In all that talk about national debt and federal government budget deficits, there is always a very important point missing. In your household or your small business, money can come or borrowed from different sources, but, ultimately it is you who is responsible and who has to pay all the bills. Similarly, in national budget, money may come from different resources like debt financing or sell of bonds, etc. But, have you ever thought about the fact that just like your household who ultimately pays all those bills? Of course, when it comes to the government, it is the tax payers who ultimately pay all the bills. If you have other ideas or you are made to believe that it is not you, than, think and try to get an answer for this question: Who else?
For sure, there is no one else. All the government spending eventually goes around and comes back to tax payers. You may be a big fan of wars, and policing the world or love government welfare, thinking that government takes care of all of that. But, where does government gets its money? The ultimate bill payer for government, just like your family, is you. For example, you can get a loan or a credit card. You spend the loan money or you can charge your credit card. But, when the bill comes, with interest on it, who ultimately pays for it? Of course, you.
Similarly, government can do as much debt financing as it wants. It can sell as many bonds as possible. But, when bill comes in the form of inflation or debt payments with interest, who takes the burden? Most definitely, it is you who takes on all that burden. That is why it is so easy for politicians to start a new war or extend the welfare programs.
All they have to do is to pass on the bill to your wallet. This is the reason why big media cannot stop to persuade you for more wars or more welfare. Without any doubt, they have lots of confidence in your bank accounts. Ethiopian government or media do not want to interfere with, and attack other countries, all the time. They do not want to expand welfare programs, every now and then. Why? Because they know that the wallets of their tax payers are not that deep. On the other hand, our tax payers own the world’s largest and richest economy. They hold 23% of world’s wealth. So, our politicians and media can never go far enough.
Far enough? They may think. But, if you look at the facts, you may realize that they have already gone way too far. The reasons why United States became the world’s largest and richest economy in less than two hundred years, were freedom for every individual to do anything, as long as it did not hurt others and the individual’s inalienable rights on their earned money, wealth and property. Especially, in the beginning, they were allowed to keep almost all of that. So, they had high standards of living, unmatched in human history, great savings and lots of money to invest.
The high standards of living which mean high spending and buying power, savings and investments kept the economic cycle going, and economy growing. Unfortunately, at the turn of last century, when governments started to grow rapidly, and tax payers had to bear the burden of these big governments, the direct and indirect taxes went on a sharp hike. Increasingly, people did not have enough left to have a great life, to save and to invest. Most of that was now going to the governments’ insatiable appetite for tax payers’ money.
So, what are the major trends that we see since the beginning of twentieth century? Falling standards of living, savings ultimately reduced to negative levels and very less left for investments. We were told, since now we have big houses, big cars, TVs, electronics, telephones and computers, we have higher standards of living. As a matter of fact, the ownership of these items does not prove better standards of living. They just prove the magic done by American creativity and innovation. The high standards of living were when whole family of up to seven or eight people could live on one full time income.
It was, when in spite of having big families and only one income, they never had to worry about their bills and debt. The basic needs of whole big family were met by one income without any worries or problems. No one ever had to do multiple jobs and families could still gather on dinner table, every night. They could still afford vacations and quality time offs. When, due to ever increasing direct and indirect government taxation, it became increasingly difficult to survive on one income, they gave us the gimmick of sexual equality. There is nothing wrong with equality of sexes. But, why in the world, it must mean that both partners have to leave their family and go out to work?
In addition to be able to afford everything on one income, most of them were able to save a set portion of their single income. When direct and indirect government taxes made it impossible for most of people to save, they came up with the hoax of social security. Oh! You don’t have to worry about your savings. Government will take care of your retirement? Yeah, right? No, one is now ignorant enough to not know that social security cannot take care of our retirement.
Worst of this shows in serious recessions like recession of early nineties. With all the money going into direct and indirect taxes, most people do not have any money left for investments. New ideas, new ventures, new businesses, small businesses, business expansions and R&D mostly started to rely on highly skewed and corrupt government financing, Small Business Administration, big banks, corporate controlled institutional investments or angle investors and venture companies, mostly controlled and ran by MBAs getting their education from Keynesian university and college syllabi.
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