Why we don't have a Spending Problem

To understand why our Great Nation does not have a spending problem all you have to do is the math. Add up the revenues going into the US Treasury monthly and then compare the amount of dollars flowing out of that same federal institution to calculate a governmental surplus or deficit condition.  Having done so, I have determined that the federal government currently spends several hundreds of billions of dollars a month in excess of what we taxpayers deposit with these same folks.  As this state of affairs has been the norm for most all of the existence of our Constitutional Republic - granted not on the scale of deficit spending this Administration has achieved - it appears that government spending more than its annual revenue is no big deal really.

Of course, the government's revenue shortfalls are fully compensated for by the Treasury borrowing the needed funds from persons, businesses and nations willing to lend dollars to us in return for repayment of the loan principle plus interest.  In the past, I have complained that this mortgaging of America to foreign enemies such as the Saudi's, Chi-Coms and the French gravely jeopardizes our independence.  Should any of these nations threaten to pull the plug on existing or future loans, the government would be in an untenable situation - thus, my concern has been that these creditors can extort foreign policy/national security concessions from the United States by merely starting to close their Central Bank cashier's window when Uncle Sam is standing there with his handout.  So far, however, I have not seen any examples of such extortion having taken place. Of course, such wielding of undue influence will not be trumpeted by press releases or public statements, so we really don't know for sure.

What we do know for sure is that this Administration, clearly cognizant of the danger of having our Great Nation "owned" by foreign enemies, has moved swiftly to rescue deficit borrowing from these unfriendlies. Today, the US Treasury just goes over to the US Federal Reserve to borrow most of the funds needed to cover the government's deficit spending.  Because the Federal Reserve has unlimited money - it actually does go into the basement and print US dollars - the spending "problem" of the US government is neatly solved by this unlimited expansion of the money supply in circulation both domestically and in world markets.  So, who says that there is no such thing as a magic bullet - the Federal Reserve is us; its Board of Governors will never threaten to withhold more credit or pull its existing loans, as all these guys/gals are American Patriots.  So, you ask what could go wrong with this monetization of the government's deficits - only one thing: the Federal Reserve adds absolutely no value to the US economy by expanding the money supply; indeed the only asset owned by the FED is a single printing press that makes dollar bills, out of non-recycled paper I might add.  Accordingly, when an nation's economy is literally flooded with massive amounts of non-assets - new dollars, indeed trillions of dollars annually - that explosion of currency makes each dollar worth less and less in buying power daily, as the same amount of good and services exist in the economy but there exists trillions of additional dollars available for their purchase.

Now, we are not speculating here.  In 1924, the Weimar Republic of Germany sought to print its way to a painless way of paying off the country's WWI reparations/debt.  Soon a loaf of bread at a Berlin grocery store cost more than two millions German marks.  My reminders of this reality, of course, are the photos of the German moms and grandmothers going shopping with wheelbarrows of almost worthless cash, as the nation's economy has devolved into a barter system where bread was the real currency.  So, I say buy wheelbarrows or bread now, as we have no spending problem, just a printing problem.