Super Committee Holds Public Session on Budget Cuts

Super Committee Holds Public Session on Budget Cuts; National Journal

Just a day after a heated closed-door meeting that indicated there’s still a large gap between Democrats and Republicans on entitlement and tax reform, the Joint Select Committee on Deficit Reduction convened for its third public policy hearing on Wednesday morning.

And if the points members made during the two-hour hearing are any indication, the 12-member panel has a long way to go to reach a deal before its Nov. 23 deadline to present a package worth $1.2 trillion in deficit savings over 10 years to Congress.

The hearing was scheduled to be a discussion of discretionary spending, which makes up about 40 percent of the budget. But the members only loosely stuck to those guidelines, instead making partisan points about income distribution, defense spending and savings, tax reform, and economic uncertainty.

Congressional Budget Office Director Douglas Elmendorf, who testified during the group’s first public policy hearing on the drivers of the debt, carefully explained budgetary concepts, warned the committee that its decisions on discretionary spending could be voided by future Congresses, and highlighted the savings already wrung from discretionary outlays. He also noted that mandatory spending “dominates” the federal budget.

The committee’s Democrats and Republicans alike agreed with him – at least in theory. But while Democrats pointed out that mandatory spending reforms would have to be paired with reduced defense spending and additional revenues, Republicans maintained that spending – not revenues – is the problem.

Read the rest here.

Comment: While there are number of discussions that could be considered in this article, the one thought I have as I read it, is that the idea of repealing the 17th gets pushed back further in to time as each day passes and no Americans challenge the unconstitutionality of the super congress.

Senators flout own immigration law on worker verification

Senators flout own immigration law on worker verification; The Washington Times

Sen. John Boozman is co-sponsoring a bill that would require every employer in the country to use the E-Verify program to screen for illegal workers — but until earlier this month, the senator himself wasn’t signed up for the system, thus violating a 1996 law that makes its use mandatory for all congressional offices.

The Arkansas Republican wasn’t alone. As of the beginning of this month, seven Senate offices were not signed up to use the system, which lets employers check would-be workers’ Social Security numbers against a government database to determine whether they are in the country legally.

After inquiries by The Washington Times, all seven offices said they are now properly signed up.

“It was an oversight that is being corrected,” said Sara Lasure, a spokeswoman for Mr. Boozman. “As a supporter of E-Verify, Sen. Boozman wants to lead by example and is fully supportive of the program.”

The hiccup, though, underscores the difficulty of devising a successful system for the rest of the country at a time when there is no general agreement on how to revamp the American immigration system and how to find the most cost-effective tools to weed out illegal workers.

E-Verify, which is run by U.S. Citizenship and Immigration Services (USCIS), a branch of the Homeland Security Department, could fit that bill — but the sides also disagree about how to expand it.

Read the rest here.

Comment: While I am for immigration reform and finding a solution to resolve the problem with the large number of illegal aliens we have living in our country, I see right though this whole scheme. It has nothing to do with determining if the person being hired is illegal or not, but to control who works and who doesn't and when Americans wake up to this it will be too late.

McCain Raises Prospect of Surpassing Hitler's Invasion Record

McCain raises prospect of military option in Syria; AFP

US Senator John McCain raised the prospect Sunday of possible armed intervention to protect civilians in Syria where a crackdown on pro-democracy protests has killed more than 3,000 people. ...

Read the rest here.

Note: Bold font used by blogger.

Feds Close Probe into Senator Robert Menendez, Report Says

Feds Close Probe into Senator Robert Menendez, Report Says; Latino FOXNews (yes, FOX does pander to divisiveness.)

A federal investigation into Robert Menendez's relationship with a non-profit organization in New Jersey has come to an end – though it remains unclear if the U.S. senator has been cleared of any wrongdoing, according to a report.


The Star-Ledger of Newark said prosecutors concluded their five-year probe into Menendez's affiliation with the Hudson County non-profit agency. It reports that no charges will be brought in the matter, which became public during the Democrat's bid for his first full term in 2006.


