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December 18, 2009


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"A bit preachy" is a huge understatement.

I thought I was living in a country that had the separation of church and state boldly written into its constitution but it seems that you can't get away from religion either in politics, the armed services, on the financial pages, or even on our currency.

While we're on the subject of Scrooge and Marley from Charles Dickens writings how about bringing up the ultimate miser from William Shakespeare's writings - Shylock - the jewish moneylender in the Merchant of Venice, that if he couldn't get the money he was owed from the debtor, he wanted a pound of his flesh instead.

Old Limey --

Bah humbug to you too!

And as far as the Constitution goes, the "separation of church and state" is not as boldly written into the document as most think. The phrase is actually from some separate writings of Jefferson's:

And as for this blog, there is no such separation. If you haven't figured out yet that charity, helping others, and a spirit of goodwill toward all men -- and especially for those in tough situations (many of which are there by no fault of their own -- contrary to what you seem to think) -- is part of what's talked about here regularly, you haven't been reading very closely.

I like the post.

I think the constant pressing theme of "Save every cent! Get wealthy!" of all personal finance sites can get unbalanced.

It is so important to be reminded of what we are saving money *for*.

I also really like the idea that we are always investing in *something*, even if we are just sticking our $ in the bank for ourselves, and to look at what the payback for our investments is in real terms.

I loved reading this article. It was interesting, informative and helpful, no matter what religion one is (or isn't).

Don't let the naysayers get you down, FMF. Some of us get something out of articles like these.

I really enjoyed this post. In fact, I'm inspired to subscribe. Thank you for the timely reminder of what is truly important in our short little lives.

and FMF finally makes his reply! i was wondering where you were in the other thread ;)

Eric --

Ha! I was off work and out shopping much of yesterday (last minute stocking stuffers needed) and didn't get much of a chance to follow which of the two posts had the giving discussion going on. Any way, I'll probably link this one to the other one so readers there can see my response.

Now I feel bad about writing an article (that will be posted later) on not giving to organized charities.

I really think the work you do here FMF is outstanding, hopefully you have fun doing it as well!

As for this post, I think people should rise up and demand that inflation doesn't devalue your savings by 2% every year. That is unacceptable. Savings, that are created from work and earnings, shouldn't have to be devalued. The US dollar was pretty stable for decades. Taking wild ass risks (like the investment bankers) don't necessarily make you the opposite of a miser.

We need a plan to have the Fed phase out, as they have been the source of boom & bust bubbles and inflation that has only gotten much worse in the last 25 years.



What do you propose to replace the fed with, Politicians?

You are aware that boom & bust cycles occurred prior to the fed right? The late 1800s are full of them. And they were often more severe and more frequent than we have now (except for the great depression of course).

You are also no doubt aware that inflation of 2% per year is far below the 100 year average inflation in the U.S. no? Perhaps you could point us to the currency and financial system that is operating or has operated anywhere in the world that has eliminated the march of inflation. (The gold standard didn't stop it either by the way). 2% inflation is a gift not a malady. We have been greatly historically blest to have the low inflation we have had the last 20 years. It will likely not be that low in the next 20.


Why do you attempt to apply the constitution to private speech? You know that doesn't apply. And you can get away from religion, stop coming to sites that reference it. This site has made no secrets about it and yet you are here. If your view of religion cannot tolerate others referencing theirs, you should hide yourself from those who so invoke such a profound reaction in you by the mere quotation of a passage from a religious book.

Regardless of your view of religion and how it motivates people, I find it encouraging that it motivates many to help out their fellow man. I noticed that you proudly announced on a previous post that if you got a windfall, zero of it would go to charity. It's interesting that you felt compelled to explicitly point that out.

Hi Apex,

I am aware of the booms & busts that happened in the 1800's.

We haven't had 2% inflation, if we did that would mean the purchasing power of a dollar would be 4 times lower than it was in 1940, I believe it's more like 30 times lower than it was in 1940 so that would equate to an annualized inflation rate of about 5-6% or so. Is that still a gift to you?

There is the control issue of who would run the money supply, but I don't see the FED doing the right thing. Look at the present situation, the US dollar is being used to finance a huge carry trade, replacing the Yen. Just raising the interest rate to 2% would pop the carry trade yet there is no push to do this. The FED has been blowing bubbles during the last 25 years, with each one creating a worse disaster when it pops. What about when this gov't debt bubble pops? It's going to be a huge mess, one that makes the previous housing bubble look pretty tame.

Not sure I have the best answer on what to replace the Fed with but their mission of 'price stability' and 'maximum employment' is a total joke. What we have in place isn't working.


I find this to be a great post and quite thought-provoking. More text I need to revisit.

@Mike, the 2% number was not a number I was claiming, but one I took directly from your post when you said the following:

"I think people should rise up and demand that inflation doesn't devalue your savings by 2% every year"

Also I referenced specifically inflation of the last 20 years. I don't think it probably averages out to 2% over the last 20 years probably like 3% or so. And yes, I think that's still a gift.

Your reference to inflation since 1940 is why I think its a gift. Inflation in the high teens in the 70s and other high periods in our past history has been common. And the long term reduction of inflation in the last 2 decades started when Volker and the Fed killed inflation in the early 80s. Since then global pressures have worked to help hold inflation down, but the Fed is what initially gave us low inflation.

I also do not disagree with you that they have had a tendancy in recent recessions to try to ease the pain too much. I would hope to see another Fed Chair on the order of Volker who was leaning more towards the inflation mandate.

But here is my problem with everyone who wants to get rid of the Fed and with Ron Paul who wants to put oversight on the Fed. If we get rid of the Fed, some body must eventually make money supply and interest rate decisions for the US banking system. It is not possible to suggest getting rid of the Fed without a plan that replaces it. Without an independent Fed it seems this falls to Congress. I do not think you would likely find that Congress in its desire to spend tax payer dollars on easing the pain would be less accomdative than the Fed. In fact everytime the Fed embarks on an interest hiking policy, the Fed Chair has to sit before Congress and listen to Senators tell them that they are costing jobs and causing unemployment by increasing borrowing costs. Congress never cares one bit about inflation.

So if not Congress then who? And if it is someone other than Congress, then isn't that just a different name for what we already have, namely the Fed. Frankly I love the Fed. Without the Fed, I don't know how we don't have monetary chaos.

The only answer I have ever gotten in response to this was go back to the gold standard. Of course this doesn't really do anything. We had a Fed when we are on the Gold standard. We still had inflation. And we don't have enough Gold in the world to back our currency anymore.

I am sure there are probably some proposals out there to do something different from the Fed, but I have never never met anyone who wanted to abolish the Fed who could articulate one to me (other than the Gold Standard which I already addressed).

So even if you don't know what to replace the Fed with, you must have some idea of why having no Fed is better than having a Fed for inflation. And if you haven't thought through how that works out I would suggest that might be a good thing to try to think through.

Simply stating that the Fed has made some poor decisions isn't enough. Our government has made some poor decisions. I think a lot of poor decisions. I suggest we abolish the whole constitutional system we have. Taxes are too high, we are losing freedoms, too much beurocracy interferring in my life etc. Clearly this representative form of government isn't working. I don't know what to replace it with but anything has to be better than this. Just abolish it and see what happens.

A little hyperbole perhaps, but I don't see how abolishing the Fed and leaving a vacuum is much different.

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