Governments Borrow Money

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Public verses Private Debt

When a person BORROWERS money to consume, he is borrowing against his  own 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 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. 

The only thing we paid for and received nothing for was the interest Corporate Banks and Investors in Money charge us. National Debt is always created and then rolled over at maturity to support The Money changers.  When it is borrowed outside of the Federal Reserve System for the purpose of helping private Investors and foreign Sovereign interest to hold their reserve currency in US dollars to earn interest, the tax payer is charged and receives no benefit in Goods & Services

 It eventually ends up as debt held by the Federal Government at the highest interest Money Changers can get and still keep the system viable.  If the Debt were financed by the Federal System itself at 0% interest, all the money would be used to benefit the needs of taxpayers and not people who had more money than they could spend

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The Politicians have created a great Lie about the dangers of debt to your grandchildren that has become conventional wisdom. They have had at least two reasons 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 financed with free money. 

The Corporate Capitalist want a work force that is compelled to work at minimum wages without benefits or they 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  Mammon

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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 Corporate Banks to provide a Debt Instrument 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 more stuff than they buy.
-In addition we create money in the Federal Reserve System to buy US treasury Bonds & Notes on the secondary market to stabilize Debt in circulation . 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 for the Fed is to require all Corporate 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

Rich & Poor

Using Money is the Creator of Value 

How to Cook a Goose in Three Decades.

The Capitalist economic system is based on the private

production of goods & services for the consumption of

the private citizen, Public institutions of government

and social institutions,

1. Employer (consumer)

2. Employee (consumer)

3. Government (consumer)

4. Social Institutions (consumer)

5. Consumer (employer – employee – government – social institutions.

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The Two major parts for most of our American history

was the interaction between employee and employer.

In the earlier years of this nation the employers were

entrepreneurs with very few employees. The only large

employers were governments who only represented a

small part of the of the work force except in time of war.

Because of a shortage of labor outside of the plantation

slavery system of the South, the earlier years were marked

by a balance of economic strength between components in

the free market system. In someways the Plantation system

was a precursor to Corporate America. It was the ultimate

imbalance between Employer and employee.

_

Corporation began to become more important early in the

1800′s when some states began to grant them more flexible

powers of operations. In 1819, the U.S. Supreme Court granted

corporations a wider range of rights. The Corporation as a

whole was labeled an “artificial person,” possessing both

individuality and immortality. Because of the limited liabilities

of corporation they have become the primary method of doing

business of both the big and small employers.

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One of the growing needs of larger employer units was a

constant and universal currency to conduct efficient

transactions in the market place of the growing consumer.

The tension between Banking power and government

power had made a National Currency. The Greenbacks of Abraham Lincoln’s Treasury Department was the closest

creation until the birth of the Federal Reserve Banking System

in 1913.

In the interim there were some major bank Panics

that wrecked havoc between the production and consuming

components of the capitalist economy. Unfortunately the

Federal Reserve did not prevent the Greed of Banking interest

from causing two large Economic disasters including the

Great Depression triggered by the levered Stock market

Bubbled of 1929.

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The Banking reforms and Labor reforms of Roosevelt

during the 1930′s set up a stabilized condition between

the rise of Corporate Capitalism and Union Labor.

The Wealth spread between the Middle Class and the

wealthy elite narrowed and 50 Years of prosperity ensued.

_

Then came Reaganomics. The Banking reforms were gutted.

The Rich were give the larger slice of the Economic pie and

were trusted to trickle down on the Middle Class. He broke

the back of of the Union movement and made the wage

earner a slave without power to the Corporate Capitalist.

The Middle Class languished and is now dieing. The Corporate

Capitalist shifted the wealth to themselves at the same

percentage that existed under the imperial rule of Hoover and

the Bankers. Once again Bankers had the power to leverage

money to make money with out adding anything to the

consumption equation.

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The Corporate Capitalist that were engaged in the

Production, Employment, Consumption cycle were

in the meantime killing the Goose in the search of the

Gold they wanted so badly. Technology and offshore

job transfers were expanding the profit with great

rapidity while the purchase power of the working class

was rapidly declining. The Middle Class was sliding

into limbo. The economy was being carried on the backs

of the Credit cards that Banking was getting rich on and

the inflation of the Housing Boom was creating a spending

boom among the privilege class of home owners.

The Boom Busted, the Bankers begged, Bushed Bailed.

Every Banker took home a Bonus and all was happy 

among the Financial Barons.

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There was one small flaw in the plan. With credit dead

in the water due to the the Housing mess and the tight

credit market and the rash of Bankruptcies destroyed the

 consumption by the labor market .

Business is recovering because Technology and layoff

have made them profitable. But consumption and hiring

will be slow returning.   Republicans were in House and Senate

 Screaming “Burn baby Burn”   

It is their hope to pick up the pieces of power and they could

care less about who pays the price. They have and will block

every piece of legislation that is designed to uplift the

American worker and try to force the Congress to save the

unseemly rewards that have been reaped by the most wealthy

among us.

 I have news for the Corporate Capitalist who want

someone to buy their stuff. The Bankers have cleaned your clock

And they are busy resetting time to make another rape of the

old system and you will be among the victims.

Copyright © William Hodge 2010

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   August 3rd, 2010 at 10:22 pm
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