Inflation Rears Its Ugly Head, Questions About Higher Taxes Abound

Inflation is a growing worry for some top investment firms, according to a recent Bloomberg article.

And that should make us consumers very worried. Inflation is very hard to control. For those old enough to remember what it was like living under President Jimmy Carter, you remember how inflation impacted your household. It was a good idea to stock up on non-perishables at the grocery store, because you knew the next time you went to the store, those same items would cost a lot more.

Yes, it’s a scary thought. Inflation. Higher and higher prices on items, and your paycheck didn’t pay for as much week to week. The dollar was being devalued. Inflation happens when a government increases its borrowing, and in so doing, puts more dollars into circulation (by printing more money). Currently, that is what is happening in the U.S.A.

So to me it’s laughable to read the CnnMoney article by Pat Regnier, Money Magazine assistant managing editor, titled, “Coming Soon, Higher Taxes, Bigger Government.” Why funny? Because in that article Regnier states that he foresees higher taxes with the expansion of bigger government. He also asks whether people should be upset about the prospect of paying higher taxes, since, in his opinion, people will look more to the government to “help them manage risk.” Regneir states it seems fair to him to pay higher taxes “if we could also get a more reality-based economy.”

Well, I don’t know what economic theory Regneir is following, but paying higher taxes does not automatically lead to a “reality-based economy.” Higher U.S. taxes lead to less discretionary money saved and spent by American corporations and consumers. And as far as the government helping us Americans manage risk, that is just hilarious. Yeah, they’ve done a great job overseeing Fannie Mae and Freddie Mac, preventing the housing and credit bubble and crisis, and reining in entitlement programs such as Social Security. Not.

When it comes down to it, most of the American public think they can do a better job spending their money than the government can.

What say you? How worried are you about inflation, and do you think that Americans should be open to paying higher taxes to achieve a “reality-based economy?”

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