An alternative to popular faith
Representative Earl Pomeroy, a North Dakota Democrat, famously told AIG employees: “Give us our money back.” He had no idea what he was talking about.
Imagine that you rent an apartment in a large building. Every month, each tenant sends the landlord rent. One month, the landlord decides to give one of the tenants a gift of $50. Did the landlord give that tenant your money or did he give his own money?
Imagine that the tenant spends the $50 on something you consider to be wasteful. Should you, a fellow tenant, tell that tenant, “Give us our money back”?
Imagine that instead of giving the tenant $50, the landlord lends the tenant $50. Some time later, the tenant repays the landlord the $50 plus another $10 in interest. Have you made a profit?
Now imagine that the rent the landlord collects does not cover his expenditures, so each year he runs a deficit. But he is fabulously wealthy, so he never has problems paying his debts. Do you owe the landlord’s creditors or does the landlord owe his creditors? Are your grandchildren liable for the debts or is he?
Seems pretty silly, doesn’t it? Yet exactly that kind of thinking permeates the discussions of our economy.
In essence, the federal government is our landlord, to whom we pay “rent” (taxes). The rent does not cover the government’s expenditures, but the government is so wealthy, it never has problems paying its debts.
When the government gives out stimulus money, it does not give our money (aka “taxpayers’ money). It gives government money, which it creates out of thin air. When the government lends money to a taxpayer, and the taxpayer subsequently repays, plus interest, we taxpayers do not make a profit. Only the government makes a profit. We don’t owe the landlord’s creditors, nor do our grandchildren.
Our “landlord,” with help from the media and politicians, has created the myth that when he takes a loss, we taxpayers and our grandchildren are liable, when he raises our rent or cuts services to reduce his losses, we benefit, and when he makes a profit, we should believe it actually is our profit. Nonsense.
This is a message to anyone who agrees with Rep. Pomeroy and the media, and who believes our landlord spends our money, not his, and we and our grandchildren owe his debts, and when he makes a profit, that’s money in our pocket: I have some costume jewelry I’d like to sell you.
Rodger Malcolm Mitchell
For more information, see http://www.rodgermitchell.com