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More on the Big Lie
In previous WUFYS posts I have explained that the US government has no “debt crisis,” since the US government has no debt.
The $15 trillion that the US government has sold in T-bills is not a debt. Instead, it is money that people have invested in the US government, in exactly the same way that people buy stock in a company.
In one perspective you could say that the US government “owes” this $15 trillion back to the people who gave $15 trillion by buying T-bills. However, the US government can always create limitless money to pay off anything. (No federal check ever bounced, or ever will.) Thus the US government has no debt.
If you can grasp this simple truth, then you will know more about economics that 99.9999% of the people out there. And you can dismiss 99.9999% of all articles written about the national economy.
Just today I explained this to a Mexican. (She speaks no English, so I explained it to her in Spanish.) She instantly grasped it, but her adult son could not grasp it, since he was born and raised in the USA. Being brainwashed, he thought I was an idiot.
John Thomas Financial is an independent broker on Wall Street. The firm’s Chief Market Economist, Michael Norman, admits that the US government has no debt. In a Russia Today article titled “US has no debt if you think about it,” Mr. Norman says,
“You only get into debt when you borrow someone else’s money, but the US government creates it own money. There is no need to borrow what you can create without limit. A nation that issues its own currency floats freely, and is not convertible to any sort of default or anything of that nature. It is just not applicable.”
Likewise I have previously explained that the US government has no “deficit crisis,” since the US government has no deficit. Not really.
The “deficit” is the difference between the money the government puts into the economy by spending, and the money the government sucks out of the economy by taxing.
However, the US government has no need or use for tax revenue, since US government creates its own money. It destroys tax revenue upon receipt (i.e. cancels out the revenue on the government’s ledger). The only purpose for federal taxes is to control the money supply (which is necessary), and to maintain the Big Lie.
The Big Lie is that US government finances are the same as personal finances – i.e. that an entity that can print limitless money is the same as an entity that cannot.
Almost everyone believes the Big Lie. The only people who do not believe it are those who benefit from it and spread it, namely politicians, top-level bankers, and the corporate media (which is ultimately owned by the bankers). They maintain the Big Lie so that you grovel before them, while you bicker about things that do not even exist, such as the “national debt,” and the “budget deficit.”
From this Big Lie come myriad other lies...
THE “BALANCED BUDGET” LIE
Politicians, top-level bankers, and the corporate media say that taxes on the middle and lower classes must be increased, and spending on social programs must be reduced, in order to have a “balanced budget.”
The masses believe this “balanced budget” lie without question. Like the Jewish holo-hoax, they accept it as an “obvious fact,” since the masses falsely think an entity that can create limitless money (e.g. the US government) is the same as an entity that cannot (e.g. you and me).
A “balanced budget” means that the government takes as much money out of the economy via taxation as the government puts into it via spending. If that ever happened, then there would be no money in the US economy. Plus, the USA has a $50 billion negative trade balance per month (according to the US Census Bureau Freign Trade Division). Therefore a balanced budget would cause the economy to lose $50 billion every month. No money means no economy. Period.
Thus, the term “balanced budget” is meaningless at the federal level.
It is not meaningless when applied to you as an individual, since your personal expenses must not exceed your income. As an individual, you need a balanced budget. However, if you could print limitless money in your house or apartment (like the US government can), then the term “balanced budget” would not apply to you.
State, county, and city governments must balance their budgets. They have deficits, and they are being crushed by debt, since they cannot create money. The US government is different. It can create money, and does so by spending, and by accounting tricks (as I have explained in previous posts).
Euro-zone nations also have crushing debts, since they do not create their own money. Their debt crisis is real. Their solution, of course, is to dump the euro and return to their own currencies. (Wall Street economist Michael Norman agrees with this in the article I cited above.)
Unfortunately the European masses have been conditioned to believe their own Big Lie (“We must support the euro at all costs!”) just as the American masses have been conditioned to believe the American Big Lie (“We must fix the debt crisis!”).
Therefore, when you see an article that mentions the USA’s “national deficit,” or the “national debt,” or the “need for a balanced budget," it will usually be deceptive, and designed to maintain the Big Lie.
Since the US government can create as much money as needed for any purpose, the only reason for cutting social programs is so the bankers, the politicians, and the One Percent can increase their godhood over the peasants.
