Peak Prosperity - Too Few Appreciate the Dangers of Our Fraudulent Money System

Episode Date: January 17, 2025

Chris discusses the fraudulent nature of the monetary system, focusing on inflation as a hidden tax, its impact on society, and the role of government and financial institutions.Click here for part 2.

We have a money problem because our system of money is fraudulent. The following is the audio version of a video released at peakprosperity.com. Visit peakprosperity.com to watch the video and to find other insightful content such as articles, discussion forums, and exclusive subscriber-only content. Hello, everyone. I am Dr. Chris Martinson. Today, we're going to be talking about how inflation is taxation. This is fundamentally a fraud, a fraud committed on the people. And I'm going to talk about the hidden reason why the dollar is doomed I'm gonna reveal that that is for subscribers in a later part of this but let's begin with the front part of this what is the definition of fraud well it's the act of intentionally deceiving someone to obtain a benefit such as money or property or services now in our elected

system of government the way it's supposed to work, right, is that if or when your elected officials deem it necessary and in the national interest to take some of your money so they can spend it on something, well, they have to tax it. They pass a law, a law is written, it's debated, then it's passed, I guess, over time. Now, the U.S. tax laws have morphed into a colossal pile of, well, impossibly complex code, usually penned, you know, not by actual congressmen or senators. It's it's by special interest lobbyists and and as distasteful and as embarrassing bloated as the tax code has become, and by the way, that is the tax code. That's all of it printed out. 70 plus thousand pages.

In fact, here it is stacked up. It's more than that. 74,000 pages in 2014. It's probably, I don't know how many more than that today. But you can see that it started at 400 pages in 1913, and uh-oh, it's morphed into something. Okay? Now, as distasteful and as embarrassing bloated as the tax code has become, at least it's technically honest. But there's another tax the government operating in cahoots

with the Federal Reserve that they levy on all of us, and this one is as fraudulent and as dishonest as they come. Inflation is that hidden tax tax as Milton Friedman put it inflation is a hidden government tax and it's fraudulent as defined above that we just defined it right inflation is the process of taking your money's ability to buy things from you but doing it deceitfully nobody votes for inflation you can't vote it out of office. Nobody outside of the Federal Reserve and the banking system actually wants it. They do for reasons, but you don't. I know you don't.

Now, in his confirmation hearings recently when discussing tariffs, Scott Besant showed that he clearly understands the process. Let's see. Yeah, he said he said during a Saturday interview with Larry Kudlow that tariffs can't be inflationary because if the price of one thing goes up, unless you give people more money, then they have less money to spend on other things. So there's no inflation. Quote, the inflation comes through either increasing the money supply or increasing the government spending. Okay, that's absolutely true. So let's turn now to our good friend. I don't know, but a real hero of mine, Milton Friedman, because he was so pithy and he had such a great way of explaining things.

Here he is explaining the process of inflation to us all. Inflation is the most destructive disease known to modern societies. There is nothing which will destroy a society so fairly and so fully as letting inflation run riot. Inflation doesn't arise because you got consumers who are spendthrift. They've always been spendthrift. It doesn't arise because you've got the businessmen who are greedy.

They've always been greedy. Inflation arises because we as citizens have been asking you as politicians to perform an impossible task. We've been asking you to spend somebody else's money on us, but not to spend our money on anybody else. Everybody talks against inflation, but what he means is that he wants the prices of the things he sells to go up and the prices of the things he buys to go down. The real tax on the American people is not what you label taxes. It's total spending. If Congress spends $50 billion more

than it takes in, if government spends $50 billion, who do you suppose pays that $50 billion? Of course. The Arab sheiks aren't paying it. Santa Claus isn't paying it. The Tooth Fairy isn't paying it. You and I as taxpayers are paying it indirectly through hidden taxation. Ah, hidden taxation. There it is. Thank you, Milton, for putting that down. And that's what Scott Besant is talking about here. Now, this is where the story gets a little bit awkward. Now, this alone, just that statement, inflation comes through either increasing the money supply or increasing the government spending. This has been well known or ought to be well known.

