Is Inflation a Hidden Tax on the Public by the Government?

[planet-crypto]

After conducting considerable research (secondary) into the workings of our current global financial system, it is becoming evidently clear that inflation is effectively a form of hidden tax on the public. The relationship between the Government, Central Banks, and Banks effectively increases the money supply of the economy which directly leads to price increases but, the price increase itself is nothing more than a reflection of a decrease in the purchasing power of the currency from the increase in the money supply in the first place. Which means, by borrowing money from Central Banks, the Government is actually taxing the public without their notice.

I have uploaded a video explaining the concept in detail for Hindi/Urdu speaking members, you can refer to the link below to learn more, I actually connect the concept with Cryptocurrencies, more notably, with Bitcoin. So if you're interested in the Cryptocurrency space, you'll definitely find it interesting.

Video Title: This is why Inflation is a Hidden Tax! (for Hindi/Urdu) 2019
Link:  https://www.youtube.com/watch?v=UfdfTtId5qA

I'm curious to know If you think I am on the right track or not.

Do you think that inflation is a form of hidden tax?

[1713986765]

1713986765

[1713986765]

1713986765

[1713986765]

1713986765

[TECSHARE]

Exactly. This is why it pisses me off so much to see crypto turned into another casino economy. The value of a valid method of transaction with a set monetary base is infinitely valuable, but people are more interested in LAMBO LAMBO LAMBO! Just stop and think for a minute how much human effort, suffering, and lives have been wasted in order to earn currency that is constantly on fire and losing its value. The Federal Reserve prints more money, as a result its buying power drops, then employers need to pay more to keep up with inflation and cost of living, then according to the IRS you are now "making more money" and they need to tax you even more! This is the first time in human history we have had the true ability for an independent stable based method of exchange. In the world of economics this is basically equivalent to the invention of the wheel in its importance.

[mayo2u]

Do you think that inflation is a form of hidden tax?

Here are two of many opinions on the matter.

The advocates of public control cannot do without inflation. They need it in order to finance their policy of reckless spending and of lavishly subsidizing and bribing the voters.
Ludwig von Mises, 1912 The Theory of Money and Credit

"Inflation is not caused by the actions of private citizens, but by the government: by an artificial expansion of the money supply required to support deficit spending. No private embezzlers or bank robbers in history have ever plundered people’s savings on a scale comparable to the plunder perpetrated by the fiscal policies of statist governments."
Ayn Rand 1962

Carl Menger
von Mises
Hayek
Rothbard
Milton Friedman - his video are an excellent introduction

[theymos_away]

It's called seignorage. In fact, Satoshi explicitly said:

I think this is a nice advantage vs fiat currency, instead of all the seigniorage going to one big entity, let it go in convenience amounts to people who need to scrape up a small amount of change.

In fiat economies I think that the majority of price inflation is basically a government-imposed wealth tax via money-printing, but some inflation is caused by other factors. For example, you could design (and I have elsewhere sketched out) a cryptocurrency based on debt, similar to government fiat currencies, but totally fair without any government skimming off the top; but due to the way these currencies work, you still need a small inflation rate (maybe 0.5%) to make it work. Some inflation can also be caused (even with a BTC world reserve currency) by things like oil price increases or changing market interest rates, though the long-term trend should be deflationary due to constant tech improvements.

[davis196]

Of course it is a hidden tax.It's a tax over the poor and the people,who have a fixed steady income.
It slowly devalues the savings of the working class people,while the rich,who get lots of business loans have to return less money in the future.

[PrimeNumber7]

Inflation is bad, but it is an necessary evil in order to keep economies going at a reasonable pace. I am talking about low/mild inflation, Venezuela level, or even high level inflation is very bad and should be avoided at all costs.

