Friday, April 10, 2015

Beware Those Balanced Budget Candidates

I wish there were some way to make my formerly rational-seeming friends see that their growing angst over the federal government’s deficit spending and the growing federal debt, currently at about $18+ trillion, is misplaced and a needless waste of their time and energy. I know, because until a couple of years ago I was of that same mindset.

It made me furious to think that my tax dollars, dollars that I could have better used for my own well-being, were being taken from me and handed over to a myriad array of government spending schemes, notably welfare. When guys like Ron Paul demanded that we cut federal spending, lower the debt to save interest, and balance the budget it made sense to me. Why? Because in my pea-sized mind I associated federal spending with federal taxes. It seemed only logical that reduced federal spending would result in lower taxes which meant that I could hang on to more of my own money. Besides, I thought it unfair and virtually unconstitutional for the federal government to take my money from me and spend it on someone else, especially when that someone else could be using my money to buy cell phones, beer, cigarettes, drugs, and flat screen TVs. And, I was afraid that the US could actually go broke as Obama and Bill O’Reilly warned.

Then, in 2012, I had an epiphany. When, in one the Presidential debates, Ron Paul said he would reduce the tax rate to zero I did a double take. Curiosity started me digging into money, the nature of money, and how the federal government gets and uses money.

What I discovered makes guys like Paul Ryan, Ron Paul and Rand Paul, Ted Cruz, Scott Walker, Lindsey Graham, and other guys like Barack Obama, Bill Clinton, Alan Simpson, and Erskine Bowles, and ladies like Nancy Pelosi and Hilary Clinton look like imbeciles or villainous liars. They all want to either cut federal spending to get our fiscal house in order or to increase federal taxes to finance national initiatives. What they all really want is to cut us, the private sector, off at the knees. What I learned is this: federal spending creates all the dollars that we in the private sector get to keep and use for all our financial activities, and federal taxes destroy those same dollars making them unusable by us.

And there it is – Bam! Federal taxes do not fund federal spending. Let me repeat – the federal government does not spend tax dollars! The federal government creates money. It does not need our taxes to have money. It does not even need to borrow money to have money. Because it creates money by spending, the federal government can always pay any bill, no matter the size, as long as it is denominated in US dollars. If all federal income, payroll, inheritance, and other taxes were suspended tonight, the federal government could continue to pay for everything it pays for now, including Social Security and Medicare. My taxes and your taxes don’t go to anybody else’s cell phone or F-35 fighter jet. The federal government always creates new money to pay for those things.

Further, the dollars the federal government spends and does not tax back are the dollars that you and I and everyone else gets to spend, save, and invest. Lower federal spending and higher taxes both equate to less money for the private sector. A balanced budget simply means that the federal government taxes back every dollar it spends – that is – no more federal deficit spending. A balanced budget boils down to two results: 1) an end to the money supply for the private sector and 2) the federal government pays for nothing – just like a socialist government it would basically own the factors of production. It does not hurt the federal government to spend more than it collects.


So there you have it. Any candidate whose platform includes cutting spending, or raising taxes, or more specifically promoting a balanced budget amendment, is serving someone other than the private sector of the United States. They may be serving the government, or the oligarchy, or the lords of idiocy or socialism, but they are not acting in the best interest of the American republic. That’s why I can’t get excited over Rand Paul, Ted Cruz, Scott Walker, or any of the other potential Republican, Tea, and Libertarian Party hoo-hahs of their ilk. It’s also why I can’t get excited about Hilary either. I want someone who exposes a balanced budget for the lie that it is. I want someone who will either cut federal taxes, or increase federal spending, someone who will strengthen the economic well-being of the private sector and not try to appeal to our misguided idea that the federal government should mimic a household.

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