Blog-IT-o ergo sum

	5/30/2003

Economics 101 and the Evils of Fiat Currency

John Hammer editor of the Rhino Times, and chronic GOP's disease patient, is sure that the Bush tax cut, slashed in half as it was, is going to be good news for our economy. The logic: Cutting taxes puts more money into people's hands and helps expand the economy. OK. As a libertarian I'll agree with that for a moment. If tax cuts are good for an economy though, why do STATES never cut taxes but only rearrange them at best? The answer: States are forbidden by Federal law from replacing tax revenues with "money" created out of thin air.

Not so for our Federal Government though. That is why most of this "tax cut" is only a charade as long as we have a currency backed by absolutely nothing that can be created at will by those who garner such a fancy in Washington. We might be allowed now to keep 80 cents of every dollar we earn instead of only 70 cents, but what good is this extra 10 cents if the inflation/debasement of our money supply means that it will soon cost us 85 cents for things that we used to pay only 70 for? A 10 cent saving on paper could quickly turn into a 5 cent loss in the real world.

Keeping 150,000 plus soldiers in Iraq is not cheap and the dollars to pay for them will have to come from somewhere in spite of this tax cut. What better place then from out of the sky? Bottom line: all this "tax cut" really means is that our Federal Government has decided to temporarily take a little bit less from us on our 1040's, but its has every intent to take even more of it from the value of our money. Inflation is the hidden tax and it is going up. Buy your next BMW before it is too late.

12:57:04 AM

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