I understand it as follows:
The US Treasury takes in taxes (that's the IRS). They also cut checks. When congress wants to give money to whoever, it is a check from the treasury.
When they are broke they do not have to stop. This is called deficit spending. Reducing the deficit means to "not overspend by as much as before". When your personal household does this it means that they are overdrawing your bank account or writing bad checks.
But the Federal Government does not have to play by the same rules.
They order the Federal Reserve (a cartel of private banks) to create the money. The Fed does not have this money on "reserve". There is no investment, no gold, no reserve, nothing that backs this up. There is a checkbook but no checking account.
The money enters the system. The total number of dollars available is increased. The checks are cut and the money is distributed to the organizations selected by Congress's bill. These organizations get to spend the dollars at the value they have in 2009 (before inflation takes effect).
Then the money is deposited in banks where they get to lend it out at about ten times what was deposited.
The money later has to be paid back to the Federal Reserve with interest. The piece of the puzzle that I'm missing is "who gets the interest?"
This system creates an invisible crushing wave across the whole nation. You, the common man, feel its effects but do not quite understand what is happening. You are told that the country is in "recession" and are expected to accept this as part of life. Various parties are blamed.
I do not understand everything. But I do know this: my life is not my own. At any time a low-level bureaucrat from any number of state or federal agencies could bring down the might of Government on me. And don't think it couldn't happen to anyone. There are tens of thousands of pages of laws, code and regulations (most of this tax code). Have you read them?
I must pay income taxes. I must collect income taxes from my workers. The threat? Imprisonment or confiscation of my property. However, I recently got a little blurb in my Social Security notice saying that the program is likely to be insolvent by 2016 (PS- keep paying into it). Sounds like I'm a loser in the Social "Security" program. The short stick.
I do not trust government. I do not trust large corporations. I definitely don't trust the media (any kind). The consolidation of power into monolithic blocks has the end result of crushing the common man. However, a corporation generally does not have a police force that will arrest and imprison you for not buying their product. They can be overthrown relatively easily by the masses.
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Enron is gone. The IRS is forever.
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I do trust my local community. The closer a government is to the people, the easier they are to change if there is a problem. It's my opinion that my ward (congregation) could handle almost any problem. I know this because we do. A city is a good level of government in my estimation. This is where the lion's share of tax revenue should be going (which it's not). A State is the largest size goverment that there should be, with only a little tiny Federal level government doing some very, very basic things.
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How would you feel if State Farm came and arrested you for not paying your premiums? Well, Social Security is like an insurance program. Only it is enforced with threat of fine and imprisonment.
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Your labor is your life. By the time you die you will have spent ten or twenty years in service to the federal government. The government (composed of men who swore this one thing: to uphold and protect the Constitution) will have taken away part of your life.
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Are you signed up for Selective Service? They can draft you into the military and spend your blood on foreign soil.
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Who is behind all this? I believe that if I pull back far enough, and put enough of the puzzle pieces together, there will be an empty space in the shape of something.
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For my part, I am studying and getting involved as much as possible. And what I do with this blog. But most importantly I'm voting Independent. It's been a hundred years of pillaging under the two parties we have now. That they point fingers at each other is an elaborate charade in my estimation-- both covering for the same fundamental regime. A two headed monster.
Now some comments by my good friend Eric D.
Have to take issue with one section:
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"When they are broke they do not have to stop. This is called deficit spending. Reducing the deficit means to "not overspend by as much as before". When your personal household does this it means that they are overdrawing your bank account or writing bad checks."
Its not writing bad checks, but spending using a credit card financed by other countries like China, Russia, and much of Europe buying US Treasury Bills. This is still potentially very bad should say China invade Taiwan and call in their debt because we act to defend that country. This actually isn't a big a threat as it sounds as the Dollar is actually still a pretty good investment compared to most other countries.
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However, we cannot simply stop deficit spending altogether, a lot of good programs would cease and the recession would certainly get worse. The deficit is a severe problem that needs to be fixed rapidly through some revenue increases (Cap & Trade program on CO2 emissions, raising the marginal tax rate on those that make more than $250,000, etc.) but mostly through the reduction of spending on bad programs. It is important to note that economic recovery significantly helps reduce the deficit as incomes rise. Reducing the deficit needs to be done quickly, but cannot be done immediately.
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Unrelated, I know there is a lot of misinformation out there about the concept of raising taxes on the rich. When Obama talks about raising taxes on those people that make more than $250,000 by 3% most people think that means you have to pay 3% more on your entire income. Instead, its only raising on income above $250k. So if you make $350,000 the first $250,000 is taxed at the existing rate and you pay 3% more on the next $100,000. Bottom line is that if you are making $350,000 a year you are only going to pay an additional $3,000 in taxes or .085% more of your total income. Also please note that this rate only goes to the levels it was before Bush took over which if you remember the economy was spinning at a good clip at that time. Also keep in mind that is about 10% less than what the top tax rate under President Ronald Reagan.
