The United States Constitution has about 4500 words in it, including all the amendments. These 4500 words have stood the test of over 200 years. They not only govern a nation, but they help identify who we are as Americans. For the first time in history, people determined that certain rights were universal - they did not come from a King, or government. Because of this principle, this idea that we have certain unalienable rights that come from our creator, not from government, the American people have grown in ways unimaginable to most of the rest of the world. For this reason alone, we are the shining star on the hill for the rest of the world.
The health care bill that was recently passed has over 175,000 words in the bill. That is roughly 39 times the amount of words that govern this entire country. People have been arguing for over 200 years as to what some of the words meant in the Constitution. How long do you think people will be arguing what the health care bill really means??
Whether or not the idea of universal health care is a good one is a topic for another column (my opinion is that it is a bad idea). My fundamental question is, whether it is a good idea or not, is the idea of universal health care even constitutional? Maybe I can't answer that, I am not an expert in constitutional law, nor do I have a law degree. But I do have a copy of the constitution, and I have the ability to read - which may make me more of an expert than some lawyers.......
As best as I can tell, we are definitely witnessing history. From everything I can find, for the first time in history, in order to be a lawful citizen of the United States of America, you have to buy a product. Not only a product, but one that is being sold by a private company. Let me repeat that - the government is mandating that you buy a product from a private company. Now, I have looked long and hard through the Constitution. I cannot find any mention of the government forcing its citizens to buy any sort of product, never mind from a private company. Again, set aside whether health care is a good idea. Is it Constitutional????
Maybe you think to yourself, 'Well, maybe it is not Constitutional, but it should be!' My response is why should it be? If the government can force you to buy this product, what other product can they force you to buy? A government motors vehicle? 'Green' electricity that is 5 times the cost? Only certain foods?
This bill is a major expansion of the powers of the government and they know it. They realize this is a stepping stone to much greener pastures for them. If they can specify what citizens have to buy 'for their own well being and for their own good' - they can put their hands in so many of your pockets that your head will spin.
The Constitution provided for a limited Federal government. The people and states have relented much of their power to the Federal government - you must remember that the system was set up so that the people and states had the majority of the power. Unfortunately, that is not the case now.
Let me remind you again - we are now forced to buy a product, on pain of financial penalty. We are not expanding the number of hospitals, clinics and more importantly, we are not expanding the number of doctors. In fact, we will be giving all of them less money to provide the same services. Oh - and 30 million more people will now be flooding the existing system. How will it be possible to keep the same level of care, with all the extra people and the same number (and probably fewer) doctors? How much longer will it take to get tests done with that many more people in the system? How can there not be rationing of care? How can the government make you buy a product that you may not want or need?
4500 words versus 170,000. The first governs the country. The second may start the domino chain that leads to its destruction. Do words have meaning any more?
Tuesday, March 30, 2010
Wednesday, February 3, 2010
Federal Budget???
Webster's 'New World Dictionary', 3rd College Edition defines the word budget as:
According to the numbers in the 2011 budget released by the President this week, the government is expected to spend at least $3.8 trillion during the fiscal year of 2011, but only bring in $2.2 trillion during the same time frame. That leaves a projected $1.6 trillion deficit for the year. That means the government is projecting to spend at least 72% more money that it brings in.... I'm fairly certain that is not a good way to run a home, business or a government.
This deficit just gets added right to our national debt - a number so staggering it defies comprehension. The debt is so big, that the interest alone will be over $500 billion this year alone. It is projected that in the next few years, if nothing changes, all the income generated by the government from individual tax returns will do nothing more than pay the interest payment on the debt. If that is the case, how can the government fund any program??
Things will obviously have to change. The government can spend less, or they can try to generate more revenue. As one congressman put it the other day - "We have to spend our way out of this recession...." Based on that comment (which is absurd anyway you look at it) - I'm guessing they ain't gonna spend less.... So that means they'll tax more.
