WHAT ARE THE CAUSES OF INFLATION LEADING TO THE GREATER DEPRESSION?

BY DELWYN LOUNSBURY - THE DEFLATION GURU

The causes of inflation are fiat money or money with no backing, fractional reserve banking and big wasteful government using financial repression schemes to pay off their big debt with worth - less money.

Fiat money is money with no gold backing.  Fiat means "let it be made" in French.  History has shown that fiat currencies always go bust.  Lobby for private gold backed money or else we get runaway inflation again in 10 years!  It's the only way to keep government honest.  Do not let government or a central bank control the money!

The gist of financial repression is that government waters down it's own currency fraudulently figuring to pay for excess borrowing with inflated money.  Financial repression is a rip off of savers, the elderly and others on a fixed income.  Just like a drug dealer who cuts his dope in order to sell more.  It is actually government bankruptcy!  Game over!  The U.S. dollar will be in a bull market until 2016.  Cash Is King!
 
We should know (but don't) that this is outright socialism. Socialism by it's very nature is a form big government wealth redistribution. Funded by increased taxes and fiat money (essentially borrowed money), socialism takes from the haves and gives to the have-nots.  The problem with this is it pisses off the people doing the free enterprise (the gooses that laid the golden egg of business and job creation) and at the same time takes away the will to even try and better ones self and supports debtors, those on the dole and those on welfare. 

Freedom, liberty and morals all have socialism metastasizing them like a cancer.  Socialism is a cancer which grinds down free enterprise until business people can't keep up and give up trying.  It trains the rest to be unthinking pawns reliant on the state and voting for the party with the biggest giveaway program.  Like right now.  Like the Democrat party that wants to make immigration from Mexico to the U.S. easier and thereby swell their ranks of voters.

Fractional reserve banking is the government conspiring with the Federal Reserve Bank, a fraudulent monopoly cartel, to grease the credit inflation.  Essentially, If  $1 gets deposited in a bank then that bank must keep 10 cents as reserve but can loan out the 90 cents.  Then the 90 cents gets deposited and 90 percent of that can be loaned out.  And so on and so on.  It’s creating money and credit out of thin air.   Remarkably, since the late 1990's Congress has OK'd a no bank reserve policy.  None!  They let the banks sweep all the days money into an overnight account and call that their reserve. Ha! Ha!  Dangerous!  No wonder all the banks in the world locked up in 2008 and wouldn't even lend to each other. 

Paper money and deposits in banks are all IOU's.  Only gold is not someone else's debt, by the way.  For this reason gold has a 5,000 year history as money.  Lobby for and join a future private money system or else this insane inflation infected bad dream will just repeat again.  Don't trust government issued money even if they say it is backed by gold.  It will not be.  Hitler came into power because of a runaway inflation in Germany.  You don't want something like that to happen again. Do you?  

Government is now 30% of the economy.  It's a parasite!  Parasites weaken and eventually kill the host.   Austrian economics tells us that credit inflations are always (that's every darn time) cured by a complete crashing credit deflation.  Deflation is the only cure for inflation.

All the dictionaries say the causes of inflation are more money chasing the same goods and services.  Inflation lets government borrow money that it uses to grow itself figuring to pay it back (if ever) with money worth less in the future.  This is the definition of bankruptcy.  Heaven help us.  Government is the cause of inflation.  Also, "Soylent green is people."  

Robert Prechter says most asset values will drop by 90 percent into 2016 - 2018 and unemployment may hit 30%.  He even says the price of gold may drop in half.  Welcome to the Greater Depression that started in 2000 with the dot com stock mania bubble climax blow-off.  The causes of inflation are cured by the deflation.  Always have been - always will.  Cash is KING in a deflation.  As prices drop you can buy more.  Japan has been going through deflation for 20 years and now the rest of the world is about to catch the epidemic.  The end result of all these causes of inflation will be years of deflation and the Greater Depression. 

