Category: 12th Grade Economics

Businessmen and movie stars are both rich. However, people like movie stars, but resent businessmen. How big is the difference between them that people love movie stars but hate businessmen? I think people like movie stars because in the movies they play in, the audience can relate to the characters, and they love the movie, so they love the actors who were a part of it. The audience can relate to the characters in the movie, and actors say things to the public that makes the audience love them even more (but is what they are saying to the public actually true, or are they saying it only to get more fans?). Most businessmen build their wealth for themselves, and very often they do it at someone else’s expense. People think all businessmen are the same, they lie to get their money and they are selfish people. Now, not all rich businessmen do this, but a lot of them did, and that is what they are remembered for, and people think they are all the same.

I think that people like movie stars because movie stars want the audience to like them, so they will try anything to make people like them, and people believe them. However, some are honest with the audience, but people love them. And people think businessmen are all the same. They think that the businessmen think that they are better than the common person because they have more money, so the people become jealous and resent businessmen, but what they do not realize is the businessmen worked hard to obtain their wealth, whereas the common people did not. They could have worked hard to become rich, but instead of trying to become rich, they decided to be jealous of the rich people and not do anything about it.

What is a price level? According to Wikipedia, “The general price level is a hypothetical measure of overall prices for some set of goods and services, in an economy or monetary union during a given interval, normalized relative to some base set. Typically, the general price level is approximated with a daily price index, normally the Daily CPI.” Notice this definition stated that the price level is “hypothetical”, saying that it is not real. There is no price level. So, how could anyone prove that monetary inflation raises prices if there is no price level? It is not a set price level. Then people would pay the same amount for the same thing. But there is no set price level, it keeps rising, and that is because of inflation.

Tax-funded education includes public schools, because they get money from the government. The private schools, however, are not tax-funded. They do not get money from the government.

What does it mean to be bureaucratic? According to the Dictionary, it is “relating to the business of running an organization, or government.” According to Wikipedia, “Bureaucracy is a system of organization where decisions are made by a body of non-elected officials. Historically, a bureaucracy was a government administration managed by departments staffed with non-elected officials.” Non-elected officials are officials who were not voted into ‘office’. For example, if you became the boss of a company, you have not been elected to take that position, but now you are an official, which is someone in an organization or government who practices authority.

Is tax-funded education inherently bureaucratic? Being tax-funded basically means that it is state-funded. Have you ever heard of the quote “He who pays the piper calls the tune”? It is like that for tax-funded schools too. The state funds the schools, so the state decides what is taught in public schools. That means that the state basically controls the public school system. The government teaches in the school that the government has supreme authority and the public must do everything it says. Government education restraints freedom, even though we think we live in a free country. Reality is that the public should decide what to do with tax money, but because of the teachings they were taught in school, they are deprived of that liberty.

 Tax-funded education is inherently bureaucratic. And the fact that people think they are free, when indeed, freedom is lacked due to the government education people were taught when they were kids, is destroying the country. To a kid, education is everything. And if the government cannot give kids the education they need, but the education the government wants, kids will grow up thinking the government is everything. They will think that life without the government will be chaotic. There are people like that today. Government education is destroying kid’s lives. Thankfully, there are private schools that are not tax-funded, and homeschooling is always an option.

According to Investopedia, “The factors of production are land, labor, entrepreneurship, and capital. These inputs are needed for the creation of goods and services.” The factors of production are the building blocks of the economy. A common way of putting “what it is worth to customers” is called value. According to Harvard Business Review, “Value in business markets is the worth in monetary terms of the technical, economic, service, and social benefits a customer company receives in exchange for the price it pays for a market offering.” How can profits arise in a free market economy if every factor of production is paid its value to customers? If people pay for a factor of production in a free market economy (where the government is in control of nothing, it is all controlled by private business owners), and they pay the value of the product (the worth in monetary terms of the benefits from a service a customer receives in exchange for the price the customer pays for the service) for the product, how can profits arise? In a free market economy, the business owners get to set the prices. But, certain services have a certain value, and business owners get to determine to set the prices of their service(s) above or below the value of their service(s). However, if all the prices were set at the value of each service, how can your profits go up? They can’t. What if the valued price of your service was below the price it kept to keep your business alive? You would go out of business. Now, some people might stay in, and get all the business, but what about the losers? Now there are more unemployed people than there were before. This can destroy the economy.

