Linkage Between Monetary Economics And Labour Slavery, Circumventing It To Your Advantage--Part 4 (FINAL PART)

And more importantly, this tendency for prices to go up will develop step by step; it is not a general upward movement of what has been called the "price level." The metaphorical expression "price level" must never be used.

When people talk of a "price level," they have in mind the image of a level of a liquid which goes up or down according to the increase or decrease in its quantity, but which, like a liquid in a tank, always rises evenly. But with prices, there is no such thing as a "level." Prices do not change to the same extent at the same time. There are always prices that are changing more rapidly, rising or falling more rapidly than other prices.

Consider the case of the government employee who received the new money added to the money supply. People do not buy today precisely the same commodities and in the same quantities as they did yesterday. The additional money which the government has printed and introduced into the market is not used for the purchase of all commodities and services.

It is used for the purchase of certain commodities, the prices of which will rise, while other commodities will still remain at the prices that prevailed before the new money was put on the market. Therefore, when inflation starts, different groups within the population are affected by this inflation in different ways. Those groups who get the new money first gain a temporary benefit.

When the government inflates in order to wage a war, it has to buy munitions, and the first to get the additional money are the munitions industries and the workers within these industries. These groups are now in a very favorable position. They have higher profits and higher wages; their business is moving. Why? Because they were the first to receive the additional money. And having now more money at their disposal, they are buying. And they are buying from other people who are manufacturing and selling the commodities that these munitions makers want.

These other people form a second group. And this second group considers inflation to be very good for business. Why not? Isn't it wonderful to sell more? For example, the owner of a restaurant in the neighborhood of a munitions factory says, "It is really marvelous! The munitions workers have more money; there are many more of them now than before; they are all patronizing my restaurant; I am very happy about it." He does not see any reason to feel otherwise.

The situation is this: those people to whom the money comes first now have a higher income, and they can still buy many commodities and services at prices which correspond to the previous state of the market, to the condition that existed on the eve of inflation. Therefore, they are in a very favorable position. And thus inflation continues step by step, from one group of the population to another. And all those to whom the additional money comes at the early state of inflation are benefited because they are buying some things at prices still corresponding to the previous stage of the exchange ratio between money and commodities.

But there are other groups in the population to whom this additional money comes much, much later. These people are in an unfavorable position. Before the additional money comes to them they are forced to pay higher prices than they paid before for some — or for practically all — of the commodities they wanted to purchase, while their income has remained the same, or has not increased proportionately with prices.

Consider for instance a country like the United States during the Second World War; on the one hand, inflation at that time favored the munitions workers, the munitions industries, the manufacturers of guns, while on the other hand it worked against other groups of the population. And the ones who suffered the greatest disadvantages from inflation were the teachers and the ministers of God.

As you know, a minister is a very modest person who serves God and must not talk too much about money. Teachers, likewise, are dedicated persons who are supposed to think more about educating the young than about their salaries. Consequently, the teachers and ministers were among those who were most penalized by inflation, for the various schools and churches were the last to realize that they must raise salaries. When the church elders and the school corporations finally discovered that after all, one should also raise the salaries of those dedicated people, the earlier losses they had suffered still remained.

For a long time, they had to buy less than they did before, to cut down their consumption of better and more expensive foods, and to restrict their purchase of clothing — because prices had already adjusted upward, while their incomes, their salaries, had not yet been raised. There are therefore always different groups in the population being affected differently by inflation. For some of them, inflation is not so bad; they even ask for a continuation of it because they are the first to profit from it. We see how this unevenness in the consequences of inflation vitally affects the politics that lead toward inflation.

Under these changes brought about by inflation, we have groups who are favored and groups who are directly profiteering. I do not use the term "profiteering" as a reproach to these people, for if there is someone to blame, it is the government that established the inflation. And there are always people who favor inflation, because they realize what is going on sooner than other people do. Their special profits are due to the fact that there will necessarily be unevenness in the process of inflation.

