THE TEXT
Here is the complete text for the course:
A large economy needs more money than a small economy. Therefore, a growing economy needs a growing supply of money. All money is debt. Therefore, a growing economy requires a growing supply of debt.

THE EXAM
Please answer the following question:
Where will the money come from to grow our economy?

THE ANSWER
The federal government must create the money by running a deficit.

THE EXPLANATION
         Every form of money is a type of debt. Your checking account, savings account, money market account and traveler's checks all are counted as part of the money supply.
         Your bank owes you the money in your checking and savings accounts. Your money market owes you what you have deposited. American Express owes you the money you paid for those traveler's checks.
         Even a dollar bill is a form of debt. The federal government owes you, the holder of that dollar, full faith and credit (the ability to use that otherwise worthless piece of paper as money). There is no form of money that is not debt.
        Printed on each dollar bill are the words "Federal Reserve Note. "Bill" and "note" are words signifying debt (as in "T-bill" and "T-note.")
        Increasing the supply of money means increasing the supply of debt.
        Although you, I, businesses and local governments all create money when we create debt, only the federal government has the unlimited ability to service debt. Why? Because only the federal government has the legal right to create as much money as it wishes (subject to the meaningless "debt ceiling").
         So, the safest, most controllable supply of money is the federal debt.

Question:
Will our children and grandchildren have to pay the federal debt?
         No, our children and grandchildren are not the debtors. In many cases, they are the creditors. Only debtors are liable for debt.
         Taxpayers do not owe the federal debt. The federal government is the debtor and is liable for its debts, which it pays by creating money. Example: Taxpayers are not paying for the Reagan deficits, proportionately the largest deficits in our history. In fact, tax rates have been cut.

Does rising federal debt cause inflation?
        No, contrary to popular wisdom, there is no historical relationship between federal debt and inflation. President Carter had high inflation with low deficits. President Reagan had low inflation with high deficits.

Does rising debt help the economy?
        Yes, there is a direct historical parallel between changes in Total Debt and changes in the Gross Domestic Product. A growing economy requires a growing supply of money (debt). Limit the money growth and economic growth slows.

Does rising federal debt reduce the amount of lending funds available to the public?
         No. Rising federal debt increases the amount of lending funds available to the public, because the federal government pumps more money into the economy as it creates and services the rising debt.

Do high interest rates slow economic growth?
        No. To a slight degree, high interest rates are associate with faster economic growth, because the federal government, in paying these higher rates, adds more money to the economy.

1. A large economy requires more money than does a small economy.
2. All forms of money actually are forms of debt.
3. Therefore a large economy requires more debt than does a small economy.
4. Therefore, a growing economy requires a growing supply of debt.
5. When inflation is at 3%, the total amount of real money in the economy will decline by 3%, unless more debt/money is created.
6. Further, when the population increases 1%, the amount of money per person decreases by 1%, unless more money is created.
7. Therefore, with inflation at 3% and population growth at 1%, a debt/money increase of 4% is needed each year, just to remain stagnant.
8. For a GDP growth of 4% on a per-person basis, the total debt/money supply must increase at least 8%.
9. The trade deficit (more money leaving the country than entering) in 2007 was $711 billion, or above 5% of the $13 trillion GDP, which brings the per-person total debt/money (federal, state, local government plus all private debt) creation needs to nearly 14%.

History shows that when total debt does not increase enough, as happened prior to the most recent recession, and is happening now (2008), we have slow economic growth, a recession or a depression.
                    

Perhaps you would like to see some proof and explanation. You can find them in FREE MONEY. To purchase the book, go to www.Amazon.com and search for "FREE MONEY Mitchell". For more information, click this link:
FREE MONEY