Let's look at some personal income tax statistics based on 2006 - the latest year I can find data. According to the Congressional Budget Office, the top 1% of all individual wage earners made 18.8% of all the income in the United States. However, they paid 39.1% of all income taxes. The top 5% of all wage earners made 30.1% of all income, yet paid 61% of all the taxes. The top 10% made 41.6% of all wages, and they paid 72% of all taxes. Finally, the top 50% of all wage earners paid over 99% of all the taxes.
Read that last sentence again. In 2006, half of all taxpayers did not pay federal income tax. These people receive all the same perks, benefits and services as the other 50% of the country yet do not contribute anything towards them. When fewer and fewer people have to pay a larger and larger share of the taxes you do not have to be a mathematician to figure out this is another recipe that won't work. Here's another little statistic for those who say we need to tax the rich more... If we were to take all the money away from everyone who is in the top 1% of wage earners, those making more than $332,000 in 2006, we'd have about $800 billion. A lot of money to be sure, but no where near enough to pay off the debt, the deficit or even pay for the health care bill. And since all their money has been taken away - who picks up their tab the next year???
So who do you think will get their taxes raised? The 50% of the people that don't pay anything, or the 50% that do? How much do you think the rich should pay in order to pay 'their fair share'? Remember, the top 1% already pay 40% of all taxes, even though they only account for 18% of the income. How about corporations and businesses? They should pay their fair share, right? Did you know the United States has the highest corporate tax rate in the industrialized world? And when they do get taxed more, do you think it hurts them or the customers that they have to pass the cost off to?
If you or I were running the government like a normal household, we'd have to slash spending. No one in our homes would like it. We'd be grumpy, but understand that we just didn't have the money to do the things we normally liked to do. We know if we didn't do it, we wouldn't have a house to live in, a car to drive and all of our prized possessions would be taken away.
The government doesn't think this way. They think they can keep spending forever with no regard to anything. Their talk about being financially responsible is smoke and mirrors. The current proposal to freeze discretionary spending takes effect next year - and only after they raise current discretionary spending from something like $600 billion to $715 billion. Only then, after the huge raise, will the freeze spending. Doesn't sound like financial stewardship to me.....
Finally, the talk about spending our way out of our problems should provoke our strongest outrage. And yet the public doesn't quite get it - so let me use a sports analogy. Athletes with some injuries to knees, elbows, shoulders and the like may opt for a cortizone shot to help relieve pain and allow them to continue to play. When the cortizone wears off, the pain comes back, often even worse. They may elect to get another shot. However, they know that this cortizone shot, while making the pain go away for awhile, does not solve the problem. In fact, if they keep getting cortizone shots, the problem and injury becomes much worse - potentially career ending. The only way to solve many of these types of injuries is surgery.
Now let's look at the government and their pain - namely recessions. Their idea is to give the injury a shot of cortizone - in this case a bunch of money. The next recession comes along, and the injury hasn't been fixed yet because the government hasn't changed their spending ways, so they inject more money into the system. The difference between the athlete and government is the athlete finally has surgery to fix the problem. Government doesn't. It simply adds more cortizone to the problem. Sooner or later that injury to our economy won't be able to be fixed.
Benjamin Franklin said the definition of insanity is doing the same thing over and over again and expecting a different result. You make the determination how insane our government is. I'll be holding on to my wallet......
'A plan or schedule adjusting expenses during a certain period to the estimated or fixed income for that period'Based on that definition, I'm not sure what the government does every year is considered a budget, as their expenses far exceed their income for the year. The whole purpose of a budget is to constrain your spending to that of your income. Can you imagine creating a household budget of $100,000 when your total household income for the year is $75,000? Unless you have a bunch of money in savings or hiding under a mattress, it won't take long for you to figure out that your 'budget' isn't working.......
According to the numbers in the 2011 budget released by the President this week, the government is expected to spend at least $3.8 trillion during the fiscal year of 2011, but only bring in $2.2 trillion during the same time frame. That leaves a projected $1.6 trillion deficit for the year. That means the government is projecting to spend at least 72% more money that it brings in.... I'm fairly certain that is not a good way to run a home, business or a government.
