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Monday, July 18, 2011

Debt Ceiling "Debate"

It is offensive to watch the "negotiations", regarding the debt ceiling increase.

This is not a true negotiation. Suppose I am negotiating for a job. I'm contributing my salary, and the employer is paying me. Each side is contributing something. (That distinction is blurred, when you're working for a corporation with a State-backed monopoly. A typical employment contract is take-it-or-leave-it, rather than a true negotiation.)

The Republicans and Democrats are not spending their own personal money. They are spending other people's money.

This is a common mistake. Politicians are spending other people's money. Via the Principal-Agent problem, politicians treat tax money like it's their own personal money. Anytime you control resources that you don't own, there's a temptation to line your own pockets, rather than spend it wisely.

As another example of the Principal-Agent problem, a CEO controls the corporation, but isn't 100% owner. The CEO is tempted to line his pockets at the expense of shareholders.

No matter what precautions you take, the Principal-Agent problem exists whenever you control resources you don't own. That's one of the key scams of the State. Via the State, many people control wealth that they don't actually own. This leads to theft, fraud, waste, and malinvestment, rather then people using that wealth wisely.

Suppose I'm 100% owner of a business. Then, "making a budget" is a reasonable exercise. I try to match my expenses and income, and maximize my profit.

Suppose I'm 50-50 equal co-owners with someone else. Now, there is a problem if we can't agree. Either party can threaten to torpedo the business, if we're equal co-owners. (Never enter a business with exactly 50-50 split. You can be SOL if your partner misbehaves. Similarly, if you're a minority owner, there are plenty of ways you can be cheated. I'd be reluctant to be the majority owner, because the minority holders can still sue and harass you if you're successful. Consider E-Bay vs. Craigslist, as an example where a minority shareholder can harass you.)

Democrats and Republicans act like they're 50-50 co-owners of the government. That's not true, because it's technically owned by the people. However, the average slave is nearly completely disenfranchised. The two groups of insiders act like co-owners of the government.

Government is not bound by the accounting rules of normal people. In a system of paper money, the government can have an arbitrarily high deficit and debt. The only cost is inflation. If inflation gets too high, then there's hyperinflation, and the monetary system and government collapse.

The deficit and national debt aren't free money. The cost is paid by everyone else via inflation.

If you cut taxes but don't cut spending, that's silly. Politicians could decrease the income tax, but that's offset by an increase in the inflation tax. The only thing that really matters is spending cuts.

Paper money gives politicians an unlimited fudge factor. If they want increased spending, they can run higher deficits rather than raising direct explicit taxes. Instead of raising the income tax, they can raise the inflation tax.

It also is a farce, that they're projecting $X budget cuts over the next 10 years. That is silly. No current agreement is binding on future Congress. The only thing that really matters is current spending. They can make an agreement for future cuts now, but change their mind later.

Due to the Compound Interest Paradox, the debt ceiling *MUST* be raised. Due to a flaw in debt-based money, the "national debt" must increase exponentially to keep the scam running. The "national debt" cannot be paid unless the Federal Reserve is reformed or eliminated.

The national debt is greater than the M2 money supply? Does that make any sense at all? How can the government be in debt by more money than there actually is? It's even more obvious if you add all private debt, which is $50T or more. How can people collective be in debt by a huge multiple of the money supply?

You might wonder "Why not print money to pay off the national debt?" Instead of printing new money, the Federal government continuously refinances its debt by printing more Treasury bonds. There is no substantial difference between printing new money to pay off the debt, and continuously rolling over the debt by printing new Treasury bonds; both are inflationary. The only real difference is that the banksters make a fortune on "interest payments on the national debt". The banksters borrow from the Federal Reserve at 0%-0.25%, and buy higher-yielding Treasury debt, making a guaranteed riskless profit. If the Federal government prints new money and pay off the national debt, then the banksters can't make easy profits speculating in Treasury debt.

The budget negotiations is a game of chicken. Each side threatens "I'm willing to end the criminal conspiracy of government, if I don't get what I want." Of course, they never would take such drastic measures.

The Democrats and Republicans are false opposites. They're colluding to rip off the American people. Many people think that the opposite of a Democrat is Republican. The President has more in common with Boehner than with the average slave. They're both politicians and parasites and insiders. They earn a living by corruption at the expense of everyone else.

They're pretending to debate and be responsible. Most politicians are not aware of the scam, which makes them more effective liars.

It's amusing to watch politicians argue about the debt limit and budget. They have to raise the debt limit. They have to agree on a budget. What else are they going to do? Give up, go home, and get a real job? They have to reach an agreement. They will phrase the agreement that both sides claim "victory". The losers are the slaves who suffer higher taxes and higher inflation.

1 comment:

Anonymous said...

Another spot on post. Congratulations.

You really do see things for as they are.

For years I was frustrated about working hard and getting nothing back in return. Now I know that the system is rigged against you - whether it be government or your employer.

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