You may have heard of the most common example of the division of labor, the pencil. If you have not, I will be explaining the division of labor on a different, but perhaps even more commonly used than the pencil, household tool, the book.

The division of labor is just as it sounds, everyone is divided into separate jobs according to the kind of labor in which each person specializes. And when people use their own skills to create things, they can make pretty simple things, but when they work together to build something, they can build incredible things, from a pencil to a skyscraper.

Do you think you can make your own book? Good luck! It is not as easy as it sounds. Lets make it simple. Can you make a piece of paper? I do not think so. To do that, you would need to cut down a tree. To cut down a tree, you would need to build your own tools to cut the tree down with. Then you would need to transport the tree somehow to a factory where the wood is made into paper. But, since you are supposed to do all of this yourself, you would need to build your own factory. You would need to get all the raw materials to build your own factory. But, you will get hungry, so you will need to eat. But where will you get food? You will have to find it yourself. You will also need a place to live. You need materials to make the materials to make the tools to just cut down a tree. You can not do it yourself. That is why the division of labor is a thing. So you do not have to anything yourself. Everything you see that was made by humans was made by the division of labor. It the division of labor did not exist, the world would be very different today.

What is the broken window fallacy? The broken window fallacy was supposed to explain the things seen and the things not seen. If someone breaks a window, the owner must use his money to replace the window. That is the thing seen. What about the thing not seen? If the window was never broken, what would the owner of the window would have used the money that was supposed to replace the broken window on? The owner of the broken window would have used that money on something else, but he had to use it on the broken window. That is the thing not seen. What the owner would have used his money on if the window was never broken. What if the owner of the window was going to buy a new suit? Before the window was broken, he had the window and the money. Now, he has only the window. Or, he will have to chose, either the window or the suit. This fallacy creates jobs (the window maker gets money for the new window) and destroys jobs (the suit-seller now can not sell a suit because the man now has to buy the window instead of the suit he wanted to buy), thus, harming the economy. And since we see the winners (the window maker) and not the losers (the suit-seller) we say the economy is better off.

According to Study.com, “Government intervention is when the government gets involved in the marketplace for the purpose of impacting the economy.“

One such example of government intervention of the broken window fallacy is the money spent on war. The government takes money from people to spend on war things, like weapons, uniforms, etc. That is the thing seen. However, now that money can not be used for other things, like food, healthcare, clothing, and several other sectors of the economy. That is the thing not seen. Now, the winners in this system are the weapon manufacturers of the plane manufacturers, etc. The losers are the people who work in basically every other part of the economy, including the people the government takes money from to “fuel” their war.

Why wouldn’t someone voluntarily offer you a job at twice today’s minimum wage? Because, the minimum wage law must be modest. It can not be a huge wage. But why not? Why can’t there be a big wage? Start with this: if a worker feels underpaid, or if the minimum wage is above what the worker is worth, the worker will leave, and find a job that is probably not legal. But if you talk about increasing the minimum wage, the person who is leaving will be like, ‘you can not make people richer by increasing wages’. But why is this the case? People realize that if you increase someone’s wage, you will not have enough money to pay other workers, so you will have to fire people. You have to fire people to pay other workers more. And people realize this. If a huge minimum wage increase will not work, will not make people rich, ask yourself: Why not? Well, you can not pass a law to make people rich. It’s that simple. You can pass a law to make people a little better off, but you can not pass a law to make people rich. And people know they can make people better off, even if they know that they can not make them twice as better off by doubling their wage. Increasing wages will also mean an increase in prices, and businesses can not immediately pass on these increased costs to customers. And if businesses can raise the prices to pay for extra wages, why does the business not raise the prices whenever they want? And the people who quit or get fired because they are not getting the increased wage, must seek employment elsewhere. And competition lowers prices. Now the people who can’t find a job are really suffering. With lowered prices, businesses can not afford to pay new workers. Now, the state may put unemployed workers on relief, unemployment insurance. So now we have the state intervening. The state uses tax money to help unemployed people who were fired through no fault of their own, because they were not fired through any fault of their own. It is the government’s fault for increasing the minimum wage in the first place.

