Part 28 – Inflation – Stealth Tax

Inflation is regarded by some as a stealth tax.

How so?

Imagine you are about reach the age of retirement. You have worked all your life and have a good amount of money in your savings account. Let’s say 100,000 Dollars. Imagine then that you suffer a strange illness and go into a coma. The coma lasts for a year. During that time the economy suffers a sudden, massive bout of inflation. Let’s say the inflation rate is 50%. When you come round from your coma and resume your life, you go into your bank and discover that the 100,000 Dollars is still there as you left it, but its purchasing power has been cut in half. So in effect it’s really only worth 50,000 Dollars in real terms.

This is admittedly an absurd scenario, but illustrates the pernicious effects of inflation.

But why is it regarded as a tax? Well, because it’s the government that is in control of the money supply – or I should say to be correct, it’s the Central Banks. They are in charge.

Wise up and rise up.