Baseball Card Inflation: The Tax Our Founders Hoped to Avoid

If you believe wages keep up with inflation you are wrong. Inflation is a government tax. When the government prints money, then is the first to spend that money, it reduces the buying power of the money we the people have in our wallet. But because the government is first to spend their newly printed dollars in the market place, the government gets the full benefit of spending dollars that are valued higher than they should be. And destabilizes the market place.

The rule of inflation is: He Who Spends First Wins; He Who Spends Last is Taxed.

This is how it works. This is how we the people who spend last get taxed. Think of baseball cards and a circle of baseball card collectors. All the collectors are gathered one evening at the house of one of the collectors. The homeowner’s name is Uncle Sam. Let’s say among the cards traded are 10 rare Babe Ruth baseball cards valued at $1,000,000 each. Ten identical Ruth cards. The only 10 in existence. These are traded this evening among the circle of card collectors along with lesser valuable cards. No other baseball cards are allowed to enter or exit the house during the evening except for those cards the collectors bring into the house initially.

Of course, the baseball cards represent money because each card has an agreed value. This is what economists call a market with monetary stability. There is confidence in the system. Confidence that fair trade between two parties can proceed.

Remember we only have 10 rare Babe Ruth cards. Let’s say Uncle Sam discovers an 11th rare Babe Ruth card in his attic. Lucky Uncle Sam. He tells no one that he has found an 11th rare Babe Ruth card. Of course, now that there are 11 of these cards in existence, the value of the other 10 Ruth cards will decrease a bit. Not much, but some. Clever, Uncle Sam tells no one of his discovery. He trades his 11th Babe Ruth card at full price ($1,000,000) for several other baseball cards. He trades with a collector who simply assumes Uncle Sam’s Babe Ruth card must be one of the 10 in existence. The collector is ignorant of Uncle Sam’s secret.

Later that evening, Uncle Sam returns to his attic and finds yet another and another Babe Ruth card. Thirteen rare identical Babe Ruth baseball cards are now in existence, but only Uncle Sam knows of the increase. As before, Uncle Sam returns to the trading circle and trades—or, spends if you will—his new-found Ruth cards at full price to unwitting collectors, keeping well his secret of the new-found cards. Uncle Sam returns to the attic again and finds two more Babe Ruth cards. He spends those Babe Ruth cards again in trade with unsuspecting collectors for full price.

Soon, one of the collectors realizes there are more than 10 rare Babe Ruth cards in circulation. He is holding one of the Babe Ruth cards, and tells no one of the increase in supply of the Ruth cards. He tells no one because, if he did, he knows he will not get a full $1,000,000 for the Ruth card he holds. The wary collector trades(spends) his one and only Ruth card. He spends it as Uncle Sam did at full price to one of the other 8 unsuspecting collectors.

Soon, another one of the collectors realizes there are more than 10 rare Babe Ruth cards in circulation. He presently owns two Ruth cards. He keeps his mouth shut, and quickly spends both of his Ruth cards at full price to the remaining 7 unsuspecting collectors. He has to spend it quickly before the others realize the value of Babe Ruth cards are no longer worth a full million dollars each.

And so on. Eventually all 10 collectors realize there are more than 10 rare Babe Ruth cards in existence. Only Uncle Sam knows the true number of Ruth cards in circulation.  Because the cards are more plentiful than earlier perceived, the value of each card goes down. If the original 10 cards once traded for $1,000,000 each, now the value of each card will be reduced according to the number of cards now in existence. We now have a total of 15 rare Babe Ruth cards in existence. Consequently, the new value of rare Ruth cards is approx. $666,000 each.

In economics we say the supply of rare Babe Ruth cards has “inflated” or increased. Consequently, the value of each card has decreased. Those who are aware of the inflated supply of Ruth cards quickly spend their Ruth cards on unsuspecting buyers. Eventually everyone figures it out. But, the rule remains: He Who Spends First Wins; He Who Spends Last is Taxed. In other words, he who spends inflated dollars first(the guy with the printing press, the government) buys goods and services in the market place with over-valued money. Those who spend last are ripped off. And because our hard earned dollars are property, inflation is a subtle but real form of property confiscation by the government. A tax. It’s a tax because whenever the government spends money, it is our money—the taxpayer’s money—they are spending.

Inflation is not an increase in price for a loaf of bread. The increased price for a loaf of bread is the consequence of inflation. Inflation is the increase in the supply of dollars being printed by the government. The grocery store that sells you that loaf of bread is the 9th baseball collector in our example above. We the consumer are the last, the 10th, collector in the example above.

Inflation is a secret tax. A dirty little secret our elected representatives hope we don’t figure out. The dirtiest of secrets. A secret that governments around the world and across the ages has suffered on its people time and time again. It’s a secret hiding in plain view. The tax of inflation is hidden only by our ignorance and an education system whose progressive agenda perpetuates our ignorance.

Our money and income are our property after all. If I’m going to be taxed I want the tax clearly printed on my pay-stub, income tax return, or purchase receipt. Inflation tax is the worst kind of tax for we the people simply because it is the favorite tax of the government.

The terror of inflation was not lost on our Founding Fathers. At the time our Constitution was drafted and debated, our Founders had hoped to spare our nation the ongoing crime of inflation via money printing. And they knew exactly how to do it. Allow no more printing of paper money. Only gold and silver coin was to circulate as money in the U.S. You can’t print gold and silver. Thus no inflation. This provides a stable market place and protects us from the ravages of government.

Are gold and silver coin a practical option today? Perhaps. At the very least, US dollars must be backed by something you can’t print—gold and silver.

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