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Inflation, hidden taxes, national debt, and devaluation

已有 2105 次阅读 2020-10-16 23:22 |个人分类:生活点滴|系统分类:海外观察

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Inflation, hidden taxes, national debt, and devaluation of your currency

Any legitimate country, authoritarian or democratic, needs revenue to conduct its business. Revenue are raised from taxes to the populace. As Franklin has famously said, “In life only death and taxes are inevitable”. But nobody likes to pay taxes. Thus, how to resolve this dilemma. It turns out there is an easier way for the government to raise money. They can simply print money. This only needs to have the congress authorize the debt limit which they routinely give (otherwise the government will cease to function and the legislators won’t get paid). But printing money from nothing simply increases the supply of money vs. demand. Elementary economics which everyone knows say this cheapens the value of currency. Inflation naturally occurs. Thus, inflation is simply a hidden form of taxation which no single person can be held responsible or the populace need to give consent to.

In the olden days, each country has its own currency. Thus inflation is limited to a single country who practices this form irresponsible economic policy. But now with globalization, strong country such as the US can even export its debt overseas to other countries in the form of international bonds. Instead of inflation you simply devalue your currency in relation to others. Thus, other countries find out that your debt to them are now worth less (they are in fact paying the US a hidden tax). Of course, this burden often gets passed back onto the US populace when they import goods from other country. The best example of this is the British Pound. The two World Wars costed the British empire enormously. I recall during my first visit to London in 1966 the British Pound is worth four US dollars. Nowadays it is just about worth 1:1. Need I say more.




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