The newspaper cited a letter sent to Menendez's lawyer by Zane David Memeger, U.S. Attorney for the Eastern District of Pennsylvania, whose office took over the probe in 2009 when Paul Fishman was appointed U.S. Attorney for New Jersey. Fishman recused himself to avoid a potential conflict of interest, because Menendez had supported him for the federal post.


"After review and consideration of the matter transferred to me, I have decided to close the file," Memeger wrote in the Oct. 5 letter, co-signed by Assistant U.S. Attorney Richard P. Barrett.


It indicates that Menendez's lawyer, Marc Elias, had called Memeger to seek an update on the investigation, though prosecutors typically don't respond to such requests.


The newspaper did not say how it obtained a copy of the letter, which does not explicitly say Menendez has been cleared of wrongdoing. But one expert told the newspaper that it amounts to a "de facto exoneration" because prosecutors rarely send out such letters to people being investigated.


Menendez declined comment on the conclusion of the investigation, which focused on his relationship with the North Hudson Community Action Corp., an anti-poverty group that he helped secure millions of dollar in federal funding.


Read the rest here.

Comment: Menendez is one of hundred reasons to repeal the 17th Amendment.

Most are Manufactured Senators

Rubio’s compelling family story embellishes facts, documents show; The Washington Post

During his rise to political prominence, Sen. Marco Rubio (R-Fla.) frequently repeated a compelling version of his family’s history that had special resonance in South Florida. He was the “son of exiles,” he told audiences, Cuban Americans forced off their beloved island after “a thug,” Fidel Castro, took power.


But a review of documents — including naturalization papers and other official records — reveals that Rubio’s dramatic account of his family saga embellishes the facts. The documents show that Rubio’s parents came to the United States and were admitted for permanent residence more than 21 / 2 years before Castro’s forces overthrew the Cuban government and took power on New Year’s Day 1959.

Read the rest here.

Reid signals government jobs must take priority over private-sector jobs

Reid signals government jobs must take priority over private-sector jobs: The Hill

Senate Majority Leader Harry Reid (D-Nev.) on Wednesday indicated Congress needs to worry about government jobs more than private-sector jobs, and that this is why Senate Democrats are pushing a bill aimed at shoring up teachers and first-responders. ...

Read the rest here.

This headline surely indicates that Reid and the Congress have been bolstering government jobs over the private sector for quite some time:

Beltway Earnings Make U.S. Capital Richer Than Silicon Valley

S.978 Could Put Bieber in Jail

S.978 Could Put Bieber in Jail: Open Congress

If there’s one bill in Congress that pits people of all political stripes against big corporations and the politicians they fund, S.978 is it. The bill would make web streaming of copyrighted content a felony with a prison sentence of up to 5 years. That means you could go to jail for posting a video to YouTube with the wrong background music, all in the name of protecting big media companies that don’t want to update their old business models for the age of peer-to-peer sharing. ...

The link to the bill:

S.978 - A bill to amend the criminal penalty provision for criminal infringement of a copyright, and for other purposes.

Comment: This bill should be opposed because it represents the continued collusion between a business sector and government using legislation to prevent competition.

The Senate has lost sight of its real purpose

The Senate has lost sight of its real purpose; LakeNewsOnline

...The 17th Amendment has allowed federal deficit spending, inappropriate federal mandates, and federal control over a number of state institutions. It has caused a fundamental breakdown in campaign financing issues with respect to the Senate. If repealed there would be no need for campaign financing. It would also re-link the states to the federal political process and in effect elevate the present status of state legislatures from that of a lobbyist to a partner in the federal political process. It would give the states direct influence over the selection of federal judges, influence over the federal judiciary and a greater ability to modify the power of the federal judiciary. It would allow for a better flow of power between the states and the federal government as the needs of the republic changes. ...


Read the whole letter here.

