A good honest inflation gives not only the joy of petty interest on your bank deposits, but a loss of buying power as the dollar evaporates. Mystified, we turn to the words of a wise man.
“One of the most comfortable places to live is just inside your income.”
— Edward Hull “Boss” Crump, former Memphis mayor, 1910-15
“My colleagues and I know that people who rely on investments that pay a fixed interest rate, such as certificates of deposit, are receiving very low returns, a situation that has involved significant hardship for some.”
— Ben Bernanke, Fed chairman in Indiana speech
“It is easier to make our wishes conform to our means, than to make our means conform to our wishes.”
— Robert E. Lee, to one of his sons, August 1860
Good character is fundamental to success of local economy — basking in the power of Washington and added Fed stimulus — as the national scene continues to unsettle one’s nerves.
“‘Fiscal cliff’ to bring huge tax hikes” is the top story on the Times Free Press business page today, and warns that if Congress cannot repeal the expiration of tax cuts Jan. 1, taxes on millions will soar. Fed Chairman Ben Bernanke spoke Monday at an economics club in Indiana and defended the bank’s inflationary agenda. “We expect inflation to remain low for the foreseeable future. *** The Federal Reserve’s price stability record is excellent and we are fully committed to maintaining it.”
The issuer of U.S. currency has suppressed interest rates to convince the marketplace to undertake a new round of borrowing. Cheap interest is deceptive, it realizes. It convinces governments, businesses and individuals that they can take on big loans and repay them with little stress. Cheap interest stimulates a sense of well-being and confidence about the future. Leverage is a light thing to take on, because everyone else is optimistic too, and everyone else is borrowing big.
Phony inducements to go on hook
Mr. Bernanke claims the bank’s “price stability record is excellent” and that “low” inflation within its 2 percent per year target is good. Is Mr. Bernanke telling us the truth?
Inflation is the result of monetary expansion or increase caused by the lending process. When a paper money economy expands, the growth comes from new money being created from nothing via the loan creation loans. A simple point about Federal Reserve notes is that they are mere banknotes and are created ad infinitum electronically and partly ad infinitum on the printing press. They come from the ether in an act of credit creation.
Inflation is the term describing the loss of buying power. So, 2 percent inflation means that F$1 on Jan. 1 has only 98 cents in buying power on Dec. 31. This loss is the excellent price stability record Mr. Bernanke mentions. Is he being honest? Are his words wisdom?
Is Mr. Bernanke looking me in the eye? Is inflation bad for me? He is manipulating the marketplace by suppressing the price signal on the real value of credit, and fooling people into thinking cheap credit is really cheap. Is this process benevolent? How does inflation hurt local economy?
Maxims of Gen. Lee make us draw back
Robert E. Lee was one of America’s great men. The leading general of the South’s armies in the second war for American independence, Gen. Lee fought for self-determination of the South in service to his state, Virginia.
To turn to his sayings for wisdom about the actions of our betters may seem quaint. But the general was a man who was unequalled in his representation of godly character, and his stirling virtue.
His maxims warn about staying out of the way of sinners, and watching for temptations in our own breast.
➤ “If our people would only cease from vain self-boasting and adulation, how strong would be my belief in final success and happiness to our country.” Lee to his wife, Christmas 1862
➤ ”The real honest man is honest from conviction of what is right, not from policy.” One of Gen. Lee’s personal maxims
➤ “Pay all debts as soon as possible.” Lee to his son, Custis, December 1860
➤ “I notice *** that my mistakes are never told me until it is too late.” Lee after Gettysburg, 1863
➤ “Hold yourself above every mean action. Be strictly honorable in every act, and be not ashamed to do right. Acknowledge right to be your aim and strive to reach it.” Lee to son, Custis, May 1851
➤ “We must be content with the bare necessities of life, if we can maintain clean hands and clear consciences.” Gen. Lee to Gen. Butler
We see here humility, honesty, integrity. These virtues are almost certain not to be found among the regulators and the super-regulators such as Mr. Bernanke. The facile lies told to the public and the phony storyline of economic recovery peddled by official media make us yearn for a genuine statesman to bring us from the brink.
Sources Richard G. Williams Jr., ed, The Maxims of Robert E. Lee for Young Gentlemen (Gretna, La.: Pelican Publishing Co., 2005)
