Essays

Also, I can find no record of my essay "I Love The Smell of Asymmetric Warfare in the Morning." So, if anyone has it, please send me a copy. 

Inflation vs. Deflation: 

Embracing Incentives and Reality

Mr. Mason Hawley Ballowe

Trigger Warning

Background: 

First, what is the dollar? It’s a store of labor. You trade your time for money under the belief it will have the same value when you need to use it in the future. It is just a small contract. Every day, the creator of that contract, violates it. 

In the current American macroeconomy, the federal reserve controls the supply of money, and the interest rate at which the money is lent. This is an insane amount of power for an unelected entity, especially when there is a law outlawing competition, as minting money is illegal. 

Interest Rates: In the previous article on student debt relief, I did a deep dive on the true cost of interest rates. Roughly a one percent interest rate change, is an actual five percent cost increase. It’s using math to hide cost. 

Supply Of Money: If you increase the quantity of something, its value decreases. Every day when the fed prints money, or creates it digitally, it decreases the value of every existing dollar. This is what they call inflation. Strangely, without the fed creating new money, deflation would become the natural state. As dollars were destroyed through poor care, the dollar would naturally increase in value daily. 

Inflation Deep Dive. 

There are proponents of inflation. There are people who say devaluing the bedrock of the economy is a good thing. They are idiots. These retards state that by devaluing the currency, it’ll incentivize investment, because the cost of failure is lower as investors will be paying for the failure in future devalued money. The tyrant also apparently believes that only the investor matters. Finally, the fool doesn’t understand the long term opportunity cost of labor. 

First, the argument of the idiot who thinks there is value in devalueing currency. The fiduciary stability of an economy is the foundation upon which all other things rest. Devaluing it just makes numbers in reports look bigger. The Sound of Music only made $287M in 1965. Avengers made $1.52B in 2012. Which is better? An additional cost the idiot forgets, is the loss in confidence in trust of the dollar, as well as the actual efficiency loss of carrying more tokens to achieve the same objective. 

Next, the argument of the retard. Incentivizing investment can be a good thing, if you think you’re smarter than the free market. No individual is. Hayek’s The Fatal Conceit extrapolates this quite well. The retard is conceited enough to think he or she knows you better than you know yourself. As a result, they invest in market inefficient options. These inefficient investments are more likely to fail, creating a compounding systemic collapse of businesses that were never market efficient and never had a chance to succeed in the first place. 

Then, there’s the argument of the tyrant. The tyrant only values himself or herself. No value is placed on labor. This is why salaries do not keep pace with inflation or the cost of living. The tyrant doesn’t value his customer either. As a result, the tyrant no longer has workers that can afford to work for him, or customers to afford to acquire his products, and his entire venture becomes lost. 

Finally, there's the cry of the fool. The catastrophic cost of this market intervention is long term inefficiency also known as the opportunity cost of labor. We have a generation of students learning pronouns instead of how to repair anything of value. Our infrastructure is crumbling, and we have more individuals skilled at fixing our feelings than fixing our foundations. 

Deflation Deep Dive:

Deflation occurs when the value of the dollar increases in a given year. Talk about a negative sales pitch or modern witchcraft. The word choice just sounds bad, calling it deflating the dollar, when it’s increasing the value of the dollar? 

Deflation, as already stated, is the natural state of any finite asset. The world is entropic in many ways. This creates value for the dollar annually. 

Deflation means every worker gets a natural raise annually, without adjusting their salary. Managers can greedily offer new workers lower wages to compensate, naturally rewarding seniority.

The Mind Boggling Inversion

Assume 3% annual inflation in this example: 

The grand impact is insane. Every year, every worker with a stable wage, makes 3 percent less than the year before. This means they likely will consume less, or take on debt. Debt becomes a compounding negative to their demand, as they are now paying off debt and usury interest instead of investing in their local markets. 

Since the fed’s inception, the dollar has lost roughly 99% of its value. Imagine if instead, the dollar was worth double its value of 1913. 

In my high school, one of my favorite English teachers had a sign hanging in the back of the classroom. It was an old aluminum advertisement for a single coca cola classic in a glass bottle. I do not know the size. It said “a nickel drink worth a dime.” because it only cost a nickel. 

We toss nickels in the cupholders in case we run into a toll one day, but imagine if a penny could buy a coke. That’s what the federal reserve has taken from you.

Finally, I want to go into game theory. Specifically, the "Prisoner's Dilemma." This theory states that in a given set of circumstances, an individual may be forced to surrender their values and take an action to survive or maximize. In an inflationary world individuals take out debt to create a business because that is the only path offered, especially with federal interest rates as high as they currently are. Currently, almost no one can make money anymore. The anaconda of regulation and banking has stifled free thinking and prosperity to the point the prisoner is now the warden, unable to see the jailhouse as his own prison. The dilemma is both real, and compounding. 

Solution:

End the Fed. Create a localized fed at each state. I have no idea what each state will create. Likely one will be great. Enable each state’s currency to be traded without restriction within all 50 states. Issuing its own currency, with its own interest rates. Which state’s currency will be a good investment? Likely not California.

There are probably better solutions that do not involve government. What Would Ron Paul Say? 

Thank you for reading.