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The Deceptions of “Price Stabilization”


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2010 Jul 3, 7:41am   13,114 views  119 comments

by NastySlapper   ➕follow (0)   💰tip   ignore  

One of the two mandates of the Federal Reserve is to "stabilize prices". This seemingly innocuous endeavor has deeper implications than most people realize. It does, after all, just seem to be reasonable, and even desirable. But, in practicality, it is a vehicle for those in power to steal from you. Most people have at least a basic understanding of how inflation can benefit the government, and how the government, by printing money, can pay its debts and bill it to you, the taxpayer. This, in itself, is criminal and treasonous on its face. But there are two other less obvious mechanisms in place that are used against you, and are rarely exposed…

The first is deflation. The banks take your money not only by inflating (counterfeiting), but also by deflating. To make this point clear, imagine that you have been given the power to forge/print money (which is done today not with a printing press, but by simply adding "credits" into a computer account.) You would soon learn that you could "credit" yourself with as much money as you want, "lend" it all out, and quickly place most of the people around you in debt. At this point, which of the following options do you think will benefit you the most:

a) Keep printing money as fast as possible, devaluing the currency and causing your debtors to effectively owe you less (the money would be worth less).
b) Stop printing money, causing the value of the currency to rise (meaning it's harder to get, wages decrease, etc.), effectively causing your debtors to owe you MORE.

The term "money" simply describes a medium of exchange. What truly matters is value - which ultimately comes down to production. After all, if it takes you 1,000 hours to produce enough money to buy a new car, the actual amount of fiat currency you used to purchase it doesn't much matter. What matters is that you had to work 1,000 hours for that car.

And this leads directly to the following point…

The second is theft of standard of living. No one notices this. However, it is a powerful weapon that is used against you over the span of your entire life, and understanding it will leave you with a very bad taste in your mouth. It has to do with the idea of technological advancement. It is natural and clear that humans evolve technologies over time to improve their lives. As time passes, we find ways to produce goods and services more efficiently, which in turn makes them less expensive. Nearly everything that you buy should, over time, become cheaper. And hence, over time, your overall level of comfort, wealth, and quality of life (a.k.a. "standard of living") will improve.

Now, recall the honorable mandate of the money forgers to "keep prices stable". Since as mentioned above, in nearly all cases a free market will, over time, cause the real prices of goods and services to decrease such that the average person is able to acquire more of them for the same amount of money (or work), this provides a beautiful cover for those controlling the money supply to skim from the masses. Under the guise of providing price stability they are able to inflate the money supply at a rate that denies working and productive citizens the full fruit of their labor. By "keeping prices stable" what they've effectively done is simply raised the real cost that you must pay for services and goods that are trying to become cheaper. So what happened to the extra "money"? What happened to the extra "fruit" of the producers? It went to the money printers.

The end result is that your standard of living remains "stable" and does not improve. This happens in a way that is essentially invisible to the general population. If citizens were truly aware of the lives they really should be living right now, and who has taken it from them, there would be a revolution tomorrow.

There is no morally defensible position to the concepts of monetary inflation/deflation & "price stabilization".

End the Fed.

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83   Honest Abe   2010 Jul 30, 5:09am  

Ray, liberals can't stand the truth anymore than Dracula can stand bright sunlight. The fact's are that the liberal agenda's collective causes have undermined individual rights and freedom and have severely damaged America.

It has undermined the growth of individuals to adult competence. Undermined the family. Undermined the proper function of modern society. Undermined the concept of personal responsibility. It has weakened the obligations of promises, contracts, ownership and property rights. It has disconnected rewards from merit. It has polarized the population (some animals are more equal than others) into warring classes...old v. young (socialized insecurity), wealthy v. poor (soak the "rich" and make them pay their "fair" share), race v. race (look whats happening in Arizona). It has created an idealized parental and administrative state and endowed it with vast managerial, caretaking, and regulatory powers. It has created a massive burden of business regulation.

The liberal (do-gooder, bleeding heart and "progressive") agenda has fostered government dependency instead of self-reliance, government "assistance" instead of self-determination, coercive collectivism instead of cooperation, indentured servitude instead of genuine altruism. In other words, liberalism has succeeded in displacing the individual form his rightful place as the primary economic, social and political unit of society. Why? Because our "wise", "trusted", political "leaders" know whats best for us.

