Sunday, January 27, 2008

The Inflation Tax

Today, the federal government burdens us with one of the most dangerous taxes it can impose — the inflation tax. When the federal government finds that it cannot afford its out-of-control spending, and is unwilling to directly tax the public, it resorts simply to creating the money out of thin air.

Inflating the money supply is the easiest form of financing the government. The Federal Reserve, an unelected and unaccountable private organization, pumps more dollars into the economy whenever it chooses. Because the public is forced to accept these bills, the Fed essentially gets away with legally counterfeiting. We cannot possibly expect the government to control spending when it has a blank checkbook.

This greatly benefits the politicians and special interests — they are able to finance the massive welfare-warfare state. But how does this inflation affect you?

Basic economics tells us that the more there is of a good, the less valuable it becomes. This is also true of money. The dollar is worth four cents of what it was when the Federal Reserve was created in 1913.

Day by day, every dollar you have is being devalued. You pay an inflation tax without even realizing it because you are forced by a falling dollar to pay more for goods and services....

I keep some similar items in my quotes file:
"Lenin is said to have declared that the best way to destroy the Capitalist system was to debauch the currency." -- John Maynard Keynes, THE ECONOMIC CONSEQUENCES OF THE PEACE

"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens... The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." -- John Maynard Keynes, English economist and board member of the Bank of England

I've said before that public goods are very few and far between. Government control of currency is NOT one of them, any more than government control of telecommunications, news media, the water supply, education, health care, or roads. (Now there's a big stack of rants I must remember to do some time.)

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