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Welcome to my Conservative Blog, Solomon's Conservative Wisdom. The name comes from my middle name and the historical & biblical figure King Solomon, now I make no claim to have Solomon's Wisdom, but I do have Common Sense. I welcome anyone to join in and comment about anything I may have written, posted or one of my Articles / Columns. This blog is dedicated to conservatism and freedom. I invite all conservatives to join in, I don’t mind non-conservatives joining in (after all the only way to change liberals and fence-sitters is to debate them and change their minds, some are just too hard headed to admit they are wrong) . All I expect is a respectful debate.

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Welcome to my blog, Solomon's Conservative Wisdom. The name of this blog comes from my middle name and the historical & biblical figure King Solomon. This group is dedicated to conservatism, and I invite all conservatives to join, I really don’t mind non-conservatives joining. All I expect is a respectful debate. So tell everyone you know.

Saturday, December 12, 2009

What a cartoon taught me about economics and inflation

With the Obama administration printing money like it is going out of style soon, I want to bring up a cartoon to help everyone better understand the dangers of inflation. The cartoon was from the DuckTales series that originally ran from 87-90, it was episode 82 "Dough Ray Me" it originally aired on November 3, 1989. The episode involved the character Gyro inventing a ray that was could duplicate any object, but when ever the object was in range of a bell it would duplicate itself again and this process would continue until the object would reach a tipping point
where it would implode back into the original object. Huey, Dewey, and Louie use this ray on a coin and spend it, through the process of the show the coins continue to duplicate to the point where they cover the entire city. As the coins duplicate the cost of everything goes up and up, to the point where it is shown that it takes a kids wagon full of coins to buy something that originally cost only one or two of the same coin.
Now to help ones imagination to better understand how inflation works let me create a scenario. Lets have a small village of 50 people and that the currency used is made up of three coin types, made of three precious metals gold, silver, and copper, respectively. Now lets say that it takes ten silver coins to equal one gold and one hundred copper coins equal one gold coin and the total number of the coins are this, 20 gold, 200 silver, and 2,000 copper coins. Now lets say some strangers come through the village and spend lavishly spending only silver coins, spreading
the wealth as some would say, adding a total of 2,800 silver coins with no removal of the other two. Now you have more silver coins chasing fewer goods lets say that a chicken before was only two copper coins but now there are more silver coins then copper so the price increases because there are fewer copper to silver the exchange rate inflates to match, so now it takes at least two silver coins to buy a chicken. This effect would be felt throughout the village so if someone else came through they would find the prices high in that village.
This effect has happened throughout history, but when money was tied to a precious commodity like gold or silver most prices tended to stabilize with in a reasonable amount of time. But with the abandoning of tying a paper currency to a commodity you get situations like what happened in the post-WWI government of Germany the Weimar Republic where they printed up so many Marks that it took a wheelbarrow full of Marks to buy a loaf of bread.
Now with the Obama administration running the printing presses on full blast to the point of burning them out, we should fear what will happen when the inflation catches up to us, like Jason in a Friday the 13th horror movie.
On a final thought it might be a good Idea to get the series DuckTales for your kids if you have any, they can actually learn a lot from that series.

By Solomon the Wise.

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