Franklin Countys First News

Letter to the Editor: The real reason things cost more each year

Being involved with Town, local, school, and State budgets and spending since the early 1980’s, and having a household and business budget all these years, it’s really frustrating to see the numbers rise annually.
It’s also saddening to see townspeople, taxpayers, citizens, voters, often neighbors; argue, debate, and bicker, sometimes bitterly, over increases, while trying to set priorities.

It’s time the name the real culprits, and call them to task. It’s our very own Federal government, more specifically the Federal Reserve and the US Treasury.

In simpler days our fiat money was backed by gold, and silver. Remember our silver coins? Our fiat money supply was detached from its gold backing in 1974+/-, by President Nixon. Since then, the inflation of the money supply has continued. That is, dollars are created from nothing, either as printed paper bills, or lately, as digits on a computer. The Federal Reserve Banks loan this new money out, often to other banks, or sell bonds, sometimes to other countries, and, Presto! It’s in the system, more money.

Every year we have a federal deficit, money spent we don’t have, nearly every year since Nixon, (Clinton missed a few) is inflating the money supply by that amount. Remember Quantitative easing after the 2008 recession, Presto!, trillions of dollars from nowhere.

Just recently, the 2.5 trillion dollar Pandemic relief package. Presto! From nowhere to our money supply. Nothing was cut from the current Federal Budget.

Yes, our GDP has expanded, which softens the effect. But just look back at what a dollar could buy in 1980. How about even 2000? Look at prices rising now.

Don’t get mad at your Selectperson, School Board member, or State Representative; it’s not their fault. It takes more dollars each year to buy the same thing.

Call your Congress person and tell them; stop spending money they don’t have! Get mad, demonstrate, write letters, and send emails. Tell them to cut the federal budget and stop deficit spending, or else; Presto! Look for a new job!
Your Neighbor in Fiscal Responsibility,

Pete (P. Forrest) Tracy
Farmington

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8 Responses »

  1. Pete, the answer is simple. Our CongressIonal representatives are so far out of touch with Maine, I’m not sure how they can take a paycheck without laughing at us. Stop defending the big pigs at the money trough, schools and welfare are the problem. Ie. stop buying the same thing and say NO. Anyone that votes for more taxes is either blind, stupid or part of the problem.

  2. The big backfire happens when The Protesters and Socialists get what's left,,,Nothing.
    Just what they deserve.
    There Ya Go!!

    Everything Is Beautiful.

  3. What you say is true, Pete. I was born in the 1970s and there has been hyper-inflation in this country my whole life -- 3 to 5 percent a year at least. It has been going on so long that when I went to business school they taught us that was the "normal" amount. Do you realize that if John Adams had lost a dollar between the couch cushions at the brand-new White House, and if Teddy Roosevelt found it a century later, it would have had the same value? The constant inflation is deliberately designed to (1) prevent citizens from saving money (because it'll lose value in the bank) and (2) encourage us to borrow, to get in debt, and spend money we don't have. Unfortunately it's like a pyramid scheme, and it'll eventually come crashing down around us.

  4. By the 1970s the Gold Standard was becoming untenable. The US dollar was vastly overvalued, meaning it was cheap for Americans to travel and buy foreign goods, but US goods were very expensive thus hurting business. The dollar had become the defacto reserve currency, meaning dollars were issued that were not circulating in the US, but were in the global economy. If they had been exchanged for dollars at the guaranteed rate ($35 = 1 oz of gold), then it would not have taken much to drain the US gold supply. Charles De Gaulle even started doing that to demonstrate how much of a bluff the gold standard had become.

    Add to that the fact most new gold was in the USSR (at that time) and South Africa (which had apartheid), and economists argued that it was ridiculous to base the value of money on a commodity - especially one mined extensively by our cold war adversary. Moreover, inflation rates were rising at a faster clip than today by the late sixties when the US was still on the gold standard. Inflation rates now are relatively low by historical comparison.
    Here is the data on yearly inflation rates: https://www.thebalance.com/u-s-inflation-rate-history-by-year-and-forecast-3306093

    Economists generally believe that the law of supply and demand should set the price of a currency - the market. So in 2000 when the US had a surplus and was at peace, a Euro cost 88 cents, the dollar was strong. In 2008 when the US was in dire straights with high debt and war, the Euro cost $1.60, the dollar was weak. The Federal reserve board's task is to try to manage the money supply to keep inflation low; being independent, it has been pretty successful. Most of our problems are not due to monetary policy, but reckless fiscal policy (taxing and spending, and running up debt). I don't see any feasible way to return to a standard that arbitrarily sets the price of a currency to a commodity - even gold only has value to the extent the market says it does. Currencies reflect the policies, stability and economy of the country that issues them, and the market through supply and demand sets their value.

