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Average Joe
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Joe sits perplexed on his sofa while the television feeds him headlines.
“The Associated Press reports that investors are ditching the dollar for more stable commodities like oil, which rose back over the $100 mark to $122.60/barrell. The value of gold has risen fifty points in September.”
During his final months in office, President Bush has neglected Joe and adopted a quick remedy for the ailing financial landscape. A spoonful of $700 billion from the Federal Reserve should keep collapsing mortgagers at bay until Bushy can finally shirk away.
“The Federr … huh?”
The Federal Reserve, Joe. The Fed. The institution that determines your interest rates and controls the supply of money in the market. Those little green pictures of George Washington, you know? Those are federal reserve notes backed by the The Fed’s word; worth its weight in … err, Gold. The Fed’s predecessor was the National Banking Act, which chartered national banks to use the U.S. dollar supported by the gold standard.
Before 1933, when our money was actually worth something, Joe’s great-grandfather could exchange $20 for one ounce of gold.
“ZZZ … “
Wake up Joe! Your money is only as good as the word of the U.S. government. And now they want to get directly involved in your finances by buying up your debt to save immoral and irresponsible corporate juggernauts.
“We’ve never seen anything like what we’ve seen in the last three or four weeks,” Dr. Don Holley, BSU Economics Chair said. “It’s unprecedented.”
Famed economist, Ludwig Von Mises, warned against this type of action decades ago when he said, “government interventions create unintended consequences that lead to calls for further intervention, and so on into a destructive spiral of more and more government control.”
Those “unintended consequences” could have bigger implications than you think especially if the Fed continues to flood the supply of money and further devalue our currency on a global scale. Economic theory provides that price levels rise as the supply of money rises.
“If the quantity of money goes to infinity the price level goes to infinity and the value of money goes to zero,” Holley said.
The world is experimenting with alternative forms of currency for trading commodities.
According to The Persian Journal, the Iranian Oil Bourse is planning to experiment with the Euro as a currency for oil transactions instead of the ever-diminishing dollar.
Independent organizations have adopted a new form of the gold standard called digital gold, backed by real gold that remains secure while its ownership gets traded. Money is a useful commodity, just like anything else. But when the Fed perpetuates its monopoly, we’re all forced to use an inferior product and are prohibited from designing our own and backing it with actual substance.
Joe still has that $1,344 mentioned in my last article from 10 years ago, money that accrued interest, but no value. Today it could buy 13 barrels of crude oil.
Investors would then know what holds its value when things go sour. Gold has been a long time safety net, and oil has risen as the world’s most sought after resource.
This, as the dollar falls and with it everything it represents, which is the stable, universal, all knowing, ominous and in … err … credible word of the U.S. government.
JACOB MORRIS<>GUEST OPINION
