Thursday, December 08, 2011

Where'd all the money go?

Since the U.S. went off the gold standard, it's been fashionable to blame inflation on different villains -- OPEC and various retail corporations being among the favorite targets.  While the latter may bear some culpability, due to their facilitation of the Wall Street-Washington axis, in reality the damage is done via official policy... through the auspices of the Federal Reserve.  Nominally charged with keeping the economy in tune, supposedly balancing inflation versus unemployment, in reality its existence completely skews the market.  Want to know why the politically connected rich keep getting richer relative to everyone else?  It's because they have first access to all the 'money' the Fed creates... that only 'trickles down' to the rest of us after it's lost some (or in recent cases, a lot) of its value.
...a small investor who earns a nominal yield of 1% and pays a 20% marginal tax rate, while the rate of inflation is 3.5 %, actually ends up paying a real tax rate of 370%. For example, an investor buys a $100,000 CD, earns $1,000 in annual interest, pays a tax of $200, and incurs a loss of $3,500 in purchasing power on the invested principal. Total (nominal) income is $1,000; total real tax (nominal tax plus inflation tax) is $3,700.

This expropriation of private wealth is not accidental.  (emphasis added)

Inflation is merely an orchestrated stealth tax, one that would be grossly impeded by a sound monetary policy (such as a gold standard). And now we've reached the end game, where even this manipulation and debasement can't supply the ravenous appetite of government, while at least appearing to preserve the 'American Dream.'

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