If you put $1,000 in your piggy bank in 1960 and took it out to spend in 2000, you would discover that your money had, over time, lost 80 percent of its value.
Despite all the political rhetoric today about how taxes won’t be raised except on “the rich,” inflation transfers a percentage of everybody’s wealth to a government that expands the money supply. Moreover, inflation takes the same percentage from the poorest person in the country as it does from the richest.
That’s not all. Income taxes only transfer money from your current income to the government, but they do not touch whatever money you may have saved over the years. With inflation, the government takes the same cut out of both.
It is bad enough when the poorest have to turn over the same share of their assets to the government as the richest do, but it is grotesque when the government takes a bigger bite from the poorest.