(a) Spending at rates which usher in unacceptable levels of inflation, or spending more than the economy can absorb at full employment.
(b) Supporting political preferences which contradict fundamental principles of Monetary Sovereignty. Our forty years of austerity policies is a prime example. Policies grounded in obsolete gold standard rubrics which force economies to grow too slowly and indeed stagnate in real terms.
2. As mentioned above, Federal taxes that all Americans pay in one form or another DO NOT PAY FOR FEDERAL EXPENDITURES. This has been indisputable FACT since 1971. Thanks to Nixon, the world was in transition from an international gold standard to today's international fiat currency standard.
During the gold standard, it was "tax and borrow to defend a finite supply of gold". The US Government could always spend, with or without taxation and borrowing, because it was then and still is today the exclusive issuer of US Dollars. But how it did so during the gold standard was called "printing money".
The concept of printing money to fund federal spending does not exist in today's fiat currency regime. It is purely a gold standard federal spending operation. (Back then) if the US Government wanted to increase the amount of US Dollars in circulation, it would print dollars and spend them into the economy. Doing so could threaten the gold supply as well as devalue the dollar.
In the fiat currency regime that we have today, all federal spending is the manufacturing and disbursement of NEW US Dollars. The federal government spends by crediting bank accounts with its IOU (US Dollars).
What this means in layperson's terms is that the US Government enters a bank account somewhere and types numbers into that account, thus raising the numbers up. (Source Ellis Winningham .gl/vxQQ2E)
The act of taxation withdraws dollars from the economy. Those receipts NEVER RE-ENTER THE MONEY SUPPLY THEY ARE DESTROYED.
3. Trump's tax "Reform" will not be "paid for". Economists claim the economy will not be sufficiently robust to pay for his "reforms". Revenue shortfall estimates range into the trillions over ten years threatening huge deficits and burdening future generations and blah, blah, blah.
I'm dismissive of these arguments because I know the Federal government NEVER needs REVENUE per se to fund itself. Full stop. End of discussion.
However, allow me to reiterate, the sole issuer of dollars never needs an income of dollars. WHY would it? If you the reader issued ex nihilo all the money your family needed why would you need a job to bring in money? You're the sole issuer. It is only the issuer that never needs revenue/income to fund itself. The rest of us, families, firms, states, non-monetarily sovereign governments (EC/Euro members) are USERS of dollars, Yen, Pounds, etc. We need to get out there and make a buck to pay taxes and other bills. The Federal government never has nor doesn't have dollars.
So, where's this taking us? It's a place we should have been in 1974. A nation fully understanding that government was not financially constrained to fund public purposes since we were not at full employment. That means Nixon could have had his universal health care success. Democrats could have had a free public education system from pre-K to post Grad. Conservatives could have had the best defense fiat currency could buy. Our transportation and infrastructure repair would be a non-issue today. And much more.
But instead, we're mired in obsolete gold standard beliefs and practices that put us further and further behind in just about every metric of economic, social, medical, and technological development.
We'd love to have the fast trains of Japan and Europe. The universal health care of Cuba, Sweden, Canada. The EC's education system, Germany's transition from fossil fuels to alternative energy made possible by its trade policies more so than by its monetary policies.
We can't get there while most folks, wrongly, fret about "how are we going to pay for it." Alan Greenspan told Paul Ryan in his testimony before Ryan's Budget Committee in 2010, "A sovereign government can always make payments as they come due by crediting bank accounts -- something recognized by Chairman Ben Bernanke when he said the Fed spends by marking up the size of the reserve accounts of banks." (Bernanke was referring to the $29 TRILLION bail out of the financial and other sectors during his interview with Scott Pelley on "60 Minutes" in 2009.)
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