Our Government is Seriously Lying to Us About the Economy

  • As a monetarily sovereign nation, the US created and denominated its currency by law
  • In 1971, when President Nixon took the US off the gold standard, the dollar became a fiat currency, one that is not backed by any valuable commodity
  • While on the gold standard, if the government wanted to increase the money supply it would have to increase the gold reserves proportionally
  • Now, with a fiat currency, the Feds can create an unlimited amount of dollars if it chose to
  • States, counties, cities, all businesses and the public are not monetarily sovereign and must use the government issued dollar for all financial transactions. Thus, unlike the US government, all of them need some form of revenue to pay their obligations. The points about fiat currency discussed here do not apply to them.
  • Taxes DO NOT fund Federal government spending. Since all the money in circulation was created by the government by paying its obligations, it must first spend in order for businesses and individuals to have the money to pay their taxes. NOT the other way around, as commonly thought
  • The US government does not borrow money; therefore, it has no debt. Since the government creates new money at the stroke of a computer key, it has no reason to borrow its own dollars.
  • The Treasury bonds and bills that the government holds are commonly referred to as debt, but they really are simply public savings. The Feds do not sell T bonds as a means of raising money to pay obligations. Again, they have no need to. This practice is but another means of controlling the money supply. When it spends big, the government will schedule a bond sale in order to draw off the excess money supply.

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