Will the Fed increase, decrease or allow the prevailing cost of borrowed money to remain at its prevailing level ? (This is the sound of a broken record, listening to that monotonous sound for more than thirty years.)

"...interest rates are going up, and stock prices are likely to fall. ...a lot of jaws fell open and (stock market) "sell" buttons were pushed, because it looked like interest rates would go up again. ...Fed Chairman Alan Greenspan...can be expected to nudge rates higher several times over the course of the year. ... In 1994, the Fed under Greenspan's leadership doubled the funds rate... ...as the market fell Thursday (Dow-Jones fell 140 points, Standard and Poor's fell 16 points), a market analyst for A.G.Edwards & Sons in St. Louis said, "...it will get one or two more (interest) rate increases before the year is over."

Why not ? The Money Supply valve that allows introduction of new money into circulation remains wide open (increasing total national money supply amount at some rate that exceeds the natural growth rate of the total national population headcount), forcing the increase of national and popular debt that can only be paid for by higher prices of all products and services in the market place.

Taxes are an 'effect'. You can only kill an 'effect' by killing the cause of the effect. (The 'Corrective Actions' of this web site kill the causes of this effect.)

Taxes, of all kinds, increase for the same reasons the prices of all goods, products and services increase. Look to root causes in a deliberate inflation of money required to support the market for money - a market that is totally independent and oblivious to the market for goods and products.

Why Not ? If you understand the simple dynamic relationship of the vector forces of the Balance Equation, it should be clear that any increase of interest rate is an increase of liability.

The only recourse of those who borrow money to purchase stock (currently 50% of market value) is to sell the stock [part asset (the part owned by the down payment, part liability (the amount borrowed to purchase the stock, and part capital (the dividend return on the investment).] to compensate for the increase in liability.

(How simple the problem! Not rocket science, but application of natural law relationships endemic or inherent to rocket science, from Huntsville, AL.) ( See Balance Equation In Vector Form).

Inflation of money is the single cause for the constant increase or higher cost or price of everything, and lower quality and durability of everything in the market place. Inflation of money is caused by:

INCREASING THE GROWTH OF TOTAL NATIONAL MONEY SUPPLY AT SOME RATE THAT EXCEEDS THE NATURAL GROWTH (by natural birth and immigration) OF THE TOTAL NATIONAL POPULATION HEADCOUNT.

This thesis recognizes the several legitimate measurements used to track higher prices; but asserts only one singular cause for the higher cost or price of everything in the market place - taxes as well prices.

Critical distinction must be made between a single cause for one or more effects and the possibility of several ways to observe or measure magnitude, frequency and/or duration of effects.

Two well known and legitimate 'measurements' of the effect of inflation, i.e., the higher cost or price of everything in the market place, are:

1. the 'Cost of Living Index' and

2. the 'Consumer Price Index'.

See Table A5-1 for record of the growth or expansion of the 'U.S. national money supply', compared to growth of total 'U.S. population headcount', from 1900 through 1995.

See Figure A5-1 to view 'Chart' of the data contained in Table A5-1.

Opening the flood gates for a deluge of new/additional money into circulation was enabled by Amendment to the Federal Reserve Banking Act of 1913 by the Bretton-Woods Agreement Act of 1945, as discussed in Essay 6.

2. The U.S. Bureau of the Census is the 'source' for the population numbers. This too is public record data verifiable through the Internet.

The 'Cost of Living Index' (COLI) is a 'market basket' of the price or cost of things that everyone must have, or must buy, to live - the selection of those things are left to whoever is responsible for making this Index. It is this Index that is used by the Federal Government to make upward 'Cost Of Living Adjustments' (COLA's) in all payments to all recipients of all checks from all Federal Government programs eligible for COLA's. Here, we are interested only in the concept, not in the details of what constitutes this particular 'market basket' of prices.

The 'Consumer Price Index' (CPI) is ostensibly a different 'market basket' of the price or cost of things, and, like the COLI - a selection of different things left to whoever is responsible for making this Index. From observation over the last thirty years, it is perceived as only one, but a significant one, of probably many other inputs used by the 'Fed' for it's decision to increase, decrease or not change the prevailing cost of borrowed money, i.e., the 'interest rate'. Here, and again, we are interested only in the concept, not in the details of what constitutes this different and particular 'market basket' of prices.

Now we shall wait for another two to four years for the 'political' decision outcome of this statistical measurement exercise.

While you wait for another two to four years for the 'political' decision outcome of this exercise, take a course in Accounting (a minimum of eight quarters or four semesters) to learn about 'elements of cost' that are common to all goods, products and services in the market place.

You will find that all 'elements of cost' are reduceable to the cost of labor - that is:

1. DIRECT expenditure of labor man-hours by individuals, to produce a product or provide a direct service to the manufacture or production of a product.

