Big Government Help Isn’t Helping

Ronald Reagan once said the most terrifying nine words in the English language are, “I’m from the government and I’m here to help.”

One of the biggest problems with government help is that it always comes at a cost. And the burden of that cost almost always falls on the very people that big government claims to help – the poor and middle class.

As economist Daniel Lacalle put it in an article published by the Mises Wire, “Everything that government spends is paid by you.”

There is no free money. Even for the recipients of benefits in constantly depreciated currency. Inflation, the tax on the poor.”

“Did you feel happy when the government gave you a check paid with printed money?” Lacalle rhetorically asks? “Watch now as your daily groceries, gas and power become unaffordable.”

In fact, the inflation tax is currently costing the average American household $433 extra in expenditures every single month. That comes to $5,200 over the course of the year. And who is least able to handle this sudden increase in expenses? The poor and middle class.

Proponents of big government always claim they can fund all of their programs by “taxing the rich.” This plays well in political speeches but is detached from reality. The fact of the matter is that “the rich” don’t have enough money to pay for all of the government spending. As Lacalle points out, the government isn’t handing out money for social programs from some secret reserve stash of cash.

Government takes away from existing and future wealth of the economy via currency printing, taxation, spending and debt, but math never works for those who believe extractive and confiscatory policies will work. The ‘tax the rich’ crowd are doing an enormous disservice to the citizens they pretend to support. Interventionists may use the excuse of stealing from the rich to give to the poor, but the reality is that government spending is so enormous that they cannot finance every entitlement and social program with the money of one percent of the population. Government takes from the 99 percent to give devaluated and increasingly worthless funds to 45 percent of the population, and in the process bloating an ever-expanding bureaucracy to administer it all.”

Lacalle sums it up perfectly.

“Government always takes three when they promise one.”

Huge public debt accumulation will be paid by the 99 percent via inflation, taxes, or both. Deficit spending and artificial money creation are just two sides of the same coin, dissolving the existing wealth of a nation by issuing more promissory notes. Wealth is the same, just more units of currency in circulation. Hence, prices do not rise, the purchasing power of money diminishes.”

The powers that be blame inflation on everybody else. It’s due to COVID, or supply chain problems, or Putin, or greedy corporations, or voodoo. But they need to look in the mirror to see the real culprit.

As Lacalle points out, supply shocks can cause some prices to rise. But if the quantity of money remained constant, it would be impossible for all prices to rise simultaneously. As people spent more on say oil, they would be forced to spend less on other things. As Lacalle explains, “Prices of most goods and services can only go up in unison if the quantity of currency is rising faster than its demand.”

But most people believe that government can solve economic problems. As long as that belief persists, the government will continue doing what it’s doing.

If citizens believe that government can create wealth via money printing, governments will do it, presenting themselves as the solution to the problem they created. We got our pandemic cheque and now we are paying for it multiple times over.”

The bottom line is that politicians and central bankers are not helping. In fact, they are robbing you blind in the name of “help.”

The mirage of enormous government spending and exponential currency printing is a process of expropriation. Government expands its size at the expense of the rest of the population, especially those that defend rising public expenditure programs.

Demand-side policies expropriate wealth in three ways. On the way in, by running uncontrolled deficits financed with debt, which means higher taxes in the future. Second, raising taxes to “reduce deficit.” Third, with inflation. Government weight in the economy rises in all three steps. Then, when it fails, repeat.

If you wanted more government, this is more government: Less growth, higher inflation, and poorer citizens.