Inflation Is A Tax And The Federal Reserve Is Taxing The Living Daylights Out Of You
March 1, 2012 5:40pm PST
This is why so many economists get so upset when the Federal Reserve starts printing money like there is no tomorrow. Inflation is a tax that is very cruel to average American families. It destroys their wealth and it destroys the purchasing power of their paychecks.
Unfortunately, this is always what happens when a society adopts fiat currency. Our dollars are just pieces of paper backed by absolutely nothing. When more pieces of paper are printed up, the value of the pieces of paper already in existence goes down.
This is one of the reasons why so many people out there are talking about “real money” like gold and silver. Unlike fiat currency, precious metals tend to hold value over a very long period of time.
For example, it will take you about three times as much U.S. currency to buy a gallon of gasoline in 2012 as it did back in 1990.
But an ounce of silver will actually buy you more gasoline today than it did back then.
Back in 1990, an ounce of silver would buy you about 4 gallons of gasoline. Today it will buy you more than 8 gallons of gasoline.
Talk about holding value.
We see the same kind of thing happening with gold.
When Barack Obama first took office, an ounce of gold was selling for about $850. Today an ounce of gold costs more than $1700 an ounce.
It is not that gold is becoming so much more valuable. It is just that the U.S. dollar is losing value on a continual basis.
So why don’t the U.S. government and the Federal Reserve quit flooding our economy with more paper money?
That is a very good question.
Sadly, our leaders seem to have a never ending addiction to more paper money and the American people are not demanding change.
On Wednesday, Federal Reserve Chairman Ben Bernanke told Congress that the Federal Reserve may have to implement even more stimulus measures in order to help the economy.
Of course such talk is utter insanity considering what Bernanke and his cohorts have already done to the monetary base over the past few years….
Thankfully, the vast majority of that money is still trapped in the financial system. If all of that money was floating around on the street inflation would be far worse.
Those of you that think that the surging stock market is a sign of “economic recovery” should realize that the market has been pumped up by huge amounts of funny money from the Federal Reserve. Just because the number of dollars circulating has increased does not mean that things are getting better.
There is much more to all of this of course, but what is important for the man and the woman on the street is the fact that when the Federal Reserve expands the money supply it is a tax on all of us and it makes all of us poorer.
So what do you think about the inflation tax and the reckless monetary policy of the Federal Reserve?
Please feel free to leave a comment with your thoughts below….
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