And as the issuer of the currency the federal government needs to take seriously its role in supporting domestic employment.
This is made difficult by the misconception the general population has surrounding taxation and federal spending. Because most people get their pay from an employer and pay taxes to the government they mistakenly believe that the employer is the “source” of productivity and money and that their government is a “cost” factor that drains capital from the economy.
The truth is that money itself is a product of law, a unit of measure used to denominate pricing and contracts, not a “thing” that is limited in supply. I like to use an analogy to lumber to describe the function of money in our economy. One can never run out of inches or feet used to measure lumber, but one can run out of the lumber being measured. Money supplies a universal denomination to measure resources and provide a store of value that makes our commerce possible, but it has no intrinsic value of its own, any more than does an inch or foot without being used in relation to a resource (or labor).
Wealth/savings is also a product of the government because it isn’t possible unless the government spends/creates more currency in the private sector than it removes by taxation. Banks can create “credit” and businesses can shuffle that around to determine winners and losers, but in the end “net” accounting only the money created by the government can retire debt, pay interest on that debt, or be net saved.
Money collected by the government in any form is permanently destroyed by the “debt”, a tracking entity to balance the money created in the non-government sector when it spends to conform to dual entry accounting used worldwide to track money. Whenever a positive and negative get together in the same sector of the accounting system they balance to zero, so “tax revenue” is an oxymoron for misdirecting the attention of regular morons. A balanced federal budget is nothing more than a 100% tax rate and the theft of any resources and labor used by the government. The fact that it is the holy grail of politicians should tell us all we need to know about the current qualification bar for the job.
The government also cannot “borrow” what doesn’t yet exist, so debt is never a funding mechanism for it. It neither needs nor uses “revenue”, as it simply creates what it needs when it needs it. No purpose is served by creating money with the intent of “borrowing” it back, destroying it, and later re-creating it with interest added, except as a welfare payment to banks and the wealthy. Treasury debt only leveled out the money supply when we did that gold standard nonsense and no longer is necessary or productive except as propaganda fodder to provide big numbers to beat the little people about the head and shoulders should they demand nice things, like healthcare and retirement, that other countries take for granted.
In addition to tax policy and spending on infrastructure modernisation and other programs serving the common good, it could also effectively end unemployment by paying for transition employment for anyone between jobs, thereby also stabilising private sector employment levels.
One of the primary functions of any government is organizing its society and economy around its currency. It does this by imposing a tax payable only in the currency it creates at will. This makes the people effectively unemployed until they can earn enough of its currency to pay the tax and avoid penalty. This drives the acceptance of the government’s currency and allows it to provision itself without regard to revenue.
A government that is responsive to the people’s needs will also assure that they have the means to secure the currency necessary to pay the tax and provide for a dignified minimum income. This is best accomplished with automatic stabilizers that deploy currency into the economy in a countercyclical fashion to the natural business cycle without requiring intervention by political figures and their whims.
The most productive means for this is a federally funded job guarantee that provides a floor for the living standard of the workers. It can be managed and administered at any level but must be funded with newly created currency that can only come from the federal government. Such a system also pegs the economy to the hour of labor instead of capital, which is much more effective at stabilizing and avoids rent-seeking. As long as sufficient production and resources exist in the economy to absorb the injected currency inflation is not a concern and the government issuing the currency will remain the price setter.
Using involuntary unemployment of the people as inflation control is cruel and unnecessary, but provides a considerable advantage to business by suppressing wage and benefit demands as well as driving private credit demand. It also presents a risk of serious social issues as any demographic that is first fired/last hired is at an even greater disadvantage in accessing credit and will be suppressed systemically.
