Inflation is a Stealth Tax

Before I can explain the stealth tax, you have to understand that inflation is a monetary phenomenon.  Inflation is too much money or purchasing power chasing after too few goods.  Imagine an auction where everybody has unlimited amounts of money to purchase the everyday necessities of life, namely food, clothing, shelter, and mobility.  Obviously, these items would be bid up in price. 

Now there can also be price inflation due to differences in supply and demand.  A poor orange crop will lead to a lower supply of orange juice next year and so the price would increase.  That is not inflation from monetary causes.  In reality, the price of any good or service becomes a combination of monetary inflation and supply vs demand levels. 

So, what do I mean by a stealth tax?  While many poor people do not pay income tax and are happy not to pay, they fail to realize that policies resulting in inflation actually hurt them more than would a stable currency.  The wealthy, however, benefit under such a system such that the economic divide increases.  Why is this?  The poor have to spend a greater proportion of their income and resources just purchasing good necessary for survival.  They don't have the opportunity to save and set aside assets that would benefit from the inflation.  The wealthy already have the assets and can benefit in such an environment.  The result is that the poor continue to remain poor while those that have continue to get more on the backs of those struggling for survival. 

Those in power know this to be true and rather than adopt policies that would maintain a sound medium of exchange so that people can make informed decisions, they would rather pacify the lower and middle class with "tax cuts".  Little do they realize that they end up being hit with the stealth tax instead--INFLATION!