  5. There's no conflict between "the gold standard is untenable" and "what we have now is also untenable". What we have now is a system engineered to destroy savings, encourage debt, and keep us all spending beyond our means on low-quality products from China, to enrich Wall Street and to pump up economic statistics like GDP without creating lasting wealth. There has got to be a better way, a system that would incentivize savings, increase wages, and encourage businesses to produce better quality goods at lower prices. If gold is too scarce and unevenly distributed to base a currency on, maybe silver or copper should be the basis of our currency. Or maybe cryptocurrencies are the future (though I doubt it).

  6. Gold standard equals depression, that was a huge problem during the depression, banks were only good for the money they had that was backed by gold, $10,000 dollars was only good for $10,000 in gold, and the crash happened because the banks had no more money because at that time a bank's assets belonged to the bank and were worthless until sold for money which was then tallied with the federal reserve and added to the bank's gold backed money, when people drew out their money, the banks couldn't get more money because it would have thrown off the standard, so no seed money for businesses. Getting off the gold standard, and rather using the assets of the bank as a means to refund( called a bailout now) the bank in a lean time, bank grants a loan for a house, that house now has value of it's own because the government would buy the house from the bank(called an FHA loan today) to refund the bank. Well, the constitution has a clause "on the full faith and credit of the United States, this pretty much means the federal reserve which is a really big bank and part of the world banking system, the Government can't borrow more money than it has assets to cover, it is in the triple digit trillions, our current $21 trillion in debt, is only a small portion of America's total assets. So while people see it as the country just printing more money, the loan from the fed is just a mortgage on the Whitehouse, the Whitehouse is just an asset of the government, there are many, assets. Bases, tanks, ships, etc. are assets that the government can use to get loans from the federal reserve.

  7. I see that the Private Planet once again tried to blame a political group.This is a big part of the problem and everything is not beautiful as this is just more of the same distraction that divides us.

    Look at the letter. Deficit spending every year since Nixon, except for a few years with Clinton. It has been 46 years if we say from 1974 to 2020. In those 46 years,a Republican was President for 26 of the years (Nixon 2, Reagan 8, Bush I 4, Bush II 8 and Trump 4 if we include this year). A Democrat was President for 20 years (Carter 4, Clinton 8, Obama 8), but Clinton did not have a deficit for a few years.
    The current record deficit is result of a Republican President and a Republican Senate and House Majority that enacted the big tax cut. I would guess that if the Democrats win this year, they will no doubt have a deficit as well for their 4 years.
    This is not a Conservative/Liberal thing. This is a fundamental flaw in how our economy has been constructed for the last 50 or 60 years. And, Trump has the worst deficit on his watch, all before the pandemic so don't write replies that say he is different. He just is a better self promoter than any previous president

    If we want to bring jobs back to America, we need to break away from Globalism. In this case, we no longer need a giant military so we can slash the military spending by 67% as opposed to increasing it each year. We can then get out of all countries and spend a ton on job training programs. In the end, we can sustain ourselves. We have all the energy resources and food we need. Plus, no one can ever invade us.

    This will also mean the end of 8 tvs in every house, a new car every 2 years, a new iPhone every year etc.

    Is everyone ready to do their part of do we prefer to just sit back and blame some invisible enemy?

    Can we survive if we can't buy a 55 inch Smart TV because it costs too much?

    If we are not prepared to change ourselves first, then learn to live with the continued system, quite blaming the other guy and be prepared for things to get worse. I fault all Presidents and all people (myself included) as we all made this mess.

  8. Adam,
    Did I blame one party??
    Well, I see you did the same after saying you wouldn't..

    Maybe what's dividing us is hypocrisy.

    I'm opposed to the CMP corridor because I think the power glugging culture in Mass can learn some control instead of messing with Maine for an extension cord from Canada.
    So,, yes we are all in this together.

    I understand the costs of things like schools.
    I want the focus on the kids which means we need great teachers. We have a lot of those. Thankfully.
    I support this.

    I object to staff pushing the "activism of their personal choice" while they are on the clock.
    This,,,, is not their job.
    In today's "climate" it's all about be mad and protest.
    Don't Use Our Kids for your "message".
    If you do, don't get upset when the Indoctrination Talks starts up.
    Do your job and I'll go to bat for you every time.
    I promise I know it's a tough job.
    Please Hang In There.
    Just like Police,, we need you to be doing a great job.

    Were all big boys here who can civilly disagree, Right?
    (That probably offended someone,,,).

    Everything Is Beautiful.
    Yes It Is.

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