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Time: Hyperinflation Will Be Tea Party’s Fault

November 11, 2010

If hyperinflation happens, it will be because of the tea party.  And Sarah Palin.

So goes the reasoning of Time Magazine.  In a post on its website Thursday, Time’s Stephen Gandal asks, “Will Sarah Palin and the tea party cause hyperinflation?” In case this thought seems counter-intuitive to you, it’s because it is.  As NewsBusters pointed out Thursday afternoon, “The notion that debt is equal to income minus expenditures also eludes the folks at Time.”

So how on earth would the smaller-government/decreased-spending agenda of the tea party movement possibly cause hyperinflation?  If you believe what you read in Time Magazine, it apparently goes something like this:

Before the Tea Party, inflation is rising slowly. But in the first year the Tea Party or a group with similar views wins the Presidency or takes over Congress, whamm-o. Inflation doubles, and keeps going up. …
Ever since the financial crisis, some, Tea Partiers in particular, have been predicting that the country may have an upcoming massive bout of inflation. And why not. Many of the things we have been through seem like the type of stuff that should make our currency dive and prices go up.
The real threat of inflation comes from tax policy, namely lower taxes. Lower taxes and the government will have a harder time paying back its debt. Investors run from our bonds and currency. Inflation ensues. …
But the real problem may be the Tea Party itself… “The Fed is well aware that its policies could have profound inflation consequences,” says Leeper. “Where as [sic] the Tea Party is not thinking that at all.” In fact, just the opposite.

Forget that the federal government has hiked annual spending levels by a whopping 38 percent in just three years.  Pay no attention to the fact that Congress continues to raise the debt “ceiling.”  And ignore the fact that the Federal Reserve is printing more and more money to keep interest rates artificially low.  None of that has anything to do with the threat of hyperinflation — Time says it’s the people who oppose all of these fiscally reckless policies who will be the real culprits, or something. 

Instead of owning up to the fact that the federal government’s fiscal policy has been a trainwreck for years, Time puts blame on the tea party movement because they demand Washington actually start paying its bills and stop digging in its financial hole.  Instead, Time reasons that the only way to avoid hyperinflation is to raise taxes — a notion NewsBusters calls “absurd.”

Finally, Ed Morrissey at Hot Air effectively defended the tea party and its spending-cuts agenda, directing the blame where it belongs:

Uncontrolled inflation doesn’t get created from tax cuts; it arises from bad monetary policy, ill-advised government interventions, and a serious lack of confidence in the currency.  Tax cuts uncoupled from spending cuts can certainly make for bad policy and set the stage for inflation, but all one has to do is look at the last nine years of stable tax rates and the runaway rate of spending increases in Washington to determine where the actual problem lies.  It’s not the tax rates that kept changing, nor is it a decline in revenue that created the massive deficits.  For most of the last ten years, revenues have increased, with the exception of the last two years of deep recession; the deficit problem resulted from spending increases that have far outstripped the revenue increases.

Finally, the Tea Party may be philosophically inclined to low taxes (seeing how well they worked in the 1980s and in the early 2000s in stimulating growth), but that’s not the issue on the table.  Democrats in Congress want to raise taxes on the employer class, not cut taxes for everyone else.  The Tea Party and Sarah Palin want to cut spending instead and shrink government, a strategy that has worked to restore economic growth in this country when it was tried in the 1960s, the 1980s, and in 2001-3, and in none of those cases created runaway inflation.  Perhaps Time needs a little more intellectual curiosity.

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