However, history records the inevitable result of such expansions of government power: individual liberty and peaceful coordination of human activity are severely compromised or lost altogether. In other instances, tens of millions of deaths due to psychotic political "leadership" of "centralized" government. For a chilling glimpse into the future, read (or re-read) George Orwell's '1984'.

"And the reason for liberal madness? Psychopathology". Lyle H. Rossiter, M.D.

84   marcus   2010 Jul 30, 6:59am  

A lot of broad generalized statements.

"Hey I saw them in a book, and coincidently they are exactly what I would like to believe. Cool, I can use these as a substitute for comprehending more nuanced points of view. "

Honest Abe says

And pllleeease don’t say “BUT WE NEED TEACHERS, AND POLICE, AND FIREFIGHTERS. AND WE NEED ROADS AND AIRPORTS TOO !!!” Of course we do…just not to the point where we all lose our freedom and all of us become slaves to the state in order to provide everything to everyone (Utopia)

Okay, so you understand we are talking a slight difference in where we draw the line. My progressive point of view is just on the other side of the line from you. So I argue that the line needs to move a little that way. I am not arguing for Utopia.

You don't hear me saying that just because you argue for the line being in a slightly different (let's call it to the right), that therefore you are a fascist, corporatist, selfish greedy pig that won't be happy until 95% of the wealth is owned by the top .005 of the population. (which by the way, your supposed common sense should tell you would destroy us much faster than a little redistribution would).

The older generation was scarred by the left / right polarization back in the days of the Vietnam war and hippies (not that hippies were all so asinine) spitting on soldiers coming back. You need to get over it. Let is go man. Those particular hippies didn't speak for me, any more than you should let that jerkwad Savage speak for you.

85   RayAmerica   2010 Jul 30, 7:34am  

Abe .... your last post is probably the best that has ever appeared on Patrick.net. I honestly can't think of one that is better. It says it all. No one that has even a remote amount of honesty and objectivity can effectively argue with your statement. Radical leftist liberalism is intent on destroying and then remaking America. We are heading towards totalitarianism that is heavily steeped in egalitarianism that will punish any and all that refuse to "fall into line." This is precisely what happened in the good old USSR, which just so happens to be the radical leftists' ideal state that just needed a little tweaking. What they fail to see is that the Bolsheviks simply lied about setting up the workers’ paradise, and instead, created a peasant slave class that was ruled viciously by the ruling elite. Lenin/Stalin murdered up to 60 Million people. To this, the radical leftists shrug their shoulders and whimper out a “ho hum.” The warnings of history are there for all to see.

86   marcus   2010 Jul 30, 7:45am  

If I said that everything that is wrong with our country can be traced to greed and more specifically the ideology of republicans, I would hope that no republican would dignify it with an argument. It's too general, and no proof is given.

Someone would have to be a complete and total moron to think that it was even an argument, let alone a good one.

87   🎂 simchaland   2010 Jul 30, 8:09am  

Honest Abe says

Ray, liberals can’t stand the truth anymore than Dracula can stand bright sunlight.

Sure I can stand sunlight. Oops!

88   tatupu70   2010 Jul 30, 8:27am  

RayAmerica says

Abe …. your last post is probably the best that has ever appeared on Patrick.net. I honestly can’t think of one that is better

It's not surprising that you like his post, since you wrote it...

89   Honest Abe   2010 Jul 30, 8:39am  

Ray, thanks for your response - yea, lib's refuse, or deny history with a "it can't happen here" mentality. They deny cause and effect. They reject the thought that history can repeat itself. Mental illness is doing the same thing but expecting a different result.

Marcus, I'm sorry but you appear to be in denial. Who do you think is responsible for: legislation forwarding collectivist causes? Social programs? Replacing our society's safety net with a hammock? Building a Nanny State? Authoring a blizzard of laws and a flood of oppressive and business strangling regulation? Providing government handouts in exchange for votes? Encouraging bondage through dependency? Rewarding failure and punishing success?

Virtually all of the California Senate and Assembly bills which: expand employer liability, hamper employment, increase government regulation, implement unlimited fees and taxes, drive up costs, make litigation the only dispute resolution, increase business costs and threaten jobs...are sponsored by liberal democrats. And if you want the identifying SB and AB numbers I'll be happy to provide them to you.

So Marcus, this isn't my "argument", its fact. Denial is willful and deliberate ignorance.