The socialist president Franklin Delano Roosevelt fascist policies were the start of much of the inflation.   The New Deal actually led us down this path to perdition.  Roosevelt made owning gold illegal.   Then he raised the price of gold from $20 to $35 and ounce.  He greatly delayed recovery after the 1930's depression with some 500 new regulations,  ill conceived anti-business ideas and government make-work programs.  There are no jobs when government projects are finished.  Better to lower taxes and let businesses create jobs that will be around. 

Two of the biggest myths I know of are that the New Deal and World War Two got America out of the depression.  Hogwash!  The New Deal was pure socialism and it led to inflation and the huge government debt mess we are in today.  Additionally, when does taking a countries men, material and treasure (money) and throwing it down a foreign foxhole really benefit?  It was the industrial revolution!  We were coming out of the depression anyway.  Both Roosevelt and the war delayed the recovery.

Obama is trying these hair-brained schemes that were are direct causes of inflation past.  The "shovel ready" projects, the bank bailouts, ObamaCare the QE1 and QE2 bogus bond deal are all more socialism.  Obama finally had to admit in October of 2010 that there was no such thing as a "shovel ready" job.  It is like we are living in a treadmill and forced to watch a cruel movie remake of Bill Murray's GROUND HOG DAY.  Every government program just grinds out more debt.  This time deflation will rule. 

While a private business creates a new job for around $100,000, the feds do it for one million dollars and in Los Angeles it was reported to be an astounding two million dollars   A new law just passed has unemployment insurance now paying for up to 161 weeks!  At least with FDR's CCC Corp, there was some honest work in return for the $1 per day stipend.   

Franklin Roosevelt was a misguided socialist president.  He was a fascist in my book.  Both Hitler and Mussolini praised the New Deal.  He had total control and started the county on the stupid path to bigger and bigger government. He made the depression worse by making so many new rules.  His "Brain Trust" advisors came up the NRA (National Recovery Act).  It had 542 new regulations and 100 new government oversight agencies.  They favored bigger business because he thought economies of sale would bring out efficiency.  Well, yes.  But we all know the small business is the great job creator.  Stupid is as government does when it is one of the main causes of inflation.

He outlawed gold ownership, started farm subsidies that are still in effect today, created government jobs instead of letting businesses create jobs and hurt free enterprise with rules requiring government oversight and micro management.  He and his advisors reasoned that low prices where the problem and sought to raise them by reducing supply by paying farmers not to produce.  Why did they do that when people were starving?  It was just helped the cause of inflation. In addition, sharecroppers were forced out because landowners got more money for not working the land.  He led us down this path to big welfare government sucking the very life out of the working people to pay those on the dole and bloated government.  FDR's legacy is an enormous inefficient socialist government who's bureaucrats bow down at night by their be and pray to the cause of inflation so they can pay back in worthless inflated money.  It's a disguised bankruptcy.  It is going to be our downfall. 

I actually had a client fully invested in over leveraged real estate confide in me that he prayed every night for more inflation.  True story!

Barack Hussein Obama, a community organizer from the politically corrupt city of Chicago. He is a socialist and a Marxist graduating into a fascist.  In his early life he has close ties to known communists.  Bad news!  The American President Barack Hussein Obama wants to stop the U.S. dead in it's tracks with all his socialistic wealth redistribution and increased taxes and spending.  Those are the causes of inflation.  It won't work this time.  The pendulum of deflation is already swinging.  It can't be stopped.

His father (Barack Obama Senior - deceased) was anticolonial and a socialist.  Obama Senior believed the U.S plundered and ripped off the third world by selfishly using up the worlds resources, bullying other countries around and dominating the planet. Obama Sr. was a philandering, alcoholic, African socialist who wanted to get even with both Britain and the United States.  He also was in favor of state confiscation of private land and increased taxes with no upper limit.  Like father - like son?  Obama Sr's anticolonialist dreams are becoming our socialist, communist, fascist, one-world-government/new-world-order nightmare thanks to his son Barack Hussein Obama Junior and his Marxist ideas.

