This past week, with the nation in full Olympic fever, savvy politicians, led by Sen. Marco Rubio (R-Fla.), moved quickly to introduce legislation that would protect all US Olympic winners — from the darling Gabby Douglas to the mighty Michael Phelps — from having to pay federal taxes on the value of their medals — bronze, silver and gold — as well as other honoraria.
As tax-cut proposals go in this testy election year, this one looks to be a winner.
But sadly, the flap over taxing Olympic gold misses the forest for the trees, and the failure of our nation’s leaders to recognize that fact is why our standard of living will likely move down a pedestal or two by the time the torch arrives in Rio in the summer of 2016. That’s because while gold and other precious metals are increasingly valuable, our paper currency is not.
The irony of this past week is that at the same time the world’s top athletes were going for the gold, trying to accumulate as much of the yellow metal as possible, the world’s top central bankers were competing in a race for the bottom in their own money-printing Olympics.
In the monetary games, European Central Bank chief Mario Draghi and Federal Reserve captain Ben Bernanke are the unlikely stars of the horror show.
Still, that didn’t stop hundreds of judges (i.e., business anchors and analysts) from commenting on their every move as if they were marking a McKayla Maroney vault.
But in the money-printing Olympics, there is no beauty or perfection. Sure, new world records would be broken with Quantitative Easing, but the buying power of the paper money we earn or hold would also continue to erode, with living standards continuing to decline.
It’s worth noting that such monetary gymnastics come as we approach the one-year anniversary of S&P’s decision to strip the United States of its gold — Uncle Sam’s triple-A credit rating. Since then, our national debt has risen by a stunning 10 percent, or $1.4 trillion.
Enjoy your standard of living while it lasts. Like an Olympic moment, it’s likely to be fleeting.