Capitalism exists to capture demand. which it does a good job of. It runs into trouble when it deems the monopoly creator of demand as its enemy and funds opposition to that creation, perpetuating its own starvation.
You feed into this insanity when you conflate public purpose spending with socialism which has been successfully vilified in American politics since the end of WWII. The average voter in America can’t tell you the difference between dollars created by their government and those created by banks, so they will be easy marks for shortsighted propaganda based in how the voter views their own budget process. They must “get” money before they can spend it, so they assume their government must also.
This leads to the fallacy of taxpayers paying for their government and the demand for debt reduction. There are many problems associated with this erroneous view of federal taxation and spending, but the main issue is that it isn’t true and wouldn’t work if it were. One simply cannot collect or borrow what doesn’t exist, so the truth is that federal spending “funds” taxes and bonds, not the other way around. The federal government is not a competing “user” of the nation’s currency, it is the monopoly “issuer” of currency.
The American economy appears to function with money created by banks, but banks cannot create money that is able to retire the debt that created it or be net saved. It can move resources into the economy, but it cannot provide any net store of value for commerce or function as a real denomination for contracts. Banks create credit accounts that must be retired with the “real” dollars only Congress can create, but those credit dollars are just as inflationary as the real dollars.
Without a regular supply of real dollars to retire credit accounts, fund trade deficits and provide a store of value the system can only function by constant growth. Any hiccup in that rate of growth sets off a chain of defaults that threaten critical supply chains and stability. The only way to prevent a domino of supply chain collapse from progressing into a total and impossible to escape depression, and the end of capitalism, with any serious downturn in the business cycle, is the injection of public money via automatic stabilizers which are vilified continually by — -wait for it- — -”capitalists”.
The only things preserving this dysfunctional form of capitalism that depends upon “socialist money” is the econ ignorance of the general population, including most politicians and economists, and the insulation from harm of the decision makers of capitalism. If those decision makers faced any real threat from the results of their actions, such as loss of homes or their ability to feed their families, they would learn to love deficit spending by their government.
A balanced budget, the holy grail of politicians, is another way of saying 100% tax rate and deficits are “required” for any net importer, especially one that allows extreme wealth accumulation, almost all the time. Unless the issuing government is leaving some currency in the private sector after taxes it is essentially “stealing” the resources it uses, leaving nothing to store value.
