July 31, 2022

Jesus Christ: Yesterday, Today, and Forever ~

Inflation is a tax on everyone, the rich and poor alike, but it is the poor who suffer most. How did we get here? An answer: there was a breakdown in the international supply chain as a result of covid. That raises the question: why are we having foreign nations make everything for us in the first place? Answer: because it’s cheaper to have lower paid employees in other countries make everything and ship it over to us. Of course this means that we become dependent upon those nations for everything. When they can’t make our stuff anymore, or the international supply chain breaks down, or they become our enemy, then we lose those goods. Then our demand for those goods exceeds supply and inflation takes off.

There is another and more ominous reason inflation is so high and persistent: government spending. Our national debt stands at 130% of our gross domestic product, or 30% more than everything in this country is worth (we’ll never pay that off). That debt has interest attached. To bring down inflation the Federal Reserve raises interest rates. As I write this pastor’s column the Federal Reserve announced it was raising interest rates another .75%. The problem with raising interest rates is that it gets more expensive to hold debt, and when our national debt is 130% of what we are financially worth, then those interest payments start cutting into our national budget. Normally we just spend more money so nothing gets cut, raising our debt even further, but since inflation is the immediate problem, spending more money will only exacerbate inflation! It looks like our greed has finally caught up with us.

In 1831, Alexis de Tocqueville, a French aristocrat, toured America to find out what made us work as a republic when all other republics before us had failed (and there were many). An observation he made was that our republic, or democracy, would only last until the people realized they had access to the public purse. Meaning that once people realized they could vote to print money and go into debt, then they would never vote to cut off their government income, and eventually the country’s economy would collapse under a mountain of debt. It’s 191 years in coming but it looks like Tocqueville’s prophecy has finally arrived.

Personal debt in this country is very high too, between all those home mortgages, car loans, business loans, college debt, credit card debt, etc., we’ve racked up quit a bill. Not all of that is a testament to greed but a lot of it is. Do I need this much house, in this location no less? Do I need a new car when the one I have is working just fine, or could be fixed at a fraction of what a new one would cost? Do I need to keep buying clothes, don’t I have enough shoes? An expensive vacation every year? Dining out as much as I do?

In addition to being selfish, greed creates a sense of entitlement and once that happens, people get hurt. The next time you’re thinking of keeping up with your neighbors, think of the extra children you could have had, or the children you could have sent to Catholic schools instead of the ‘free’ government run schools. Think of someone else’s kids you could have helped. All the houses, cars, clothes, food, vacations, etc., in the world don’t add up to that. And the next time a politician votes to spend more money on something, consider the effect that will have on our debt and inflation.

In Christ, I Love You,