John Maynard Keynes was an economist who preached government intervention and spending as a cure-all.  This actually leads to harmful big cyclic swings in the economy. Business people have to deal with the cycle uncertainty, piles of red tape and waste of time restrictions and reporting requirements.  All governments of the world these days are Keynesian.  Governments ramp up stimulus programs in downturns then pull the plug on stimulus when inflation heats up.  The cyclic swings make it hard for business to plan for the future.  The economy whips around so much that eventually business people finally get so confused, uncertain and scared they freeze up.  That is what is happening now.  Keynesian economics is a big mistake and eventually ends in a much worse depression.

Alan Greenspan head of the Federal Reserve presided over 4 or 5 bubbles.  Originally, he was a libertarian and friend of Ayn Rand, the author of “Atlas Shrugged.”  He wrote a long article about gold being the only safe money and best backing for paper money.  He got bought off.  Bureaucrats loved Greenspan in the good market years.  I think his name will be "mud" in the future.  Google Greenspan gold and see his article.  Not having gold backing our money the cause of inflation.

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 "We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force."

Ayn Rand

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Obama, Franklin Delano Roosevelt, Alan Greenspan and John Maynard Keynes along with many other social scientists, political bureaucratic hacks and do-gooders names will be mud in the future.

This is not what our freedom favoring founding fathers had in mind when they wrote the constitution.  In fact, these big brother, Orwellian, wealth redistribution, utopia, power elitist, oppressive, power hungry, police state, tax us into oblivion, take our freedoms, take our rights, take our guns, big government,  socialistic, Council On Foreign Relations, warmonger, communistic, Marxist, new- world-order, Trilateral Commission, one-world-government ideas are TYRANNY.  We need to stand up for our rights and LIBERTY everywhere we can or we can kiss our own FREEDOM good-bye.  We will soon be told what to do, how to act, how high to jump, where to live and what to think.  Is this the life you want for your children and your children's children?  I don't think so.  Stupid is as government does.  Stand up and be a free thinker.  Be a contrarian.  Be a renegade.  Live your life to the fullest.  These are historic times.  Don't back down!  Help restore our principles.  That is the honorable thing to do. Be a Paul or Paulette Revere.

What is deflation?  Soon the stocks, mutual funds, commodities and most bonds you invested in will also be toast due to the ravages of deflation.  Just like the real estate bust that Robert Prechter says will eventually be a 90% plus drop from peak and gold in half, by the way.

The dollar from 1913 when the Federal Reserve Bank was chartered has dropped to 4 cents in value.  We have had our runaway cause of inflation.  Next up is deflation.  You want to know "What is Deflation?"   People’s mood changes to pessimism.  Then we get the GREATER DEPRESSION.  It will not be pretty but we will come out of it- eventually.  Hopefully, we will be stronger and with more freedom and less government.  The only chance we have is if there is new money backed by gold and run by private enterprise.  Until you see that happening, all will not be right in the world.   Do not trust government or the Federal Reserve. They are the main cause of inflation.  It is a trap!  They are slowly trying to take our LIBERTY.  The new-world-order conspiracy is right out of George Orwell's book "1984."   A "Big Brother" one-world-government in the disguise of cap-and-trade green legislation is next.

PS   Dangerous deep deflation dead ahead!  Austrian economics says all credit inflations end in crushing credit deflations.  Especially, in a Keynesian, socialism, welfarism one world government world turning ever more fascist.  The parasite (big government) always sickens the host (the economy) - deja vu all over again and again.  Nature! 

It just took a 80 year Kondratiev wave this time instead of a 40 - 50 year one like in the 1900's. 

PPS  Homestake gold mine shares went from $65 in 1929 to S544 in 1935 and paid a whopping $56 per year dividend.  Gold too high at $1,600.  Additionally, the Anglo financial power elite will want a strong dollar for the next several years to hide their money in in the safety of America.
 
Lobby for a private gold backed money.  Don't let government do the money thing again or they will do us in (again) with all the borrowing, counterfeiting of fiat money and the financial repression.  Government is one of the main causes of inflation.

Copyright 2011 by Delwyn Lounsbury - THE DEFLATION GURU
Use of this article allowed with attribution back to:  http://www.deflationeconomy.com