Now that Covid is maybe starting to get behind us and people are now returning to some semblance of normalcy, a new panic seems to be setting in among us - the national debt. The go to boogeyman.
When the government was sending out money to almost anyone with a pulse (disclosure: Sherri and I didn't qualify for any program), I don't recall anyone sounding the debt alarm or having an issue receiving thousands of dollars in their bank account monthly.
Well now that the smoke has cleared, the news cycle now turns to Canada's mounting "debt" problem and of course, the fact your grandchildren's grandchildren will be paying for our current largess.
And what do I say about this: Bhahahahaha hahahahah hahahaah!
Oh and did I mention Bhahahahah hahahaha hahahaah
When I hear people complain about the debt or taxes my head immediately begins to hurt. The reason this aggravates me is that it has no basis in reality. And no, I am not some crazy conspiracy theorist. Chew on this for a few minutes:
- The Canadian government is the sole issuer of Canadian dollar (unit of account). I think we can all agree on this.
- If the Feds have a monopoly on issuing currency then it follows that every dollar in the economy must have been spent into existence by the Feds.
- The government doesn't need its money but in fact needs you to need it's money which is where taxes come in.
- In order to ensure that there is demand for the dollar, taxes must be paid in Canadian dollars...the Feds don't accept chickens or corn for payment of taxes the last time I checked.
- Taxes are not required to fund federal government spending. When you pay your taxes, they are effectively deleted out of existence. So every dollar the government spent is in essence a new dollar created on a Bank of Canada computer.
- Taxes merely provide a reason for you to need the Canadian dollar and act as a tool to manage inflation...taking money out of the system when inflation is high or pumping it into the system when demand is low.
- This is also where the silliness of "paying off the debt" or "reducing the debt"comes into play. Knowing that the government just creates the money it needs to provision itself and that taxes really just provide demand for the dollar and act as a tool to manage inflation, if the government starts reducing the debt, it is taking money out of the economy as every dollar in the economy is just a dollar that hasn't yet been taxed away. So if the government reduces the debt...it is really reducing the money supply which means there is less money for you and I and everyone else.
- Follow the logic then...if you pay off the debt in full, that means there is no money left in the economy so this is virtually impossible feat unless you want to destroy the economy altogether.
- As long as the debt is denominated in Canadian dollars, we can't go bankrupt - remember we own the printing press.
- Inflation? Its just too many dollars chasing too few products. As long as the economy is producing real goods and services and can absorb the extra dollars we van't have inflation. If you recall, we haven't had an inflation problem in decades...essentially meaning there is NOT ENOUGH money in the economy...a money desert if you will. Now, before you conjure up the spectre of Venezuela or other example of "printing money leads to inflation" examples, have a look at some great moments in hyperinflation:
So here are the takeaways:
- The debt is nothing to worry about.
- Your grandchildren will not be paying off your debt...how much of your parents or grandparents debt have you paid off? - See how silly that sounds?
- We can fund any programs we want for ourselves...its just political will. If you don't believe me, see what former Fed Reserve Chair Alan Greenspan has to say about it:
Alan Greenspan Says Print the Money!
Just Keep Printing Money
Now this is about the US but any country that has its own currency in the same position.
- Your taxes don't pay for squat when paid to the Feds so don't go parading around to public sector workers telling them you pay their wages - you don't.
Any questions? Its about 2:30 AM and a few negroni's in as I write this so I cannot be held responsible for spelling or grammatical or logical errors.
No comments:
Post a Comment