This deficit just gets added right to our national debt - a number so staggering it defies comprehension. The debt is so big, that the interest alone will be over $500 billion this year alone. It is projected that in the next few years, if nothing changes, all the income generated by the government from individual tax returns will do nothing more than pay the interest payment on the debt. If that is the case, how can the government fund any program??
Things will obviously have to change. The government can spend less, or they can try to generate more revenue. As one congressman put it the other day - "We have to spend our way out of this recession...." Based on that comment (which is absurd anyway you look at it) - I'm guessing they ain't gonna spend less.... So that means they'll tax more.
Let's look at some personal income tax statistics based on 2006 - the latest year I can find data. According to the Congressional Budget Office, the top 1% of all individual wage earners made 18.8% of all the income in the United States. However, they paid 39.1% of all income taxes. The top 5% of all wage earners made 30.1% of all income, yet paid 61% of all the taxes. The top 10% made 41.6% of all wages, and they paid 72% of all taxes. Finally, the top 50% of all wage earners paid over 99% of all the taxes.
Read that last sentence again. In 2006, half of all taxpayers did not pay federal income tax. These people receive all the same perks, benefits and services as the other 50% of the country yet do not contribute anything towards them. When fewer and fewer people have to pay a larger and larger share of the taxes you do not have to be a mathematician to figure out this is another recipe that won't work. Here's another little statistic for those who say we need to tax the rich more... If we were to take all the money away from everyone who is in the top 1% of wage earners, those making more than $332,000 in 2006, we'd have about $800 billion. A lot of money to be sure, but no where near enough to pay off the debt, the deficit or even pay for the health care bill. And since all their money has been taken away - who picks up their tab the next year???
So who do you think will get their taxes raised? The 50% of the people that don't pay anything, or the 50% that do? How much do you think the rich should pay in order to pay 'their fair share'? Remember, the top 1% already pay 40% of all taxes, even though they only account for 18% of the income. How about corporations and businesses? They should pay their fair share, right? Did you know the United States has the highest corporate tax rate in the industrialized world? And when they do get taxed more, do you think it hurts them or the customers that they have to pass the cost off to?
If you or I were running the government like a normal household, we'd have to slash spending. No one in our homes would like it. We'd be grumpy, but understand that we just didn't have the money to do the things we normally liked to do. We know if we didn't do it, we wouldn't have a house to live in, a car to drive and all of our prized possessions would be taken away.
The government doesn't think this way. They think they can keep spending forever with no regard to anything. Their talk about being financially responsible is smoke and mirrors. The current proposal to freeze discretionary spending takes effect next year - and only after they raise current discretionary spending from something like $600 billion to $715 billion. Only then, after the huge raise, will the freeze spending. Doesn't sound like financial stewardship to me.....
Finally, the talk about spending our way out of our problems should provoke our strongest outrage. And yet the public doesn't quite get it - so let me use a sports analogy. Athletes with some injuries to knees, elbows, shoulders and the like may opt for a cortizone shot to help relieve pain and allow them to continue to play. When the cortizone wears off, the pain comes back, often even worse. They may elect to get another shot. However, they know that this cortizone shot, while making the pain go away for awhile, does not solve the problem. In fact, if they keep getting cortizone shots, the problem and injury becomes much worse - potentially career ending. The only way to solve many of these types of injuries is surgery.
Now let's look at the government and their pain - namely recessions. Their idea is to give the injury a shot of cortizone - in this case a bunch of money. The next recession comes along, and the injury hasn't been fixed yet because the government hasn't changed their spending ways, so they inject more money into the system. The difference between the athlete and government is the athlete finally has surgery to fix the problem. Government doesn't. It simply adds more cortizone to the problem. Sooner or later that injury to our economy won't be able to be fixed.
