Government debt, the consumer promising production

Government doesn’t produce anything. It always consumes more than it produces. When it attempts to produce something, it always has to consume more in tax revenue than it produces in order to produce whatever it is it’s trying to produce. So you always end up with a black hole. This is because if the government needs more money, they can ask the Fed or tax you for it. A constant source of revenue at the point of a gun or the flick of a switch.

We are all taught that money doesn’t grow on trees. But for the government it does.

What does it mean exactly that “the global economy is broken”? How can that actually be quantified? Well, we discussed previously that money is not wealth. Money is merely the means with which one can either produce or consume wealth. So theoretically, we could have a world with money everywhere but no wealth. This would be the world of maximum inflation and minimum prosperity.

A broken global economy means that too much money has been spent on consuming wealth and not enough has been spent producing it. An undrugged economy would be able to balance that out when investors spot a need for more production and supply it. But that can’t happen in this economy because the main consumer, the government, forbids market entrepreneurs from entering the market and rebalancing the production side of the equation with regulation, taxes, forms, and the like.

So the government, just like the Keynesians want, becomes the spender of last resort. Spreading money around and getting less efficient in every spending round. Whereas in the first round, say they had to spend $10 for every unit of wealth, now they have to spend $50. But the amount doesn’t matter to them because they can always print it.

And then you have “government debt”. Debt meaning money is owed. Money, again, can either represent newly produced wealth (in the best case) or preexisting wealth. The former is when a business succeeds. The latter is when you are taxed or your money inflated.

Any normal business pays back its debt by either producing or going bankrupt. The government though can just steal it from you and pay back its debts, making you poorer.


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