- The highest inflation rate in three years…
- The cruelest tax…
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Dear reader,
The April inflation rate scaled 3.8%, the Bureau of Labor Statistics informs us — the highest rate in three years.
At the gasoline pump, at the grocer, at the light switch… Americans gasp against inflation’s constricting squeeze.
CNN, in summary of April’s inflation numbers:
- As it stands now, the higher prices are hitting consumers in some of the most visible of places: the gas station, the grocery store and their electric bills…
- The 5.4% [gas price] increase in April was the second-fastest seen since the latter part of 2023…
- In April, prices for electricity rose 2.1%, the fastest monthly increase in more than four years…
- Overall food prices rose 0.5% (grocery items were up 0.7%) last month and are up a respective 3.2% and 3.6% from the year before.
The Government Secretly Welcomes Inflation
Meantime, we are informed that — for the first occasion in three years — Americans’ wages presently lag behind inflation.
Thus Americans must jog faster and faster to run in place.
How do you like it?
You may not like it — I hazard you do not like it.
Yet the United States government, on a certain level, does like it.
Certain of its officials may sob and moan about inflation Yet the tears are the crocodile’s tears. They are not authentic.
That is because the nation’s fiscal and monetary authorities are heart and soul for inflation.
Not hyperinflation, mind you — hyperinflation carries severe political risk. And hyperinflation carries great reputational risk for the Federal Reserve.
They are, after all, tasked with the dollar’s defense. And hyperinflation represents a vast dereliction of duty.
Yet the very same authorities are out for inflation… merely of a lesser and subtler nature.
They simply do not want you to know it. Why are they out for inflation?
The answer is as simple as it is dishonest.
Inflation Lightens the Chains of Debt
The United States national debt runs to $39.2 trillion.
Combined United States debt — public and private — crosses $107.8 trillion.
Yet inflation lightens debt’s burden. Inflation reduces the weight of debt’s chains around the neck.
That is why a government sunk deeply in debt is out for inflation. Explains Freedom Financial News contributor Jim Rickards:
- The national debt is [$39.2] trillion. A $39.2 trillion debt would not be a serious issue if we had a $50 trillion economy.
- But we don’t have a $50 trillion economy. We have about a [$30] trillion economy, which means our debt is bigger than our economy…
- The debt is unmanageable without inflation. Inflation favors debtors because they get to pay back the debt with depreciating dollars. It’s easier to pay down debt because you’re paying back debt with dollars that are less valuable than when you originally borrowed them. So inflation eases the real value of debt.
- On the other hand, deflation increases the real value of debt. With deflation, the value of money increases, making it more burdensome to pay off debt. This is why debtors hate deflation.
A Swindler’s Deal
Assume Uncle Samuel borrows a dollar. Under inflation he repays that dollar in cents.
The creditors are handed their money — their nominal money. In reality they are handed sawdust.
Here is what the deadbeat tells his creditors:
“I borrowed $100 from you, good sir? Well, here is your $100 back, as promised. I hereby discharge my fiduciary responsibility to you. I have fulfilled my contractual obligations.”
Comes the bitter reply of the creditor:
“But the $100 I loaned you is now only worth $50 because of the vicious inflation you caused. You’ve robbed me blind! You’re a goddarned crook, that’s what you are.”
“Your problem, not mine,” answers the deadbeat.
Is the business dishonest? The business is dishonest. Yet it is the business.
“The wicked borroweth, and payeth not again,” Psalms informs us.
That is Uncle Samuel for you.
This uncle of ours is a cad. He is a bounder. He is a scoundrel. He is wicked.
Under inflation your loss is his gain. And your impoverishment is his enrichment.
Thus you are the victim of a vast swindle.
The Cruelest Tax
Even worse… you may not necessarily notice you are being swindled.
That is because inflation is a supremely skillful pickpocket. It is justly and aptly named the invisible tax.
It is a cat burglar on tiptoe.
Yet is it merely the invisible tax — or is it even worse?
The famed economist Milton Friedman once labeled inflation the “cruelest tax” due to its disproportional impact upon the impoverished.
The affluent can hold inflation at bay through the purchase of hard assets — and even profit from inflation.
The impoverished cannot. Hence, inflation’s cruelty.
Yet I propose another label for inflation: the scoundrel’s tax. And what is government but a giant scoundrel?
The United States government devours some 36% of the gross domestic product. It is the largest government presently infesting Earth.
Only a thieving, swindling, scoundreling inflationary system can sustain it.
Thus I implore you to sweep aside government sobs about inflation.
Recall: Government does not mean it. Its tears are false.
Regards,
Brian Maher
for Freedom Financial News