Comment: What I find interesting in these letters the editors, if it has a wide circulation, are the comments, and this one doesn't disappoint.The level of sheer ignorance is staggering. Getting facts across to ideologues is tough, but I am sure of one thing, this country is going broke. It might happen next year or in five, but assuredly we'll go broke. The question then is, will these ideologues turn to constitutional reform and a return to state sovereignty or to Obama, Soros and the Occupy Wall Street agenda when it happens?

Bipartisan group of senators announce agreement on “No Child Left Behind”

Bipartisan group of senators announce agreement on “No Child Left Behind;” The Washington Post

I have come to understand the meaning of the word "bipartisan" when used in the context of politics, as the gang raping of the American public.

Signaling some unity in the Senate on overhauling the “No Child Left Behind” law, two senators announced Monday an agreement to move forward on bipartisan legislation to revamp it.


Soon after, however, Education Secretary Arne Duncan issued a statement noting that the bill did not include a provision the administration favors, which is a requirement that local and state districts develop teacher and principal evaluation systems. Duncan said he believes “that comprehensive evaluation system based on multiple measures, including student achievement, is essential for education reform to move forward” and “we can’t retreat from reform.”


Sen. Tom Harkin, D-Iowa, and Mike Enzi, Wyo., the top senators from their parties on the Senate committee with jurisdiction over education, made the announcement two days before the committee will consider the sweeping bill that seeks to give more control to states on education and change some of the law’s unpopular proficiency standards. Last week, Harkin released an outline of the plan the senators had been working on behind closed doors that did include a component on teacher and principal evaluations. At the time, Enzi hadn’t yet publicly signed onto the plan.


In a statement, Harkin called the bill a “compromise that demonstrates that congressional Democrats and Republicans can overcome partisan differences.”

Comment: More Statist indoctrination pushed by the two main parties. Education in the United States has been on a downward trajectory since the US Department of Education was created. Stop taking the money and nullify this BS.

The Constitution: A Progressive Love Story

The Constitution: A Love Story; The American Prospect


I hoped to find something meaningful in the article linked above, but as usual, a Progressive treatment of any type of constitutional discussion is mired in the history of the South, and of course a little narcissism. Like any literature review it's always worth reading another perspective, but you won't find depth in this one.

Sen. Rand Paul on The Kudlow Report - 10/17/11

Sen. Rand Paul Questions Treasury Sec. Tim Geithner at Hearing - 10/18/11

Some Media of the Day Saw the Future

HT: WL

This picture is making the rounds on the internet depicting the ramifications of the Federal Reserve Act of 1913, and it's clear that there were some in the media that had great foresight.

Update: For more information about this cartoon, check out U.S. money vs. corporation currency, "Aldrich plan." By Alfred Owen Crozier, where it first appeared.

Sen. Lugar, All Things to All People as He Seeks Reelection

SENATOR RICHARD LUGAR, ALL THINGS TO ALL PEOPLE AS HE SEEKS RE ELECTION; All Voices

From the last paragraph:

...It appears that our senator is trying to be all things to all people as he seeks reelection for a seventh term to become a forty two year fixture of big government. What America needs in this time of unprecedented economic crisis is a public servant that stands the line on Midwestern conservative principles, not one who will flip flop on these principles and say anything to hold onto power.

Comment: In reality Lugar isn’t all things to all people. While it might seem that way from his actions he is one thing, a panderer for votes, who is one thing to special interest, their servant. If a US Senator was representative of their state their actions would be entirely different.

McCain slams Obama over Iran Policy, Not Enough War for Him

McCain slams Obama over Iran policy; CBSNews

...Sen. John McCain said Mr. Obama's decision not to jeopardize his negotiations with the Iranian government by not publicly supporting street protestors in Tehran in 2009 was a mistake.


"I think if we had supported the demonstrators at the time it could have meant a significant change in the government of Iran," McCain said on CBS' "The Early Show," adding it was "opportunity that we lost."


"We should have supported them and they could have overthrown the government then," the Arizona Republican said.


Read the rest here.

Comment: Said another way, Obama lost a great opportunity to expand the endless war.

