Printing Money…

Here comes the GOP, planning to tackle “tax reform”…again.  By now, most of us should be aware that “tax reform” is political-speak for “cut taxes on the wealthy.”  Okay, sure, the not-wealthy usually enjoy a small break as well.  That can’t be helped.  But, long term, the cuts benefit the wealthy and everyone else ends up paying more in one way or another.

And let’s be clear: we’re no longer talking “economic theory”, here.  We, the people of this once-great nation, have been living in this experiment since Ronald Reagan initiated the wealthy assault on America.  We can SEE actual results – and all we have to do is look around.  If you think the average American is better off, economically, than the average American of, say, the 1960’s, well, you’re probably not old enough to remember the 60’s.

In fact, it’s my own little pet theory that average Americans of the mid-twentieth century became SO strong, economically, that they began refusing to go fight the bullshit little wars rich people find so…rewarding.  Enter Reagan and “voodoo economics” (check), return to the great days of income disparity that existed before the New Deal (check), return HUGE swaths of society to subsistence level incomes (check), kick off a few new wars for profit (check), (check), and (check), and see if the desperately poor still refuse to join the military…

But I digress.  As it happens, much of our society has been coached to understand that printing money is a harmful behavior without being given the context as to WHY the government keeps finding itself in the position of having to do so in the first place.  Also as it happens, the short answer is…”tax reform”!  (I promise, I’ll do this a painlessly as possible…)

Every once in awhile, I hear someone opine that they “couldn’t run their household or business the way the government runs the economy.”  That’s true, but only because national economies don’t work the way your household or business economy works.  See, in a national economy, your spending is my income and MY spending is YOUR income.  National economies stall when – for whatever reason – everyone stops spending at once.  When that happens, the government is forced to step in and spend until there’s enough money in circulation again to keep things humming along.

Ah, circulation.  That’s the key to this whole mess, then, right?  Why, yes.  Yes it is.  But we’re getting just a bit ahead of ourselves because there’s one more piece you need to understand before it all fits together.  As it happens, there’s only so much money.  Certain segments of our society have been taught something else – that the “pie” is infinite and, as such, it just doesn’t matter if rich people keep more and more of it – there will ALWAYS be enough to go around.  Hmm, devoutly to be wished, for sure, but simply not true.

There’s only so much.  EVERY DAY, the government knows it’s own net worth.  (Rich people tell not-rich people not to trust government numbers but rich people use government numbers every day in order to make multi-million or -billion dollar decisions…)  It’s a HUGE number and it changes all the time but every day, the government knows it’s own net worth.  So…let’s tie these bits together using (admittedly) ridiculously small, made up numbers.

Let’s say the total money pool is 10 bucks.  As long as 5 bucks are in circulation, everyone is doing well.  One guy has 5 bucks all to himself.  He’s rich but everyone else is okay because there are still 5 bucks in circulation.  But then, Mr. 5 Bucks decides to keep more.  When he keeps the next dollar, someone else begins to suffer because there’s not quite enough money in circulation.  By the time Mr. 5 Bucks has squirreled away 8 bucks, people are in dire straits.  The government has two choices.  One, it can use it’s leverage (in the form of taxes) to pry some of that beautiful lucre away from Mr. 5 Bucks OR it can print more money.

The thing is, when they print more money, it’s only a short-term solution.  Mr. 5 Bucks is so well positioned in the market that he’s just going to suck up that newly printed money as well, leaving everyone else to try and survive on the remaining 2 bucks.  Now, Mr. 5 Bucks has 11 bucks and everyone else is STILL struggling to get by on the remaining 2 bucks in circulation…so the government prints more money to keep the economy moving.  Now, just keep reading this paragraph over and over and over again until the whole kit and caboodle comes crashing down onto your head…

As long as the government refuses to tax Mr. 5 Bucks – FORCING him to return some of “his” money to circulation – they have no choice but to keep printing money.  And none of this even touches on what it means to have 16 bucks out there covering 10 bucks worth of value…

So I’ll tell you this: when I hear talk of “tax reform” I know my world is about to get rougher (and more expensive) because I know that the more rich people are allowed to hoard, the less there’s going to be for everyone else…

If you like what you read when I write, you don’t have to wait for the hit-and-miss of Facebook to see these musings.  You can come directly to my website at MyBaconPress.com.  Even better, you can come to MyBaconPress.com and click on the little button at the bottom of the page.  A form will pop up asking for your email address.  (It looks like they want you to “join” but there’s nothing to join and it’s free.)  From then on, The Bacon Press will be delivered directly to your inbox.  You can even comment from there…

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