The Worst Tax: Who's Responsible For Skyrocketing Food Prices?
Government is always limited to how much it can tax the people directly. People will ultimately rebel against high taxes. So, as a workaround, a monopoly was granted to The Federal Reserve. If the government wants money, The Fed can just print it. The people will still pay for this, of course, but not directly. They'll pay when they see rising prices in the marketplace. The government can just blame something else as the cause. Inflation is the worst tax of them all.
Hello, everybody, and thank you for tuning in to the Liberty Report.
Today, we're doing audio only due to a few problems in our studio, but I'm sure we'll be back in full force next week.
But we are going to proceed, and we have our co-host, Chris Rossini, with us today.
Chris, welcome to the program.
Great to be with you again, Dr. Paul.
Very good.
We're going to be talking about important things because it affects every American and every business person and anybody interested in politics.
We're going to be talking about taxes.
And I'm going to bring up the subject of the worst tax ever, and it's not the income tax.
That one's pretty bad.
I've ranted against the income tax for a long time.
That establishes a principle that the government owns everything we earn, and then they allow us to keep a certain amount.
So it's a positively horrible tax.
But I've often also said that taxes are bad, and we have to deal with them, and we're going to deal with the worst one.
But the real problem is the size and scope of government that the people endorse and tolerate.
And that once you spend the money and the people allow for it, then they will find a way to pay for it.
Sometimes it's direct taxes, like an income tax, sales taxes, inheritance taxes, everything they can think of.
But Chris, one tax I want to talk about now, and this actually came up during the presidential debates one time about what we thought was some of the real bad aspects of some taxes.
And I considered the worst tax, the inflation tax.
And that is that when there's a deficit run-up, there's spending permitted through the Congress and the people demanding the spending.
But raising taxes is always an uncomfortable thing to do.
And it's not good politics.
It's good to promise people stuff, take care of our special interests, the military-industrial complex.
We give all this incentive and they're happy, but then there's still the bills to pay.
Well, you know, if governments were more honest, but I don't know why we should expect that, they would say, okay, you want to do ABC or there's a war going on and we should enter the war.
And what we should do is people should be taxed or they should donate their money and do whatever they want to do.
But that doesn't happen hardly ever.
What happens is the money is spent, the government goes into debt, and the government's powerful and people trust the government, and then the deficits are run up.
And then the problem is solved not by raising taxes.
Yes, some will try.
Democrats are more likely to do it than Republicans, but the Republicans do it, and the Republicans like this inflation tax, too, because it's universal, and the people don't complain, sometimes because they don't understand it.
But nevertheless, it gets passed.
So then the authorities in cahoots with the Federal Reserve, they say, oh, we spent $10 billion last year.
Now we have to talk about maybe it was $10 trillion.
We have to be careful.
So what do we do?
We just can't go and raise more taxes and think everybody's going to spend the money.
What we do is we get the Fed to print the money and they pass it out to the banks and they pass it out and pay all the bills.
The military-industrial complex gets taken care of.
The welfare state gets taken care of.
The people who are the special interests that deal with government, the banking system in itself, they're all quite happy with this.
And it sort of, you know, is a very popular thing, or we wouldn't get this far.
So it is a tax, though.
That's how they're paying their bills.
People don't think of this as a tax, but it really is a tax.
And that's how they pay the bills by deceitfully deflating and devaluing the currency.
And they complained here in the last several years.
The Fed and others keep complaining.
Well, really, what we want to do is reduce the real debt that we owe.
So we have to devalue the debt by printing more money.
So, Chris, you heard it just like I did many, many times.
They kept saying, well, we need to do is at least get the prices going up and deceive the people by 2% a year, steal that much.
And of course, our beef was, yeah, they're going to get the pretense that they can't get there was a farce.
And I always argued, and that is, you know, when the time finally comes, the government and the people are going to end up that the bill is much greater than they ever thought because that 2%, once it's reached, it'll be ignored because they'll be talking about three and four and five.
And Chris, I believe you have an opinion about this that just maybe inflation is raising its ugly head.
