Funding Government without interest

No interest funding

Taxes should only be used by States and local Governing units to raise money to fund spending. They are not Sovereign entities and cannot create money to spend or repay debt. The National Sovereign government does not have to balance budgets. Local Government does.

The National Sovereign Government should only tax for three reasons:

1. To repay Treasury issued interest-bearing debt.
2. To cause the use of dollars to be Necessary for the economy.
3. To achieve good social behavior purposes.

All other National Government funding should be done by having the Federal Reserve System create it in the exact amounts requested by Congress at the appropriate time as needed. That money should be loaned to the US Treasury at 0% interest to fund specific programs. It should be repaid at the rate of 1% of the annual balance each year. 

The only reason it needs to be repaid at all is to establish an accounting system for public transparency. The only control over appropriation should be the availability of labor, productive capacity, and input resources. That alone should be enough to avoid the likelihood of disrupting inflation.

End of being Poor

Life, Freedom, & a pathway to Achievement 

There are hundreds of articles about Universal Unconditional Basic Income{UBI} on the Web with just as many opinions, This is my plan. 

Start with the Supplemental Security Income[SSI] program that is used to supplement income for the Handicapped and very poor Social Security recipients. It is not part of Social Security but it is administered by the Social Security Administration. and paid out of Government general revenue.

Everyone 60 or older should automatically be put on the program and the funds should cover both Medicare premiums and enough to buy Supplemental Insurance that covers the 20% that Medicare does not cover. It will not matter if you have already retired and collect Retirement Social Security. The only "Means test" will be your being age 60 or older

Next, you lower the eligibility age every two years until everyone 18 or older has Full care Medicare. Then you keep increasing the pay overtime that will not shock the economy until every person is out of Poverty. My current estimate is that would be around $2000 a month. Everyone [rich or poor] gets it because it is philosophically a Common share Dividend for every citizen's ownership in the National Commonwealth. [The Commonwealth is the total revenue collected by Government to service the needs of the people as specified in the Preamble of the Constitution.}

Fiat Money

When I write about or discuss Government debt & deficit, I am often told that Government needs to balance its budget like "anyone else". Then is when I know that they know nothing about a Sovereign Currency.

Paying Taxes & Debt gives Money Value

1. The US is not "Anyone else". It is a Sovereign Nation with a Sovereign Currency. It is impossible for the Government to go Bankrupt unless Congress forces it into bankruptcy  by passing laws that prevent it from paying its Bills.  If Congress lets the Federal Reserve Banks finance Government spending at no interest it would make the taxpayer debt burden nonexistent and Government projects less costly.

2. The past Debt of the United States is the Money that is already in and has been circulating in the economy since it was borrowed and spent. The United States has not been Debt-free more than a single year in all of its history and that created one of the Greatest Depressions in the Nation's early years of its History. The greater the Debt the Greater the Money supply and greater the possible activity in the economy. Whatever inflation was caused by that debt is long since a part of the supply/demand equation and is effected only by the velocity that money is spent and not by the money amount itself.

3. Deficit Spending can create an expanding money supply and a  growing economy if it is spent on job-creating and Nation-building projects. It will not create inflation unless there is a shortage of needed labor, or productive capacity or input materials. That is why a Nation must increase spending during high unemployment and decrease spending during low unemployment. 

by William Hodge

Money is not a THING.

Not a "THING"

Most people think that if they are holding cash money or coins they have real money. They do not. There is no such thing as real money.  By that I mean that you cannot see, smell, taste, hear or feel money.  It does not objectively exist as a "Thing"

The next thing people do when I say this is show me a Dollar Bill and show me "This note is legal tender for all debts public and private". That means it is Money. It isn't.  It is a Federal Reserve "NOTE" That would be a  promissory note .  

It is a promise that the Federal Reserve Bank is holding electronic [virtual] money in an Asset account to cover the printed value . When the holder deposits it into a Bank account the money is transferred to that account as electronic numbers. A Federal Reserved Note[and coins] has the same function as a check or debit card or an on-line-transfer has.  It moves money. It is not Money itself. All Fiat money in existence, exist only as digital numbers on bank computers.  It can be found no where else.    

