Part 1: Control By Crisis, Deception & Technology
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Economics is a study of how people and institutions behave and interact with each other in regard to exchanging value. The dictionary definition refers to it as a science analyzing the creation, distribution, and use of goods and services.
The purview of economics includes investment, real estate, resources, production, distribution, transport, markets, prices, assets, liabilities, financial instruments, currencies, banking, other financial institutions and more.
It is important to know some simple basics about this to understand how the TICK has accomplished what they have.
Since most people think of economics as incomprehensible and boring, we will explain these basic concepts as simply, concisely and enjoyably as possible.
Also in this chapter: More About Inflation
Key Economics Concepts
Scarcity, Demand And Supply
As our current economic system has developed, people, business enterprises and governments are forced to compete for what are considered "scarce" resources and other goods.
Economics studies the methods that have been developed for making goods and services available, marketing and distributing them, receiving appropriate value in return, and the ultimate consumption and use of these valuable goods.
The amount of "demand" for something desirable compared to the available "supply" is considered the major factor in the pricing of that good or service.
Uniqueness, quality, processing expense, risk, promotional costs, and market manipulation are other factors in the determining of a price.
When there is a high degree of control of a widely desired resource or product, or dominance of the marketing of that item, a significant extra profit may be built into the price of it.
Our global economic system is based on the concept of scarcity and the unhealthy idea that individuals and social organizations are all separate entities with competing interests.
Originally, simple small items of agreed upon value that are easy to store and carry were used as "means of exchange". In a barter economy, so many beads could be exchanged for so much grain or blankets for example.
Certain metals became recognized as precious, and nuggets, bars and coins made of these metals became a common means of trading at some point long ago.
Eventually, with development of the banking system, paper currency representing precious metals in storage, became the common way of transacting business.
The tie between paper currency and gold was loosened in the 1930's. The U.S. government attempted to stimulate a depressed economy, under guidance of the Federal Reserve Bank, by pumping out more dollars than all the gold in Fort Knox could back.
In 1971 the dollar was divorced from gold entirely. Soon inflation became a serious financial concern as government spending for the Viet Nam War and other projects mushroomed.
This is a major economic problem that can effect virtually every business and household, which they cannot really control. The gradual erosion of the value of a currency known as "inflation" results in a lessening in the value of all cash-type assets.
The term inflation is derived from the idea of pumping up dollars with air so they look bigger, but each one has less "weight" and will actually buy less. This results from an increased money supply without a balancing increase in the amount of goods produced for consumers to buy.
Anyone who has experienced "cost-of-living raises" probably understands that their paycheck increased, but the total received would be worth about the same or even less in purchasing power than in the past.
We usually think of inflation as rising prices. The "Consumer Price Index" is the average retail value of a common selection of consumer goods that economists use to indicate what prices are doing.
More about inflation below.
The term "deflation" refers to air leaving an inflated dollar, meaning prices going down. This may occur during a period of stagnation where economic growth subsides to practically a standstill, or recession when the economy contracts.
We saw a period of some amount of deflation after the Crash of 2008, especially in real estate. Producers and vendors of goods and services also lowered prices or ran sales and specials as they attempted to prompt reluctant consumers to purchase.
Deflation has been rare in modern times. Our modern economic slowdowns have been times of "stagflation" where inflation continues in a stagnant economy, or even inflationary recessions where there is still a little inflation.
The U.S. and several other western nations have been pouring more and more money into the world economy. With such massive government spending, inflation is inevitable, and will likely become very significant eventually.
Meanwhile, with a combination of the temporary end of "Quantitative Easing" money creation by the FED, and manipulation of markets, such as oil, gold, stocks and bonds, near the end of 2014 the dollar strengthened to its strongest relative value in years.
If the lower price of oil persists, it could engender a deflationary period. Although goods and services would be less expensive, there may be few people having enough work and income to afford to purchase much.
If the economy slows down, companies cut expenses. Workers are laid off; then people may have less in their bank accounts and also spend less. Merchants have lower receipts and not as much to deposit in their bank accounts.
As a result, the banks have less loan money available and fewer loans are made. Then even less funds are available to be spent or deposited.
Economic contraction develops in waves, usually anticipated by dives in the stock market. We have seen major market dives and waves of contraction in the last few years, and there are likely more to come.