The government may think that inflation — as a method of raising funds is better than taxation and private sector Investment, which is always unpopular and difficult. In many rich and great nations, legislators have often discussed, for months and months, the various forms of new taxes that were necessary because the parliament had decided to increase expenditures. Having discussed various methods of getting the money by taxation, they finally decided that perhaps it was better to do it by inflation.

But of course, the word "inflation" was not used. The politician in power who proceeds toward inflation does not announce, I am proceeding toward inflation." The technical methods employed to achieve the inflation are so complicated that the average citizen does not realize inflation has begun.

One of the biggest inflations in history was in the German Reich after the First World War. The inflation was not so momentous during the war; it was the inflation after the war that brought about the catastrophe. The government did not say, "We are proceeding toward inflation." The government simply borrowed money very indirectly from the central bank. The government did not have to ask how the central bank would find and deliver the money. The central bank simply printed it.

Today the techniques for inflation are complicated by the fact that there is checkbook money. It involves another technique, but the result is the same. With the stroke of a pen, the government creates fiat money, thus increasing the quantity of money and credit. The government simply issues the order, and the fiat money is there.

The government does not care, at first, that some people will be losers, it does not care that prices will go up. The legislators say, "This is a wonderful system!" But this wonderful system has one fundamental weakness: it cannot last. If inflation could go on forever, there would be no point in telling governments they should not inflate. But the certain fact about inflation is that, sooner or later, it must come to an end. It is a policy that cannot last.

In the long run, inflation comes to an end with the breakdown of the currency; it comes to a catastrophe, to a situation like the one in Germany in 1923.

Lord Keynes, the same man who said that in the long run we are all dead, was one of a long line of inflationist authors of the 20th century. They all wrote against the gold standard. When Keynes attacked the gold standard, he called it a "barbarous relic." And most people today consider it ridiculous to speak of a return to the gold standard. In the United States, for instance, you are considered to be more or less a dreamer if you say, "Sooner or later, the United States will have to return to the gold standard."

Yet the gold standard has one tremendous virtue: the quantity of money under the gold standard is independent of the policies of governments and political parties. This is its advantage. It is a form of protection against spendthrift governments. If, under the gold standard, a government is asked to spend money for something new, the minister of finance can say, "And where do I get the money? Tell me, first, how I will find the money for this additional expenditure."

Under an inflationary system, nothing is simpler for the politicians to do than to order the government printing office to provide as much money as they need for their projects. Under a gold standard, sound government has a much better chance; its leaders can say to the people and to the politicians, "We can't do it unless we increase taxes or private sector that could invest in our project."

But under inflationary conditions, people acquire the habit of looking upon the government as an institution with limitless means at its disposal: the state, the government, can do anything. If, for instance, the nation wants a new highway system, the government is expected to build it. But where will the government get the money?

If you increase the quantity of money, you bring about the lowering of the purchasing power of the monetary unit. This is what people whose private affairs are unfavorably affected do not like. People who do not benefit from inflation are the ones who complain.

If inflation is bad and if people realize it, why has it become almost a way of life in all countries? Even some of the richest countries suffer from this disease. The United States today is certainly the richest country in the world, with the highest standard of living. But when you travel in the United States, you will discover that there is constant talk about inflation and about the necessity to stop it. But they only talk; they do not act.

So the question raised is how do the cedies and other African currencies that used the dollar as the gold bar standard affected by the dollar fluctuation due to it inflation issues?

