This will be my last response to you. I have other things to do besides repeatedly answer your questions and then be accused of avoiding them. It is not my fault your cognitive reasoning can’t connect dots.
You continue to ignore this question, where do the funds payed out in SS benefit checks from the Treasury come from?
Like all federal spending, they are self-funding by the creation of new currency at the point where it enters the private sector. This is evident from a simple examination of the federal non-discretionary budget. Treasury instructs the Fed to mark up its spending account and keys are stroked. That’s it.
What did the lock box describe? It was a proposal to hold the surplus payroll tax revenues in marketable securities or other liquid form rather than to do what we were doing, buying Treasuries with those surplus funds and dumping the money into the general fund to be spent on government operations.
Doing so would require that the government never actually take possession of the payroll deductions. Since taxation/bond issues don’t fund “any” spending at the federal level they are not “dumped” into the general fund to be spent on other priorities. They simply cancel out an equal amount of debt. End of story for “all” federal revenue. It is an accounting impossibility for taxes to decrease the debt and survive to fund other spending. If it were, the national debt would have been paid off long ago by SS deductions alone.
FDR admitted that the only reason for payroll deductions was to give workers a sense of ownership of the benefits so Republicans couldn’t whittle them away. He fully understood the purpose of Treasury bonds as a way to draw down excess reserves, not to “fund” spending. He used them extensively to avoid the inflation that was all but unavoidable when war requires almost total dedication of resources and everyone possible is employed.
You say that every dollar issued is balanced by debt. Debt to who? And you don’t seem to understand where the dollars spent by the government go. How could this money “deplete the money supply of the private sector” when most of it is spent directly back into the private sector?
The debt I referred to isn’t an actual debt except that the government “owes” a dollar of tax credit for every dollar it creates. This is simple math and dual entry spreadsheet accounting that requires an opposing entry in another (government) sector for every dollar created in the private sector. This is the normal method of tracking money in every bank in the world.
Since currency is created from thin air at the point it enters the private sector (the Fed) the normal tracking mechanism doesn’t work without a debt entry also created from thin air. Whenever two opposing entries meet in any sector they balance each other to zero. The debt informs Congress of the amount of currency in circulation and the upper limit of potential taxes without creating more currency. Without a gold reserve to defend Treasury bonds are totally unnecessary as the act of spending creates the reserves used to purchase them. Spending “funds” both bonds and taxes, not the other way around.
Why would you think that government spending is the only way to increase the money supply, that taxing isn’t possible until government puts new currency into circulation through spending to be taxed?
Because it is? Banks create reserves when they loan to facilitate interbank transfers of loan proceeds, but they will always balance only the loan principal. Paying off a loan decreases the net money supply. The government always demands only its own currency back to settle tax obligations. That is how it drives acceptance of the currency as a standard unit of measure to denominate trade and contracts.
Congress can appropriate money, it can’t create money.
Actually, it is the only entity that is Constitutionally authorized and mandated to create the currency. Article 1: Section 8. Where, exactly, do you believe the money comes from? Keep in mind that any theory has to pass the “first dollar” test.
I’m interested in how dollars that “don’t exist in reality” can be used to purchase real goods and services, a pretty neat trick.
It is the government purchasing goods and services, as well as paying for programs, that creates dollars in the private sector. The government only holds the debt that is created when those dollars are created. A monopoly issuer of the currency neither needs nor uses “revenue” to spend and can always afford anything that is denominated in the currency it creates.
I can’t imagine any other ways to explain this to you, so take your best shot knowing it won’t be responded to.
