So if I posit one dollar and one teacup on a table, is it not the case that when the Federal Government “prints” money–by “loaning” it to private banks at low interest rates–that two dollars are now on the table, and one of them belongs to a bank? True, not true? Cash enters the system, creates inflation, with the result that cash based buying power goes down. The same amount of goods are in existence, so logically if the banks add the money, they control the portion of the wealth that was “taken” by inflation? True, not true? It seems true, but I need to read the two books on this that I ordered, and think a bit more carefully.
Additionally, we should add that much of the lending to the Federal Government was historically done by investors in this country. The Fed adds money, it goes out, and much of it comes back to the Federal Government. We could with justice, I think, view the New Deal and the constant tinkering that followed it–especially the Great Society of Johnson that did so much to destroy Detroit–as a massive transfer of wealth from the private sector.
We must view the government as just another large corporation, that is in it for the “profit” of increased power, and more “stuff”. Look at all the buildings in Washington: do you really own them? Phrased another way: do you have the slightest direct voice in their disposition? Every building the government builds detracts from our net wealth. Every employee on the payroll of Federal, State or local government detracts from our wealth.
Now, from this it does not follow that we need no government. If we needed no government, then the Constitution would likewise not be needed. As John Madison put it, roughly: “If we were ruled by angels, there would be no need for checks; and if we were angels ourselves, no need for government.”
We need a military, border patrol, customs, and legal apparatus to preside over inter-State disputes, among other things. We need local police, firemen, judges and courts, roads, and laws protecting property rights and against fraud.
Having said this, it is both proper to ask which duties should reside with the sundry States, and which with the Federal government; and as importantly which functions should be done by government, and which left to charity and the private sector. So often, as in the so-called War on Poverty, programs that are meant to help do the job of making leftists feel good about themselves, but due to unforeseen (but scarcely unforseeable) effects, do active harm to those who were meant to benefit.
The War on Poverty, for instance, encouraged an attitude of dependency, resentment when promised help was not forthcoming, and the breakdown of the nuclear family. It is a virtual certainty that the riots in Watts and Detroit and elsewhere that did so much to form permanent black ghettoes were the result of Democrats overpromising and underdelivering, strictly for partisan political purposes. They set expectations high, which led to profound resentment and anger when the moon did not appear over their local corner, for their private disposition. This caused the flight of most of those who paid taxes, with urban blight the inevitable result.
Making a short story long, the Federal payroll is enormous. If we think of it as a corporation, it is no doubt one of the largest employers in the nation, and likely THE largest. It’s “income” continues to rise, and it continues to borrow money for future “expansion”. Problem is, every dollar they take out, is a reduction in our wealth.
China is doing the same thing, but much more aggressively. Their net tax rate is something like 66% (I’m pulling the number out of a hat, but the principle is sound), so that despite the huge amount of wealth their industries are generating, very little of it is going to workers, or poverty reduction. They are getting more money than they did 30 years ago, clearly, but the system is still corrupt. And what they are doing with that money is build more government, and loan the rest to us. If we defaulted on even a part of our debt, it would be catastrophic for them. We seem to fear them, but they have cause to fear us, too, and ask for reassurances their money is safe at every high level conference.