I'll gladly pay you Tuesday for a hamburger today

This page was last updated on Wednesday, April 02, 2014

This essay includes two links to the Federal Deposit Insurance Corporation and one link to the Department of Labor Statistics Inflation Counter. I placed these links near the end of this paper. The reason that I mentioned this here, is that some people may be interested in official statistics and not something brewed in a very large pot. The sentence that ‘I’ll gladly pay you Tuesday for a hamburger today’ came from a comic strip created by E.C. Segar. This sentiment is now used to show monetary irresponsibility. See


Stephen W. Hawking related a vaguely remembered lecture by a well-known scientist. According to his book, ‘A Brief History of Time’ the well-known scientist may have been Bertrand Russell. As the story goes, this scientist gave a public lecture on how the earth orbits the sun. Using this notion, he described how the movement of our solar system relates to motion of stars in our galaxy, the Milky Way. Then a little old lady got up and said: " What you said is rubbish." The world is really a flat plate supported on the back of a giant tortoise. According the story, the scientist asked, "What is the tortoise standing on?" The old lady replied "You’re a very clever but its turtles all the way down!" I suppose that is one way of describing infinity.

Imagine this, what would happen if the supply of turtles was finite. Then this essay could be about the national budget in the world economy, the national debt, the cost of goods and services, and the balance of trade. Over the years, spending has nearly always exceeded revenue and only twice in recent memory has the government produced a balanced budget. Trying to decrease the national debt through deficit spending is much like borrowing today and promising to pay next Tuesday. Since Congress rarely balances the budget and we will never repay the debt because next Tuesday never seems to arrive.

The economic law of supply and demand means that prices are a result of necessity, desirability, scarcity and abundance. So the point of economic equilibrium has to be considered. The cost of an egg in the California gold rush was figuratively and literally worth more than its weight in gold. One reason for that was that gold was plentiful but it was not edible. So merchants made more money than the prospectors as gold became more difficult to mine. The cost of operations exceeded the value of the ore and so most gold mining ended.

Inflation and Loss of Purchasing Power

In some countries inflation was so rampant that a liter of milk would cost a half day’s pay or more. So economic inflation is this. What a person bought yesterday will cost more today. Suppose a court awarded a judgement of one dollar. How much would that judgement be worth in a month if inflation doubled each day? At the end of a month, your judgement should be worth about 107 million dollars. So the cost of living goes up while the availability of goods and services go down and so your award of one dollar is worthless due to economic depreciation.

Economic depreciation is the loss of value or of purchasing power resulting from an increase in the level of domestic prices. This is why economic depreciation refers to lowering the value of a country’s currency. This is the reason that economic depreciation affects the balance of trade. So it is about the value of a country’s currency compared with the currencies of other countries.

Depreciation refers decreasing the value of certain kinds of property over time. The economic notion of depreciation includes the loss of value of buildings, machines, vehicles, and other property through use, accident, or obsolescence. For tax purposes, we apply depreciation only to property that produces taxable income. So businesses can treat depreciation as a cost of doing business.

Economic Depression and the Gold Standard

Economic depression is a deep, extended slump in business activity where buying and selling drop leading to a decline in employment that leads to a decline in production. As a result, the quantity of goods and services decline while employees lose their jobs and businesses fail. Entangling military alliances that were in place before The Great War partly caused the Great Depression of the 1930's (World War I). These alliances included the Entente Cordiale (later the Triple Entente) and the Allies (Germany and Austria-Hungary). The other causes of the Great Depression were stock markets that allowed stock trading on the margin. In this sense, the margin was percentage of the actual stock value. So a person could buy $100 worth of stock for 10 dollars, sell it for $100, and make a $90 profit without exchanging money. So $100 was only worth $10.

The Gold Standard

After the end of World War I, most governments returned to the gold standard. This was done to promote wage and price stability and halt inflation. The return to internationally fixed currency values that were based on another nation’s currency did not portray the economic reality that some currencies had no value. After the war ended, many governments returned to the gold standard to provide price stability and to halt inflation. A return to fixed currency values hurt many countries that had seen prices rise.

One of Richard Nixon’s campaign promises was to end the war in Vietnam and as President he tried to do that. The problem was that many people had depended on jobs in the Defense Sector, the companies and military agencies that make weapons and materials of war. As a result, considerable lobbying went on to protect military production in the government and the private sector. The result was sluggish economic growth, high inflation, increasing prices, and high unemployment. The economy was not growing so what a person bought the previous year would cost more in the next year. So the relationship between world oil prices, inflation, stagflation and the balance of trade was indisputable. So the ten years from 1971 through 1981 were years of persistent inflation and unemployment where the armchair critics preferred theoretical action rather than practical solutions. When Nixon ended the trading of gold at 35 dollars per ounce, the price of gold (in U.S. Dollars) soared. The ten years from 1971 through 1981 where years of persistent inflation and unemployment while the armchair critics preferred theoretical action (words) rather than practical solutions.

Economic Inflation and Stagflation

Deflation is the contraction in the amount of available money or credit that causes a decline in prices. As a result the economy contracts while unemployment increases. In the third quarter of 2009, the government initiated the cash-for-clunkers program. So a person can turn in their old car and buy a new car that meets certain clean air and mileage standards. This government initiative was a part of an economic stimulus package and the results remain unknown (September 3, 2009).

A side effect of this economic deflation is that the taxpayer will pay more in taxes because the government deliberately designed the tax tables to include inflation. This could lead to an economic ‘yo-yo’ or a partial reversion to a previous stage where government spending will increase at the detriment to individual spending.  In other words, government spending goes up and individual spending goes down.

