New research from bitcoin financial services company River argues that inflation works as a hidden $800 billion tax on Americans, costing every household roughly $6,000 this year.
River calls inflation a tax nobody votes for
In the research piece, River’s Sam Baker wrote:
“Inflation is a form of taxation that you don’t vote for, and doesn’t show up on your tax returns.”
River noted that the official inflation rate has averaged 4% a year since 1970, which means prices double about every 18 years.
According to River, reporting inflation as a single number understates the damage, since essentials like healthcare, education and housing have climbed far faster than the headline rate.
River also pointed to companies disguising price hikes through shrinkflation and cheaper inputs, from hotels dropping daily housekeeping to airlines charging for carry-on bags.
The firm added that prices should actually be falling, given that economic productivity has grown around 2% a year over the past century.
Money printing behind rising prices
River’s research identifies new money creation as the long-term driver, with the number of dollars in circulation growing about 7% a year since 1970, an increase of 3,580%.
Baker explained why governments lean on this approach:
“Politicians lose elections when they raise taxes, but rarely get blamed for borrowing, which is ultimately paid off by printing more money.”
River traced the shift to 1971, when President Nixon ended the dollar’s convertibility into gold at $35 an ounce.
The firm said federal debt has grown without that constraint ever since, while the US dollar has steadily lost purchasing power.
Baker noted:
“It’s no coincidence that the wealth gap began widening in 1971.”
River says asset holders pull ahead
River said money printing shows up first in stocks, gold and housing, a process known as asset price inflation.
Baker wrote:
“You may think it’s a good thing that the stock market keeps going up, but much of that ‘growth’ is just inflation in disguise.”
According to River, the top 1% hold most of their wealth in these assets, while middle and lower-class Americans largely miss out.
River’s research also tied rising costs to lower personal savings, more young adults living with parents or renting, and a falling US fertility rate.
River’s case for opting out
River argued that raising taxes, cutting spending and supercharging growth are all unrealistic, leaving money creation as the only option the government has relied on for over 50 years.
Baker wrote:
“You can’t vote your way out of this. But you can opt out of it.”
River urged savers to stay disciplined and avoid letting cash sit idle, warning:
“Every dollar you hold onto loses value while you wait, quietly, year after year.”
The firm concluded by recommending assets that can’t be printed, such as gold and bitcoin.