Bob Tuskin Confronts 9/11 Inquiry co-Chair Senator Bob Graham 9/11/11

Ralph Nader "The Tea Party Now Is Basically The Corporatist Wing Of The Republican Party"

EU debt crisis being used to consolidate political control

EU debt crisis being used to consolidate political control; Activist Post

Note: This post highlights the hidden problems within the global economy and banking structure the international elites (who are outside the scope of nation states and its laws) are using to create this very undemocratic world banking structure, and could be the very reason Das Uber Congress was create.

Ahh yes. Fear is being laid on thick as another "crisis" is being used in an attempt to consolidate political power. This time-honored tactic looks like it is now getting the final push in Europe as financial leaders and presidents alike call for a United States of Europe to avert collapse.


The message is clear coming from the establishment: form a more centrally-controlled political and economic union or you will suffer.


Unfortunately, that's not a prediction, but a promise.


It's become obvious that this has been the plan all along. "If you have a currency union, you certainly also need more elements of a political and of an economic union. That was clear from the outset when we started this project some 10, 15 years ago," said the Luxembourg finance minister Frieden.


However, many nations have not been so quick to give up their sovereignty and economic independence. Therefore, a good crisis is needed, followed by a coordinated chorus of experts to sway public opinion and policy.


Earlier this month former German Chancellor, Gerhard Schroeder, set the stage for solution by calling for a United States of Europe. "The current crisis makes it relentlessly clear that we cannot have a common currency zone without a common fiscal, economic and social policy." He added: "We will have to give up national sovereignty. From the European Commission, we should make a government which would be supervised by the European Parliament. And that means the United States of Europe."


New IMF chief, Christine Lagarde, warned that developed economies have entered a "dangerous new phase" because of a "vicious cycle" of weak economic growth and feeble political leadership. Singing the same tune, Lagarde recommends a collective solution; "Without collective, bold, action, there is a real risk that the major economies slip back instead of moving forward." Incidentally, debt was not mentioned as part of the problem.


George Soros recently claimed that a European treasury is needed to avoid a depression. Soros warned, "Even if a catastrophe can be avoided, one thing is certain: the pressure to reduce deficits will push the euro zone into prolonged recession. This will have incalculable political consequences." Leaving no room for discussion, Soros states, "There is no alternative but to give birth to the missing ingredient: a European treasury with the power to tax and therefore to borrow."


U.S. Treasury Secretary Geithner has not publicly endorsed a policy, but he's demanding more "forceful action." Geithner is also echoing calls for more unity; "What's very damaging is not just seeing the divisiveness in the debate over strategy in Europe but the ongoing conflict between countries and the [European] Central Bank." In other words, individual nations and the European Central Bank must unite the policies. ...

Read the rest here and see all of the links.

Comment: The US Senate is the lynch pin in any global aspiration because all treaties are approved there.

Rockefeller to Meddle in High Speed Internet; Prepare for Bad Outcome

US Senate Hearing to Focus on High-Speed Internet; WBOY

The Senate Committee on Commerce, Science and Transportation will convene a hearing Oct. 12 to look at the Federal Communications Commission’s Universal Service Fund, which offsets the costs of bringing phone networks to rural areas.


The hearing will provide a forum to discuss efforts to reform the high cost of USF. The programs supports basic phone service, and the FCC wants to redirect the program’s money toward building new high-speed and wireless Internet networks across the country.


“Industry and government have worked together over many years to help provide phone service in rural areas of the country so that Americans and West Virginians and other rural states can get access to phone service at an affordable price,” said Sen. Jay Rockefeller, D-W.Va., and chairman of the Senate Commerce Committee. “But it’s time to bring this program into the digital age and refocus it toward bringing high-speed and wireless services to people across the country. We have a real opportunity to close the digital divide in rural America if we get this right.”


In addition to USF, Rockefeller has also worked to develop the $4.7 billion Broadband Technology Opportunities Program in the Recovery Act, which is designed to improve high-speed Internet access in unserved and underserved areas, expand public computer center capacity and encourage the adoption of high-speed Internet service. Nearly $180 million in federal funding for high-speed Internet services has been awarded to West Virginia.

