Monday, September 12, 2011

All government spending is someone's income..

And all government income is someone's taxes.

Read the above again.

Am I saying every dollar the government spends ends up as someone's paycheck?

Absolutely! The Federal government has no savings. Hell, it doesn't even have own any money! Remember there's no appropriation for the U.S government because it spends and get's it all back from taxes and doesn't need to own, keep or save money.

Now it takes awhile for this to happen but payments made and checks created in our economy by government spending becomes part our national income. 

Therefor when we pay taxes on this income (even the rich pay personal taxes to the Federal government tax authorities) it all goes back to the treasury where it came from in the first place.

Notice that the government has to "spend" the money before we get any of it. And it has to take it back in taxes for the system to work .

In accounting it's known as income-outgo. In our system, the government's outgo is called spending. It goes through the banking system and becomes part of our income (Social Security, government payroll, contractual payments, welfare, VA, etc. etc.)

And government income is our taxes coming back to the Treasury.

How does that work? Can we create money out of nothing?

We have been doing it for years. It's just no one ever explained how it's done because most everyone has been taught economics as if  we are still on a gold standard.

But we have been a pure fiat system since 1971 when Nixon told the French you can't have our gold.

Anyways, when the Congress passes a budget and the President signs the "appropriations" the authorization to spend sent to the treasury. The treasury authorizes the payments by crediting all the bank accounts that are legally authorized to have payments to. Then everybody authorized spends the money.

In due time all that money spent by the government comes back as taxes (read above again for an explanation) and the "appropriations" are paid thereby correcting any deficit.

How can the Federal government get away with it?

They create the money as stipulated under the constitution and can borrow from within it's bank accounts to float the transaction by borrowing from one account to another. This is accounted as deficits.

By the way, as alluded to above, deficits are the lag time between the Fed's spending and collecting the taxes and have nothing to do with destroying the economy, bankrupting the Fed, screwing our children over, giving the country away to the Chinese or any other nonsense the gangsters who own us can think of!

And another point, the only printing of money done is to replace worn out or torn and defaced bills not to spend us into the poor house.

But it sounds better to scare you if your told that the government is printing trillions to bankrupt us and vote for me and I'll stop the dirty bastards !!!

So, briefly, what is money?

First of all, in our fiat system, we have bank money which is a set of bank accounts in the Treasury, The Fed and our regular banks.

Second, we have currency: Bonds, bank drafts, money orders, credit cards, and good old cash. (Our currency is almost all created by borrowing from banks and credit unions).

But it's bank money that finances our federal system. It's simply when the government spends it pushes key strokes on Treasury computers
and authorizes checks and credits into these bank accounts.

How can they do that?

The full faith and credit of our economy which they control guarantees the system working. They always have the means to pay because they can type into computer terminals any amount authorized by Congress and signed by the President and the I.R.S can and will get it back.

Yes, they create the money from nowhere! It also goes back to nowhere! It's computing blips, electrons, and that's where they go when they click those keys.

It simply comes back as taxes and the "deficit" is paid off.

Got big deficits? Quit cutting taxes during booms! Create a few million jobs! Or quit worrying about it and problem solved.

What about hyperinflation?

If the economy over expands it creates too much money (stopping this is the job of the Congress by raising taxes and the Fed by raising interest rates slowing the economy) because our banks also create money out of nowhere and the tax mechanism doesn't work here. This leads to too much money in our hands and we borrow and spend just to keep up with price increases generated by people buying stuff in competition with each other.

In short, Speculating on price increases is big business and millions of people love to gamble and make the market for it. This leads to over bidding on assets and everybody ends up with a surplus of cash and no place to put it to keep up with mild inflation created by our Federal Reserve banking transactions  except in a few selected commodities: gold, real estate, foreign money, etc.

This activity leads to bidding wars on assets called inflation.

If corrective action isn't taken early the system explodes. (it's cure is mainly raising interest rates and taxes to remove extra money from the consumer).

What about Zimbabwe the only fiat nation to suffer hyperinflation? If you'll click on the link and you will see how corrupt governments work and end up printing currency to save their asses.

Our system doesn't need to print cash. It has the banking system to create all the money Congress authorizes.

Reread the above! All money problems, shortages, printing, borrowing, etc. etc. comes from our Congress. Not from the Gods, not from evil Jews, not from drunken Democrats unless they are in Congress, not from cheating on taxes, and especially because we don't have a gold standard .

We have a criminal problem and stupid, ignorant voter problem paying for and voting for the gangsters who are screwing us over!

For a more detailed explanation because I'm not an economist or a very good writer, go here.

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