This 2 minute read could save you tens of thousands of dollars.

Let’s say you lived in a small town of 3300 people with an annual budget of, say, $20 million dollars. Let’s also say you’re not a very good person, but you’re an amazing counterfeiter! You are able to produce $10,000,000 in perfect bills, and there is absolutely no way to get caught. Disregarding any moral arguments, what would be the economic effects on the town? Who wins? Who loses? Let’s see.

Once you created $10 million out of thin air, you might buy a mansion, a Lamborghini, and some gifts for all your friends. Then you would probably stash a bunch of money in numerous bank accounts to use for your benefit later on. Of course, you wouldn’t leave the money sitting around too long, especially when you can counterfeit more money if you need it. But more on that later.

Now the banks have a bunch of new money at their disposal. So, the banks do what banks do. They loan 90% of the money out and make money on the new money. The banks also spend money, like building new offices and paying bonuses to the executives. After all, it’s a ton of money in this small town and no one is going to get caught!

The bank executives then spend money on lavish items to enjoy and show off all their wealth. Pretty soon, the bars and restaurants and establishments that these newly wealthy people patronize realize that they can raise prices without affecting the bankers’ demand for goods and services.

they can raise prices without affecting the bankers’ demand for goods and services.

Next, the suppliers of these establishments also, in turn, manage to raise prices on the establishments.

Over time, nearly every business in town has raised prices to meet the newly increased demand, and competition at the new prices sets in. Unfortunately, the word has gotten out that a lot of people have a lot more money to throw around, so prices adjust and everything costs twice as much as before.

Let’s now revisit our original question about the winners and losers.

Clearly the counterfeiter wins the most. He gets everything for free right off the bat. Over time his spending power decreases as the town adjusts to the new money, but it takes a while. And of course, he doesn’t care because he can always just counterfeit as much money as it takes to buy what he wants.

The next biggest winners are the ones who handle the money next. They’re the banks, the financial institutions, and large businesses where the counterfeiter can pass off large amounts of money.

And down the line it goes, but as each fake dollar passes hands over and over, the purchasing power of the dollar loses its strength as price inflation naturally takes hold. Thus, the people who handle the money later in the scheme benefit less and less from each counterfeit dollar, until eventually there is no extra benefit from the new dollars at all.

Who are the biggest victims? They are the people who have no way to raise prices on anyone, because they don’t sell anything, not even their own labor. These are people on fixed income, retirees, and poor people. They handle the counterfeit money last, if at all. The prices have already adjusted to the new money supply. And the townspeople on social security income, or people with pensions (fixed income), now get half the benefit from the same amount of income.

Add a few zeros to the population of the town and the town budget, and you have the United States of America. The counterfeiters are the Federal Reserve and the US Treasury, because between them they print off all the phony money they need to spend on whatever they want. This year it will be somewhere upwards of $5,000,000,000,000 dollars, or one-quarter of our GDP.

The biggest winners will be the government itself, the banks that finance the government, the large corporations, and so on, down a very long line to you and me. The poor, the elderly, pensioners, retirees – those with no ability to screw the next guy in line – will see their money devalued and their quality of life diminished.

If the people towards the end of the line see prices rise without a corresponding increase in their income, doesn’t that sound like a tax? The government may not take money away, but by increasing the money supply, it creates a situation where the money buys less. Isn’t this the same effect? And isn’t increasing the money supply a way to tax citizens without having to go through a difficult, inconvenient process of passing unpopular legislation which might harm a politician’s ability to get votes and stay in power? Of course! This is the Stealth Tax.

Creating fiat currency out of thin air is nothing more than legal counterfeiting, and a tax by any other name. It is the worst tax of all, because it is the largest, it hurts the people who can least afford it the most, it will ravage the quality of life of our children and grandchildren, and it doesn’t even require the consent of The People though passage of law. If you or I do this, it’s called crime, punishable by prison. The government does this, and it’s called “stimulus!”

Would you like to know how you can protect yourself and your loved ones against the harmful effects of the government printing press? What if, by understanding the Stealth Tax, you could actually make inflation work for you?

Contact us, and we’ll show you how you can actually make inflation work for you, rather than against you.

Inflation: The Hidden Tax

Prepare for the Inflation Stealth Tax – September 2020 (Pdf Download)

* Dividends are not guaranteed. However, companies we use have paid dividends without fair for more than 100 consecutive years.

Disclaimer: This newsletter represents the opinion of Arieff Consulting, Inc, and does not constitute financial, tax, or legal advice.