–Monster scandal; massive confusion; when will taxes end?

Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor,
which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive.

=====================================================================

The U.S. federal government originally passed the laws that created the U.S. dollar. Ever since, the government has passed laws that alternatively made the government Monetarily Sovereign and monetarily non-sovereign.

A Monetarily Sovereign government has the unlimited ability to create its sovereign currency. A monetarily non-sovereign government does not have this ability, either because it doesn’t have a sovereign currency (example: the euro nations), or its currency is pegged to the dollar:

As of 2008, there were at least 17 national currencies pegged to the U.S. currency, not counting other organizations that maintain a similar link. These include the Netherlands Antillean guilder, Aruban florin, Jordanian dinar, Bahrain’s dinar, Lebanon’s pound, Oman’s rial, Qatar’s rial, the Saudi riyal, Emirati dirham, Maldivian rufiyaa, Venezuelan bolivar, the Belize dollar, the Bahamian dollar, the Hong Kong dollar, the Barbados dollar, the Trinidad and Tobago dollar, and the Eastern Caribbean dollar, which is used by Antigua, Dominica, St. Kitts, St. Lucia, St. Vincent, the Grenadines and Grenada.

Occasionally, a Monetarily Sovereign government may pass laws that restrict its ability to create its sovereign currency. Examples in the U.S.: The debt-limit laws and the current austerity laws, all of which have no economic purpose, but solely are in place to give the illusion of economic prudence.

Because the U.S. government controls its own laws, it has the unlimited ability to revise those laws at any moment, meaning it has the unlimited ability to create as many sovereign dollars as it wishes, at any time.

Given this ability, the U.S. does not need to ask anyone for dollars, not you, not me, not China. Thus, federal borrowing and federal taxing do not support federal spending. Whenever the U.S. government wishes to pay a bill denominated in dollars, it simply creates those dollars at the press of a computer key.

In summary, federal tax collection is a useless, time wasting, manpower wasting, ineffecient and unfair exercise, which is why the following article should be of interest:

New York Times
Confusion and Staff Troubles Rife at I.R.S. Office in Ohio
By NICHOLAS CONFESSORE, DAVID KOCIENIEWSKI and MICHAEL LUO
Published: May 18, 2013

During the summer of 2010, the dozen or so accountants and tax agents of the Internal Revenue Service office in Cincinnati got a directive from their manager. A growing number of organizations identifying themselves as part of the Tea Party had begun applying for tax exemptions, the manager said, advising the workers to be on the lookout for them and other groups planning to get involved in elections.

Low-level employees in what many in the I.R.S. consider a backwater, they processed thousands of applications a year, mostly from charities like private schools or hospitals.

For months, the Tea Party cases sat on the desk of a lone specialist, who used “political sounding” criteria — words like “patriots,” “we the people” — as a way to search efficiently through the flood of applications for groups that might not qualify for exemptions.

Visualize it. Congress and the Supreme Court tweaked the law and some lone schnook had to interpret them and apply them to thousands of applications.

But it gets worse:

Overseen by a revolving cast of midlevel managers, stalled by miscommunication with I.R.S. lawyers and executives in Washington and confused about the rules they were enforcing, the Cincinnati specialists flagged virtually every application with Tea Party in its name.

But their review went beyond conservative groups: more than 400 organizations came under scrutiny, including at least two dozen liberal-leaning ones and some that were seemingly apolitical.

Do you remember the “I Love Lucy” show, the episode titled, “Lucy Goes to Work”? Lucy and Ethel find a job in a chocolate factory, where they stand at a production line, trying to wrap chocolates.

The chocolates come down the line faster and faster, overwhelming Lucy. You should stop now and look at it. It’s a scream — and is the perfect description of what was happening at the IRS.

Now, think of that production line and imagine that the chocolates had no value at all, and the whole process was unnecessary. That’s the IRS.