According to Wikipedia, “The parable of the broken window was introduced by French economist Frédéric Bastiat in his 1850 essay “That Which Is Seen, and That Which Is Not Seen” to illustrate why destruction, and the money spent to recover from destruction, is not actually a net benefit to society.”

The broken window fallacy was supposed to explain the things seen and the things not seen. If someone breaks a window, the owner must use his money to replace the window. That is the thing seen. What about the thing not seen? If the window was never broken, what would the owner of the window would have used the money that was supposed to replace the broken window on? The owner of the broken window would have used that money on something else, but he had to use it on the broken window. That is the thing not seen. What the owner would have used his money on if the window was never broken.

This happens all the time in different examples, but it is the same fallacy. People argue that building a bridge, for example, creates jobs, therefore helping people. And it does help people get jobs. However, what would have the money used on the bridge be used for if the bridge was never built? Maybe for other projects or expanding the business, which also increase jobs. And with the bridge, once it is built, you do not need the workers any more. They lose their jobs. However, if you use the money to expand the business, people fill those new jobs, and these jobs stay, so the people stay.

What is money? Money is the most marketable commodity that is used to be traded for goods and services. Money is also hard. Hard money does not mean it is hard like a rock, but rather, it is hard to make, or find. That is why gold and silver have been used as money for thousands of years. Because gold and silver are hard to mine, and they can be made into small, portable coins. However, nowadays, gold and silver are too valuable for every day purchases and are too heavy to carry around large amounts of. So the government decided to make paper money backed by gold. Basically, you could trade gold for paper money for gold when you wanted to buy things, but then people started to realize that paper money had the same value as the gold, so they started to trade paper money for goods instead of gold. The government could not print more money without mining more gold, and it worked great! until the government started printing as much money as they wanted without actually mining more gold. This is called inflation. Inflation is when the prices of goods and services go up when the value of your money go down. Have you ever noticed that prices on goods going up? The cause of that is the government printing as much money as they want. Inflation have destroyed entire countries in the past, and I would hate for inflation to be the cause of the destruction of the US.

However important the topic of money is, it is not the topic for this essay. The topic for this essay is ‘Does a national government need to issue its own money in order to secure honest money?’ What is honest money? Well, it is not something I can really explain. I think I can better explain this with an example. So, U. S. money is paper, but it is backed by gold. That is honest money. The money is honest. It has value. Back in Roman times, they used gold coins to buy things, And it worked great, because gold had value because it was rare, and hard to mine. This money worked very well, however, the government decided to try to make more money without actually mining more gold. Romans shaved off little pieces of gold off of the existing gold coins, and melted them down with other metals, like iron, or copper. Now, there are more coins acting as money in the system. These half-gold half-other metals coins are not honest money. Do you get what I’m trying to say? And now, since there are more coins in the Roman money system, people have to mark up prices on everything, making everything more expensive. And since there is less gold in the coins now, from shaving off little pieces of the existing coins making them worth less, and melting those shavings down with other metals to make more coins which have less gold and other metals in them, the coins are worth less. These two problems make the prices of goods and services go up (making more coins out of existing coins), while the worth of the coins are going down (because the coins are no longer one-hundred percent gold and the coins are now smaller because of shaving gold off them meaning they have less gold in them), at the same time! Also, that’s why U. S. coins have ridges on them so people can see if people have been shaving off little pieces of them. The new coins that have pieces of gold shaved off, and the coins that have been melted down with other metals are not honest money. Also, back then, coins were measured by weight, not value. People used scales to weigh the money to figure out how much you could buy. If the coins that had pieces shaved off of them are put back into the system, that coin will not be as heavy as it was before it was shaved, making it worth less. And the metals melted down with the gold from shaved pieces of coins might not be as heavy as gold. So they might be the same size, but they are full of different metals, all different weights depending how much extra metal they put in with the gold. Depending on this, these new coins might be heavier or lighter than the real coins were. So now, there is more money in the system, and the current money is losing value. This is also happening in the America today.

