Let’s talk about inflation a bit, shall we?
People talk about inflation like they talk about the weather, or a volcanic eruption, or an earthquake. Like nobody has control over it. That is just plain nonsense.
The government has control over inflation. It always did. If inflation is going up, it is because the government is making it go up. Why are they doing that?
It’s simple. To spend more of your money. If the government spends money it brings in, no big deal. No inflation. If the government spends more money than it has coming in, it can either borrow it or print it. If the government prints new money to pay its bills, you get inflation.
It’s simple enough. There’s only so much value in the world. Things you can buy. If there’s more money, the amount of money it takes to buy some portion of that value goes up. The price, that is, goes up, on everything. This is macroeconomics 101, folks.
Now, people like Bernie always talk about raising taxes on the rich to pay for extra spending. That ain’t gonna happen, for two good reasons. One: Who do you think makes the decisions, eh? Two: The rich don’t have that much money.
The government is planning on spending $6,000,000,000,000 in 2022. Six trillion dollars. There are 724 billionaires in the United States, most of them just over the line of a billion. If you taxed them each a BILLION dollars, reducing most of them to poverty, you would get enough money to run the government until Valentines Day or so.
And that’s just this year. What do you do next year?
No, to increase taxes, you have to tax the middle class. That’s where most of the taxes come from, because that’s where most of the money is. But politicians have to pretend they’re the friends of the working man, because that is also where the votes are.
Back to inflation. Plain and simple, inflation is a tax on the middle class. The government creates inflation as a way of taxing the middle class while pretending it isn’t their fault. This is so they can spend vast amounts of money without taxing it directly. If they tried to tax it directly, they would get voted out, and all their favorite spending projects would go away.
Why is inflation a tax on the middle class? Consider first the poor. The lower class. They don’t have savings. They spend money when they get it or soon after. They don’t hold on to money long enough for it to devalue due to inflation while it’s in their hands.
The upper classes don’t have savings in dollars, either. They have assets. If inflation knocks the dollar down to half its previous value, they don’t care. Their stock, their property, their yacht – whatever – will double in dollars even as the dollar goes to one-half its prior value. The overall value, however, is the same.
It’s the middle class that has savings. In retirement accounts. In bank accounts. Inflation allows the government to just reach in there and take some of it so they can spend big and still claim not to have raised taxes.
It’s a giant scam. It always was. Under Jimmy Carter. Under Joe Biden. Just a giant scam.
Federal revenue from all sources is an almost constant 20% of GDP over the last seventy years. No matter how you change the tax code, that’s about what people are willing to pay without cheating or changing their taxable behavior.
So if you want more revenues, raise GDP. Get the economy humming, and revenues will go up. Duh. That’s what Trump did. That’s what Reagan did. That’s even what Bill Clinton (“It’s the economy, stupid.”) did.
But some Democrats just can’t seem to get that concept.
Including most of the ones in charge today.