BUTTE, MT - Do you find yourself being a more skeptical person the older you get?

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You are not alone. When it comes to most things these days, especially about our government, economics, or news sources, it appears that the truth on the matters discussed is something for us to figure out and seek, and not what is being outright disclosed. It can be exhausting for those who simply want to understand what's truly going on in the world around them, instead of being filtered through a screen of bias.

Inflation is one of these matters. The topic of inflation seems to be deliberately centered around inflation being something bad, something good, something not to worry about, or something that will end the nation. The U.S. government also continues to say that "wages are up, inflation is down," when it was determined recently how inaccurate that is. Whether any (or all) of those conclusions are true, it appears that discussing the whys, hows, and incentives of inflation are put by the wayside.

However, in a recent Youtube video titled "Inflation Alert: The US National Debt Cannot Be Repaid," produced by ClearValue Tax, the escalating national debt and its implications surrounding our skyrocketing inflation costs are examined in a sobering analysis. Brian, the name of the gentleman who produced the video, also delves into the factors contributing to the government's incentive for inflation and what that means for the everyday American—including us here in Montana who are facing the inflated costs of living every single day.

Why the U.S. Government Would Welcome Inflation

Brian does a phenomenal job of explaining his theory about inflation and why the U.S. government would be incentivized to increase inflated costs for Americans. The national debt amount, which is essentially the amount of money the U.S. government owes to outside sources, has reached an unfathomable number of $34 trillion. How could the U.S. government pay that back? Well, they can't, especially when considering how much money the government brings in versus how much the government is spending.

An easy graphic to explain expense vs. profit with the U.S. government. Credit: ClearValue Tax/Youtube.
An easy graphic to explain expense vs. income with the U.S. government. Credit: ClearValue Tax/Youtube.

Wait, how is the "best solution" inflation? Let's utilize the example used in Brian's video.

Say, for example, you are an American paying off a 30-year fixed mortgage of $400,000 and you make $70,000 a year in income. It'll take you a significant amount of time to pay off that mortgage loan, right? Now throw an exaggerated hyperinflation matrix into the mix. During the next few hypothetical years, prices go up so much that a McDonald's burger now costs you $1,200, a gallon of gas is $600, and a new home is averaging around $100 million. Sounds terrible! But now you're also making a hyperinflated income of $10 million, assuming wages keep up with the hyperinflation.

Remember that $400,000 mortgage loan you needed to pay off? Now that you're making $10 million a year, that $400,000 could be paid off a lot easier. To apply that same logic to the national debt, the U.S. government, owing the $34 million dollars, will have an easier time paying that off if their taxpayers (us) are paying inflated prices versus deflated prices. You see, the U.S. government, instead of bringing in $5 trillion a year from taxpayers, could then bring in an inflated income of $10 trillion, $11 trillion, it doesn't matter. Over time, it would be much easier for the government to pay back its debt with inflation. Or so Brian says.

Are we all playing along? Credit: ClearValue Tax/Youtube.
Are we all playing along? Credit: ClearValue Tax/Youtube.

So, what is inflation being used for? According to Brian, it's being used to predominantly pay off the national debt.

What happens if the U.S. government doesn't pay back its debt? Their debt obligations would default, leading to the U.S. dollar losing its reserve status. In a nutshell, that means the dollar loses its value exponentially, and the U.S. economy is severely impacted. And no one really wants that.

What This Means for Montana

For Montana, a state that has seen its share of economic struggles, is especially feeling the effects of inflation. In fact, Montana's inflation rate almost doubles the national average by a full 3.2% over the past 12 months (Montana's rate: 6.5%; U.S.'s rate: 3.3%, respectively). These high inflation rates in Montana are predominantly due to our rising housing costs and fuel pricing. So, as inflation continues to rise, Montanans could face larger financial challenges in comparison to other states and might have a harder time making ends meet.

The Montanan economy is also being affected. Small businesses, a cornerstone of Montana’s economy, are struggling with higher operating costs and reduced consumer spending power. But what is the alternative?

In a Bit of a Pickle

In the end, there appears to be no concrete way to solve the economic issues brought on by an inflated economy. To continue to face rising inflated costs is to continue to hope that our wages match the increase, though Harvard has made it official that they aren't, which results in mass economic panic. To want to bring the inflated costs down—deflation—is to want to bring down the possibility of the U.S. government paying off the national debt, which results in a different flavor of mass economic panic.

All I can say for certain is that the next few years will be interesting, to say the least.

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