Mises Wire

Home | Wire | Government Counterfeiting — Not Capitalism — Squeezes Family Budgets

Government Counterfeiting — Not Capitalism — Squeezes Family Budgets

  • prices1.PNG
0 Views

Tags Money and BanksPovertyMoney and Banking

08/23/2018

Many American families are having trouble making ends meet. It’s no surprise given the value of the dollar has fallen 95% since the Federal Reserve was created. Not everyone is harmed by inflation, but those who, according to inflationdata.com are,

the other big losers those on fixed incomes like the elderly and anyone whose income isn’t indexed to inflation.

Inflation affects them especially hard because the prices of things they buy go up while their income stays the same. In addition, the poor are generally renters so they don’t even benefit from a “cheaper” mortgage while they are paying higher prices for their groceries.

Also even though their wages may be indexed to inflation there is a time lag since it is usually only re-indexed once a year. During this time they are on the old wages while prices for things they buy have already gone up.

However, in her book Squeezed: Why Our Families Can’t Afford America, Alissa Quart doesn’t mention the Fed or money creation. Instead, most of us are “marinating in an atmosphere of ‘cruel optimism’...an atmosphere that ‘exists when something you desire is actually an obstacle to your flourishing.’”

Quart claims members of the middle class are happy idiots, encouraged to do what they love, while being pummeled by capitalism, no union protections, and a frayed social safety net. The hyper-educated poor are hidden she writes. “The number of people with graduate degrees receiving food assistance or other forms of federal aid nearly tripled between 2007 and 2010 and those with a Ph.D. who received assistance rose from 9,776 to 33,655.”

Quart spends considerable time complaining about the pittance adjunct college professors are paid. Having done adjunct duty myself, I know how little it pays. I also know I was happy to get the work and loved every minute of it.

Universities can’t pay for all of those useless administrators if adjuncts aren’t willing to teach for a couple grand a class. As of 2011, the author writes that only one professor in six is tenured. Back in 1975, about half were full-time.

Quart frets that Union membership is down to 11 percent from 30 percent in the 1960s and in the private sector only 7 percent are union members. She also points out, “the number of part-timers working just below thirty hours a week rose from 2013 to 2015..” but neglects to point out the reason, the Affordable Care Act.

Capitalism has responded to consumer needs with the increase in 24-hour daycare centers. Instead of celebrating this, Ms. Quart writes in all caps “TWENTY-FOUR-HOUR DAYCARE CAN SEEM SHOCKING TO PEOPLE…” It is in this section of the book that Quart writes this whopper, “degradation of care is caused by ‘hypercapitalism,’ our crazed unfettered free market.”

“Hypercapitalism,” “unfettered free market”? In the “2018 Index of Economic Freedom,” the United States is ranked 18th.

The author has a knack for statements that jump off the page and make anyone’s blood boil who even marginally believes in freedom. In a section about multiple couples sharing parenting duties, she writes, “Why haven’t state-based or federal policy fixes been implemented that would free us from our exhausting and often unsustainable independence?”

She constantly derides individual inginuity believing the nanny state should solve everyone’s problems. The way Quart puts it is, “we substitute market transactions for what should be human interactions.”

While minimum wage laws and work regulations push employers toward automation and robotics, Quart writes, “why shouldn’t we be Luddites?” and “shouldn’t we be concocting legislation to help all strata of workers who will be displaced by our mechanical friends?” There are 140 hospitals now employing 500 robots. “The medication delivery robots are programmed to require only a biometric access and pin code from a human to finalize the meds’ deliveries.” Remembering my extended time in the hospital a robot would have been an improvement over some of the surly RNs I encountered.

The author is even worried about attorneys. Some lawyers shouldering $200,000 in student loan debt have been relegated to being “Doc monkeys” who earn only $17 to $20 an hour.

Second jobs driving for Uber and the like are required for teachers and others to afford housing in expensive cities like San Francisco. Quart makes no mention of the real reason for home price and rent increases; the aforementioned Fed money creation, as well as local government restrictions on the creation of new housing supply. Instead she claims, “Rent stabilization and control go along with better-regulated real estate development overall, especially in desirable cities.”

Time Magazine calls “Squeezed” one of this summer’s best new books. If you want to know how socialists think, what they don’t understand and who they blame, Quant’s work is an eye opener.

A better book to read is Murray Rothbard’s “The Case Against the Fed.” He explains,

Monetary inflation, then, acts as a hidden "tax" by which the early receivers expropriate (i.e., gain at the expense of) the late receivers. And of course since the very earliest receiver of the new money is the counterfeiter, the counterfeiter's gain is the greatest. This tax is particularly insidious because it is hidden, because few people understand the processes of money and banking, and because it is all too easy to blame the rising prices, or "price inflation/' caused by the monetary inflation on greedy capitalists, speculators, wild-spending consumers, or whatever social group is the easiest to denigrate. Obviously, too, it is to the interest of the counterfeiters to distract attention from their own crucial role by denouncing any and all other groups and institutions as responsible for the price inflation.

It is the Fed’s counterfeiting that has American families squeezed not hypercapitalism.

Douglas French is former president of the Mises Institute, author of Early Speculative Bubbles & Increases in the Money Supply , and author of Walk Away: The Rise and Fall of the Home-Ownership Myth. He received his master's degree in economics from UNLV, studying under both Professor Murray Rothbard and Professor Hans-Hermann Hoppe.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
Image source:
iStock
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Add Comment

Shield icon wire