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.

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             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. (See below)
            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 usually is less risky, and most 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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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.

E-mail: phyllisrgarber@yahoo.com

Medicare: A Solution to the Problem

Read Letters to the Media

US National Debt is $9 Trillion!

For those who want a balanced budget, here is a history lesson:*
          1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
          1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
          1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
          1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
          1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
          1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
          1998-2001: U. S. Federal Debt reduced 9%.    Recession began 2001


CONTENTS OF THIS WEB SITE:
  1. Stagflation
  2. Federal Budget Deficit
  3. Social Security and Medicare Solutions
  4. National Debt Letters
  5. Federal Deficit Solution
  6. Concord Coalition.
  7. Balanced Federal Budget
  8. Federal Deficit Problem
  9. Federal Government Budget
  10. US National Debt
  11. National Debt Solution
  12. A Child In Arms
  13. Inflation and Stagflation
  14. Glossary of Economic Terms Debt, Money, Deficit, Spend, Owe
  15. U.S. National Debt
  16. US National Debt Clock

    What does this logical progression tell you?
    *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, because the federal government, alone among borrowers, never will default.
    *Thus, there is no federal debt or deficit problem, and a balanced federal budget guarantees recession, and depression.


    The Interest Rate Fallacy | Social Security Solutions | Medicare Solutions | Economic Solutions | Recession | Federal Debt of the U.S. | Federal Budget Deficit | Stagflation | National Debt Letters | Federal Deficit Solution | Balanced Federal Budget | Federal Deficit Problem | Federal Government Budget | US National Debt | National Debt Solution | A Child In Arms | Glossary of Economic Terms Debt, Money, Deficit, Spend, Owe | US National Debt Clock | Inflation and Stagflation | Pseudoeconomics   | Money supply and the weather | The Relationship Between Gold and Money | Social Security Reform | Does Federal Debt Cause Inflation? | The 5 Myths That Damage Our Economy | 10 Reasons to Eliminate FICA | GETROYS | Opinions | Rodger M. Mitchell -- Ideas |