The Federal Government and the Federal Reserve Keep Screwing the American People

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The Four-Letter Economic Words we all should live by

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Free August Rothbard Giveaway The Case for a 100 Percent Gold Dollar!

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Celebrating 77 years in America! Arriving in the land of the free August 6, 1949

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Randall Forsyth’s Barron’s column, “Inflation and Taxes Are Eating Into Your Savings,” correctly warns that inflation and taxes are undermining the ability of Americans to preserve and grow their savings. But the solution should not be to encourage savers to assume greater investment risk merely to stay ahead of a problem created by government.

The Federal Reserve’s monetary inflation is itself a tax—a hidden tax that reduces the purchasing power of every dollar saved. When the Fed expands the money supply and holds interest rates below market levels, savers are punished twice: the purchasing power of their principal declines while the interest they earn may fail to compensate for inflation. The result is a negative real return on supposedly safe savings.

Then comes the income tax. Even when savers earn interest or investment income that merely compensates for inflation, the IRS taxes those nominal gains. If a savings account earns 5% while prices rise 4%, the saver has earned only about 1% in real terms—yet the government taxes the entire 5%. Inflation therefore creates the illusion of income that may not represent any real increase in wealth.

This is not an unavoidable feature of capitalism. It is the consequence of monetary and fiscal policies that penalize thrift.

The answer is more fundamental than finding the right investment strategy. Abolish the federal income tax and end the Federal Reserve’s monopoly over money and monetary policy. Restore monetary discipline through a market-based monetary system, ideally one in which gold can once again serve as money and a restraint on government money creation.

Americans should not have to gamble with their life savings simply to preserve their purchasing power. Nor should the government tax nominal returns that merely compensate for its own inflation.

A free society should reward saving, investment and productive enterprise—not punish them. End the inflation tax. End the income tax. Let Americans earn—and keep—a genuine return on their savings.

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I created the MAFI movement—MAKE AMERICANS FINANCIALLY INDEPENDENT—to take back the country from the statists, democratic socialists, money printers, and the military-industrial complex. Please visit mafiusa.com.

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Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. He is also an Associated Scholar at the Mises Institute. His book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021),provides decision makers with tools needed to help manage their businesses during the business cycle. Sabrin’s autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022. He is also the author of Why the Federal Reserve Sucks.