The alternative to inflation is deflation, that is when prices of goods and services fall over time. This sounds good, but it creates a spiral effect of ever decreasing prices and economic contraction. For example, with deflation, if a refrigerator costs $2,000 today, and is estimated to cost $1975 in six months, and $1950 in a year, if your refrigerator is old, and should be replaced soon, and you can afford to replace it today, you will wait as long as you can to replace it so you can save the $25 or $50. The delayed purchase means less work for the people in the refrigerator factory, and for the refrigerator salesmen. The decreased amount of work will often exceed the amount of savings a customer would realize by delaying his purchase. This means in addition to delaying purchases due to anticipated future price declines, those in the refrigerator industry will spend even less to be additionally frugal out of necessity.

When an economy sees deflation, all goods and services as a whole see declining prices, so the above example would be expanded into the entire economy.

[Carlton Banks]

Ayn Rand
Carl Menger
von Mises
Hayek
Rothbard
Milton Friedman

right, but there's a problem with that list.


I remember getting into Austrian economics and wondering why mainstream media/culture are so dismissive of it; if you don't look for it, it appears not to exist at all. Yet it makes so much sense, at least in comparison to the economics served up in the mainstream.

Then comes the subtle stuff.

Some (but not all) of the people on that list were two-faced. They espoused free markets, classical liberalism and sound money, but then behaved very differently where the rubber met the road. The trangressing parties (namely, Milton Friedman, Rothbard and Hayek) ended up caricaturing these positions, in a way that made it easy for opponents of these ideologies to say "look at these nazis/corporatists/genocidal maniacs"


What has sound money got to do with being in favour of corporatism or genocide? ZERO.


It's interesting that these people that get celebrated for promoting sound money have these other (unconnected) associations. And that's ever so convenient for those who lose if sound money became popular.

[planet-crypto]

Exactly. This is why it pisses me off so much to see crypto turned into another casino economy. The value of a valid method of transaction with a set monetary base is infinitely valuable, but people are more interested in LAMBO LAMBO LAMBO! Just stop and think for a minute how much human effort, suffering, and lives have been wasted in order to earn currency that is constantly on fire and losing its value. The Federal Reserve prints more money, as a result its buying power drops, then employers need to pay more to keep up with inflation and cost of living, then according to the IRS you are now "making more money" and they need to tax you even more! This is the first time in human history we have had the true ability for an independent stable based method of exchange. In the world of economics this is basically equivalent to the invention of the wheel in its importance.

I agree with you, try not to get too frustrated though, remember that the evolutionary PROCESS is often ugly but the final product is always more beautiful. Likewise, we are currently going through a transitionary phase between the old and the new system, and such hurdles are to be expected.

[planet-crypto]

Inflation is bad, but it is an necessary evil in order to keep economies going at a reasonable pace. I am talking about low/mild inflation, Venezuela level, or even high level inflation is very bad and should be avoided at all costs.

The alternative to inflation is deflation, that is when prices of goods and services fall over time. This sounds good, but it creates a spiral effect of ever decreasing prices and economic contraction. For example, with deflation, if a refrigerator costs $2,000 today, and is estimated to cost $1975 in six months, and $1950 in a year, if your refrigerator is old, and should be replaced soon, and you can afford to replace it today, you will wait as long as you can to replace it so you can save the $25 or $50. The delayed purchase means less work for the people in the refrigerator factory, and for the refrigerator salesmen. The decreased amount of work will often exceed the amount of savings a customer would realize by delaying his purchase. This means in addition to delaying purchases due to anticipated future price declines, those in the refrigerator industry will spend even less to be additionally frugal out of necessity.

When an economy sees deflation, all goods and services as a whole see declining prices, so the above example would be expanded into the entire economy.

Thats exactly what the problem is though, it is a necessary evil in an unnecessary system. Being as close to the actual reserves is a better alternative, and our best shot at that seems to arise from a proper use of Decentralized Blockchain Technology which aims to eradicate the current unnecessary system all together by eliminating the need for trusted third parties which includes Central Banks which effectively eliminates their control over the money supply and by extension, Inflation.