Over three years, as the office struggled with a growing caseload of advocacy groups seeking tax exemptions, responsibility for the cases moved from one group of specialists to another, and the Determinations Unit, which handles all nonprofit applications, was reorganized. One batch of cases sat ignored for months. Few if any of the employees were experts on tax law.

“The I.R.S. is pretty dysfunctional to begin with, and this case brought all those dysfunctions to their worst,” said Paul Streckfus, a former I.R.S. employee who runs a newsletter devoted to tax-exempt organizations. “People were coming and going, asking for advice and not getting it, and sometimes forgetting the cases existed.”

Administering the nearly four-million-word federal tax code involves so many arcane legalities, and is so fraught with potential to ignite Washington’s partisan skirmishes or infuriate taxpayers, that much of the I.R.S. is run by lawyers.

But the Exempt Organizations Division — concentrated in Cincinnati with fewer than 200 workers, according to I.R.S. officials — is staffed mostly with accountants, clerks and civil servants.

The article gets worse and worse; I don’t need to continue. You can read the entire article if you wish, but you get the picture. It’s “I Love Lucie” meets the Keystone Kops.

The point: Here is a giant organization, employing thousands of people, spending billions of dollars, causing millions of Americans to spend billions of hours (many of whom will be prosecuted for not spending those hours) — and all for naught.

The federal government has no use for the dollars collected, and in fact, the dollars sent to the government disappear and no longer are part of the money supply. It’s the classic having one team dig holes and a second team filling them up.

I have no objection to the federal government hiring people for useless work. This pumps dollars into the economy. It supports thousands of IRS employees’ families, plus thousand more businesses and their employees.

But I do object to having millions of Americans waste billions of person-hours, doing unpaid, useless work, and wasting more billions of dollars to prosecute those who do the work wrong. Those wasted hours never can be recovered.

And did I mention the waste of time by an “irate” (fake irate) Congress, investigating the scandal of their own making?

I wonder when America will come to its senses and simply do away with the federal tax, its collection and the related prosecutions. The whole process is nuts.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================

Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone. Click here
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

#MONETARY SOVEREIGNTY

25 thoughts on “–Monster scandal; massive confusion; when will taxes end?

  1. Only time the IRS is of any value is when they hand money out. Let them keep their pay and send them back to school on it to study something really worth while. Wasted intellects!

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  2. same here. totally agree–though i’m puzzled by this statement: “I have no objection to the federal government hiring people for useless work. This pumps dollars into the economy.”

    you have got to be kidding, rodger!! have you forgotten your rants against the so-called “JG” here and even on other MMT blogs last year? or have you had yet another “change of heart” (in this case, literally)?

    a change of heart like FDR apparently had:

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    1. JG is is proposed to be an “unemployment solution,” that offers minimum-wage make-work to everyone, everywhere in the nation.

      For the several reasons I have described, I oppose that as a solution to America’s unemployment

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  3. Government spending needs to exceed amounts collected in tax by roughly 10 to 30% in a recession. And occasionally, and with a view to controlling an economy that is overheating, taxes may need to exceed spending: i.e. a government may need to run a surplus. But Roger’s claim that government does not need to collect tax at all is going much too far: that would just result in rampant inflation.

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    1. Two separate issues:
      1. The government’s power to create dollars, and
      2. The effects of deficits.

      The federal government does not need to collect taxes in order to pay its bills. (State and local governments do need to collect taxes in order to pay their bills.)

      Yet another separate issue: Using taxes to fight inflation is unrealistic: Tax policy is:

      –Too slow and too political (By the time Congress agrees and then, by the time the tax actually is collected, the economy would be in free-fall.)
      –Too unfair (Raise taxes on whom?)
      –Too uncertain in effect (How much should each tax be raised?),

      Using taxes to fight inflation is an idea that demeans MMT’s usually logical proposals. It simply cannot work.

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    2. i totally agree with ralph.

      but i also totally agree with rodger. why?? because, though rodger puts forth state & local taxes in opposition to “MMT’s” federal tax, they don’t necessarily have to be opposites. the “state & local” taxes could be used as a stealth “federal” tax. in fact, based on statements i occasionally hear from people in congress, i often wonder if that is actually the case right this very moment.

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    3. @Yuu Kim: There is a difference between encouraging the government to hire people for useless work, and FORCING the government to hire people for useless work, as the MMT “jobs guarantee” would do. When such a scheme becomes mandatory and obligatory, it has myriad problems and unanswered questions, which Rodger has discussed in past posts. MMT people have never come close to answering any of those questions.

      In any case, the goal is to get money circulating in the economy, regardless of how it is done. This is the opposite of austerity.

      ++++++++++++++++++++++++++++

      Ralph Musgrave says: “Roger’s claim that government does not need to collect tax at all is going much too far: that would just result in rampant inflation.”

      Spoken like a true austerian. “No matter how bad things become now, any change would make things infinitely WORSE.”

      Put another way: “The genocide that is austerity is the only thing preventing genocide. We must exterminate you to save you.”

      First, it is an ABSOLUTE FACT that the US government does not need or use tax revenue, and actually destroys tax revenue upon receipt. The government creates, spends, and destroys money by instructing banks to change the numbers in bank accounts (credits and debits). Money is purely digital. Coins and notes are claims to digital values. When the government credits (adds to) accounts, the money “comes from” nowhere. When the government debits (subtracts from) accounts, the money “goes” nowhere. It is destroyed.

      Second, the other question is whether the US federal government SHOULD collect taxes. If (and that’s a big “if”) taxes prove necessary to control inflation, then taxes can be collected at the state, county, and municipal level. Federal taxes are a form of austerity. The federal FICA tax is an odious penalty aimed at the middle and lower class. Again, the federal government does not need or use FICA revenue. To eliminate the FICA tax would be to give working Americans an 18% raise, plus an 18% boost in profits for employers. Equally odious are federal taxes on corporations. And consider all the wasted, non-productive hours spent on figuring one’s income taxes. It’s absurd. All federal taxes should be eliminated. Monetarily Sovereign governments do not need or use tax revenue, Federal taxes are rife with illogic and injustice. The IRS can persecute you for no reason at all. It’s madness.

      Can anyone prove that the elimination of federal taxes would cause “runaway inflation”? Are there any historical examples involving Monetarily Sovereign governments? ANY? No. To say it would cause “runaway inflation” is to falsely assume that inflation is simply a product of the money supply. In reality, inflation is a product of [a] demand and supply of goods and services, [b] faith in government (or lack thereof) and [c] energy prices. (Changes in energy prices drive changes in all other prices.)

      In any case, the federal government can control the money supply by controlling spending. Even now, 85 billion dollars a month “leaks” out of the US economy via the foreign trade deficit.

      This is one area (among several) where the MMT people and I live in different universes. They adore federal taxes. I say federal taxes should be eliminated or dramatically reduced.

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  4. Re: Using taxes to fight inflation is an idea that demeans MMT’s usually logical proposals. It simply cannot work.
    ——
    OK, what will work? Cutting spending is also slow and political.

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    1. The system the Fed has used for many years, to reach its inflation target: Interest rate control.

      Demand for the dollar is based on risk and reward. The reward for owning a dollar is interest. Raising interest rates makes a dollar stronger, i.e. is anti-inflationary.

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  5. What is inflation?

    Is inflation an increase in price and deflation the opposite relative to demand and supply?

    Than why do prices rise sometimes on falling demand? Why do prices drop on rising demand?

    The reason an MMTer will never be able to answer this question is because inflation is not related to prices. The word “inflation” is simply mis-used by the elite and their minions to confuse the masses. Why? Because they don’t want the people to figure it out because the day they do (and they will), the day a revolution begins.

    Inflation is an increase in the money supply and credit. Note that I said money supply and CREDIT, because the Federal Reserve does not normally create money, it creates CREDIT and hands it out to the government who than spends it like money.

