If you haven’t read the introduction to Critical Government Theory, read it here
INTRODUCTION
The definitions we use in this chapter are what we call “rabbit hole” definitions which simply tell it as it is and works to provide you with a true understanding of what is happening in the world today as it relates to money.
So, what is the relationship between wealth, money and currency?
Wealth is your time and Freedom (money is not wealth)
Money is simply a tool for trading your time or resources and a means of storing your economic energy (in a bank, in your pocket or under your bed) until you are ready to use it.
Currency is an aberration of money. It does not act as a store of value or of economic energy, rather, it steals your time and freedom through government-sanctioned inflation.
SHOP CRITICAL GOVERNMENT THEORY
Currency facilitates the transfer of wealth from the poorest in society to the richest. Oftentimes, this wealth transfer is blamed on corporate greed. The recent covid-19 pandemic was a great facilitator of this wealth transfer.
The government shut down small businesses, disrupting supply and demand as well as creating an economic environment where inflation rose to historic levels, resulting in the theft of the value of your savings and income, thus causing you to spend more of your time working to maintain or increase your wealth.
Because wealth is never destroyed but transferred, a crisis presents opportunities that knowledgeable people in society often capitalize on. For example, if the housing market crashes, the owners of those homes sell at a loss, but the buyers benefit by purchasing at a much more affordable rate; oftentimes, wealthy individuals buy up large swats of real estate during these times of upheaval. A crisis is a big money maker (for some). Educating yourself on how money works is key to protecting you and your family from an economic crisis as well as building a legacy for your children and your descendants.
Section 1
Money VS Currency
To better understand money and to understand why the poor get poorer and the rich get richer, we jump down the rabbit hole of the differences between money and currency.
These are the features of currency:
Medium of exchange (allows you to trade time and resources)
Unit of account (Monetary unit of measurement of the market value of goods, services etc.)
Portable (Able to transport with ease)
Durable (Is not easily destroyed or tampered with)
Divisible (You can make change with it)
Fungible (Its interchangeable as a dollar in your pocket is worth a dollar in my pocket)
Money is everything above in addition to being a store of value (usually over a long period of time). This is the factor that is most important. Because governments have the ability to create currency out of thin air, it transfers the wealth from your pocket to themselves and the banking system, making it impossible for it to be a store of value.
Real money is limited in supply, cannot be created by the government and thus maintains its purchasing power. Three examples of this are gold, silver and decentralized cryptocurrency tied to productivity (or some other resource of limited supply). Currency today, known as fiat currency is not backed by limited resources, but backed by a promise of Government that it will not take advantage of the monetary system (well that was a lie). If you are holding any paper money or coins in your pocket or the bank, you are holding something that is worthless.
This is why the rich do not hold on to currency, they instead trade it for something that has value. They purchase real estate, businesses, gold, silver or other natural resources, I call it the rat race of the rich. In order for them to maintain the value of their hard work, they have to get rid of the fiat currency they earn as fast as possible in exchange for a real store of value. It’s not just corporate greed that sees companies buying as many homes, land and businesses as they possibly can, it's just a race against the government to prevent it from stealing their savings and earnings, something you should be doing too if you want to survive an economic disaster.
Here’s another thing that currency causes; two parents working while someone else raises their children. Remember that time in history when only one parent had to work to provide for the whole household? That was a time when the currencies of the world were backed by gold, and not a promise. The moment currency was taken off the gold standard is where things went into free fall and now, because your family’s wealth and purchasing power were stolen and redistributed to the government and the banks, both parents are needed to provide for the household. As a matter of fact, both parents are not even enough anymore, we’ve now reached a point where the Government has decided to step in as a third parent, which is an extremely scary thing to happen.
For a more detailed understanding of money, do not move on without watching the video below:
Action Summary:
Do not save fiat currency. Only leave enough for spending on daily necessities. Invest the rest in stores of value, businesses, real estate or natural resources
Encourage your political leaders to return currency to the gold standard or to back currency by something valuable or limited, like productivity
Advocate for a system of free banking in your country, where regular citizens can set up their own banks and monetary systems with little government intervention. The government’s role should only be limited to protecting life, liberty and property. In this instance, defending citizens against theft and fraud
Create your own money in a parallel economy if you can. Invite businesses that produce their own products from scratch (farms for example) to use your money
Teach your children about money
Speak with a certified and qualified financial advisor before making any decisions at the prompting of this section
Section 2
Inflation
Inflation is an expansion of the currency supply, while deflation is a contraction of the currency supply. Expansion of the currency supply occurs in different ways, either by natural demand from the market or from the government printing (creating) more than what the market demands. When the government prints more than what the market demands, it results in an increase in prices and if you reduce the amount of money in circulation (deflation), prices will fall.
Let’s use an example. Watch the video below:
Many people, due to a lack of understanding of the consequences of flooding the market with currency, believe that the more government gives currency to people, the more they’ll be able to buy, the wealthier they’ll be and the better off society will be. I believe economics to be a science that actually follows Newton’s Third Law, for every action in nature, there is an equal and opposite reaction. For every dollar created and distributed by the government, there will be some form of chain reaction in the economy.
Whenever there is inflation, there is in fact an immediate increase in purchasing power, which means an increase in demand and eventually a decrease in supply. Once supply decreases and demand stays high or increases, then prices will begin to rise, chipping away at your purchasing power. So you see, the first group to spend the inflated dollars (usually the banks, government and big corporations) are the ones who benefit; and the last group to spend (the poor) are the ones who are disadvantaged.