2. OVERHEAD or BURDEN expenditure of man-hours by individuals, to support those individuals who's direct labor makes the product and provides the direct service for the product that is bought and sold in the market place.

PRICE is the sum of all 'elements of cost', plus 'profit' by the producing company or corporation, increased by the 'profit' amount added by the 'supplier' or 'distributor', plus inflation, plus all the taxes imposed by Federal State and Local Governments.

The 'BURDEN' Cost of the 'producer' and 'supplier' includes all the costs imposed by 'government' on the 'producer' and the 'supplier', to comply with all Federal, State and Local government regulations, licensing fees, reporting requirements, et al.

"Refrigerator manufacturers are in a regulatory deep freeze, waiting for the federal government to issue a new standard to wring more energy efficiency out of their products. .... "We handed (DOE) a rule in a package. It could have been put right into the Federal Register," said Charles Samuels, government relations counsel [overhead labor - the cost of his services (his income) is included in the cost of the refrigerator products] for the Association of Home Appliances Manufacturers, which includes companies such as Amana Refrigeration Inc., Frigidaire Co., Maytag Corp., G.E. Appliances and Whirlpool Corp.

By 1995, it all fell apart. Four of the five companies pulled out of the agreement, saying DOE had not acted quickly enough on the proposal ...", (that is), to comply with the energy rule, to replace hydro-chloro-fluoro-carbons (FREON) to meet the terms of the EPA rule."

This is a prime example of socialist control of 'national household management' at its best.

MONEY SUPPLY, FALSE DEFINITIONS OF INFLATION, THE COST-WAGE SPIRAL FROM INFLATION OF MONEY, INTEREST RATES AND THE STOCK MARKET RELATION

The natural law of demand and supply illustration applies here.

Texts on 'economics' provide three false definitions of inflation:

1. "Demand-Pull"
2. "Cost-Push"
3. "Profit-Grab" or "Structural"

THIS IS NOT INFLATION. This is the force of the natural law of demand and supply at work, causing the increase of the price of a product in the market place, as a function or result of an increase of demand and increase of operating cost to meet higher demand.

THIS IS NOT INFLATION. Prices go up before the unions demand higher wages to keep up with the higher prices. Unions, or wage earning labor, do not have control of a company's pricing practices or its accounting ledgers, or a company's borrowing practices, or investment decisions that depend on acquisition of more money for capital investment. The higher cost of debt to run the company or corporation pushes prices up before the reaction of unions, or labor, to demand higher wages. This action, by unions, or labor, is only the effect of inflation.

Unions are in a free-fall decline, because large industrial factory /manufacturing operations are in decline; because manufacturing and factory industries have been forced, by 'investment bankers' and 'environmental regulatory requirements', from international trade agreements made in the 1960's and '70's, and incorporated into the NAFTA agreement, to leave the country.

NOTE 2:
The existence and formation of 'Labor Unions' are provided for under the "freedom of assembly" provisions of the 'Bill of Rights' under the U.S. Constitution of government.

Those who blame 'labor unions' for higher prices are the most ignorant of the causes or reasons for 'labor unions' to exist in the first place. Opponents of Labor Unions are those who have never had to work in a factory, so they must be completely ignorant of the labor-management conflicts that occur in the factory. There is no one, who has ever worked in a factory, and who has had to raise his hand for permission by management to go to the bathroom, who will be against manufacturing 'labor unions'.
END OF NOTES

PRICES WILL CHANGE AS A NATURAL EFFECT OF THE NATURAL LAW OF DEMAND AND SUPPLY.

Prices of products will increase as a function of an increase of demand, and the producer/supplier will incur increased costs to meet the higher demand. The supplier, then, must increase cost of product to stay alive.

Converserly, prices of products will decrease when demand for the products decrease. Not many need horseshoes any more. Demand for horseshoes is low so the price for horseshoes is low.

[Exception to this rule: The current price of horseshoes could be very high today because of:

1. high cost of foundary operations to make horseshoes
2. high regulatory costs of compliance with envronmental regulations for foundary operations
3. high cost of the iron charged by the foreign nationals who own this natural resource
4. high demand for 'horseshoes' as a collector's item.

For a given Total National Money Supply Amount, and a given Total National Population Headcount, (the M/P ratio of this thesis), for some given period of time, higher prices, or price fluctuations, are a totally natural result of the natural forces of the natural law of demand and supply at work in the trade or exchange of labor for goods, products and services of the market place (using money to make the trades).

It's not "Supply and Demand", the correct sequence of terms is "Demand and Supply".

Why ? Because demands occur first as a function of awareness. That's what 'advertising' is all about.

It's not "Wage-Cost Spiral", the correct sequence of terms is "Cost-Wage Spiral".

Why ? Because costs go up first, followed by demand for higher wages to keep pace with the increased costs. When those demands are not met, strikes follow. And, when the strikes are not effective, strike riots and strike-breakers are the inevitable result.