Benjamin Franklin said the definition of insanity is doing the same thing over and over again and expecting a different result. You make the determination how insane our government is. I'll be holding on to my wallet......
Wednesday, January 27, 2010
What if you had to?
About 14 years ago my company paid for all of the salary employees to attend a Stephen Covey's '7 Habits for Highly Effective People' seminar. I'm sure it cost the company a great deal of money, and many of the employees didn't get anything out of it. Like many seminars, it had good points and bad, thinks to take from it and things to forget. I enjoyed it, still being rather impressionable and open I guess being just out of college. I enjoyed it so much that I volunteered to take the training necessary to become a facilitator in those same 7 Habits, so that we could bring it to the entire hourly population at the plant. It is amazing how much more you learn when you have to facilitate the material!
In any case, after these years I doubt I can name all 7 Habits. I still have the training material, gathering dust in a corner. But I still remember one important phrase I heard when I was originally taking the seminar. "What if I had to?"
The facilitator at the time brought up this phrase to make some point that I don't remember - but the gist of the idea is that we too often put up barriers, too often think that something can't be done, too often don't give ourselves enough credit for the things we can do. By saying that phrase, many of those barriers and negative thoughts can be erased.
I've said that phrase to myself over the years since then when I get stressed, or worried that something won't/can't get done. It especially comes in handy when my 'To Do' list at work gets long, and the phone is ringing, with 153 emails to answer. It is very easy at that point to get overloaded and self-destruct into a heap. However, by saying and thinking about these 5 words, I've found they've given me strength and resolve, and a better sense of purpose, when I find myself in those positions.
When you think about the words - really think about them - they hit home (at least to me). What if you had to? What would you do differently if you had to? How could you succeed if everything depended on it? What if failure was not an option?
Some might say that this may just add stress to the situation. I disagree. It is when you are stressed the most and not thinking clearly that this brings clarity to the situation. You immediately prioritize what is most important. In most cases, the path becomes remarkably clear, as the fog lifts from your brain waves, showing you the way. You may not like the answer or the path shown, but deep in your heart you know that probably is the only road to take.
When I look at the path that our government has taken these last years/decades, I realize that they constantly look for the quick and easy fix. They are not solving the real problems, the underlying issues that they are making bigger and nastier by not addressing. We are now at the point where we need to demand of the government to answer the question - "What if YOU had to?" What if you had to fix the health care system - really fix it? What if you had to fix the debt problems? What if you had to fix social security, medicare, etc. etc. etc. What if you had to fix these problems so that we don't fall off another financial cliff into oblivion?
First, they'd say that they are trying to do just that. They'd never admit to you that in order to fix it right, they are worried that they'd never get reelected. They don't want to make the hard choices. The truth of the matter is, the only choices that are left are hard. I believe the American people can accept that truth if properly told to us. No doubt we will be mad, and angry and our lives greatly affected. But show us the way, the path that deep down in our hearts we know to be true, and we'll follow it. We'll follow it because we know that it'll be better for our kids, our grandkids, and for the generations to follow. We'll follow that path because we've asked that question of ourselves. Americans have shown for more than 200 years that we are willing to roll up our sleeves and get to work to solve the grandest of problems - we just need to be pointed down the path. When asked at the end of the Constitutional Convention in 1787 what kind of government we had, Benjamin Franklin responded "A Republic, if you can keep it". That caveat holds no less true today.
'What if you had to?' That has a lot more promise in it than the words - 'What if we don't.'
In any case, after these years I doubt I can name all 7 Habits. I still have the training material, gathering dust in a corner. But I still remember one important phrase I heard when I was originally taking the seminar. "What if I had to?"
The facilitator at the time brought up this phrase to make some point that I don't remember - but the gist of the idea is that we too often put up barriers, too often think that something can't be done, too often don't give ourselves enough credit for the things we can do. By saying that phrase, many of those barriers and negative thoughts can be erased.