Hopefully you can see what I’m trying to explain to you.

America used to give people paper money worth gold the government had in reserve. They could not print more money without mining more gold. And back then, people traded their paper money with the bank for gold the bank had in reserve to buy things with, but it was not long before people began to realize that the paper money had value, because it basically had the same value as gold, so they started trading that instead. It worked great. Do you understand? They could not print more money without mining more gold. Paper money backed by gold in reserve? Now that is honest money. However, the government began to get greedy, as they all do. They started printing money without mining more gold. They made money out of nothing! When you make money out of nothing, that is fake money. The U. S. A.’s main source of currency (paper money) is fake. It is not honest money. The United States of America’s main source of currency is not honest money. It used to be, but since then, the government got even more greedy, and started printing money out of thin air! The money used to be worth something, but when you make money out of nothing, it is not honest money. It is not real money. It has no legitimacy. Also, it is much harder to mine gold than to print money, so the government thought it would be a good idea to use paper money instead of gold. Big mistake. This just paved the way for future government officials to print money out of nothing. If the government continues to print massive amounts of money every year, the money may soon become worthless. According to the Federal Reserve Bank of St. Louis, “How can it be dangerous? If the government prints too much money, people who sell things for money raise the prices for their goods, services and labor. This lowers the purchasing power and value of the money being printed. In fact, if the government prints too much money, the money becomes worthless.“

Does a national government need to issue its own money in order to secure honest money? How does a national government issue its own money? In simple terms, the Federal Reserve prints it, and releases it into the system. But does a national government need to issue its own money in order to secure honest money? What kind of money are we talking about? I will assume that we are talking about American currency. As I just explained, the paper money we as Americans use used to be honest money, paper money backed by gold in reserve. However, the government recently started printing money out of thin air. This makes the money fake. There is no honest money. American paper money is not honest money. So, if the government prints dishonest money, then releases it into the system, then gets some back from taxes and what not, it is still dishonest money. Now, if we are talking about any other government from a different country, it would probably be different. Their money might be honest. But in American currency, the money is not honest, therefore, the national government can not secure honest money because there was no honest money to begin with.

People can also use their own ‘money’. It is called bartering. People used to do it all the time before gold or coins were used as money. People traded one thing for another, just as long as both people were willing to accept it. Why don’t we do this today? Because money gives you a larger market. If you want to trade an apple for an orange, you would not only need to find someone who wants an apple, but also is willing to trade it for an orange. With money, you can sell your apple to anyone who wants an apple, and then spend the newly acquired money to buy an orange. Money widens the market. This is only one reason out of several others of why we use money instead of bartering.

What happens when a national government issues too much money? If there is too much money in the system, then prices can rise and the value of the money decreases, causing inflation. Inflation is when the prices of goods and services go up, while the value of your money goes down. There are some countries that have experienced hyperinflation. The prices of goods and services go up every day, sometimes the prices even double or triple every day! That is what happens when the government prints too much money. And soon, the money becomes worthless, pretty much worth nothing. Did you ever notice how much a penny is worth? It can not buy you anything in today’s world. One hundred years ago, a penny used to be over eighteen times the value today! And with the minimization of inflation, money was worth a lot more than it is today. And the prices of products and services were also a lot lower than they were today. Butter back then was thirty-six cents, eight dollars and seventy-two cents in today’s dollars. The common dollar had much more value one hundred years ago than it now does today.

