Government intervention in the economy takes many forms, from subsidizing businesses, to competing with small business, to facilitating immigration,  and even raising interest rates and taxes. Each of these actions has complex implications for inflation and prices, affecting the balance between supply and demand and influencing the overall economic environment.

This essay exposes how the the totality of interest rate hikes, full spectrum taxes, immigration and public assistance dollars all contribute to hyperinflation and price hikes. Sadly, the inner city workers, teachers, union members, and small businesses are getting crushed by artificially high rates for rent, food, utilities, internet, insurance, health care, education, heating oil, and even essentials like water.

Government Subsidies Impact Food & Essentials

Subsidies to specific industries or businesses can distort market competition and resource allocation. For instance, subsidies for food or housing for new immigrants and schools might lead to higher prices in related industries due to increased demand coming from subsidized spenders.

While the intention might be to support non-workers or immigration such interventions can cause consumers to be overcharged and ripped off, as resources are diverted towards subsidized sectors regardless of their economic contributions.

Government Competing With the Private Sector

When the government enters markets as a competitor or a major buyer, it can significantly influence pricing and competition. In markets where the government is a major purchaser, such as healthcare or education, its buying power can lead to price increases that put small business such as electricians, plumbers, nurses, teachers, or training centers out of business.

This artificial competition by the government sector can lead to higher prices and lower quality services, as the competitive pressure that incentivizes efficiency as innovation is diminished.

Increasing Money Supply

One of the most direct ways the government influences inflation is altering the money supply by frivolous government spending. An increase in the money supply, typically executed by the central bank or presidential spending, can artificially flood cities in the short term.

However, if this increase is not matched by a corresponding private sector growth, it leads to inflation and the gouging of the middle class workers with overpriced rents, taxes, fees, costs, food, insurance and so forth. This inflation occurs because untaxed federal money in the form of public assistance is chasing the same amount of goods, decreasing the currency’s purchasing power and effectively raising prices.

Thus, excessive increases in the spending and subsidies can lead to hyperinflation, severely disrupting economic stability and eroding savings. In contrast to government spending, the inflation and high interest rates takes money from working folks in the form of outrageous debt burden increases.  Thus, banks and government make more money off of the working poor while those receive tax-free subsidies feel no pain.

Artificial Devaluation of Savings & Income

If a nation doubles its money supply by spending more money, it devalues the currency. For example, if a government worker or new immigrant in New York or Boston gets increased payments for housing, that money is used to pay higher rents that civilian workers cannot afford.

Thus, women and minorities in the USA’s big cities can’t afford the totality of overpriced housing. These same workers need $20 to $30 per hour or higher just to survive. Therefore if the city, state and federal government had not artificially jacked-up the costs in these cities, they may still be affordable for workers and small business.

Devaluing Your Money

Devaluing currency is a targeted action affecting domestic purchasing power. People and government entities using free untaxed money are competing with those who must pay federal, state, and city taxes on their purchases. Currency devaluation is created by the lessening of buying power even though the dollar is strong outside of the USA. A strong dollar has effects on trade balances by altering export and import prices. In contrast, the governments giving away more more money to friends and cronies leads to inflation, which dilutes domestic purchasing power for workers and those on social security.

Government Created Unfair Competition & Inflation

When the government acts as a buyer in markets like rent, advertising, health care, and education, it directly influences prices for workers. If the government’s purchasing is significant, the government would typically outbid private sector competitors and restrict supply, potentially leading to overpriced products and services in the inner cities. As an example, a hotel offering to house immigrants rather than provide services to local citizens who pay taxes.

Similarly, unbridled immigration hurts inner city workers by boosting competition for housing, food and other necessities, again creating artificial inflation.  The only good that occurs is that major investors in residential real estate including Wall Street Firms keep their so called hotels “full at capacity” receiving government subsidized and higher rents while draining the working class of their money.

The Artificial New Debt Crisis Hitting Cities Hardest

With interest rates on loans up 100% or more in the last 3 years on mortgages,  auto loans, credit cards and student loans, there is a new debt crisis.  This crisis was created by poor government policies on energy, subsidies, lending, and regulations.

These flawed policies have created a totality of impact unnecessarily costing the American Middle class an extra $200 and $500 billion dollars in the last 3 years.  This artificially created debt burdens have wiped out savings and spending power for workers between the ages of 20-40 particularly in America’s top 50 cities.

This is created an entire generation that is living paycheck to paycheck who live on the edge of bankruptcy ever day due to increased costs on everything from cell phones, food, rent, credit card debt, and insurance payments. Many with homeowners insurance or auto insurance have seen prices go up 30-50% in the last 3 years.

In conclusion, while government interventions in the form of subsidies, competition with the private sector, and adjustments to the money supply can play important roles in achieving policy objectives, they also carry risks of devastating city workers. Women and minorities in the top 50 US cities have suffered with brutal artificial inflation, higher debt burdens, and prices in the last 3 years. Recent government policies have distorted market forces, reduced competition, and killed the purchasing power of currency and savings of families in their working years and now when retired.

In sum, the policies of higher interest rates, public assistance, subsidized housing, subsidized health care, subsidized educational bodies, and immigration subsidies have all formed a giant mosaic that drives up the cost of living in big cities and primarily hurts the middle class workers, union workers, teachers, women and minorities in throughout the USA.

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Commissioner George Mentz JD MBA CILS CWM® is the first in the USA to rank as a Top 50 Influencer & Thought Leader in: Management, PM, HR, FinTech, Wealth Management, and B2B according to Onalytica.com and Thinkers360.com. George Mentz JD MBA CILS is a CWM Chartered Wealth Manager ®, global speaker – educator, tax-economist, international lawyer and CEO of the GAFM Global Academy of Finance & Management ®. The GAFM is a EU accredited graduate body that trains and certifies professionals in 150+ nations under standards of the: US Dept of Education, ACBSP, ISO 21001, ISO 991, ISO 29993, QAHE, ECLBS, and ISO 29990 standards. Mentz is also an award winning author and award winning graduate law professor of wealth management of one of the top 30 ranked law schools in the USA.


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