Colman: A DANGEROUS, HIDDEN TAX–Inflation

Under President Trump inflation is running at about 2% a year.  This is the lowest, consist inflation rate in years.  The Federal Reserve is proud of itself—while the economy is booming, jobs are plentiful and wages are going up, inflation is down.  One major reason is that the cost of technology continues to drop.  But as the Federal debt grows, along with the sales of tens of billions of bonds by States and local government, inflation has to rise.

 According to the U.S. Inflation Calculator (www.usinflationcalculator.com), between 1980 and 2020, prices in America have risen 213.1 percent.  In dollar terms, what cost $1.00 in 1980 now costs $3.13.

 For other intervals, the news is still bad.

 From 1990 to 2020, prices rose 97.4 percent, meaning that what cost $1.00 in 1990 costs $1.97 in 2020.

 From 2000 to 2020, prices went up 49.8 percent.  What cost $1.00 in 2000, now cost $1.50.

As Dr. Colman notes, inflation is a tax—one not passed in a bill by Congress, but by policies that demand it.

A DANGEROUS, HIDDEN TAX

By Richard Colman, Exclusive to the California Political News and Views,  2/18/20

A hidden tax is robbing Americans.

 The tax is not one that Congress, any state legislature, or any local government has passed.

 The tax is rising prices — also called inflation.

 Ever since the 1913, the year the federal income tax became law, prices in the United States have risen dramatically.

 One does not have to go back to 1913 to see the harmful results of rising prices.

 According to the U.S. Inflation Calculator (www.usinflationcalculator.com), between 1980 and 2020, prices in America have risen 213.1 percent.  In dollar terms, what cost $1.00 in 1980 now costs $3.13.

 For other intervals, the news is still bad.

 From 1990 to 2020, prices rose 97.4 percent, meaning that what cost $1.00 in 1990 costs $1.97 in 2020.

 From 2000 to 2020, prices went up 49.8 percent.  What cost $1.00 in 2000, now cost $1.50.

 Inflation is a tax not passed by legislation.

 Inflation is robbing individuals of their purchasing power.

 No one voted for inflation.  Government policies, according to some economists, have led to higher prices.

 From 1800 to 1899, according to The Economist, a magazine, inflation was only 12 percent over that 100-year span.

 However, the arrival of big government changed everything.

 If one needs to choose a year when big government began, the year would be 1913.  During that year, not only did the federal income tax become law, the Federal Reserve was established.

 The Federal Reserve is a federal banking system that sets interest rates.  The Fed, as the Federal Reserve is frequently called, has the power to print money.  (Today, a computerized process, instead of a printing press, is used to put money into circulation.)

 The current Fed wants a annual inflation rate of two percent.  Currently, the inflation rate is 2.3 percent.

 By law, the Fed has two responsibilities.  The first is to keep prices stable.  The second is to create full employment.

 The Fed should have only one duty:  price stability.

 Government became bigger in 1935, when Congress passed the Social Security Act.

 In 1965, Medicare, a plan to assist elderly individuals with health-related expenses, became law.

 In 2010, Congress passed and the president signed the Affordable Care Act, giving all Americans access to health care.  The Affordable Care Act is often called Obamacare because the president who signed the enabling legislation was Barack Obama.

 In general, an American’s income has, over the years, not kept pace with inflation.

 Some economists claim that excessive government spending contributes to higher prices.  Other economists disagree.

 Around 1960, a household income of $10,000 a year, while not great, would allow a family to have one car, be able to send their children to college, and save for retirement.  Even a short vacation was possible.  Only one spouse had to work.

 Now, 60 years later, what cost $1.00 now costs $8.72, a 771.5 percent increase.  To some people, this rate of inflation understates the reality.

 In some parts of the United States, a house that cost $24,000 is 1960 now has a value of $2 million.

 The time has come to put an end to inflation.  Many suggestions abound.  One frequently heard argument is to tie the American dollar to the price of gold.

 In 1967, the price of gold was $35 an ounce.  The price was fixed by the federal government.  A person could exchange one ounce of gold for $35.

 In 1933, the federal government prohibited Americans from owning gold.  There were exceptions for jewelry and dental fillings.  In 1975, Americans, by an act of Congress, were able to own gold legally.

 On Feb. 14, 2020, one ounce of gold had a value of $1,578.  This price ($1,578 an ounce) is 45 times (4,500 percent) more than the 1967 price.

 Thus, $10,000 in 1967 would have — in terms of gold — a value today of $450,000.

 How many people who were earning $10,000 in 1967 would be earning $450,000 today?

 Inflation is wrecking the American economy.  Housing, food, and gasoline cost too much.

 America is not on the brink — at least not yet — of hyperinflation.  In Germany’s Weimar Republic, which went from 1919 to 1933, hyperinflation led to wild social unrest.  What cost one German mark in 1919 cost $1 trillion German marks in 1923.  German incomes could not keep pace with rising prices.

 Hungary right after World War II had even worse inflation.

 Certain financial analysts argue that inflation is caused by government central banks’ (like the Federal Reserve) printing too much money too quickly.  As more money is printed, people start to buy more goods and services.  The result is escalating prices.  A significant group of economists argues that inflation is the direct result of the federal government’s printing too much money.

 America must be careful to avoid hyperinflation.  In fact, the current levels of inflation in America are too high.

 The time to attack American inflation is now.  The nation does not need any more shrinking dollars.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. The voters have to stop electing Sociailsts who expand government with the excuse that there is an infinite amount of money in the business sector. To balance the cost of government with income you have two options 1) raise taxes and lower the quality of life, or 2) cut back spending and privatize much of government.

    In the mid-west you have a co-op medical insurance that allows you to pay $50/month. You get full coverage. So why would you vote for Democrats and single payer?

    Solve the issue of the border and save that money. But if you vote “D” you have open borders and beggars for welfare.

    And the list goes on.

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