It's been well known through history. Currently, a lot of people don't actually know this. And unfortunately, many of those people are in Congress or the U.S. Senate. This statement alone places Scott Besant well above the average congressman or U.S. senator. Actually, practically in a league all his own. A few other people. You've got Thomas Massey in there, Ron Johnson, Rand Paul. There's a few. And perhaps a few others, but I guess they're going to remain silent about all that right now for some reason. Thomas Massey recently wrote about the Omnibus Spending Bill. He said, what many of my colleagues fail to realize is that that bill is the tax bill. It's just spending. Two trillion dollars is deficit spending, but it is the tax bill. All money spent by government is money that will eventually be taken from people regardless

of whether it's collected through income tax tariffs or corporate tax fees or inflation this inflation part is not well talked about you have to understand it because this is going to be the stone cold retirement killer it's a portfolio killer we have to have an honest conversation about it because there's a lot more inflation coming, and I'm going to show you why. To begin this story, though, remember Scott Besant? He said, well, you know, that first point he said about money supply increasing, there's two ways inflation goes up, right? Money supply increasing or the government spending what money it doesn't have. Now, the Federal Reserve, in cahoots with the banking system, they've massively increased the money supply. We call that M2. This is from the Federal Reserve right here.

They used COVID as the reason for really ramping this up. But that green dotted line down here, and I'll get my little laser pointer, this was already inflationary. We've been experiencing lots and lots of steady inflation. That's what the Fed wants. They like it. And that's what we that was already inflationary. But then they used covid, an enormously overhyped pandemic, which really didn't affect most people hardly at all, just the elderly and those with comorbidities, as we know. They use that as a justification for massively, massively increasing the money supply, which is in that green circle. That's extra inflationary. Okay? All right. So now, if you want to know why everything's so expensive, this chart right here.

This gets you most of the way there. The already inflationary expansion of money, it was supercharged, and now it's double extra supercharged, right? And now, wouldn't you know it, the Well Connected and Wall Street, they're somehow already completely addicted to having that amount of surplus funds sloshing around. So guess what? That's the new normal. They don't know how to undo that. These things ratchet up always. Now, the inflation that has resulted from the COVID emergency has already been enormously destructive to the lower economic classes, right?

And to younger generations, right? Who start in life as economic heads of households and completely hobbled right out of the gate. Now, the second reason given by Besant concerned government deficit spending. That's the second reason. On that point, the future looks positive for inflation. That's another $25 trillion of additional federal debt, which would add to the other $35 trillion, bringing the entire smoking pile to $60 trillion of U.S. government debt by 2034. Now, this too, every one of those red bars is more inflation, because that's the government spending money it doesn't have.

This isn't really a complicated topic, but we ought to be having a fairly nuanced conversation, which is like, okay, U.S. government, you've decided to saddle future generations and all of us with enormous amounts of future inflation. Can we talk about it? Like, why is that the plan? Why is this the best way to go about doing what we want to do now? This is, of course, starting to really show up in in its as Milton said, it's socially destructive. Right. And so now I think this young woman is kind of channeling for her entire generation when they started to detect this overall inflation scam. And this is in the context of her and other people of her age getting exposed to a Chinese app, a red note, which allows them to see into other people's lives in other countries in an unfiltered way. Hopefully, probably there's some propaganda written in there, but at least they're seeing

how other people live. Here's how it's landing on this young woman. I stay for this because I've reached the part in this whole like class consciousness part where I'm just filled with the most impotent rage and like I'm talking that white hot I need to sink my teeth and into something and scream kind of rage because what do you mean that it never had to be this hard for us like what do you mean in other countries they don't have to spend 20% of their paycheck on groceries? What do you mean in other countries everyone can own a home because they're not paying $2,000 a month in rent? Or that their mortgages aren't like their entire paycheck. What do you mean that people in China work one job

and they don't even work 40 hours and they can easily afford their life. And then I'm over here working 60 hours a week, just me as a single parent to like barely make ends meet. And I'm penny pinching every single second. And like, there's so much life that my kid misses out on and that I miss out on because of money and like work and no social support net. Yeah. And it carries on. It's tragic.

