Former Fugees rapper Pras Michel was charged on Friday with funneling millions of dollars in illegal foreign contributions to Democratic candidates and groups in the 2012 elections.
In a four-part indictment, the Justice Department alleges that Michel and his co-conspirators gave 20 individuals over $850,000 to distribute under their names to Democrat campaigns. This practice, known as using “straw-donors,” is used to avoid contribution limits and donor disclosure requirements.
The world is sitting on the largest financial bubble ever created. While the economic elite says that we will never see another crisis in our time (just as Keynes said two years before the crash of 1929), we have been living in a bubble for more than a century, and it will inevitably break. This bubble, however, is unlike any economic boom we have dealt with before. The inflated commodity that will cause the future bust is the currency which the US Federal Government forces us to use: the US Dollar, and this is all because of the unnecessary fear of deflation.
Estimates say that as much as 98% of the value of the US Dollar has disappeared since the Federal Reserve claimed a monopoly power over currency in the United States. The only reason the Dollar has not collapsed already is due to legal tender laws, which requires businesses to deal in US Dollars within the US.
So, how did it get so bad? As alluded to in the first paragraph, it is because the government is terrified of deflation. They fear that since prices have a tendency to decrease, people will hoard their money since they can make a profit by simply refraining from spending in the present. Since consumers hold on to their money, firms earn less revenue, which causes them to decrease their spending. This leads to a decrease in employment, and therefore production. With this loss of production, those who make the factors of production also lose revenue, leading them to cut spending, thus decreasing production and employment. With the loss of employment, consumers spend even less. This ultimately leads to a complete collapse of the economy according to the Keynesians (see Chapter 12 of John Maynard Keynes’s The General Theory of Employment, Interest, and Money).
Deflationary Spiral will not destroy the economy
The process outlined in the prior paragraph is known as a “deflationary spiral,” in which deflation causes the entire economy to disappear. This, however, is an economic myth. In truth, a deflationary spiral can only occur under special circumstances. The reason why Keynes is wrong in assuming a deflationary spiral will happen is two-fold.
First, it is not possible for human beings to reduce spending externally. Although money does possess deflationary tendencies when unregulated, this does not mean that people will hoard their money indefinitely. Humans have basic needs, namely food, water, and housing. It simply isn’t possible for the people to cease all forms of economic activity.
The second reason why a deflationary spiral will not destroy an economy is time preference. Time preference is the concept that human beings prefer present goods to future goods. If one offered you one thousand dollars today or one thousand dollars in one month, people will typically take the money today. This is why we have an interest in society. Interest gives an incentive for one to refrain from present consumption so that they may have even more future consumption.
People, however, have varying degrees of time preference. The lower your time preference is, the more willing you are to forego present consumption for future consumption. Simply because something is cheaper in the future does not guarantee that someone will wait to consume it. If the price drop is high enough, then they will wait, but that only applies to those with low enough time preferences to be willing to wait. Those with higher degrees of time preference will still consume and the economy will not totally disappear.
What are the causes of deflation?
There are four immediate causes of deflation.
An increase in the demand for money will cause deflation. If the demand for money increases relative to the demand for goods, then price deflation will occur. Money will have an increased purchasing power due to the increased demand for money.
A decrease in the supply of money will lead to price deflation. If less money is in the system, then people will marginally value money more than goods. Simply put, with less money in the system, people will be able to purchase more goods for less money.
A decrease in the demand for goods. If the demand for goods decreases relative to the demand for money, then money becomes more valuable and deflation occurs.
An increase in aggregate output. In other words, an increase in the supply of goods will cause price deflation because production has become more efficient.
The commonality among these causes is that it leads to the decrease in the price of goods.
Deflation is caused by economic growth
The fourth cause of deflation, an increase in aggregate output, is simply economic growth. Economic growth, in fact, is inherently deflationary. When the people can afford more for less, there is growth. This compels more production, more innovation, and more prosperity, especially among the lower classes.
The only examples in which economic growth was not deflationary was in times of war. In times of war, the State forces an increase in production through inflationary policies that allow the government to “afford” these wars. This inflation, of course, always leads to a bust in the future.
Inflationary growth is unsustainable.
Under inflationary growth, the government utilizes their power to dictate the devaluation of their currencies. This leads to vast misallocations of resources. By devaluing the currencies, governments redistribute wealth to political entrepreneurs who position themselves to receive money straight from the printing press. Major banks and corporations are among the most prone to doing this.
The growth these firms experience, however, is vastly unsustainable, whereas it is built upon wealth that did not exist in the first place. In true growth, firms cut their costs in order to produce more efficiently and maximize their profits. Under inflation, however, the exact opposite happens. An inflationary monetary policy, especially one based on a fiat currency in a system that tolerates fractional reserve banking, will lead to a boom that must be corrected.
