In the April 25 edition of the Bangor Daily News Maine state Rep. Jeremy Fischer attempted to do damage control for the state by showing a rosy picture of job and wage growth for our fledgling state.

“In 2000, the average Mainer made $25,969; by 2004, that number had grown to $30,567 – an increase of 17.7 percent,” wrote Fischer in an op-ed.

What Fischer either fails to realize or refuses to point out is that in the time period indicated, where wages appeared to rise more than 17 percent, our nation’s M2 also rose as well. The M2 is the total of all money in circulation. The M2 is figured by totaling all the currency, traveler’s checks, demand deposits, other checkable deposits, money market mutual funds, savings and small time deposits.

According to the Federal Reserve’s Web site, in January 2000 there was a total of $4.68 trillion in circulating money compared to $6.09 trillion in January 2004. That’s a 23 percent increase in total money in circulation. Inflation of wages and prices is due to an increase in the money supply. Hence, “the more there is the less it’s worth.” Germans learned the lesson of printing excessive money in the 1930s when so much was printed and circulated that it took a “wheelbarrow full of money to buy a loaf of bread.” As our money supply was expanded (via bank loans and credit extensions) the corresponding reduction in its value was corrected by the rise of wages Fischer brags about.

The devaluation of our dollar not only affected wages, but it made the cost of everything else go up, too. Gold, trading at $285 an ounce in 2000, was up to $425 in 2004 – a 32 percent increase; butter, selling for $1.79 an pound in 2000, was up to $3.00 in 2004 – a 40 percent increase; and milk, selling for $2.49 a gallon, was up to $3.69 a gallon in 2004 – a 32 percent increase.

It seems that as our money supply was expanded by 23 percent, the prices of products, services and wages rose at nearly a corresponding rate, thereby creating a “wash” with nobody really any better off at all.

Fischer goes on in his commentary, “The total number of jobs in Maine has steadily increased from 603,400 in 2000 to 613,900 in 2004.”

He failed to note that out of necessity, many Mainers have been forced to work two or three jobs in order to make ends meet and that each of those extra jobs may be performed by the same people. Furthermore, Fischer’s statistics don’t seem to line up with other industry researchers.

According to the AFL-CIO Website, Maine lost 20 percent of its manufacturing jobs in the 2001-2005 time period. “What’s more,” according to the Web site, “the 7.7 million officially unemployed represents only about 57 percent of all U.S. workers – approximately 13.6 million, according to the U.S. Bureau of Labor Statistics – who are either unemployed, underemployed in part-time jobs out of economic necessity or who have become so discouraged that they have given up looking for work.”

“Maine’s state and local taxes have declined each year, from 13.1 percent in 2000 to 12.3 percent in 2004,” bragged Fischer.

While state and local taxes may have gone down, the prices of Maine’s licensing, penalties and fees have gone up at a corresponding rate. The tax burden in many cases has been shifted to businesses such as restaurants and food vendors who have seen a nearly 20 percent increase in the cost of their permits in that time period; not to mention the excessively high fines exacted from the taxpayers via the Maine District Courts for traffic infractions. Again, a “wash.”

Fischer notes the state’s gross state product as rising 29.1 percent since 2000. That’s understandable considering the previous analysis of our money supply as having devalue 23 percent and causing prices to rise by about that much on average. If the price of the goods rise, then naturally the numbers for the GSP will, too. All in all, we were really no better off in 2004, than in 2000, Fischer’s optimistic analysis notwithstanding.

In the 1920s a person could acquire a good suit of clothes for $17.85, when a one-ounce gold coin was worth $20. In 2004, that same person would have to pay over $400 for that same suit of clothes, which is still equal to that one-ounce gold coin. The rising wages and prices of products are the effect of a rapidly expanding money supply, not the cause of it. Therefore, they are not a very good indicator of economic health.

David Deschesne is the editor of the

Fort Fairfield Journal.