    That money is SPENT into the economy. Simple logic tells you that if 5 million in demand for bread show up today (no government spending); while tomorrow 10 million show up tomorrow (government spending), prices will close to double as demand has just doubled. Not only are the suppliers being robbed of their earning power, so are the consumers who had to work for their funds.

    MMT is fatally flawed from the getco by focusing on giving things for “free” and “equality”. Why don’t you go and ask the producer if they produced it for “free” and see what their answer will be. Go see why politicians are voted in and I bet you will see similarities in MMT theory. That should create some flags..

    What should be the focus of MMT and any other theory? Well, as Mr. Mitchel says while defending the government’s sovereignty, Sir, which existed first, fiat money or goods and services. Fiat money or gold?

    The focus of any theory should not be on “free”, it should be how to increase a country’s output because output is what makes citizens wealthier. The focus of our government should not be “equality”, it should be in enforcing the laws and letting risk takers eat their losses, banks fail, companies like GM and their union thugs fail. Letting these companies fail actually removes wealth from the upper 1% and re-distributes it to the lower tiers. You do not get a check, but you are benefited overall.

    Let’s start using our brains.

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    1. Flash: Again, the common modern meaning of “inflation” is price inflation. Not “monetary inflation”, increases in the money supply however that is understood, and yes, “monetary inflation” is the older meaning of the word “inflation”. So what? Because price inflation is important, and monetary inflation isn’t. The only reason anybody ever cares about monetary inflation is that it can affect price inflation.

      But the relationship is not simple and direct. Your “simple logic” is illogical, and just plain wrong. That’s not how it works in reality and in theories like MMT that try to understand reality. Your “simple logic” contradicts your third and fourth sentences even! No, prices would not double if demand is doubled, in most sectors of the economy, especially at times like these, with high unemployment. The lack of government fiat money is starving an otherwise healthy economy.

      Sir, which existed first, fiat money or goods and services. Fiat money or gold?
      The goods and services existed first, produced in traditional economies which were run on forms of informal credit. Then Fiat money existed, which was nothing but formal credit. Gold was a latecomer and came much later.

      MMT or MS does not focus on “free” or “equality” Good economics focuses on understanding economics. Everybody here knows and understands your arguments very well. And understands their flaws, and how whatever truth they contain is incorporated into better theories.

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      1. There is no “price inflation”, there is inflation of the money supply which results in an increase in the price of goods and services. Savings and loans bubble? Tech Bubble? Housing Bubble? Government Debt bubble? What do you suppose caused those?

        We are much more productive today than before, yet when was the last time you saw prices drop. More credit in circulation is what. And it was not the “speculators” as some claim, speculators cannot speculate if they don’t have the money/debt and the government back-stop them.

        Yes, prices will double if you double the money supply. Why do you think counterfeiting is illegal? It’s not the tokens that will make you wealthier calgarus, even gold only a metal which cannot be eaten. It’s the output that will and you cannot increase output by stealing from those who produce it. You cannot increase it by giving people “free” money. What happens when you produce less while demand increase? I don’t think we need to take a course on rocket science to figure that one out.

        Gold came WAY ahead of floating fiat currencies, that was my point.

        MMT and MS may attempt to understand economics, but the focus is how more spending is somehow going to save us. Little difference than Keynesian economics really.

        Again, the focus should be on how to reward people for doing the right, ethical, human thing to do and produce things which will be used or eaten by their fellow humans. I am not surprised that there will never be an Austrian Central bank, but tons of Keynesians. I bet MMT and MS will get there first and it wont be because they want to “help” people, but because of an agenda to defend the bad deeds of our government. We have reached a point where everyone is out for themselves, those saying otherwise are the worst offenders.

