The Cruelest Tax of All

Americans aren’t particularly savvy about all things economic. One thing they do understand is high gas prices. I watch a lot of business news, and sometimes I wonder if the folks doing the commentary live in the same world I do. Last time gas prices got this high, the economy went belly up. Granted it was aggravated by the excessive and reckless debts that accrued to our banking institutions at the instruction of Barney Frank and his Freddie Mac and Fannie Mae cohorts...but it was still the gas prices that lit the fuse.

Couple the high fuel prices with soaring food prices and one has inflation, the cruelest tax of all. The pain is primarily born by the poor and middle class. The uber rich don’t give a rat’s ass about the cost of fuel, they can afford it. It is the rest of us schmucks that are footing the bill.

President Obama said he wasn’t going to raise taxes on the poor and the middle class. Technically, he hasn’t. But his policies have back door’d ya!

You see, there only three ways the government can raise revenue to pay off the debt. The first is to raise taxes. The second is to devalue the currency. Our government has chosen the latter. By printing billions of dollars and putting it into circulation, it makes the money that was already floating around worth less. The government benefits by paying back existing debt with cheaper dollars.  The only problem is they keep borrowing.

Sounds like a good deal? Not really!! You see, while the government is paying back foreign debt in devalued dollars, the stuff we import goes up in price…and guess what import a lot of! Oil!!! So while Uncle Sam is paying back less than it borrowed, you are picking up the slack by paying more for the things you need to live. That's the hidden tax on the poor and middle class. You know… the tax that Obama said he wasn’t going to do.

The pain extends to foodstuffs as well. If our dollar is worth less, then the other currencies that haven’t been devalued are worth more. These folks come into our country and buy up all the wheat and corn at cheap prices for them, forcing us to pay more if we want a bowl of cereal in the morning along with our very expensive toast.

There is no magic wand to get rid of the debt, pull at one end, and it will fly out the other. Sooner or later, somebody has to pay for Obama’s spending sprees.

I did say there were three ways the government could climb out of this mess, but only mentioned two. Number three is to grow the economy. Stand up to China. Stand up to OPEC. Stand up to the EPA. All of these things may be initially painful, but it will fertilize our economy and eventually we will regain our manufacturing prowess. We work harder; we work longer; we work smarter; and we work more productively than any other nation in the world. But unless this spirit is unleashed, we will continue to pay the inflationary piper.  And the cruelest tax of all will continue on those who can least afford it.