CONTENT OF LABOUR UNION STRIKE ACTIONS IN GHANA HAVE ECONOMICS FLAWS TO ADDRESS MEMBERSHIP LONG TERM INTEREST AND EMPLOYMENT OPPORTUNITIES

To give you some facts: after the First World War, Great Britain returned to the pre-war gold parity of the pound. That is, it revalued the pound upward. This increased the purchasing power of every worker's wages. In an unhampered market the nominal money wage would have fallen to compensate for this and the workers' real wage would not have suffered. We do not have time here to discuss the reasons for this. But the unions in Great Britain were unwilling to accept an adjustment of money wage rates downward as the purchasing power of the monetary unit rose. Therefore real wages were raised considerably by this monetary measure. This was a serious catastrophe for England, because Great Britain is a predominantly industrial country that has to import its raw materials, half-finished goods, and food stuffs in order to live, and has to export manufactured goods to pay for these imports. With the rise in the international value of the pound, the price of British goods rose on foreign markets and sales and exports declined. Great Britain had, in effect, priced itself out of the world market.

The unions could not be defeated. You know the power of a union today. It has the right, practically the privilege, to resort to violence. And a union order is, therefore, let us say, not less important than a government decree. The government decree is an order for the enforcement of which the enforcement apparatus of the government — the police — is ready. You must obey the government decree, otherwise you will have difficulties with the police.

Unfortunately, we have now, in almost all countries all over the world, a second power that is in a position to exercise force: the labor unions. The labor unions determine wages and then strike to enforce them in the same way in which the government might decree a minimum wage rate. I will not discuss the union question now; I shall deal with it later. I only want to establish that it is the union policy to raise wage rates above the level they would have on an unhampered market. As a result a considerable part of the potential labor force can be employed only by people or industries that are prepared to suffer losses. And, since businesses are not able to keep on suffering losses, they close their doors and people become unemployed. The setting of wage rates above the level they would have on the unhampered market always results in the unemployment of a considerable part of the potential labor force.

In Great Britain, the result of high wage rates enforced by the labor unions was lasting unemployment, prolonged year after year. Millions of workers were unemployed, production figures dropped. Even experts were perplexed. In this situation the British government made a move which it considered an indispensable, emergency measure: it devalued its currency.

The result was that the purchasing power of the money wages, upon which the unions had insisted, was no longer the same. The real wages, the commodity wages, were reduced. Now the worker could not buy as much as he had been able to buy before, even though the nominal wage rates remained the same. In this way, it was thought, real wage rates would return to free market levels and unemployment would disappear.

This measure — devaluation — was adopted by various other countries, by France, the Netherlands, and Belgium. One country even resorted twice to this measure within a period of one year and a half. That country was Czechoslovakia. It was a surreptitious method, let us say, to thwart the power of the unions. You could not call it a real success, however. After a few years, the people, the workers, even the unions, began to understand what was going on. They came to realize that currency devaluation had reduced their real wages. The unions had the power to oppose this. In many countries they inserted a clause into wage contracts providing that money wages must go up automatically with an increase in prices. This is called indexing. The unions became index conscious. So, this method of reducing unemployment that the government of Great Britain started in 1931 — which was later adopted by almost all important governments — this method of "solving unemployment" no longer works today.

In 1936, in his General Theory of Employment, Interest and Money, Lord Keynes unfortunately elevated this method — the emergency measures of the period between 1929 and 1933 — to a principle, a fundamental system of policy. And he justified it by saying, in effect, "Unemployment is bad. If you want unemployment to disappear you must inflate the currency."

He realized very well that wage rates can be too high for the market, that is, too high to make it profitable for an employer to increase his work force, thus too high from the point of view of the total working population, for with wage rates imposed by unions above the market only a part of those anxious to earn wages can obtain jobs.

And Keynes said, in effect, "Certainly mass unemployment prolonged year after year, is a very unsatisfactory condition." But instead of suggesting that wage rates could and should be adjusted to market conditions, he said, in effect, "If one devalues the currency and the workers are not clever enough to realize it, they will not offer resistance against a drop in real wage rates, as long as nominal wage rates remain the same." In other words, Lord Keynes was saying that if a man gets the same amount of sterling today as he got before the currency was devalued, he will not realize that he is, in fact, now getting less.

