You might be hearing a lot about stimulus money and inflation lately.
Decades ago, inflation was the enemy. Now it is seen as the saviour of our bloated debt ridden system. It’s the only thing that can, maybe, get the world out of the catastrophic debt trap it is mired in.
Right now, the global economy is being propped up by money printing governments. Like a game of musical chairs, they are doing this to keep the music going in the hope that people don’t realise there aren’t enough seats on the lifeboat for everyone.
Printing money to fuel inflation, they diminish the real value of money and hence diminish the real value of debt. Coupled with artificially low interest rates we are in the greatest credit bubble in history. It will end badly and tonight’s talking points memo explains why inflation is the enemy of the people.
Inflation benefits the rich. Wealthy people have more real assets – property, stocks, gold, art and so forth. Inflation causes the price of those things to rise meaning the rich get richer.
Inflation punishers savers Because inflation reduces the purchasing power of money, if you save cash it effectively diminishes in value because over time it will buy less.
Inflation hurts those on fixed incomes If you are on a fixed income like a pension, as prices rise it’s unlikely your income will rise by a greater amount. Inflation is effectively robbing you of your income meaning your lifestyle becomes less affordable.
Think about your lifestyle today. Inflation is supposedly very low but food, utility, housing and health costs are rising by double digits. That’s inflation that the government doesn’t want you to see, even though you feel it every day.
Inflation fuels unrest Because inflation impacts everyone, as one group benefits and others suffer, the social divide grows and often results in unrest. A nation with civil unrest focuses on that rather than other, more productive things.
Inflation is a tax As prices rise so too does the GST. That means you’ll be paying more tax even if you aren’t earning more. If your wages do rise to keep up with the cost of living, you’ll likely find yourself in a higher tax bracket, meaning you’ll be paying more tax.
There’s a reason no government indexes tax brackets with inflation…it’s a stealth tax and no government has ever said no to a tax rise that they can pretend they aren’t responsible for.
Cory Bernardi is the author of seven books and has been a member of the Australian rowing team, a publican, an investment portfolio manager and spent nearly 14 years as an Australian Senator.
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