Comment: We are going to spend taxpayers money to do what private industry should be doing? It's no wonder we are in the middle of depression and being run to the ground by crony capitalists.The senators have their head so far up their collective asses it's amazing.

Is Warren Funded by Soros?

Warren draws $3 million in first weeks of Senate bid; Reuters

I by-passed to the end of the article to this quote:

...Progressive groups, including MoveOn.org, have thrown fund-raising muscle behind Warren, a consumer advocate and Wall Street critic.


Warren created the Obama administration's Consumer Financial Protection Bureau and led a panel created by Congress to examine how bank bailout money was being spent.

Comment: She didn't create the Consumer Financial Protection Bureau, it was mandated in Dodd-Frank and if she examined where the banker bailout money went, she didn't tell the American public.

Also we know today that MoveOn is trying to co-opt the leftist groups protesting the Federal Reserve, which is funded by George Soros; so can we assume she is funded by George Soros?

Former U.S. Senator Byron Dorgan Joins "Climate" Insurance Company

From the bizarre land of Al Gore:

WeatherBill Changes Company Name to The Climate Corporation; Appoints Former U.S. Senator Byron Dorgan to Board of Directors
The Climate Corporation's Mission Is To Help World's People and Businesses Adapt To Climate Change

The Climate Corporation combines Big Data, climatology and agronomics to protect the $3 trillion global agriculture industry with automated full-season weather insurance. As part of its effort to help farmers adapt to the increasingly unpredictable weather that threatens their livelihood, the company today also announced the appointment of former U.S. Senator Byron Dorgan to the company's Board of Directors.

"We are honored to have someone of Senator Dorgan's character, experience, and passion helping us meet the needs of today's farmer," according to David Friedberg, Chief Executive Officer of The Climate Corporation. "As we deepen our agricultural focus, we now have a company name and identity that better reflects our constituents, as well as the counsel of a distinguished public servant who has worked throughout his professional life to help the American farmer."

Byron Dorgan joins The Climate Corporation Board of Directors following a distinguished 30-year career in the U.S. Senate and U.S. House of Representatives. As a U.S. Senator representing the State of North Dakota -- a rural state with a thriving agriculture industry -- Senator Dorgan was a strong advocate for family farmers. He served on the Agriculture Committee in the U.S. House and on the Agriculture Subcommittee of the Senate Appropriations Committee. Mr. Dorgan is currently a Senior Policy Advisor at the Washington, DC law firm Arent Fox LLP, a Senior Fellow at the Bipartisan Policy Center, and a Visiting Professor at Georgetown University. ...

Who Elected the G20?

Legitimacy vs Effectiveness for the G20: A Dynamic Approach to Global Economic Governance; Paola Subacchi and Stephen Pickford; Chatham House

(Note: Chatham House, or the Royal Institute of International Affairs,  is the British cousin of the US based Counsel on Foreign Relations, which together, promotes the elimination of the nation state and the development of a global government.)

Highlights from the paper:

The emergence of new economic powers in an increasingly integrated world economy has highlighted the need for better management of international interdependencies and reform of global economic governance.


Since 2008 the G20 has emerged as a key multilateral forum on the basis of its perceived effectiveness as a 'crisis committee' managing the global economic and financial turmoil. It is now turning into the world’s 'permanent steering committee' with a broader agenda including global imbalances, climate change, trade and development.


In the process, the G20's lack of legitimacy and representativeness has become more apparent. Improving its governance is necessary over the long term, but simply expanding its membership could undermine its effectiveness.


Developing the G20's outreach to a broader range of countries and building a permanent secretariat could make it more representative but this will take time and be very contentious.


In the short run, the G20 can increase its legitimacy through greater transparency and accountability, by establishing an independent audit mechanism for commitments, and leading governance reform of the international financial institutions.

Comment: Assuredly, the increase of G20 power will come at the expense of the US Constitution and the gateway for this shift is in the US Senate. This is why it is so important for US Citizens to elect people that are constitutionalists above anything else.

