To the editor: I, along with millions of other Americans, just received a “stimulus” check for $600 from the federal government, and I’ve read that there may soon be another in the amount of $2,000. Federal debt is closing in on $28 trillion, spending plans have been proposed that will add trillions more, and the consensus seems to be that there is nothing to worry about because the U.S. government has access to the printing press.
So, I have to ask: If the government can create money out of thin air without consequence, why are we taxed? If government can create wealth, why doesn’t it?
Because it can’t.
Wealth — all those goods and services for which money is the medium of exchange — is not created by government, but by individuals acting alone or in concert with one another, and government can only appropriate and redistribute. Government can, of course, give the appearance of wealth creation by printing pieces of paper or adding 1s and 0s to digital ledgers, but they are as worthless as a pile of Treasury notes on a desert isle if there is nothing to trade them for.
An increase in the supply of money is the classic definition of inflation. As more and more money is pumped into the economic system, price inflation inevitably follows as more and more dollars chase an always limited supply of goods and services. Even if goods and services were increased, so that prices appeared to be stable, that would only mean that prices were not allowed to fall as productivity climbed.
At some point, the government will be forced to either raise taxes and/or cut spending (and if you think only “the rich” will be affected, I’ve got a bridge in Brooklyn to sell you), or it can continue to try to “print” its way out of its financial difficulties. And as more and more “money” enters circulation, we could end up in a very nasty period of hyperinflation. Just ask Venezuelans, Zimbabweans and Germans how that turns out.
Michele Alice, Williamstown