Russell knows that someone has to pay for all the excesses of the past 30 years in addition to continual overspending at the federal government level. He also knows that we have one of 3 basic ways to accomplish a drastic reduction in the reliance on borrowing:
- cut federal spending dramatically
- increase taxes dramatically
- inflate the currency
Item number 2 is going to be very difficult to implement because it has been shown that overt taxation reaches a point of diminishing returns. If you suck all the capital out of the economy via taxes then investment and growth crashes and jobs collapse. If it gets too bad then it generally leads to civil unrest or worse. They will talk about higher taxes but nothing significant will actually happen.
Item number 3 is the easy way out for the con men. With inflation they don't actually have to tell people they are raising their taxes and suffer the back lash. Inflation is the silent tax that most people don't even understand is a tax. I estimate that only 10-20% of the people in this country understand that inflation is nothing but a tax. People actually blame "the greedy Arabs" for higher oil prices and "the greedy farmers" for higher food prices. They just don't get it that when Bernanke prints more money from thin air that it waters down the buying power of the money you already hold as well as that of your monthly salary. Inflation is sneaky taxation.
In addition, government actually cares about two kinds of people: those who vote and those who are economically productive. They care about those who vote for obvious reasons and they care about those who are economically productive because without them who would there be to steal from in order to buy the votes from those who vote? When things get really bad (read "foreigners stop loaning us money") then the protected class must always be those who are productive and taxable. When you inflate the money supply, inflation eventually results in wage increases right along with food and energy prices. That means that workers take some pain but over time their salary will make up for some of it if the inflation stops long enough for a new equilibrium to form.
On the other hand, retirees living off of fixed income and entitlements are not producing anything for politicans and statists to steal and so they are a prime target for government to attack. We have a lot of savings in this country and when people get old they become too weak to fight. Thus, inflation steals their money by reducing the purchasing power of their savings and the government really doesn't feel the heat because of it. As Sheen might say, "#Winning!". The final reason why inflation is going to be the mechanism of choice for paying for ridiculous government spending is that it destroys the value of everyone's dollars globally, not just the dollars held by US citizens. Thus, inflation spreads the tax pain to non
Today Monex is selling silver Austrian Philharmnic 1 Troy oz. silver coins for $41.59 each (when bought in quantities of 100). 1 Troy oz gold Phils just broke $1500 each (when bought in quantities of 10) for the first time ever.
Smart man, that Richard Russell.