kylejack
11-07-2007, 11:56 AM
Maybe you have seen the Wendy’s commercial where the politician is on the stage and says, “We must stop inflation!” and the guy in the Wendy’s wig in the audience stands up and says he wants a baked potato with his burger.
That’s how Republican Presidential Candidate Ron Paul must have felt in a recent debate when he said inflation was the hidden tax.
And before I go on, so you gentle readers don’t get mad at me, I am neither endorsing any presidential candidate nor advocating that men wear pig-tail wigs. So, moving on… .
When Ron Paul said inflation was the hidden tax, I yelled at the screen, “He’s right! Follow up: This is a key comment!” Instead the moderator, other candidates, and the crowd just stared at him and probably just wanted a baked potato with their cheese burger.
But, if you understand the large implications of what he said, then government policy clears up for you and you will become a better investor. Here is why.
First, you gentle readers already know that everything government does is done via coercion. Governments do not earn anything. Governments do not make products or create wealth. Taxes are levied, fines imposed, regulations and rules implemented by fiat and decree.
And, while government is obviously necessary, there is always a tension between the citizens and their government… especially if government pushes too hard with respect to taxes. That is why taxes via inflation are so popular in the back rooms of power and why Ron Paul was warning about them.
Let me explain.
Let’s just say that because of inflation the price of an item goes from $100 to $200…and the sales tax on that item is 7%. Well, when the product is $100, the government rakes in $7; at $200 the government rakes in $14. You lose. Government wins.
There are no heated debates. There are no unpopular tax votes. Politicians don’t have to campaign on the need for more revenues. It’s the perfect tax: Just inflate prices and people’s incomes will eventually work their way to Government.
Meanwhile, the public is none the wiser.
As an investor, knowing this though, you can now chart an investment course based upon a policy of inflation. Your goal now becomes to exchange your paper money or digits-printed-on-your-check for things that can’t be printed like energy, natural resources, commodities and precious metals. It makes no sense to go into paper-y stocks like banking, brokerage, insurance, and mortgages.
So maybe the guy in the Wendy’s wig is right after all… invest in potatoes.
http://kob.com/article/stories/S249459.shtml?cat=500
This was fantastic!
That’s how Republican Presidential Candidate Ron Paul must have felt in a recent debate when he said inflation was the hidden tax.
And before I go on, so you gentle readers don’t get mad at me, I am neither endorsing any presidential candidate nor advocating that men wear pig-tail wigs. So, moving on… .
When Ron Paul said inflation was the hidden tax, I yelled at the screen, “He’s right! Follow up: This is a key comment!” Instead the moderator, other candidates, and the crowd just stared at him and probably just wanted a baked potato with their cheese burger.
But, if you understand the large implications of what he said, then government policy clears up for you and you will become a better investor. Here is why.
First, you gentle readers already know that everything government does is done via coercion. Governments do not earn anything. Governments do not make products or create wealth. Taxes are levied, fines imposed, regulations and rules implemented by fiat and decree.
And, while government is obviously necessary, there is always a tension between the citizens and their government… especially if government pushes too hard with respect to taxes. That is why taxes via inflation are so popular in the back rooms of power and why Ron Paul was warning about them.
Let me explain.
Let’s just say that because of inflation the price of an item goes from $100 to $200…and the sales tax on that item is 7%. Well, when the product is $100, the government rakes in $7; at $200 the government rakes in $14. You lose. Government wins.
There are no heated debates. There are no unpopular tax votes. Politicians don’t have to campaign on the need for more revenues. It’s the perfect tax: Just inflate prices and people’s incomes will eventually work their way to Government.
Meanwhile, the public is none the wiser.
As an investor, knowing this though, you can now chart an investment course based upon a policy of inflation. Your goal now becomes to exchange your paper money or digits-printed-on-your-check for things that can’t be printed like energy, natural resources, commodities and precious metals. It makes no sense to go into paper-y stocks like banking, brokerage, insurance, and mortgages.
So maybe the guy in the Wendy’s wig is right after all… invest in potatoes.
http://kob.com/article/stories/S249459.shtml?cat=500
This was fantastic!