WASHINGTON (TNS) — “Inflation is always and everywhere a monetary phenomenon,” Milton Friedman once said. In other words, don’t blame greed — blame the politicians who control the money supply.
Ron Paul called inflation a “hidden tax” on Americans. Today, politicians have used it as a weapon to destroy the American way of life.
The last four years have seen a dramatic 20% price increase for most Americans — adding over $20,000 to the annual cost of living for a typical family of four. This is no accident. It’s a malicious implementation by D.C. politicians of the left-wing policy known as Modern Monetary Theory (MMT).
This is the “theory” that our government can simply print as much money as needed to finance its spending — in effect, using inflation as a backdoor form of taxation.
This is a tax that no one voted for and that is outside the control of the Congress — the elected representatives of the American people. Instead of maintaining the dollar as a way of preserving the value of your hard work, MMT turns the dollar against the American people.
MMT has converted the Fed into a massive instrument of wealth redistribution — from hard working Americans to those favored by the federal government. By the end of the pandemic, “650 billionaires in America saw their net worth increase by more than $1 trillion” according to Forbes. While politicians shut your life down and made it illegal to celebrate Independence Day, they managed to give some of the richest of the rich trillions of dollars in net worth.
The problem is not that these people are billionaires. The problem is increasingly how wealth is acquired in the U.S. In a free market, profit naturally follows innovation and work to improve the quality of life for all. However, people should not become rich through government’s redistribution of wealth by way of devaluing the dollar.
In 2020, when the government-induced recession occurred, the Fed flooded markets with $4 trillion that had been newly created out of thin air to finance massive increase in government spending.
Many of the so-called “expert” economists tried to tell everyone that this wouldn’t cause inflation, which would be laughable if not for the economic tragedy that ensued. This, of course, created the classic recipe for inflation—more dollars chasing fewer goods and services. Government lockdowns created the “fewer goods and services” while the Fed saw to the more dollars.
This is just the most recent example of where the government used MMT to print money for their schemes at the expense of your livelihood. With inflation back over 3% and the Fed beginning to cut rates again — to increase the money supply — inflation is sure to follow again.
The pressure now is not just from COVID spending. It comes from the weight of the $36 trillion national debt — well over $100,000 per American. This is what decades of reckless government spending has done to our economy and our nation.
In just the last four years of MMT, we’ve seen the worst inflation in 40 years and 20-year highs for interest rates, including mortgage rates that have tripled since President Joe Biden took office. This has devastated the household finances of most Americans.
No matter what the alleged “experts” claim, a government cannot simply run deficits and turn to the money printer run indefinitely. History has shown us what a horrific disaster that is. The Weimer Republic and the Roman Empire, along with many other countries, drowned under just such a devaluation of their currency and the resulting hyperinflation.
If we are to avoid their fates, we must cut reckless government spending and prevent politicians from abusing the dollar to finance their goals at your expense.
Put simply, the American Dream cannot co-exist alongside a government with the ability to weaponize inflation against its own people.
(Richard Stern is director of the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation. Brooks Newby is a member of Heritage’s Young Leaders Program.)
