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America’s disastrous budget deficit
I constantly see garbage like this…
The average person loves this nonsense. It makes him feel “superior.” In my case, it kicks all my meters to extremes…
The lies have no become so popular and ubiquitous that I had to install one of these in my house to keep track of it all…
Let’s review the “debt” and the “deficit.”
WHAT IS THE NATIONAL DEBT?
With any bank, including the Federal Reserve, a deposit is a loan from the depositor. A deposit is a debt. The higher a bank’s debt (i.e. the more deposits) the stronger the bank. The national debt means the total deposits in the Fed by customers. The larger the national debt, the stronger the Fed. Currently the national debt just helps bankers get richer, but if the Fed were to force banks to start lending again (instead of engaging in fraud and speculation), then we would say that the larger the national debt, the stronger America would be, since the deposits can be used to issue loans.
The national debt does not mean that the U.S. government is in debt. The US government cannot be in debt, since the government does not borrow its money from the Fed or anyone else. The US government creates its money out of nothing. The US government is a public entity. The Fed is private and separate.
WHAT IS THE DEFICIT?
The deficit is the difference between (1) the money the government creates and spends into the economy, and (2) the money the government taxes out of the economy.
Whatever the amount of this deficit, the government must sell T-bills to make up for it, because of an obsolete law dating from before 15 Aug 1971 when the USA was still on the gold standard. If the government spends $1 billion more than it robs in taxes, then it has a deficit of $1 billion, and must sell $1 billion in T-bills. Not that the government uses that $1 billion (it doesn’t). And not to “balance the budget.” The government does this because it’s the law. And the law is there because, well, it just is. The law should be modified or abolished.
Does the deficit increase the national debt? Yes, and that is a good thing. The debt only affects the Fed and the banking system, not the government. Every dollar in the deficit is a dollar in T-bills sold to investors, and thus a dollar in deposits at the Fed. You and I do not owe this debt. Besides, debts (deposits) are good. The national debt keeps the Fed fat and happy. It is no more a threat to the USA than having huge deposits is a threat to a bank. On the contrary, it signifies strength.
Currently the Fed boasts $16.1 trillion is deposits. That’s impressive, but the media and politicians pretend it’s a bad thing.
Bank of America’s debt is $570 billion. That’s the amount on deposit at BofA, and it makes BofA powerful.
Politicians want you to think that the more deposits a bank has, the weaker the bank is.
This is the opposite of reality.
OUR DISASTROUSLY LOW BUDGET DEFICIT
The USA is just like a large corporation. It must constantly grow or die. There can be no standing still. (This is nature’s design, not mine.) This does not necessarily mean imperialism. It means that overall economic growth must exceed economic contraction. Company profits must exceed losses. For the USA, money creation (by spending) must exceed money destruction (by taxing) at all times. This is called “deficit spending.” Without it, the US economy will be destroyed, just as any large corporation will be destroyed if profits are exceeded by losses.
Today we have a depression because spending is too low, and taxes are too high. That is, we have a disastrously low budget deficit. (Remember: a budget deficit does not mean the US government is in debt. The government does not borrow its money.) Politicians want to lower the deficit further still, which is the same as lowering a company’s profits “for the good of the company.” And the public believes this garbage.
The Jewish holo-hoax is based on photos that prove nothing. Likewise, deficit hysteria is based on graphs that prove nothing, and even conflict with one another. No one knows what the graphs mean. Not even the people who make them know what they mean. But if everyone chatters about the deficit, then the scare-mongering must be true, right? Wrong. If everyone chatters about the holo-hoax, does that make it true? If kids believe in Santa Claus, does that make Santa true? If everyone chatters about the emperor’s new clothes, does that make the “clothes” real?
One way to reduce the deficit (and thus increase the depression) is to increase federal taxes.
Federal taxes should be abolished, especially the FICA tax, which the government steals from every paycheck of every person who makes $113,700 a year or less. The government steals that money from workers, and destroys it in special shredders located in every major city, like this one…
Just kidding. No, when the government steals the FICA tax, the tax revenue vanishes into nothing. Instead of the bank changing the numbers in your account by twenty dollars (the amount on your McDonald’s paycheck for a month’s work), the government changes it by 20-minus-7.65% =
$18.47 <-- Your pay for a month’s work
Where did that $1.53 go? It went nowhere. It was vaporized.
