The Real Meanings of Two Important Words

The Real Meanings of Two Important Words
by JBS President Emeritus John F. McManus

An increasing number of Americans have found themselves confused during discussions only to find out that the cause of the problem stems from distortions in the meaning of key words.

Image from Pixabay, CCO License.

We live in an era when correct definitions have been almost universally lost. Two prime examples come to mind: the words “democracy” and  “inflation.” I contend that getting back to the true meaning of each is long overdue and very much needed. Venal politicians and dull or deceitful economists are deceiving the public and that has to stop.

The word “democracy” entered our language from Greece. It means “the people to rule.” If the people force adoption of something truly beneficial to their nation and its people, consider it a bit of luck. But democracy customarily invites what James Madison, our nation’s fourth president, abhorred. He and other Founders made their feelings known while creating the U.S. Constitution where they chose a republic, the rule of law, to be our nation’s governmental system.

Madison explained his detestation of democracies when he wrote that they “have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they are violent in their deaths.” Instead, he and his colleagues at the 1787 convention established a “rule of law” as the standard for deliberation and action. Its main premise was to have our infant country prosper, not because of what government would do, but because of what government would be prevented from doing by the Constitution.

Today, the Constitution is given lip service and government has greatly ignored the bonds erected to insure that it would not exceed its powers. Consequently, we are victims of democracy in action, a bowing to the demands of the mob, ignoring constitutional restraints and leading the nation toward total government. Politicians are converting our republic into a democracy that will inevitably lead to tyranny. There is great need for understanding the wisdom contained in the slogan, “This is a republic, not a democracy; let’s keep it that way.”

Regarding inflation, the misuse of its correct definition has largely been hidden. Inflation is an increase in the quantity of currency, not the condition of rising prices which is the widely known, but wrong, definition. What appears to be a rise in prices for goods and services is proof that money has become less valuable. Wet streets don’t cause rain. And rising prices are the consequence of putting more money into circulation. What is inflated is the quantity of currency. When money becomes less valuable because of increasing its amount (a common practice engineered by the Federal Reserve), the rising prices for goods and services are simply a refection of the loss in value of existing money.

Early in his career, British economist John Maynard Keynes pointed his finger at would-be rulers and described the process correctly. He wrote: “By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens…. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.” What Keynes was saying is that filling your car’s gasoline tank may have cost $5 dollars in the early and middle years of the past century. But filling your tank now costs $40 or more. The price of gasoline didn’t change; the value of a dollar changed.

A great deal more can be said about how faulty definitions inevitably lead to more power in government. Combating the harm being done to the American dream has to include correcting the widespread misinformation about democracy and inflation.

Help is needed. If you’re interested in joining the cause, contact your local JBS field coordinator today!

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McManus_2Mr. McManus served in the U.S. Marine Corps in the late 1950s and joined the staff of The John Birch Society in August 1966. He has served various roles for the organization including Field Coordinator, Director of Public Affairs, and President. Mr. McManus has appeared on hundreds of radio and television programs and is also author of a number of educational DVDs and books. Now President Emeritus, he continues his involvement with the Society through public speaking and writing for this blog, the JBS Bulletin, and The New American.


What to Do About Government Economic Fraud

What to Do About Government Economic Fraud
by JBS President John F. McManus

Paul Singer manages the hedge fund Elliott Management. He’s a billionaire and has helped those who invest with him to reap substantial gains. In a recent message he sent to the fund’s clients, he stated:

Nobody can predict how long government can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth…. We do not think optimism is warranted, and we think a lot of the data is cooked or misleading.

Is Singer correct? The New York Times published a denial from Jesse Eisinger, a reporter for the independent new provider Pro Publica. Eisinger could hardly be more dismissive of the claims issued by Mr. Singer.

Who’s right and who’s wrong? We tend to side with Singer. We do so because of numerous phony claims issued by government. For instance, the unemployment rate claimed by officialdom doesn’t include people who have given up finding a job or others who were formerly employed full-time and are now able to find only part-time jobs. Counting part-time employment as real employment when the people involved want a steady job is deceitful. Real unemployment is likely twice the figure given by government.

