Sunday, March 25, 2012

There is never a Shortage of Money.

Here we are in the middle of an unemployment Depression and Radical Republicans and some semi- intelligent Democrats are telling us we must destroy Government Service to people because there is not enough money.  They say we must stop borrowing because the interest will Bankrupt our Grandchildren.  POPPYCOCK.  

It is possible for the Treasury Department to borrow enough money from the Federal Reserve Banks at 0% interest to finance the entire National Debt.  Only the Congress prevents this from happening by allowing only a special group of appointed Corporate Bankers to bid at the Primary Auction for Treasury Debt. 

The only role the Fed is allowed by law to play is to buy up debt on the secondary auction in order to control interest and money supply. But even in that role the Fed has keep interest rates at almost zero. and the Treasury debt it buys becomes interest free because the interest it Fed earns is returned to the Treasury as profit.

Now we know that money is unlimited and is scarce only because your friendly Wealthy elected Congressmen have made it scarce by law to aid their own  SPECIAL INTEREST.  the question becomes when is it possible to spend this unlimited money in a way that helps the purposes of the Nation and does no harm

The argument that is used most often is that if you spend this magic money it will cause inflation. When can you spend money without causing inflation?  First you must understand what money does when you spend it. The Nation already has all the money it needs whenever need it.

Having money is like having gas to power your vehicle.  It is like having enough gas to power all the vehicles we will ever have for a million years.  So what do you need to use gas wisely. You need a driver [skilled labor].   You need a truck [productive capacity]. You need a load [resources].  If you have a road to travel and a destination you can fill up the truck with gas and get moving. In the middle of a recession you have the all three available. That is the best time to use your the unlimited supply of gas. 

If on the other hand  all the drivers, trucks, and loads are in use, then pumping more new gas will just spill on the ground and cause a fire [inflation].  A good thing to do then is stop pumping.  Your problem is now training new drivers [education] and building more trucks [capitol investment] and building roads [infrastructure]. 

This ain't Rocket Science Folks. It is no shortage of money ever.  It is POLITICAL, pure and simple.  I  suggest you elect a new Congressman who understands Money.

Copyright © William Hodge 2012

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