The name of this act is a direct misrepresentation of the dynamics within it that contributed to inflation in the first place.
This is an opinion editorial by Andrew Axelrod, a Bitcoin educator and writer.
As every charlatan knows, the best kinds of lies have at least a kernel of truth to them. This makes them far easier to slide by. But of course, there’s an altogether different class of lie – an entirely more psychotic kind of lie.
This lie is not only untrue, but is actually the exact inversion of the truth.
An anti-truth.
Historically, this is known as a “big lie.”
In fact, the term was coined by Adolf Hitler, inadvertently describing his own tactic of telling lies so monumental that people would simply acquiesce, unable to grapple with the idea that someone “could have the impudence to distort the truth so infamously.”
It’s the difference between a child telling a fib:
“Sorry mom, I ate a cookie — or maybe two at most. But I have no idea what happened to the rest of the jar.”
and a psychotic lie:
“Mom, not only did I not eat the cookies, I know for a fact that it was YOU!”
When repeatedly confronted with such glaringly obvious anti-truths, decent people don’t know how to react. They go into a state of shock. Oftentimes, enough people will finally just shrug their shoulders in resigned acceptance and move on.
That’s all it takes for an anti-truth to carry on.
Aleksandr Solzhenitsyn put it best: “We know they are lying, they know they are lying, they know we know they are lying, we know they know we know they are lying, but they are still lying.”
In politics, there are many such anti-truths and they are used strategically to great effect, especially when it comes to hoodwinking the public into swallowing legislation that is opposite to their best interests.
It’s not surprising, unfortunately.
Bills are usually thousands of pages long and almost nobody bothers to actually read them, often including the voting bodies themselves.
There’s a running joke that if you want to know what’s really in a bill, you just take its name and infer the opposite:
The Patriot Act was in fact deeply hostile to American values.
No Child Left Behind abandoned students in favor of a stultifying, tick-the-box exercises.
The Affordable Care Act was unaffordable, as it turns out.
And now, the ironically-named Inflation Reduction Act was just signed into law.
With the U.S. unofficially in a recession and the midterm elections just around the corner, politicians have been tripping over themselves to rush through the next big stimulus.
Although they are doing their best to put a happy face on the severity of the current situation and are celebrating constructed employment figures and squabbling over definitions of recessions, the facts on the ground look dire.
The reality is, personal savings have collapsed to lower than 5%, the lowest since 2008.
This means, the average person is entering a recession without the safety net of a cash buffer.
And so enters the money printer, stage left.
The $3.5 trillion Build Back Better bill, which died last year as inflation spiked, was miraculously resurrected from the dead last month.
How convenient.
Only this time, the name was hastily changed to “Inflation Reduction Act” and the stimulus was trimmed down to $740 billion.
Despite the bill’s name, the unfortunate fact remains that it floods the economy with billions of dollars as inflation still runs hot. Take a wild guess what that will do to prices. But who would be so reckless as to pour gasoline on a raging fire?
Well, central planners in a debt-based fiat system would. Because the current system is debt based, the money supply must be inflated. Money comes into existence through debt issuance and compounds through interest. The supply of U.S. dollars has increased by more than 50% since 2020. And the rate of money expansion is only ramping up.
No matter what anyone says, the system must gorge itself on more debt to service compound interest. Otherwise, it all unwinds in a cascading debt spiral.
To be clear, this is not a U.S. problem — it’s a fiat money problem. The same and much worse is happening all over the world.
It’s no coincidence that the total global debt-to-GDP ratio is near 350% and growing fast.
In stark contrast, bitcoin proposes an alternative system; a system that makes no promises except for a fixed inflation schedule as block after block is mined like clockwork.
In a Bitcoin system, there’s no room for a 730-page bill that floods the system with freshly printed money and drives prices to unattainable heights.
The 21 million supply cap is an iron rule, almost a law of nature. This truth cannot be altered, no matter the lies.
But given that our current fiat system has a built-in, money printing requirement, money will be printed one way or another.
And those pushing the Inflation Reduction Act are happy to oblige.
Another feature of this bill is the $80 billion in funding it will allocate to the IRS over the next 10 years, with a focus on tax enforcement. This will more than double the IRS’ current workforce with an additional 87,000 new agents.
This is more staff than the Pentagon, State Department, FBI, and Border Patrol employ, combined.
Taxing Americans into poverty is certainly one way to go about fighting inflation, albeit a slightly morbid one. But why now?
For many recent decades, government budgets have not been financed by actual tax revenue.
Instead, a growing portion of the budget is financed by inflation, AKA money printing.
There’s two reasons for this:
1. It’s politically much easier to tax through inflation (via money printing) than harvesting taxes directly. It’s kind of how paying for stuff on credit feels different than paying for it in cash.
2. As discussed, the current fiat system is debt-based and has a built-in requirement for money supply expansion.
This has worked, up until now.
But as compound interest necessarily keeps growing the debt exponentially, things may start to break down. It’s just math. That’s because the price of money printing is the destruction of currency.
As currencies fail, there’s now rumblings of a return to some type of hard money standard, ending the 50-year fiat experiment.
Many panicked central banks are picking up the pace of stockpiling gold and two countries have of course adopted bitcoin as their reserve currency — they won’t be the last either.
Under a hard money standard, deficit spending will be much more difficult than printing money and tax revenue will be vital for governments.
The Wall Street Journal and CBS News have already been reporting a shift in IRS behavior and how average taxpayers might be increasingly audited.
This won’t preclude taxpayers in the lower brackets. Last year’s ruling that the IRS now requires reporting of payment transactions exceeding only $600 seems to underscore this point.
And so, not only does the Inflation Reduction Act print more money, but it also assaults the very people it promises to protect with a barrage of tax audits.
That’s the big lie.
This is a guest post by Andrew Axelrod. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.