Peter Schiff: Inflation Is Really a Tax
Peter Schiff recently spoke at the January 2021 Virtual Money Show. He explained why the coming financial crisis will be much worse than 2008, and how the Federal Reserve and the US government are driving us toward this crisis with their inflationary monetary policy. «The cause of the looming crisis is the same — the Federal Reserve and its monetary policy, along with government borrowing and spending that is helping drive the reckless monetary policy. » Peter said you should not just consider inflation as an expansion of the money supply and the resulting increase in consumer and asset prices.
The other way is borrowing money. The government sells bonds to willing lenders. Eventually, the lender has to be paid back and that money must come from the taxpayers of the future. Meanwhile, the taxpayer of today has to pay the interest on the borrowed money.
In other words, when government pays for its spending programs by borrowing, the taxpayers are actually on the hook for an even greater cost. «Today, the US government faces another problem. This is due to the enormous debt the US government has run up. The US government has borrowed so much money to try to delay the day of reckoning for so long and kicked the can down the road as we’ve gone deeper and deeper into debt, now that we have a national debt that’s approaching $30 trillion, there is no way that the US government can finance that. »
So at this point, the government is forced to pay for its expenditures through inflation. When the government taxes you to pay for its spending, it literally takes your money. Your money it takes just comes right out of your paycheck if it’s an income tax. Government takes your money and then they give that money to somebody else.
And now somebody else spends the money that you earned. You can’t spend it because the government took it and gave it to somebody else. So, your standard of living, your purchasing power, is diminished because you have less money to spend. But when the government doesn’t raise your taxes, if it just prints money and then gives it to that same individual to spend, your purchasing power, at least in dollar terms, hasn’t been diminished.
So, instead of the government taking your money, the government takes the purchasing power of your money. « Consider the fact that nearly half of the money the government is spending is being printed out of thin air by the Federal Reserve. » «Peter called it a reckless monetary policy that is designed to protect the government — not the economy and certainly not the people. » .
Source: Peter Schiff | SchiffGold