Most elected representatives parrot the bromides of mainstream economists, such as:
- The national debt is a burden that will crush the economic prospects of our children and grandchildren.
- The federal government must balance its budget and pay down the debt.
- The government needs to borrow or tax before it can spend.
- If unemployment gets too low, we’ll have runaway inflation.
- etc.
I used to believe those things, but on closer inspection, they all fall apart. So here are some simple questions that directly challenge those claims. With very few exceptions, you won’t find any congressperson who can give a coherent answer to these questions. Nor can anyone who believes the points above. Can you? Feel free to comment.
- If the federal government needs to borrow or tax to get dollars, where did its first dollar come from?
- Suppose the federal government had balanced its budget every year since the founding of the country. Would you own any dollars in your wallet or bank account? If so, where would they have come from?
- If the government runs a surplus, then the non-government sector is, by definition, running a deficit. Can we grow our economy by taking dollars out of it?
- When we pay our taxes, where did those dollars originally come from?
- The federal government “borrows” by issuing Treasury securities which you can acquire in exchange for dollars. Where did those dollars originally come from?
- Why can we achieve full employment during wartime but not during peacetime?
- If we can always afford a war, why can’t we afford socially beneficial things like education, healthcare, a clean environment, etc.?
- If you believe that adding dollars to the economy necessarily causes inflation, have you ever been offered a pay raise? Did you accept it? If so, where did those dollars come from? Did someone else have to take a pay cut so you could get your raise?