That's right, Dr. Paul.
And that's why we're focusing today on food because that's a big one.
But, you know, government and the Fed have created a very big problem this time.
Their response to COVID was terrible, but then financially, they handed out trillions and trillions of dollars.
And it's not like the government is in the black and they have all this money to hand out.
They don't have money.
In fact, it would be a step up to not have money.
It's even worse.
They're 28 trillion in the red.
So how does someone or some organization that is 28 trillion in debt hand out trillions of dollars?
Like you said, Dr. Paul, the Fed just prints it up.
You know, most of it went to the politically connected, and then the people got $1,400 checks.
So the Fed counterfeited money to handle all this.
And as Dr. Paul has pointed out many times in the past, they can't control where all this money goes.
You know, it's gone into the housing, there's another bubble again.
The stock market, there's a bubble again.
And, you know, unfortunately, most people, because they don't understand, think that these are good things until the bust arrives.
But when it gets into consumer goods and food and those prices start to spiral upwards, now they've got a problem on their hands.
It's one thing to take money out of people's pockets.
It's another to take food out of their stomachs.
And that is what is ultimately going to happen.
Central planners create these unsurmountable problems for themselves that they cannot fix without a very big economic crisis.
Very good.
You know, the people don't quite understand, and that's part of it.
It also looks like a free lunch for them, and they're satisfied with it.
People Accept Inflation Over Income Tax00:06:09
And the very big people who have a lot of influence, they benefit tremendously.
But others will say, well, this inflation, these prices going up, is just a technical factor.
Unions demand higher wages than they deserve.
Business people demand and get more higher profits.
And they just go on and they have these excuses.
Farm prices, I'm sure they'll come along and say, well, farm prices are going up because of weather conditions.
There's always an excuse, or there's a skirmish, there's a war.
We have to do it for national defense.
Whether there's any threat at all, there's always, no matter what they ask for, there's always a national defense reason for doing it.
I think the more important thing for me is the morality of the whole thing, because I see it as an outright theft.
And it's a confiscation of wealth.
It's something the founders detested.
And yet at the very beginning, we endorsed this idea.
Even in the Revolutionary War, they had the runaway inflation with the Continental Dollar.
And, you know, by the time of the Civil War, where they had the greenbacks, even the Spanish-American War, debt accumulated and inflated to some degree, but it keeps going and going.
And so to me, it's really a moral issue.
And I think it emanates from the fact that we as a people drifted a long way from a question the founders asked and gave an answer to and precisely define the role of government.
Because if you're going to have some sort of rules and regulations or limitation on governments, you have to say, well, what is the role of government?
Is it a role of government to make sure that everybody gets three vaccine shots a year, even if they're not necessary, and get them involved in medical care, education, and everything under the sun?
So that question is asked, I guess, because they accept the idea that the government should be doing everything.
They should make us safe and secure and do whatever we need to do to make sure that nobody ever attacks us.
And right at the moment, we're being told that the real enemy is both China and Russia, and therefore we have to punish them before they attack us, that sort of thing.
So we use sanctions and tariffs and sanctions on people to punish.
So this is something we don't ask.
And of course, for those of us who believe in limited government, we ask that question because we want to defend the position that the role of government really ought to be limited.
And that's what the Constitution allows, is limitation of government power.
And it should be limited to protection of liberty for the purpose of letting the creative energy come from individuals to take care of themselves, both in the sense of physical security and economic security.
We've drifted from that because very few people are asking this question.
So there's an endless demand for more and more government.
And unfortunately, the tax that they have accepted is just following up on the immorality of doing something they shouldn't be doing.
And that is use fraud and deceit and let the people know that don't worry about it.
We have a modern monetary theory, which is just a replica of the old monetary theory, which has been around for a long, long time.
And that is the people will accept inflation a lot easier than they will accept the idea of an income tax.
And as bad as the income tax is, if it were used in a more decent way, the people would know.
And of course, the people would revolt against it because it would be so outrageous.
But no, those questions aren't asked.
So I'd like to continue to work on this subject of trying to get people to ask what could the role of government be in a free society.