One CNN article claims that if the Medicare eligibility age were raised from 65 to 67, then the US government would “save” $125 billion by 2021. The article also claims that if the federal income tax were raised by one percent on ordinary people, then the US government would “save” $208 billion.
Again, total bullshit. For the US government, which can create limitless money, the term “save” is meaningless. “Saving” $333 billion would mean sucking $333 billion out of the economy – i.e. out of your pocket.
This theft from your pocket is exactly what the bankers, politicians, and One Percent want. The US government has no need and no use for this money, since it can create limitless money. If the government wanted to, it could kick-start the US economy out of the depression by handing a every American a check for, say, $20,000.
Politicians, central bankers, and the One Percent maintain the Big Lie because they enjoy watching you squirm.
Corporate media employees maintain the Big Lie because if they don’t, then they will be unemployed along with everyone else.
The average person maintains the Big Lie because he has not only been brainwashed; he thinks he is smarter than evereyone else. Hence he angrily defends the Big Lie that is impoverishing him, just as Europeans defend their own Big Lie (the need for the euro currency).
Incidentally, you will find the same Big Lie in every nation that issues its own currency. In all of them, the bankers, the politicians, and the corporate media bemoan the "national debt," the "budget deficit," and the "need for a balanced budget."
Euro-zone nations that do not issue their own currency have a different Big Lie.
Both Big Lies amount to the same thing: the impoverished masses must be further crushed by austerity.
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Comments
Re: More on the Big Lie
There is one problem with this argument. The US government does not create money. The US government has (illegally) ceded the power to create money to a privately-run monopoly, namely the Federal Reserve. So instead of creating money, it incurs debt and the privately-run Federal Reserve creates the money.
While the US government can create money without recourse to a third party, it does not. It has not done so since the establishment of the Federal Reserve. President Kennedy did try to exercise the right of the government to issue money by authorising the issue of silver certificates. We all know how that one ended.
As things stand now, the US as a nation does have a debt, although it can be justifiably argued that the debt is odious. The US government issues T Bills in exchange for currency. T Bills are considered a short-term debt obligation with a maturity of less than one year. Unlike investment in shares, where the entire amount of the investment can be lost, T Bills are good for their face value plus interest regardless of any external factors. They must be repaid. If there is a shortfall, the US government can request the creation of new money to ensure the T Bills can be repaid, this is again done through the issue of more T Bills and results in the creation of yet more debt.
There is no qualitative difference between the money systems in Europe and the US. Ditto with most of the rest of the world. Money is created as a loan using future taxation revenue as collateral. In any country operating this system, if there is money in circulation, there is debt. The more money in circulation, the more debt there is.
Re: More on the Big Lie
Sullivan, thank you very much for reading the post, and for commenting.
At the end of my comments (below) I will agree with you, but first, I think some qualifiers are in order. The US Treasury’s national balance sheet uses the double-entry system of accounting, meaning that when the US Treasury auctions $15 trillion worth of Treasury bills, the Treasury regards the $15 trillion collected from investors as both a credit (positive cash) and a debit (negative cash, i.e. a debt). Therefore, one of the ways that the US Treasury magically creates or destroys money is by moving numbers from one side of the balance sheet to the other and back again. (You and I could do this if we owned a business, but it would be an illegal form of “creative accounting.”)
In the post above, I quoted Michael Norman, who is the chief market economist for John Thomas Financial, a Wall Street firm. In that video clip, Mr. Norman says that most people wrongly focus only on the debit side of the accounting ledger. Therefore most people think the USA is in “debt,” in the same sense as a private individual. They forget that the $15 trillion is also a credit, i.e. money collected from investors. Treasury bills carry interest, so in one sense the US government is in debt. However the US government can always auction more Treasury bills to get more cash. Thus, the US government effectively has a limitless credit account. If you had a credit card with no credit limit, then in one sense you would be “in debt,” but in another sense you would not be, since you can always draw more money from your infinite credit account. The central point is that for the USA, national finances are not the same as personal finances – although bankers and politicians want you to think it is, so they can falsely claim that there is “no money” for social programs.
Government bonds have no credit risk, since the government can create additional currency in order to redeem the bonds at maturity. Therefore the US government has no reason to default on the bonds it sells.