90   🎂 simchaland   2010 Jul 30, 9:53am  

Honest Abe says

Mental illness is doing the same thing but expecting a different result...

If you're going to quote something from 12-Step meetings then do it properly. Insanity is doing the same thing over and over again, expecting different results. It's one of my favorite ways of explaining what is meant in the 2nd step by including the word "sanity" implying that we are practicing insanity by engaging in compulsion. (Came to believe that a power greater than ourselves could restore us to sanity.) It refers to compulsion and not to mental illness. Compulsion can be part of a mental illness, but compulsion and insanity isn't in and of itself a mental illness. Try again, Rayray/Abebabe.

Honest Abe says

So Marcus, this isn’t my “argument”, its fact...

Must I remind you of the definition of the word "fact?" Ah, but doing that again and expecting you to understand it is the very definition of insanity. So, I'll pass.

Honest Abe says

...Denial is willful and deliberate ignorance.

No it's not. Again you fail Psychology 101 and 12-Step 101, Rayray/Abebabe. Denial is being in a state of ignorance that you are ignorant. That seems to define all wing nuts quite nicely. I have to believe that you wing nuts are in denial so that I don't fall into the trap of believing that you wing nuts are all willful and maliscious liars, as you so plainly believe about people you consider to be "liberal."

Now, go call your sponsor!

91   marcus   2010 Jul 30, 10:21am  

Honest Abe says

Providing government handouts in exchange for votes?

If it weren't for "tax cuts" which could be viewed as paying for votes, I don't see that republicans would have had any presidents in the last 22 years.

Honest Abe says

Virtually all of the California Senate and Assembly bills which: expand employer liability, hamper employment, increase government regulation, implement unlimited fees and taxes, drive up costs, make litigation the only dispute resolution, increase business costs and threaten jobs…are sponsored by liberal democrats.

The litigation one might be somewhat correct. But otherwise, all of these consequences are only the negative side of legislation that had other intentions and other (hopefully) positive consequences. So it doesn't prove anything. It would be like me pointing out the trillion plus part of the deficit increase and the thousands killed that comes from our recent wars, as if that was all that happened. I know you weren't necessarily for the wars, but you may be capable of understanding that just focusing on negative doesn't really prove anything.

You may have heard about how sometimes people consider the "pros and the cons" when making a decision. Sometimes with a tough decision someone might say "make a list of the pros and the cons." I guess it might be easy afterwards to look at the "cons" side only or the "pros" side only. But many of us are smarter than that.

Didn't I say I was going to stop, like 10 comments ago ?

92   🎂 simchaland   2010 Jul 30, 10:26am  

marcus says

Didn’t I say I was going to stop, like 10 comments ago ?

LOL! Yeah, you better watch it, you might be slipping into insanity. However, it can be kind of fun sometimes...

93   Honest Abe   2010 Jul 30, 3:12pm  

Marcus makes some good points after all, and has a positive way of disagreeing without sounding like an elitist snob who argues in circles.

94   marcus   2010 Jul 31, 4:13am  

Thanks Abe. I appreciate that, and it makes me want to give further consideration to some of your criticisms of the liberal mind set.

95   jljoshlee3   2010 Jul 31, 8:04am  

this post is suposed to be about the fed's mandate to keep inflation low, and why. Not about the relative merits of Liberal vs Conservative idiology. Every thread degenerates into this culture war BS.

Inflation is a tax on the rich, unless the printed money is given back to the rich, which in this case it was, which is cronyism not socialism.

96   NastySlapper   2010 Jul 31, 6:56pm  

marcus says

Thanks Abe. I appreciate that, and it makes me want to give further consideration to some of your criticisms of the liberal mind set.

Admirable that you would consider thinking about something objectively simply because someone compliments you. 'Honest Abe' has actually used you to directly demonstrate his earlier assertions about your psychological underpinnings.

97   marcus   2010 Jul 31, 8:04pm  

No, I think he meant it. And if you were paying attention, I was just talking about how there are two sides to every issue. Even us non-sociopaths like to be heard and understood, when we make an effort to converse. My comment was meant as much as anything as an attempt to set an example. Showing some respect back.

You also might want to note I said "consider further." Meaning putting more time, sorting through and filling in a lot of the details and context and other side to what is a litany of perceived negatives.