And I think that would help us sort all this mess out.
Right, Dr. Paul.
Unfortunately, today, so many people, they constantly run to politicians asking them to do something.
And, you know, I fear that that may happen because we're noticing that even the mainstream media is covering how food prices are rising rapidly.
I can see it in my food bill.
I read people on Twitter.
They're saying, what's going on?
Why are prices rising?
Well, it could get much worse if the people continue to go to the government.
Now, we've got to remember that the government and the Fed, with their counterfeiting, created these high prices that will continue to go up.
Well, what if people, and this is very possible, go to politicians and complain, prices are high, prices are high, please do something.
Well, the government will do something.
They'll say, okay, we'll help you.
How about we tell the businesses to sell the products for less than the market price?
Price controls will force them to sell below the market price.
Well, what happens when you go to the supermarket now and something with a market price of $2 is marked down, is on sale for $1.50 or something, or 50 cents.
By the time you get there, the shelves are empty.
People grab it all up.
So price controls will lead to shortages.
You know, we see this in other nations all the time.
They stand in line, stand in line, because there's price controls by government helping them, and that leads to shortages.
So it could get even worse than that.
People can say, Mr. Politician, now there's shortages.
Please do something.
Okay, we'll do something.
How about we ration the products and just look what they did?
And that's all arbitrary, what they did during COVID.
25% couldn't be open.
You know, how do they come up with that number?
It makes no sense.
So they can say, okay, well, people with the last name that begins with R can buy on Mondays, Wednesdays, and Fridays.
That's how crazy it can get with all this government help, with high prices, price controls, and then rationing.
Inflation's Arbitrary Rationing Era00:10:56
And then the kicker at the end is after all this government interference, they will have the audacity to say that this is the problem with capitalism and freedom, and we have to abolish this stuff.
You know, the real answer is to please stop going to government.
They will not solve the problems.
Right.
You know, one thing that is happening now is happening around the world all the time.
It's used for those who want to move toward a socialist system all the time, and that is the maldistribution of wealth.
So when you have a system like this, the first thing it does is when you can spend money and not worry about raising income taxes, is the fact that people have to be satisfied with what they're getting.
But then, who gets what?
That's a big question.
So then there's this multiplication of the lobbyists.
There's a right to petition our government.
Usually it was thought that originally that petitioning government meant they wanted their liberties protected and local governments protected.
But now lobbyists is just epidemic.
Now there's an epidemic that we ought to deal with.
But the lobbyists there, then they fight over it and fume, and then it becomes a political partisan thing, even though they don't really change or ask the right questions about changing the role of government.
Because both sides endorse the warfare, welfare, state, and all the special interests.
And believe me, the richer they are, just look how big business and tech right now are seen essentially part of the government.
They seem to do the dirty work for government.
But when they have this system set up, the lobbyists thrive and they want the money, but they also want the power.
And I think that's what's happening now because it is so bewildering.
And the question has been asked many times over the years.
Why did business go with the fascists in Europe and different places?
Why did they do this?
I thought they believed in free enterprise.
But no, they see that there's some financial benefit to it.
They become partners with government.
And then also they like the power.
People like the power.
Sometimes that's all they that's the most important thing to them.
There are some politicians that they just love the power.
And we certainly saw that breaking out all over this country with this artificial attack on a virus and the lockdown.
They were just doing this to get more and more power.
But business people work hand in glove with big banks, the spending apparatus.
And guess what?
The poor get poorer and the rich get richer.
And Chris, you started off with talking about, you know, food prices.
Guess what?
Bill Gates is not worrying about the price of coffee or the price of wheat.
And how about the people now that are homeless in this country?
They have a few things to worry about.
There's a lot of people that just are not getting by with this system.
So the very wealthy, if prices go up, you know, we predict and assume they're going up much faster than 2%, and they're going to go a lot higher because all you have to do is look at the deficit right now in the national debt, $28 trillion, and all this money gets printed.
So they're going to continue to do this, and the people are going to support it as long as they think they're going to get a check in the mail.
So the things has been turned on its head that the government is there to redistribute wealth and power and things, the things will work out.
But they should really talk about what is it like to live in a free country?
Should it be better to look at what happened when we were a much freer country compared to a country like Venezuela when it has come to its bitter end with excessive amount of government and socialism?
But I think the shortcut is always too tempting, and the people take it and it's endorsed by, you know, the university professors who are supposed to know everything.
And unfortunately, they have infiltrated the minds of so many people.
For instance, Chris, of all the people, the politicians, other members of Congress that I met over the many years in Washington, I never met only a couple, maybe a handful, that had any part of the understanding of what a free market economy, which you cite all the time, that they don't have any understanding of that.
It's all been taught Keynesian socialist economics, and they believe this is the way it's supposed to go.
So it's a major problem because right now what we're witnessing is coming to an end.
And they've been able to get away with the bubble formation with just printing the money.
But this whole system comes to an end when all of a sudden, you know, prices become so outrageously high that people can't tolerate it.
And then the system literally breaks down.
It'll be more than the lower 5% people who are really in big trouble.
The whole economy can crash.
And sometimes it even involves those very wealthy people who have been living off those other people.
And then it becomes a real revolutionary struggle.
And of course, I believe that that's a possibility, but also the reason that we try to work to prevent that by introducing the ideas of liberty to people and find out, you know, we'd all be better off if we accepted some of the basic principles that the founders made an effort to give us.
But right now, the warning is when you see prices going up, and you're going to see a lot more here in the next several years, it's your tax that you're paying.
It's the hidden tax, the deceitfulness of the tax to pay for wars and intervention overseas that we don't need to be doing, paying for the welfare that goes to business people more so than the people on the street.
So we have to get the people to realize that they cannot find the answer and saying, we need more government handouts.
Just tell the Fed to print the money and we're all going to be okay.
We don't believe there's any bubbles out there because, you know, the professors have told us there aren't any bubbles.
So therefore, we should be reassured that we can continue to do this.
Very good, Dr. Paul.
I will finish up with a sense of optimism.
You know, when I look over what has happened over these last five years and the results, you know, I would say tens of millions, maybe even half the country, have become wise to what is actually going on.
I even see it in my small circle of people that are not political, and all of a sudden, you know, they're noticing that government is our government is not some benign thing that you can just ignore in the background.
So that is up to that's a reason to be optimistic that people are waking up.
They may not have all the answers, but they're at least waking up that something is very wrong.
Now, as you pointed out, and it is inevitable, once prices really get out of hand, you can be sure that everything else will be blamed besides the Fed.
I mean, if you think it's hard to criticize Fauci or the WHO, the Fed is beyond even them.
Who knows the excuses that they will come up with?
Perhaps they'll pick a commodity and say, oh, it's the oil.
That's the reason why everything's going up.
Or they'll pick a foreign country and blame Russia or China.
Or they may pick stuff that's just totally off the wall, like it's all climate change's fault.
Our plea to you is to always stay focused on the source, on the root of the problem.
It's the Federal Reserve.
And to quote the great host of this show, the solution is ultimately to end the Fed.
Very good.
That's a good statement, Chris.
And I'm going to follow up and give my last statement now in trying to answer a question.
So, in spite of the fact that we know what they're doing with the money supply, and people understand that and they have concern, but they'll come back with a statement and they say, Yeah, but the inflation is there.
And we're warning people that there's deflection and there's going to be more.
But other people will say, Well, if you look at the money supply increases, it's been so unbelievable that we should be seeing a lot more prices going up.
We should see gold a lot higher if you do any of these calculations.
Well, the reason that isn't a bother to me that doesn't contradict anything that Austrian economics teaches because prices are set for various reasons.
And we emphasize so much the number of dollars that are printed, the money supply going up, the values of currency, and prices go up.
But it's not like you can write a chart for it and say you double the money supply next year, and prices are all going to double and the wages are going to double.
Nothing like that.
And that's one of the reasons why it's so evil.
That some people get all the benefit, and the other ones get the bills.
They get the higher prices.
So the higher prices are unpredictable.
But when people want to tell us that, well, there is no inflation to worry about.
Well, I think it's a misconception on the definition of inflation.
I consider, as is emphasized in Austrian economics, is that inflation is the increase of the money supply of a fiat currency when the government's just printed to roll, you know, to take care of the debt.
So, yes, there's a lot of inflation if you look at dollars.
And what they're saying, though, is they're confused because they'll say, well, the CPI is not going up.
But more and more people now know that people lie, or governments lie to us.
And they're very deceiving on what the CPI is doing.
And there's been more revelation of that.
And the CPI is not a dependable measurement.
And the other thing is, say, well, why doesn't gold go up?
Well, there's a lot of rigging in gold prices.
There's rigging in silver prices because there are people who benefit from it.
But ultimately, you know, the best example of not trying to figure out about rigging of prices, they rigged the price of gold at $35 an ounce from 1933 up until 1971 at $35 an ounce.
And it was harmful, but it also gave license to printing a lot of money.
Rigging And Devaluation00:04:38
And then finally, that whole system broke down.
So you couldn't argue back then that there was no inflation because there was a lot of debt and a lot of money supply increases.
But right now, it is astounding.
It's probably more astounding than ever before in our history when you look at this $28 trillion national debt.
That comes out $85,000 per person in the country that it has an obligation.
Of course, it will never be paid, but it has to be liquidated.
The debt will disappear.
But under these circumstances, the only way they can significantly reduce the real debt or have it disappear is the devaluation of the currency.
And there's no easy effort.
You can't turn the switch off.
The people now are totally addicted to this money supply increase at a certain rate.
And that's what's been happening these last couple years.
Just think we were in an economic problem before COVID.
But COVID, you know, it was just a convenient excuse that they could talk to people when a crisis, a crisis is coming.
You know, and therefore the people will say, okay, there's a crisis.
We have to go along with it.
And what did they do?
They pumped out the money like crazy and they attacked our civil liberties.
So, and that's going to come to end because at the rate we're going, people are going to get pretty darned upset with each other with the ones who seem to be benefiting.
And then there'll be all kinds of excuses.
The one thing that bothers me a lot about this civil strife is that it's been turned into a racial issue.
And it's grossly distorted.
And that is going to bring about very, very bad emotions.
And yet it's a consequence of bad economic policy.
And the neat part about this is if you look at this and study and look at alternatives to the system that we have, you find that it's not complicated.
It's simple.
It protects liberty.
It protects the integrity of the society and helps people get along.
It emphasizes morality.
The founders understood this and they said, you know, well, we put together, this is a me ad living for them.
And they said, if the people, if the people do not have a moral society in the future, the American people don't maintain their morality, this is not going to work.
And I think that is the case.
When you look at what's happening now from moral standards, the country's in a big mess.
So it's pretty hard to expect the bureaucrats in Washington, the money managers in Washington to all of a sudden have perfect moral standards when the people themselves don't have moral standards and they either participate or allow others to use the system for their special benefit.
And it's very disturbing to me that we see so many business people now joining the woke people, the cultural Marxists.
This whole thing about major league sports where they concoct issues and they try to solve some problems that don't exist by taking the baseball teams and moving them around and telling them where they can play or not play and how many people are.
It's a mess that can be stopped if people know and understand what a free society is all about.
And it's based on one basic principle.
Nobody's allowed to initiate aggression against anybody else.
And you can do anything you want as long as it's peaceful.
And that's a pretty good system.
You say, well, won't that make us all suffer and be poor and not have food?
No, it does exactly the opposite.
The society that we don't want is approaching.
And therefore, people should look at the two choices and say, to me, I think there's great evidence to show that liberty is a much better solution and may be the only solution to a prosperous, peaceful society.
And we ought to go in that direction.
That was the advice that we got early in our history.
And right now, there's not enough people endorsing those views.
So we, on this program and what we do at RPI and the Liberty Report, is try to get people energized to participate in convincing others that the answer to the problems we have can be found in the morality of liberty and the rejection of authoritarianism and tyranny.