'Inflation is fundamentally a problem of too much money chasing too few goods and services,' E.J. Antoni writes. 'Unfortunately, this latest piece of legislation in Washington does nothing to solve the problem.'
The result was a vast increase in the amount of money in circulation without comparable growth in the size of the real economy. All that extra money bids up the price of goods and services, a phenomenon we call inflation.
Unfortunately, this latest piece of legislation in Washington does nothing to solve the problem. It does not reduce the amount of money in circulation. Worse, it reduces the quantity of goods and services through measures likePeople often underestimate just how much energy affects the price of services that we receive and the goods that we buy. Before an item can be placed on a store shelf, it had to be transported there, whether on a train, a ship, a plane, a truck, or even all of these.
Meanwhile, natural gas is not only a widely used fuel for both energy production and home use but it is also used in the manufacturing of countless chemicals that go into making other products. Additional taxes on natural gas will make all these more expensive. Once again, the marketing around this legislation is not merely misleading, but exactly opposite its actual effects.
The higher prices that stem from these tax increases on energy will ultimately decrease the goods and services that consumers can afford. As fewer goods and services are traded, the economy contracts. In June, sky-high energy prices proved a surefire way to decrease consumer purchases. Gasoline consumption in July fell to— during the pandemic when there were mandatory lockdowns, causing people to drastically cut back their driving.
As if the energy taxes were not bad enough, the legislation provides for 87,000 new IRS agents. We’re told they’re intended to hound tax-cheating billionaires, but this is just more deceptive marketing. There are fewer than
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