Back to the Future With Price Controls

Democrat presidential candidate Kamala Harris is demonstrating why monetary debasement has always been a favorite way for government officials to plunder the citizenry. Rather than focusing on the Federal Reserve as the root cause of prices rising across society, she’s blaming rising food prices on grocery-store owners. Consequently, she says that if she is elected president, she’ll get a federal “anti-gouging” law enacted that prevents grocery stores from raising prices.

In other words, she’s going to impose price controls, which inevitably means that we are going to have to deal with shortages of everything in grocery stores that has a price control imposed on it.

Of course, this is what governments have done since the invention of the printing press. Debasing the currency by printing ever-increasing quantities of money and then blaming the resulting rising prices on greedy, rapacious, evil, profit-seeking, capitalist swine has always been the way that government officials plunder the citizenry without having the citizenry figure out what the government is doing to them.

Let’s assume that the government is spending $2 trillion more per year than what it is bringing in with taxes. Let’s also assume that the government is already $34 trillion in debt.

Where does the government get that $2 trillion? One way is to raise taxes. Another way is to borrow it and add it on to the overall federal debt. But people get angry when taxes get too high. They also get concerned when they see the government’s debt getting excessively high because they know that ultimately taxpayers are on the hook for paying it off.

Thus, the government has to figure out a way to tax people without their realizing that they are getting taxed. That’s where a central bank (i.e., the Federal Reserve) and the printing press come into play. The central bank simply prints up that $2 trillion and the government goes out and spends it.

But that $2 trillion in new paper money has consequences. It lowers the value of everyone’s money. And there is only one way that that lower value can be reflected: through higher prices of most everything in society. In other words, people’s money simply doesn’t buy as much as it did before the government’s monetary debasement. Let’s say it buys 20 percent less than it did before. That’s the same as if the government had taxed people an additional 20 percent of their income.

Except that there is a big difference between raising income taxes by 20 percent and a 20 percent monetary-debasement tax. The difference is that people can see the 20 percent increase in taxes but many of them can’t see that the government is behind the 20 percent debasement tax. Instead, they see the rising prices in the grocery store and blame it on the grocery-store owners rather than on the Federal Reserve, which has lowered the value of their money through monetary debasement.

The government, of course, plays into this phenomenon by riling up people against the grocery-store owner and other retail owners. That’s what Harris is now doing. Big Oil and gas-station owners have also long been used as scapegoats for rising prices arising from monetary debasement. Don’t be surprised if Harris calls for price controls in those sectors also. And be prepared for the same gas shortages and long lines at service stations under which Americans lived during the 1970s, when the federal government imposed price controls on that sector of society.

Our American ancestors fully understood that government officials engage in the fraud of monetary debasement. That’s why the Constitution made gold coins and silver coins the official money of the United States. The Framers knew that government officials could not print up gold coins and silver coins. For more than 125 years, the American people had the finest monetary system in history, one in which federal officials were unable to plunder and loot people through monetary debasement.

Unfortunately, however, in the 1930s, the Franklin Roosevelt administration abandoned that monetary system and replaced it with one of printed money. The FDR regime did this without even the semblance of a constitutional amendment. The Supreme Court, whose job it was to enforce the Constitution, buckled and upheld what was clearly an unconstitutional act.

Ever since the enactment of FDR’s paper-money system, the American people have suffered the consequences of monetary debasement. Of course, it’s bad enough to be plundered and looted in a fraudulent, surreptitious way. The situation is made worse with the scapegoating and shortage that come with price controls.

Reprinted with permission from The Future of Freedom Foundation.

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