Does a national government need to issue its own money in order to secure honest money? Honest money in this scenario is paper money backed by gold the Federal Reserve or banks have in reserve. Paper money used to be honest money, when it used to be backed by gold. The government could not print more money without mining more gold. But, lately the government has become greedy and started printing tons of money every year without actually mining more gold. Therefore, the money is now no longer backed by money. Or, money is backed by gold, but an extremely little bit of gold. This makes gold very expensive. The paper money is no longer backed by gold, so it is not honest money. Does the national government need to issue its own money in order to secure honest money? The nation government issues money, and the money we use circles back to the national government when people use it. The national government secures this money, so the national government does need to issue its own money to secure money, but if the money was not honest in the first place, how can it be honest later? The money is no longer backed by gold (if it is then it an incredibly low amount of gold) so it is no longer honest. So the national government does need to issue its own money in order to secure money, but if the money was not honest in the first place, it can not be honest later. The national government can not secure honest money because there was no honest money to begin with.

Can this money become honest again? How I think this is possible, is if the government prints no more money, and they mine more gold. They mine gold until they equal each other. Then the money will be honest. Also, I have heard that one of the reasons the government prints money is because of the ever growing population. However, they are printing too much money, and prices rise. In fact, if they did not print any more money, and the population did grow, people would have to be paid less so they can spread out the rest of the money to the rest of the population, and that actually lowers prices of goods and services. If the population is growing, they do not need to print more money to satisfy the whole population. The money will be spread out across the population so that more people get paid. And with people getting paid less, businesses will lower prices of goods and services to satisfy the population.

Do you know about counterfeiting? Printing money illegally? I am sure you do. But, did you also know that you can counterfeit legally? The government does it all the time. That’s right. The government prints money all the time, and that is also counterfeiting. The government counterfeits all the time. Counterfeiting is basically getting something for nothing. If someone printed money (nothing) and traded that for something (goods and services) they are basically stealing from the people who have the ‘something’. The government prints money out of thin air and uses it to buy things. The government is basically stealing from people using paper as money. Paper has no value. The government prints money out of paper. Now, when paper money was backed by gold, it had value. It was honest money. Now, the government just prints money without mining more gold. They are printing money out of nothing. Paper money is fake. Why do we still use paper money if it is fake? There are laws that say that you are only allowed to use money that is approved by the government, which is the paper money. You are not allowed to use any other type of money.

Were you ever aware that when you use paper money, you are really using fake money? Well now you do. However, did you know that there alternatives to paper money that are not illegal? I have two examples. One: Bitcoin. Bitcoin is the first ever decentralized cryptocurrency. It is digital currency. Now you may be thinking how this is any different than paper money. For one, it is impossible to inflate. Whoever has Bitcoin owns a part of it. You have a say in if someone wants to make a change to it. And to make a change to it, you need the majority vote, which is basically impossible. And the more people who own it, the more valuable it becomes. The second choice is the Goldback. The Goldback is like paper money, but with major differences. Yes, it is physical, you can hold it. However, it is made out of pure gold, also making it impossible to inflate. And because it is made of gold, the vale of it rises with inflation, whereas the paper money’s value decreases with inflation. And you can use it just like you use cash.

Both of these choices are accepted world wide, making them acceptable in several countries. Now, some countries may not accept it, but the U. S. does. And both of these choices are widely better than paper money. A lot better.

What is money? Money is the most marketable commodity. You trade it to buy things. How did we get to paper money? Well, in the past, people bought thing with gold, because it was hard money (hard money means it is hard to find, or make). However, gold is very heavy and far too valuable to use for every-day modern-day purchases. So the government decided to use paper money instead. You could trade gold for paper money, and when you wanted to buy something, you go to the bank and trade in the paper money for gold. And paper money made sense because paper money was easily divisible to use to but things and it was portable. It was not long before people figured out that the paper money also had value and started to use paper money to buy things instead of gold. The government could not print more money without mining more gold. It worked great! however, the government became greedy and started printing more money without mining more gold. This caused inflation, prices going up with the value of paper money going down.

Counterfeiting is when people illegally print money. Can governments counterfeit? Yes they can, and they do. For example, the Federal Reserve. The Federal Reserve controls how much money is printed in the US every year. Technically, paper money has no value, so all money is fake. When banks create money out of nothing (a.k.a. paper and ink),and pump it into the system, that is counterfeiting.