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        1. Saying that there is no price inflation, but there is increases in the prices of goods and service is gibberish. That is what price inflation means. Prices don’t double if you double money supplies, however you understand “money supply”. This is because the very concept of “doubling” is problematic. Money is not a thing which we can double the amount of, but a relationship between a creditor and a debtor. The relationship between monetary inflation and price inflation, which is all that anyone sane cares about, is complex and little understood, and not all that important. Sure, you can say that if the money supply went up by a factor of a billion, prices would go up by around a billion, give or take a factor of ten, say. But doubling meaning doubling? Please.

          Right now, if the government printed a lot of money and just helicopter dropped it, prices would not change, but production and real wealth would. Basically, flash, you don’t understand what you are talking about, and you are trying to educate people who know much better. This doesn’t mean that we think we should just give people money for nothing. Just that in current conditions, it would be better than what you propose.

          The government spending to employ the unemployed to produce real wealth, spending on direly needed, efficient social programs is in no way stealing from anyone else. If someone builds a house with his own two hands a hundred miles from you, is he stealing from you because he diluted the house-supply? Surely you think this is insane. If you understood what you are saying about money and production, you would realize it is just as crazy. It is almost identical to the house supply dilution example. You definitely can increase output by increasing demand. If this increased demand is coming from money which comes from increased production, then the idea that anyone is stealing from anyone is bizarre.

          Gold did not come way before fiat currencies. “Fiat currencies” are truly, truly, ancient. Some historians speculate, on the basis of tally sticks, that they are as many as 40,000 years old. Unquestionably, ancient money, in Sumeria and Egypt is best analyzed as “fiat” currency.

          Yes, MMT, MS = Keynesian economics, more or less. MMT etc makes sense. It accords with addition and subtraction = accounting. Most other economics fails elementary school, even if it pretends to use advanced mathematics.

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        2. Hmmm hmmm Calgarus,

          So you are telling me that it’s more productive to re-direct purchasing power from the producers to the non-producers. And you think this will kick start the economy because the producers will be so happy about getting their purchasing power stolen from that they will ramp up production. You clearly lack understanding the implications of issuing un-backed currency and your statement makes me think we are close to a large event related to fiat money, simply because people seem to think there is some sort of value to a piece of nothing. Not the case sir…

          We diverge in the social spending item. As a society we totally lack critical thinking. What good does it do us to have the government take 2 dollars and hand us back 1. What good does it do us to have the government send us a 200 check while prices of food and other necessities go up by 300?

          We think we can somehow break the laws of physics and can somehow create things out of nothing. I know we will soon find unicorns that can crap gold out of their behinds, just around the corner. Unfortunately Calgarus, anything the government gives is taken from someone else whether there unicorns or not. People work more when they are not stolen from and produce less when they are.

          Let’s give you an experiment. Go look and see how much our government spending has gone up, say, in the last 30 years. Than go and look at how much our output has grown (hint, it hasn’t grown, it has gone down!!!). Are you surprised that people don’t want to work and that those employed by the government rarely produce anything?

          Tally sticks are not floating fiats like our currencies today. I bet anything that gold has been used as currency for longer than any other type?

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  6. ” . . . why do prices rise sometimes on falling demand?”

    Inflation is based on the relationships between money and goods/ services.

    Thus, there are four variables:

    1. The supply of money
    2. The demand for money
    3. The supply of goods and services
    4. The demand for goods and services.

    In the past 40 years, the key inflation variable actually has been #3, led by oil. See: https://mythfighter.com/2010/04/06/more-thoughts-on-inflation/

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    1. #2, 3 and 4 cannot be controlled by people, only the market will set those. How about #1 sir, hasn’t the government been controlling that one?

      I saw oil go from 13 bucks a barrel to 120 without much increase in demand, and I’ve been following the market since 2000. If demand did not increase, and supply did not change, than what made it go up 10 fold? Dare I say #1 coupled with #2…

      And it’s #1 and #2 for housing, for cars, for medicine, for food, for everything sir.

      The market was trying to clear out the system in 2008 and there was a sharp drop in #2, which was immediately picked up by… our government…. So prices began to rise again… and the consumers could have really used lower prices just about now Mr Mitchell.

