The Effects of Inflation

Whether intended or not, one of the bad effects of a government-regulated monetary system, is that it creates a disconnect between money and the real things we need to buy.  Take food for instance. If we were use hamburger gift certificates instead of the money we use today, we would know that we would get the same amount of food for our money today as we would after leaving the certificates in a box for 10 years.  Somehow, we’ve managed to mess up our monetary system such that it is significantly more difficult to depend on it for real needs… like eating or clothing ourselves.

Let’s consider the effects of inflation using terms that we can actually eat.  Let’s assume that you had put a 10 hamburger certificate under your mattress in the year 2000, only let’s also assume that someone has allowed inflation to eat your hamburgers without your permission over time.  How many hamburgers do you think you would be able to buy today with an inflation adjusted 10 hamburger certificate?  By 2017, your 10 hamburger certificate would only buy you about 5.68 hamburgers.  This is quite typical, inflation is usually eating away at our savings.  There’s a website that makes it easy for you to see how the costs of things have changed over time as a result of inflation.  It provides a calculator that allows you to enter your own dates and amounts and see the effect for yourself using the government inflation data.

Try it at:  US Inflation Calculator

The problem is that once money is disconnected from something real, it can change in value quietly over time.  For much of the United States’ history, our money has been buying less and less over time.  There were periods in which inflation went backwards.  Yes, that’s called deflation.  That might sound good at first, but those times are often harmful as well.  One of the most notable times that this happened in our history was the Great Depression.  If deflation is happening to money, it’s likely that it’s because people don’t have jobs or money to pay for things they need.

Whether our problem is inflation or deflation, disconnecting money from something that is real is not a very good savings plan.  In order to plan, you kind of need to know how many hamburgers you will get to eat, shoes you will get to buy or tanks of gas you will be able to fill.  Thankfully, there are still some tools at our disposal that can help us combat the effects of inflation like I Bonds and TIPS.  They’re not quite as easy as putting money under your mattress, but at least they are available.

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I Just Want to Save My Money!

So, you are at the point where you have decided to stay out of the market and all you really want to do is save what you have for later.  The problem is, you haven’t found a way to save money for longer than a year or so, without feeling the effects of inflation.  A simple look at the inflation rates reveals that you would have to get an interest rate of somewhere around 2% just to break even!  With 5 year CD rates at 1.5%, you realize that you would be paying the bank half a percent to keep your money from you!  If you were an irresponsible spender, that might make sense, but you are serious about saving.  Now, am I the only one who thinks this is crazy?  Why are more people not upset about this?

One reason might be that people have been placated by the possibility that they could make money using the stock market.  It’s hard for me to believe that this was not the intent of denying us the right to save our money.  I believe it is dishonest for any government to act like money is money if it can’t be saved for more than a few months.  It would also be pretty hypocritical for a government to complain about the number of people without savings, if they haven’t even provided a way to save this so-called money.  Well, I’m happy to inform you that they actually have provided a way to save.  There must be a few godly people in the government because they gave us a way to save money that can actually avoid much of the exposure to inflation.  In the United States, there are actually two ways.  They aren’t perfect, but they do appear to be a step in a good direction.  This information is so little known, and so important, that I really wanted to share it.

I’m going to assume that you are familiar with how a savings account accrues interest.  It’s important that you also understand how CDs or Certificates of Deposit work at the bank too.  A typical CD is a special account in which you give the bank your money for a dedicated amount of time with the promise from them to pay you interest.  If you take your money out early, there is a penalty.  The interest is calculated on the amount of money you initially put into the account, plus any interest accrued.  Now if that interest rate is less than the rate of inflation, you are actually losing money.  That’s because what you can actually buy with the money has become less over time, while at the same time, the interest didn’t increase fast enough to give you the same purchasing power your money had when you earned it.  So what did the United States Government do to help us in this situation?

In 1997 the United States Treasury provided a new way of saving by issuing something called: “I Bonds. ” In order to understand what those are, you kind of need to understand what a normal “bond” is.  Stocks and bonds are really different even though they are often spoken of together.  When you “buy” a bond, you are actually loaning your money to someone.  Pretty confusing right?  It sounds like you are purchasing something when, in reality, you are loaning someone else your money!  Well, no matter what it seems like, that’s what it is.  When you buy a bond, you become the bank.  You can loan money to companies by buying corporate bonds.  You can also loan money to a government by buying government bonds.  That’s one way that United States Treasury finances their needs and they allow individuals or institutions to buy bonds.  One institution that does this is, … surprise…. your bank.  In fact, those CDs you get are often backed by government bonds.  I tell you this to help you understand that that these I Bonds are not really a new risk to you.  You are accessing the same United States Treasury only in a different way.  Let’s look at how a typical bond earns money for you.