[TECSHARE]

That is kind of the catch 22. It is like saying, "oh lets just have a LITTLE BIT of murder." because it some how works out. Now the door is opened and the amount of acceptable murder is up for debate and soon we have concentration camps forming and conveyor belts rolling bodies into incinerators because the base premise has been justified allowing its expansion. There will always be pressure for more and more, the only logical line is none.

[KingScorpio]

After conducting considerable research (secondary) into the workings of our current global financial system, it is becoming evidently clear that inflation is effectively a form of hidden tax on the public. The relationship between the Government, Central Banks, and Banks effectively increases the money supply of the economy which directly leads to price increases but, the price increase itself is nothing more than a reflection of a decrease in the purchasing power of the currency from the increase in the money supply in the first place. Which means, by borrowing money from Central Banks, the Government is actually taxing the public without their notice.

I have uploaded a video explaining the concept in detail for Hindi/Urdu speaking members, you can refer to the link below to learn more, I actually connect the concept with Cryptocurrencies, more notably, with Bitcoin. So if you're interested in the Cryptocurrency space, you'll definitely find it interesting.

Video Title: This is why Inflation is a Hidden Tax! (for Hindi/Urdu) 2019
Link:  https://www.youtube.com/watch?v=UfdfTtId5qA

I'm curious to know If you think I am on the right track or not.

Do you think that inflation is a form of hidden tax?

jes if the population isnt working hard enough for the newly inputted currency tokens, then there will be a problem and inflation.

its the population's fault not to work hard enough for the money

[TECSHARE]

After conducting considerable research (secondary) into the workings of our current global financial system, it is becoming evidently clear that inflation is effectively a form of hidden tax on the public. The relationship between the Government, Central Banks, and Banks effectively increases the money supply of the economy which directly leads to price increases but, the price increase itself is nothing more than a reflection of a decrease in the purchasing power of the currency from the increase in the money supply in the first place. Which means, by borrowing money from Central Banks, the Government is actually taxing the public without their notice.

I have uploaded a video explaining the concept in detail for Hindi/Urdu speaking members, you can refer to the link below to learn more, I actually connect the concept with Cryptocurrencies, more notably, with Bitcoin. So if you're interested in the Cryptocurrency space, you'll definitely find it interesting.

Video Title: This is why Inflation is a Hidden Tax! (for Hindi/Urdu) 2019
Link:  https://www.youtube.com/watch?v=UfdfTtId5qA

I'm curious to know If you think I am on the right track or not.

Do you think that inflation is a form of hidden tax?

jes if the population isnt working hard enough for the newly inputted currency tokens, then there will be a problem and inflation.

its the population's fault not to work hard enough for the money

Aren't you the one always ranting and raving about capitalists and bankers? Inflation is the worker's fault now? Just stop talking retard, you have no business trying to tell anyone anything.

[Mometaskers]

It is truly disgusting. And we know that once price rises, it'll never go down, it always just rise. They're the most effective bank robbers.

Not that the banks are any better. Just a while ago I was reading an article about Chase closing accounts of people that is not in line with their political stance, saying they don't need those people's money. Apparently they also didn't need people's money when the government bailed them out.

Partners in crime, these banks and governments.

[Naida_BR]

After conducting considerable research (secondary) into the workings of our current global financial system, it is becoming evidently clear that inflation is effectively a form of hidden tax on the public. The relationship between the Government, Central Banks, and Banks effectively increases the money supply of the economy which directly leads to price increases but, the price increase itself is nothing more than a reflection of a decrease in the purchasing power of the currency from the increase in the money supply in the first place. Which means, by borrowing money from Central Banks, the Government is actually taxing the public without their notice.

I have uploaded a video explaining the concept in detail for Hindi/Urdu speaking members, you can refer to the link below to learn more, I actually connect the concept with Cryptocurrencies, more notably, with Bitcoin. So if you're interested in the Cryptocurrency space, you'll definitely find it interesting.

Video Title: This is why Inflation is a Hidden Tax! (for Hindi/Urdu) 2019
Link:  https://www.youtube.com/watch?v=UfdfTtId5qA

I'm curious to know If you think I am on the right track or not.

