Another few words on national debt. People have a hard time accepting that debt is different for the government than for you and me. They figure, nobody is above the rules. But that's wrong, because there's one group who's very clearly above the rules: the Mafia. /1
Everybody knows the rules don't apply to the Mafia. When the Mafia asks you for something, you give them what they want. When the Mafia tells you what to do, you do as you're told. The rules are different. Why? Because they have the guns. That means they set the terms. /2
And it's the same with government. They have the guns. They use those guns to force you into debt, also known as "imposing taxes." The gov imposes a tax on you, then tells you that it will only accept payment in 1 form: the currency that the government creates. Or else. /3
Imagine for a second if the Mafia did this. Suppose they announced that everybody in a certain neighborhood was now in debt to the Mafia, and that the only way to pay that debt was with tokens that come only from the Mafia. Let's call these tokens, "Gambinos." /4
The people aren't stupid. They know what will happen to them if they don't pay. So suddenly everybody in the neighborhood is looking for the Mafia guys to ask them what to do to get Gambinos. The crime family can now tell the folks in the neighborhood exactly what they want. /5
Maybe they want some people to work for the Mafia, and also they need some supplies, like food and fancy suits. Whatever. The point is that the Mafia can use this token/monetary system, combined with threat of violence, to get what they want, which is the labor or goods. /6
Our left-wing friends might not like this comparison, but the government is basically a democratically-elected Mafia, and the real monetary system works the same was as Gambinos do. And just like the Mafia, the government is above the rules. And that's a good thing. /7
We want our leadership to be above the rules. That way they can accomplish the tasks that the rest of us can't. Of course if we give them this power, then we also have to figure out how to hold them accountable to our will. But the point is, the government really is different. /8
So back to national debt. How is national debt different from personal debt? The government doesn't need your money. As the sole creator of the currency, it has all the money it could ever want already. What it needs is your goods and labor, which it gets by imposing taxes, /9
then telling you what work or goods you can sell to the gov to get the currency you need to pay the tax. So, what if people wanted to save some money, rather than pay it all immediately in taxes? Then they could do more work for the gov, resulting in a gov deficit. /10
If gov spends more than it takes back in taxes, then the rest will accumulate as savings in private hands. If gov thinks it's good for society for people to save, then it can provide some incentive by paying interest on people's savings. It does this by selling Treasury bonds /11
But does the government need to do this in order to function? Absolutely not. Will the government go bankrupt if nobody wants Treasury bonds? Should we be worried that bankers or China could force up interest rates gov pays? No and no. Gov has the guns, they set the terms. /fin
