The Christian Solution C   S  
Home Page   About TCS   Contact Us  

January 28, 2009

Inflation Explained - The Dollar Stock Split

Source: Walter Williams
There is no Santa Claus

Source: David A. Patten for Newsmax
Obama's Bill Hands ACORN $5.2 Billion Bailout

Source: Thomas Sowell for
What Are They Buying?

    "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property, until their children wake-up homeless on the continent their fathers conquered."

    -- Thomas Jefferson

The best way to understand inflation is to look at extreme examples.

Think of the U.S. Dollar as a merely a Stock Certificate, issued by the Federal Reserve, a private central bank, that is only as good as the stability of the company who issued it.

Yet, it gives you no dividends and it's guaranteed to go down in value year after year.

A Google Stock Split

Let's start our understanding by examining Google stocks.

Let's say that one Friday afternoon your Google stock closed at $400 per share. After the closing bell, Google management has decided to reduce the price of Google stock, because few can now afford to buy a share of Google stock at that price.

Google has decided that they want their stock repriced at $100. So, they overnight ship to you, three more shares of Google stock.

Now you have 4 shares of Google instead of your measly one share. "I'M RICH !!!!", you think

All weekend, you figure ways to spend all your new found wealth that Goggle graciously gave to you.

Monday morning, you race into you stock broker's office to sell your 4 Google shares thinking you now have $1,600 in 4 Google stocks. Your stock broker looks at the price of Google Stock and tells you its value of each share of Google is now only $100. But, he informs you after you sell all four of them for $100 each, then you will have your original $400 back.

But, you say -- "Friday the price was $400 for one share."

"Yes, you stupidly naive stock trader -- Google did a four-way stock split", he says.

Sadly you walk away with the same amount of money you came in with.

You should feel lucky, because in the private world, Google had to give the three shares of Google directly to you -- since YOU were the owner of the one share. You neither gained ground, nor lost ground in the transaction.

Actually most investors welcome the stock split, because now many more people can afford to buy your stock, pushing the stock higher with real gains.

Unfortunetely, government has no such restraints on who it dispenses its "dollar splits" to. Since the government makes the rules, it is not bound to send you, the owner of the dollar, the new dollars from a dollar split.

The Benign Dollar Stock Split

If you imagine the $400 U.S. dollars you received for the Google stock as actually 400 shares of Uncle Sam's dollar certificate, then you will understand how the value can change.

Let's say that Uncle Sam wants to do a 2-for-1 dollar stock split. Uncle Sam sould then be required to send to you another 400 shares ($400 U.S. Dollars) to match the 400 shares you already had. You would instantly imagine, after the dollar stock split, that the total of 800 shares of U.S. dollars are of the exact same value altogether as before the split.

In other words, if you could by an LCD TV with $400 before the dollar stock split, then you would need $800 to buy the exact same LCD TV after the dollar stock split.

This is inflation, but not taxation.

Either way, both before or after the split, you are neither better off nor worst off than you were before. You have not been harmed in any way.

The Evil Insidious Dollar Stock Split

The problem is that Uncle Sam does not do his "dollar stock splits" that way, in a legal, transparent, above-board approach.

Instead of sending you 400 dollar shares right away, he places 20 dollar shares into his own Federal Reserve account each year, for 20-years. After 20 years then, Uncle Sam has performed his complete "dollar stock split" on you, in stages, but he was the one receiving and spending the extra split dollars.

This is called both inflation and taxation.

Not realizing that your money was being deliberetly chisled away from you, you were bewildered as to why you have to have 20 more "dollar stocks" every year to add to the 100 "dollar stocks" you used to spend on milk and bread for your family.

This form of thievery government has labeled with the word "inflation", but neglect to tell you that it was also taxation.

This form of "dollar split" is stealing and thus should be illegal, as it was your money Uncle Sam was splitting and giving to itself.

But, you say -- "In practice, it is really just another tax, and Uncle Sam does need money to operate".

Of course, this is not the only scheming way the Feds impose taxes. They love to increase the Social Security "tax" to shore up the Social Security system for the baby boomers. But the IOUs into the Social Security system is nothing more than another tax that gets spent today. There is no savings. Just a hat trick accounting scheme.

Adding thief to the Evil Insidious Dollar Stock Split

The secret tax through the splitting of the dollar is an intentional fraud done by our elected officials against us and again should be illegal of itself, because it is a fraudulent deception of what the true cost of our government is to us.

Then the worst illegal and unConstitutional fraud and insult of all happens -- Uncle Sam decides deposit your yearly 20 "dollar stock" split proceeds into somebody elses bank account, not yours. This is done in a variety of ways; either through progressive (i.e. communist) taxes, earned income credit, or Obama's $5 Billion payoff to ACORN.

This form of government stealing, the taking from those it does not like, to give it to those it does like, is called "Spread the Wealth" by communist types such as Herodian Obama.

The system where voters, who pay no taxes, vote someone into office to return to them taxes, that they have never paid, is nothing more than "Representation without Taxation".

Our Founding Fathers would have had a cry to arms over such tyranny.

And Thomas Jefferson was right, "We are being kicked out of our homes, first through inflation of our homes, then by deflation of our homes!"

Article located at:
Last Hope for America
Christian Libertarian: Harmonious Union
Church and State

The Christian Solution ©             First Release: March 15, 2008