The Church of Jesus Christ of Latter-day Saints has a few things in common with Ebenezer Scrooge. Scrooge, who stars in “A Christmas Carol,” is rich beyond belief. He has untold riches, and it skewed his ability to be human. Scrooge won’t burn enough coal to keep his clerk, Bob Cratchit, warm. But he also won’t burn enough coal to keep himself warm. Scrooge is miserable because he won’t spend his money. He’s tight-fisted and unpleasant to be around.
Jesus had this to say about people who hoarded their riches: “And he spake a parable unto them, saying, The ground of a certain rich man brought forth plentifully. And he thought within himself, saying, What shall I do, because I have no room where to bestow my fruits? And he said, This will I do: I will pull down my barns, and build greater; and there will I bestow all my fruits and my goods. And I will say to my soul, Soul, thou hast much goods laid up for many years; take thine ease, eat, drink, and be merry. But God said unto him, Thou fool, this night thy soul shall be required of thee: then whose shall those things be, which thou hast provided?” (Luke 12:16-20)
The Church is rich beyond belief. It has untold riches. Literally untold, until a whistleblower revealed the size of the Church’s stock portfolio. It skewed Church leader’s ideas about sacrifice and created such odd beliefs as, “it is better to ask volunteers to clean bathrooms than to hire someone to clean bathrooms and provide that employee with good wages and health insurance.” The Church is tight-fisted with anything hinting at fun, like youth groups and what used to be the activities committee, and then can’t understand why people are miserable and unwilling to take callings.
Being too rich is a bad thing for the rich person. It’s also a bad thing for the economy in general.
Tax and Spend vs. Hoard and Invest
Tax and Spend
Taxes work like this: The government takes some money from all of us and spends it on stuff that benefits all of us. It should take more money from rich people. That’s called progressive taxation and it puts more of the responsibility to pay taxes on rich people. The justification for that is that rich people have benefitted the most from government services. Amazon’s delivery trucks drive on roads built using tax dollars, for example. Google hires people who got their first twelve years of education paid for by tax dollars. Facebook is brought into your home by an electrical grid built and regulated by tax dollars. Walmart taps into taxpayer funded water and sewer lines to put restrooms and drinking fountains into its stores.
The government spends the taxes it collects. It hires people to build roads and pays them wages. Those road construction workers take their taxpayer-funded wages and buy a house, buy Christmas presents for their kids, maybe even go on vacation. In order to build the road, the government buys gravel and asphalt from private companies that mine and haul gravel and asphalt. The taxes it uses to buy gravel is then used by the private company to pay wages for its own employees, and maybe buy a new truck to haul more gravel.
The government hires teachers, and tax dollars go to teacher salaries. Teachers spend their salary on buying food and clothing, which puts those tax dollars back into the economy in the form of purchases from places like Walmart. Teachers also spend some of those tax dollars on supplies for the classroom, like tissues and hand sanitizer.
Tax dollars fund SNAP (food stamps), which is spent at grocery stores. Grocery stores use that money to hire people to stock the shelves, and buy more food, keeping that money in circulation. Tax dollars hire social workers to work with the desperately poor, and social workers spend their salaries.
Tax dollars buy fighter jets, pay salaries to people in the military, build military bases, buy ammunition, and otherwise fund the most epic military on the planet.
I could go on, but you get the point. Tax dollars are spent and go back into circulation in the economy. This is good for the economy because it keeps the money flowing around.
Money circulates. This is a good thing. Buying stuff makes the world go ‘round. Or the economy go ‘round, anyway. That’s important.
‘Tax and Spend’ is good for the economy because it keeps the money circulating. Taxes pay wages. Taxes buy services. Taxes build infrastructure. Taxes fund military bases and buy assault rifles for soldiers. Who chooses what to spend tax money on? Our elected representatives. That part is important. It’s a big group of people deciding how to spend tax money, and by voting, we average people have a little bit of say in how that tax money is spent.
Hoard and Invest
Now let’s talk about the ‘Hoard and Invest’ option. Say taxes get cut, like a big tax cut, like the Tax Cuts and Jobs Act of 2018. That was a complicated bit of legislation that I can’t easily summarize, but I can say that it cut my taxes by a few hundred dollars per year. Yay! It also cut the taxes on big companies and millionaire-billionaire individuals by thousands upon millions of dollars. Less yay.
‘Trickle Down Economics’ (which has been thoroughly debunked) assumed that if the government cut the taxes on rich people and companies, the rich people and companies would take their tax savings and raise wages, or hire more people, or invest in research, or upgrade their equipment, or produce new and wonderful products. In other words, the tax dollars given back to companies and rich people would stay in circulation; the tax-cut dollars would get spent.
That is not what happened. Instead, record breaking profits keep making the headlines. Rather than use tax-cut money to raise wages, companies just kept it. Instead of hiring more people, rich companies like railroads short-staffed their companies to the point that they couldn’t allow people to take sick days because there weren’t enough employees to cover the shift if someone called out sick. Then the companies shifted all the tax-cut money to people who were already rich in the form of stock buybacks.
If you give rich people more money, they get to a point where they can’t spend it all. Teachers, firefighters, scientists working at the EPA, lawyers working at the DOJ, other government employees, and anyone else paid a taxpayer-funded salary spends their wages just on living. But billionaires have already maxed out their living expenses by owning multiple palaces, private jets, big yachts, collecting art, buying jewelry, hiring someone to carry their favorite meat in a suitcase when they go on vacation. No matter how ridiculously luxurious their lifestyle, mega-millionaires and billionaires can’t spend it all.
Rich people invest their money. Wage earners, like you and me, are supposed to invest money for retirement. Rich people already have enough for retirement. Instead, they have to find other things to invest in. They create hedge funds and private equity funds, for example, and work on getting even richer.
“Hey!” say the rich people, “we can get richer if we own not just our multiple palaces on three continents, but all these single family homes in every city in America! Let’s buy homes so wage earners can’t buy them and then charge them rent for living there! Since we’ve reduced the supply of homes on the market, we can raise the rent too!”
Or they buy hospitals. Once a private equity hedge fund (meaning a group of people with so much money that they don’t know what to do with it all) buys a hospital, it becomes miserly and has the goal of extracting the maximum amount of money from sick people while providing the cheapest possible services. Hospitals purchased by private equity hedge funds are more likely to go bankrupt and close. That leaves an entire community with fewer (or no) hospitals.
And why is this happening? Because “hoard and invest” is terrible for the economy.
Yay Taxes
Tax cuts create Scrooges – people who are so wealthy that they don’t know what to do other than make themselves and everyone around them miserable. While, in an ideal world, rich people would voluntarily spread the wealth around, that’s not what happens. It’s the government’s job to protect ordinary people from the greed of big business. Whether that’s a government agency forcing a company to pay overtime, or taxing record breaking profits out of existence, only the government is big enough to force big business to stop accelerating the wealth gap.
Questions:
- What taxpayer funded services do you regularly use?
- I used the electricity in my house to run the air conditioning and ran water to take a shower. During the school year, I send my children to school. My children were born while I was married to a full-time soldier, so tax dollars paid the entire medical bill for their births (thanks you guys!). I commute to work on a train. My neighbor had to call 911 after she took a bad fall. I buy food packaged in facilities that have to pass government safety and cleanliness inspections. The labels on my food packages are mandated by the government, so I know how many grams of sugar and protein are in what I buy. My home’s electrical wiring has to meet government safety code so it doesn’t catch fire and burn down. I could go on and on and on.
- Do you think billionaires do a better job at spending vast amounts of money than our elected representatives do?
- Why might billionaires want to make ordinary wage earners believe that taxes are always a bad thing?
- Is it possible for laws to require rich people/companies to pay lots of taxes while ordinary wage earners pay much less in taxes? [hint: the answer is yes]
- Wouldn’t it be great if the Church would spend its vast hoard of wealth on making the world a better place? In addition to building Christ another palace?
About me: My perspective on economic issues comes from personal experience. I started my career as a tax attorney helping BigCo minimize/avoid taxes (I’ve since repented). I spent several years as a SAHM, divorced and unemployed and living in a low income neighborhood. I’m now a bankruptcy lawyer, still living in that low income neighborhood. I get my economic news from paid non-partisan subscription news services. I sometimes click through citations in news articles and read the legislation directly. What I’m saying is that my thoughts on the economy come from some unique personal experiences and in-depth professional experiences, plus the education to understand laws and regulations. I’m not creating propaganda and my only agenda is to help create a world where I’m not tearing my hair out because I’m so upset that ordinary wage earners can’t afford to live a comfortable life. The propaganda that tries to tell people that it’s better to trust billionaires than trust the government is a frustrating lie. Not that the government is perfect, but good grief, have you seen what billionaires are doing?
Wheat & Tares 
Thank you so much, you put into words wh
Fantastic post. Just have to share this after years of conservative government trying to follow the worst excesses of the US…
The Trump tax cuts (his only real major legislative achievement) didn’t even come come close to creating the gains in GDP promised. By late 2019, about a fifth of the economy was in recession (in large part due to Trump tariffs) and by early 2020 just before the COVID lockdowns in the US, the economy was in recession. Trump added billions to the debt. That said, on the question of whether the government or the private sector is more responsible for spending money, it really depends on who is in power and who that billionaire is. I trust the government and government programs to a good extent in the US to solve a lot of problems. Generally the administrative state hires many competent people who are good at their jobs. That could change, however, with Project 2025, which would allow Trump to replace federal employees with lackeys who would pledge loyalty to Trump first and foremost and many of whom would be radical libertarians with an agenda of bringing down the government from within. It would government programs with an intent to sabotage. That I wouldn’t trust.
#Not Going Back
I have to say that growing up in the 80s, the conservative narrative about the economy sounded plausible, but as you rightly point out, has been thoroughly debunked.
The Church is an excellent case study. Most Churches are primarily concerned with their charitable mission, not with amassing wealth. There are a couple examples that came to mind as I read your OP: BYU is subsidized through tithing funds, but there is a direct financial benefit to the church due to a few things: 1) people tend to marry someone they met in college, so the likelihood of an increase in adult members who stay in the church goes up, and 2) college graduates overall earn higher salaries, so tithing paid will be higher. It’s not charity; it’s an investment. The other thing I thought about was the building of the mall across from the COB that was pitched as a “beautification” (codeword for gentrification) of the downtown area, followed by the unsavory “Let’s go shopping!” when Monson cut the ribbon. One could say that it was charity, designed to stimulate the economy through more spending, but no, for the church it was an investment because the spending was by the citizenry (largely whose tithing dollars created the interest that went into the Smaug’s hoard of investment funds). If you watch where the money flows, it all goes into the Church, not really out of the church. You could say that the church doesn’t “upcharge” for garments, selling them at or near cost (I’ve heard this, but IDK if it’s true). But, that’s not charity because the people who wear them are also the same people paying 10% to the church and filling the callings for free with little to no training or professional oversight (no paid clergy sounds like a cool idea until you think about it). Where does the church REALLY spend big bucks? Kirton-McConkie, and that’s sure as hell not charity. That’s preventing victims from accessing any kind of remuneration, limiting liability in general, and maximizing the church’s political influence (often fighting culture wars, too), which is IMO completely inappropriate. It’s honestly shocking that the church has so much political influence in Utah. It’s not a good look on any level.
The church has been accused on Reddit and other online forums (and for all I know this is true) of counting member volunteerism (assigning dollars to the unpaid labor) as part of its charitable giving to further reduce the amount of its hoard that it has to plumb to achieve basic humanitarian goals. And even so, it’s only doing a fraction of what it could in terms of humanitarianism. Now, don’t get me wrong, I have no true fondness for the 1970s when the Church was pretty much broke. But I agree with Janey; it’s gone way way way way way way way too far in the other direction. Was the goal to become the Vatican?
We’re way past “tax and spend”. Now we borrow and spend. I spent enough time in Venezuela in the 1990’s to know that even then it led to 50% annual inflation, and since then it has gotten far worse. Social Security and Medicare taxes need to be increased to the point that taxes pay for the entitlements. Otherwise they’ll get whacked very soon.
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How would spending time in Venezuela allow you understand its economic policies? Simply spending years in Brazil didn’t allow me some sort of special insight into its economic policies. Alas, the comparison to Venezuela is and has always been a special form of hyperbole. A decline in oil prices, lack of economic diversification, government mismanagement, oversubsidized goods, international sanctions, overprinting of money, and a deeply fractured political system led to the crisis there. The US, by contrast, is highly diversified, well managed, extremely powerful internationally, has a relatively well-functioning government, and is a leader is the global economic system. Besides, inflation just went below 3% for the first time since 2021. Inflationistas have been saying that the sky is falling for I don’t know long.
I don’t come here to be attacked for my observations
There was tax and spend, and then as noted we moved to borrow and spend, but we’re beyond that in the US now: we create money (remember quantitative easing) and spent. Both parties have enjoyed doing this, so this is not partisan. The annual costs to service the national debt are increasing, and in FY23 the interest on the national debt was about $658.8B, and it was about 11% of our spending. With the FY23 deficit for one year being $1.7T, interest spending will only increase in future years. Imagine if we didn’t need to spend $658B in one year on debt financing! I know I’m in a minority here on this issue, but I think that at some point we need to reduce the portion of our federal budget that goes to servicing the debt. Our economy has been robust, but if there is a retraction, a meaningful decrease in GDP and therefore a decrease in tax revenue, then that 11% of annual spending to service the debt could rise dramatically, even catastrophically.
The original post cited a parable from Luke 12, and it is one worthy of study. Here’s one from Luke 14: “For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it? Lest haply, after he hath laid the foundation, and is not able to finish it, all that behold it begin to mock him, Saying, This man began to build, and was not able to finish.” This teaching is not hoard and invest. It is tax and spend, but spend after you have collected.
Here’s a fun little tidbit. “tax and spend” and “borrow and spend” are basically the same money. The difference is who owns the money. With ‘tax and spend,’ the government owns the money – they collect the taxes and then spend it. With ‘borrow and spend,’ the rich individuals own the money. The govt cut taxes, so the mega-rich loan their money to the govt (buy govt bonds, T-bills).
About Venezuela – I googled ‘richest people in Venezuela.’ The richest guy is worth about $4.5 billion. Venezuela doesn’t have the mega-wealthy that the US does, so it couldn’t tax its way into prosperity. In the US, Musk is at $251 billion. Jeff Bezos is at $161 billion. This is from the Forbes 2023 list. You have to go down the U.S. list 258 people before you get to a billionaire worth $4.5 billion.
Afaik, the only billionaire who has really decided to spend his wealth on making the world better is Bill Gates. I don’t follow him closely, but I have a vague memory of reading that he decided to leave his computers behind and focus on global health at the urging of his wife. He’s got a budget bigger than the World Health Organization.
Other billionaires may pledge to give lots to charity, but they don’t. I’m still salty that Warren Buffet signed that pledge to give away his wealth, and then actively opposed giving sick days to people who worked on the railways he owned. Spend some of that money NOW on hiring enough people that your employees can take sick days, you greedy selfish bozo!
A couple decades ago, I read a book about the Church’s missionary efforts in the Far East. I was surprised to read about an analysis of cost per baptism. The Church would do an actual calculation about the cost-effectiveness of missions and missionaries. This was back when I thought the Church was motivated solely by a love for Jesus. But yeah, they definitely crunch numbers in making decisions.
I don’t understand the people who wear MAGA hats who refuse to pay taxes. How is American supposed to get “great again” without the investment into infrastructure and modernization? How does starving the country of resources needed for public services make it stronger?
The MAGA formula of exempting the mega wealthy from taxation is a script for decay, division and deterioration. It defies all logic. …or could they really mean “make America White again”?
Amen Georgis. If the dollar was not the world’s reserve currency, we would be dealing with Venezuela’s fiscal situation ourselves. There would be no borrow-and spend, but plenty of money printing in the race to zero value currency. Practically, 50% inflation meant that I could not change dollars for Venezuelan bolivars at a bank. I had to buy them from the people I worked with.I spent more time in Colombia, over several years, where inflation was only running 25%. That was livable. People got biannual raises to keep up. Money was spent as fast as possible and not saved. Imported goods were seldom seen, and local goods (from chocolate to cuatros to music cassettes) were often very affordable for me. It was foolish for me to retain any money for the next trip from the USA.
The whole concept of borrow-and-spend comes from the abrogation of Bretton Woods. Reagan was the first politician to recognize its value. Politicians who practiced stricter fiscal responsibility – like Carter and Bush I – were punished at the polls. Starting with Bush II our debt accumulation has skyrocketed.
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“I think that at some point we need to reduce the portion of our federal budget that goes to servicing the debt”
So stiff bondholders? Stop selling bonds? I think you mean, lower the debt. Maybe some drastic cuts to military spending, increases in taxes on the rich, and closure of tax loopholes. Bear in mind that 13% of the budget goes to paying interest.
Yes, Brad D, the way to reduce the amount of budget that goes to servicing the debt will require reductions in spending. 13% of the budget going to paying interest is a lot. No, I never said to stiff bondholders or to stop selling bonds. I also did not propose ways to decrease federal spending. I simply spoke out for the proposition that we cannot continue indefinitely to spend ourselves to prosperity. We need more responsible fiscal policy, which includes looking at both inflow and outflow. How that happens is something our legislators need to figure out, but they aren’t interested, both on the left and right.
Great post, and so much I want to respond to. But I’ll try to limit to a few observations:
Janey seems to take a Keynesian approach with tax and spend. In my view this was the correct prescription after the 2008-2009 financial crisis when interest rates were low and the problem was lack of aggregate demand. Our present day is not that. Our debt to GDP and mismatch between expenditures and revenues is significant, especially when taking into account entitlements. Basically I view now as the time to have counter-cyclical fiscal and monetary policy. We should actively be looking to cut smartly when interest rates and debt are high and raise taxes to sterilize spending. If we don’t raise taxes and cut expenditures, interest rates will be higher (for longer) and that will lead to an increase in the cost of money which will be painful for those who want to buy a home, car, or start a business. The question becomes, who do we raise taxes on? Fundamentally, I think on the higher end is correct, but there will be no sparing the middle class just based on the realities of current debt/deficit trajectory. Basically I’m on board with Biden’s 28% corporate tax rate and Obama-era income tax rates vs Trump’s tariffs which would disproportionately hurt lower and middle class. Also, president Harris will let TCJA cuts for the wealthy sunset. That would be good.
A major oversimplification is to compare household spending to govt. spending. A goverment is not a household; it can’t issue it’s own currency, nor can it tax. Also, a government is continueally gaining new revenue (new business creation and new taxpayers being born/added via immigration). Comparisons between The Church and the US govt fall apart in pretty obvious ways. I agree with most everything that has been said with respect to the Church should be doing more in the here and now to address the temporal needs of the members. But the church itself is kind of like a socialist collective. There is a redistribution of the funds in terms of employment and even pensions. My best friend’s boomer mom was a mid-level admin at BYU and draws a really good pension now.
When I worked in the Network Operations Center (NOC) under the Talmage building as an undergrad at BYU, we were spearheading the migration of the church’s data center to the same facility as BYU’s data center. Our supervisor was a returned Spanish-speaking mission president. He had absolutely zero competence in anything IT related, but he had been a mission president and he was given a job as a sort of functionary (we gave a daily devotional though, which was nice). In some ways, church money is allocated to connected firms (like Temple construction) or people within CES or LDS institutions. The real tragedy is that we don’t pay people who need it the most (like janitors) or even RS presidents, Elders Quorum presidents, or Bishops. An even bigger tragedy is that we don’t have supportive social services like healthcare clinics, daycares, or pro-supply housing initiatives to complement Welfare Square.
Laslty, when it comes to economic growth, this can only occur via increased productivity, innovation, and increased labor force participation. Taxing and spending or borrowing and spending isn’t a recipe for economic prosperity. It’s redistribution, plain and simple. Some of that might be necessary for a limited safety net, but in my view we absolutely be clear-eyed about govt programs that are working (like WIC) and those where significant fraud, waste, and abuse occur (like PPP pandemic funds).
Jacob L you have raised the perfect examp
There is a group called Patriotic billionaires that believe the rich (including themselves) should pay more tax. There should be no poverty in America. This would produce a more stable and productive society. They are supporting Harris, because trump want less tax for rich, and is not concerned about a divided country.
some historic tax rates
2021 av wage $60k tax 12% top tax rate 37%
2003 av wage $55k tax 25% top tax rate 35%
1983 $25k tax 26% top tax rate 56%
1963 $10k tax 26% top tax rate 91%
So the average earners tax rate has remained much the same until halfed in 21. The top rate and I assume corporate rate has been steadily reducing, and loop holes too?
So if you want to reduce Americas debt, the rich can help. And most would be willing to if asked. This will only happen under dems, and would be vehemently opposed by republicans.
In Australia the minimum adult wage is $47627. The average wage is $98000. The effective tax rate at $98000 is 26%. The top tax rate is 45%. We have a tax free threshold of 18000. Our present federal government last 2 budgets ran surplus but there is debt to pay off. We do have universal healthcare that costs half the US system. We have less than 10% Republican types. We are told the top tax rate can not be higher because we would loose our top executives to lower taxing countries like the US.
We came 5th on the olympic medal tally but will do better in the para Olympics in a weeks time..
“hoard and invest” is terrible for the economy.
This is semantics. I might say that I am firm, my brother is stubborn, but my enemy is pig-headed. One woman’s hoarding is another woman’s savings. The key is to look at both the macro and micro perspective, including full-employment and labor slack. I think Janey is on the right path in that as wealth accumulates at the higher quintiles, there is a lower marginal propensity to consume. This really is only an issue of insufficient aggregate demand. But again, that is not where we are now in the US (though if we tip into a recession, that could change).
I do think I understand the sentiment behind this statement. I I think it seems to be a blurring of the lines between rent seeking, monopolistic/anti-competitive behavior or anti-labor policies that concentrate the bulk of economic gain in the hands of capital. Investing is actually good for an economy. Investing in capital goods can produce efficiencies so more can be done with less. Investing (whether done by private sector or govt R&D) can lead to new techological breakthroughs. It was DARPAs investment (US govt) that laid the groundwork for the internet and information revolution. US wealth, productivity, and median income is significantly higher than most European countries.
The distribution of wealth is an important topic and I think we would be well to look at economic growth and ensure it is equitable and ensure a strong safety net (including medical care). But the US economic dynamism is the envy of the world.
@Geoff-Aus US income tax is actually quite progressive, more than most people realize especially with transfer payments including EITC, SNAP, housing vouchers, and other govt assistance programs. What is typically very regressive in the US is sales tax, excise taxes, and property taxes. Also, I do want to point out that just looking at top marginal tax brackets isn’t very instructive. I believe the more intellecually sound way is to look at the effective tax rate by decline or quartile and the total tax burden (to the extent this can be calculated) by each spending level. I recommend Institute on Taxation and Economic Policy. They have a bunch of good reports that show total taxes paid by each income group compared to shares of total income.
Toad’s two predictions:
1 – There will be a bigger financial scandal than the SEC fiasco involving the church. There is too much money sitting around in the church and humans will human. Someone(s) in a high position will be caught spending money extravagantly that even TBS won’t be able to ignore. One purpose company boards of directors, many of which have been asleep or complicit, is to ensure that CEOs don’t live like rock stars. The LDS church board of directors will follow the same pattern.
2 – The LDS church is not and never will be one of the cool kids (ie protestants or evangelicals). A movement, perhaps from jealous, smaller Christian churches, will arise demanding that churches behave like churches instead of investment banks. And / or the courts will change how tithing is treated by hedge funds, oops I mean churches.
And yes, economists agree that hoarding is really bad for the economy functioning capital markets. This may eventually play into #2. It’s also why the wealthy despise inheritance taxes. Nothing good comes to those with a lot of money who didn’t have to work for it.
For those worried about the national debt, look no further than the history of the UK, which ran debts much, much higher than the US in the early 1800s and in the mid 1900s. National debt as a percentage of GDP ran as high as 260 percent by the late 1810s due to protracted struggle against France. In WWII debt was 240 percent of GDP in the UK. The US debt to GDP ratio is at an all-time high of 123%, surpassing the previous high of 106% in WWII. This is mostly due to COVID. What brought down the burden of debt in past for both the UK and the US? Extreme austerity and blaming the poor and hysteria about Venezuela? No. Economic growth and technological development. Will the US economy continue to grow? Yes. What if there is a recession? The recession will be temporary and growth will continue. Also, it should be borne in mind that Social Security and Medicare are NOT increasing the deficit. They’re almost entirely already funded and need only small adjustments to remain solvent.
Social Security and Medicare are not increasing the deficit? What a deflection. The tax rates for both need to be increased or they’ll be bankrupt in 5 years. You left out the $800 billion a year spent on Medicaid which has NO tax base support.
Taxing the billionaires is a facile partisan meme, trotted out every election year. It does not fix underfunded and unfunded entitlement programs, which need adequate user tax bases. Neither party is willing to address that problem.
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To be fair about this, I enjoyed the 9% Social Security COLA that resulted from inflation a couple years ago, and I enjoy my no-fee Medicare Part C. I’m part of the problem because I collect the unfunded benefits which are rapidly shortening the life of both programs. These increased benefits were not paid for by an increase in payroll taxes.
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Jacob L – thank you for bringing up some of the nuances of investing. You are correct that investing (purchasing) equipment for a business or investing in research (hiring scientists/specialists) is good for the economy. As you note, I was talking more about the investing the mega-rich do to simply get more rich, like buying hospitals and trying to get profits out of them. “Investing” covers a wide range of behaviors, not all of which can easily be categorized as helpful/harmful.
Jacob L (again) – I want to address your comment that economic prosperity comes through innovation and jobs, rather than tax and spend. Because I agree with the first part of that sentence, and I want to draw attention to a ‘tax and spend’ program that is going to create innovation and jobs. It didn’t get much press, but Biden has launched an “the American Climate Corps – a workforce training and service initiative that will ensure more young people have access to the skills-based training necessary for good-paying careers in the clean energy and climate resilience economy. The American Climate Corps will mobilize a new, diverse generation of more than 20,000 Americans – putting them to work conserving and restoring our lands and waters, bolstering community resilience, deploying clean energy, implementing energy efficient technologies, and advancing environmental justice, all while creating pathways to high-quality, good-paying clean energy and climate resilience jobs in the public and private sectors.”
From: https://www.whitehouse.gov/briefing-room/statements-releases/2023/09/20/fact-sheet-biden-harris-administration-launches-american-climate-corps-to-train-young-people-in-clean-energy-conservation-and-climate-resilience-skills-create-good-paying-jobs-and-tackle-the-clima/
It’s patterned on the Civiliation Conservation Corps that FDR launched during the Great Depression to get people back to work by giving them taxpayer funded jobs.
Here’s more info: “Born amid the Dust Bowl crisis of the 1930s, the Civilian Conservation Corps revitalized farmlands across the nation. Today, farmers are facing new a threat — climate change and droughts,” said Michael D. Smith, CEO, AmeriCorps. “With equity at its core, President Biden’s American Climate Corps is addressing this new crisis by training a new generation for good-paying jobs in climate resilience and clean energy. AmeriCorps is proud to partner with the US Department of Agriculture, The Corps Network, and the National Association of Conservation Districts to launch the Working Lands Climate Corps.”
From: https://americorps.gov/newsroom/press-release/part-president-bidens-american-climate-corps-americorps-us-department
That’s a lot of new info for a blog comment. I offer it only as an example of some ‘tax and spend’ that is designed to train people with important skills that will lead to innovation and technology. These people who draw government salaries for a few years will then take that knowledge into the private sector. I think of it as govt-funded education, with a hands-on approach rather than college lectures and the like.
Great discussion, all. I very much appreciate the respectful tone and lack of hyperbole.
Also agree with Georgis that both parties spend a lot of money.
thhq, deflection? You brought up cutting Social Security and Medicare. The programs are solvent long term if we want them to be. As is Medicaid. Republican-led legislative sabotage, however, could very well cause the programs to add more to the deficit and thereby give the Republicans a justification to derail these programs (I can’t imagine a faster rejection of the GOP by most of its supporters if they succeed in getting rid of entitlements). The current deficit is largely due to COVID and high interest rates. The entitlement programs have been around for a while, even during years of surplus.
Also, I’m attacking you for your observations??? It’s called disagreeing and having a different opinion.
Brad being patronizing is not the same as having a discussion. Wh
I said nothing about cutting entitlements, only th
Janey – Thank you for your response. I agree with your investing example, and I’m also a big fan. I am a huge proponent of the Biden administration’s Inflation Reduction Act, including the American Climate Corp. Biden has easily been the best president of my lifetime. What we are seeing in clean energy in Utah is astounding (Google Fervo or Forge if you aren’t familiar with these projects that is very much helping rural Utahns, especially important when Smithfield Foods left Beaver. Another way of looking at the term “investing” is also investing in human capital, including job training and education.
Upgrading the skills of the US workforce by both public and private endeavors is how we stay at the top of the medal count in the economic arena. Oh yeah, just announced yesterday was a whopping $1.6 BILLION dollar investment by Texas Instruments in Lehi, Utah that will create over 2000 well-paying jobs that don’t require a college degree. Thank you Biden, democrats, and Romney.
Brad D- I want to push back a little bit on your assertion that Social Security/Medicare aren’t increasing the deficit. While they might not be doing so now, they are on an unsustainable course based on current birthrates and benefit schedule and the general fund would have to pay to cover benefits in a substantial way that would force increased taxes, military spending cuts, and decreases to other discretionary spending. Automatic cuts of 21% will be triggered by 2033, and maybe sooner. Both Harris and Trump have vowed to protect social security, but we all know that changes need to be made regardless of what is said on the campaign trail. The million dollar question will be how such changes will be made (lifting payroll cap, increasing retirement age, tweaking benefits formula, means testing benefits, etc)? I tend to side and trust democrats on this issue because I am aware of Mike Lee’s secret meetings where fundamentally there is hostility to the creation of social security as a project (many conservatives/Libertarians treat social security and any FDR project as “America’s Wrong Turn”; this is not a view I share).
thhq – I think you are correct on your assessment of COLA increases and how they have shortened the life of the program. The Republican Study Committee has proposed stealth social security cuts over time by not increasing COLA benefits as quickly as inflation. To be honest, there is a part of me that kind of agrees with this approach. As a Gen X-er, there is huge generational inequities brewing, especially as younger generations face drastically higher housing costs than prior generations. I was upset during Covid when social security beneficiaries were getting massive COLA increases during inflation while wage increases were lagging inflation. The UK has a “triple lock” for their pension programs to prevent what the Republican Study Committee is proposing as a slow benefits cut. But in my ideal world, I don’t think COLA increases should be allowed to go up higher than the median hourly wage increase for all workers. I view this as solidarity. After all, it is current worker wages that fund entitlements, so this makes sense to me from a societal cohesion standpoint.
WSJ had a good article a few weeks ago about how private insurers pocketed $50B for diagnoses made where no treatment was provided.
Insurers Pocketed $50 Billion From Medicare for Diseases No Doctor Treated
In my view, the absolute easiest thing we should do immediately is repeal the Bush era Medicare Advantage program as it is FAR costlier than traditional Medicare. Turns out that private competition in this area didn’t increase efficiency, just soaked the taxpayer and increased the profits of large health insurance and hospital corporations!
I’m going to push back a bit. This article and most of the comments have more to do with envy than an honest discussion of economics. What do wealthy people do with their excess money? they can spend it on luxury items like private jets and yachts, which create far more sustainable jobs in the private sector than government funded money losing jobs like green technology. They can save it, which then pools up in banks and investment funds, which in turn creates lending capital for businesses. What they don’t do is bury cash and gold in the backyard. Their excess money still circulates throughout the economy, and the private sector does a much better job at creating sustainable jobs than the public sector.
You may hate Trump, but his tax cuts did a lot of good. Record corporate profits are a good thing, not a bad thing. Lower corporate taxes mean that US corporations bring their excess profits here and foreign corporations relocate to the US, which grow the economy further. Check the federal tax revenues after 2017. Federal tax revenues did not go down, they went up and still continue to increase. And again, the private sector does a much better job of spending their own money than the government.
One last thing to Geoff in Australia: You state that in Australia, the effective tax rate on a $98,000 income 26% and that healthcare is much cheaper. I disagree. The effective tax rate in the US on $98,000 is just over 17%. That results in $17,000 in taxes paid in the US versus over $25,000 paid in Australia. Where did that extra $8,000 go in Australia? to healthcare. Your healthcare isn’t “free,” and I would argue it’s actually more expensive. You’re spending an extra $666 in taxes each month. To quote a famous economist, “there ain’t no such thing as a free lunch.” You’re paying for free healthcare through much higher taxes.
Jacob I hope this doesn’t truncate before I finish.
In the past, our entitlements were paid for by payroll taxes. SS and Medicare were created by FDR and LBJ to be pay-as-you-go retirement insurance, with employees and employer each paying half. The Federal government also heavily subsidized private company health insurance, starting under Truman. As I recall this amounts to $500 billion a year.
Unfortunately we aren’t keeping up with the taxation needed to support our entitlements. Politicians of both parties know that raising taxes costs them votes, and they borrow the money to pay for their programs, from the Iraq War to TARP to IRA. The voters don’t pay taxes to cover the costs of these trillion dollar programs, and they have the illusion that they are getting all this stuff for free.
I’m a cynic. I don’t think there is ANY solution to the problem, other than a continued decline in the dollar’s purchasing power. Our politicians won’t change how this system works because they’ll lose their jobs.
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thhq – The fundamental issue with social security is that its funding mechanism required an ever-expanding population. Even though individual contributions are made via the payroll tax, both by the employee and the employer, the lifetime benefits accrued to a median SS recipient vastly exceeded the taxes paid out. While people are prone to say, “I paid for those benefits,” the reality is that, no, you didn’t pay for those benefits. You paid for some of those benefits, but the vast majority of those benefits are/were being paid for by the current labor force by their contributions. Consider the following social security demographics:
Two years ago the Urban Institute put out a publication that estimates how much someone might pay vs. receive in SS benefits depending on their gender, marital status, and whether they were high/low earner.
https://www.urban.org/sites/default/files/2022-02/social-security-medicare-lifetime-benefits-and-taxes-2021.pdf
For illustration purposes, a single, low-earning female retiring in 2025 would have paid roughly $153k in social security contributions but she would be projected to receive $539k in Medicare and social security benefits. This is an informative report and fun to poke around with. There are only a few scenarios where an individual pays more in contributions than said individual gets back in benefits. The fiscal implications of this are obvious: the entitlement programs are unsustainable (in the sense that they are not self-funding and will require general funds) unless 1) US birthrate dramatically increases (very unlikely) or 2) we have mass immigration to increase worker to beneficiary ratio.
My preferred policy fix is a combination of tweaking the benefits formula, raising the retirement age, eliminating/raising cap on taxable wages, front-loading the benefits and phasing/tapering them out as someone ages, and implementing a guest worker program coupled with an entitelment tax on immigrant labor.
Good strategy Jacob, but sadly I don’t see any of our politicians focused
Jacob L, great observations. Indeed, regular changes to the programs need to be made in order to keep them sustainable. These necessary changes would be easier, however, if the Republicans were fully on board. But they’re not. Many of them want to greatly reduce these programs if not scrap them altogether in favor of ill-defiled private solutions. Trump says he would protect SS and Medicare, but every budget he proposed (none of them passed) included massive cuts to these programs.
Patronizing partisanship adds nothing to this discussion. Sent from my iPhone
Trump added a new tax during his term. Tariffs. 200 years ago the Federal Government ran
Biden kept the tariffs, but $100 billi
pundit,
If you include what you pay towards your insurance premium monthly plus what your employer pays towards your health insurance plan monthly, I think you will find it is more than the $666 you quote as being the monthly tax cost of “free” health care. My family’s plan costs $1770 monthly, we only pay $420 of that. On top of that, Australia provides healthcare to the entire population, not just those who have been able to get steady, good paying work.
My husband, who served his mission in Australia, points out that the US and Australia aren’t comparable, because the US has a bigger population base to tax; 33.27 people per square kilometer. Australia has 3.6 people per square kilometer. Australia has to provide roads to cover all that space so their infrastructure costs will be higher per capita.
The infant mortality rate in Australia is 3.01 per 1000 live births. In the US it’s 5.4 deaths per 1000 live births. That’s 44 percent higher. How do you like those pro life numbers?
Plus in Australia they have 7 migrants per 1000 people. We only have 3 per 1000.
My husband cites Wikipedia
You are fortunate lws. I paid the full $8000 a year for my Bronze ACA policy. As an independent contractor I also paid both halves of my Social Security.My Bronze ACA policy was $6000 deductab
Medicare is much better than ACA was. My total knee replacement cost $300 plus PT’s
This has been a very frustration post and comments to read.
I think one of the biggest problems in our society is how we all seem to worship money. Whoever has the most wins and is looked upon as the greatest. It also seems that everyone is in it for themselves and is very willing to exploit someone else to get what they need.
Taxes just make the problems worse because we see the money going out and what we see it being spent on irks us. We have all kinds of excuses for those who don’t pay their way or get something we don’t. Children shouldn’t get free lunch at school because parents should be responsible or welfare mothers use their money on drugs. Tax breaks for the rich will trickle down to the average person but no one ever sees the trickle down.
We can look at the government either as an enemy or a friend. Who would want to pay taxes to an enemy? Yet if we looked at the government as a friend, as a way to get the most services for your dollar, maybe we’d look at taxes differently. They do that in Denmark. We’re told we have the best healthcare system in the world yet places as different as Japan, Germany, or Denmark have much better health results for much less money because the government handles it. Yet in our country, we have a lot of rich people and industries being subsidized with either tax dollars or tax breaks and poorer people being blamed for shortfalls.
We need government. We need taxes to fund it. What we need most of all are honest people at all levels who are willing to serve in government to use the leverage, size, and power of government to serve the needs of the people, ALL PEOPLE.
Over time, tax-and-spend has become borrow-and-spend. The government cannot levy enough taxes to cover trillion dollar new programs like COVID and IRA, and they are unwilling to raise the taxes to pay for the old programs SS and Medicare. This is a bipartisan problem. No politician can resist borrowing money.
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Janey, I agree with you that tax and spend are not necessarily the dirty words conservatives make them out to be. We learned after the depression that dumping money out of airplanes would have actually pulled the country out of it a lot sooner.
Maybe the government overdid it a little bit during the pandemic? At the time though when everyone was hurting and no one could see an end to it, it seemed the right thing to do.
However, with our current demographics, as many commentators have skillfully pointed out and backed up with numbers, a continuation of tax and spend doesn’t appear to be as beneficial as it once was. Unless tweaks are made to entitlements, and unless a bunch of innovations come about, the national debt and interest payments threaten to eat up an ever bigger portion of a declining tax revenue base.
Give me Capitalism any day of the week! Yes, of course they needs to be some boundaries and government controls. The great irony of this debate is that it’s (most likely) not going to matter one wit; in that the World’s economies are headed for collapse – including the U.S. The entire financial system is being articifially propped up – and this much debt cannot be sustained.
thhq – I believe some of the early Covid spending was enormously wasteful and fraudulent (especially PPP funds). But certainly not all of the spending was wasteful. Indeed, we had an extremely slow job rebound from the financial crisis of 2008-2009. The US job growth and economic growth post-Covid was unmatched in the developed world. Keep in mind, we had almost a 15% unemployment rate at the peak of Covid. The lessons of austerity from the financial crisis that made the financial crisis so painfully slow to recover from were largely overcome. The Biden admin went big, arguably just a tad too big. But I think they were determined not to repeat the errors of sluggish aggregate demand. The downside was inflation, especially as the Fed misdiagnosed the “transitory” aspect of things. Americans hate inflation. But I think largely the US recovery is an amazing success and we see that in the robust jobs and GDP numbers. Now the challenge will be for the Fed to land the plane (e.g., soft landing). But given our GDP, jobs, and inflation at the moment, this is the easily the best economy of my lifetime. Hopefully we can keep it.
I believe that the Inflation Reduction Act is probably the best legislation I have ever seen passed in my lifetime. In the past week we’ve seen the first round of Medicare negotiating lower payments for prescription drugs. This is just the start of the US govt using its purchasing power to negotiate prices. Americans pay far in excess for the same medicines that are available for much lower prices all across the world. The IRA is addressing this. Also, the IRA enacted a corporate minimum tax rate of 15%. This is a huge deal! For far too long we’ve had multinationals shift taxes to places like Ireland or other areas using creative accounting in order to bilk the US tax payer. I view that as un-American. The bulk of the IRA funding is going to red states. The IRA is largely responsible for the economic boom in Georgia and other red states. So while it might be popular on certain media outlets to poke and put down the IRA, the truth is that the IRA should have been bipartisan (like the infrastructure bill was) becuase it is really good legislation.
Debt:
Debt is both good and bad. On a personal level, it means you can get today what you wouldn’t be able to afford and would have to wait for if you saved up for it. Some things are hard to get without some debt, such as higher education, a house, or a car. Of course, too much debt would be bad if you don’t have enough income. The same principles may loosely be a play for a country, except a country can print money. Some debt is what we do for ourselves like Medicare or Social Security. On a personal level, we invest in pensions, 401ks, and health insurance. We use the power of many to help each of us. Governments go into debt for a lot of other things like defense, education, roads, police forces, and disaster management. I’m sure you can think of a lot more. Much of it is paid for with taxes and managed with tax dollars. Sometimes though needs arise where we need extra investment beyond taxes.
thhd is right that it’s not tax and spend but more like borrow and spend. But who do we borrow from? We can borrow from ourselves, banks, corporations, or individuals or we can borrow from foreign countries or their banks or corporations. Borrowing from ourselves helps us, like during COVID-19 or the depression, and borrowing from other countries does not necessarily hurt us. Borrowing is done through bonds, hence the bond market is used to buy and sell bonds that go to school districts, cities, states, and countries. Buying debt from a country is a show of faith in that country because you wouldn’t invest in the debt if you thought it was going to fail. That applies to both individuals, banks, and corporations in our country buying debt but also to other countries. If the USA would default on it’s debt it would be catastrophic to its citizens and to any country that had US debt as well because they wouldn’t get their money back. So debt can be used by countries to build relationships and dependency on each other. There is something to the old saying that countries with Mcdonald’s don’t go to war with each other.
Granted debt is bad for individuals and has been bad for some countries but we don’t know where the line is for a world power. One thing we do know is that the USA has obligations to its people and countries around the world. Default is not an option. We need to work to control spending and get our taxes in line in terms of how much and how they are distributed among citizens.
If IRA or COVID programs had been backed by taxes to fund them, I would agree with you Jacob. But they weren’t. They were acts of fiscal irresponsibilty by Congress, triggered by “emergencies”. If Congress is going to spend $1 trillion, IRS tax collections should increase by 20% to pay for it. Under that restraint. it’s unlikely that Congress would pass those bills.
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It is interesting to see a lot of liberal confirmati
Liberals are no strangers to confirmati
The Strategic Israeli New World Economic World Order
Brazil, Russia, India, China, South Africa, the original economic alliance – think EU in 2009-2010. In 2024: Iran, Egypt, Ethiopia and the United Arab Emirates became official members. BRICS, conceived as a counterweight to Western dominance in managing the world economy. The population of BRICS – 45% of the global population!
BRICS focuses on political and economic cooperation. Ethiopia and Egypt joined in Jan 1st 2024 along with Argentina & Saudi Arabia. Algeria and Nigeria adds an intriguing dimension to this alliance of BRICS expansion to include African nations.
In 2001, a Goldman Sachs economist named Jim O’Neill had a brilliant idea. He was pondering the future of global economic growth and identified four countries in the Global South that collectively had enormous potential. These countries were Brazil, Russia, India, and China. O’Neill coined the term “BRIC” to encapsulate this quartet of rising economic powers.
Since then, BRICS has become more than just a term—it’s a platform for cooperation, collaboration, and economic muscle-flexing. The group discusses policy issues, shares common challenges, and even established the New Development Bank (NDB) to mobilize resources for infrastructure and sustainable development projects. And all of this started with a little acronym cooked up by Goldman Sachs.
BRICS unity was based on the recognition that existing global institutions disproportionately favored Western interests. So, they decided to create their own forum for dialogue and cooperation.
Iran’s inclusion forces us to consider shared security interests that may sometimes run counter to U.S. interests. BRICS members must agree on what that alternative world order should look like. And that’s where the complexities of geopolitics come into play.
So, when people parrot about BRICS, they’re often touching on a fascinating experiment in global governance – Bush’s “New World Order”.
It’s shaping up as a serious challenger to the American-led order? Perhaps. Critics accused early 1990s Bush of political rhetoric and lacking vision. Bush’s “New World Order” aimed at post Cold War stability.