I've said that phrase to myself over the years since then when I get stressed, or worried that something won't/can't get done. It especially comes in handy when my 'To Do' list at work gets long, and the phone is ringing, with 153 emails to answer. It is very easy at that point to get overloaded and self-destruct into a heap. However, by saying and thinking about these 5 words, I've found they've given me strength and resolve, and a better sense of purpose, when I find myself in those positions.
When you think about the words - really think about them - they hit home (at least to me). What if you had to? What would you do differently if you had to? How could you succeed if everything depended on it? What if failure was not an option?
Some might say that this may just add stress to the situation. I disagree. It is when you are stressed the most and not thinking clearly that this brings clarity to the situation. You immediately prioritize what is most important. In most cases, the path becomes remarkably clear, as the fog lifts from your brain waves, showing you the way. You may not like the answer or the path shown, but deep in your heart you know that probably is the only road to take.
When I look at the path that our government has taken these last years/decades, I realize that they constantly look for the quick and easy fix. They are not solving the real problems, the underlying issues that they are making bigger and nastier by not addressing. We are now at the point where we need to demand of the government to answer the question - "What if YOU had to?" What if you had to fix the health care system - really fix it? What if you had to fix the debt problems? What if you had to fix social security, medicare, etc. etc. etc. What if you had to fix these problems so that we don't fall off another financial cliff into oblivion?
First, they'd say that they are trying to do just that. They'd never admit to you that in order to fix it right, they are worried that they'd never get reelected. They don't want to make the hard choices. The truth of the matter is, the only choices that are left are hard. I believe the American people can accept that truth if properly told to us. No doubt we will be mad, and angry and our lives greatly affected. But show us the way, the path that deep down in our hearts we know to be true, and we'll follow it. We'll follow it because we know that it'll be better for our kids, our grandkids, and for the generations to follow. We'll follow that path because we've asked that question of ourselves. Americans have shown for more than 200 years that we are willing to roll up our sleeves and get to work to solve the grandest of problems - we just need to be pointed down the path. When asked at the end of the Constitutional Convention in 1787 what kind of government we had, Benjamin Franklin responded "A Republic, if you can keep it". That caveat holds no less true today.
'What if you had to?' That has a lot more promise in it than the words - 'What if we don't.'
Monday, January 25, 2010
12,314,704,784,213 is a BIG number!!!
Did you know that the outstanding public debt, as of today, January 25th 2010, is $12,314,704,784,213?? That's 12 TRILLION dollars. But what the heck is a trillion of anything? I mean, everyone knows it's a big number.... but just how big is it??? Here are a few ways to think about how big the number actually is......
As this number continues to grow, it eats up more and more of the available resources in the economy. Simply put, the government must set more and more money aside to pay the simple interest on the debt. So what can the government do? Can they pay it off? Maybe, maybe not. One way they may be able to pay it off is to have large inflation in the upcoming years. Remember, inflation is basically the decrease in value of the dollar, or simply put, inflation is an increase in the money supply. So, if there is rampant inflation in the upcoming years, the $12 trillion isn't worth as much as it is today. Because there are more dollars floating around, the debt is actually worth less. This works out well for the government - they can pay the debt down - but it ruins the average citizen. Just remember the late 1970's....
We are quickly coming to the point in our history where the debt is becoming more than a serious issue. Our government continues to spend money they don't have, money that is created from nothing. This fiscal insanity is putting the country on a track of financial destruction.
Think about how big $12,314,704,784,213 really is. Think about the fact that congress has to raise the debt ceiling - maybe another $1.9 TRILLION - in the near future because of interest on the debt and their continued spending. Then think about what you would do if you were running the show... or how you would have everything taken away from you if you attempted to act like this with your own finances.
$12 trillion... on the way to $14 trillion... maybe we should hold our government just as accountable for their financial decisions as they hold us for ours.... as Thomas Jefferson said, "Question with boldness...." Maybe it's about time we start!!!
