Kodos And Kang On Inflation

If you are familiar with The Simpsons then you know about my two favorite recurring minor characters: Kodos and Kang. They are both aliens who hover in a flying saucer making jokes at earth’s expense, satirizing human insanity. They have some really great lines.

I would like to imagine that if ever asked about income inequality on Earth, they would respond with a view much bigger than the average person would ever give. I think they would say something like: “do the earthlings know that there is more currency and credit on their planet than there are stars in the universe?”

That may seem like a bit of a view from 10,000 feet, but it’s actually a lot higher than that, it’s literally a view from space. It’s called perspective and it is much needed. Think about that, there is more currency and credit on this planet than there are stars in the universe. ‘Stars in the universe’ and ‘grains of sand on a beach’ are meant to be thought experiments in order to help us conceive of numbers so high that we can’t fathom them physically.

According to space.com “Kornreich used a very rough estimate of 10 trillion galaxies in the universe. Multiplying that by the Milky Way’s estimated 100 billion stars results in a large number indeed: 1,000,000,000,000,000,000,000,000 stars, or a “1” with 24 zeros after it.” A “1” with 24 zeros after it is only somewhere in the septillions range and if you were to include the amount of all currencies and credit on earth between each country, it would far surpass that number.

Just a few years ago during Zimbabwe’s hyperinflation, they routinely used 100 trillion dollar bills to purchase a single egg.

I can no longer be a progressive socialist because those people think that the world’s poverty problems are solved by creating even more money out of thin air and I prefer to be a problem solver, not one who adds to people’s pain and misery.

The way that we currently make money out of thin air, backed by absolutely nothing never gets mentioned by the likes of: Bernie Sanders or any other “income inequality” economist or politician. They always blame the rich for having more than “their fair share” which is vague and intentionally confusing. The left speaks to your emotions, they use empty jargon and emotional pleas to reason that get a visceral reaction from those who are easily fooled.

There is absolutely a problem that the average 30 year old can’t afford a home now, yet his father could back in the seventies and eighties when he was in his 20s. Rent is a problem for the majority of 30 year olds with college degrees beyond their father’s generation, income inequality is very real, but the solutions aren’t. They are politically designed to keep us on the struggle addiction, the treadmill. People like Bernie Sanders get you to focus on the struggle itself, identifying with it and not the “object” of the struggle which needs to be overcome. When the opportunity for success presents itself, all the Bernie Sanders types will sabotage in order to maintain the struggle and not the objective. That’s the primary goal of every socialist, to Jedi mind trick you into identity politics so you see yourself as this marginalized, oppressed being who can only exist through absolute government intervention because the tables are turned against you before you were even born.

Kodos and Kang always make these interesting quips about earthlings, if the average earthling realized how many units of currency and credit exists between all nations, they might begin to realize why there is poverty in the third world and income inequality in the first. Wages cannot possibly increase to accommodate the cost of living anywhere near the level of inflation we have seen in the last 30 years.

Kodos and Kang would certainly enjoy explaining to earthlings how money is created through the Fed out of absolutely nothing.

It is a four step process, but before we can understand how money is created out of nothing we first need to understand what a bond is. A bond is a future promise to pay, very simply it is an IOU. People buy bonds in order to guarantee a secure rate of interest on an investment at the end of the term of the bond, the government repays the bond plus interest and the bond is complete. The bond market is absolutely enormous.

The federal reserve’s money making process looks like this:

Step 1 the Federal Open Market committee approves the purchase of the U.S. Bonds on the open market

Step 2 The Bonds are purchased by the Federal Reserve by whomever is offering them for sale on the open market

Step 3 The Federal reserve pays for the bonds with electronic money credits it created through a computer to the bond seller’s bank, these money credits are based on absolutely nothing. They aren’t real. They are just digits in a computer that credit the seller’s bank account.

Step 4 the banks use these deposits are reserves that can be loaned out at interest to over ten times the amount of their reserves to new borrowers. This is called ‘fractional reserve banking’.

10 million dollars worth of Federal Reserve Bond purchases gets turned into 100 million dollars worth of bank accounts. The Federal reserve creates about 10% of the new money and commercial banks create about 90%.

In order to reduce the amount of money in the economy they reverse the process by selling bonds to the public and the money floats out of their bank accounts.

How does this create income inequality? In a number of ways, first when new money is created the people who get the first usage of that money get full purchasing power and the rest of us have a dwindling inflationary piece of paper. Second, it is an extremely difficult idea to grasp so it just creates confusion and leads people to think that we just ‘aren’t taxing the rich enough’. Third, this completely misdirects banking reform efforts from proper solutions, nobody other than Ron Paul has ever mentioned this in a political campaign. Fourth, Bernie Sanders knows absolutely zero about this process and most likely would be in favor of it because he’s stupid. Fifth, it prevents a proper debt free system of government finance based on gold or silver and instead favors fiat currency. The Bond/debt based system of money is confusing to the average person and a lot more difficult to grasp than “tax the rich”, so the likelihood of it going anywhere is nil. Sixth, it gives bankers the right to create about 90% of our entire money supply out of thin air through fractional reserves aka debt which they then loan to us at interest. Seventh, it centralizes overall control of our nation’s money supply into the hands of just a few people who actually understand what is going on. This is the source of income inequality. Bonds are issued as debt, money is just fake credit through computers put into bank accounts it is inherently inflationary and the cost of living has risen so sharply that now people with master’s degrees are living in their parent’s basement until their early 40s. Basic prices for food, home heating oil, transportation, healthcare, education and other basic necessities are rising enormously because our money does not hold its value and the rate of inflation far exceeds the gradual increase in wages for the average employee. Bernie Sanders is not going to let you in on this anytime soon. He thinks that further centralizing control in the hands of a few people is the answer, it isn’t. End the Fed.

There are different models for estimating the number of stars in the Milky Way and the answers they give differ depending on what is used as the average mass of a star. The most common answer seems to be that there are 100 billion stars in the Milky Way on the low-end and 400 billion on the high end. But I’ve seen even higher numbers thrown around.

I bet Kodos and Kang think we we’re stupid at the height of Quantitative Easing when we printed 90 billion a month. That’s almost as many stars estimated to be in our Galaxy, in just American currency, printed in a single month, and we wonder where income inequality comes from, there is too much money being created all of the time and being transferred to the richest 1%.

Keynesian economics is why we don’t have nice things.
Again income inequality does not come from too many people purchasing too many McDonald’s hamburgers enriching only the CEO it comes from creating many more dollars than there are stars in the galaxy. The more dollars get created the less anyone can seem to get their hands on, income inequality is caused by massive Federal Reserve created inflation. Gain some perspective and think bigger than what Bernie Sanders is telling you.

The wage rate is always going to increase slower than inflation under these conditions, wages increases depend on production per hour. Low skilled workers are always the most at risk during tremendous inflation. Savers are being punished and spenders are being rewarded, Wake up Earthlings.