This post is in a series of the “food for thought” program specifically in regard to federal deficits, national debt, and taxes.
As I’ve renewed my interest in economics during the past couple years I’ve made sure to include opposing theories for their insight into my own. The benefits of this are not only to gain new knowledge, but also to be able to use the words of those in opposition to support my own ideas.
With that being said, let me talk about a subject that confuses many including me at times.
Do we really suffer from a deficit? Is the country really in debt? If the government didn’t receive tax “revenue”, would it go bankrupt and be unable to pay for things?
An economist that I’ve been reading and following is Warren Mosler who writes The Center of the Universe blog. He has a blog post titled Taxation for Dummies. In the post he points out some facts:
- The government shreds your money if you pay your taxes with cash.
- If you pay by check the government tells your bank to reduce your bank balance, but it doesn’t increase any account on the other side.
What that should tell you is that the government is not revenue bound.
So, the next question is, can the federal government borrow too much? Again, the answer is no. As Mosler points out, Bernanke essential told congress that all the government does is go to the Federal Reserve and the Federal Reserve changes numbers in computers to give the federal government more money.
Where did that money come from? Many laugh off and say, China! But do we really need Chinese money if all we’ve done is changed numbers in a computer? The answer is no. We are never revenue or likewise debt bound.
The federal government has an unlimited amount of money at its disposal.
Let me repeat that again.
The federal government has an unlimited amount of money at its disposal.
Let’s go further.
No amount of debt is too much. We don’t owe any money to anyone. Today we could move numbers around in a computer and wipe out any debt that we think we have. In short, Cheney was right.
In a later post, I’ll discuss what Mosler says is the reason why we pay taxes. Go ahead and read ahead if you want. So far I haven’t put my spin on this, yet. (Warning: Don’t fall for the idea that I’m some kind of populist, progressive that supports such an affair!)
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As I’ve renewed my interest in economics during the past couple years I’ve made sure to include opposing theories for their insight into my own. The benefits of this are not only to gain new knowledge, but also to be able to use the words of those in opposition to support my own ideas.
With that being said, let me talk about a subject that confuses many including me at times.
Do we really suffer from a deficit? Is the country really in debt? If the government didn’t receive tax “revenue”, would it go bankrupt and be unable to pay for things?
An economist that I’ve been reading and following is Warren Mosler who writes The Center of the Universe blog. He has a blog post titled Taxation for Dummies. In the post he points out some facts:
- The government shreds your money if you pay your taxes with cash.
- If you pay by check the government tells your bank to reduce your bank balance, but it doesn’t increase any account on the other side.
What that should tell you is that the government is not revenue bound.
So, the next question is, can the federal government borrow too much? Again, the answer is no. As Mosler points out, Bernanke essential told congress that all the government does is go to the Federal Reserve and the Federal Reserve changes numbers in computers to give the federal government more money.
Where did that money come from? Many laugh off and say, China! But do we really need Chinese money if all we’ve done is changed numbers in a computer? The answer is no. We are never revenue or likewise debt bound.
The federal government has an unlimited amount of money at its disposal.
Let me repeat that again.
The federal government has an unlimited amount of money at its disposal.
Let’s go further.
No amount of debt is too much. We don’t owe any money to anyone. Today we could move numbers around in a computer and wipe out any debt that we think we have. In short, Cheney was right.
In a later post, I’ll discuss what Mosler says is the reason why we pay taxes. Go ahead and read ahead if you want. So far I haven’t put my spin on this, yet. (Warning: Don’t fall for the idea that I’m some kind of populist, progressive that supports such an affair!)
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"The federal government has an unlimited amount of money at its disposal."
Technically, yes. Practically, no. Unless it has an infinite number of vehicles in which to absorb it so that it never causes hyperinflation. I need to read the links you provided but it is all very fascinating. Thanks for the great post.
Posted by: Brutus | 09/06/2009 at 04:17 PM
Patience young patawan. You seek the answer that you already know yet you don't understand that you are the pawn in the game with rules that you don't know.
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Posted by: Triple Hash | 09/06/2009 at 11:44 PM
Chuckle... best go easy on the drink, T.H.
It sure would be nice if the Mosler website was working. My browser keeps giving me a timed-out message.
Posted by: Brutus | 09/07/2009 at 06:02 AM