The financial tug of war.I.

At the bottom: what is money?

Contemporary financial Liberals argue that gold and silver are "barbaric relics" and that the real money is the fiat currency printed by Central Banks commanded by Liberal governments. This myth gives rise to several other myths: 1. that the US can print money without consequence; 2. that we owe the debt to ourselves; 3. that it is a good thing to weaken the dollar (let's us export more). These myths can be easily exploded and I won't bother to repeat the process of doing so. Instead, I will concentrate on the consequences of these beliefs as they lead to action by the Liberal financial elite.

The US Dollar.

The central player on the financial scene is the US Dollar and its manipulation. The FED and its zombie banks maintain Liberalism by counterfeiting the Dollar and 'loaning it' to zombie banks, who can then turn around and loan 10x as much to customers. As long as the FED does not overdo it, the resultant inflation is small and the populace can be made to believe that inflation is a natural phenomenon.

As long as other Social democracies (meaning left-leaning governments) follow the same path, the rate of descent of the value of the dollar can be controlled by manipulating the interest rate (the Prime Rate the FED charges to banks for using the counterfeit money) and by adding/withdrawing fiat currency by telling the banks how much of funds they have to keep as reserve.

The economic use of the US Dollar.

The way it normally works is that the rate of inflation is controlled by the amount of money put into circulation (- the downward pressure on prices due to industrial innovation), which sets the interest rates. The FED can intervene and does by setting the Prime Rate.

The FED puts out money by selling Treasury Bills, which are IOUs by the US govt. The FED can write itself checks (and pretend that these checks are assets) and buy back some of the IOUs (Treasury Bills) and this is called Quantitative Easing. It is counterfeiting in a big way.

The bond vigilantes.

These are folks who buy bonds. If the interest rate is too low, they won't buy. This puts an upward pressure on interest rates.

Interest rates.

These are used by the Social Democrats to spur growth. Reducing the interest rate makes it easier for business to borrow. But it also increases inflation.

The hidden tax.

The outcome of all this is that a parasitic class of government regulators and bureaucrats is supported not just out of taxes, but running deficits. Inflation is a hidden tax used to finance the parasites.

Hyperinflation: the ultimate result.

As the National Debt rises due to the increase of income transfers and other govt programs, the day comes when the amount of money printed becomes so large that inflation becomes uncontrollable. That's hyperinflation.