My wife and I are getting ready to take our 2.5 children on a road trip. This caused my thoughts to wander, as they often do, to the price of gas. If the prices of gas continue to rise, will my children be able to take their children on road trips. The answer I came to was “Of course they will.” The recent surge in gas prices is due to inflation from Quantitative Easing and zero interest rates enacted by Congress and the Federal Reserve over the past few years. I suppose in the long-run the only people who will be hurt are those who have invested in US currency, like retirees and The Peoples Republic of China. Inflationary policy is effectively stealing from them. (This is also why there is no love lost between China and our current government.)

What is perhaps more interesting to the average person is how manipulating the supply of currency can be used to bypass congress in raising our taxes. With the graduated income tax system we have in the US, people are divided into a number of tax brackets based on income. The higher the income, the higher the percentage of it taken by the government. During inflationary times, employers generally increase their employees’ salaries to maintain their standard of living. This results in a number of them being placed in a higher tax bracket. Although people’s standard of living drops as they pay more in the higher bracket, inflation results in good publicity for the government. The numbers on the stock market go up, the dollar-value of homes increases. Congress may, occasionally, adjust the brackets a little bit higher for “middle-class tax relief” and still come out ahead. All the president and congress have to do is wait as more money is dumped into the system by the Federal Reserve.

So how did the federal government end up with this obfuscated power structure, with no accountability to the voters? Happy coincidence? No, it was thanks to the foresight of the loathsome Wilson Administration, which enacted both the Federal Reserve and the income tax.

So as you prepare for your next vacation, or the next time the news starts talking about the Fed keeping interest rates at 0%, or congress passing another round of quantitative easing, let us remember that it means sneaking through a tax hike and stealing from the elderly. If more people realized this without their eyes glazing over at financial talk, perhaps we could vote for a few more party faithful to take a road-trip back home…