76-14-B7

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Inflation

Transcript At the recent economic summit in London, one of our top-ranking staffers, in replying to press questions, said -- QUOTE -- "Inflation has so many causes it has to have many different answers -- there is no single one." -- UNQUOTE. If one of the advisers to our government on economic and fiscal matters actually believes that, you and I are in deep trouble. We are undergoing the longest sustained period of inflation in our nation's history. Just since World War II it has cost Americans -- in the loss of purchasing power of their savings accounts and the value of their insurance policies -- more than one trillion dollars. But let's come down to more understandable figures and see how this loss occurs. If you placed a dollar in a savings account 10 years ago, and if it drew six per cent interest compounded annually, today -- 10 years later -- your dollar would have grown to one dollar and seventy-nine cents. But it takes one dollar and seventy-eight cents today to buy what one dollar would have bought in 1967. Now if you are a cheerful soul, looking on the bright side, who always says the glass is half-full instead of half-empty, you'll say, "Well, at least we didn't lose anything -- in fact, we made a penny". No, you didn't. That one dollar and seventy-nine cents is before taxes and the seventy-nine cents in interest is taxable income. To make it very simple, you are not a penny ahead. After taxes, you are a loser by a considerable amount. What does this have to do with the cause -- or as our representative at the London Economic Conference would have it -- the many causes of inflation? It has everything to do with it. The cause of inflation is government. Nikolai Lenin, father of the Russian revolution, knew whereof he spoke when he said, -- QUOTE -- "The way to take over a country is to debauch the currency. Through a continued policy of inflation, a government can quietly and unobservedly confiscate the wealth of its citizens." -- UNQUOTE. And, don't let that word "wealth" fool you. It refers to the earnings and the savings of the workers in our land. When politicians want to continue government spending on social programs they think will win votes, but know they can't raise taxes any higher than they are, they turn to inflation. Oh, they don't call it that. It's called deficit spending, borrowing against the future -- when they'll no longer need our votes. Inflation is caused by government spending more than government takes in. Inflation can be eliminated by reducing government spending to match government revenues. Our progressive tax system is geared to the number of dollars we earn, not their value. We earn a greater number to even-up the lower value of each dollar, and end up paying a higher income tax. As purchasing power is reduced, we become more dependent on government which has more and more of our money. I do not charge that inflation is a conspiracy in the sense that politicians knowingly set out to rob the people. To tell the truth, economic illiteracy is their greatest problem. Senator Paul Laxalt has made a practical proposal to his colleagues in Washington; prohibit the Federal government from increasing the percentage of the gross national product it spends. Let government spending increase each year only as much, percentage-wise, as the G.N.P. increases. A colleague in the House, representative Laurence Coughlin, proposes indexing of the tax system so it reflects changes in the cost of living. These two measures would end inflation by removing government's profit from inflation. This is Ronald Reagan. Thanks for listening.		Details Batch Number 76-14-B7 Production Date 05/25/1977 Book/Page RPtV-163 Audio Youtube? No
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