Being involved with town, local, school, and state budgets and spending since the early 1980s, and having a household and business budget all these years, it’s really frustrating to see the numbers rise annually.
It’s also saddening to see townspeople, taxpayers, citizens, voters, often neighbors argue, debate, and bicker, sometimes bitterly, over increases, while trying to set priorities.
It’s time to name the real culprits, and call them to task: It’s our very own federal government, more specifically the Federal Reserve and the U.S. Treasury.
In simpler days our fiat money was backed by gold, and silver. Remember our silver coins? Our fiat money supply was detached from its gold backing in 1971+/-, by President Nixon. Since then, the inflation of the money supply (called M1 by economists) has continued. That is, dollars are created from nothing, either as printed paper bills, or lately, as digits on a computer. The Federal Reserve banks loan this new money out, often to other banks, or sell bonds, sometimes to other countries, and, presto! It’s in the system, more money. What happens when the supply of any thing increases? The value drops. Our dollar is worthless.
Every year we have a federal deficit, money spent we don’t have, nearly every year since Nixon, (Clinton missed a few) is inflating the money supply by that amount. Remember quantitative easing after the 2008 recession, presto!, trillions of dollars from nowhere. Congress just approved allowing the deficit to more than $30 trillion (30,000,000,000,000)!
Just recently, the $2.5 trillion pandemic relief package. Presto! From nowhere to our money supply. In fact, in the last 24 months (as of May 2022), the Federal Reserve has added $16 trillion to our M1 money supply. Presto! Nothing was cut from the current federal budget. No taxes were raised. Our dollars have lost value.
Yes, our GDP has expanded, now around $18-20 trillion, which softens the effect. But just look back at what a dollar could buy in 1970. How about even 2000? Look at prices rising now.
Don’t get mad at your selectperson, school Board member, or state representative: it’s not their fault. It takes more dollars each year to buy the same thing.
Instead, call your Congress person and tell them: stop spending money they don’t have! Get mad, demonstrate, write letters, and send emails. Tell them to cut the federal budget and stop deficit spending, or else; Presto! Look for a new job!
Your Neighbor in Fiscal Responsibility,
Pete (P. Forrest) Tracy
FMI: www.thebalance.org, then search “inflation.”