Former congressman Ron Paul used his latest column to talk about how Republicans in Congress are planning on passing a tax cut plan that, unfortunately, increases one of the most insidious “taxes” Americans are forced to pay on a daily basis.
While the new tax cut proposal has positive elements such as the elimination of the death tax, Paul explains that the plan also adopts what’s known as the chained consumer price index, ignoring how inflation impacts our standard of living.
To the veteran congressman and liberty educator, there isn’t a worse policy than the adoption of the chained CPI. That’s because ignoring inflation allows for the population to completely forget about the single most devastating financial policy the government has ever adopted.
With the end of the gold standard during the Richard Nixon administration, the Federal Reserve was allowed to inflate the supply of currency without having anything to back it with. With greater currency circulation (higher supply), money loses its value. That means that the earnings of Americans from all walks of life actually lose purchasing power since the value of their real wages drops as the Fed pumps the economy with cheap cash.
According to Paul, the embrace of the chained CPI means that the Donald Trump administration is telling the masses that inflation does not reduce our standard of living.
Calling inflation a tax that “may be the worst of all taxes because it is hidden and regressive,” Paul explains that, over time, the use of chained CPI to adjust tax brackets may actually increase tax rates for everyone.
If the Trump administration and Congress’ Republicans were actually serious about helping Americans by cutting their taxes, Paul argues, then making it easier for the Fed to keep pushing up inflation would be the last idea they would try to implement. And yet, here we are, contemplating a new “tax cut” plan that does just that.
During Paul’s two last runs for the presidency, his message of sound money was the one that inspired an entire generation of young Americans to become politically involved. The same people who filled up stadiums to listen to a doctor from Texas were chanting “end the fed” and telling friends and family members just how immoral the Federal Reserve’s policies had been since its inception. In 2017, the Fed and its policy of increasing the supply of cash are simply not being pursued by anybody who seems even remotely concerned about U.S. politics.
Unfortunately, financial policies pursued by Washington are some of the most destructive, as they impact our lives in a very direct way.
Is it time to start talking about the Fed again?