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Will 87,000 new IRS agents help inflation?

by Lear Capital EditorialAugust 11, 2022

“Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” Milton Friedman 

Inflation is not JUST money printing but also a factor of supply and demand. Prices are a signal of how many dollars are chasing how many widgets. If dollars are more or less in equilibrium to widgets, there should be price stability. If your supply of widgets increases, you can get away with a commensurate increase in money supply and in theory maintain stable prices. That’s a balancing act central planners are generally bad at, but it doesn’t stop them from trying.

When you point out the profligate spending of the current administration, you are likely to be met with what-about-ists who point out (correctly) that President Trump started it. He did. Rightly or wrongly, he started all the pandemic aid programs that Biden continued and accelerated. It was never enough aid either. It never is. As soon as Congress finishes patting themselves on the back for saving America with one massive spending bill, they step off the podium to go to work immediately on the next. It has always been thus with government spending. But yes, President Trump got things started with the CAREs Act back in April 2020, two more rounds of stimulus checks and various pandemic relief measures followed. I don’t believe he had any intention of one emergency measure turning into a continuous churn of trillion dollar spending and stimulus bills but here we are.

And yet, for all of Trump’s spending, inflation under Trump never ticked higher than 2.9%. Why? Because temporary lockdowns aside, he didn’t couple his spending with a permanent throttling of American manufacturing and productivity, as Biden has. Trump increased productivity in the United States where Biden has restricted it, especially supply of oil and gas, which makes everything more expensive. President Biden declared war on US energy on day 1 and has in general hampered US business with more and more red tape. Trump had drastically cut regulations and red tape; Biden put them back. The result is a double whammy dollar/widget mismatch. An economy flooded with newly created money AND fewer goods available to purchase.

Under Biden we’ve seen shortages of everything, from baby formula, empty gas stations, supply chain disruptions and increased bureaucratic red tape. That’s why inflation is officially around 8.5-9%. Neither stimulus checks nor taxation and tax enforcement will magically make enough of those goods suddenly appear again. Americans are simply going without, and it is all part of the agenda.

Central to the agenda is climate alarmism, which ripples into everything. We have a war on energy, causing gas prices to soar. We have a war on cows farting, which is materializing into farm destruction and eventual food shortages. And as the economy shrinks, history shows us the appetite for tax revenue will get increasingly ravenous and desperate.  

Supply chain disruptions will continue, red-tape is on the rise, government spending is increasing, but an army of IRS agents to better enforce the code are supposed to sop up excess liquidity and reduce demand, i.e. make more Americans too poor to buy stuff.

That is the calculus on the table.

In the long run, a system based on destruction rather than production collapses on itself. It is not destined to last. But there could be substantial pain for those who refuse to see the writing on the wall. There are things you can do to prepare. You can set yourself up for success on the other side. Precious metals can be part of that strategy.

Central to the destruction of the status quo is the dollar. Other forms of currency could become more functional as the dollar is eroded. Maybe we will even see the return of scrip or even gold barter at the community level… 

Precious metals have functioned as currency and a store of wealth for thousands of years of human history and they can bridge the gap for your financial future through the coming disruptions and economic pain. Wouldn’t it be smart to put some in your home safe for peace of mind? Or how about converting a traditional IRA into a self-directed precious metals IRA? Keep the tax benefits while ditching the dollar – for some of your portfolio at least.

Central banks and billionaires are loading up on gold, silver and other tangible assets. Shouldn’t you as well?

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