A New Round of Stimulus Checks Inbound – But There's a Catch
Peter Reagan

The IRS recently announced they’re sending $2.4 billion in unclaimed pandemic-era stimulus checks. Everybody loves “free money,” right? Well, there’s only one small problem – that free money isn’t really free…

Everyone loves to get “free money.” After all, isn’t that how you think about receiving a refund check from the IRS after filing your taxes? 

In fact, many Americans receive more from the IRS than they actually paid in income taxes. 

Not all IRS refunds are the same – sometimes, they come in unexpected ways. For example, remember all those stimulus checks during the pandemic panic? Most of us thought that stimulus checks were over. After all, Covid’s over, right?

Well, not quite...

The Biden administration decided they were going to send out unclaimed stimulus checks to people who didn’t get them back in 2021. And they asked the IRS to handle the paperwork.

Why are they sending them now? We’ll get into that, but first let’s talk about that free money…  

What are the details on these new stimulus checks?

Here are the details from Tom Ozimek at The Epoch Times:

The Internal Revenue Service (IRS) has announced that around $2.4 billion worth of automatic payments will be sent out later in December to taxpayers who were eligible for a pandemic-era tax break but didn’t claim the COVID cash. The move was announced by the IRS in a Dec. 20 press release after internal data revealed that approximately 1 million eligible taxpayers overlooked what’s known as the recovery rebate credit and didn’t claim it on their 2021 tax returns.

So, people who didn’t claim their “recovery rebate credit” back in 2021 (even if they didn’t want it) will be getting a payment.

One million Americans will get a little end-of-year bonus they didn’t plan on. How much? It’s nothing to sneeze at:

Payments will vary but the maximum amount will be $1,400 per individual. The IRS has posted information online about eligibility and how the payment was calculated.

That’s on top of all the other pandemic-era stimulus cash – and there was quite a bit of that:

In March 2020, eligible individuals received up to $1,200 per income tax filer and $500 per child under the CARES Act. In December 2020, eligible individuals received up to $600 per income tax filer and $600 per child under the Consolidated Appropriations Act. In March 2021, eligible individuals received up to $1,400 per income tax filer and $1,400 per child under the American Rescue Plan Act.

Now, there are two ways to look at this: 

1. “Free money? Sign me up!” That’s the attitude of virtually everyone you’re likely to encounter on a daily basis. Money is good, and more money is better. Isn’t it?
2. “Who’s paying for this?” This is the better question! If you’re a regular reader, you already know that, even though Congress and the White House spend money like it’s free, there’s no such thing as “free money.”

The inescapable truth of deficit spending is this: Every dollar the government borrows to spend (on anything) devalues every dollar in the world. Even the dollars you have in your pocket and in your bank account. 

Every single dollar of deficit spending reduces the spending power of the dollars you have. 

This “free money” stimulus payment is really an invisible tax on your savings. Politicians know that voters hate inflation – but they also know that voters hate taxes even more. By the time prices rise in response to our lost purchasing power, politicians can blame something else. 

Supply chain snarls. Putin’s invasion of Ukraine. That volcano in Iceland that shut down air traffic over Europe. Greedy corporations. The list goes on and on.

In fact, the only thing politicians won’t blame is their own addiction to deficit spending.

Which, by the way, has been a fact of life for the last 20 years – under administrations of both parties. The federal government has spent more than it’s collected year in, year out…

And it’s going to get worse.

Meet the new boss, same as the old boss

Look at the recent spending bill that was pushed through at the last minute to “avoid a government shutdown.”

Now, whether you think that the federal government shutdown would’ve actually mattered, it should outrage you that they pushed through a bill at the last minute. Its sole  purpose was spending beyond the so-called “debt ceiling” which, of late, has become less of a ceiling and more like an open sky.. 

Just look at the details of the original spending bill that passed. It was 1,500 pages and was full of all kinds of things that cost money but have absolutely nothing to do with allocating more money to keep the government from shutting down.

It passed in the House overwhelmingly being supported by both the majority of Democrats and Republicans.

I mention all of this just to point out that D.C. is full of people, both politicians and bureaucrats, think of spending the same way four year olds think of Halloween candy. It’s free, it’s theirs and they can have as much as they want. Halloween is followed by tummy aches. 

Massive deficit spending sprees are followed by – you guessed it! Rising prices.  

And there are those in Congress who want to remove even the pretense of restraint when it comes to government spending. Stephen Neukam and Andrew Solender with Axios write:

House Minority Leader Hakeem Jeffries (D-N.Y.) has privately floated embracing the wholesale elimination of the debt limit next year rather than simply raising it, Axios has learned.

More Democrats than just Jeffries support abolishing the debt ceiling which would, in effect, allow the Federal government to spend without having to stay within any limits of how much it borrows from the Fed.

But it’s not just Democrats who support removing the debt ceiling. 

Trump stunned Capitol Hill on Thursday by vowing to "lead the charge" to abolish the debt ceiling as part of a government funding bill.

I wish that I were kidding about that, but it’s true. 

On the one hand, it’s like New York City legalizing jaywalking – if nobody follows the law, and nobody enforces the law, why have a law in the first place? That’s just rational. 

There’s absolutely no point in having a debt ceiling if Congress is just going to ignore it.

Maybe the federal government can pretend that massive deficit spending is harmless – but those of us who live in the real world? We know better. 

Deficit spending is dollar devaluation 

Saying that government spending causes inflation isn’t an opinion. It’s a fact. 

Betsy Verecky, writing for MIT’s Sloan School of Management writes:

In attempting to understand the 2022 spike in inflation that followed the pandemic, some policymakers – up to and including President Joe Biden – blamed shortages in the supply chain. But a new study shows that federal spending was the cause – significantly so. 

Here’s a breakdown:

Actually, I think they’re a bit off-base. 

Here’s the same chart indicating which of these factors the federal government doesn’t directly control:

Image via MIT Sloan School of Management; edited.

That’s right – 80% of inflationary forces come directly from federal spending. 

Here’s my logic: 

• Producer prices rise when the purchasing power of the dollar falls
• Wages and salaries rise when the cost of living goes up
• Personal consumption rises when food, fuel and other prices rise
• Inflation expectations rise when inflation is out of control

See? Almost everything that the MIT study cited as an economic variable is a direct response to inflation!

And inflation is overwhelmingly caused by the government spending money they don’t have.

So, these “free money” stimulus checks will increase inflation. 

The 1,500 page spending bill passed by Congress and  signed by Biden – the one that maintains spending at current levels (with additional disaster relief and aid for farmers) despite the debt ceiling? That will increase inflation.

Even if we boil it down to stereotypes, Democrats who want to give everyone handouts and Republicans who want to lower taxes – we still get to the same place. Deficit spending, which we know both from personal experience and from academic research destroys our purchasing power.

It’s immoral and unfair. But it’s not going to stop – not until it’s far too late to matter..

Diversifying away from dollar destruction

Don’t just shrug and accept that our elected leaders are willing to impoverish us to finance their policies. Take a stand.

Physical precious metals, gold and silver, don’t rely on the dollar’s purchasing power. They’re an inflation-resistant store of wealth with intrinsic value that can’t be diluted or destroyed, no matter how far the dollar’s purchasing power falls. Learn more about the benefits of diversifying with physical precious metals here.

Declare your independence from Washington’s disastrous financial decisions – diversify your savings with physical precious metals while you still can.

 

 

Peter Reagan is a financial market strategist at Birch Gold Group. As the Precious Metal IRA Specialists, Birch Gold helps Americans protect their retirement savings with physical gold and silver.

 

 

 

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