      Sometimes I think the majority are on another planet, why would people want inflation instead of deflation is beyond my ability to understand. I would personally be able to purchase more things with my money. That’s just me.

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      1. ” . . . why would people want inflation instead of deflation is beyond my ability to understand.”

        Not sure I can solve that problem, but . . .

        Inflation is an economic stimulus, because it encourages people to buy now, rather than waiting for later. Deflation is an economic depressant, because it encourages people to wait until later, before buying.

        Also, #1 and #2 are controlled directly by the federal government. #3 and #4 are partially controlled by the federal government via deficit spending. From the standpoint of inflation, #2 and #3 have been most important.

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        1. Inflation is simply a currency phenomenon coincidental to a growing system?

          If the number of interacting components in a system is growing, there have to be more liquidity units over time, and hence a tendency for higher units/item as existing items become either standardized or extinct.

          The goal is not to freeze the arbitrary unitary cost of currently used items, but to GROW the NET degrees-of-freedom of [individuals + nation] (not that it’s not either alone, but an interactive function of both).

          http://seekingalpha.com/article/1050011-fiscal-cliff-and-deficit-conversation-misses-the-point#comment-12560061
          (note the next response, by zmoney; at least 1 person gets the obvious)

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        2. Roger,

          Coincidental? Than why are computers cheaper today than a few years back? Truth is the economy tends to be deflationary by nature. The innovator tends to make a bunch of money on the onset, but the market becomes immediately saturated with competitors that push down the prices to the benefit of the consumers. I’m not sure who is the liar, but I see the so called “socialists” fighting competition. Amazing….

          What is the intended benefit of the “goal” you mention?

          Before you answer, there is no reason at all why the amount of currency needs to grow. The amount of currency in circulation has NOTHING to do with the wealth of a nation. The wealth of a nation is summed up in 2 words, output and savings.

          Fiat currencies are nothing by measurements (as stated by Mr Mitchell himself on an old post), a bunch of cups. The output is the water. Obviously, the more water, the wealthier the nation gets. While more cups simply divides the existing water into more cups. It does nothing for the economy and a second grader should be able to tell this. It’s not rocket science.

          But, using GDP is convenient because it includes newly issued debt, which is meaningless in terms of growing output and savings.

          Mr,
          If newly un-backed issued dollars have intrinsic value, than why do people have to produce what you purchase with it with their labor? Producers and consumers has entrusted the government with the power to protect their purchasing power, not steal it. Counterfeiting is illegal for a reason sir.

          Inflation is an economic stimulus? I see, so you mean to say that you are more thrilled about spending if someone steals from you. See… if you spend it quick enough, the thieve wont have a chance at stealing it from you. Makes perfect sense and I’m sure everyone feels wonderful about it. Yes, savings are a bad thing…

          Here is the answer sir… savings, deflation are good things, not bad… having purchasing power stored for a rainy day is a good thing. Going to the supermarket and getting cheaper prices on meat, rice, cereal is a good thing. Will I stop buying meat and rice because these are cheaper? You tell me sir, should I stop eating?

          MMT and Keynesianism are lies, bold flat lies.

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        3. Flash:

          While more cups simply divides the existing water into more cups. It does nothing for the economy and a second grader should be able to tell this. It’s not rocket science.

          Yes, but your “cups” metaphor is simply wrong. Government spending – or bank/private debt driven spending can create new wealth, not just distribute existing wealth. Money is not a thing, which can be divided, but a relationship. Intuition is great, but you are using intuitions about the wrong things. Such theories of money are like “The Man Who Mistook His Wife For a Hat” (Oliver Sacks’s book) Mainstream theories are based on an utterly crazy category mistake. And completely fabricated history. Like it or not, markets come from money. And money comes from the state. Not gold, not silver. Not people freely trading amongst themselves. From governments. Money, markets – they ARE government interventions. The idea that “governments shouldn’t intervene in markets” is impossible.

