Don't Hate Welfare Just Because It's Federal

As far as I can tell, there are four arguments against the federal government providing any kind of welfare to its citizens. Well, actually three arguments and one reason. Let's dispense with the reason - resentment. People just seem to resent anyone else getting anything that they don't get or wouldn't want. Thus, when someone receives a government check, someone else is going to resent it - reasons, needs, economic benefit notwithstanding. Many people even resent Social Security. So let's just dispense with resentment. It's nothing but an emotion.

The three arguments against government-provided social welfare are cost, addiction, and vote buying. People opposed to government welfare are convinced that the government cannot afford it. People opposed to government welfare are also convinced that welfare robs people of the initiative to work, makes them lazy and dependent, and addicts them to government support. People opposed to government welfare are convinced that politicians bribe voters with promises of free stuff. I have a few thoughts on each of these arguments.

First - costs. Welfare paid for by the states does typically cost state taxpayers money. That's because the states must collect revenue in order to spend and revenue collected by most states takes the form of state income, property, and sales taxes. Except for federally provided money, states spend money collected from their residents. So yes, state-run welfare costs the taxpayers money. But this is not so at the federal level. Federal spending is not dependent on, or even related to, federal taxation. Because the federal government creates dollars by spending, welfare funded by federal spending does not cost taxpayers a dime. In fact, federal welfare adds dollars to the economy providing a degree of stimulus which promotes increased private sector spending which promotes greater private sector production which promotes private sector job creation which lessens the need for many welfare payments. So rather than argue that welfare costs the government money, I would argue conversely that federal welfare adds to the country's economic growth. I would further think that all government welfare should be paid for by the federal government, not the states, even if the states were to continue to administer the programs.

Second - addiction. Face it, there will always be some relatively few cases in which welfare recipients grow dependent on the government dole for an extended period of time or even a lifetime. In fact, Social Security is a form of federal welfare that lasts a lifetime and sometimes longer and I am certain that few, if any, Social Security recipients have ever chosen to quit receiving their payments because they already make enough money to get by. Make no mistake, Social Security is every bit as much welfare as food stamps and section 8 housing. We think we paid for Social Security with our payroll taxes, but as we've already discussed, federal payroll taxes are just federal taxes and as such, they just remove dollars from circulation and destroy them. Federal spending is not funded by federal taxes - remember? But I digress. If federal welfare promotes laziness and dependency, then do not all sources of welfare promote laziness and dependency? Welfare is welfare is it not? You can grow as dependent on the largesse of your parents or siblings as you can the federal government. Is it any less moral for the federal government to provide someone money for food than for the Red Cross, Salvation Army, or local soup kitchen or homeless shelter to provide food or money for food. Does it really make sense that welfare provided by the federal government causes more welfare dependency than welfare provided by private means? If I am hungry and broke what difference does it make to me where the welfare comes from? If I am prone to dependency, I can grow just as dependent on the Salvation Army as I can the federal government. To argue that federal welfare breeds dependency is to argue that all welfare breeds dependency.

Finally - vote buying. People vote in their own best interests whether those interests are promises of tax breaks, new roads, federal spending on pet projects, or the promise of welfare. Pick your poison. 'Nuff said.

You may choose to oppose federal welfare, that's your right. But just don't be so quick to convince yourself that because the welfare is provided by the federal government that it is inherently bad.

The Crazy Platform Plank

1.       Money is created and enters the economy when the federal government spends.

2.       Money leaves the economy and is extinguished forever when the federal government collects taxes.

3.       The federal government does not need or spend our tax money. To think it does is like thinking a theater needs to take back and reuse its tickets in order to have tickets. Or like saying the Post Office needs to take back and reuse its stamps in order to have stamps. The federal government creates money - it is not going to go broke or have to borrow if it does not tax it back.

4.       If the federal government were to tax back all the money it spends, then (much to the relief of too many of us) the federal government would have (big deal) its much sought-after "balanced budget". But if the federal government had a "balanced budget", then the economy would end up with no money. We the people, in aggregate, would have no money. The economy would tank.

5.       When the federal government spends more than it taxes back, the government ends up with a "deficit" (so what, it can always create money), but the private sector ends up with a surplus of money enabling us to spend and save. A deficit simply means that the government has created more money than it has destroyed. Is that a bad thing for us in the private sector?

So I ask you - why the political rush, especially among presidential candidates, to cut the deficit and eliminate the (mis-named) debt? What is the matter with all those politicians who want to cut the deficit and "balance" the budget? Do you get it?

With thanks to petermartin2001.wordpress.com

Kindle Version Has Arrived!

I must say, the soft cover version of my book, Richard Gatlin and the Confederate Defense of Eastern North Carolina (The History Press, 2015), is a good-looking, good feeling book, but for those of you who do all or most of your reading on eBooks now, it is available in Kindle version from amazon.com for just $9.99 plus tax. I am a Barnes and Noble Nook reader myself, but the Nook version is not available yet so I downloaded the free Kindle app for my Nook Android tablet and bought a Kindle copy of the book.

For any of you who would like an author-signed softcover version of the book, I have a limited number of copies that I can sell at $20.00 each, including tax and shipping (domestic only). Just send me an email at jimg320@gmail.com and we'll get together on how to pay and where to send the book. Sorry I don't take credit card payments. Because most sales will be through amazon.com or barnesandnoble.com, or through book stores and historic sites, I just won't have enough personal copies to make credit card sales feasible.

