FREE MONEY
demonstrates why the federal government has the unlimited ability to produce
money
by borrowing. Does the federal government also have the unlimited ability to produce
money without borrowing? How can America cut the federal
debt
and federal deficit to $0 while we eliminate federal
taxes
and pay for
Social Security,
universal medical care, the infrastructure, the military, education, research and law enforcement? Is this possible?
The Solution to Federal
Taxes FREE MONEY
contains a full description and rationale, but for brevity purposes, please visualize this: The federal government will create a checking account called
"Money
Created.” In the same way Congress arbitrarily now creates the debt ceiling, Congress arbitrarily will determine the credit balance of the
Money
Created account.
Each time the federal government wishes to spend
money
on goods and services, it will issue a paper or electronic check from this account. The recipient of the check will deposit it in a bank, and the bank will be credited for the amount of the check – exactly as happens now.
With each check issued, the amount of
money
in the economy grows, and the economy prospers. All of this is accomplished without federal borrowing.
Why eliminate federal borrowing? Because federal borrowing gives the false impression our government and taxpayers are “in debt.” Those frightening words, as misleading as they are, have caused endless mischief. When we end federal borrowing, the whole concept of federal debt, potential bankruptcy, grandchildren paying the debt and fiscal imprudence disappears. The government can take positive steps to grow our economy and to improve our society.
But isn’t federal
debt
a tool against inflation? The Fed raises interest rates to cure or prevent
inflation,
and these rates are reflected in what federal securities pay.
The Fed adjusts interest rates paid by banks, and these rates are reflected in all debt, personal corporate and state and local governmental. Even without federal debt, there is plenty of debt for the Fed to manipulate in its fight against inflation and deflation.
Because federal
debt
is unnecessary and harmful, the creation, sale, purchase and servicing of federal
debt
is a waste of economic resources. The thousands of people occupied with this useless activity could benefit the economy in more productive pursuits.
The Recommendation: In summary, I recommend this three-step formula for prosperity:
1) Eliminate federal
taxes. Sending
money
to the government is “sending coals to Newcastle.” The government is a producer of
money -- a producer that has no limits.
When you send your
tax
money to the government, the government simply uses it to pay down debt. Since federal debt is
money,
paying down debt destroys
money
in the economy. In short,
taxes
destroy
money. Further, the entire federal
tax
system is a monumental waste of resources. The millions of hours and billions of dollars spent in compliance could be better spent in productive pursuits. Visualize millions of people shoveling dirt into a hole, while millions more shovel it out. That is our
tax
system. The first taxes that should disappear: All
Social Security
and Medicare taxes. This will be politically popular, as these regressive taxes directly impact businesses and low-to-middle income people. The politician who ends FICA will be a hero.
The federal government can and will create the money to support retirement and health care.
2) Eliminate federal borrowing. As a producer of money, a sovereign government never needs to borrow money. This is an inefficient, actually harmful, exercise that provides no economic benefit. Federal borrowing provides the semantic impression the government is “in debt,” a concept people find repugnant.
No borrowing; no debt; no wrong-headed hand-wringing about how we citizens owe the debt.
3) Establish a national, money-supply goal. Include in it all the things currently called “debt.” Congress will create a checking account called “Money Created.” It will add money to this account whenever needed. It will write checks and make transfers from the Money Created account to pay for all goods and services.
That will be the system for federal money creation in our economy. Congress will determine how much money should be added to the Money Created account, thus giving Congress control over money creation. The Fed will continue to control interest rates and inflation.
Congress will spend what it deems necessary on retirement, health care, the military, the infrastructure, education, crime prevention and other national needs.
We will have freed ourselves from the tyranny of semantics and the irrational fear of federal debt. We will prosper as no nation has before us.
