Ron Paul: The ‘Cut Inflation Act’ Is Another DC Lie
We’re getting a lot of Orwellian spin from Washington DC A recession isn’t a recession, Putin’s price hikes caused inflation, and now we’re being told a massive spending bill will fix inflation.
Last weekend, the Senate gave final approval to the so-called “Inflation Reduction Act”. Despite the catchy title, it’s nothing more than a tax and expense bill. The expert class insists that this will not only curb inflation, but also reduce the budget deficit. It is a chimera. As Ron Paul explains, the bill will not only increase inflation, it will also increase government spending and taxes.
The following article by Ron Paul was originally published by the Ron Paul Institute. The opinions expressed are those of Ron and do not necessarily reflect those of Peter Schiff or Schiff Gold.
The Affordable Care Act, No Child Left Behind and the USA PATRIOT Act received a fresh contest for the title of most misnamed bill when Senate Democrats unveiled the Cut Inflation Act. This bill will not only increase inflation; it will also increase government spending and taxes.
Inflation is the act of creating money by the Federal Reserve. High prices are a negative effect of inflation, along with bubbles and the bursting of bubbles. One of the reasons the Federal Reserve increases the money supply is to keep interest rates low, thereby allowing the federal government to run large deficits without incurring unmanageable interest payments.
The so-called Inflation Reduction Act increases government spending. For example, the bill authorizes spending of hundreds of billions of dollars for energy and the fight against climate change. Much of it is subsidies for renewable energy – in other words, green business welfare. Government programs subsidizing certain industries take resources out of the hands of investors and entrepreneurs, who allocate resources according to the wants and needs of consumers, and give the resources to government, where resources are allocated according to the agendas of politicians and entrepreneurs. bureaucrats. When the government withdraws resources from the market, it also disrupts the price system through which entrepreneurs, investors, workers and consumers discover the true value of goods and services. Thus, “green energy” programs will lead to increased cronyism and wastage.
The bill also extends the “temporary” increase in Obamacare grants voted as part of covid relief. This will further increase health care prices. Raising prices is a strange way to eliminate price inflation. The only way to reduce health care costs without diminishing the quality of health care is to put the responsibility for the health budget back on patients.
The bill’s sponsors say the legislation fights inflation by cutting the deficit through tax hikes on the wealthy and a new minimum corporate tax of 15%. Tax increases will not reduce the deficit if, as they will, Congress continues to increase spending. Raising taxes on the “rich” and corporations also reduces investment, slows the economy and thus increases the demand for government programs. This leads to an increase in public spending and debt. While there is never a good time to raise taxes, the absolute worst time for tax increases is when, as is the case today, the economy is suffering from both the price inflation and, despite the gaslighting of the Biden administration and its apologists, is in recession.
The bill also spends $80 billion on the IRS. Supposedly, this will help collect more revenue from “wealthy tax evaders”. While proponents of increasing the IRS’ ability to harass taxpayers claim their target is the wealthy, these new powers will actually be used against middle-class and small-business taxpayers who can’t allow legions of accountants and tax lawyers and therefore are likely to simply pay the agency. whatever it requires.
Increased spending and taxes will increase pressure on the Federal Reserve to keep interest rates low, thereby increasing inflation. If Congress really wanted to end inflation, it would cut spending, starting with overseas militarism and corporate welfare. A Congress that takes inflation seriously would also take the first step toward restoring a free-market monetary system by passing the Fed’s audit and legalizing monetary competition.
Copyright © 2022 by The RonPaul Institute. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given.
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