Durbin is a Complete Idiot

You can watch the video for yourself and make your own call on Durbin, but my opinion is that he demonstrates he's a complete idiot, and I would say the same for the whole of Congress. It was Congress and their fascist regulations that got us into this mess, and who keep plunging us deeper into the hole, and created this whole banking mess. Unfortunately too many Americans think Durbin and Obama and Congress are right.



Comment: Sure there is lots of blame to pass around especially the fact that the Federal Government is bed with the banking industry, but the single biggest problem is that Congress abdicates its Constitutional duty to be in bed with the crook bankers. Hey at the end of the day the crony banks like Bank of America are going to pass on the cost of regulation on to us, and lay us off, but we need to remember, this is all caused by Congress. So are you ready to repeal the 17th yet?

Incredible Speech By Wall Street Protester "End The Fed" 2011

This guys nails it!!!

Uber National Infrastructure Bank

I was looking at the list of demands that appear on the Occupy Wall Street website this morning and my first impression was that this is strangely similar in content to much of the fascist agenda the government class has been advancing in Washington for the last decade, and has been the platform of the Bush/Obama Administrations, not to mention subtly reaching back to Bush the Elder.

However, as I was reading through the site "demand number six" jumped out at me. Earlier in the year there was a small post in the New York Times that was related to the same, where a "bipartisan" group in the US Senate proposed a "National Infrastructure Bank."

Amid growing concerns that the nation’s infrastructure is deteriorating, a group of Democrats, Republicans, and labor and business leaders called Tuesday for the creation of a national infrastructure bank to help finance the construction of things like roads, bridges, water systems and power grids.

The proposal — sponsored by Senator John Kerry, Democrat of Massachusetts, and Senator Kay Bailey Hutchison, Republican of Texas — would establish an independent bank to provide loans and loan guarantees for projects of regional or national significance. The idea is to attract more infrastructure investment from the private sector: by creating an infrastructure bank with $10 billion now, they say, they could spur up to $640 billion worth of infrastructure spending over the next decade.

Things are not as they appear to be, and we know things or events don't happen in a vacuum.

Comment: Today, we have the making of a massive coup d'état with the creation of Das Uber Congress. Likewise we can say that its foundation was laid out in the years following 1910 and the secretive meeting that occurred on Jekyll Island. On the surface this protest looks like a grassroots movement, but a closer examination exposes it as manufactured ACORN or Soros organization.  We know Progressives were used as the useful idiots by the corporatist bankers, media, and two main political parties that pushed the 16th and 17th Amendments and the Federal Reserve Act of 1913 through, so why not today for say a national infrastructure bank? It did happen in 1913 after all.

Update: From the CFR:

Infrastructure Investment and U.S. Competitiveness


Most experts agree the United States must address the nation's aging network of roads, bridges, airports, railways, power grids, water systems, and other public works to maintain its global economic competitiveness. In 2010, President Barack Obama proposed a national infrastructure bank (PDF) that would leverage public and private capital to fund improvements, and in April 2011 a bipartisan coalition of senators put forward a similar concept (NYT).

Four experts discuss how the United States can best move forward on infrastructure development. Robert Puentes of the Brookings Institution suggests focusing on increasing exports, low-carbon technology, innovation, and opportunity. Renowned financier Felix Rohatyn endorses the concept of a federally owned but independently operated national infrastructure bank that would provide a "guidance-system" for federal dollars. Infrastructure policy authority Richard Little argues that adequate revenue streams are the "first step in addressing this problem," stressing "revenue-based models" as essential. Deputy Mayor of New York City Stephen Goldsmith says that the "most promising ideas" in this policy area involve public-private partnerships.

Comment 2: As I said, things don't happen in a vacuum.

The Senate Insider Who Introduced the Federal Reserve Act

 ...and the 16th Amendment.