It's tragic. Let me be absolutely clear. The policies of the federal reserve, the banking system and the U. government elected representatives, right? We can have discussions about our election system at some point. Are conspiring to with the level of sheer contempt that has been levied upon them by the money keepers of the system. It's beyond description. It's horrifying. It's evil. It's not good. Okay. Those are to put some judgments on it,

but it's also, it's just a process. And I'm here to, we'll cast judgment on it later. I just want to make sure that we're very clear on the process. Inflation isn't some mysterious thing that arises out of the miasma of some swamp we've never seen before. We don't know what it is. It's an act of policy. coffee can in her backyard will lose half its value every 35 years. Now, who granted the Federal Reserve the right to say, you know what, we as an organization are going to tax you half your savings every 35 years. Now, if they get it a little wrong and it's 5% inflation, that's taxing half your savings every 14 years. Who gave them that right? Nobody, obviously, but this is where we are. This is the system and you need to understand that system so that you can begin to navigate it and make the most out of your future. Because if you don't see it coming, you don't know what's happening. You just get crushed. And that's what's happened to this lady here. Now, editorially,

I guess while I'm on editorializing, for these reasons right here, you'd think that progressives would be all over this issue, the issue of inflation, but they're almost perfectly silent on the matter. Either because it's too complicated for them to understand, which is possible, unlikely. Or it's because inflation benefits the existing political and corporate power structures, and that's where their true allegiances lie. I think it's probably that. In other words, when you hear a progressive prattle on about caring about the disadvantaged or the poor while ignoring inflation or talking about the banks or the Federal Reserve, you are free to classify them as either ignorant or duplicitous. Okay. Irritatingly, or increasingly infuriatingly, the U.S. Government Department of Labor Statistics, or the BLS,

putting the L, the lie, in the BLS, they gaslight us each month with their supposed inflation measurement reported as the CPI. Now, for a variety of reasons, you know, ranging from wanting to minimize social security cost of living adjustments or colas to helping hide political leadership's inability to govern properly the government is strongly incentivized to lie about the true rate of inflation now remember if you show me the incentive i'll show you the outcome The BLS is incentivized to lie about inflation. The outcome is we get lies about inflation. Here's the latest from December of 2024. I mean, each month, it's a new set of inflation whoppers from the BLS who is supposed to faithfully and accurately

track these things. But these fictions right here then get presented to us by a very unquestioning, very compliant mainstream media as if this were gospel itself. Oh, look, inflation was only up 2.9% year over year, according to the BLS. But anybody with any real world experience at all can immediately tell you that these are lies. And these lies must be approaching some sort of escape velocity by now, we hope. Because really, highlighted and agreed, food is up 2.5% year over year. Food at home, 1.8%. Really? Seriously? With a straight face, the BLS is telling us the groceries are up 1.8% over the past year. Because that's what the

food at home means. Groceries up 1.8%. Now, anybody who does the shopping knows that this is a complete crock, right? In restaurants, restaurants are up 3.6%. Hmm. You know, I'm going to have to bring this BLS table down to our local eatery and ask them why fish and chips for two with a non-alcoholic drink for each is 70 bucks now when last year was 50. Because that doesn't feel 3.6%-y to me. Or, or maybe the BLS would like to help us try and negotiate with Carl Jr.'s to get the cost of two burgers and fries back down to something a little more affordable than $35.68. Um, when did a couple of burgers and fries cost more than $35? Oh, let's not forget

that shrinkflation is part of this story too. We note that a Big Mac went from 50 cents to $8 and lost 40% of its size along the way from 1980 to 2024. So I think they never account for shrinkflation appropriately either in the BLS methods. Or how about medical care, they say, is up 3.4% over the past year when everybody's health insurance premiums went up by minimum double digits. Mine, 14% last year, while their deductibles wormed their way higher. That's medical shrinkflation. That's like your burger getting smaller. Oh, your deductibles are larger. You have to spend more money before we kick in. That's medical shrinkflation by expanding the deductible,

if I didn't mangle that too badly. Hopefully you get what I mean. All right. Now, obviously, obviously, these are all pure BLS fictions. Now, inflation all by itself is a very destructive thing. It ruins hopes. It ruins dreams and lives, like you saw from that poor single mother there. And it's most punishing on those who can afford it the least. And we've known that for a long time. But hey, the Federal Reserve likes it. And your politicians, by and large, love it too.

