Here is the first in a series of posts that address practical problems. What can we do to make our government work? When it comes to government, don’t most of us feel helpless?

Woe is me! I am just one small lonely voice. The problem is so big and complicated. What can I do?

We solve big problems by breaking them apart into smaller, more manageable problems. If a problem is still too big for us, we join forces with other, like-minded people. Otherwise, the only excuse we have is that we have other problems that are more important we must solve first.

So, here is a simple example. There is lots of news about inflation.

Most of the news is relatively useless. Why? Most of the big media outlets are more interested in propagandizing us than informing us. When a huge company owns a news media outlet, that outlet becomes more valuable as a propaganda device for furthering the company’s political agenda (think Crony Capitalism) than it is as a profit making news outlet that its listeners have a good reason to trust.

What is inflation? Check out Inflation Definition: Formula & How to Calculate (investopedia.com).

Is inflation a horribly complex subject? No, and we have to understand the value of money. Because have to have money to buy the things we need for ourselves and our families we have to know how to use money wisely.

The first thing to realize is that the US dollar is fiat money (see Fiat Money Definition (investopedia.com). That is, our money is no longer backed by gold or silver. So, why is the US dollar worth anything? Taxes! Our government insists we pay our taxes with US dollars, and we pay lots of taxes. The need to pay our taxes creates a demand for those little green pieces of paper that they otherwise they would not have. And NO! That does not mean that a 100 percent tax rate would be a good thing.

How does the US dollar maintain its value? Historically, the Federal Reserve has tried to limit the money supply so that the growth of the money supply does not exceed the growth of the supply of the goods and services we buy with our money.

Congress, however, can just spend money that our government collects in taxes. That effectively increases the money supply, and the Federal Reserve cannot stop Congress. Only Congress can stop Congress, and Congress struggles to control its spending.

Why does Congress struggle with spending? Because legislators gain influence and power by spending our money, legislators suffer a strong temptation to spend freely. Spending is the big way congressmen bring home the bacon (Bring Home The Bacon | Definition of Bring Home The Bacon by Merriam-Webster) for their districts and states. Hence, we almost always have some inflation. Apparently, ambitious people think gaining power and influence has a higher priority than balancing the budget.

Is inflation a problem now? Consider these numbers from CPI Inflation Calculator (bls.gov) (U.S. Bureau of Labor Statistics (bls.gov))

Because the Biden Administration is trying to spend lots of money, we have already seen significant diminution in the value of a dollar.

If we project these last four months out for an entire year, that is an inflation rate of 7.05 percent.

How does that compare to the prior administration? Well, here is the calculation for the Trump administration.

The yearly average computes to an inflation rate of 1.92 percent.

What about the Obama administration?

The yearly average computes to an inflation rate of 1.88 percent.

Obviously, the spending surge has to stop. What can we do? We can help Congress control its urge to spend by insisting upon a balanced budget. Send your member in Congress and your senators a note. Tell them that you hold them responsible for establishing sensible budget priorities and balancing the budget. Tell them that you hold them responsible for maintaining the stable value of our currency.

You can contact your member of Congress and your senators at the links below.

What is the alternative? Imagine what happens if our money becomes worthless.

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  1. Tom,

    I will contact my Congressional Reps again but because they are Democrats who in my opinion are on a mission to spend as much as possible in a short of time as possible to fulfil their agendas, frankly it will fall on deaf ears.

    They really do not care if they are fueling inflation by pumping excessive amounts of dollars into the economy, in my opinion. They consider it collateral damage necessary for their agendas.

    Besides, inflation hurts people who have or save money more than those who do not.

    What is needed is long range bipartisan planning and moderation goals to make certain not to overheat the economy and create excessive demands on goods and services with a demand push to fuel resultant inflection.

    Perhaps the 2022 election restores balance in Congress is the best hope to hopefully restore fiscal sanity and responsibility in Congress by both parties.


    Regards and goodwill blogging

  2. boudicaus says:

    Reblogged this on boudica.us and commented:
    H/T Citizen Tom

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