- According to the government, the estimated population of the United States is approximately 307 million people. That means, every man, woman and child owe approximately $40,000.... each.....
- If you had that much money in $1 bills, and laid them end to end around the equator, you could go around the equator 789,626,299,495 times!
- If you could stack that many dollar bills, they would reach 835,751 miles in the air!
- It takes 8 minutes and 19 seconds for light from the sun to reach the earth, which is about 93 million miles away from the sun. If the earth were 12 trillion miles away, it would take light from the sun 475 DAYS to reach earth!!!
- You would have to spend $16,773,500 per day, since January 1st of the year 0 - that's right ZERO - through today to spend $12 trillion dollars.
As this number continues to grow, it eats up more and more of the available resources in the economy. Simply put, the government must set more and more money aside to pay the simple interest on the debt. So what can the government do? Can they pay it off? Maybe, maybe not. One way they may be able to pay it off is to have large inflation in the upcoming years. Remember, inflation is basically the decrease in value of the dollar, or simply put, inflation is an increase in the money supply. So, if there is rampant inflation in the upcoming years, the $12 trillion isn't worth as much as it is today. Because there are more dollars floating around, the debt is actually worth less. This works out well for the government - they can pay the debt down - but it ruins the average citizen. Just remember the late 1970's....
We are quickly coming to the point in our history where the debt is becoming more than a serious issue. Our government continues to spend money they don't have, money that is created from nothing. This fiscal insanity is putting the country on a track of financial destruction.
Think about how big $12,314,704,784,213 really is. Think about the fact that congress has to raise the debt ceiling - maybe another $1.9 TRILLION - in the near future because of interest on the debt and their continued spending. Then think about what you would do if you were running the show... or how you would have everything taken away from you if you attempted to act like this with your own finances.
$12 trillion... on the way to $14 trillion... maybe we should hold our government just as accountable for their financial decisions as they hold us for ours.... as Thomas Jefferson said, "Question with boldness...." Maybe it's about time we start!!!
Sunday, January 24, 2010
Inflation vs Deflation - What does it really mean?
How many articles have been written over the last year and a half talking about the prospects of inflation or deflation? I'm sure someone can find out, but I doubt I'd be wrong to say thousands... I've read quite a few, and a lot of them have been very technical in nature, which only confuses the majority of readers even more. I'm not an economist or play one on t.v., but from everything I've read and come to understand, here are some differences between inflation and deflation:
Ok - so we know the general definition of inflation and deflation. What does that mean to the average household? Since the Federal Reserve came into being, the United States has generally experienced an ongoing period of inflation. In fact, since the Fed's inception, the value of the dollar has decreased by 95%! So what can we learn from this period? Generally speaking the banks and financial markets have done well during this time period. Why? Well, when the gov't creates money, the banks get first crack at the new money. You can think of them as the middle-man. The common folk of the country get it last, through loans, paychecks, etc. Whenever you are the last in line, you always get the scraps. In this case, the people/banks/institutions that had the 'new' money before the average joe get rich . Inflation also has hurt the middle class in that since about 1972, people's real wages actually have gone down. Salaries and raises have not kept up with inflation, resulting in a lower 'real wage'. The gotcha is, most people think that they are doing better because they get raises every year. So people have been lulled into a sense that everything is OK.
What would happen if we had deflation? What tends to happen is that the prices of goods drop quicker than salaries, resulting in a higher 'real wage'. That is, peoples salaries aren't dropping as fast as prices, so they have more bang for their buck. The downside of deflation is, sooner or later employees become too expensive and unemployment takes off. This is best seen during the Great Depression in the 1930's. What's interesting about that time period though, is that butter and meat consumption per person actually rose during that time frame, as well as an increase in charitable giving. This increase is precisely because of the increase in the 'real wages' of the worker, and is often overlooked in history books.
