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Why Inflation Is Tantamount To A National Sales Tax

Written by | December 28th, 2010

Inflation is caused by excessive currency printing by our Federal Government; and, inflation causes our currency to devalue; which, in return, causes the price for goods and services to rise in cost.

To continue with their current level of spending, our Federal Government basically has two options:

1. Borrow more money from other countries – which increases our national debt; causes the interest on our current debt to compound further; and which needs to be paid back at some point in the future.

2. Raise taxes on the citizens.

Since raising taxes is not very popular, politically, and continuing to borrow money is not very prudent, our Federal Government, instead, creates money out of thin air, to support their desire to spend more money. Therefore, anyone who insists that our Federal Government spend more money, without cutting spending in other areas, should keep in mind, that, all people, of all income levels, at some point, are going to be affected by inflation. And, likely, not too far in the distant future. For anyone who remembers the late 70s, not much else really needs to be said.

While the current income tax rates were recently extended by Congress; and, while it is better, economically, for people and businesses to keep more of their own money – as long as The Federal Government continues to create and spend more money it doesn’t have, eventually, down the road, this will still be tantamount (in the form of inflation) to a consumption-based, or national sales tax. For these reasons, and several others, it is said that inflation is the most insidious tax of all.

Since 1913, currency in our country, is created, and regulated, by “unelected” central bankers at our Federal Reserve Bank, to which, unbelievably, not even Congress can audit! At least a regular tax increase is done by “elected officials” who have been given the Constitutional authority to raise and levy taxes; and taxation utilizes currency that has already been created, and is in circulation.

If we had sound money, based on gold or silver, as it once was in The United States, then no one in our Federal Government could devalue our currency! As they could only print, and spend money based on the amount of gold or silver that we, as a country owned.

In my humble opinion, unless the Federal printing, and spending is stopped, income tax rates, marginally, mean very little. As inflation creeps in, no one, from any income level will be immune. And, this is why I hold to the belief that our Federal Government doesn’t have a revenue problem; but, rather, an out of control spending problem! Excessive printing, and spending, of money, by our Federal Government, and the subsequent inflation that follows, sadly, is the result of failed fiscal and monetary policies by our Federal Government; and, which, in this current crisis, could bring our country dangerously close to insolvency!

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4 thoughts on “Why Inflation Is Tantamount To A National Sales Tax

  1. Foxwood

    This makes all the sense in the world to me. Printing money is just a way for the FED to take money out of our bank accounts without our knowing it. More people need to wake up and realize this. Hope this blog post of yours helps.

  2. Jeff Minor

    What would we do if we actually used gold and silver to back the dollar, and someone (a mining company, perhaps) discovered a huge amount of gold or silver? If this company flooded the market with that gold or silver, the same thing would happen with regard to inflation. We would then have to insist that the government control the flow of new metal into the economy, or hope the mining company would control the rate. Either way, you’re left with controls. Case in point, when Spain plundered the New World, the huge influx of silver and gold caused inflation in England and elsewhere. Which forced England to get into the pirate game.

  3. Jeff Minor

    There are those who predict an end to money, that we will evolve a post-scarcity economy which utilizes extreme forms of manufacturing technology. But until then we should use something real, like gold. If money is just a form of power, then I have to assume there will always be those who want to limit and control that power. The Fed is a power plant, and its agenda should be suspect. Maybe it’s just me, but I don’t trust anyone with that kind of power.

  4. Jeff Minor

    “There are those who predict an end to money, that we will evolve a post-scarcity economy which utilizes extreme forms of manufacturing technology.”

    I’m saying that in the utopia of the progressive future, like Star Trek’s Earth, you have a moneyless society. All your material wants are given for free. But that’s not happeing anytime soon, if ever. So for now we need to deal with reality, and a metal is real. We still can’t make gold. But, it would be interesting if the desire for more physical gold caused a space race to the asteroid belt. There could be vast resources there. I digress.


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