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Stock Market Hits New High; Fed Still Falsely Labeling Inflation

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Stock Market Hits New High; Fed Still Falsely Labeling Inflation

By John F. McManus

ARTICLE SYNOPSIS:

Both the Standard & Poor's 500 and the Dow Jones industrials closed with record highs on May 30. But the laws of economics, especially the one that says no nation can spend itself into prosperity, will eventually trump the widespread giddiness built on borrowing and deceit.

COMMENTARY:

Interviewed after one of the Republican presidential debates, candidate Ron Paul was asked why he wasn't happy over the surging stock market, high retail sales, and big corporate profits. His ready response was simple, direct and desperately needed. He said, "My personal finances would be very good if I borrowed a million dollars every month. But some day, the bills will become due."

Our nation borrows billions every single day. One of the largest purchasers of U.S. debt is communist China. To think that Beijing will never demand any payback is to believe that there is, indeed, such a thing as a free lunch.

The U.S. national debt now exceeds $9 trillion. If unfunded obligations are added, it is several times higher. Every new baby, immediately saddled with a portion of this burden, has more than one reason to cry at birth. Today's children are being victimized by the profligacy allowed by their parents and grandparents.

Another portion of the debt burden is borne by all Americans through the deceitful practice called inflation. Not all of the government's indebtedness is covered through borrowing. A sizeable amount is paid when the amount of currency is increased through the joint actions of the Federal Reserve and the government. More money created out of thin air gets pumped into the system and the practice results in a lowering of the value of all existing money. Hence, merchants, producers and service providers require more of it in return for their goods and services.

But the Federal Reserve and many in government would have everyone believe that inflation is the condition of rising prices. Its recommendations, therefore, always treat the symptom not the cause. If you pay more at the supermarket, gas pump, restaurant, etc., don't blame the provider. Blame government and its partner in the crime of inflation, the Federal Reserve.

Just as operating one's personal finances by borrowing will lead to disaster, running a nation on borrowed funds will lead to national suicide. But expecting the media-favored presidential candidates to utter such needed common sense is like expecting the sun to rise in West. The nation needs an end to debt and a return to honesty.

Source: http://www.jbs.org/node/4149

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