Friday, May 29, 2009


In The Obamanomics Electric Kool-Aid Acid Test RS McCain uses a very scary term; stagflation. Those in my age group, I’m fifty-one, can think back to the 1970’s and 1980’s, and remember how incredibly painful stagflation was.

Stagflation is the term used to describe a period of high unemployment coupled with high inflation. Originally it was thought that high unemployment and high inflation were mutually exclusive. It was reasoned that if fewer people were working demand for goods and services would fall and result in lowered costs (deflation) and if more people were working demand would increase and prices would rise (inflation). Unfortunately, there is a third scenario, stagflation, caused by external forces; for example, the price of oil increases bringing with it an increase in the price of gas at the pump, and internal forces; an increase in prices caused by the government’s monetary policy.

The most common way that governments cause inflation is through increased taxes. The current administration has promised that ninety-five percent of the population will not see their taxes increase. I believe the administration is being cosmetically truthful-most people will not see their income taxes increase. However, the administration has a social agenda that in order to fund that agenda a great deal of money must be sucked from the private sector and transferred to government coffers. In other words, redistribution.

This will be accomplished by instituting a value added tax. The insidious and patently dishonest aspect of a VAT is that you don’t see it; it simply appears one day buried in the cost of goods and services. At the same time, the administration is ready to fire up Cap and Trade. Estimates of the cost of Cap and Trade to the average household range from $1,600 to $3,300 a year. This is government mandated inflation during a time of high unemployment.

The administration’s monetary policy will be borne disproportionately by the lower and middle classes and will force citizens to become dependent on government for their very existence. The result will be Europe. Not the Europe of Gwyneth Paltrow and George Clooney. The Europe of slums, chronic high unemployment and despair. This is not that any freedom loving citizen should allow the government to take.

However, many get their information from the MSM. The MSM no longer functions as an independent watchdog, preferring instead to act a quasi-branch of the administration. This all but guarantees that the administration’s agenda will be in place before most of the citizenry is aware of the implications.

No comments: