YOUR TAXES ARE ALREADY SPENT

 

ED Noor: Listening to this writer speak earlier today on Deanna Spingola's programme led me to his blog and the following article he was discussing. His assertions have challenged some of the beliefs I have held and promoted for years, like so many others, including esteemed historian Eustace Mullins puts me in excellent company.

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By Clint Richardson

REALITY BLOG

April 23, 2013
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Is it at all possible for the government to run out of money?
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This seems to be the talking point in the media lately, from the financial cliff to the financial crisis to the debt ceiling. And yet, is any of this even close to a reality?
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To comprehend this falsely projected fear campaign, we must first understand the difference between today’s “modern” monetary structure and that of what used to be called the “gold standard” model. 
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(Note: gold not necessary ~ the “standard” happened to be gold, but could have been seashells, sticks, stones, silver, cadmium, playboy magazines, or any animate or inanimate object with intrinsic “value”).
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In the yesteryear of gold-backed currency, the government was restricted in its issuance of currency based upon two things:

1) the amount of gold it had acquired (in ounces) and designated to back each physically printed single denomination of note, and

2) the value of each unit of currency ($1 dollar) assigned as collateral for each ounce of gold in holding based on a stable (unchanging) price of gold as set in statute.

In other words, the government technically could not spend money it did not have. As gold reserves increased, more gold-backed currency could be printed.
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This is the only reason that I would ever support a “backed” standard currency, though I do not believe gold is the correct form of collateral for currency ~ for today’s printed dollars are indeed printed with over 261,000,000 ounces of gold as collateral set at a statutory value of $42.2222 dollars. The only difference is that today’s dollars cannot be traded in for that gold, for today’s dollar is considered a “fiat” currency.
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On page 62 of the 2010 Federal Government CAFR, we read:

“Gold is valued at the statutory price of $42.2222 per fine troy ounce. The number of fine troy ounces was 261,498,900 as of September 30, 2010, and 2009. The market value of gold on the London Fixing was $1,307 and $996 per fine troy ounce as of September 30, 2010, and 2009, respectively. Gold totaling $11.1 billion as of September 30, 2010, and 2009, was pledged as collateral for gold certificates issued and authorized to the FRBs by the Secretary of the Treasury.

(LINK ~ http://www.gao.gov/financial/fy2010/10notes.pdf)
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Page 453 and 490 of the 2009 Annual Financial Report of the Federal Reserve (CAFR) also states that this gold is collateral held against Federal Reserve Notes by government.

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(LINK ~ http://www.federalreserve.gov/boarddocs/rptcongress/annual09/pdf/ar09.pdf)

You see, even with our current dollar based on but not redeemable in gold, the monetary system is completely whacked!

For it is not the gold that makes the monetary system stable and strong, it is the laws, rules, and men in charge of that system ~ the congress and its organized criminal creation called the Federal Reserve System.

Simply placing gold as collateral for a fiat currency does not make a good currency, even if its value is fixed by statutory law, as stated above at $42.2222 per troy ounce.

A commodity that is unstable in its value, especially one that is fixed daily by the London Fixing in the City of London banking collaboration of Rothschild’s and other banks, is not something I would wish to see backing my currency.

A foundation must be strong, non-interpretable, it must retain its value, it must not be able to be manipulated by corporations, it must not be used as collateral for other investments, and it must be stable.

A commodity with fluctuating value based on some corrupt banker’s whims is not ideal in any way, but especially when the “gold certificates” that represent the physical gold are traded for their market value of over $15oo, despite the fact that the statutory fixed price of that physical gold is only $42 and 2/9 dollars.

The important aspect of this old monetary system was that government was required to collect money and taxes before it could print money or spend those taxes. 

In other words, government could not create debt today that would be paid by future taxation or revenue, because it was necessary to attach gold to the printed gold or silver certificate (dollar).

But all of this has changed in the last 100 years.
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We now live in a monetary system that is based upon debt, despite this wealthy collateral.

Whereas before the currency was created after the acquirement of wealth (taxes), today the currency is created before any wealth is created.

So, the government spends money before it actually has it, in a system based on future taxation (debt).

Strangely, this means that government is creating new money into the system that is backed only by the pitiful cooperation of the indebted and ignorant people and all their property before the revenue to pay for that money is ever even conceived.

For the taxes that will pay for the monies that are being spent today will not be available until the money created today is spent by government. What is not understood, is that  

this money is not only created at the point of inception of legislative appropriation and debt, but that the money to pay for that creation of money does not exist until it is first created through appropriation, spent, and then re-collected as taxation for this past spending.

This paradox is the norm in government. The government created debt cannot be paid until the money spent to fund that debt by government is issued and circulated. 

Spending takes place before taxation happens ~ which simply means that the taxes used to pay that new debt have not been collected yet! This in turn is referred to as the “national debt”.

