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View Full Version : Are State and Federal taxes interest payments on government debt ?



shikamaru
09-09-12, 10:51 AM
I'm thinking about this in a manner similar to a credit card.

Credit cards have minimum payments when there is a balance outstanding. It is paid monthly.

In the case of government debt, the payment is made yearly.
The "minimum payment" is spread amongst all who receive income.

My outlook on money and debt has been changing due to reading "Debt, The First 5,000 Years" by David Graeber.

martin earl
09-09-12, 05:21 PM
"currency" is what keeps the system running. In theory, the GDP is given to the Federal Reserve to "pay" for the credit issued to the District of Columbia. Therefore, the 'payment' yearly is NOT the collection of taxes, it is the GDP report of the District. The GDP is all goods and services in the economy that have been pledged and signed over to the Federal Reserve in that year.

As will all currency production, there is a net loss of energy, there is no ZERO point. Add to that the artificial 'loss' of interest and worse, fractional reserve lending creating 'new debt' and you have a net loss that is exponentially greater than the currency produced and only makes the accounting numbers grow faster and bigger at an ever growing rate.

Since nothing is 'paid' with more debt, it is the labor force (the amount of raw human resources being added to the system and pledging everything they produce to the machine) that must continually increase keep the generator going. The GDP is and never has been a match for the debt, it is, in fact, impossible for it to happen, even on paper.

Your outlook on money would might be better served looking at it from a currency standpoint (electrical production in modern power plants).

shikamaru
09-09-12, 05:33 PM
"currency" is what keeps the system running.

Isn't there more money of account than money of exchange in existence currently?

Would it not be that it is debt that keeps the system running rather than currency?

Money of account is created via fractional reserve lending, in part.



In theory, the GDP is given to the Federal Reserve to "pay" for the credit issued to the District of Columbia.

How is the GDP given to the FR? Isn't GDP only a measure?
Isn't it taxes that pay for the obligations of the US to the FRB?



Therefore, the 'payment' yearly is NOT the collection of taxes, it is the GDP report of the District. The GDP is all goods and services in the economy that have been pledged and signed over to the Federal Reserve in that year.

How and when are all goods and services in the economy collateralized and pledged to the FR?



Add to that the artificial 'loss' of interest and worse, fractional reserve lending creating 'new debt' and you have a net loss that is exponentially greater than the currency produced and only makes the accounting numbers grow faster and bigger at an ever growing rate.

It would seem that there is growth or shrinkage in money of account and not money of exchange so much.

In the federal banking system US securities (lawful money) act as reserve currency. The reserve currency is used to support Federal Reserve banknotes. This process is titled collateralizing debt.

Perhaps with the reserve currency, fractional reserve lending takes place. Further fractional lending takes place with depositors' deposits.



Since nothing is 'paid' with more debt, it is the labor force (the amount of raw human resources being added to the system and pledging everything they produce to the machine) that must continually increase keep the generator going. The GDP is and never has been a match for the debt, it is, in fact, impossible for it to happen, even on paper.

To me this raises of question of debt. What is it? How is it rectified?

The machine is propelled by debt from my understanding.
The collateral is merely security for a debt.

I'm sure some attorner would say that a tax is not a debt. To me, it seems like a charge or encumbrance.



Your outlook on money would might be better served looking at it from a currency standpoint (electrical production in modern power plants).

I propose the theory of credit as the standpoint in which to view.

martin earl
09-09-12, 06:04 PM
1. Credit assumes the creditor has something of real value to lend. The Federal reserves credit is issued not on actual physical assets, but on paper that is backed fractionally on things of value. The Federal reserve does not hold equal value for its extended credit and never has. It was founded on the process (lie) of fractional reserves. The entire system relies on the belief that at no time will the credit issuer call in what is owed at any time and strip the actual 'reserves' on wich the credit is issued. To bad it does not work out that way in real life.

2. The holding out (offer) of credit does not create an obligation to use said credit. Congress can tell the Federal Reserve it needs a credit and promises to pay it back with goods and services at face value plus interest (the paper held in that promise to pay are BONDS. That "credit" is placed into the Federal Reserve banks and is then distributed to "endorsers" (people or companies who borrow that credit). Without the people endorsing/pledging their labor goods and services to "pay back" the loans, the 'credit on accounts would sit there and do nothing. Any "pay back" would simply be the Treasury returning the 'credit' to the Federal Reserve and getting its BONDS back. A paper for paper return to ZERO.

Whatever credit was actually used in the running of Government would have to be paid back by goods and services produced that year by Government itself, since nobody else endorsed it. (took the obligation to pay upon themselves).

Simply put, without YOU and me and everyone else endorsing the credit issued (in any form) and taking the obligation to "pay" it in goods and services, the only people using Federal Reserve credit or paying it back would be the Federal Government and its employees (the people directly benefiting from the contract), the way it is supposed to be.

All goods and services are "pledged" to the payment of the debt via endorsement of those using it. You endorse it, you agree to pay it back with goods and services at face value plus interest.

David Merrill
09-10-12, 02:38 AM
Fascinating conversation!

Goldi
09-13-12, 04:41 AM
Quite frankly I am not of the belief that a bank or the federal reserve takes a position as a creditor in any kind of relation between itself and it's customers. I think it's a disguised trust relation or an investment/insurance scheme, as there is nothing lent and there are only fees involved in the licensed monetization of items with signatures. Besides, the capacity of creditor is a shitty capacity in bankruptcy or insolvency. Only we the duped ones would ever enter into an undisclosed agreement to be creditors. And that is exactly what we are when we deposit money into banks, brokerages etc.

Goldi
09-13-12, 04:46 AM
"The "minimum payment" is spread amongst all who receive income.".... well that sounds familiar, like an insurance premium or an annual straight interest loan payment.

David Merrill
09-13-12, 09:29 AM
I am enjoying your mental models Goldi.

That would resolve the Credit River Money Decision (http://img338.imageshack.us/img338/7137/creditrivermoneydecisio.pdf) as legalized naked contract.


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