Thanks again — I’m still trying to parse through some of your statements, and see if we can find an…
Jere Krischel
21

“eventually, that dollar bill came from a moment when some government official paid currency out of the U.S. Treasury for say, a hamburger, which said hamburger maker paid to the candlestick maker, so on and so on.”

That is the premise behind all currency, fiat or other. Remember that any currency in existence is the product of government debt, even that supposedly backed by a gold standard. Any government that wishes to issue a currency to fund itself must supply a reason for people to accept that currency in transactions of trade, and that reason is taxation. When a tax is imposed that must be paid in the denomination of the currency and sufficient penalty for not doing so is imposed the need to acquire the currency is created. The need drives the currency, so taxes do not fund spending by the government, as spending must occur before the currency is available to pay the tax.

Over time the private sector will accumulate a sufficient amount of currency to pay the tax without the pre-requisite of spending by government, but only if the government continues to spend in deficit of taxation. A “balanced” budget would not allow such accumulations, or wealth. The accounting category mislabeled as “debt” is a record of this accumulation of currency in the private sector. Any politician proposing that we “pay the debt” or “end deficits” is either ignorant of double entry spreadsheet accounting or dishonest. Either should disqualify them from public service.

Government can only discharge debt by “collecting” that payment from the other side of the balance sheet. The balance sheet of the economy is divided between private and public sectors with trade balances floating between them to account for foreign impacts on the supply. When the economy is viewed from the macro perspective a strange schitso political block becomes apparent. A large segment of the population advocates for “balancing” the budget, but doing so without targeting the wealth that comprises the debt or making any reduction in the spending category (military) that accounts for the largest portion of spending.

Given that the bulk of this segment of voters has none of the wealth involved, they are asking their government to confiscate the currency that they use in their day to day functions to provide their basic needs as the only choice left. A government that is loyal to the holders of the wealth/debt and to those benefiting from military spending has been more than happy to oblige their wishes and that is why the richest nation on earth has one of the crappiest economies among developed nations. If this voting block ever becomes economically literate there will be politicians and their wealthy backers hanging from the street lamps across the nation.

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