          Stable prices are best, but deflation is ordinarily much worse than inflation, because deflation ordinarily causes bankruptcy and unemployment and endless depressions. And the natural state of a peacetime capitalist economy is deflation. Partly because monetary, financial savings tends to cause real world dissaving, real profligacy, real disinvestment : above all the colossal profligacy called unemployment, which would be the consequence of the policies you support. Because people save money, the government has to print more money than it taxes away. If it didn’t, the wheels of commerce would grind to a halt. There would be an endless Great Depression. Throughout history, governments have always spent more than they taxed. This is NOT devaluing currency, this is NOT causing inflation, but a good and necessary thing.

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        4. \Is a relationship not a thing? Money is a thing designed to hold purchasing power. If you want to call that relationship, beats me, to me – it’s a thing.

          I’m not sure where you are getting your history with regards to the markets, but are you telling me that people can’t trade without money? Because I have personally done it and many times. So than markets do NOT come from money. Markets are more efficient because of money. Money is simply an arrangement between people in which the currency is accepted as a form of payment instead of half a cow or 5 and 3/4 chickens. Growing the cow and chickens took work, that work creates something someone else wants, these things are stored in the relationship/thing you call money. But the chickens and cow didn’t come into existence for free as I stated. It took work to grow them.

          The power to manage the money supply was entrusted onto the government by us, the people. As a matter of fact, manipulating the money supply is an act of treason. I suggest you look up counterfeiting and understand why it is illegal and an act of treason. Why do you think the handed the power to the Federal Reserve? What do you think your government will say when crap hits the fan? That it was not our fault because it’s the Fed that’s in charge? See how that works?

          I have given and continue to give examples as to why increasing the money supply is theft, while all I get in return is “deflation is bad because people wont spend”. Again, are you telling me that I will stop eating, driving, etc because I don’t want to spend because I will wait for lower prices? The reason you can’t answer is because it doesn’t make sense. People spend when they want/need something whether prices are dropping or not.

          This is the way it works calgarus, prices will drop until there is enough demand to support a certain price. Per demand and supply this is a perfectly normal scenario. The reason prices are dropping is because people can’t afford them. What do you think higher prices do for the poor people that don’t have access to credit, like the rich. It steals from them, that’s what. And it steals from producers too, that’s the reason unemployment is over 7 percent, and our output has been plummeting for years.

          Do you now see why I stated that the government hands the poor a check for 200 bucks, while stealing 300 from their pockets?

          Bankruptcies…. this is a more complicated topic, as irresponsible lowering of interest rates causes speculation and higher risk taking by companies and banks. The speculation would not have happened if the government was not manipulating the interest rates in the first place. Banks and companies like GM take huge risks as not only do they have more debt and lower rates to play with, they have the full backstop of the government. Is it any wonder banks and companies like GM are a mess and basically worthless? I mean, the reason their cars were selling is because the government was buying their cars, not because their cars are any good. They are crap as a matter of fact. Companies that are well run do not speculate and measure their risk while making decisions.

          The issue with our current system is that we’ve been issuing ever more debt leveraged on a limited amount of assets. We’ve been pulling demand forward which feels good, but is not healthy. It’s like drugs, it feels good but destroys you in the long run. Why? Because when you can only pull demand forward so much, and you can only get high so much. In the end, you will revert back to the mean whether you like it or not. The mean is not a bad thing, but will sure feel like it.

          The reason unemployment is so high is because prices are too high point and simple. The market is not being allowed to work. If we did, prices would immediately collapse until demand could support and hiring would again be restored and we would move on with the poor and middle classes holding on to what they so rightly earn. As I have said before, the poor and middle class don’t need a stinking bone, all we need is to keep what we have earned.

          I support cutting spending and balancing the budget tomorrow even if it means a medium term collapse. Not because I’m a masochist, but because by the time we wake up from this “dream” it will be much worst and the drop will be from much higher. You may feel much better in the mean time, but I guarantee you there will be a war around us.

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