Peter Schiff: Inflation Is a Painful Tax

The comments below are an edited and abridged synopsis of an article by Tyler Durden

We’re told inflation isn’t a problem, but a trip to the grocery store or gas station tells you otherwise. Prices are rising. Peter Schiff says the price of everything is going up and the value of everything is going down. It’s clear that prices are rising. Peter said it’s going to get even worse.

Peter Schiff: Inflation Is a Painful Tax | BullionBuzz | Nick's Top Six
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Inflation is nothing more than a tax. To spend money, the government needs to get money. Normally, the government raises taxes, taxpayers pay the taxes, and the government spends it. But the US just passed a $1.9 trillion stimulus bill, and nobody’s taxes were raised.

So, how is the government paying for this massive stimulus spending?

The Fed prints the money, then the government spends it into circulation. But when that happens, the value of all the money that’s already out there goes down and the price of everything you buy goes up. And that added price is basically the inflation tax.

The Fed is printing money at an unprecedented rate. There have been 11 straight months of historically high money creation. The money supply expanded at a record rate yet again in February.

This seems intentional—that the government is trying to pay for all of the spending—making it less costly by devaluing the dollar.

But Peter said the government has no plan to pay off the debt. And the real problem is the amount of money the government will have to spend just to finance all of its current commitments.

The Fed pretends that it’s transitory. But when it has to admit that it’s not, the inflation rate will be far too high for the Fed to do anything about it. Because if it actually raises rates to fight inflation, it will create a much bigger financial crisis than 2008, and the US government will be forced into insolvency.

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