Soaking the Poor

Those who believe that Barack Obama is a savior for the poor, working and middle class, just had their hopes dashed. The junior Senator along with the other criminal element in D.C. just passed the "Soak the poor" bailout bill supposedly designed to "save" the U.S. financial system.

What will this mean for us here in the states? Well, first off it will mean that the national debt will be enlarged in order to help rich bankers. This is money for which those of us, primarily in the middle class will be on the hook. As the national debt climbs more and more of our GNP will be devoted to paying the interest on this debt. So long term this will affect taxpayers.

In the short term this will affect the poor and the working poor and the middle class by raising the cost of living. The money that the state will use to bailout the financial industry will be newly manufactured fiat money. Which means that it will instantly devalue any dollars you and I have in our pockets and in our savings. Those with tangible assets, like real estate and precious metals will realize an increase in their value as the market adjusts. Additionally food prices and other perishable and non-perishable prices will become relatively higher — relatively, that is, to what they otherwise would have been.

How does this work? Well, money is part of any market economy, therefore it is subjet to all the rules of economics. The rule of supply and demand is the one that regulates value. When a potato crop fails, the cost of potatos goes up because of their scarcity. Likewise when their is a bumper crop, the potato farmers get less per pound, because there is more competition. Competition always drives the price down. Sometimes to bolster prices the military will buy "surplus" food from farmers to help them lower the overall supply and bolster prices. Of course then also demand for a product determines the price as well. If a study came out about tainted potatos and everyone started eating rice as a side, this would decrease demand and even during a year with crop failures, potatos may not rise in price. Money, however is a medium of exchange, and is necessary whether you buy potatos or rice. The demand for money changes only with the international markets and inflation. For example, if there were only 1,000 dollars in existence, the scarcity of dollars would drive up the buying power of the dollar and a new car might cost $1. If the government printed another 1,000 dollar bills, all other things remaining equal, the cost of a new car would now be $2. So, with the expansion of the money supply by the FED, it will now cost more money for all people spending dollars to live.

With the latest welfare package for rich bankers passing in congress, the stage is set for increased misery for the rest of us. The recession was nothing more than a correction of the inflationary practices of the FED. Having further inflated the supply of money, there will have to be another correction to stablize the economy. Depending on how the money system is inflated this could be sooner or later, but I wouldn't pull that money out of your matress just yet. For more information on money and how it works, download this free eBook, "What has Government Done to Our Money" By Dr. Murray Rothbard.