So here we are. But it gets worse. Remember, as Thomas Sowell said quite pithily, there's nothing so good that politicians can't make it bad. And nothing so bad that politicians can't make it worse. Thank you, Thomas, for saying in a single sentence what it would have taken me a whole paragraph or two to say. All right.

Now, here's the thing. Inflation is actually a double tax when it comes to your investments into your portfolio. Inflation acts as both a tax and a tax upon a tax. Now, what do I mean by that? Well, first, tax inflation is the single biggest tax on investments and retirements, vastly outstripping the predation of ordinary income and gains taxes. So, for example, if your portfolio gained 10 percent, but inflation was 5 percent, then fully half of your gains were confiscated by inflation, the inflation tax. Now, that represents a 50% tax rate, right? Your portfolio went up 10%, but half of it got eviscerated, taken by inflation. That's a 50% tax rate.

Now, I should point out that's a vastly higher rate than the long-term capital gains tax rate of 20%, right? I mean, that just hopefully makes a lot of sense there. Now, if you put your money instead into something safe like U.S. Treasuries yielding, say, 4%, but inflation was actually 5%, then your effective tax rate was 120%. You lost money. Your wealth went backwards. And, oh, just to add a little insult to that injury, you still have to pay federal taxes on the 4% interest income you gained, right? So my view here is very simply that all investment gains should be inflation adjusted before taxes are calculated, because if not, the government is double taxing the same money twice, right? First, there's the inflation

tax, which has eaten away at the purchasing power of our savings and our investments, right? That's a straight up tax. We've already established that, hidden though it might be. And again, this tax comes as a result, a direct result of the government spending money it doesn't have, which the Fed and the related banking cartel are only too happy to manufacture out of thin air to lend to the government. For a hefty fee of course. The interest costs. Hey, that's the banking scam.

Profitable line of business. Good work if you can get it. But second, there are the capital gains taxes we pay when we sell the investments. And after deducting the inflation portion, the remainder, that represents legitimate capital gains. And that's the only part the government can legitimately lay claim to. And even there we have some questions and concerns. Now, this logic of deducting inflation before calculating taxes should apply to every asset class. That includes real estate, stocks, Bitcoin, bonds, anything you can think of, right? And if

the government doesn't like inflation reducing its haul, well, then it will be properly incentivized to stop creating so much inflation. For the government to double tax its citizens on the inflation and the gains is both immoral and unfair. And by the way, it incentivizes the government to do more of the thing that it's doing. So here's my conclusion. Inflation, it's going to get a lot worse. You need to be prepared for that. You really ought to have a very strong plan for that. And I'm not talking the 3% people thing. You should be planning on 5% to 7% inflation. Now now that comes from a simple observation right the government's gonna deficit spend another 25 trillion over the next 10 years right and that's without that's without factoring in the likelihood of a

recession or a war or anything like that those are extra right those cost extra the process of printing money out of thin air or the government printing money it doesn't have right those are both acts of fraud right both are underhanded ways of taking money that you already earned in stealing some of its ability to buy you things any money system predicated upon fraud is one that encourages corruption and we're humans so we respond to incentives. If we're in a system built upon fraud, there's literally a disincentive to act honestly.

You will be punished. The problem is obvious. Fraudulent systems cannot persist. They end up consuming themselves. They leave a trail of wreckage. But that's not even my biggest concern in this story. For that, we have to turn now to the math problem that's lurking at the heart of our system of money. It's completely obvious once you see it. So that, you know, once you do, you can't unsee it. And very few see this. And it's a testament. It's a testament, I think, either to the power of self-delusion or maybe to the power of evidence of poor educational systems.

I don't know. Maybe a combination of both. But here's my prediction for the future. How is our nation going to go bankrupt? Well, slowly, then all at once. All right. Now we're going to turn to part two. We have to talk about the hidden reason the dollar is doomed. I'm going to reveal that. And once we talk about that, I think it becomes to turn to part two. We have to talk about the hidden reason the dollar is doomed. I'm going to reveal that. And once we talk about that, I think it becomes obvious what the implications are and some of the steps you're going to need to take in order to avoid the worst of that. With that, thanks very much for listening. I am Dr. Chris Martinson of Peak Prosperity.

Come on by, become a subscriber if you want to see the rest of this story and or to become part of our amazing tribe of free thinking people talking about reality until next time bye for now Thank you.