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Everything on this web site begins with this philosophy:
*The measure of an economy is money.
*A large
economy needs a larger supply of money than does a small
economy.
*Therefore, a growing economy needs a growing supply of money.
*All money is a form of debt.
*Therefore, a growing economy requires a growing supply of debt.
*U. S. Federal Debt is the safest, most controllable form of debt. The federal government, alone among borrowers, never will default.
*Thus, there is no
federal debt or deficit problem, and a
balanced federal budget leads to a
recession or a depression.
Balanced Federal Budget
To learn the implications of a balanced Federal Budget, read
FREE MONEY by Rodger Malcolm
Mitchell.
Click the cover to see excerpts from FREE MONEY
What exactly is a
balanced federal budget,
how do we achieve a
balanced federal budget,
and what are the economic implications of a
balanced federal budget?
A
balanced budget,
occurs when the
Federal deficit = $0. Taxes paid to the government = government spending. A
balanced budget,
means the government does not add money to the economy.
If state and local goverments, businesses and private individuals do not add money to the economy, the total amount of money in the economy remains static. When the total amount of money in the economy remains static, the smallest inflation reduces the real value of money in the economy.
Assume the total amount of federal money in an economy is $50 trillion and inflation is only 3%. If no new money is added via deficit spending, the total real value of federal money in the economy will fall $1.5 trillion.
If the balanced federal budget continued, and 3% inflation remained, after ten years, the real value of federal money in the economy would be only $37 trillion -- a $13 trillion drop!
Those who believe in a balanced federal budget would have to explain how an economy can grow while the money supply falls.
Associated Press - January 13, 2008
"Lawrence Summers, one of President Clinton's treasury secretaries, said the odds of a
recession this year went up after the dismal employment report. He advocates temporary tax cuts and emergency spending."
If tax cuts and increased spending are good for the economy, why are they "temporary" and "emergency." Why not "permanent" and "ongoing"?
History shows that when the real value of money in our economy falls, the economy experiences a
recession or a depression. And in fact, every depression in U.S. history has immediately been preceeded by a reduction in the Federal Debt.*
A persistent 3% inflation (which is not particularly high), combined with a persistently balanced federal budget, would cut the real federal money supply in half in 20 years!
Assume we would like the GDP to have a real growth rate of 3% annually. To accomplish this, we would need real money to grow at least fast enough to account for inflation, population growth and that 3% GDP growth.
Say inflation is growing at a 3% rate and the population is growing at 1%. To achieve a GDP growth of 3%, the growth of debt money would have to be 1.03 (for inflation) x 1.01 (for population growth) x 1.03 (GDP growth) = 1.07 annual total debt/money growth. In ten years, the total necessary debt/money will have doubled while GDP increased 35%.
This assumes the nation's current account (sometimes referred to as the "balance of trade") is not in deficit. If the current account is negative -- meaning more dollars flow out of the country than flow in -- the amount of debt money growth to achieve 3% GDP growth will increase further.
Over a ten year period, achieving a 35% increase in GDP requires a 100% increase in debt/money.
Money, that is, total debt, is the fuel that runs our economic engine. But all money is not equal. Personal debt has a high degree of risk. People go bankrupt with troubling frequency. Corporate debt is somewhat less risky, and state and local debt is less risk-prone yet.
But the least risky money is federal debt, with a risk factor approaching zero. No federal check ever has bounced, not even during the worst days of the depression.
Therefore, the safest way to assure economic growth is to create federal debt, and the safest way to assure substantial economic growth it to create substantial federal debt.
Rodger Malcom Mitchell is a "turnaround specialist", a businessman who comes in to save troubled
companies. He looks at each company with fresh eyes. His task requires him to ignore the company myths and corporate common knowledge, and to determine the reality of each company's situation. In FREE MONEY, he uses the same techniques to investigate the commonly held beliefs about our economy. What he
discovers will amaze you.
To learn more about a balanced federal budget, read FREE Money.
Review Rodger Malcolm Mitchell's book, FREE Money.
CLICK HERE
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PGM Worldwide,
Inc.
FREE MONEY: THE ANTIDOTE TO POPULAR WISDOM
ABOUT SOCIAL SECURITY, MEDICARE, THE FEDERAL DEFICIT AND DEBT,
TAXES AND THE ECONOMY.
.When the obvious answers don't work, the real answers
will be counterintuitive. |
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E-mail:
phyllisrgarber@yahoo.com
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