Economist: ‘Inflation tax’ effectively doubled everyone’s taxes without passing an increase

American Enterprise Institute Economist Paul Kupiec said in an op-ed published by The Hill on Thursday that the “inflation tax” Americans will pay this year is equivalent to doubling our federal income taxes without passing any kind of increase.

Inflation when it is unexpected, Kupiec explained, not only reduces people’s purchasing power but transfers purchasing power from the household or business to the government. That is because central banks will raise interest rates if they expect inflation to occur, but not if they don’t.

Without an increase in interest rates, there is no way for people to recoup the extra money they are spending on goods and services, he said.

And because the government is a “massive” borrower, it benefits from inflation while the people and businesses suffer, particularly in what Kupiec called an “overly stimulative environment” like the one we have today because of COVID.

Intentionally or unintentionally?

Whether intentionally or unintentionally, the U.S. government seems to have caused a perfect storm by dumping trillions of “stimulus” money into the economy and keeping interest rates low at a time of supply chain problems, causing inflation to take off like a rocket.

Given the 5.4% annualized inflation rate so far this year, Kupiec calculated that a spending power transfer of at least $1.9 trillion will take place from households and businesses to government. This is equivalent to the amount the government takes in each year from income taxes, which means the government just basically doubled its income tax revenue for the year.

While no one can prove that the government engineered this inflation crisis on purpose to change the economy and get money from the people that they could never get by passing legislation, they couldn’t have planned it better if they did do it on purpose.

It certainly looks like inflation benefits the government much more than the people, which may be why no one is trying to do anything about it.

Great reset?

Conservative commentators like Glenn Beck have talked in recent months about a global economic plan called The Great Reset, which the left has tried to call a conspiracy theory but is laid out on the World Economic Forum website and is being discussed by people like John Kerry, an unofficial advisor to President Joe Biden who says that Biden supports the plan.

Even Biden’s calling his economic plan “Build Back Better” is just code for the Great Reset to transfer wealth to the government and effectively end private ownership through any means necessary, as this YouTube montage shows.

“The inflation tax is not only real, in 2021 it is really large,” Kupiec said. “No wonder governments love central banks.”

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