To further explain the consequences of printing money, I’ll use an excerpt from the book, “Economics in One Lesson”, by Henry Hazlitt.
“Suppose, for example, that the government prints money to pay war contractors. Then the first effect of these expenditures will be to raise the prices of supplies used in war and to put additional money into the hands of the war contractors and their employees.
The war contractors and their employees, then, will have higher money incomes. They will spend them on the particular goods and services they want. The sellers of these goods and services will be able to raise their prices because of this increased demand. Those who have the increased money income will be willing to pay these higher prices rather than do without the goods; for they will have more money, and a dollar will have a smaller subjective value in the eyes of each of them.
Let us call the war contractors and their employees group A, and those from whom they directly buy their added goods and services group B. Group B, as a result of higher sales and prices, will now in turn buy more goods and services from a still further group, C. Group C, in turn, will be able to raise its prices and will have more income to spend on group D, and so on, until the rise in prices and money incomes have covered virtually the whole nation. When the process has been completed, nearly everybody will have a higher income measured in terms of money. But (assuming that production of goods and services has not increased) prices of goods and services will have increased correspondingly, and the nation will be no richer than before.
This does not mean, however, that everyone’s relative or absolute wealth and income will remain the same as before. On the contrary, the process of inflation is certain to affect the fortunes of one group differently from those of another. The first groups to receive the additional money will benefit most. The money incomes of group A, for example, will have increased before prices have increased so that they will be able to buy almost a proportionate increase in goods. The money incomes of group B will advance later when prices have already increased somewhat, but group B will also be better off in terms of goods. Meanwhile, however, the groups that have still had no advance whatever in their money incomes will find themselves compelled to pay higher prices for the things they buy, which means that they will be obliged to get along on a lower standard of living than before.
We may clarify the process further by a hypothetical set of figures. Suppose we divide the community arbitrarily into four main groups of producers, A, B, C, and D, who get the money-income benefit of the inflation in that order. Then when the money incomes of group A have already increased 30 percent, the prices of the things they purchase have not yet increased at all. By the time money incomes of group B have increased 20 percent, prices have still increased an average of only 10 percent. When money incomes of group C have increased only 10 percent, however, prices have already gone up 15 percent. And when money incomes of group D have not yet increased at all, the average prices they have to pay for the things they buy have gone up 20 percent. In other words, the gains of the first groups of producers to benefit from higher prices or wages from the inflation are necessarily at the expense of the losses suffered (as consumers) by the last groups of producers that are able to raise their prices or wages.
It may be that, if the inflation is brought to a halt after a few years, the final result will be, say, an average increase of 25 percent in money incomes, and an average increase in prices of an equal amount, both of which are fairly distributed among all groups. But this will not cancel out the gains and losses of the transition period. Group D, for example, even though its own incomes and prices have at last advanced 25 percent, will be able to buy only as many goods and services as before the inflation started. It will never compensate for its losses during the period when its income and prices had not risen at all, though it had to pay 30 percent more for the goods and services it bought from the other producing groups in the community, A, B, and C.”
So from this example used, you can clearly see the ripple effect caused by the government supplying more money to a single sector of the economy. It eventually affects every aspect of life and the entire country. The same thing happens when Government engages in handouts, whether it's corporate handouts or handouts to the poor, someone, somewhere always loses in the end.
Action Summary:
Advocate for your Government to end corporate bailouts and handouts. This is called socialism for corporations, it must end.
Advocate for your Government to end handouts to the poor. This is called socialism for the poor, it must also end. Social safety nets may be necessary for some instances, but as you can see from this text, there are consequences, especially if a return on investment is not calculated in these handouts and if there are no limits to these handouts. The problem we have with these forms of handouts is that Governments are not using them to boost the economic freedom of the poor, they are purposely keeping them poor and reliant upon government services in return for their votes.
These are the following features that I believe will reduce the negative effects of a social safety net:
Make it limited, scarce and temporary
Must provide a return on investment to individual taxpayers first, and society after
Must reduce the recipients’ reliance upon government services
Must boost the economic freedom of the recipient of the funds
Must be designed to increase the supply of goods and services in the economy
Must be designed to increase competition, and thus innovation in the economy
In order to fully protect yourself and your country from government-created inflation, advocate for a free banking system.
Section 3
The Greatest Scam in the History of Mankind
Behind the recent covid-19 pandemic, the global monetary system is the biggest scam perpetrated on the global population. Fair warning, once you watch this video, there is no going back. Although this video is directed at the American banking system, note that because the world’s currencies are linked to the American dollar, this applies to every country on the planet.
CHAPTER 2 - THE TRUTH ABOUT POLITICS
INTRODUCTION
The discussions under this topic will be in relation to systems of governance and political parties and how they affect your life today and in the future. Later on, we’ll see how this applies to economic systems.
The systems of governance we’ll discuss are:
Monarchy
Democracy
Fake Republics
True Republics
Section 1
Monarchies and Democracies
The discussion surrounding Monarchies will be limited to Canada, Jamaica, the United Kingdom and Barbados. We all know that all these nations were once ruled by an absolute monarchy, the Crown of England and today, are thought of as independent. But, are they really independent?……. (READ CHAPTER 2 HERE )
Chapter two will be released next week. I need your help to complete Critical Government Theory, get a paid subscription today, leave a comment and let me know what you think about every chapter. If I made a mistake or made incorrect statements, I want to hear about it!