–Taking Big Government outside the box. Separating money creation from money direction.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.

One central myth forms the foundation of the right wing / left wing debate — a myth that energizes the right wing against “Big Government” — and that myth is the belief that dollar creation inevitably requires dollar control.

Few people are opposed to Big Government per se; instead, they oppose what they believe Big Government does, namely take away our personal freedoms. Consider the objections to “Obamacare.” Yes, there are the usual budget concerns expressed by those who don’t understand Monetary Sovereignty, but the more visceral objections have to do with the potential for “Big Government” to rule our lives.

Sarah Palin’s fictional “death panels” were her woolly-headed attempt to scare voters about the loss of their personal freedom. Her “Mama-bear” persona speaks to personal control and freedom. The debate about mandatory purchase of health insurance is a debate about freedom. The gun-control debate is more about freedom than about guns. The abortion debate devolves to a disagreement about personal freedom’s boundaries. The Patriot Act’s bitter debates have had to do with personal freedom.

America fought the Revolutionary war for freedom. The Boston Tea Party was about freedom, as is the current Tea Party. Americans are born into a cowboy, can-do, independent mind-set. President Obama tapped into it with his “Yes we can” mantra. John Wayne is an American icon, because he symbolized personal freedom. “Socialist” is a powerful epithet, because to many Americans, “Big Government” is a synonym of “Big Brother,” the all-seeing, all-controlling, monster entity that will turn us each into a helpless robot, taking away our freedoms.

And it doesn’t have to be that way.

Yes, the federal government has the infinite ability to create dollars, limited only by inflation. That is a fact. But the mere production of dollars does not need automatically to confer power over those dollars. The federal government could retain its ability to create the dollars, while being stripped of its ability to direct most of those dollars.

Visualize a new nation, called “Freedom.” The Freedom federal government creates dollars, which on a per-capita basis, it distributes to each state, each county, each city and each person. There would be no federal, state or local taxes. The states, counties and cities would get all their money according to a formula, and spend the money they receive according to their local requirements. The people would spend the money according to their personal desires.

Federally directed spending would be limited to national defense (the military, CIA, FBI et al and the few other instances where state control would be inefficient). All other initiatives – transportation, communication, ecology, education, food inspection, police, fire protection, health care, justice, would be paid for by the Freedom federal government, but directed by the states and local governments.

Where state and local governments disagreed about some mutually important question (for instance water rights, air space, pollution, etc.) some form of arbitration could be established to settle the issue. Where greater efficiency can be attained by combining jurisdictions the states and local governments could create mutually appropriate ad hoc entities.

In essence, what I have described is something resembling the 13 original colonies, sovereign as to most laws, but hanging together for mutual protection. The Freedom states, counties and cities tell their federal government: “You create the money and give it to us; we’ll decide how to spend it.”

The argument over “Big Government,” is not so much about “bigness” as it is about control. While Americans enjoy the benefits of federal spending, they chafe under federal control of spending. What if we were to separate the money creation from the money control, having the federal government continue creating dollars, while the local governments control their use? Now some may believe that “He who pays has the say,” but I wonder whether that is necessarily true.


Rodger Malcolm Mitchell

No nation can tax itself into prosperity, nor grow without money growth.

4 thoughts on “–Taking Big Government outside the box. Separating money creation from money direction.

  1. Under the constitutions of many (all?) States, the State government controls the existence of local governments. See, e.g., NC Const., Art. VII (“The General Assembly shall provide for the organization and government and the fixing of boundaries of counties, cities and towns, and other governmental subdivisions, and, except as otherwise prohibited by this Constitution, may give such powers and duties to counties, cities and towns, and other governmental subdivisions as it may deem advisable.”)

    The State legislatures can create or dissolve local governments at will. The money, then, would have to be distributed to each State. The State would then determine how to allocate the Federal dollars as needed.

    But your broader point stands and we could still do away with federal taxes.


  2. Thanks Larry,

    Your right. I suspect the details (where the devil lives) might be different for every state. The concept is to give people more power to make spending decisions about the things that affect them.

    Rodger Malcolm Mitchell


  3. Interesting. I think the question of residency would get very sticky if such a system were in place and states took different approaches.


  4. Andrew,

    States already determine legal residency for voting and taxpaying. Insurance companies do the same. Usually, legal residency requires proof of physical residency for at least 6 months + 1 day, and the state government looks at spending, i.e. credit cards, tolls, etc.

    Rodger Malcolm Mitchell


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s