"isolationist") that continually discounts his candidacy.
As Mr. Paul
once said, "There is a risk I could win." (The Tonight Show with
Jay Leno 2007.)
him mail] is a frequent writer on health and political
topics. His health writings can be found at www.naturalhealthlibrarian.com.
latest book is Downsizing
© 2011 Bill Sardi Word of Knowledge Agency, San Dimas, California.
This article has been written exclusively for www.LewRockwell.com
and other parties who wish to refer to it should link rather than
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