Posted by: Ted | August 9, 2012

Inflation, The Hidden Tax On All of America

 

The Federal Reserve is said to be set to act to stimulate the economy in September.  What that means to every voter/taxpayer/purchaser of goods is you will be spending devalued dollars.  So, if the Fed moves, it will buy U.S. Bonds by printing more worthless paper money.  It’s the equivalent to taking the dollars you have in your pocket and cutting 10% off and letting you spend the remaining for 90% of the value.  The 10% taken off is distributed to those who the government has decided needs it more than you do.  All the rhetoric is about being fair and having the rich pay more but this is not a penalty on the rich, it is action that places the greatest burden on those who have less.  They will be paying more for the goods they purchase and the politicians will have more money to give to those who support them.  So, while the price of the stocks in your 401(k) might go up in value it won’t be because their worth more, It’s because the dollars you must now pay for them are worth less and more dollars are needed to buy the same things.  The main problem for most of us is that our wages and income are not going up as fast as the cost of goods and services we must buy with these less valuable dollars.  It’s another example of our government saying they are looking out for us and helping us, doing so by their misguided understanding of economics or thinking we are just too stupid to realize what they are doing.

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Responses

  1. Inflation does hurt us all. In 1982, an income of $1200/year would provide a standard of living that, today, would cost $6000/year in the same part of my town. Wages have only tripled in those 30 years. Costs have quintupled.


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