Returning again to double-entry national ledgers, the US balance sheet is controlled by the US Treasury, not the Federal Reserve. Thus, the US government maintains fiscal control (i.e. where the money is spent). And since the US government sells T-bills, it also retains some degree of monetary control (where the money comes from).
The Federal Reserve’s power comes from its control of the Federal Open Market Committee, i.e. the weekly process of auctioning of the government’s T Bills.
T Bills are auctioned at a discount, and are redeemed at face value. If I buy a one-dollar T Bill at auction, I might pay ninety cents for it. The difference between that ninety cents and the one-dollar face value is interest. The Fed determines the ground rules of the auction, and thereby determines the Prime Interest Rate, which affects the entire economy. However the US government decides how many T Bills are to be auctioned in the first place. Therefore the US government and the Fed are partners in crime.
State, county, and municipal governments (unlike the national government) cannot create their own money (although they could create their own credit if they had their own state banks). They get their money from the national government, and from taxes, and from borrowing (i.e. from selling bonds to investors). When these lower-level governments do not get enough money from taxes, or from the national government, they must borrow money from bankers and speculators.
Currently all states are in severe debt except North Dakota. If state, county, and municipal governments increase taxes, they will increase the depression, which will further increase the shortage of tax revenue. Hence they get money by selling bonds, i.e. going deeper and deeper into debt. In order to cope with this debt (i.e. keep paying the bankers), they are firing teachers and public employees, and are cutting or privatizing public services.
I say there should be no federal taxes, since the US government does not need or use that money. However, I support taxes at the state, county, and municipal levels, where taxes are a form of socialism. As the depression dries up tax revenue, the state, county, and municipal governments increasingly rely on bonds (rather than taxes) for revenue.
States would not have such a severe debt problem if they had their own banks, like the state of North Dakota does. The Bank of North Dakota creates credit by issuing loans. This is a publicly owned bank. By law it must serve the public, and not only private bankers. Thus, North Dakota is the only state in the USA that is not in severe financial trouble. When other states consider creating their own bank, the private bankers bribe politicians to kill the idea.
At the national level, 97% of all the money and credit exists as mere numbers in computers. Both the Fed and the US government manipulate these numbers. Again, they are partners in crime. The US government can auction as many T-bills to investors as it likes, being limited only by the possibility of inflation. The government takes money from these weekly auctions and injects it into the national economy via government spending, which is all by computer. When the government pays a Social Security benefit to a private citizen, the government simply adds a credit to that person’s bank account. Again, by computer.
For you and me, money is scarce. For the national government, money is an accounting game in computers. The US government can always create more. This is what US bankers and politicians don’t want the US masses to realize.
It would be nice if the US government created money directly, without selling Treasury securities, and without the Fed to oversee the auction process. However this would require a national revolution. Even the current system could work, if the government and the bankers truly wished to serve the public. The Nazi government, for example, issued treasury bonds known as “Mefo bills.” Since this was done for the benefit of the entire nation, and not just for private bankers, Nazi Germany went from being the poorest nation in Europe to the richest in a space of five years. It went from severe unemployment to a shortage of employees.
However, consider double-entry accounting. When the US government sells $15 trillion in T-bills, the government owes that $15 trillion back to the buyers, but the government also collects $15 trillion. Therefore the $15 trillion is both a credit and a debit (i.e. positive cash, and yet a debt). Whether or not the US government is “in debt” depends on which side of the balance sheet you look at. And since the interest rate on Treasury bills is extremely low, the US government does not have a “debt crisis.” It’s a giant shell game.
Ultimately you are correct, since both systems use debt-based money, and since both systems cause wealth to flow to the bankers and speculators. Euro-zone nations have surrendered their monetary sovereignty to Troika bankers. To get money, they must raise taxes, or sell bonds at high rates of interest (seven percent or more), or borrow money from Troika bankers. The more they raise taxes, the worse their depression becomes. The more bonds they sell, the worse their debt becomes. They are locked into a debt-and-depression spiral, just like state, county, and municipal governments in the USA. Meanwhile the gap between rich and poor continues to widen.
If euro-zone were to dump the euro and revert to their own currencies, thereby reclaiming monetary sovereignty, then they would still have corrupt governments. Instead of money flowing to Troika bankers, the money would flow to national bankers.
In both cases the masses are doomed, so yes, “There is no qualitative difference between the money systems in Europe and the US.”
Thanks for your comments.