Perhaps an easy way of looking at this is to say that if government paid off all of its debt yesterday, then all taxation collected today would be purely a surplus in tax revenue, since today’s taxation would not already be spent as debt on past things. 
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So today’s taxation would be unnecessary, and it would sit in an investment fund or account as unappropriated tax until it was needed in the future. And really this would be the ideal governmental disposition ~ where congress would not spend taxpayer money until it actually had the money to spend ~ by collecting that tax before it spent money instead of after.
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With a gold-standard currency, new spending was dependent upon the acquiring of taxation before that spending took place.
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But today, spending happens before taxation is collected.
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If we ponder the meaning of this, it breaks the fallacy that taxation pays for government. For government can at any time spend as much or as little as it wishes by creating more debt. And this means also that government cannot and will not ever run out of money if it wished not to. In other words, there is no fiscal cliff. And the only “debt ceiling” is an imaginary line in the sand that can be crossed by government at any time it votes to.

Of course, this also means that the money created by government is purely fictional.

By this I mean that money is created out of nothing by a signed appropriations bill by Congress. To this bill is attached a “promise to pay” on behalf of all citizens as taxpayers. And the debt keeps getting higher and higher and higher…
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So is there a limit to this debt that can be created by government?
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The answer in truth is no, for the “debt ceiling” is again just an imaginary total that can and has been changed to meet new debt. 
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There is certainly no set in stone limit to how much our irresponsible bureaucracy can spend except the statutory restrictions placed by the very body who is appropriating this new debt to be created.
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Imagine if your son or daughter had the power to create his or her allowance money by pre-funding their piggy bank. It would go something like this:

Mom, I’m going to take a blank check out of your check book so that you can sign it. I’ll be creating future allowance today of $10,000 for which I pledge your future wage earnings to pay that debt back to yourself. Oh, and I’ll be charging you interest for the privilege of allowing me to screw you over and put you in debt. Love ya!

Is this not what government does by creating new money as debt instead of waiting to spend money it earns as revenue through past and current taxation? 
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Is there some reason that the people seem perfectly OK with this insane allowance given to government at the expense of their livelihood? 
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Can someone tell me why these men and women of Congress with child-like mentalities get away with screwing the collective taxpayer base every year for more and more debt?
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Seriously though… if your child is misbehaved and irresponsible, the last thing you should do is give him or her advance on their future allowance. And yet taxpayers allow trillions of their dollars at a time to be spent without government actually earning that money first. And no, extortion is not what I mean by earn!
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The reality is that our fiat currency is not based on anything but the good faith and credit of the United States. 
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Of course this should be translated as the people and their collective property and wealth pledged to back the dollar, no matter how many are printed. And more importantly, the gold that is held as collateral for this currency has nothing to do with the assigned value of each unit of currency. So the value of each dollar is not set, which means that at no time can the value of each dollar actually be defined by the collateral held. 
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For instance, with over 261 million troy ounces of gold held as collateral against the printed Fed Res Notes, $1 dollar may be worth $.20 cents one day and then $.15 cents the next compared to the gold held as collateral, because the gold is not the “standard” by which the dollar is based. 

And so whether there are billions or trillions or quadrillions of dollars in circulation, there is no tangible thing to base the actual value of each dollar.

Why is this important?
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Because there is no real limit as to what can be spent by government. If all the money created by government is purely representative of a single object, no matter how much money is created and circulating, then that money has no real value other than the fact that it is ALL based on one single object ~ in this case a pile of gold and some other listed things.
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What does this mean?
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If government can create new money as debt based on future taxation, it can just as easily un-create all of its debt based on any reason it wishes. Let me explain. 

Since government is the creator of money,

it is also the law and rule maker of that money.

As far as money creation and destruction goes,

government is as God.

When government creates money, at no point does that money ever cease to be the property of government. All dollars are property of the United States Mint and are copyrighted as such. 

So even if you currently have some dollars in your wallet, you are only in possession of those dollars as a user. 

You have the privilege of being a user of government property just as you have the privilege of paying that money back in taxation. 
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And if you stop and consider for a moment, you realize that for every dollar printed by government, that dollar by necessity must eventually be paid back to government through taxation to pay for the creation of that dollar.

You only have it on loan as an IOU.

The “national debt” is just that ~ all money formally created that must be paid back with interest to the very government who created it ~ even if that money hasn’t been created yet!

In case you missed the point here, this means that government is in debt to nobody but itself.

Yes, that means that government is borrowing from itself too. It funds its own debt.

Now if I was to borrow money from myself I could do one of two things: I could create a chaotic system of debt and credit to pay myself back the money I owe to myself while charging myself interest that I can probably never pay back in my lifetime, or I can simply forgive myself of that debt that I created in the first place for myself and never go back into debt again… because I have plenty of money to never need to create more debt with what I already gave to myself.
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So let’s ask the obvious question: if government defaults on its own self-created debt, how can this possibly harm anyone at all?

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Answer: It can’t!