In addition, government relies on a fraudulent definition of inflation – that it is rising prices. Even then, what’s in the “basket” of goods whose costs are totaled in the Consumer Price Index is regularly changed in order to reflect government’s reassuring claims. But inflation is an increase in the quantity of currency – the making of newly created dollars that have no backing and derive their value by lessening the value of everyone’s dollars. Ask a supermarket shopper whether it costs more dollars to shop each month and you’ll get a good lesson in what inflation truly is.

As for growth, U.S. manufacturing wealth creation is way down, and so is income growth. When the value of the dollar shrinks by an amount that even a raise in pay doesn’t cover, there’s no growth – except in the true rate of inflation.

In recent years, the Federal Reserve has waged war on the dollar with a program dubbed Quantitative Easing. That’s a clever name for a thieving process that creates dollars out of nothing and floods a favored few with them. But Q.E. is inflation pure and simple. It may have helped some “too big to fail” friends of the Fed to survive. But meanwhile, the American people continued to face higher prices, fewer jobs, and deceitful statistics.

So the conclusions reached by Paul Singer are worth consideration.

What to do about this? Start with an audit of the Fed, a demand recently made by 333 members of the U.S. House that awaits approval in the Senate. Unfortunately, the Senate will be led by Harry Reid until January when a new measure will have to be generated by the House and then sent to the Senate again. Maybe then, it will get the respect it deserves.

If the full truth about the Fed were known, public sentiment aimed at having it abolished would mushroom. Then, there would be moves to end deficit spending and cut back the size of government to what is authorized by the Constitution. Eliminating unconstitutional agencies and bureaus (education, energy, housing, medical care, foreign aid, and more) would be a boon to the nation. Also, Congress should put an end to creation of so-called “free trade” agreements that make it advantageous for businesses to flee the U.S. for cheap labor overseas. Finally, demand truth from government officials – all of them right up to and including the President.

The course our country is on amounts to suicide. Those who provide the fake data and the cooked books are steering America into a world government. Some honesty about that would help to bring about needed corrective actions and guarantee continued existence of our nation, free and independent.


Mr. McManus joined the staff of The John Birch Society in August 1966 and has served various roles for the organization including Field Coordinator, Director of Public Affairs, and now President. He remains the Society’s chief media representative throughout the nation and has appeared on hundreds of radio and television programs. Mr. McManus is also Publisher of The New American magazine and author of a number of educational DVDs and books.


Making the Case for Higher Inflation? Krugman’s Cockamamie Economics

Making the Case for Higher Inflation? Krugman’s Cockamamie Economics
by JBS President John F. McManus

A correct definition of inflation, something increasingly hard to find, appeared in “Webster’s New 20th Century Unabridged Dictionary (1957)”. It said that inflation is “an increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices.” Note that what is inflated is the amount of currency. The effect of inflating the amount of currency is a rise in how much more of the less-valuable currency is needed to purchase anything.

In 1920, in a burst of youthful honesty, British economist John Maynard Keynes wrote a book entitled “Economic Consequences of the Peace.” In it, he correctly identified inflation as an increase in the amount of currency and then summarized, “By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens …. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.” Here we see that inflation constitutes thievery by government. Keynes, however, didn’t stand firmly by his correct 1920 attitude. His later twisted thinking greatly influenced President Franklin Delano Roosevelt and the socialistic New Deal of the 1930s.

Jump ahead to 1946 and the publication of economist Henry Hazlitt’s book “Economics in One Lesson.” It presents the absolutely correct definition of inflation. A prominent columnist whose work appeared regularly in Newsweek and other publications, Hazlitt minced no words when he wrote that inflation “tears apart the whole fabric of stable economic relationships. Its inexcusable injustices drive men toward desperate remedies. It plants the seeds of fascism and communism. It leads men to demand totalitarian controls.” The correctness of his dire forecasts was demonstrated in recent years as inflation ravaged Zimbabwe, Argentina and elsewhere. Hazlitt’s warnings should have been heeded in our country but they haven’t been listened to by most Americans. In our nation, inflation (courtesy of the Federal Reserve and a compliant Congress) continues to erode the value of everyone’s dollars.

Nobel Prize winner Paul Krugman writes about economic matters for the New York Times. On April 7th, without ever defining inflation, he told readers that more inflation is needed. He proposed a “compelling case for raising inflation targets above 2 percent.” In presenting “the case for higher inflation” he stated that “moderate inflation turns out to serve several useful purposes.” Not only did he rely on the false notion that inflation’s definition is rising prices, he proposed that America needs those prices to rise even higher.