I encourage everyone to get a copy, though, regardless of format or source. You and I will both be glad you did! As one of my favorite readers said in his excellent review, "This is a great read for Civil War buffs and for those wanting to see real life in the nineteenth century!"  

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.

Book Sales Appear Strong!

My book, Richard Gatlin and the Confederate Defense of Eastern North Carolina, was released on March 23, 2015, a little over a week ago. As far as I can tell, book sales are satisfyingly strong. I've sold 27 copies myself from my small cache. I can't tell how many copies have been sold on amazon.com or on barnesandnoble.com but, even though it has fallen back now, at one point early on it ranked around number 124,000 on Amazon in overall sales and 15th in the category of Civil War - Confederate. On Barnes and Noble it has consistently ranked between 450,000 and 550,000. I don't really know what any of those numbers mean in terms of actual sales, however.

At any rate, I have heard from a handful of folks who have read it and let me know about it that it is a good, easy-flowing read. They seem to universally relate to and sympathize with General Gatlin too. I am looking forward to the appearance of the Kindle and Nook versions online, but don't know how soon that will be. I learned yesterday that there is only one copy in the Barnes and Noble store in Greenville, NC but that they have eight more copies on order for arrival this week. I have seen online ads for the book also from Target, Wal-Mart, and Sam's Club. Apparently, they either will carry it or sell it online.

This book is not a novel folks, but a biography and non-fiction historical account of Gatlin's life and his command of the North Carolina Department early in the Civil War. I strongly urge each and everyone to go ahead and get a copy, read it, even if you're not a Civil War buff (it's not just a Civil War book), and leave a review out on Amazon or Barnes and Noble. Or just post your thoughts on this blog page in the comments somewhere. If you want a signed copy, email me, then send $20 bucks, and I will get one into the mail (foreign delivery extra). Thanks to each and everyone who has bought, will buy, and has read or will read my work.   

Can America run out of money? No.

Can Americans run out of money? Yes.

Let's examine these two seemingly contradictory assertions.

First, America, that is, the United States government, cannot run out of money because it actually creates money by spending. You see, US dollars are essentially federal government IOUs. Dollars are created when the federal government issues checks or makes electronic payments and the recipient's bank increases the balance in the recipient's account by the amount of the payment. At that point of balance increase, and not before, money is created in the US economy. If nothing else, the US government is authorized by the Constitution to spend. Of course, Congress could theoretically put an end to federal spending through legislation. That legislation might end government spending, but, it technically would not end the government's ability to spend. Thus, the federal government, which does not need to have money in order to spend money, can never run out of money.

What about the federal "debt" you say? Well, decades ago Congress enacted an arbitrary law that requires the US Treasury to sell Treasury securities in an amount equal to the difference between federal spending and federal tax collections. Get that? Spending does not follow Treasury security sales. Rather, Treasury security sales follow the amount of federal spending and tax collections. The federal "debt" that everyone complains about is the amount of outstanding Treasury securities, not some amount of money the federal government had to borrow to pay for its spending. The "debt ceiling" is a limit on Treasury sales, not a limit on federal spending per se.

Now, on to the second assertion - Americans can run out of money.  

Money is created in two ways: 1) through bank lending, and 2) federal spending. In both cases, the private sector, of which the American people, households, businesses, and local and State governments are a part, are the recipients of this newly created money. With bank lending, however, the borrower incurs a responsibility to pay the money back. When he borrows $1000 from the bank he must pay it back, with interest. Consequently, if money came only from bank lending there would be no net money in play except for loan defaults. A growing money supply would necessarily be only the flip side of a growing private sector debt load. In aggregation, the private sector cannot, has not, and will never be able to create a positive net amount of money. If it had to depend on itself, the private sector would always stay in the hole to the tune of interest amounts.

On the other hand, when the federal government spends into the private sector (all its spending goes into the private sector by definition) there is no requirement that that money be repaid to the federal government. However, there is a little thing called federal taxes. The money paid to the federal government in the form of taxes simply reduces the net amount of money the federal government has injected into the private sector via its spending. If the federal government were to tax back exactly as much as it spends, then there would be no net money flowing to the private sector and the private sector would eventually run out of money, and be unable to save a dime or pay interest on any private borrowing. Oh, by the way, that situation where the federal government taxes back every dollar it spends, thus depriving the private sector of any net money flow, is known as "The Balanced Budget". Good thing we don't have a Constitutional requirement to balance the budget, huh? Hear me Oh Tea Party, Libertarian Party, Republican Party, and even Democrat Party!!!

Book Sales Are On!

Okay. Now that the publication date of March 23,2015 has come, book sales are officially under way. I can't tell how many copies have been sold on amazon.com and Barnes and Noble, but I had an impromptu book signing at the Kinston Civil War Round Table meeting tonight and sold my first 15 copies. Gatlin's story wraps itself around many of the major events of the 19th century and I really want it to get out there into the reading public. I'll bet you did not know, for example, that as a new West Point graduate in 1832 Gatlin and several of his newly graduated classmates volunteered to join General Winfield Scott on the first Great Lakes military steamboat armada, from Buffalo, NY to Fort Dearborn, IL, to fight in the Black Hawk War. Unfortunately, a deadly cholera outbreak short-circuited the voyage, several hundred soldiers died, and the West Pointers returned to Buffalo having faced the army's greatest enemy - disease. That was the first, but not the last time that Gatlin would come face to face with death and win. His family was not so lucky however. Check out Richard Gatlin and the Confederate Defense of Eastern North Carolina. It's not just a Civil War book.