If I hacked your Venmo account and took out 23% without asking, I would be a thief.
According to the Bureau of Labor Statistics, average prices in the USA during September of 2024 were about 23 percent higher than four years earlier in September of 2020.
If you earned $100,000 in 2020, you would need $123,000 in 2024 to buy the same cart of groceries you bought four years earlier. Furthermore, any money you saved is now worth less as well, as there is no credit union out there offering savings rates anywhere close to 23 percent.
The decimation of both income and savings inflicted by inflation can be felt by most Americans, especially those who are less affluent and those raising families. If this were a natural phenomenon like thunderstorms or earthquakes, then we might not like it, but it would be hard to assign moral blame to it.
But inflation does not “just happen.” It is caused when money is devalued, or made worth less than it was previously, by whoever controls the supply of currency. Usually this is the government or a central bank that is set up or controlled by the government.
Sometimes this is done by physically printing too many new bills. Things are economically more valuable when they are scarce and hard to get and less valuable when they are plentiful. Creating more money makes it less valuable, as there are now more dollars but the same quantity of goods and services.
People in government might also spend more than they actually have in reserves or from taxes, effectively creating new money. Historically, this is done in times of war or crises, where leaders need (or want) to finance massive expenditures quickly. They could raise taxes, but it is faster and politically expedient just to create more money. Citizens know who is responsible if they have a higher tax bill. They are slower to connect the dots if prices simply creep upward over time.
Either way, this is why economist Thomas Sowell (among others) describes inflation as “a hidden tax”: “The money that people have saved is robbed of part of its purchasing power, which is quietly transferred to the government that issues new money.”
Taxation in itself is not inherently theft. We have a moral obligation to pay taxes justly due to civil authorities so they can fulfill their duties to the common good (CCC 2240). Our Lord himself said, “Render to Caesar the things that are Caesar’s” (Matt. 22:21).
This does not imply, however, that government officials can take money from people whenever or however they want. Leaders are still capable of acting in ways that match the Catechism’s definition of theft: “the usurpation of another’s goods against the reasonable will of the owner.”
There are three strikes against inflation that push it out of the “tax” category and into the “theft” category. The first is the Catechism’s call for the state to provide stable currency:
Economic activity, especially the activity of a market economy, cannot be conducted in an institutional, juridical, or political vacuum. On the contrary, it presupposes sure guarantees of individual freedom and private property, as well as a stable currency and efficient public services. Hence the principal task of the state is to guarantee this security, so that those who work and produce can enjoy the fruits of their labors and thus feel encouraged to work efficiently and honestly (2431).
Only in a secure and stable environment can people, families, and their businesses plan ahead and take chances with the reasonable hope that they will be able to make a profit and “enjoy the fruits of their labors.” Slight inflation over long periods of time may be inevitable and might not cause too much distress for businesses and families, but regular, significant, and intentional inflation caused by government leaders destroys stability and undermines people’s ability to save and plan ahead.
The second strike against inflation is that it circumvents the rule of law. The Church has always held, and the Catechism notes in paragraph 1904 (among other places), that government authority is not absolute. Those in power must follow the law as well. There is no nation on earth where the government is authorized by a constitution to tax citizens via inflation. Even if it were, there’s the argument that this would be inherently unjust, as it would violate the obligation to provide a stable currency. Juan de Mariana, a seventeenth-century Jesuit who spent time in prison for critiquing the king of Spain’s inflationary policies, sums up this objection in his work “A Treatise on the Alteration of Money”:
If the king is the director—not the master—of the private possessions of his subjects, he will not be able to take away arbitrarily any part of their possessions for this or any other reason or any ploy. Such seizure occurs whenever money is debased.
The final strike against inflation is that it hits the poor the hardest. The rich family is (rightly) unhappy when prices go up. However, the poor family who live paycheck to paycheck need to pick what essentials to skimp on and watch helplessly as any meager savings they have scraped together over the years lose their value before their eyes.
This violates the long tradition and clear teaching of the Church that economic and public decisions should be made with a “preferential option for the poor.” Those in government must, while respecting the dignity and rights of all in society regardless of wealth or status, seek to protect those who are most vulnerable first.
Taxation may not be theft, but inflation caused by irresponsible government action is. It financially pulls the rug out from under people and families, all outside the regular legal processes that are supposed to happen when taxing citizens. It is particularly egregious, as it most harms the poor and those providing for families.
Government leaders need to find ways to ensure that purchasing power is not robbed from people over time. They need to ensure that the value of money is at least relatively stable and live up to the Church’s call to guarantee security, “so that those who work and produce can enjoy the fruits of their labors and thus feel encouraged to work efficiently and honestly.”