No, Mr. Krugman. America needs honest money whose value can’t be manipulated by government, the Federal Reserve, or even by Nobel Prize winners. Americans also need a correct definition of inflation, not a confusing mishmash of highbrow economic verbiage that cloaks the real truth about thievery, solves no problems, and destroys the people’s wealth – in their paychecks, savings, pensions, insurance policies, investments, etc. The value of all dollars continues to sink, something every supermarket shopper experiences week to week and wonders why. The cause is inflation and its continuing toleration by a government that allows the Federal Reserve to produce a continuous stream of freshly created cash.

Could the people of our nation become desperate and “demand totalitarian controls” as Henry Hazlitt soberly suggested? The answer is obvious. But Paul Krugman doesn’t tell Americans what they need to know. Without the truth about inflation, the people will continue to worry about their future, maybe even begin to “demand totalitarian controls.”

Mr. McManus has written “Dollars & $ense,” a booklet explaining solutions to the economic meltdown.


Fed Creates Money; Food Prices Rise

Fed Creates Money; Food Prices Rise
by JBS President John F. McManus

The government claims prices are up only 6.4 percent since 2011. But a shopper trying to feed a family sees chicken up 18.4 percent, ground beef up 16.8 percent, bacon up 22.8 percent, and the price of fuel steadily rising. “The things that are going up in prices are the things I absolutely need to buy,” laments homemaker Jen Singer in a report published by CBS News.

What causes these increases? Sadly and mistakenly, Ms. Singer refers to her problem only as a rise in prices of the goods she needs. She seems unaware that the real problem is the eroding value of her dollars. With precious few exceptions, the staples she buys for herself and two teenage sons haven’t risen in price; the changes she bemoans are due to theft of the value of her dollars. The thieving culprit is a partnership between the Federal Reserve and the U.S. government that manages a slick form of thievery.

In July 2011, the Government Accounting Office (GOA) issued a report doggedly pried out of hiding by Bloomberg News. It showed that the Federal Reserve had created at least $16.1 trillion to shore up the mega-banks after the 2008 banking crisis. Recipients of the bailouts, in round figures, included Citigroup $2.5 trillion, Morgan Stanley $2.04 billion, Merrill Lynch $1.9 billion, and Bank of America $1.3 billion. Slightly lesser amounts in the hundreds of billions were supplied to Barclays, Bear Stearns, and Goldman Sachs. Foreign banks, benefitting from the Fed’s money creation, were Arab Banking Corp., Bank of China, France’s Societe Generale, Japan’s Norinchukin Bank, Germany’s Deutsche Bank AG, Dublin’s Depfa Bank Plc, and Dexia SA in Brussels.

All of this was money that didn’t exist previously. It acquired value by stealing a portion of all existing dollars. The process has long been correctly described by Soviet dictator Lenin, British socialist John Maynard, and others. Both Keynes and Lenin could be classified as champions of honest money.

While this thievery was occurring, an awakening House of Representatives approved H.R. 1207 by a vote of 223-202 in December 2009. It called for an audit of the Federal Reserve, something that has never been done in the Fed’s 100 years of existence. The House bill, however, was gutted by the Senate in a 62-37 vote led by Vermont’s Senator Bernie Sanders, the proud and admitted socialist who regularly votes with the Democrats. His major helpers in continuing the gigantic cover-up were Senators Harry Reid (D-Nev.) and Charles Schumer (D-N.Y.).

Not only food but just about everything else, certainly including the fuel needed to heat homes and run businesses, costs more of everyone’s less-valuable dollars.

Government personnel, Federal Reserve officials, and their allies in the main stream media steadfastly refuse to tell the American people two very simple truths: 1) rising prices are the effect of inflation, and 2) what is being inflated is the amount of dollars created by overworked printing presses and computer entries. If Americans understood these truths, the process would stop.

Either it stops or America will grind to a halt. It won’t take an invading foreign army to destroy this “land of the free and the home of the brave.” All that’s needed is a few more years of the kind of economic treachery we have just described. After that, America will beg for mercy from others because it will have ceded what remains of its independence and freedom.

Learn more at our “Restore Constitutional Money” page, as well as watching Dollars & $ense, featuring the author of this post: