The Hidden Tax we all pay!

Last Wednesday, Nov. 3, the Federal Reserve announced it would be implementing a new round of quantitative easing to the tune of $600 billion. Most people do not even understand what quantitive easing is, much less what it will do to their purchasing power, retirement savings or job security.

Quantitative easing means “the printing of money” and it always causes inflation. No amount of tax planning can keep a taxpayer from paying this bill. Inflation is a hidden tax. It is the most regressive of all taxes since those who earn a limited income do not have the means to hedge themselves against inflation.

Why is Ben Bernanke and his Federal board members doing this then? Frustration is the word that most comes to mind. Economics is a theoretical science that is really more akin to psychology than mathematics. Unfortunately for everyone involved, there doesn’t seem to be a grown up involved who knows this.

The U.S. is a market-based economy. Businesses and people trade their goods and services for economic gain. The U.S. government gets its money to provide services to its people from this trade. When a business owner cannot predict major factors such as how much their tax bill is going to be or how much the currency they are paid in is going to be worth, it slows down the pace of business.

We had a major election just last week and the voting public clearly sent the message to Washington that it did not like the changes elected representatives have been making and wanted it to stop. The results were that more than 60 of these “supposed representatives” lost their jobs.

Being in business is an incredibly risky proposition. Circumstances change and businesses react. There is enough change in a stable economy for plenty of businesses to fail and succeed. When politicians, or in the case of the Federal Reserve, political appointees, decide it is time to change the rules our economy contracts with the corresponding increase in the unknown. It makes sense.

This new round of quantitative easing is exactly what voters do not want. It is not what business wants and it will cause our economy to contract further causing more social unrest. It would be wise for voters to talk with their representatives about restricting the powers of the Federal Reserve, or even better, eliminating the Federal Reserve all together.

About this Author 

John Beidle is an enrolled agent who specializes in helping entrepreneurs, small business owners and real estate investors pay the least amount of tax as legally possible.

About The Author

John Beidle

John Beidle is an enrolled agent who specializes in helping entrepreneurs, small business owners and real estate investors pay the least amount of tax as legally possible.

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