Tuesday, March 22, 2016

Backward Thinking Americans

You know what's funny to me? Well, not exactly funny, but odd. Well, not exactly odd, but annoying. Yes, annoying.

What's annoying to me is that probably most Americans are convinced, totally convinced, that our federal government gets its money from the American people. You see it when people talk about the government spending taxpayer money. You see it when certain politicians and their disciples complain about out-of-control federal spending. You see it in Tea Party and Republican and even some Democrat platforms to cut federal spending in order to reduce taxes. You see it when people rant about the federal deficit and how the resulting federal debt will impoverish our children and grandchildren and in how the federal debt amounts to $55,000 per person.

Why do I find it annoying for people to complain about federal spending? Why do I not fall in and join the complaint about the federal government spending too much of my money, wasting it on people who don't work, on countries that don't like us, on initiatives that are counter to my beliefs?

I find it annoying because I know, and you should know, that the federal government does not get its money from the American people. In fact, just the reverse is true. The American people get their money from the federal government. Only the federal government is authorized to create and issue US dollars. No one else can. The federal government issues those US dollars every time it spends into the private sector to acquire the goods, services, and goodwill that only the private sector can produce. It produces those US dollars out of thin air when it spends because each US dollar is nothing more than a federal government IOU backed by the good faith and credit of the US government. In short, the government creates money and injects it into our pockets, the private sector pockets. The private sector does not create dollars and inject them into the government sector. We get our money from the government, not the other way around. Isn't that ironic, since most of us think it works the other way?

Taxes? Taxes at the federal level do not fund the federal government. The taxes we pay, whether income taxes, payroll taxes, estate taxes, corporate taxes, or whatever, simply drain dollars from the money supply. The taxes we pay disappear from this earth when we pay them. After all, we are simply returning to the federal government a bunch of its own already-issued IOUs. An IOU back in the hands of the issuer is meaningless. It is no longer an IOU. It is nothing but history.

So, rather than the American people funding the US government, it is clear to me that the US government funds the American people - just the opposite of what most Americans think. It is funny, odd, and annoying to me that the American people can be nearly unanimously, almost 100 per cent, backwards on this issue.  

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