Spending Our Way To Prosperity

Link Between Federal Deficits And Money Supply Growth

In the graph below, you can clearly see the link between Federal deficits and money supply growth. Notice the yellow Monetary base rise (yellow line) in proportion to the each major federal deficits (blue line).

Link Between Federal Deficits And Money Supply Growth

The graph below shows the link between government deficits and inflation pre1980. The surge in inflation after each major deficit is crystal clear.

However, in 1982 the link is broken

The government still prints money

The disconnect can be seen in this long term graph comparing the growth of the US monetary base and historic inflation rates.

The next graph shows the disconnect even more clearly. The US money supply growth accelerates after 1982, while inflation slows down.


Deficits explode out of control and inflation/interest rates fall

Unemployment dropped like a rock

The Dow rallies sharply

Interest rates fall

After decades of fighting high interest, Congress phases out regulation Q (interest rate ceilings), and interest rates fall.

Gold prices crash

After decades of fighting gold prices, US stops regular gold sales. Gold prices then crash.

We're Spending Our Way To Prosperity

We' re spending our way to prosperity
Star-News - Google News Archive - Jan 24, 1998

We might not have known everything there was to know about world economics 10 years ago. but we knew this much:
The American century was over; Japan was the wave of the future. The evidence was overwhelming. Nine of the 10 biggest banks in the world were Japanese, Japan carried a huge trade surplus with us, the yen was replacing the dollar as the world' s strongest currency and the Japanese were buying up American icons like Rockefeller Center. Not only that, they made better cars than we did, their kids studied harder than ours did and their crime rate was lower.

American CEOs were practicing their bow from the waist, in preparation for greeting their new masters.

There was a reason for all of this, of course:
the Japanese knew how to save. They had the highest savings rate in the world, while we, as a nation, hardly saved anything at all. We were the flibbertigibbet grasshoppers, putting life on a credit card; the Japanese were the purposeful ants, saving for the future. Slowly but surely they were overtaking us in productivity, standard of living and just about everything else.

And it wasn' t just Japan, either. All of the Asian economics were going great guns. South Korea, indonesia, Hong Kong. even China had growth rates several times ours. I hey were all outsavrng us, outgrowing us; it was only a matter of time before we' d go the way of Britain, a once-first-class power living in past glory.

That was then. The story now is a little different. The Asian economics, awash in corruption we now find, are experiencing a crisis that suggests total collapse. Indonesia is a basket case; South Korea isn' t any better and Japan stands trembling in the winds of change. The Western economics are scrambling to get together multibillion-dollar bailout packages for the former Asian miracle-workers.
We are no longer afraid of them overtaking us; we' re afraid that if they go down, they' ll take us with them. Our stock market is looking over its shoulder even as it sinks.

What' s the problem? Funny you should ask.

The problem, it is generally agreed, is that Japan saves too much. Rather than spend its money on itself in a way that would stimulate its economy and encourage its citizens to buy goods from its struggling neighbors, thereby helping them back on their feet, it just continues to save and save. The Japanese economy has been in the tank for more than six years and they have yet to come up with an aggressive stimulus package.

Spend! we tell them. Buy a new TV set, take a vacation, borrow some money. Live a little. Be a grasshopper. But it is not in their nature.

We, on the other hand, are enjoying the best economy we' ve had in years —
low unemployment, high profits, trivial inflation all fueled by our willingness to go deeply into debt in the cause of immediate gratification. Consumer confidence we call it and we' re doing great, so long as the Japanese don' t screw it up with their puritanical attitudes toward consumption.

Actually, this entire matter is merely proof of something I' ve known for years, but have been un' able to convince my wife of:
Saving is a dangerous habit and should he kept under strict control. Oh, I don' t mind a little social saving, on special occasions, but that save- something-out-of-every-dollar sort of saving should be avoided at all costs. It' s too addictive.

I' ve known people who saved all their lives for retirement and put aside a pretty good pile. Then, when they finally retired, they couldn' t spend the money. They wanted to keep on saving. They' d neglected their spendthrift habits, you see.

Which has never been one of my problems. When I was a young reporter I made next to nothing. Considering I had a wife and two kids, it was less than nothing. But through all those awful years,
I never failed to spend more than I made.

As a matter of fact,
I generally spent in one year what I would make in the following year. When my wife would complain that we were always in debt, I would point out that our income was merely running a year behind us.

It worked out.

This is part of section 2 of paper. nearly done.


Below are the 21 sections of the major article I am working on.

Section 01: =====INTRO=====

Section 02: =====1982 Disconnect=====


Section 04: =====THE US TREASURY'S WAR ON GOLD=====

Section 05: =====Social security and democracy's warped incentives=====


Section 07: =====FOREBEARANCE-Choosing The Lingering Disease=====


Section 09: =====The US Ponzi Scheme=====

Section 10: =====Dismantling the free market=====



Section 13: =====MANIPULATION=====


Section 15: ===== BREAKING THE MEDIA=====

Section 16: =====DOLLARIZING THE WORLD===== (the major fraud I haven't written about yet. (Hint: Iran-Contra wasn't about the cocaine, the contras, or the guns. It was about the dollar. If not for Iran-Contra, the dollar would have collapsed back in 1982. )

Section 17: =====FOREBEARANCE=====

Section 18: =====SPREADING MORAL DECAY=====

Section 19: =====Looting the Europe===== (the last fraud)

Section 20: =====Reaching the breaking point=====

Section 21: =====US on verge of a disconnect=====

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