Inflation Harms the Poorest: End the Fed

By DEIB Visuals @ Adobe Stock

At OfTwoMinds.com, Charles Hugh Smith explains that the recent Biden-era inflation hurt America’s poor the most. He writes:

There are always statistical games that can be played to mask the realities of our neofeudal economy and society. But “narrative control” can’t obscure the facts or the banquet of consequences that these realities have set.

Not everyone in America gained ground as a result of the rampant hyper-financialization and hyper-globalization of the 21st century. Let’s begin our analysis of who gained ground and who lost ground in the year 2001, when China entered the WTO (World Trade Organization) and offshoring / globalization shifted into high gear and when the Federal Reserve began ramping up its financialization / monetary manipulation–oops, sorry, policy interventions.

The top 1% and the top 10% gained ground. The bottom 90% lost ground, especially the bottom 50%. Wage earners lost ground, while corporate insiders, financiers, speculators using leverage and those lucky enough to be born long enough ago to buy assets at pre-bubble valuations gained ground.

Inflation is a transfer of wealth from the poor to the rich, and from everyone to the government printing the money. Former Congressman and presidential candidate Dr. Ron Paul called out the effects of inflationary Federal Reserve policies back in 2004 while he was still in Congress, writing:

All government spending represents a tax. The inflation tax, while largely ignored, hurts middle-class and low-income Americans the most.

The never-ending political squabble in Congress over taxing the rich, helping the poor, “Pay-Go,” deficits, and special interests, ignores the most insidious of all taxes — the inflation tax. Simply put, printing money to pay for federal spending dilutes the value of the dollar, which causes higher prices for goods and services. Inflation may be an indirect tax, but it is very real — the individuals who suffer most from cost of living increases certainly pay a “tax.”

Unfortunately no one in Washington, especially those who defend the poor and the middle class, cares about this subject. Instead, all we hear is that tax cuts for the rich are the source of every economic ill in the country. Anyone truly concerned about the middle class suffering from falling real wages, under-employment, a rising cost of living, and a decreasing standard of living should pay a lot more attention to monetary policy. Federal spending, deficits, and Federal Reserve mischief hurt the poor while transferring wealth to the already rich. This is the real problem, and raising taxes on those who produce wealth will only make conditions worse.

This neglect of monetary policy may be out of ignorance, but it may well be deliberate. Fully recognizing the harm caused by printing money to cover budget deficits might create public pressure to restrain spending — something the two parties don’t want.