The big lie or deception begins when natural market price increases or natural market price fluctuations are called 'inflation', or are used to define 'inflation'.

The lie or deception increases when 'bankers' and 'economists' (statistician servants of the banking and finance industry) say that demand for money changes. Demand for money does not change. Demand for money is always high and constant. High and constant demand for money is demand for all the money that exists in a given nation, or the world.

By treating 'money' as a commodity, or product, the private banking authority assumes the self-appointed position as the supplier or producer of that product called 'money'. It rests its case and justification for increasing the cost of borrowed money on the high demand for money, according to the natural law of demand and supply. By increasing interest rates, the Fed hopes to discourage more borrowing or demand for money, and by taking money out of circulation by increasing the interest rate (the cost of borrowed money) - but if the higher interest rate doesn't discourage the borrowing of money, then, by God, you will pay for it.

There should be no other reason to lend money to any applicant other than trust in an applicant's ability to repay it. With the cost of borrowed money fixed at 5%, the Prime Lending Rate under the Reserve system could be 3%, and the banking and finance industry would still make a 2% profit. Doesn't sound like much, but 2% of $billions of dollars in loans is not exactly poverty for the private banking and finance industry.

The 'Fed' controls the amount of money available for lending through 'reserve' requirements. If the 'Fed' increases reserve requirements, less money is available for lending, and vice versa.

The other 'Fed' authority, is control over the interest rate (i.e., the cost of borrowed money).

By increasing the cost of borrowed money (interest rates), it is felt that such an increase on the cost of borrowed money will discourage demand for money, and thereby hold down increase in the cost or price of the product in the market place.

If you accept these false definitions, or false causes that are always at the root of deception, you simply lay down like a female dog, and posture yourself to receive and accept the artificial shaft of higher interest rates.

There is only one single or solitary reason the Fed increases interest rates - that is - to satisfy their high-constant demand for money whose purchasing power is decreased because the pimps in the U.S. House of Prostitution just increased Federal spending and are issuing U.S. Treasury Certificates to pay for increased and profligate spending.

The truth behind the causes of the continuous upward 'spiral' of prices and wages is the fact that increases of 'total national money supply' occur first, followed by higher prices to absorb the higher money supply amount, followed by labor's demand for higher wages.

Issuance of U.S. Treasury Certificates, the process whereby new or additional money becomes available for lending, precedes the increase of prices in the market place.

This is the process and procedure whereby bidding for purchase of these U.S. Treasury Certificates raises the purchase price of these Certificates, and subsequently and concurrently, (with most certainty, consistent with the natural law of demand and supply) forces increase of yield for the purchase of the Money Market Certificates, or the buyers have no incentive to purchase them. This is the junction at which inflation and the cost-wage spiral begins and is sustained.

The United States will never restore itself from its present condition as a 'socialist welfare state', OR restore itself and its strength as an industrial power in the world, until it becomes cheaper to do business in the United States than in any other location in the world.

So we have deliberate inflation of money, on top of issuance of technical regulations by bureaucratic pimps, who's JOBS AND INCOME depend on political favoritism, and who couldn't pour piss put of a boot with instructions on the heel.

Socialist regulation of industry, and THE DELIBERATE INFLATION OF MONEY to support the pimps in the U.S. Congress (assembly of pimps in a House of prostitution) is not the way to staff the ship of state, to steer it out of troubled waters into the calm seas of stability and balance.

• Does the State, under our Constitutional form of Government, exist to support you, as an individual, or do you, as an individual, exist to support the State (the elected and appointed officers of the State) ?

• Doesn't your freedom or independence as an individual depend on the freedom and independence of national sovereignty in a world of nations ?

• Doesn't freedom and independence of national sovereignty in the global market place (since Noah's Ark after the Great Flood) depend on employment ?

• Doesn't employment depend on the strength of industrial capacity and capability to manufacture hard and tangible tools and products essential to continuous improvement in standards of living for all ?

1. Limit membership and participation in the United Nations to exercise the veto against all UN resolutions that force Foreign Trade Agreements based on the votes or consensus of other United Nations members.

2. Limit membership in the World Bank to participation solely for its use for foreign currency exchange and to track exchange rates of all other currencies.

3. Abolish the 'Exchange Stabilization Fund' that is the petty cash fund for use by the Executive to buy any particular foreign currency to prop up its exchange rate against other currencies. (Like the Mexican peso bailout in 1994-95.) Let every nation use its own currency to support its own foreign and domestic trade and employment. Let every man and nation pay the cost to dispose of his own garbage and not be forced to pay for someone else's bloody nose.

4. Repudiate the GATT and NAFTA agreements. This is not 'isolationism', this is critical and essential self-defense.

Other nations would do well to heed this advice. This thesis is universal in its validity and its application, because it comes from natural law that cannot be ridiculed or denied.

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