Keith Evans
Aug 31, 2018 · 3 min read

the far-right are asking: How are we going to pay for it?

The short answer is fairly simple: through taxation. That is, of course, the implication of any public program. It’s how such initiatives are funded in other nations that implement them.

You lost me early, but I kept reading for a bit anyway. You can use taxation to accomplish social goals, or simply to draw down the currency supply, but never to “pay for” spending at the federal level. They are completely separate and should be considered that way when discussing any economics at the federal level. Our system was designed around the gold standard and defending the gold reserve, not “paying for” anything.

With no gold reserve to defend, the currency that Congress is given a monopoly patent on creating becomes a cost-free commodity that it is mandated to use “for the common welfare” in Article 1: Section 8 of the constitution. The primary function of taxation is to drive acceptance of the currency and draw resources into the economy where they are available to provision the government on demand and without restraint of revenue. Beyond that, they balanced the currency in circulation with the gold supply, but never did pay for spending because spending has to occur before there is currency available to tax. Spending “funds” taxation, not the other way around.

Since we left the gold standard in ’71 little has changed in political rhetoric, in spite of the fact that the action changed global economics for all time. Those countries you listed have high taxation rates, but not to “fund” their programs. Their taxation is necessary to avoid inflation in economies that are functioning close to maximum output. That is why it is considerably flatter than ours, as only currency with velocity is inflationary. With our low currency velocity we have little choice but to tax the wealthy, but their currency is already sequestered, so it has little effect if spending isn’t in deficit by sufficient amounts to compensate for their wealth accumulation and trade deficits.

This basic misunderstanding of how our government funds itself and pays for the programs it has authorized is literally killing people here and it’s past time to stop capitulating to the corporate interests and banks that benefit from a currency starved economy. The proper answer to “how do you intend to pay for it?” is, “By electing representatives that understand economics and will never ask that question again.” In other words, we just pay for it, and as long as we have sufficient resources to supply the purpose of the spending in makes no difference if we collect taxation to cover it or not.

That leaves taxation of the wealthy as something we do just because they are too damn wealthy and cause economic mischief, which gives them every incentive not to do so. Otherwise, we must take on two fights for every program continually. One to justify the program, and another to unnecessarily wrestle money away from the wealthy, giving them even more incentive to use their wealth to purchase our Congresscritters. Why go through the pain when we have no need for it? All we have to do is let them know we are onto their scam and understand our economy and things will get a lot better.

    Keith Evans

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    Meandering to a different drummer.