The Allegory of the Baseball Card:

I wish to write to you the viewer of my profile in hopes of conveying the economic and political realities that I either stand for or am against. In the 19th Century a French Politician by the name of Frederic Bastiat wrote a short pamphlet, called "The Law" which wished to express the need of the marketplace to move with very little to no intervention from any outside agent. In it he gives a very simple analogy explaining the dangers of "Stimulating" the Economy through government interventionism, called "The Broken Window Fallacy," the point of this message is that, while we may proclaim the good works of said interventionism to stimulate the economy, we do not see the unseen damage done on the economy through such interventionism. It is my hope that I may convey to you a similar understanding of Inflation, through a cultural pastime that we Americans love so much, Baseball, in particular Baseball Cards. It is my hope that my analogy will be used by others to explain the basics of inflation to people who may not understand the complexities of said common sense economic teaching.

2. Basic Definition and Effects of Inflation

Inflation is defined by Investopedia.com as, the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. The Austrian School of Economics asserts that inflation is an increase in the money supply, rising prices are merely consequences and this semantic difference is important in defining inflation. The Effects of Inflation are Threefold: (1) decrease in the real value of money and other monetary items over time, (2) uncertainty over future inflation may discourage investment and savings, and (3) high inflation may lead to shortages of goods if consumers begin hoarding out of concern that prices will increase in the future. While some Schools of Economics believe that inflation can be beneficial, I would disagree, these benefits are at best short-term and at worst illusory and inevitably the need to liquidate these illusory assets would be inevitable, because any benefits derived from inflation cannot be sustained by the true marketplace at the moment.

3. The Story

Let us assume that you have a Rare Baseball Card, it's so rare that it is prized, people are willing to give you anything for that card, because it's valued for its scarcity, if you have even 1 of these rare cards, people will be willing to trade that 1 card with you for a slew of other cards or material items as well. There are only 100 of these Cards in existence.

One day the manufacturer of this particular card decides to put a few more of these cards into circulation, the card you possess, while uncommon is no longer rare. Now there are 1000 of these cards, 10 times of the original cards are now at better chance of being found by people. Because it is has been downgraded from Rare to Uncommon, people are not as willing to give you anything for that card, because its value has been diminished by the downgrading of its level of scarcity. Therefore, you will need 10 of these now Uncommon Baseball Cards, in order to be treated to a large slew of other baseball cards, or various material possessions.

Finally the manufacturer announces that, they want to put more of these cards into circulation, and they produce 10,000 of these cards, now making it 100 times the original cards in existence. This is considered a joke of a card by now, it's been downgraded now from Uncommon to Common. Now in order to get a slew of other cards or to get material items, you will now need at least 100 of these cards to be taken seriously. As you can see we can take this analogy further and further until eventually, people see this once prized Baseball Card, as something so common, that it becomes annoying and it is no longer taken seriously by even the most amateur of Baseball Card Collectors. What would happen if the manufacturer of these Baseball Cards announces to the Collectors that there's a warehouse full of these particular cards? As you might imagine, no one will want it, no one will consider it, and whatever remaining value it once had, will be gone.

4. Translation of The Allegory

Who is "The Manufacture?"

The Manufacturer is the Central Bank, in America our Central Bank is the Federal Reserve. Their role [if there ought to be a role at all] is among other responsibilities to control the money supply, in hopes of controlling inflation and deflation. However, more often than not, because they are run by large corporate banks, they fail at their responsibility most utterly. Rather than raising interest rates in order to encourage savings in times of economic downturn they lower interest rates in hopes of encouraging spending and preventing liquidation of illusory values in the marketplace, caused by their inflationary measures. The Federal Reserve controls the money supply through the interest rate. Often times inflation is used in hopes of giving more money to more people, but all this does is in the long term allow prices to rise and the value of each individual unit of currency (e.g. the Dollar) to be devalued. In the allegory we see here, that decision by the manufacturer to "put more cards into circulation" as an inflationary measure to make this particular card available to as many people as possible.
What are "the Cards?"

The Cards represent in the economic reality, the money itself, each card is a unit of money (e.g. a Dollar) and they are broken up into 4 groups: (1) You're Card, which is the main currency that you use in your day to day interactions in the marketplace. (2) Other Cards, which represent other currencies, thus demonstrating the competitiveness with your card and other currencies. (3) The Original Cards, these are what the marketplace produced. (4) This implies then that there are new cards too; these cards are the very thing that causes inflation, rather than making this new and rare card available to everyone, the economic reality is that, while this card is being made available to everyone it loses its value and status as a rare card. So it begs the question, what then is the point to making a rare medium of exchange available to everyone if no one stands to benefit from the status of rare? The answer is that it does not, but in this interventionist marketplace we think that the name on the card will solely responsible for its worth, but the reality is also the opposite rather, the number of cards with the name on it determine its worth, not just the name itself.

Who is responsible for "Downgrading" the Status on the Card?

Rating Agencies determine the value of the card; they say whether or not the card is rare, uncommon, common, or even excessive. Bond Rating Agencies, Moody's and Standard and Poor's are the most common rating agency's which determine the worth of the currency or the economy from which we look to make investments in. These agencies' would also look at the risk of defaulting, which is the inability to make payments or honor a debt. Sadly, these rating agencies's can also be politicized as well.

5. Other Notes

The Card Analogy also works perfectly to explain the ease of making such a rare and esteemed card into even a commoners laughing stock of a card, one that "even the amateur collector will be annoyed at." Why? Because like the Currency we use today, cards are made of Paper. If the Baseball Card was made of Silver or Gold material, the manufacture would be unable to make too much of the Baseball Card to put into circulation.

The other important lesson to learn here, is that you need to put more and more time and energy into getting more of your [once rare and valued] Baseball Card in order to be taken seriously by those who share in your hobby. This time and energy could have been spent elsewhere in other pursuits, but are now being spent increasingly more and more just to survive, because with more of your Baseball Card being made available to all, the less each individual card will become for you to secure not only the material items you wanted but the material items you may need in exchange for this card. So you progressively begin to serve the Baseball Card rather than having the Baseball Card serve you.

Finally, it becomes clear that once this [once rare and esteemed Card] becomes excessive in its presence, those who use the card as their pre-dominant means of exchange will end up selling these cards for a fraction of the cost that they could of gotten it before the manufacturers wanted to make it available to all. The irony to this however is that, in reality, even the Baseball Card Manufacturing Industry knows that it is foolish to produce more rare cards, but why can't the Money Manufacturers of the Central Banks of all Nations see the foolishness in their printing press, without anything to secure their currency in something that cannot be easily reproduced, like Silver or Gold which are rare resources that would inevitably stop at a certain point of availability. From which the Marketplace would be able to progressively adapt to the increase of the money supply, something that paper use could never accomplish because with paper it is too easy to replicate over and over again in a manner that the Marketplace could not adapt too, because the money supply is constantly rising. Its like a heroin addict on withdrawal, the withdrawal process is too painful so the addict would prefer to get there fixes, and risk failure of health, then stop and go through a momentary time of adjustment and coming back down to a realistic level.