One big factor that most don’t recognize when the discussion turns to labor v. capital is the move to a fiat currency. While all efforts were, and are, being made to minimize America’s awareness of the fact we are no longer restricted by an archaic gold standard, politicians have shown no reluctance to use their unlimited power of the purse to gain corporate favor. This has never been more obvious than the actions taken by a “Democratic” Congress and President from 2009.
Even while President Obama was capitulating to Republicans on Social Security cuts and giving banks permission to foreclose on large swaths of homeowners, mostly due to misdeeds by those same banks, he was overseeing vast sums of newly created dollars, pulled from the backsides of the Federal Reserve, shoveled to corporate coffers.
“Loans” to failed banks and automakers were repaid in Treasury bond gains while the President was giving stump speeches about our national debt being credit “from the bank of China” taken out in our children’s names. Meanwhile, the persistent myth of taxation and borrowing funding our government were perpetuated at every possible opportunity with fear porn aimed at the growing national debt. Any mention of measures to aid an ailing Main St economy were immediately squashed by the simple question “How will you pay for it”?
The right and the neoliberal left seemed to find common ground in the concept of trickle down economics on a scale that was unprecedented, especially in favor of the financial sector. No amount of money creation was too much for bailing out corporate America, but the people seemed to be caught in a time warp where the old gold standard rules of economics were chiseled in stone. Even nutrition programs for children were not safe from the chopping block of imposed austerity while the perpetrators of the largest heist in world history were showered with money and protected from any repercussion from their own actions.
America needs to take a crash course in economics, or this duality of fiscal policy is going to wipe out the middle class. “ALL” spending by our government is done with newly created fiat dollars, not taxed from the people or borrowed from the wealthy and banks. Tax collections are destroyed upon receipt, just as they always were. Spending has to precede taxing or borrowing or there is nothing to collect or loan. Both taxation and bond issues are simply methods of controlling currency in circulation, not revenue for a government that has no need for revenue.
Without a gold reserve to defend the currency becomes a cost free commodity for Congress to use in affecting social policy and achieving economic goals. The only limitation to this is inflation, which is only remotely related to the money supply. As long as goods and services are available the government can afford anything for sale in the dollars it can create without restraint from revenue. This means that the people could have assurance of their core needs to sustain life guaranteed to them, regardless of what the business cycle and private sector economy is doing.
We could have universal healthcare, and a job guarantee that would set the minimum standard for wages and benefits without intervention by Congress. If the people were guaranteed basic living requirements they would be free to function in a “true” free labor market that didn’t use poverty and homelessness, or even early death, as bargaining chips for capital and employers. No one’s “money” needs to be extracted from them to fund these basic rights and the purpose of taxation could be returned. Treasury bonds could be eliminated and existing bonds paid down as they mature, ridding our political discussion of the fear fodder of “debt”.