Imagine a small town with it's own monetary system. There are 100 people and each one starts out with one dollar, so the total amount in circulation is $100. Twenty years later the population has doubled to 200 people, leaving half as much money to go around. That means there is only fifty cents available for each person. In order for the money to remain useful the prices for everything have to drop by fifty percent. As population increases money becomes more valuable, and less money will buy more things.

Instead we see the population increase and prices constantly climbing higher and higher. But as the example above shows, that is impossible. The only way inflation can happen is if someone injects more money into the economy out of thin air, and that is exactly what has been happening all across the world.

In the U.S. that money is "poofed" into existence by the Federal Reserve bank. The Federal Reserve is a private business. In spite of it's name, it has no more to do with the federal government than Federal Express. When the government needs more money than it collects in taxes, the Federal Reserve loans money it doesn't have to the United States government, which is then required to pay it back, plus interest. Hundreds of billions of dollars have been injected into the banking system every year recently, and the citizens have to pay it back in taxes, with interest, to people who never had the money to begin with. When Bill Clinton left office the budget was balanced, but the national debt is now measured in trillions of dollars and is higher than ever before.

The system is obviously corrupt and the people who own the Federal Reserve make endless millions while the national debt grows so out of control we will never be able to pay it back. We can't even pay back the interest on those loans. The dollar loses value overseas (it's down by a third since Bush took over) and could eventually become worthless because our money is no longer backed by gold or silver. The money in your pocket is not backed by anything but your faith that other people believe it has value.

The Federal Reserve has to go. If the government needs money it can just poof it into existence without having to borrow and pay interest to a handful of ultra rich people. When taxes are collected the government can simply wipe some of the money out of existence in the same way it created it, and that will stabilize the value of the dollar. Then again, there is no reason why government can't live on a budget like everyone else does and avoid going into debt at all.

So as you watch wages and prices increase (prices faster than wages for most of us) just remember that inflation is impossible, and a handful of people at the Federal Reserve are growing rich making money out of thin air. We have to do away with the Federal Reserve before our money becomes worthless.