Recession and Depression
Economic slowdowns are not unusual. They are an aspect of a modern economy continuously changing to reflect new trends, technologies and markets, as well as changes in interests and in lifestyle. Contractions can also be effected by monetary and fiscal policies.
Deflation is more likely during a serious recession, a time of economic contraction and sluggish activity; or worse, a depression in which the economy suffers a longer period of decline and greater unemployment.
An inflationary recession or depression could also occur, especially when there is massive amount of debt, particularly government debt.
Economists describe four different forms of industries or markets:
~ pure or perfect competition -- There is easy entry to the market and a lot of competitors, each with little control over resources or price. A business in such a market must respond quickly to changes to be able to survive. This is the most efficient way of doing business. Small, family owned businesses often exemplify this model.
~ partial or practical monopoly -- An example of this is a local store that serves a neighborhood or a larger area with particular products or services. Within price extremes and depending on levels of service, they control most of their market within a certain radius. Their appeal diminishes in the areas where possible customers reside who are drawn to shop at the nearest similar store.
~ oligopoly -- There are several giant companies striving for brand identity and a bigger share of an important market. The competitors monitor each other, and strategize their product development, advertising, marketing and determination of a pricing range that makes them the most money in a certain period.
Reactions to financial or economic changes are sluggish. There is a lot of waste. A company may advertise lower prices than another for a time to win customers from the competitor, possibly then charging more for an adjunct product or for service. This is a less efficient way to do business, but it is how most major industries function, usually involving a corporate structure with officers and a board of directors. Example: the auto industry.
~ monopoly -- There is one source for a good or service, with no competition, no motive to have a low price or to strive for quality, minimal control on spending, and a slow response to changes in the market. Monopoly is the least efficient way of doing business. An example of a local monopoly is a utility, such as electric or natural gas delivery. These are usually regulated.
Which of these do you think a government is most like? Examples of government monopolies include local water and sewer service, automobile titles and registration, and various licenses.
More About Inflation
Inflation has been one of the most persistent aspects of economic life for about fifty years. A modest amount of it has been built-in throughout the economy.
When inflation continues year after year, it accumulates and currency becomes gradually worth far less than it used to be. Most people are aware that it takes a $10 bill today to buy what used to cost about $1. In fact it takes about $100 to buy what $1 bought around the year 1900.
Reasons For Inflation
There are different reasons for inflation. Economics textbooks talk about some of them.
~ "Demand-pull inflation" occurs when consumers have access to extra money, and increase their spending on various wants (perhaps before the prices go up anymore!).
~ "Cost-push inflation" puts the blame for price increases on rising costs. There could be greater costs of raw materials or supplies, or increased transportation costs from higher gas and diesel prices, or organized labor may have negotiated for wage hikes.
Borrow Into Inflation
Inflation benefits those who borrow (including governments), because they can pay back their loans with dollars that are worth less than the ones borrowed earlier.
Lenders try to compensate for inflation by charging a high enough interest rate to cover it. In fact, inflation does not usually hurt the big banks.
Whether banks are borrowing from other banks through the FED or from their depositors, inflation causes the value of the dollars they pay back later to be less than when they borrowed as well.
Meanwhile, if they lend or invest the money at a rate-of-return greater than the interest they pay, they earn income using "other people's money".
Companies and individuals may also take advantage of inflationary times by borrowing, especially for business purposes.
However, access to credit may lead to increased debt spending, adding to demand and contributing to more inflation.
On the other hand, deflation usually means money is harder to come by, making it harder to pay back loans and interest, especially if the asset purchased with the loan has declined in value while the loan balance remaining is high.
Inflation Hedges And Losers
Sometimes real estate and other real assets like gold and silver will rise in price along with inflation and be a "hedge", a protective buffer, against suffering losses from holding depreciating dollars.
Actually, gold and silver coins are real money and currently worth vastly more than their face value. In an economy where paper currency is no longer trusted, gold coins could be used for larger purchases; and silver coins would be good for small buys and making change for larger purchases.
The dollar price of gold increased dramatically in recent years, similar to how it moved in the late 1970's. Then there was a fall off in 2014 as the dollar strengthened and oil prices declined. Most experts believe it highly likely for both gold and sliver prices to climb again and further than ever when an inevitable substantial inflation returns.