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After all, government did not go out and get credit from some other entity in order to create its own money. That’s ridiculous! The maker of money (God) doesn’t need permission to create money, nor does it need to borrow from anyone else to create its own currency.

Remember, it owns all currency no matter who is holding it. And it can call in that currency any time it wishes, which is why it can be taken right out of your bank account at any time.

Banks are simple whores of the Federal Reserve System, who are allowed to also create government money out of the ether under Federal Reserve rules. This is why banks join the Federal Reserve.

For without this privilege of money creation, banks could not make loans. They cannot loan the money in other peoples accounts because that money is a liability to the bank. Banks only risk money that is not their own, and government allows them to do so through the Federal Reserve.

 

So if government were to write off $7 trillion dollars in public debt tomorrow, as well as to put a halt to the interest and Seigniorage charged on the creation of its own currency, would this in anyway affect “creditors”? Would this act harm any other entities that may be holding the government’s debt?
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The answer is a surprising one.
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Let’s see who is holding the debt of government…
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Listed as the #1 holder of government debt, just as Walter Burien of CAFR1.com has been proclaiming for 20 years… The U.S. Government! Here listed as:
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1. Federal Reserve and Intragovernmental Holdings

Total U.S. debt holdings: $6.328 trillion

(From the article)

“That’s right, the biggest single holder of U.S. government debt is the Federal Reserve system. The Fed’s system of banks and other U.S. intragovernmental holdings accounted for a stunning $6.328 trillion in U.S. Treasury debt in September 2011 (the most recent number available). The amount is an all-time high as the Federal Reserve continues to expand its balance sheet, partially to purchase U.S. government debt securities.

“About a decade ago, the total government holdings were “only” $2.5 trillion.”

7. State and Local Governments

U.S. debt holdings: $484.4 billion

(From the article)

“U.S. state and local governments have nearly a half-trillion dollars invested in American debt, according to the Federal Reserve. The level of investment has remained stable since 2006, moving within the range of $484 billion and $576 billion. The current debt holdings, however, represent the lowest aggregate level for state and local governments since December 2005, when they stood at $481.4 billion.”

This info taken from my previous article here: http://realitybloger.wordpress.com/2012/02/02/u-s-government-in-debt-to-itself/

Oh, so the Federal Reserve is holding the debt of the United States government?
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But wait a minute; the Federal Reserve is the United States government!!!
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Of course the mythology surrounding the origins and nature of just what the Federal Reserve is has created a fallacy from within the population that the Fed is somehow not a government entity. Of course, this is absolutely absurd when you do just a token bit of research about the Federal Reserve and how it was created. Yet the fallacy persists despite the fact that the Federal Reserve was created by Congress and can at any time be ended by Congress.
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I have written extensively on this subject, and for those who base their beliefs about the Federal Reserve on what they’ve heard around the way, I suggest you correct your mistake. 
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For government wishes nothing more than for you to think that the Federal Reserve is not part of government, and that government owes the Federal Reserve all this money listed above. This is nothing but sleight of hand, proven in triplicate through my previous research (2 links):

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http://realitybloger.wordpress.com/2012/09/01/todays-creatures-from-jekyll-island/
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http://realitybloger.wordpress.com/2012/06/23/the-incontrovertible-conundrum-of-dr-ron-paul/

Once we understand that the Federal Reserve is just a sub-corporation of the main United States Corporation, we understand that government is funding its own debt ~ meaning that it owes money to nobody but itself ~ which means it owes money to nobody but uses this scam to fool the people into an illusion of indebtedness.

The creator of money can simply un-create the debt attached to that money; and the only victim would be government itself and its embezzlement scheme to acquire higher and higher tax revenues to pay a debt that for all intents and purposes does not actually exist.

The purpose of this rant is simply to put an end to the fallacy that a government as powerful as ours can possibly be in debt, especially to itself.

The power of money creation is both the disease and the cure for this debt issue, and the solution is as simple as writing off that portion of the debt that is self-funded. While we did not cover other debt holders, we must consider that all municipal cities, counties, districts, and states are also all holders of Federal debt. Public pension funds as “institutional holders” of debt are also a large part of this equation, with debt holding in the 100′s of billions. And this leaves a fractionally small portion of debt that is held by foreign governments, most of which are heavily built up by American investments in their infrastructure and manufacturing base.

The reality is that most of this debt can be disappeared as easily as it was created. For most of this debt has never even been represented by physical dollar bills. 

Most of it is purely a fictional digital entry in some financial database somewhere. 

A beam of negative energy scaler or an EMP pulse would easily wipe out all records of these digital transactions just as easily as an action by Congress and the president.

(Yes, I’m a Fight Club fan!)

 

But unfortunately, the reality as well is that the people will continue to pay their taxes to support more and more debt money created by a purposefully irresponsible government. And ironically, they will do so without ever realizing that the money they spend in taxation today will be used to pay for the spending of the past, without any hope for the future.