A good old-fashioned bond used to be printed on paper, kind of like a dollar bill.  On the face of this bill, it had a value, like $100.  If you were to buy this bond at its face value you would loan the government $100 and they would give you this bill.   In those days, part of your loan agreement was that every six months or so, the government would pay you by sending you a coupon in the mail for all the interest they owed you on that money so far.  You could then go cash the coupon and use the money.  That was your interest for allowing the government to use your $100.    Another thing about your bill is that it would have a term associated with it that was recorded in a book somewhere.  That’s the mount of time you agreed to allow the government to use your $100.  When time is up, you can cash in your bill to get your $100 back.  As long as they are using your $100, they promise to keep sending you your interest as coupons in the mail.  Well, it’s pretty obvious that computers were bound to change this process a bit.

Now days, we use the same terms, but the paper is almost gone.  You still can buy a bond, but the coupon never gets sent to you, it just accumulates in an account.  In fact, the Treasury is willing to compound the interest now just like a CD.  Not only that, you can go to the Treasury’s web site and open an account online, just like using online banking.  Anyone with a Social Security Number is eligible.  Their website even has a clever name:

TreasuryDirect.gov

Yes, you have your very own online bank account waiting for you, but wait, there’s more.  Let’s go back to talking about I Bonds.  I Bonds, whose full name is actually: “Series I Savings Bonds,” are what the Treasury calls “Inflation Adjusted Bonds”.  Yes you heard that right.  They are bonds whose interest is tied to inflation.  That means that when inflation goes up, the interest rate on those bonds go up too.  They connect a part of the interest calculation to an index that follows the cost of goods in the United States called the CPI-U.  The interest calculation and the CPI-U are good things to study later.  It’s good to know, for now, that your interest rate will go up when inflation has gone up in the recent past.  It’s also important to understand that what goes up, must also come down.  If inflation goes down, yes that would be deflation, the rate goes down, but the Treasury wisely decided that they would not allow your bonds to ever go down below what you put in.  That’s pretty good, because you could actually make money in a deflationary time as well.

Now let’s say that you are sold and you are ready to put some of your savings into one of these I Bonds.  First, let’s talk about the down side.  I Bonds, unfortunately, are not protected from taxation by the IRS.  The United States Tax Code, for some reason, doesn’t recognize the fact that you already earned this money once.  Evidently, our congress believed that simply recovering your money’s lost value to inflation is a taxable event and that we owe money for that.  This means that you aren’t completely protected from inflation.  You will have to treat your interest on an I Bond as “income” and report it.  That’s the bad news.  This same bad news spans all investments including your bank account.  That’s not much comfort, but there are two tax advantages that you also need to consider as well.

First, we are allowed to defer reporting our interest to the IRS.  You can choose to not report your interest until you need to use the money.  The reason that this is significant is that you can wait to use the money for a rainy day, such as, a year when you don’t have much income.  For many of us, that will probably be during retirement.  At that time, you may not even be taxed, depending on what other income you have.  The other advantage is that these bonds are not taxable by state or local governments, like your bank account is.  So, even though taxes make things less than perfect when trying to shelter yourself from inflation, these I Bonds are one of the best things we have.

Now for some important details about I Bonds:  You can buy an I Bond for $25 or more at Treasury Direct, but you can’t buy more than $10,000 in any given year.  For many of us, that’s not an issue, but there are some who would like to save more than that.  Well, there is another trick… You can use your tax return to buy about $5000 more and guess what, you will get the paper certificates!  They are pretty cool, I have to admit.  They have pictures of them at Treasury Direct.

Also, I Bonds are a long-term investment.  They act kind of like a CD in that there are restrictions about when you can take the money out.  You can’t cash them in for the first full year.  Also, you are penalized if you cash out before a 5 year term, but the penalty is not very bad.  You would have to give up the previous three months of interest, but that’s it.  Since you probably want to save anyway so that’s not a big deal.  The good thing is that you can keep your money in this bond for 30 years!  Yes you read that right.  anywhere from 5 to 30 years, the government is willing to keep growing your interest rate with inflation and allow you cash out any time.  After 30 years the interest stops so it’s a good idea to cash it in and get a new one so you keep earning interest.

If you are looking to shelter more than that, or were wondering how you could do something like this in a retirement account, I do have other cool ideas… but that’s for another time.  For now, be happy.  You can save money after all!

Tree Ring of Truth

If you watched the debate between Ken Ham and Bill Nye, you may remember that Bill Nye used tree ring evidence to support the idea that there was not a global flood 4,000 ago.  He said that they found evidence of a tree that was dated by humans to be 9,500 years old.

