The economy becomes the free lunch

I have set out to illustrate and explain in several posts the immorality and fraudulent monetary system we as South Africans and citizens in every other country of the world are faced with.

I’m interested today in explaining particularly the morality of government spending on goods and services in Rands. Lets begin with the facts about money supply.

• The government controls the supply of Rands through legal tender laws.
• You may not forge/counterfeit R5 coins or R200 notes in your garage at home.
• You may not destroy any Rand in coin or note form.
• You may not use US dollars or Euros in exchange for goods and services in South Africa.
• If you want to buy or sell foreign currencies in exchange for Rands, legally you must tender your ID document as well as proof of address to an FX bureau.

The government controls the Rand market completely. It is the only entity that has the ability to create and destroy Rands at will. It has a 100% monopoly on the Rand market. You get my point.

Here we have a small group of people who are the only ones that may legally create a good which is worth a piece of paper plus some ink, a watermark, and a special silver strip. All it takes is to hit the Enter key. With economies of scale a R200 bill probably cost in the region of 20 cents to manufacture, give or take a couple of cents. This means the Reserve Bank has a mark-up on each R200 bill of roughly 100,000%. Central bankers and other mouthpieces of government call this profit ‘seignorage.’ Perhaps a better name is ‘theft’.

So if you’re working for the government as a contractor on an infrastructure project, the government can, pay for your labour, good or service at a cost of 0.1% of what it’s worth to you. Just about all the effects of this transaction are totally unseen (and will be explained in follow-up posts).

You have exchanged productivity for bureaucracy. The central bank and government has ’stolen’ productivity from its citizens. Laziness festers in governmental departments as nothing can continuously be exchanged for something. Government life is a free lunch. In fact, the economy is the free lunch as government gobbles it up at a fraction of the cost.