Do you think that inflation is a form of hidden tax?

You just opened my eyes.
Also, this explains the reason why governments print money. They say that they do it for helping the economy by injecting liquidity but they just print it in order to get indirect taxes.

[PrimeNumber7]

Inflation is bad, but it is an necessary evil in order to keep economies going at a reasonable pace. I am talking about low/mild inflation, Venezuela level, or even high level inflation is very bad and should be avoided at all costs.

The alternative to inflation is deflation, that is when prices of goods and services fall over time. This sounds good, but it creates a spiral effect of ever decreasing prices and economic contraction. For example, with deflation, if a refrigerator costs $2,000 today, and is estimated to cost $1975 in six months, and $1950 in a year, if your refrigerator is old, and should be replaced soon, and you can afford to replace it today, you will wait as long as you can to replace it so you can save the $25 or $50. The delayed purchase means less work for the people in the refrigerator factory, and for the refrigerator salesmen. The decreased amount of work will often exceed the amount of savings a customer would realize by delaying his purchase. This means in addition to delaying purchases due to anticipated future price declines, those in the refrigerator industry will spend even less to be additionally frugal out of necessity.

When an economy sees deflation, all goods and services as a whole see declining prices, so the above example would be expanded into the entire economy.

Thats exactly what the problem is though, it is a necessary evil in an unnecessary system. Being as close to the actual reserves is a better alternative, and our best shot at that seems to arise from a proper use of Decentralized Blockchain Technology which aims to eradicate the current unnecessary system all together by eliminating the need for trusted third parties which includes Central Banks which effectively eliminates their control over the money supply and by extension, Inflation.

There are several points I would like to respond to.

In general, investors and savers can earn a rate of return that exceeds the rate of inflation. If inflation is 2% per year, you might be able to earn 3% on money in your savings account, so your real rate of return is 1%. Or if inflation is 2%, you might be able to earn 11% in the stock market, making your real return 9%. According to world bank data, and St Louis Fed data, real interest rates have been positive, meaning after accounting for inflation, someone with money in the bank in the beginning of the year will have additional buying power at the end of the year with that same money plus interest.

One drawback to real interest rates is that nominal interest payments and nominal capital gains are taxed. This means if inflation is 2%, nominal interest on my savings account is 3%, I will have to pay taxes on the entire 3% I earn, and this will put my after tax real interest rate just above 0%. If inflation is too high, taxes may push my real interest rate to below zero if I do not keep my savings in a tax advantaged account.

Not having a central bank will not guarantee there to be no inflation. If there is no central bank to conduct monetary policy, and a fixed money supply, supply shocks may still cause prices to increase, and excess capacity may cause prices to decline (deflation). If there is excess capacity, the economy may experience deflation, and this is hard to stop, even with a central bank. In the 90's Japan had a deflation problem, and its economy contracted (shrank) by almost 20%, and according to wikipedia, real wages fell by 5% from 1995 to 2007.

Money being used with blockchain technology will not stop any bank from using a fractional reserve system. Neither will a fixed amount of currency units in circulation. In fact, there are a fixed amount of dollars in circulation today, but this does not stop banks from using a fractional reserve system. Coinbase for example, could choose to pay interest on bitcoin deposits, and use bitcoin deposits to make loans. As long as coinbase does a good job at pricing loans, and not making loans to too many people who do not repay what they borrowed, the value of their total assets will exceed the liabilities of their bitcoin deposits they owe customers. In this example, coinbase could offer CD-like products that match the maturity of longer term loans they make, and make short term loans against "demand deposits". In this example, coinbase could owe more bitcoin to deposit holders than it has in its various wallets, but has enough assets, in the form of loans to cover all its deposits. The interest paid to deposit holders give customers incentives to not withdraw their bitcoin. Some companies have tried this in the past, and failed because they were not prudent in underwriting their loans, were run by scammers, or both.