Why Nation spends money.

We are going to explore why the Nation 

spends money.

How the Nation is constructed is described in the body of the Constitution  The reason why the Nation was created are listed in the Preamble to the Constitution. The Government spends money to accomplish purposes for which it was created.

" We the people of the United States, in order to form
a more perfect union, establish justice, insure domestic
tranquility, provide for the common defense, promote
the general welfare, and secure the blessings of liberty 

to ourselves and our posterity, do ordain and establish
this Constitution for the United States of America."

The people wanted:
1. A more perfect Union
2. Justice
3. Domestic Tranquility
4. Common Defense
5. General Welfare
6. Liberty

That stuff doesn't come free.
Even though the British ruined our Continental [fiat money] Note by counterfeiting them during the Revolution, we whopped them with the help of a French Blockade at York Town.

Then The British Royal Bank was nice enough to show us how to create a privately owned Corporate National Bank that we could support with Taxpayer Money. The Monetary Profiteers tried twice to create one. Twice they failed. So the big bankers went back to each one just creating their own debt notes. During the Civil War, Lincoln brought the problem to a head by issuing the Green Back Note to finance the war, He knew the Banks would bankrupt the Union charging 25% interest to finance the war.

Finally, after some misadventures, we set up the Federal Reserve Banks in 1913. That gave us our own Sovereign currency. We finally had one currency that all Corporate Banks used.
Treasury still has to pay interest when they use it.  Maybe soon we will discover that we don't really have pay interest to get people to lend us money if we don't want to.

Union, Justice, Defense, General Welfare, and
Liberty are public purpose. Private Corporations making a
profit when the Government borrows money from or through them is, most certainly, a private affair. We borrow Money from them in spite of the extra cost. Then we have to tax the people to keep the debt from getting too big and expensive. Paying interest on Public Money is not a good thing for taxpayers.  If we can get out from under the Banks that the British help create for us, we can do stuff for the people a lot cheaper. We will work on solving 

that problem in another Blog Post.

What is Money

MONEY?

1. It is "legal tender" that can be used to buy stuff and to pay debts.

2. Only money can be used to pay Taxes (debt that is owed to Government].  Taxes make money necessary and therefore valuable

3. Most Money spent by the Treasury is obtained by special-appointed Corporate Bank-brokers when only they purchase Treasury Bonds at the primary Auction for themselves and their clients. 

4. The rest is created by the  Federal Reserve Banks to purchase Government Bond Debt on the secondary bond market.  

5. Government spending money comes from
 A.  Taxing 
 B.  Borrowing
 C.  Creating

6. Corporate Bankers are the primary Brokers for borrowers. They alone are the buyers of Government Bonds at the Primary Auction because Congress gave only them that privilege.

I know stuff about money

I know Stuff about Money


I am not an Economist, but I play one when Blogging.
I did not finish college so I have no BA in Stuff. 
I am skilled in BS though. I studied a lot about Stuff while in College.
Then I dropped out, got married [49 years], have 2 kids and 4 grand-kids and retired from doing stuff.   

Now I write about stuff [economics - government  - politics].    My economics started with learning 
about the Austrian School.  They love gold and Balanced Budgets 

Then I learned Keynesian Economics.  They think Government should spend in hard times 
and build surplus Money in good times. They think money can control demand and supply. 

Then I found out about Modern Monetary Theory         [MMT]  They think you can just create Money 
as you need it.  I am now a Modified MMT'er.  
I call it  MY MONEY THEORY.   I was never 
good at leaving "good enough" alone.

This will be the opening page on my new 
Website  -  My Money Theory  It will begin 
with  "What is Money?". Then whatever strikes 
me as the best thing to write about will be what I write. 
It will take me a bit of time to think this through 
so I'll be getting back to you as I figure it all out.

2/2/2012

Copyright © William Hodge 2012