Democrats and Republicans give a lot of lip service to their commitment to offering a helping hand to those in poverty. Whether that hand is an expansion of the welfare plantation or tax relief, neither side pays any attention to the long-term implications of these policies, especially how to pay for them.
The dirty little secret is that to pay for these policies, the left and the right are perfectly content borrowing money, causing an increase to the national debt. We are trained to think about the national debt and deficit spending as “spending now and paying for it later” and “leaving the bill for future generations.” Although the piper must be paid down the road, there is an immediate consequence to borrowing money to pay for an unfunded policy. That consequence is inflation.
Through the national banking system [federal reserve], money is created from nothing, then borrowed by the government. This money is then spent into circulation, by Left and the Right, to pay for their schemes “offering” a helping hand to the impoverished. This sounds crazy, but sometimes fact is stranger than fiction. As we looked at in part 1, when more money is introduced into circulation, it causes prices to rise. Our purpose is to look at who benefits from inflation and more importantly, who it harms.
First and foremost, who benefits from inflation? The benefactors of inflation are the people that get to spend the newly printed money into circulation. These groups are typically the government and large corporations. They spend the newly created money into the economy and buy goods, resources, and services at today’s prices. As the new money cycles through the economy, prices gradually rise, leading to inflation. These groups are members of a privileged class that often times work together [big government spending projects, war, social programs, etc.] , being the first ones to handle the newly printed money.
Most importantly, who is the victim of inflation? Everyone else. We can examine three groups individually: the impoverished, savers, and those on fixed incomes [normally the elderly].
People in poverty have no money left over after they pay their monthly expenses. Often times, they have to cut corners just to financially make it month to month. This may mean going hungry, skipping a necessary visit to the doctor, or even selling their own possessions to pay the monthly piper. When prices inflate and their money pays for less and buys them less [remember that bills increase as other prices increase], this worsens their already painful lot in life. The shackles grow heavier. These well-intentioned politicians seated in their cozy towers of ivory know nothing of the plight of the poor. The consequence to their overspending on programs that are supposed to help the poor, make a bad situation even worse. A single mother can buy even less at the store to feed her hungry children.
Savers are people that have enough money at the end of the month, after paying their bills, to put money away for the future. Economists say that savers are postponing their consumption. They may be saving for retirement, a down payment on a home, or simply setting money aside for an emergency. The important thing is that they have a savings account with money in it. Let’s examine inflation’s impact on the efforts of the saver.
Over time, as the privileged classes spend the newly printed money into circulation, prices increase. This is inflation. Over time as prices increase, savers can exchange their savings for less and less. Let’s say that a saver is setting money aside to buy a new up to date computer. As time passes and the inflationary cycle roars, the saver’s savings can be exchanged for less and less computer as the months roll by. The saver’s savings are subject to the most hidden and regressive tax of them all; inflation.
The classic example of someone on a fixed income is a senior citizen collecting social security and/or a pension. People on fixed incomes usually do not receive much a “cost of living” increase, if they do, it is minimal. When someone is collecting a fixed income each month, they are generally on a fixed budget. Inflation causes their fixed income to buy them less groceries, goods, and services leading to a “cost of living” decrease. We see the same pattern again. Inflation is a hidden tax, causing serious harm to people spanning from the middle class to the impoverished.
Politicians are in the business of making short term decisions that cause long term harm. They sit perched in the clouds, deficit spending their delusions of grandeur into reality. How do they pay for their schemes? Inflation of course! Remember that this is a hidden tax, never talked about, and pickpocketing us in the dark. The poor and working classes are disproportionately victims of the inflationary beast.
As we have seen, government debt is not just a burden to future generations, but a burden to those of us trying to survive. How can we prevent the politicians from causing inflation? Demand that they pass balanced budgets! Like the rest of us, the government must learn to live within their means. Hold them accountable, be the voice for the voiceless.