In old fashioned language, Keynes proposed cheating the workers. Instead of declaring openly that wage rates must be adjusted to the conditions of the market — because, if they are not, a part of the labor force will inevitably remain unemployed — he said, in effect, "Full employment can be reached only if you have inflation. Cheat the workers." The most interesting fact, however, is that when his General Theory was published, it was no longer possible to cheat, because people had already become index conscious. But the goal of full employment remained.

SOLVING EMPLOYMENT USING LABOUR UNION TOOL
What does "full employment" mean? It has to do with the unhampered labor market, which is not manipulated by the unions or by the government. On this market, wage rates for every type of labor tend to reach a point at which everybody who wants a job can get one and every employer can hire as many workers as he needs. If there is an increase in the demand for labor, the wage rate will tend to be greater, and if fewer workers are needed, the wage rate will tend to fall.

The only method by which a "full employment" situation can be brought about is by the maintenance of an unhampered labor market. This is valid for every kind of labor and for every kind of commodity.

What does a businessman do who wants to sell a commodity for 50 cedies as unit? When he cannot sell it at that price, the technical business expression in the United States is, "the inventory does not move." But it must move. He cannot retain things because he must buy something new; fashions are changing. So he sells at a lower price. If he cannot sell the merchandise at 50 cedies, he must sell it at 40 cedies. If he cannot sell it at 40 cedies, he must sell it at 30cedies. There is no other choice as long as he stays in business. He may suffer losses, but these losses are due to the fact that his anticipation of the market for his product was wrong.

It is the same with the thousands and thousands of young people who come every day from the agricultural districts into the city trying to earn money. It happens so in every industrial nation. In Ghana they come to Accra with the idea that they should get, say, Ghc.100 a week. This may be impossible. So if a man cannot get a job for Ghc.100 a week, he must try to get a job for Ghc.90 or Ghc.80, and perhaps even less. But if he were to say — as the unions do — "Ghc.100 a week or nothing," then he might have to remain unemployed.

Because a certain group of people believes that full employment can be attained only by inflation, inflation is accepted in the United States. But people are discussing the question, Should we have a sound currency with unemployment, or inflation with full employment? This is in fact a very vicious analysis.

To deal with this problem we must raise the question, How can one improve the condition of the workers and of all other groups of the population? The answer is, by maintaining an unhampered labour market and thus achieving full employment. Our dilemma is, shall the market determine wage rates or shall they be determined by union pressure and compulsion? The dilemma is not "shall we have inflation or unemployment?"

This mistaken analysis of the problem is argued in England, in European industrial countries and even in the United States. And some people say, "Now look, even the United States is inflating. Why should we not do it also?"

To these people one should answer first of all, "One of the privileges of a rich man is that he can afford to be foolish much longer than a poor man." And this is the situation of the United States. The financial policy of the United States is very bad and is getting worse. Perhaps the United States can afford to be foolish a bit longer than some other countries.

The most important thing to remember is that inflation is not an act of God; inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy — a deliberate policy of people who resort to inflation because they consider it to be a lesser evil than unemployment. But the fact is that, in the not very long run, inflation does not cure unemployment.

Inflation is a policy. And a policy can be changed. Therefore, there is no reason to give in to inflation. If one regards inflation as an evil, then one has to stop inflating. One has to balance the budget of the government. Of course, public opinion must support this; the intellectuals must help the people to understand. Given the support of public opinion, it is certainly possible for the people's elected representatives to abandon the policy of inflation.

We must remember that, in the long run, we may all be dead and certainly will be dead. But we should arrange our earthly affairs, for the short run in which we have to live, in the best possible way. And one of the measures necessary for this purpose is to abandon inflationary policies.

