War and Inflation!

“For roughly five years, the Fed has exceeded its 2 percent target for annual inflation,” writes the New York Times.

It cites Beth Hammack, president of the Federal Reserve Bank of Cleveland, and her concerns about inflation. “The escalating conflict in the Middle East represents a new inflationary risk that Ms. Hammack is watching closely, she said in an interview. Higher energy prices could translate to a more persistent inflation problem for the Fed… although it is far too early to know what the overall economic impact will be, she said.”

War and inflation are blood brothers. They travel together hand in hand. If need be, the Federal Reserve is always willing, under both Republicans and Democrats, to just print the money for its elective regime change wars, like Iraq and Iran.

When the government collects the money in taxes to pay for the warships, aircraft, bombs, and missiles, the construction of foreign bases, the manpower, and other means of destruction, the taxpayers footing the bill are forced to restrain their own spending a like amount (which in the case of warfare can be considerable). Individuals accordingly must reduce their own consumption, investment, or savings a like amount.

“The citizen buys less,” in such cases, says Mises, “but the government buys more.”

But taxes are an irritant to the people, so in our modern era the State has learned to pay for its wars with inflation. Rising prices generally appears after the fact and are little understood by its victims.

The new Federal Reserve appeared on the scene more than a century ago, just in time to help pay for World War I with a massive credit expansion. The lion’s share of the war’s costs was paid for by inflation rather than taxation. Consumer prices for Americans doubled as a result, amounting to nothing less than a stealth war tax for a war the people did not want.

Bear in mind that in addition to direct costs, indirect costs like the rising price of oil that are already rippling through the economy. Warfare’s demand for military commodities (like silver) will contribute to higher consumer prices across the board.

In other words, buckle your seat belts for more inflation, check your gold and silver portfolio, and speak with a Republic Monetary Exchange professional to be sure that you are prepared for the rough road ahead.