The wealthy oligarchs have managed to perpetuate a grand lie on America and that lie is catching on in other parts of the world at breakneck speed. It began with the oil crisis in the ’70s and Ronald Reagan rode it to the Presidency in America. Thatcher and the Tories followed his lead and we can now see it taking hold in Britain as well.
The basis of that lie is that wealth can only come from wealthy people and their businesses and government is a “cost” to the economy that must be born by taxpayers or “borrowed” from the wealthy. This sets up government as a competitor to investors who would really like to make society better for everyone but just can’t because the government takes too much of their money and throws it away in inefficient programs, mostly to feed and house “those others”.
If you ask any sample group in America, or Britain, how their government finance and money work you will get this same perspective from 99.9% of the group (with the .1% represented by people who make a lot of money from this belief), regardless of their political affiliation or ideology. There is simply no one in politics, the media, or academia, outside of a few economists that are mostly considered “fringe”, who will present any variation from this.
The problem is that this story is 180 degrees from the reality of most modern economies today and is responsible for most of the misery, racism, class division, and all that those cause. The lie is seldom challenged because it meshes perfectly with the finances and budgeting of those who would be sampled and is generally accepted as a universal truth, even by many in leadership or that present themselves as “experts”.
It is possible for a lie to be so universally believed that institutions are structured around it and it becomes a quasi-reality. One can advance up to the level of a state Governor or anyone below the federal level without knowing the truth of money creation and perform at a level of excellence. It is only when one reaches the level of responsibility for the “FEDERAL” budget that the operational reality is turned on its head and one’s belief is no longer valid.
The federal/national government of almost all modern nations (except those who gave up the sovereignty of their currency and adopted the Euro) are unique in how they relate to the currency of their nations. They are not “users” of the currency that must get it from some outside source prior to spending. They are the monopoly “ISSUER” of their respective currencies. This means that, once bank debt is settled, the total net currency in their economies was created by the central bank/government spending into the private sectors more than they collected from any source of “revenue”.
For such a government that maintains the sovereignty of its currency, there are no revenue constraints and it is not possible for it to be “in debt”, as it would have to create the currency and give it to someone prior to borrowing it. It also cannot finance its spending via taxation, even dedicated taxes, because of the same logic. It is simply not possible to “collect” what doesn’t yet exist, so it is more accurate to state that its spending “funds” taxes and borrowing than the reverse.
Most currency issuing governments “destroy” any currency collected, by any means, because it is in keeping with dual entry spreadsheet accounting used in finance all over the world where tracking money and error checking is critical. This was especially true when many economies were constrained by the gold standard and it benefited no one for the government to “have” currency that could be converted to gold on demand and also hold the gold it represented.
For most of these economies “money” doesn’t exist in the government sector, only the debt that was created when the money was spent into the private sector and serves to inform of the money in circulation and balance that money to zero when it enters the government sector. When Thatcher stated “There is no public money, only taxpayer money” she was lying, and likely knew it as well as Reagan did when he stated, “Government IS the problem”.
As long as the average voter believes that “their” money funds their government they will resent any spending that doesn’t directly benefit them and especially if they believe that the beneficiaries of the spending are not “deserving”. If the majority of them would ever discover that “their” money is only the product of government spending into the private sector and that their taxes are deleted, not used to fund anything, the economic and political environments would take a serious left turn and America would be returned to “by the people and for the people” again. The oligarchs and their lapdog politicians would be lucky to survive.
