You stated this: “At its current worst, economics has become a dangerous ideology.”, but then went on to state this: “Let us not forget that those who are setting the rules of the system have been directly or indirectly hired by us and are paid by our taxes.”
I fully understand that you might not recognize the contradiction involved between these statements, but therein may be the most critical error of any movement aimed at rolling back the decimation of the environment. Any such movement is going to require capitalization on a scale not seen since FDR’s New Deal, but the general misconception of how government funds itself and its spending will only present insurmountable obstacles of affordability to such a movement. The fact that these are all false constructs, intentionally maintained in spite of not being applicable to the reality of economics with a fiat currency, must be understood if we hope to succeed, and survive.
I’ll try to be as brief as possible, but explaining my meaning is going to require an economics lesson, and that lesson holds the potential to change the power balance once it is understood. The structure of our federal government’s funding was originally organized around the archaic limitations of a gold standard, as were most modern economies around the world. A currency that is pinned to a commodity or another currency must be managed to maintain a balance of currency supply with whatever that currency is pinned to in order to keep inflation in check and protect the value of the currency.
When the currency supply fell short of the value of the gold reserves, or whatever else it was pinned to, the government had room to increase the supply in the economy by investing in the commons or provisioning itself. When the supply exceeded the value of what it was pinned to the issuer had to have a means to extract sufficient currency to protect its value. This extraction (and to give the currency its initial value) was accomplished by levying taxes payable only in that currency. At no time was the collection of taxes meant to represent “revenue” to enable spending unless for the purpose of redistribution of wealth, usually upward.
Contrary to popular belief, there is no function of our Treasury that applies collected taxes forward to fund spending by the federal government. Taxes “cancel” currency. End of story. The issuer of the currency neither needs nor uses our currency to spend currency. Using your statement that we “pay for” our representatives with our taxes may seem petty, but it represents the general misconception among the public that has been the bane of all progressive movement and the reason the richest nation on earth is in a death spiral economically. Every spending bill forwarded to advance the society and protect the earth is stopped in its tracks by the same question. “How will you pay for it?” Take note that this question is rarely asked before venturing into multiple wars or expending unnecessary trillions to provision the military and if you believe that all of our military spending is funded with our taxes I have this lovely bridge you should look at.
While we haven’t strictly adhered to the gold standard for most of our nation’s history (because we have been at war during most of it), we made the break completely from a commodity based currency in ’71 (thank you President Nixon) and moved to a sovereign fiat currency. As such, our currency is independent of revenues and is worth whatever we say it is worth. It is created when our Congress appropriates spending by the federal government and it is canceled when used to pay taxes.
In spite of the negative attention given to it deficit spending is the “ONLY” method of increasing the currency supply and a balanced budget is actually a drain of currency available to the general economy due to trade deficits and wealth accumulation. This is supported by the “fact” that each of the seven times our national budget came within two percent of being balanced for multiple years almost immediately preceded a depression (the ’08 recession was only kept from depression status by massive deficit spending).
Once we approach deficit spending from the correct perspective it then stands to reason that how we view the debt is also in error. In fact, it represents all of the currency created by Congress that hasn’t yet been canceled by taxation since our nation’s founding, not an obligation that our children will have to pay for. Paying the debt would amount to removing all currency from circulation to pay for outstanding Treasury bonds and selling a considerable chunk of America in some denomination that isn’t the dollar, so it is anything but an admirable goal. We don’t actually “owe” the $trillions$ that are represented by the massive number used to beat us over the head with whenever we demand nice things like other countries have, we “OWN” them. They are our wealth and the lifeblood of our economy, albeit poorly distributed.
Understanding our currency, and the appropriation process that creates it, is the key to moving forward as a society with different values and priorities, which is why the establishment status quo will fight with everything they have to preserve the false rhetoric of the debt and the illusion of the federal government as an “overhead” cost that detracts from available currency when it is the “ONLY” source of the currency. While I’m sure that many of our representatives pander to the falsehood out of ignorance, or political expediency, we can not afford either.
Nothing that “MUST” be done to reverse the ravages of uncontrolled capitalism and assure our survival is going to be free, or even revenue neutral, so we “MUST” convey the truth of economics as widely as we can manage. It goes against the commonly accepted assumption because it is so foreign to how we think about our personal finances, but it is the truth, and “ONLY” the truth will set us free. When the opposition asks “how we will pay for it” we have to be able to tell them that paying for it is the easy part, because it is, and prove that assertion with verifiable fact. I urge everyone to become intimately familiar with economics and our funding process and a good place to begin is researching the work of many economists that have come together to form a movement they call “Modern Monetary Theory”.
