Taxes, gasoline, and the coming economic slowdown

In recent weeks we’ve examined the plans now advancing to mop up some of the excess liquidity the Fed created between 2002-2004. These efforts have included a pronounced slowing down in the money supply growth rate and interest rate hikes. The focus of this commentary will be a tool that is used to combat inflation ?both officially and unofficially.

In his book, “War Cycles, Peace Cycles,” Richard Hoskins explains how taxes are used by the government to remove excess money from circulation in order to curtail inflationary pressures and to prevent imbalances in the accumulation of wealth. What is not widely known is how modern day governments employ the use of surrogates to tax money out of circulation in a non-official capacity. One such example of surrogate tax collectors are the petroleum concerns, which use their control over the price of gasoline and other fuels to tax consumers, mop up excess liquidity and reduce consumption.