Beside the fact that there’s a big difference between 10,000 and 5,000,000,000 (the supposed evolutionary age of the earth, a problem that wasn’t really addressed), he was playing on a childhood belief that there is only one tree ring per year on a tree.

A little research into the science of tree dating reveals that it is a well known fact that, sometimes, trees produce more rings than one in a year.  I wouldn’t throw away your belief in a young earth based on Bill Nye’s arm chair analysis.

To learn a bit more about the assumptions that go into dating trees, see these articles:

Do Tree Rings Disprove the Genesis Chronology?

Evidence for multiple ring growth per year in Bristlecone Pines

Remember, evidence isn’t proof because scientists can be wrong.  Even when something is likely to be true, it doesn’t mean that it is true.  Sometimes, unlikely things happen.  In this case, it wasn’t even unlikely.  Sometimes, trees produce more that one ring a year, and scientists already know this.

Believing in Science

The evidence for God’s existence is everywhere.  The same evidence is used by both atheists and evolutionists.  This evidence is found in biology, geology, chemistry, astronomy, paleontology, physics and everything else.  The most obvious evidence for God’s existence is the Bible.  It’s hard to top a written document that explains things, but somehow, this most obvious evidence, is often ignored.  This demonstrates that the problem isn’t evidence, it’s how that evidence is being interpreted.  Because evidence has to be interpreted, there is absolutely no way to do science without a faith.  Allow me to restate that.  If you must interpret scientific evidence, then your method of interpretation, or faith, is a prerequisite.

Let’s consider “faith” in “the law of cause and effect.”  We must “believe” in the law of cause and effect, or doing experiments wouldn’t be possible.  When we do an experiment, we naturally “believe” that the experiment is the cause and that the result is the effect.  If we didn’t then we couldn’t do any science at all.  We must also “believe” in the existence of “laws of nature.” Isn’t that what science discovers?  If there were no laws in nature, why do science?   Somehow, we “know” that nature has laws.  We make these assumptions and these assumptions form our faith.  The sum of all of the things we believe or “take for granted,” is what we call a “worldview.”

Requiring evidence for a worldview is not rational because your worldview tells you how to interpret evidence.  The Bible provides us with a worldview.  Requiring evidence for it would never prove it, because any evidence would simply be reinterpreted by the worldview of the person considering the evidence.

Did you know that there is a mathematical model for the geocentric (earth is the center instead of sun) view of the solar system?  I am told it is possible to chart the movement of objects in the sky using this model with success.  The model, however, is extremely complicated.  If one insists on the fact that the earth is the center of the solar system, the evidence can be interpreted that way.

I am also told that at one time, Galileo tried to convince the skeptics of his day that the moon wasn’t a perfect sphere, as Aristotle had stated.  He had them look into his telescope and see that the moon was covered with craters and valleys.  They refused to believe their own eyes!  They stated that there must be an invisible crystalline sphere that  covered the moon, filling in its valleys and craters.

These examples demonstrate the limit of evidence.  It cannot prove anything, ultimately.  It can confirm a person’s ideas but it is amazingly inconclusive when faith is involved, and faith is always involved.  Why couldn’t the earth be the center of the solar system?  Why couldn’t there be an invisible crystalline sphere around the moon?  Evidence alone won’t prove the point!  If you try to live by evidence without faith, you will always be easily confused.  I tend to believe the simplest answer, if God doesn’t say otherwise.  The Bible tells us that God is a God of love and hides things for us to discover.  It makes sense that God’s science would be fascinatingly simple.

The faith problem explains why so many evolutionists and atheists disregard the best evidence of God.  They find ways, based on their faith, to disregard things, like the Bible.  It is consistent with their faith to re-interpret evidence, but to so and then act like others shouldn’t, is very inconsistent.  I find that, in general, evolutionists and atheists don’t actually want evidence for God or the Bible, they already have faith in something else that causes them to use the evidence the way that they want.  They may think they are being “neutral,” even though that doesn’t exist, but they are merely holding to their worldview.  If something disagrees with their worldview, they simply create a new possibility, based on the unknown, and reinterpret the evidence.

Bible believers actually have a more strict position.  Unlike evolutionists, I can’t just make things up.  God’s words are pretty clear and never change, and I have to stay consistent with them.  It is true that when I don’t understand something I use conjecture, just like the evolutionists, but I try to stay within the confines of what God has said.  I’m not asking evolutionists for evidence, though, because I am aware that the real issue is that evolutionists have an opposing faith.

I have a good reason to believe in God and science.  Evolutionists and atheists don’t have a good reason to believe what they believe.  The demand for evidence is just being used as a way to suppress the fact that what they believe doesn’t make sense.  Take the “law of cause and effect” for instance.  How can evolution explain the existence of a law like that?  If things change randomly, what’s to stop the law of cause and effect from changing randomly?  As far as I can tell, evolution doesn’t provide a rational framework for the existence of any law.  In order for an evolutionist to believe in science at all, they must irrationally rely on biblical assumptions.  The Bible says that the earth was created by a Person who never changes and makes laws.  Because of that, I have a real reason to believe in science.  Evolution, however, cannot rationally support the worldview that must be assumed in order for science to exist.

