The Arbitrary Point of Federal Issued Debt

Executive Summary

• The phrase is often stated that all money is debt. The answer is that it depends upon whether the central bank is public or private.

Introduction

It may seem that the interest on any federal debt of any country that controls its own currency (so not the EU countries) is paid by taxpayers, but that is not correct. The federal government does not use taxpayer money to pay for anything. The government issues money, so it does not “need” money. (imagine being able to create your own money, what you use the money that was given back to you for if you can create it at will? While you may not have used for something you can create with an accounting entry, you would want to — like the DeBeers Company — keep the supply of this monopoly money restricted to maintain its value. This is the reason for taxation, to pull money out of the economy to reduce the buying power of your citizens. However, that is not the same thing as “needing” the item in question. DeBeers does not “need” or have a use for the mass quantities of diamonds it keeps off the market. It only needs to control them to maintain the illusion of scarcity.) This further means that the point at which a country is considered to borrow is arbitrary and is a quantity that matches what was debited from cashed checks from taxpayers. If borrowing begins when the federal government has spent more than it has received in taxes, then the government must have a parallel way of spending up to this point that does not involve the central bank issuing debt. That is creating accounting entries to make purchases. Then after that point, it issues debt through the central bank. However, as the federal government does not use the money it receives in taxes, it could set the point where it needs to begin to issue debt to any level. That is, it would work even under a private central bank model. It would not have to issue any debt at all. The statement contradicts this that all money is debt in a modern central banking system. However, how can that be true if the government does not add other lower expenditures than the taxes collected to the federal debt? On the other hand, the US dollar is repeatedly referred to as debt-based money. The question remains regarding the parallel mechanism the federal government uses to pay for things without using debt. (This entry is in the process as there are several missing pieces of information. Mainstream sources cannot fill this information as they do not accurately explain how the design works) None of this applies to state or local governments who need to use taxpayer money to pay for things and need to issue debt. However, state and local governments only need to do this because they have not been given the power to issue the government’s money. However, this means that a private bank in that state has more privileges than the state and local government. Because the federal government does give this power to private banks. Furthermore, many private banks work against the public interest. This brings up the question of why they continue to receive government endorsement. The federal government is saying, in effect, that Bank of America or Wells Fargo deserves more public benefits than does the state of Wisconsin. This obvious inconsistency is what is behind the movement to allow for state public banks based upon the Bank of North Dakota (see entry for this institution on this website). However, even the BND design, the only currently functioning state bank in the US, brings up issues, as the BND is designed not to compete with private banks. However, citizens would be much better served by a state public bank than most private banks. Therefore, this concession on the part of North Dakota is a loss for the state’s citizens. Many of these banks demand the right to loan out money they create on a computer with an accounting entry but disagree with servicing the public good and insist on profit maximization. Therefore, this restriction of the BND to very specialized tasks and even to helping private banks has been done to appease private banking interests, and it against the public interest.