The Stealth Tax Rises – July 2021

Inflation has finally become a thing. Without even looking at data, we all have felt the jump in prices. I have pool service and prices have gone up about 20% across the board, as businesses have had to recover costs from soaring chemical prices. Groceries, eating out, and materials like lumber have all gotten way more expensive, far outpacing wage increases. People are even selling their used cars for more than what they paid for them new!

The explanation: MATH.

Have a look at the Money Supply in TRILLIONS (from usdebtclock.org)

2000: $4.8

2008: $7.8

Now: $20.7 (up 430% from 2000)

2025: $35.1 (up 730% from 2000)

2029: $59.3 (up 1230% from 2000!)

What’s the reason for all the money?

When the Government creates massive amounts money out of thin air, it also reduces the power of each dollar in circulation. That makes it easier for the Government to pay its bills such as entitlements. But the Government’s gain is the taxpayer’s pain, because prices adjust to the new money supply, and it takes more dollars to buy everything.

If it helps the Government and hurts the consumer, doesn’t that sound like a Stealth Tax?

Inflation is the largest tax the Government imposes on its citizens, and it’s the least fair of all, because it is passed without legislation and disproportionately affects the people who can afford it the least: the elderly, the poor, and those living on fixed income, such as retirees.

Jerome Powell and the Fed said inflation was not a risk. Now they’re saying it’s just “transitory!” Do you really believe that? They always tee up a perfect explanation... but are your eyes really lying?

Maybe we shouldn’t be too hard on Jerome. If he said our financial policy is completely out of control, and printing money is the only way we can attempt to finance our ludicrous debt and new spending, might that lead to a financial panic?

People are so concerned about the devaluation of our currency that they’ve fueled meteoric rises in cryptocurrency. By the way, that's not working out so well. But many others aren’t so speculative, and they just want to hang on to what they have. That’s why people have parked more than $18 Trillion Dollars in negative yielding assets. They are so concerned over money losing value that they’re willing to take small losses just to avoid larger ones.

For the record, inflation rose .9% in June, far exceeding "expectations" (again). That's 3.6% in a half year, or more than 7% annualized. Do you know what this means to the Government if this increase in inflation translates to rising interest rates? We'll save that for another time - but it's not good.

What if you not only could protect yourself from inflation but also use inflation to your advantage? Wouldn’t that be amazing? We’ll show you how.

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Additional Resources

Too Much Money Portends High Inflation (requires WSJ subscription)

World’s Negative-Yielding Debt Pile Hits $18 Trillion Record

Study: Social Security Benefits Lose 30% Of Buying Power Since 2000

Inflation: The Hidden Tax

My previous newsletter on inflation from September 2020