Economic inflation is the uncontrolled and continuing increase in money and credit against the availability of goods and services. As a result the economy expands while employment increases. The side effect of inflation is that what a person could buy last year will cost more next year. In other words, the purchasing power of money goes down while the cost of living goes up; so what they buy today will cost more tomorrow. First coined in 1965, stagflation is persistent economic inflation combined with stagnant and rising levels of unemployment. This leads to rising unemployment that leads to almost no growth in consumer demand that, in turn leads to, little growth or a decline in business activity.

Congress and Spending

Ronald Reagan became the 40th president in January 1981. Then he proposed a plan that included tax cuts, reducing some welfare programs, increasing defense spending, while restraining federal agencies that went too far in regulating the private sector. The problem was that the political establishment had created a government that could not trust the people to spend their own money on what the power brokers wanted. That is why the prices would go up when the people were to get a raise and this created a yo-yo effect.  So the cost of living would go up while the amount of disposable income would go down.

The yo-yo effect is a situation or condition described as fluctuations between one extreme and another. The Economic Recovery Tax Act of 1981 led to the largest tax cut in U.S. history. Yet it did not last long because it led to a rapidly increasing budget deficit. So Congress increased taxes by 91 billion dollars in 1982 and so the unemployment rate increased to about 11 percent of the labor force, the highest since 1941. Still, the economy began to recover rapidly in 1983. Yet the federal budget deficit reached another record level in the 1983 fiscal year-about $195 billion.

Although the President may have a discretionary budget that he controls, the big ticket (costly) items are in the purview of Congress. The problem is that the President does not have the authority to exercise a line item veto. This explains how the annual budget grown to a point where it exceeds the past total national debt. This attitude leads excessive government taxation and government regulation. Imagine the effort in trying to read several thousand pages of a government document to find an entry for a $600 toilet seat or a $400 hammer? Presidents may propose budgets but only Congress makes them.

Although the economy thrived in 1984 and the rate of inflation remained low, the deficit rose rapidly. The reason for this was that the taxes that the government received did not keep pace with the money spent and the rich became wealthier while the National Debt increased. Although this spending did contribute to the end of ‘the Cold War’, Congress decided to spend the ‘peace dividend’ on new wars in the Middle East and elsewhere. In 2009, the national debt was more than 11.956 trillion dollars and we paid 383 billion dollars in interest. That is why the rich are getting richer while our annual deficits continue to exceed the previous ceilings for the national debt. Yet the current President still does not have a line item veto and we are running out of turtles.

Changes in FDIC Deposit Insurance Coverage

From 1986 to 1995, the number of US federally insured savings and loan corporations have declined from 3,234 to 1,645. This was primarily due to grossly inflated home values and unsound real estate lending. In other words, the lenders were lending large amounts money to pay for homes whose value was far less than the loan. The local tax assessors ‘loved’ this arrangement because it was an easy way to increase revenue without increasing taxes on existing homes. Moreover, a change in Federal Savings and Loan Insurance Corporation (FSLIC) simplified fraud in many leading institutions. They reduced the minimum number of stockholders to one person.

Beginning December 31, 2010, through December 31, 2012, the FDIC insures all noninterest-bearing transaction accounts, no matter the balance of the account, at all FDIC-insured institutions. The unlimited insurance coverage is available to all depositors, including consumers, businesses, and government entities. This unlimited insurance coverage is separate but an addition to, the insurance coverage provided to a depositor’s other deposit accounts held at a FDIC-insured institution.

A noninterest-bearing transaction account is a deposit account that does not accrue or pay interest. Institution permits depositors to make ‘an unlimited number’ of transfers and withdrawals. The bank does not reserve the right to require advance notice of an intended withdrawal. Please note that Money Market Deposit Accounts and Negotiable Order of Withdrawal accounts are not eligible for this unlimited insurance coverage.

For more information, visit:

The current standard maximum deposit insurance amount is now $250,000. FDIC insurance coverage limit applies per depositor, per insured depository institution for each account ownership category. Additional information about the FDIC deposit insurance coverage is available through the FDIC’s Electronic Deposit Insurance Estimator (EDIE) on the FDIC’s website.

For more information, visit:


Lavishing Their Own

A lawsuit brought under the Federal Claims Act that began in 2006 was unsealed on October 4, 2011 in Atlanta, Georgia. The lawsuit claims that thirteen banks and mortgage companies had cheated the taxpayers and military veterans out of hundreds of millions of dollars to hide illegal fees. Although Federal rules allow lenders to charge "reasonable and customary" fees and taxes, but the rules bar lenders from charging veterans with attorney fees and settlement closing costs.

This is how it works. A veteran applies for a loan and the lender approves the loan. Then at closing the deal, they charge the veteran for additional attorney fees and costs for the loan. This is similar to ‘bait and switch’ tactics used to deceive a buyer. So they saddled the veteran with illegal and excessive fees and closing. According to the report, they have tainted more than 90% (1.2 million) with alleged fraud. The lawsuit has ‘targeted’ several major firms including Bank of America, JP Morgan Chase & Co., and Wells Fargo Bank. (October 4, 2011, EarthLink and the Associated Press).

Credit Bureau Resources

Equifax Information Services, LLC
PO Box 740241
Atlanta, GA 30374
National Consumer Assistance Center
PO Box 2002
Allen, TX 75013
TransUnion LLC Consumer Disclosure Center
PO Box 1000
Chester, PA 19022


The Bureau of Labor Statistics

I contacted The Bureau of Labor Statistics’ website and found that it included a yearly inflation calculator. This person specifies the start year, the end year, and the dollar amount for the start year. Then the inflation calculator will compute the dollar amount for the end year. For an example, I used 10 dollars for the start year beginning in 1982 and the year ending in 1993. The result was that something costing $10.00 dollars in 1982 would cost $14.97 in 1993.

Click Button For Inflation Calculator and use the Back Arrow to Return.