Since people have no money, the depression is severe. Therefore in 2011 the government lowered the FICA tax rate for employees to 5.65% of every paycheck. When this helped the economy, and made people happy, the government took revenge on the masses by raising the FICA tax up to 7.76% of every paycheck. Again, all of that stolen money is vaporized. Also, your employer must contribute additional FICA taxes for every employee. Therefore employers seek to fire every employee they possibly can. The result is severe unemployment. Lying politicians call this “sound money principles.”
This has nothing to do with the Fed. It is the fault of Treasury, and of lying politicians.
The federal government does not need or use tax revenue. Nor does it need or use any revenue from the selling of T-bills. Instead, the federal government raises funds like this…
THE SECURITY BLANKET
It is human nature to complain, but we enslave ourselves when we make complaining an addiction. We reject whatever does not feed our addiction. For example, if we are addicted to whining that the USA is “broke” and “in debt” and imperiled from “an unsustainable deficit” then we reject the truth. No matter how often I prove that the US government is not in debt, and does not borrow its money, people will nonetheless respond, “I still say the government borrows its money, and is in debt.” People offer no proof for this claim, since any genuine attempt to prove it will remove the security blanket of cynicism.
Cynicism forms a web. For example, many people complain that U.S. tax dollars go to Israel. You can tell them that tax dollars are destroyed upon receipt, that Israel is monetarily sovereign and doesn’t need US revenue, and that most aid to Israel goes to U.S. contractors – but it won’t matter. “I still say we should stop sending out tax dollars to Israel.”
Each part reinforces all the other parts: “I still say that the USA is in debt, the deficit is unsustainable, and we should stop sending tax dollars to Israel.”
Yes, cynicism can be a security blanket. People feel let down when they discover that the USA does not have a debt problem, or that “tax dollars sent to Israel” are meaningless. They feel bored without constant anxiety and moral outrage. “You mean the USA has no debt crisis? Social Security can’t go broke? Tell me it ain’t so! Give me back my security blanket.”
Recently Vermont Sen. Bernie Sanders released a report (.pdf) listing 18 CEOs that (Sanders says) paid zero federal taxes, but reaped gigantic refunds from the IRS. Sanders did this to highlight the hypocrisy of these same CEOs, who demand cuts to Social Security, Medicare, and Medicaid. That’s good, but Sanders relies on moral outrage, saying that the CEOs should “look in the mirror for the causes of America's ballooning deficit.”
Sanders’ moral outrage gets people riled up, but it blinds people to the fact that a ballooning deficit is not only a good thing; it must become much larger if we are to ease the depression. The USA does indeed have a deficit crisis. The deficit is far too low.
But people cling to their security blankets. They want the deficit reduced. Thus, they cut their own throats.
YOU WANT GENUINE FEAR?
If you like fear with a real cause, then consider this…
The real dream of Wall Street and the “1%” is not to cut Medicare and Social Security, but to privatize them. Imagine billions of FICA dollars not being destroyed upon receipt, but going to Wall Street. Imagine the floodgate this would open. As Wall Street continues to indulge in fraud and speculation, Wall Street will demand more and more bailouts, meaning higher and higher FICA taxes. The government could pay bailouts by creating money from nothing, buy why do that when Wall Street can crush the “99%” with ever-higher taxes?
Further, this would allow Wall Street to say, “You see? Tax revenue is NOT destroyed upon receipt. It goes to maintaining Social Security, which is broke. Therefore you must send us even more from every paycheck.”
On 1 Jan 2013 the USA will arrive at the “fiscal cliff,” whereon Congress will do one of two things.
(1) Make a show of wringing its hands and predicting doom, but “miraculously” fixing the budget just in time for Christmas, or else …
(2) Let it stand, and use it to push for privatization of Social Security and Medicare.
If the former happens, then things will continue as usual until the US fiscal year ends on 30 Sep 2013, whereon the entire charade will begin anew.
If the latter happens, then the “99%” will be doomed. Not only because of the loss of Social Security and Medicare, and not only because of whopping tax increases, but because this will be a new level in everything and everyone existing to serve Wall Street.
Quantitative easing, for example, is between the Fed and the banks. The Fed exchanges credit for trash securities, but the credit goes to the reserve accounts of banks, and is not negotiable. It just sits there in the computers, and is used to back-stop bank fraud and bank lending. It has nothing to do with the money supply, and cannot cause monetary inflation.
Privatized Social Security is different. It does not involve reserve accounts. It is a vast river of cash to Wall Street. Privatized Social Security is a wet dream for Wall Street, and a nightmare for the rest of us.
Since the public refuses to understand these simple facts, the masses will not only accept their doom; they will cheer for it.
THAT is terrifying.