The idea that inflationary policies can lead to growth in the short run is just another example of the broken window fallacy. As mentioned before, political entrepreneurs who receive money straight from government printers benefit, but those who are not politically connected suffer since they cannot pay the higher wages and other costs. This leads to unnatural growth at the expense of others.
Inflation is fraud.
When the government implements a fiat system, they have the ability to manipulate the currency to deceive the masses into believing out economic condition is better than what it really is.
Fractional Reserve Banking
Perhaps the most egregious form of inflationary fraud is fractional reserve banking (FRB). FRB is a system in which banks loan out the deposits of its customers, keeping only a fraction of their nominal reserves in the bank. This leads to unnaturally low-interest rates and thus high levels of debt.
If a shock in the economy occurs, bank runs will happen. When it comes out that the bank can’t give its customers their money, the bank goes under (or gets bailed out due to government intervention), and the people lose everything.
FRB is a clear instance of fraud in which a bank claims to have more money than it truly has. It is loaning out its customers’ funds, leading to credit expansion, which leads to business cycles.
Of course, we can dodge this by returning to the gold standard and punishing those who partake in fractional reserve banking.
Deflationary Spiral punishes parasitic frauds.
Inflation must come down eventually. And the only way to do that is through deflation. This is not to be feared but celebrated. It is the market’s way of correcting the malinvestments caused by government manipulation of money. Deflation is a means by which the economy returns to the real world. In addition, it halts the centralization of power under governments that have cartelized the monetary system of their nations.
Firms that are deeply in debt, which have certainly taken advantage of the fraudulent fiat and fractional reserve banking systems, will go under. The power elites of the State will be humbled as they will lose the foundation on which they rested. Deflation purges our society of the parasites and frauds that have been manipulating the economy to their advantage since 1913. By this, of course, I mean the central planners and political entrepreneurs who have propped up the Federal Reserve and the federal government. For they have delayed deflation for more than a century. For liberty and prosperity to return, we must have a deflationary spiral to rid us of the wealth that the State holds, which never existed, to begin with.
Angered users of Bitcoin.com have launched a lawsuit over what they describe as misleading tactics carried out due to Bitcoin Cash, or BCH, being labeled as the central Bitcoin and the original, BTC, being labeled as a secondary Bitcoin Core.
The blur between BCH and BTC has led some to purchase the Cash edition while they were seeking the original Bitcoin, according to frustrated buyers. Several users claimed that the actions are tantamount to fraud, a basis for their lawsuit.
The lawsuit, with its digital home at Bitcoin.com Lawsuit, is made up of a group of some 975 individuals “from influential industry leaders to community volunteers [and] contributors” working to protect users from fraud and recover lost funds.
The conflict between BTC and BCH is a long-lasting fight, with supporters of the secondary, minority version, Bitcoin Cash, aiming to establish the newer currency as the main and top-tier Bitcoin.
The founder of Bitcoin.com and major pro-BCH figure, Roger Ver, holds a small minority of support for his view of Cash being the real Bitcoin, but skeptics of cryptocurrency take the conflict as preceding a digital currency “crash”.
On his Twitter, Mr. Ver promotes the successes of BCH, posting graphics, information pages and news interviews, claiming that “Bitcoin Cash has the roadmap that lead to Bitcoin’s original success”, and will lead to future success for the cryptocurrency.
Bitcoin Cash has the roadmap that lead to Bitcoin's original success, and Bitcoin Cash has the roadmap that will lead to Bitcoin's future success.#BitcoinCash
Ver has attempted to frame the so-called “fork”, or split of Bitcoin into BTC and BCH, as an equal split over a sub-shoot from the mainstream, with Core and Cash being compared as a permanent separation.
“We came here all the way from different parts of the country…”
An investigation has been opened up on the senate race former Alabama senate race between Moore and Doug Jones. The investigation will be conducted by Alabama Secretary, John Merrill who will be looking into potential voter fraud.
During an interview, by FOX 10 a Jones supported made comments which fired up the investigation. A man was approached by a camera and was asked by the reporter why he is so excited about Jones’s victory. The man said quite passionately said, “Because, we came here all the way from different parts of the country as part of our fellowship, and all of us pitched into vote and canvas together, and we got our boy elected!”
As of now, we have no evidence of voter fraud occurred, however, Merrill is very curious as to who this unidentified man is and wants to know more information.
It seems very suspicious when someone who’s not from Alabama says that they voted in Alabama’s election,
“We don’t have any evidence of people doing that, our numbers do not indicate that has happened, but when you have someone actually recorded on television saying that they voted, and that’s what he said, then we’ve got to get to the bottom of that,” Merrill later stated.
We don’t know if, in fact, these claims are true, and if this is the next Water Gate or just a nothing story.