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Trump’s tax reform will be meaningless unless he stops the Fed from imposing the hidden tax of inflation

Trump’s tax reform will be meaningless unless he stops the Fed from imposing the hidden tax of inflation

For producers and consumers there are two primary ways to be taxed… directly and indirectly.¬† And judging by how the Fed has been allowed to hold sway over both fiscal and monetary policies since the 2008 Financial Crisis, President Trump’s tax reform plan will end up being meaningless if he doesn’t reign in the central bank’s programs that have led to rising inflation.

Over the past several years the Fed has been jawboning how they have sought to bring about an inflation level of 2%, but have failed miserably in their attempts.¬† Yet for the average American this has really been a bold faced lie since the Fed’s expansion of the money supply has really brought about an annual inflation rate in consumer prices of between 6-10%.

Chart courtesy of Shadow Stats

Inflation is known as the hidden tax, and eats away at the wealth of individuals while protecting the government from having to pay the consequences in passing any new tax legislation.  And all one has to do is look at the rise in education, healthcare, and food costs to see that while wages have barely increased over the past 10 years, many of their necessary purchases have doubled, tripled, or even risen 10 fold during that time.

(and is it any wonder why nearly 80% of all American workers are living paycheck to paycheck?)

The worst part of the tax plan is that it adopts the chained consumer price index (chained CPI). Chained CPI is a way of measuring CPI that understates inflation’s effects on our standard of living. It does this by assuming inflation has not reduced Americans’ standard of living if, for example, people can buy hamburgers when they can no longer afford steak. This so-called full substitution ignores the fact that if individuals viewed hamburgers as a full substitute for steak they would have bought hamburgers before Fed-created inflation made steak unaffordable.

Chained CPI increases the inflation tax. The inflation tax may be the worst of all taxes because it is hidden and regressive. The inflation tax is not even a tax on real wages. Instead it is a tax on the illusionary gains in income caused by inflation. The use of chained CPI to adjust tax brackets pushes individuals into higher tax brackets over time.

Politicians love the inflation tax because it allows them to increase taxes without having to vote for higher rates. Instead, the Fed does the dirty work. Since their creation in 1913, the Federal Reserve and the income tax have both enabled the growth of the welfare-warfare state and the erosion of our freedom and economic well-being. The key to restoring our liberty and prosperity, as well as avoiding a major economic crisis, is reversing the great mistakes of 1913 by repealing the 16th Amendment and auditing and ending the Federal Reserve. ‚ÄstRon Paul Institute

There are countless reasons why government reporting masks the true rate of inflation, because if they were required to account it accurately over the past two decades then a large portion of the budget would be spent on COLA obligations for things like welfare, social security, etc….¬† But by lying about the inflation rate through the mouthpieces in government and at the Fed, the system can run for decades before the rest of the people catch onto the truth, and by then another President will simply obfuscate the issue by calling for another round of tax reform.

Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.com, Roguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.


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