Relative to the high oil prices of 2008, gold should have been nearly $2000 per ounce or more. The price of gold was strangely subdued when the oil price was extremely high.
This may have been partly due to unfamiliarity with purchasing and storing "hard assets", but there also has been manipulation of the gold market by big time players using options contracts to hold the price down. The sell off of gold reserves by governments in deep debt has also subdued the price.
Nonetheless, gold and silver are good assets to have, and they should be a part of any investment portfolio. Accumulating while the prices are low is the best policy.
Significant losses can result from holding assets in a cash savings account, CD, cash value life insurance policy, etc., during times of inflation. These may not return enough value to give you any real gain after accounting for inflation, and they may be serious losers!
Recent Low Inflation
In recent years, inflation has been modest for several reasons:
1) Even though the economy was operating at close to full employment several years ago, workers were willing to work more hours rather than demand more in wages per hour.
2) Increased world trade and low labor costs in developing areas have resulted in competitive prices from imported goods and incited an emphasis on improving productivity.
3) There was an over-capacity of capital equipment in many U.S. factories, so there was less need for investment in new machinery (which would have raised the cost of making products).
4) Consumers are price-wise in their shopping for bargains.
5) Now we are in a world-wide recession or depression, with high unemployment and a low price of oil. These conditions cause other prices to remain low or be reduced.
The temporary deflation we have experienced may have been assisted by the TICK financiers. It allowed them more time to gather up available assets at bargain prices, and low interest rates, while stemming a consumer uproar over the economic downturn with some price relief.
Is Inflation Inevitable?
In the long term, the main reasons for inflation are expansion of debt, and the way that our currency is issued and handled. Major inflation is due to an overly increased amount of dollars in use.
Inflation can be described as "too many dollars are chasing too few goods."
Because of the excessive debt of both individuals and governments, the supply of dollars (mostly as computer credits in bank accounts) has increased substantially, so the value of each unit of cash is greatly lessened.
As long as the U.S. government spends more than it takes in, borrowing more by selling bonds is the way it pays its bills. There is a consequent interest on the growing "National Debt", but when the rates are very low government is more likely to borrow through, and even from the Federal Reserve Bank, and spend more.
The government doing business this way means ever more debt and more interest to pay. The value of the U.S. dollar diminishes with higher government expenditures and inflation.
Since World War II, when the dollar was set as the primary reserve currency of the world, The FED and the U.S. government have exported vast amounts of dollars to the world. This process was facilitated by the 1973 agreement with Saudi Arabia and OPEC for the "petro-dollar" to be used exclusively for oil purchases.
In essence these agreements caused dollar inflation to be spread around internationally, rather than having the excessive creation of fiat dollars generate hyperinflation in the U.S. Rampant inflation may have upset U.S. consumers enough to react.
Now the dollar's status as world reserve and petro-dollar is subsiding as other nations have begun to trade in oil and other goods using their own currencies and bypassing the dollar. Unless there is a currency reset and a significant reduction or elimination of play money production by the FED, the dollar is likely to collapse leading to big time inflation, especially in oil and imports.
A relaxing breath and fresh thought can make things better.
Love is real prosperity. ~ Natural Sage Jon
Caring For One Another
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Quick Links To Other Chapters in Part 1:
What Is Going On?
What Is The "TICK"?
Control Of Energy
Beware Of The TICK
Prepare For Crisis
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Corporatism, "Psyence" and Tyranny
Jon Miller, M.A., M. Div.
the natural sage
societal analyst, philosopher, holistic educator
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If you are not already aware of it, this information may be shocking and a lot to consider at once. It is unlikely that all that has been mentioned in this analysis will happen, but events that will change life for all of us are more than probable. They are already happening.Awareness and cooperation are essential for humanity to make our way out of the deep trap The Powers That Be have created for us. We must break free of the ignorance instilled by poisoning with chemicals and electromagnetic fields, and the hypnosis by distraction and fear that keeps us confused and clinging to the hope of normalcy.It is very important to form an alliance with your close friends and relatives to help each other through difficult times. Such an alliance is the best resource for making plans to provide food, shelter and protection for yourselves.
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