BRICS and the possibility, seeing that Saudi Arabia has abanoned the Nixon era petro-dollar monopoly commodity based oil currency, especially after Biden’s green energy prioritization. Saudi Arabia is gradually moving away from the exclusive use of greenbacks (U.S. dollars) in its oil trade. Instead, it’s exploring alternative markets.
This symbolic win for de-dollarization, the movement seeking to reduce the greenback’s stranglehold on world finance has transformed BRICS as one of the leading voices against the dollar.
The Nixon alliance with OPEC – dead. BRICS works with China on initiatives like mBridge – a cross-border payments system using central bank digital currencies.
President Biden’s focus on green energy and reducing dependence on fossil fuels is reshaping global energy dynamics. It continues the Obama Era downturn of US domination. This Obama/Biden economic strategy has forced Saudi Arabia to recalibrate its economic strategies.
BRICS has a clear oil based currency dominance now with the alliance of Russia with OPEC. The US could counter by returning back to a gold based commodity currency.
If the U.S. were to consider returning to a gold-backed currency system, it would signal a significant shift. A gold-based commodity currency could potentially provide stability and act as an alternative to the current fiat currency system.
The classical gold standard, which prevailed during much of the 19th and early 20th centuries, was a system where currencies were directly convertible into a fixed amount of gold. Under this system, the supply of money was inherently tied to the availability of gold reserves. Countries maintained fixed exchange rates relative to gold. Their currencies were pegged to a specific weight of gold.
Governments could only issue additional currency if they had corresponding gold reserves. This limited the expansion of the money supply. The gold standard aimed for price stability by linking money supply growth to gold reserves.
The fixed convertibility of currency into gold restricted policymakers’ ability to adjust money supply rapidly. In times of economic crisis or recession, flexibility restricted and limited. However, during the Civil War, the United States faced immense financial strain. Traditional gold-backed currency was insufficient to fund the war effort. Enter the “greenbacks”—emergency paper currency issued by the U.S. government. These greenbacks were printed in green ink on the back, hence the name.
Two forms of greenbacks: Demand Notes: Issued in 1861–1862, these bore no interest but were fully redeemable in gold. They were soon at par with gold. And United States Notes: Issued in 1862–1865, these were legal tender for most purposes but not backed by existing gold or silver reserves.
Greenbacks were a form of fiat money—legal tender without direct backing by gold or silver. While they carried varying promises of eventual payment in coin, their value relied on the government’s ability to maintain trust and stability. The greenbacks helped finance the war, even though they weren’t directly tied to gold reserves.
The greenbacks were a pragmatic solution during a time of crisis. They demonstrated the flexibility needed to fund the war effort. Lincoln’s dollar—represented by greenbacks—played a crucial role in financing the Civil War, even though it wasn’t strictly gold-backed.
A gold based commodity currency favors Free Banking policies over a Federal Reserve Central Bank. Closing the Federal Reserve Washington cound negate 90% of all Federal debt in a single day. The U.S. debt-to-GDP ratio was around 97% last year, which is below the critical threshold of 100%. The US spent appoximately $695 billion to service just the interest owed on its debt in the last fiscal year.
The Fed clearly contributes to debt accumulation, a hidden tax upon the American people. While closing the Federal Reserve might not instantly negate 90% of all federal debt, it would indeed have significant implications. The debt-to-GDP ratio remains a critical metric, and the U.S. government’s ability to service its debt relies on investor confidence.
As of the second quarter of 2024, the U.S. debt-to-GDP ratio stands at 121.57%. This ratio reflects the relationship between the national debt and the overall economic output. While it’s below the critical threshold of 100%, economists remain concerned about the impact of interest payments on the U.S. economy. The US government, set to spend more than $1 trillion on interest payments in 2024, surpassing military spending for the first time in history.
Factors driving interest payments include deficit spending (especially during the pandemic) and the Federal Reserve’s anti-inflation interest rate hikes. The interplay between monetary policy, debt management, and economic stability continues to shape our financial landscape.
Free Banking refers to a system where banks issue their own currency notes without central regulation. These notes are backed by assets (such as gold) held by the bank. Proponents believe that competition among private banks issuing currency can lead to efficient and stable monetary systems.
The Federal Reserve (often called the Fed) is the central banking system established by President Wilson in 1913 which overthrew the free banking economic model established by President Andrew Jackson in 1825.. It controls monetary policy, interest rates, and the money supply.
“Free Banking”, which allowed state-chartered banks to issue their own currency without strict federal regulation. Each bank’s notes were backed by its assets (often including gold or silver reserves). The Free Banking era was characterized by a multitude of banknotes in circulation, varying in value and reliability. Some banks thrived, while others collapsed, leading to financial instability.
The Fed was designed to address the shortcomings of the Free Banking system. It centralized control over monetary policy, interest rates, and the money supply. Free Banking offered flexibility but lacked stability. It allowed for innovation but also led to frequent bank failures. The Fed too has witnessed major ‘To Big to Fail’ government established Corporate monopoly failures, which includes major Banking monopolies.
Free Banking allowed individual banks to issue their own currency notes without strict federal regulation. This flexibility led to innovation and diversity in banking practices. However, the lack of centralized control meant that some banks were poorly managed or fraudulent. Frequent bank failures and currency fluctuations were common during this era.
The Robber Baron Fed was established in 1913 to address the limitations of Free Banking. It centralized control over monetary policy, interest rates, and the money supply. Post WWI, the Reparation Commission, set Germany’s war reparations – the final bill at 132 billion gold marks. (Appoximately $33 billion at the time.) The purchasing power of modern dollars: about $519 billion today. That’s an increase of inflated Fed fiat currency of $486 billion dollars in about 104 years. Inflation hence exists as a hidden tax upon the people. Which makes it “Taxation without Representation”. By adjusting for inflation concealed taxes $100 in 1920 would equal approximately $1,623! Thank you President Wilson for your Robber Baron IRS and theft of American wealth.
Fed bureaucrats unilateral, independent of Congressional overview, decided to back up the British and French economies during WWI. Hence when Wilson joined the war, he had no other choice but to side with England and France. Robber baron bureaucrats removed the power of Congress to make another 1812 War against the British. Post war, Britain and France imposed war reparations upon defeated Germany, to pay back its war debts owed to the Fed. The 1929 Crash of Wall Street Fed stupidity restricted the currency exchange by 1/3rd and caused the Great Depression, and stopped giving loans to Germany. Causing the economic collapse of Germany and the rise of Hitler’s Fascist Nazism.
The carpenter king, bearer of thorns, preached of treasures not of this earth—yet gold piles high, temples gleam, and the meek wait outside, hands empty. Did the shepherd forget his sheep, or do we? 🕊️✨