"I Didn't Raise Taxes Once"

Yesterday's Wall Street Journal carried a short piece about President Obama's declaration that (so far) he has not raised taxes. This might be a bit disingenuous, but evidently the president believed it when he said it. The problem was that he was probably thinking of the personal income tax, not the wide array of other taxes that pervade society.

Naturally, the Wall Street Journal didn't cut the president any slack. Why should they? Doubtless Mr. Obama was sincere, but grossly inaccurate. Like Horton, he really should have said what he meant. He would then not be in the embarrassing position of looking as if he didn't mean what he said, and of coming across as less than 100% faithful to the trust with which he is vested.

The problem was that the Wall Street Journal was itself a trifle off the mark. Possibly because they stand to benefit more than anyone else from inflation and the transfers of purchasing power that results from manipulation of the currency by the State, they forgot about the dangers (both political and economic) that result from the hidden tax of inflation.

Naturally, we weren't going to let that lie, so we fired off yet another letter to the Wall Street Journal which, since it was written from outside their past-savings paradigm, probably went right over their heads. Nevertheless, if only to ensure that it gets published somewhere, we present it here for your edification and enlightenment.

Dear Sir(s):

You could have strengthened your case greatly in "'I Didn't Raise Taxes Once'" (WSJ, 02/08/11, A14). Contrary to his assertions, President Obama has eroded private property and the soundness of the currency through the "hidden tax" of inflation. Government borrowing and the consequent inflation is more devastating than any form of direct taxation — to say nothing of being based on an unsound understanding of money, credit, banking and finance.

President Obama could do much better by reforming the financial system to rebuild the tax base rather than inflict hidden taxes on an increasingly burdened productive sector. Dr. Harold G. Moulton in his contra-New Deal treatise The Formation of Capital (1935) recommended financing new capital by discounting and rediscounting bills of exchange instead of existing accumulations of savings.

To this should be added promoting wealth creation in which all citizens participate through direct ownership instead of redistributing existing wealth through artificial job creation and inflationary stimulus packages. This was suggested by Louis O. Kelso and Mortimer J. Adler in their two collaborations, The Capitalist Manifesto (1958) and The New Capitalists (1961), the latter with the provocative, yet insightful subtitle, "A Proposal to Free Economic Growth from the Slavery of Savings."

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