Nelson W. Aldrich; Wikipedia

Nelson Wilmarth Aldrich (November 6, 1841 – April 16, 1915) was a prominent American politician and a leader of the Republican Party in the Senate, where he served from 1881 to 1911.
Because of his impact on national politics and central position on the pivotal Senate Finance Committee, he was referred to by the press and public alike as the "General Manager of the Nation", dominating all tariff and monetary policies in the first decade of the 20th century. In a career that spanned three decades, Aldrich helped to create an extensive system of tariffs that protected American factories and farms from foreign competition, while driving the price of consumer goods artificially high—which hurt many workers and farmers. He was a party to the re-structuring of the American financial system through the institution of the federal income tax amendment, which he originally opposed, and the Federal Reserve System. He stated that he believed these reforms would lead to greater efficiency. Aldrich became wealthy with investments in street railroads, sugar, rubber and banking. His son Richard Steere Aldrich became a U.S. Representative, and his daughter, Abby, married John D. Rockefeller, Jr., the only son of John D. Rockefeller. Her son and his grandson Nelson Aldrich Rockefeller, served as Vice President of the United States under Gerald Ford.

Read the rest here.

Comment: While the roots of Socialism in this country are deeply connected to the Democrat Party, the fascist roots are as equally connected to the Republicans Party. When one considers that the lines between Socialism and Fascism are hair thin, you begin to see why it's really one party, one agenda, one end state.

Das Uber Congress (aka Super Congress or the Joint Select Committee) is nothing new in our history. As we can see through the life of Senator Aldrich and others, the powerful circumventing the citizens' will and the US Constitution is nothing new, only that in 1910 and 1913 they did it in secret while today they act right before our eyes.

Our Monetary Mayhem Began With the Fed

Our Monetary Mayhem Began With the Fed; The New American

Nearly all Americans know they are plagued by inflation. In 1962, a postage stamp cost four cents, a candy bar a nickel, a movie ticket 50 cents, and a pair of tennis shoes $5. A new imported Renault automobile cost $1,395, annual tuition at Harvard was $1,520, and the average cost of a new house $12,500. Over the last century, a dollar's purchasing power has declined over 95 percent — i.e., it won't buy what a nickel did in 1909. What causes inflation? The public hears various explanations from the establishment media — that oil's rising cost causes inflation, since nearly all industry sectors use it; or that inflation is the fault of American workers demanding wage increases, which has a ripple effect throughout the economy. In other words, Joe tells his employer, "Boss, my wife's expecting. How about a raise?" The boss says, "Joe, the only way I can afford that is by raising our prices — I'll have to pass the cost on to our customers." Then firms doing business with Joe's company say, "Since you've raised your prices, we'll have to raise ours." And so, all across America, prices rise because "greedy" Joe, and millions like him, asked for a raise.

Furthermore, the public has been lulled into believing that inflation is inevitable, like "death and taxes." Indeed, based on the Consumer Price Index (CPI), the broad index used to measure the price of goods and services, that seems true. America has experienced general price increases every year since 1955, without exception.

But as we can easily prove, inflation is not inevitable. Figure 1 depicts American price levels from 1665 to the present. Note there was no significant increase for the first 250 years. Little blips upward are on the graph, as during the American Revolution, War of 1812, and Civil War, when the United States issued large quantities of paper money to pay for those conflicts. Of course, increasing the supply of money (which is what inflation really is) diminishes its value, causing prices to rise. But notice that, after the wars, money always returned to its normal value. A dollar in 1900 was worth the same as in 1775; there had been no net increase in the cost of living since George Washington's day. Throughout this time, Americans asked for, and received, wage increases, without causing prices to rise overall.

But look at the graph's right side. During World War I, our currency inflated, but instead of resuming its normal value afterwards, it continued inflating out of sight. American money, relatively stable for 250 years, began to rapidly and permanently lose its value. This did not happen by chance; every effect has a cause. Around the time of World War I, something significant must have happened to induce this transformation. As we shall see, the cause of this transformation has nothing to do with Joe and others who, suffering from the effects of inflation, asked for a raise.


Read the rest here.