But yeah, he meant it, it wasn't a trap. Worst case, he was being polite, and helping that back and forth come to a graceful finish. But as the kids say, you killed it.

Still, nice try. I know it's not easy to be as misinformed (or uninformed ) as you are about the Federal Reserve.

98   NastySlapper   2010 Aug 1, 1:03am  

Who cares if he meant it? That only strengthens my point.

You have clearly demonstrated that your logic is closely intertwined with your emotions. Both via your last exchange with Abe, and your last sentence to me (making assertions about something of which you have no specific knowledge, simply because you want it to be true).

You are a patent example of what Abe has described.

99   marcus   2010 Aug 1, 1:26am  

NastySlapper says

making assertions about something of which you have no specific knowledge, simply because you want it to be true

wtf ?

I spent hours discussing this, arguing this with you. And yes, I usually try as best as I can to listen to and understand the point of view who I am arguing with. That is where I got my "specific knowledge."

I fully expected Abe to be as closed minded as you or Ray have been when I argued with you. He surprised me, what can I tell you, even if he didn't mean it.

The ironic thing is that after we actually for once end a conversation on a nice note, you come in, what, with supposed logic, basically with only one message,... a message of hate,...attacking my psychological disposition. I wish you had the logic and lack of emotion to appreciate what you did there.

Happy Sunday to you too.

100   RayAmerica   2010 Aug 1, 2:18am  

marcus says

know it’s not easy to be as misinformed (or uninformed ) as you are about the Federal Reserve.

Nice example of a dismissive comment without any substance. Marcus, fully explain exactly the reasons "Nasty" is "misinformed (or uninformed)." If you do, you'll separate yourself from other Libs on this (Hi ellie) site that just make blanket statements without feeling the necessity to explain your position.

101   marcus   2010 Aug 1, 3:16am  

You obviously not only didn't read the thread, you didn't read my response to Nasty trying to say the same.

See your Ford thread, and read it to understand why I know you never even consider what I write.

102   PeopleUnited   2010 Aug 1, 5:00am  

As an ecologist, I have seen how in nature, over time balance is always restored. This is going to hold true for the human animal as well of course. The reason things get out of balance is people try to intervene to uphold some ideal. For example, we think housing should be more affordable so we establish rent controls. This has the effect of reducing the available amount of housing as landlords often find they cannot make a desired return on investment and thus quit maintaining their property. The intervention was worse than the "disease." This is especially true since when it comes to rents people are totally limited by what they earn. There is no need to intervene in the rent market, if people can't afford it, landlords will be FORCED by the wage market to reduce their rent prices.

Central planning fails, and will continue to fail. We best quit fooling ourselves into thinking that government can solve the problems of scarcity in our world. More often than not as governments grow, through wasteful spending, misallocation of resources and needless wars they cause more scarcity than they prevent.

103   NastySlapper   2010 Sep 10, 4:52pm  

jljoshlee3 says

this post is suposed to be about the fed’s mandate to keep inflation low

The FED is the cause of inflation.

104   rob918   2010 Sep 11, 4:07am  

speaking of The Deceptions of Price Stabilization, here's a real Fairytale as told by the HUD Secretary and is reported in today's Las Vegas Sun

http://www.lasvegassun.com/news/2010/sep/11/hud-secretary-says-vegas-housing-market-stabilizin/

105   elliemae   2010 Sep 11, 4:13am  

Well, then, the world is all flowers & sunshine. We should all move to Vegas because the market is stablizing.

Should we tell the oodles of people out of work and the miles of homes in foreclosure that they're out of the woods? I don't think they can afford the paper and lost their internet access, choosing to buy food instead...

106   Honest Abe   2010 Sep 12, 12:20am  

AdHo - your comment above is very clear and well stated. Its the 'invisible hand' at work. Unfortunately "the others" don't understand that simple concept.

107   marcus   2010 Sep 12, 2:18am  

AdHominem says

For example, we think housing should be more affordable so we establish rent controls. This has the effect of reducing the available amount of housing as landlords often find they cannot make a desired return on investment and thus quit maintaining their property

This makes some sense. But what you call balance wouldn't be pretty. Consider this.

Say you have an entire region of a major city with escalating rents, up to a price that 65% of the households can afford. Say the supply is such that 65% of the people that work in the area are enough to rent all of these units.

