America's Youth vs. Big Government

6 months ago, someone turned me on to a great video put together on YouTube which explains the fallacy of the Federal Reserve and dangers of inflation perhaps better than any other single source I have come across today. Titled ‘Duck Tales Inflation Lesson,’ the video is a four minute clip taken from an episode of Duck Tales (one of my favorite shows growing up. I totally remember this one) where the ignorant boys stumble upon a device which can duplicate money.

Watch the video here

The Mutiphonic Duplicator is the Federal Reserve. The Federal Reserve is the private (meaning not governmental; meaning owned by private interests) central bank who is solely in charge of setting monetary policy for the United States. They control the interest rates (which are currently about as low as they can go) and currency printing presses. They loan the US Government money (with interest) to fund any spending program or foreign war that our President and Congress desire. This is done simply by entering a number with many zeros into a computer at the Fed which is then transferred to another digital bank account where the funds will then be available for spending. Every time this is done, the currency inflates and every existing dollar drops in value. Through the creation of cheap credit, the Fed has ushered in a century booms and busts (though it was created to prevent such a phenomenon), bank bailouts, and nearly continuous foreign wars. Back to the story…

The boys are really a combination of the American government and the American people. The government side of the boys is the one that is thrilled to have the powers of the Duplicator (the Fed) to purchase whatever they want with easy money (backed by no production). The American-people side to the boys is shown through their ignorance of what is happening. They don’t understand the basic economics of monetary supply and it isn’t until Scrooge, the smart self-made millionaire duck, that the boys finally realize the trouble they have created. Unlike the boys, however, the government knows exactly that it is devaluing the US dollar through inflation when it borrows money from the Federal Reserves printing press (computer).

When more un-backed currency is pumped into the economy, the existing money (the dollars in your bank accounts, wallet, investments, etc) becomes worth less. If more people have more of something, it becomes less rare and less valuable. It is the simple law of scarcity, demonstrated expertly in this cartoon. When everyone has millions of dollars, prices sky-rocket in order to meet demand. Consequently, Duckberg becomes completely buried in duplicated money in a manner resembling the recent hyper-inflation witnessed in Zimbabwe (in November 2008, Zimbabwe’s annual inflation rate was 89.7 Sextillion (10^21) percent). This created much hardship and strife in the already poverty stricken African nation.

As the video states, there is a happy ending for Duckberg, because all of the funny money magically implodes. Sadly for us, the fake money created by the Federal Reserve can’t be destroyed. It takes years for all of the newly printed money to circulate throughout the economy, therefore the effects of inflation are gradual. This is why general inflation is viewed as a normal occurrence (remember, your Grandma’s car only cost her $1500 new). This is because the Fed has been inflating the currency since its inception in 1913. Inflation is not a natural phenomenon, but an artificial man-made problem. Governments love central banks, such as the Fed, because it can borrow money without having to raise taxes or even telling the American people what it is doing. It then uses this money to finance entitlement programs such as Medicare and Social Security, which are insolvent, as well as unpopular wars abroad with seemingly no immediate financial strain on American people.

This is very dangerous because eventually the government borrows too much printed money and begins to flirt with Duckberg-style hyper-inflation that could potentially crush the wealth of every American. All it would take is a single event, such as China calling in our debt and having their country flood American dollars back into the States, scooping up all of our goods in the process. With the influx of trillions of dollars on top of the trillions already printed by the Fed, our economy would collapse, and the American way of life along with it.

When it comes to economics and monetary policy, the Powers-That-Be love to complicate the issues, confusing the average person into compliant ignorance. It is refreshing to see such a straight forward lesson in inflation from a great children’s program like Duck Tales.

Now if you’re ready to graduate to the big boy class on Central Banks in America, The Money Masters – How International Bankers Gained Control of America, is the quintessential history of these evil banksters. It is chilling.