In the end, neither inflation or deflation works out well for us citizenry. What works best for the normal folks is to have a stable dollar. However, that doesn't help the financial firms, banks and other 'fat cats'. They can't make the big bucks by having a stable currency - but unfortunately they are the ones in power. Unfortunately, once they got in power, our past generations were not aware enough to kick them out. We need to realize what is going on here and make our government understand that we are in charge, not the financial markets.
My first blog is about complete. I hope I've been helpful in explaining what inflation and deflation really mean. Neither one is necessary - we went for long stretches in this country's history without having either. They are now a result of monetary policy which is not designed to help out the average citizen. President Andrew Jackson saw this very thing when he abolished the central bank in the 1830's. Thomas Jefferson warned of a central bank repeatedly. Maybe now is a good time to remember the old adage... 'Those who do not learn from history are doomed to repeat it'.....
Thanks for reading, and remember it's always ok to ask 'Why?'
- Inflation simply occurs when the gov't, by way of the Federal Reserve, prints more money than is destroyed in a time period, usually a year. A good example is that if the government produced 5 widgets this year, and there was $100 in the money supply to buy those 5 oranges, then each orange would cost $20. However, if the government decided to print more money, and the next year there were still only 5 widgets, but now there was $200 in the money supply, then each orange would then cost $40. Nothing else changed, except now there was more money available, and the price per widget went up.
- Across-the board prices generally go up because of inflation, not the other way around. The laws of supply and demand obviously have to be taken into account - so I am strictly talking about general, across the board price increases that we see every year.
- Deflation occurs when the gov't decreases the money supply, by any number of ways. Using the above example with widgets, if the gov't decreased the money supply from $100 to $50, then those same 5 widgets now cost $10 instead of $20.
- Across-the board prices generally go down because of deflation, not the other way around.
Ok - so we know the general definition of inflation and deflation. What does that mean to the average household? Since the Federal Reserve came into being, the United States has generally experienced an ongoing period of inflation. In fact, since the Fed's inception, the value of the dollar has decreased by 95%! So what can we learn from this period? Generally speaking the banks and financial markets have done well during this time period. Why? Well, when the gov't creates money, the banks get first crack at the new money. You can think of them as the middle-man. The common folk of the country get it last, through loans, paychecks, etc. Whenever you are the last in line, you always get the scraps. In this case, the people/banks/institutions that had the 'new' money before the average joe get rich . Inflation also has hurt the middle class in that since about 1972, people's real wages actually have gone down. Salaries and raises have not kept up with inflation, resulting in a lower 'real wage'. The gotcha is, most people think that they are doing better because they get raises every year. So people have been lulled into a sense that everything is OK.
What would happen if we had deflation? What tends to happen is that the prices of goods drop quicker than salaries, resulting in a higher 'real wage'. That is, peoples salaries aren't dropping as fast as prices, so they have more bang for their buck. The downside of deflation is, sooner or later employees become too expensive and unemployment takes off. This is best seen during the Great Depression in the 1930's. What's interesting about that time period though, is that butter and meat consumption per person actually rose during that time frame, as well as an increase in charitable giving. This increase is precisely because of the increase in the 'real wages' of the worker, and is often overlooked in history books.
In the end, neither inflation or deflation works out well for us citizenry. What works best for the normal folks is to have a stable dollar. However, that doesn't help the financial firms, banks and other 'fat cats'. They can't make the big bucks by having a stable currency - but unfortunately they are the ones in power. Unfortunately, once they got in power, our past generations were not aware enough to kick them out. We need to realize what is going on here and make our government understand that we are in charge, not the financial markets.
My first blog is about complete. I hope I've been helpful in explaining what inflation and deflation really mean. Neither one is necessary - we went for long stretches in this country's history without having either. They are now a result of monetary policy which is not designed to help out the average citizen. President Andrew Jackson saw this very thing when he abolished the central bank in the 1830's. Thomas Jefferson warned of a central bank repeatedly. Maybe now is a good time to remember the old adage... 'Those who do not learn from history are doomed to repeat it'.....
Thanks for reading, and remember it's always ok to ask 'Why?'
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