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| His Voice |
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| Written by Earl Hiatt / Community Columnist | |
| Friday, 04 April 2008 | |
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Runaway inflation robs middle class This column is the third in a four-part series on federal economic policy and the stimulus package.  Earl Hiatt / His Voice Who’s going to suspect that the real culprit in people’s economic woes is the federal government itself — or, more precisely, the welfare-warfare state whose out-of-control spending threatens the financial and economic well-being of the American people? This is the big lie that central banking makes possible, because it breeds the political lie that the state can spend and spend all it wants and never collect. In fact, inflationary credit does have a cost. It diminishes the purchasing power of the dollar. We are being robbed year by year, and it makes no difference that we’ve gotten used to it. So long as the issue is only about taxes, however, the political class is trying to pull the wool over your eyes. Inflation is always and everywhere a monetary phenomenon. It cannot occur without the quantity of money increasing more rapidly than output. Increases in money supply are what constitute inflation, and a general rise in prices is the symptom. Who’s in charge of the money supply? In the case of the U.S., it’s government operating through the Federal Reserve. The government has passed a total rebate of $168 billion. As the U. S. savings rate is about zero, the money will have to be borrowed abroad. The U.S. dollar has been losing value against other traded currencies, and having to borrow another $168 billion will further erode its value. Meanwhile, Congress passed a $700 billion “defense” bill so that the Bush administration can continue its warring ways. Our leaders in Washington are out to lunch. They have no idea of the real challenges the country faces, especially the United States’ dependence on foreign creditors. Financing wars, especially unpopular wars, is a tricky business. Direct taxation is the least desirable option, as it might create undue awareness of the war’s real cost. Politicians much prefer to exact the invisible tax of inflation, which eats into people’s savings and takes its highest toll on those least able to afford it. Our empire is a bubble that’s about to burst, along with the economic bubble the Federal Reserve lives in mortal fear of. Things that can’t go on forever typically don’t. We now have deficits as far as the eye can see, with a $2 trillion military debacle that has no end in sight and that is sucking money out of the country like a giant vacuum cleaner. The Bush chickens are now coming home to roost. Patterson resident Earl Hiatt is a semi-retired agri-businessman whose major interests are nutrition, economics and religion. His columns appear occasionally on the Irrigator Voice page. He can be reached by e-mail at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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