Executive Summary The US Treasury creates money by issuing debt or a government bond, not directly issuing money itself. Introduction The government has massively increased in size since the founding of the country and the period when the country was a colony of the UK. This is explained in the following graphic. Look at the…
Executive Summary The US Treasury creates money through issuing debt — or a government bond, not through directly issuing money itself. Introduction People normally look at the government as if it has expenses like any other business. Following that model, it is logical to assume that governments need income from their citizens to pay for…
Executive Summary The US Treasury creates money through issuing debt — or a government bond, not through directly issuing money itself. Introduction The income tax in the US was brought into existence with the creation of the Federal Reserve, and a major reason for this was to pay the interest on debt that would be…
Executive Summary States and local entities only need to collect taxes if they do not have the money creation power of the government. Introduction Only the federal government should have the power to issue money. The US colonies ran into problems, with each colony issuing its own money. For example, competing currencies would not be…
Executive Summary There are significant differences of taxes by country. However, the image changes when one realizes that taxes are only necessary to create a demand for the money of a country and to reduce purchasing power. Introduction There is a long-term debate over the proper level of taxation. For example, countries in Scandanavia are…
Executive Summary How taxes are used to promote economic behavior and as a control can be understood by reviewing the British’s imposition in its African colonies. Introduction How the British used taxes in African colonies to motivate behavior is explained in the following quotation. “The following is not merely a theoretical concept. It’s exactly what…
Executive Summary It is often assumed that politicians understand the role of taxes are they are in the government. The evidence is that politicians do not understand that taxes are not used for expenditures. Introduction Goverments that can create their own money do not need or use tax receipts for government funding. Governments that can…
Executive Summary The US level of taxation for most of the population is too high and leads to unused capacity. This is how taxation levels should be set to balance the utilization of resources versus triggering inflation. Introduction Taxes are not directly related to government spending as the government does not use taxes to pay…
Executive Summary In most countries, interest rates are regulated by the central bank to regulated inflation. There is another and far more effective way to control inflation. Introduction Warren Mosler believes that it is necessary to tax to create a demand for that currency. However, it does not say “how much” that taxation needs to…
Executive Summary It is often stated that governments must collect taxes to pay for their budgets. For governments that create their own money, this is false. Introduction When the government issues its own currency, taxes are not necessary. Taxes are necessary when a government cannot issue money (that is without a private central bank). However,…