But among the 35% are people who are unemployed, underemployed or otherwise in VERY low paying jobs. How does letting balance occur address their needs? They were and are the reason for subsidized housing. Say their wages don't even support the cost of construction10 miles away?

Leaving the market to figure things out, you would eventually have huge ghetto areas with little better than shacks. In cold winter climates you would have to have public housing of some kind because the corrugated metal roofed shack doesn't work in New York or Chicago.

So you want supply and demand to determine the wage of the lowest skill jobs. And likewise for housing. It's not like this doesn't exist in many places in the world already.

Actually, I don't consider this balance. But if you do, please note that the balancing act isn't through there. If we go there, then crime including violent crime would be much worse, requiring government to spend much more on police and prisons. If you think about it, that would be just another way of injecting our government in to the "natural balancing process."

108   marcus   2010 Sep 12, 2:31am  

Oh, but this is something that Abe isn't willing to understand.

109   elliemae   2010 Sep 12, 2:43am  

Well, someone's got to be the contrarian. If it weren't Abe & his merry men, it would be someone else. They seem to be bogged down in semantics.

110   marcus   2010 Sep 12, 3:10am  

I was reacting to:

Honest Abe says

Its the ‘invisible hand’ at work. Unfortunately “the others” don’t understand that simple concept.

But also I was hoping that he might even consider what I wrote and that the "simple concept" of the invisible hand, is too simple.

111   elliemae   2010 Sep 12, 3:31am  

Marcus, I agree with you on many points, and also disagree with you on others. But I truly don't believe that anyone is standing behind the curtain. That concept is too "out there" for me.

112   marcus   2010 Sep 12, 3:33am  

What ? Maybe when you disagree, it is only that you don't understand, or that I'm not being clear enough.

113   marcus   2010 Sep 12, 3:39am  

Please elaborate about the guy behind the curtain. I have no clue what you mean. Is that a reference to wizard of Oz ?

114   elliemae   2010 Sep 12, 3:48am  

Honest Abe says

AdHo - your comment above is very clear and well stated. Its the ‘invisible hand’ at work. Unfortunately “the others” don’t understand that simple concept.

Yes, it was a Wizard of Oz reference to his statement that there's an invisible hand at work. Abe states that "the others" don't understand that simple concept, but it seems to me that he's a bit paranoid in his belief that someone is pulling the strings on just about everything.

marcus says

What ? Maybe when you disagree, it is only that you don’t understand, or that I’m not being clear enough.

It could be either, or it could be that we simply disagree. But I don't - nor do you - appear to believe that we are at the mercy of some guy who directs us all with an invisible hand. That's crazy talk.

115   elliemae   2010 Sep 12, 3:52am  

I have a friend who plays the obscure reference game with me. We leave messages for each other that take a while to figure out. Sometimes it gets away from us - sorry.

116   marcus   2010 Sep 12, 4:15am  

Appropriate that you mentioned semantics. "The invisible hand" is a reference to market forces. Abe and Adho were making a point that is not totally without merit. The Mises people take it to a whole other level.

For example many on this site may believe that the invisible hand of the market should have been allowed to take real estate more quickly down in price, to a true "equilibrium," that is, as far as it (the market) wanted. I agree with this in principal, but in reality things are more complex.

Markets tend to overdo it in both directions. Because real estate is leveraged in many cases, with mortgages, if prices had been allowed to fall more, it could have led even more to a negative feedback loop. That is, foreclosures causing lower prices causing more foreclosures and so on. And then negative psychology of this collapse feeding a negative spiral in other markets. At least this is a big part of the rationale for supporting the real estate market with mortgage subsidies, tax credits to buyers etc.

Ultimately it's about risk. The risk of total collapse was a risk that could not be taken. Those who say go with "the invisible hand" are right, that by supporting the market, and advocating what is actually sort of a false market, the government has created another problem.

Sometimes a choice is between 2 or more options which are both (or all) negative.

117   elliemae   2010 Sep 12, 4:38am  

marcus says

Appropriate that you mentioned semantics.

(ellie giggles, reminded of the way her grandmother used to say, "funny you should mention...")

point taken. :)

118   Bap33   2010 Sep 12, 4:49am  

Nomograph says

Honest Abe says
Its the ‘invisible hand’ at work.
Is that when you use your left hand so it feels like someone else?

he larry us

119   elliemae   2010 Sep 12, 5:13am  

Nomo is the king of snark. Ya gotta give him a hand.

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