Thank you once again for a deep, well worded response. I think that I do understand the way taxation and currency works but here’s my problem, and likely yours as well.
As soon as I start expounding on the divorce between currency and taxation to “balance” the debt and other conventionally held beliefs about what money is, where it comes from, what is debt, etc .. well Iam immediately discounted. I am trying to find a bridge for opening up people’s eyes and yes, it’s not easy in the slightest.
But I came up with this simple generalization that I think helps get there and it’s this statement, which is not all inclusive but covers over 90% of the conflicting ideas and opens the door to getting people to think freshly. It’s this ..
There are 2 ways to create economic growth .. 1. increase the money supply which also increases debt (I am sure this part drives you crazy) .. and 2. increase the number of times that currency circulates, known as money velocity.
Money velocity is increased as consumers spend. When buying power is diminished money velocity slows. Anything that can reduce costs or increase incomes in the consumer economy will increase money velocity.
Who is it that spends? It is estimated that upper incomes spend less than 10% of the money that they earn. By contrast the lowest rungs of income spend over 100% of that they earn.
Currency that is removed from circulation weakens money velocity. That removed currency could be saved or could be taken out of our economy altogether by moving it offshore, for instance.
This chart from the Federal Reserve clearly shows that current money velocity is at all time lows, demanding that in order to have economic growth we depend on increasing the money supply .. IE selling treasuries for more currency creation.
As a point of money velocity’s importance if we had the same money velocity levels we had back in the stagflation days of the seventies our economy would be 20–25% larger than it is today. Imagine that .. a much larger economy that would employ more people, that would raise the living standards of workers.
Notice that I am not trying to explain where money comes from or that there is no debt. I am trying to make a point with them of how the greater economy works and how it can be so much better than it is today. Even in this example it’s still paragraphs long but I don’t think there’s much that I can trim out and have it make sense.
So I apologize in advance if I frustrate you with impurity of definition and a general viewpoint that marries where people are in understanding with what they can comprehend in a short conversation. I am simply trying to find a clean way to get people to understand some basics within the context of what they have embraced from what they are told about the economy and how it works.