 

The Fallacy of Neutrality

Neutrality is actually a fallacy. That’s because “neutrality” is a position.

A person who decides to be neutral is taking a position of neutrality, therefore, they are not being neutral.   They are relying on a self-refuting logical argument. Not only that, they are implying that every philosophy that takes a position is wrong, usually while convincing themselves that it is an expression of tolerance!

It is not unusual to hear people assert that they come to scientific evidence neutrally, but this a denial of the obvious fact that everyone takes a position.  Evidence can’t talk (even though some say it speaks for itself). Evidence requires a method of interpretation or else the “evidence” is just a set of objects without significance.  To deny the method of interpretation is another way to deny taking a position.

It is also common for nations, business and individuals to claim the be neutral in regard to religious beliefs.  Once again, this attempt to tolerate them all, denies them all since all of them are asserting their own position.  Just because a person claims to not be doing something, doesn’t mean that that is what they are actually doing.  You can claim to love someone while harming them.  The same thing happens when a person claims to be religiously neutral and then disallows any of them to be expressed.  The fact is that a secular position is being promoted under the disguise of “neutrality.”

The claim: “I am neutral” is itself a non-neutral claim because it assumes that “Neutrality exists.” Asserting this claim, is taking a position against those who don’t believe it exists. When a person asserts a position, they are not being neutral. Therefore, the claim that neutrality exists is a fallacy.  Dr. Jason Lisle calls this fallacy: “The Pretended Neutrality Fallacy” in his book “The Ultimate Proof of Creation”.

Both Evolutionists and Creationists aren’t really neutral. They may convince themselves that they are, but by choosing to believe in neutrality they are not only taking a position, they are being irrational. It’s understandable that evolutionists would be irrational, because they don’t have a basis for logic or morality in their worldview, but Christians actually have a moral obligation to be rational because it’s biblical.

Christians are supposed to be honest about the fact that they are not neutral. Jesus said that people were either for Him or against Him. He never said that there were people who were “on the fence.” Instead, He made it clear that the fence didn’t exist. By doing this, He exposed everyone’s position. Claiming to be neutral is to say that Jesus is wrong. When you say that Jesus is wrong, you taking a very bold, non-neutral position.

So, the claim that a person is neutral is fallacious because it is based on the non-neutral position that neutrality exists.  Christians should be aware of this and not be persuaded by the fallacy of neutrality.

Bill Nye and the “No True Scotsman” Fallacy

It is evident that Bill Nye committed a significant logical error in the recent debate with Ken Ham at the Creation Museum.  The problem with a logical fallacy is that it can sound right to people, even though an argument hasn’t really been made yet.   This article explains the fallacy that Bill Nye committed every time he would contrast “us in the scientific community” with “Ken Ham’s creation model”.  This article does a great job of addressing what the “no true Scotsman” fallacy is, how Bill Nye committed it and how he was merely insulating himself against responding to the issue.  Instead of answering with a discussion about why Ken Ham’s creation model wasn’t scientific, he merely implied that real scientists don’t use it.  In a very real sense, Bill Nye didn’t actually debate the issue.

You can read more about Bill Nye’s use of the “No True Scotsman Fallacy” here.

Here’s a great quote from it:

…early creation scientists forged the paths of each of today’s major scientific branches of inquiry, like Isaac Newton’s physics,4 Matthew Maury’s oceanography, Louis Pasteur’s immunology,5 Michael Faraday’s electromagnetism,6 and George Carver’s agriculture.7,8 Are we to believe that Newton and Pasteur were not real scientists?

Apparently, facts like these do not matter to someone who is so fully committed to the false idea that real scientists only believe in evolution that he is more than willing to adjust the very definition of scientist to preserve his argument.

Monkeying with the Truth

I’ve been finishing my next devotion book… Stay tuned.

I want to address one of Bill Nye’s supposed pieces of evidence about evolution he offered in the recent debate between he and Ken Ham from Answers in Genesis.  He showed a slide with a bunch of skulls on it and suggested that it was some kind of proof for evolution.  In this video, Dr. David Menton, who is actually an expert in these things.  Explains the real issue and does so in a very enjoyable way.

I’m sure the video is easily worth the money (I have his whole “Body of Evidence” set) but the trailer is educational in itself.  Check out: 3 Ways to Make an Ape Man.  By the way, Answers in Genesis has linked the video to articles explaining away other things that Bill said as well.