Inflation, we all know, is a hidden tax, a way the government can spend more than it takes in and let the citizenry pay indirectly. But the government right now is spending far more than it is taking in and yet inflation remains a real, but modest, two percent. Our friend, Richard Rahn, economist, explains it well in a new column.
In addition to the inflation tax (the aforementioned two percent),
"What is new is the big tax on savings, again imposed by the Fed. By artificially holding down interest rates to lower-than-expected real market rates, the Fed is, in effect, expropriating interest income (an implicit tax) that savers normally would be expected to enjoy. This interest manipulation enables the government to fund its debt at less than what would be real market rates at the expense of savers, making the deficit appear much smaller than it really is."
Then there is the burden on small businesses, especially startups, that cannot keep up with all the new federal regulatory requirements. Big businesses have the staff to handle new regulations and, in fact, that is one of their advantages in fending off pesky smal competitors who don't. So start-ups--and innovation--suffer.
In time, the bill for all of us is coming due. It doesn't mean anything to a young person to be told how much in debt he and everyone elese is. He doesn't see it.
What he does see is a constricting labor market, fewer openings and fewer promotions. A blighted future. But most people, especially young people, don't know who or what to blame. It's a cinch that most of the media, hyping the "cliff", aren't explaining it well.