Friday, September 10, 2010

Governments Borrow Money


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Public verses Private Debt
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When a person borrows money to consume, he is borrowing against his future. That encumbers both the person and his future. When the Nation creates money to build the future, it enriches the Nation and the Future.
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If money is used to build roads and bridges, we have roads and bridges. If money is used to created a modern energy transmission system, we have modern energy energy transmission . If money is used to give health care we have saved lives and improved the National Health care system. If we use money to educate, doctors, nurses, scientist, engineers and technologist for all areas of the application of science we have a modern and successful nation moving its citizens into the future.
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As to paying for it, we still have debt on the Civil War, World War I, World War II, the Korean War, The Cold War, two Bush Wars, and tax cuts for the rich by both Reagan and Bush. We have just rolled over the debt for 150 years Not one dime has been paid.
Can you point out to me how much your future has suffered for the debt we created 150 years ago. National Debt is always created and then rolled over. Even when it is borrowed outside of the Federal Reserve System for the purpose of helping private and Sovereign interest hold their reserve currency in US dollars, It eventually ends up as debt held by the Federal Reserve system at whatever interest they need to keep the system viable. Right now that rate is almost zero.
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The Republicans have created a great Lie about the dangers of debt to your grandchildren that has become conventional wisdom. They have at least two reasons reason to do this. The want to be sure that inflation does not harm the value fixed capital interest of the very Rich The other reason is that they fear the creation of Social Safety network programs.. The Corporate Capitalist want a work force that is compelled to work at minimum wages without benefits or starve. It is a labor solution based on the existence of wage slaves This is the reason for the Debt Mantra ”You will destroy your Grandchildren” that we now repeat as if it were a prayer to the God of Capitalism
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Our Republic was founded on debt, the Revolution was not subsidized by the tooth fairy. The Revolutionary War was fought with notes issued by the Continentel Congress. The were assumed to be valid debt when the Constitution created the new Nation Our Railroads were built with Government Land Grands and subsidies before and after the Civil war. Only then they didn’t have to put up “Your Tax Dollars at Work” signs in those days.
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After the creation of the Federal Reserve System it became possible for the Government to finance all of its Debt with created money. It wasn’t usually done because that was not the reason the Private Bankers created the System. They simply need a method to create money for themselves and have it recognized as legal tender nation wide. They really preferred that the Treasure borrow money directly from them because it earned them a secure return on their surplus funds.
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Today Money is borrowed by Governments only to provide a place for people to safely hold and profit from their savings (mostly the very rich. In addition it gives foreign nations a place to hold the surplus dollars they accumulate from selling us stuff.
Otherwise we create money in the Federal Reserve System and the US treasury creates Bonds & Notes to act as collateral for the Debt. It is useful during times of war and times of high unemployment. It can be harmful during times of low unemployment because it causes inflation. It requires only the will to create the right tax policy to make surplus during good times and debt during hard times and stopping wars that just blow up money and only help the War Industries.
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The next logical move is to force all Private Banks to remove their Reserves from Federal Reserve Banks and surrender their control of the Governing Body of the Fed. It needs to be a Government Operation only. We should serve as a lender to them at interest to earn money for the Government and provide them the money to finance the Capitalist Corporations as they conduct the normal business of the economy. It is time for Bankers to stop creating fortunes by moving money around and confine themselves financing the production of Goods & Services. Our Grandchildren will be all the better for it.

Copyright © William Hodge 2010

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