Title: It's Free - Are You Sure?
Original CoS Document (slug): it-s-free-are-you-sure
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Created: 2021-10-04 22:39:59
Updated: 2021-10-04 22:39:59
Published: 2021-08-25 01:00:00
Converted: 2025-04-14T20:26:21.793256891
It’s Free – Are You Sure?
You have heard a thousand times – IT’S FREE. BUT – nothing is “free.” There is always a price to pay. The cost is paid back in a hundred subtle ways. A merchant must make money or he does not stay in business. The government is a business too, but they do not treat it as a business. The government has one thing we do not have – a printing press, which is a way of charging for something and letting our children pay off the debt. Notwithstanding the New Money Theory, a debt always has to be paid and there is always rent of the money (interest) involved. The United States was a creditor nation at one time. After World War II we became a debtor nation. We may have owed the debt to ourselves, but it was a debt nevertheless.
Today, we are $21T dollars in debt. How do we pay off such a debt? There are several ways:
1. Inflation – inflation devalues the dollar so that we pay off past debt with depreciated currency.
2. The government taxes more of your income.
3. New taxes are created – a death tax, which taxes the assets you transfer; new taxes on sale of your house or other assets; a new tax on withdrawing your savings (Greece had a savings withdrawal tax of 50%); a Value Added Tax (Europe and Canada among others); a mileage tax for the miles you drive; and more new taxes that have yet been thought up, all designed to make you think you are not paying taxes
4. Increase the tax on corporate earnings, which means you pay the tax when you purchase something.
5. Devalue the currency. Inflation was so bad in Mexico that they devalued the peso by a factor of two. Interest rates immediately increased so creditors could recoup their losses.
6. Favors given by the government, which means the American public has to pay. Everybody wins - except the American taxpayer.
7. We do not pay off the debt and the country goes into a recession. If you have government bonds, you risk losing it all.
What is the best way to pay down our debt? Live within our means. This maxim also applies to government. When taxes go up, people have less money to spend, tax income then goes down, we spiral down into a recession, and we all suffer. All debts have to be paid. It is all a matter of how you want to repay the debt.
How do we avoid this mess? That is where Convention of States (COS) comes to the rescue. If done correctly, an amendment is proposed that requires the government to have a budget, to publish the budget, and to live within the budget – barring unforeseen emergencies. How did we survive prior to 1915 with no income tax? Data below is from Office of Management of Budget (OMB).
2020 Spending Budget - $6.55T (Revenue - $3.42T, Deficit – 3.13T)