INFLATION AND GHANA’S ECONOMY
Is the inflation of the economy of Ghana caused by increase in purchasing power? The answer is no, why because the purchasing power of the market will always be determined by the volume of currency in circulation. As at now the evidence of the market of Ghana indicate the volume of currency in circulation is very low and is in continual decrease in the open market and therefore could not attribute the claimed inflation to be the cause of purchasing power. Rather the evidence of the Ghanaian market indicates that the cost of production causes the rise in the selling price of goods and commodities possible the reason for the claimed inflation. Therefore will be frivolous for the Bank of Ghana to continually increasing it base rate and assert that such policy direction is a way to control inflation, which deep down in economic sense they know such an act is an intellectual dishonesty to the economic market of Ghana

The question to ask is, why have they chosen to tighten the operations of the economic market with this kind of policy which is not favorable in respect to the Ghanaian market, such could be defined by the legislative instrument that brought their existence, which brings us to a close curiosity, who is bank of Ghana working for, is it Ghanaians who are the shareholders or an unknown monetary authority, which Bank of Ghana Act 612 (2002) Section 50 Subsection 1G State categorically as an Agent for International Banking Institutions or Monetary Authority. The same Law gives them the power to limit their extent of accountability and transparency to the shareholders of this Bank who are the noble citizens of Ghana to proceed to question them the meaning to their actions in an honest manner.

I will furthermore emphasize the dishonesty of their intellectual actions to the economic market of Ghana because I believe they are aware, that it never the purchasing power causing inflation in Ghana’s economy, because as a member of IMF and understanding IMF mandate to Police the Global Monetary Management System to ensure all members are discipline to the exchange rule to maintain the membership stands; could be very surprise that the governor of the Central Bank will be ignorant about this. Furthermore believe they are aware that the volume of the amount in a member international reserve account determine the volume of domestic currency to float in it economy by the exchange rule, and understanding that the international reserve account of Bank of Ghana is in a continual decline state, the gross reserve value stood at $5.4 on 2011, is now quoting a value of US$4,471 in 2014 such correlate to the very low purchasing power we are experiencing today because the volume of cedies in circulation is curtail as a means to establish equilibrium to the external reserve, therefore could not had been the cause to inflation as projected almost all the time in their explanation.

So what has been the purpose of the use of the “Base Rate” to control Inflation? In honest economic explanation, this tool has one objective to achieve in the business market, a way to cause the Ghanaian economy to be dependent on foreign market, crashing domestic businesses and raising the taste of importation. Creating an economic environment that celebrates pure commerce in the detriment of industrial revolution. A tool used to make the indigenous businesses uncompetitive in both global and domestic market due to price rating.

It also project that any Indigenous Entrepreneur, African gives birth to, should be euro-dependence if not his fate is already determine, not to grow beyond being either micro, small or medium scale enterprise. The dream of being an indigenous business executive multibillionaire could not happen in the door of Ghana by the use of this kind of policy, when one is seeking to be an industrialist but could be rated in class of millionaires in the environment of commerce whereby such individuals are more involve in import and selling business. This is how our economy is artificially engineered at the door step of the Central Bank to the satisfaction of it Master whom it act as an agent.

I pray that more Ghanaians will realize this truth and begin to call for re-construction of the legislation to make the Bank of Ghana become 100 percent accountable to us on how they operate and be honest to us on their policies presentation and consequences, which is properly scrutinize by the independent expert for nothing but only they truth which we deserve.

REFERENCE

1. Greenspan A. The age of turbulence; Adventures in a new world. New York, Penquin Press 2007
2. Green J.R. History of the English People. Indy Publish 2008
3. Nikolay Starikov (2013); Rouble Nationalisation the Way to Russia’s Freedom
4. Https://en.m.wikipedia.org>wiki>labour
5. Https://en.m.wikipedia.org>wiki>exploit
6. Act of December 23,1913/http://www.federalreserve.gov/pubs/federies/federi:htm.
7. Bank of Ghana 2002 (Act 612)
8. Greenspan A. The age of turbulence; adventure in a new world. New York Penguin Press, 2007