How to Account for The Costs of Government

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 their functioning.

This is a false assumption.

If any entity (the government included) creates its own money, then it does not have to receive money from its citizens. That is, under a public central bank model, the government has a “printing press.” It can pay for anything it needs with the money that it creates. Banks do not have this ability because while they can create as much money as they can find reliable lenders, the banks must have the loans paid back (except, of course, when the government bails them out). However, a government never requires that the money it creates be paid back. Because of this “conjuring” capability, there is no reason for a government also to tax its citizens. When a government controls its ability to create money from private banking interests, it does not face inflationary pressures because the primary inflationary pressure comes from private banking interests, who charge interests on loans and make money from financial speculation. (this is the double problem of allowing investment banks and commercial banks to be the same bank). Private banking interests have deliberately misrepresented the history of inflation to be of governments printing too much money. However, the issue of inflation is due to the financial bias inherent in private banking itself. The Fed (a private central bank) has been controlling the US dollar from 1913 until the present day. Their dual mandate has been to keep unemployment and inflation low. However, since 1913, the US dollar has declined in value (due to inflation) but over 97%.