You have to pay, one way or another
When you understand that inflation is by design you’ll realize that the whole system is a shell game.
And the only way to survive the game is to adequately prepare for the day when it ends.
Two ways for you to be taxed
When you earn $60,000 a year but spend $80,000 you are running a household deficit.
This means you have to borrow the $20,000 difference and go into debt.
But what if you run too many deficits and can’t pay off your debt?
Then you will have to default on your loan obligations.
However, the rules change if you’re the government. 😉
Governments have another option if they have too much debt. Inflation.
I’ve been warning about inflation for years on this blog.
“Policy makers from around the world are covertly initiating inflation to see which country can print the most money to improve their economy’s competitiveness. But by doing so, the devastating knock-on affects will financially destroy millions of lives in the years to come.” ~ Blog post from 2016.
Here’s the U.S. federal government’s income and spending over the last few years.
Notice how each year the government is running a deficit.
Revenue = $3.5 trillion
Spending = $4.4 trillion
Revenue = $3.4 trillion
Spending = $6.6 trillion
Revenue = $3.8 trillion
Spending = $6.8 trillion
- 2022 (projected)
Revenue = $4.2 trillion
Spending = $6.0 trillion
How can the government bridge the gap between income and expenses? Taxation.
But raising taxes would be politically unpopular.
So it has to borrow money instead.
The government issues bonds, which is debt.
A central bank then buys these bonds with newly printed money.
Has the economy grown? Not really.
All you have is more money chasing after the same amount of goods and services.
This is why we get inflation.
But if the government had just raised taxes to grow its revenue in the first place then prices wouldn’t rise.
This is why inflation is taxation.
Deficit spending must be paid, either by direct taxation, or indirectly via inflation.
Can’t avoid the unavoidable
The U.S. government is expected to spend 36% more this year than in 2019. Why?
I don’t know. But there’s no such thing as a free lunch.
Citizens have to pay for the extra government spending, somehow.
This is why your money is not safe stored in fiat currency. U.S. inflation is currently running at 7.9%.
This is the consequence of higher government spending.
Could all this have been prevented?
Is it possible to not subject the population to higher income tax or inflation? Yes.
But that would require the government to spend less money. Good luck with that. 😅
Documents obtained by The New York Times show that Joe Biden is calling for total spending to rise to $8.2 trillion by 2031, with deficits running throughout the next decade. Good grief. 🤦♂️
Canada’s inflation number is coming out this week. My guess is it will run hotter than 5%.
Let’s see how it goes. In any case I’m sticking with my plan to protect my finances against inflation.
Welcome to the money game. Those are the rules. Now go play accordingly. 😬
Random Useless Fact:
Horror movies become comedies if you watch with a group of friends.
Inflation is not only a tax, it’s an extremely regressive tax. It affects those with lower incomes the most, who need to spend a high percentage of their earnings to get by. High income earners can often negotiate inflation-beating raises, or already own significant assets that benefit from inflation.
Excellent point, AL. 🙂 Inflation effects the financially vulnerable the most unfortunately. And often times those lower income households are the most oblivious to how the system works.
I didn’t really get your Random Useless Fact (I Usually get it though ha), is this a joke about real estate and how people don’t care how many people have died in the house anymore?
Yeah, this one isn’t so clear. It’s basically making fun of how oblivious to danger movie characters are, lol. 😀