Why do we tax anyone at all?

[This_person]

When Did Everyone Become a Socialist?

It’s AOC’s calling card, Trump’s latest rhetorical bludgeon, and a new way to date in Brooklyn.

nymag.com

Chapo devoted its set to helping the crowd debunk anti-socialism talking points. “This is the main one that anyone on television is going to be asked,” said Menaker. “ ‘How’s it going to get paid for?’ We’ve already seen Alexandria get asked over and over. It’s important to come up with a smart response. The smart response is: ‘All the numbers are correct. All this is true about the deficit. But, f**k the deficit because it’s not real and it doesn’t matter.’ ” The audience whooped. Another option, he said, is to “turn all the existing billionaires into millionaires. Or Soylent.”​

So, if the deficit isn't real, and it doesn't matter, why do we need to turn billionaires into millionaires? I'm not a cannibal, so I'm not even going to give "or soylent" the respect of responding, but I really don't understand why people say the deficit doesn't matter because our money isn't real, and then say we need to tax people more.

Shouldn't we just STOP taxing people at all, if the money the government spends but doesn't have doesn't matter?

 

[vraiblonde]

These people are ignorant and rarely make any kind of sense.

 

[This_person]

These people are ignorant and rarely make any kind of sense.

But, it's not just these folks. There have been many people here on these forums that say the same thing - "it's fiat currency, the money doesn't matter, the deficit doesn't matter, the debt doesn't matter".

So, why do we tax at all? Why do billionaires need to pay more for it to be "their fair share"?

They can never answer that question. And, clearly, they're not even trying to educate when asked bluntly right here.

 

[vraiblonde]

But, it's not just these folks. There have been many people here on these forums that say the same thing

They are ignorant and rarely make any kind of sense as well. When I say "these people" I mean all of them, not just the ones in a particular story.

 

[LightRoasted]

If I may ...

So, if the deficit isn't real, and it doesn't matter, why do we need to turn billionaires into millionaires? I'm not a cannibal, so I'm not even going to give "or soylent" the respect of responding, but I really don't understand why people say the deficit doesn't matter because our money isn't real, and then say we need to tax people more.

Shouldn't we just STOP taxing people at all, if the money the government spends but doesn't have doesn't matter?

Because taxation upon the people is used to keep them working. It's the proverbial stick and carrot. Set at just the right level, a slightly off balanced equilibrium, * in concert with inflation, to ensure that a majority of the population cannot, ever, get ahead and will stay working for near forever. That's why taxation will never STOP.

It is true the deficit doesn't matter in the sense that it can never, will never, ever, be paid off. So why worry about it? Government needs more money? Poof. Out of thin air more is created.

 

[TCROW]

But, it's not just these folks. There have been many people here on these forums that say the same thing - "it's fiat currency, the money doesn't matter, the deficit doesn't matter, the debt doesn't matter".

So, why do we tax at all?

If the government stopped collecting taxes, the value of the dollar would evaporate. Taxes, a debt which can only be satisfied with US dollars, are the primary feature which gives our currency value. If our taxes could only be satisfied with un-popped organic popcorn kernels, we’d all start dumping our dollars to obtain those popcorn kernels.

This is the fundamental feature of a fiat currency — it is the thing you need most besides food and water. Fiat currency is more valuable than gold. Don’t believe me? Try and satisfy your tax debt with gold and let me know how you fare.

This is the sole reason for taxation.

 

[Toxick]

Shouldn't we just STOP taxing people at all

I didn't even read the rest of the post.

But: Yup.

 

[This_person]

If I may ...


Because taxation upon the people is used to keep them working. It's the proverbial stick and carrot. Set at just the right level, a slightly off balanced equilibrium, * in concert with inflation, to ensure that a majority of the population cannot, ever, get ahead and will stay working for near forever. That's why taxation will never STOP.

It is true the deficit doesn't matter in the sense that it can never, will never, ever, be paid off. So why worry about it? Government needs more money? Poof. Out of thin air more is created.

Interesting thought - but doesn't fit where AOC puts forth a bill to fully-fund those "unwilling to work".

 

[This_person]

If the government stopped collecting taxes, the value of the dollar would evaporate.

Wouldn't that also be true if the debt were $600 trillion-gazillion-bazillion? I mean, while I don't think it can be paid off in my lifetime, the debt IS able to be paid off. It hasn't been since something like 1835 (I think that was the last year we had no debt), but it theoretically could be paid off.

What I'm saying is, what you're describing is a reason why the debt and deficit actually DO matter.

 

[This_person]

I didn't even read the rest of the post.

But: Yup.

I'm good with that, but I think that would have to go with massive reductions in spending, and other ways of obtaining "revenue" to fund reasonable functions of government IAW the constitution (something we left a long, long, long time ago).

 

[TCROW]

Wouldn't that also be true if the debt were $600 trillion-gazillion-bazillion?

Sure. But don’t forget that a dollar in your pocket is debt. So if the debt is higher, that just means the economy is juiced. So while each unit value would be worth less, but there would be many more dollars in each individual’s pocket/bank account and prices would rise accordingly to find equilibrium.

The biggest mistake consumers make in a fiat currency environment is equating household budgets to government budgets. Money is a store of value for consumers; it’s not for the government. Rather, it’s a tool to enact the desired monetary policy.

Talk about taxation is just a tool used to divide and conquer. Rich vs poor, and so on.

 

[Toxick]

I'm good with that, but I think that would have to go with massive reductions in spending

 

[This_person]

Sure. But don’t forget that a dollar in your pocket is debt. So if the debt is higher, that just means the economy is juiced.

Ok, now you've just explained that we would do BETTER is we just taxes everyone at 1% instead of "turn billionaires into millionaires". I'm all confused again.

Talk about taxation is just a tool used to divide and conquer. Rich vs poor, and so on.

I get that the "talk" is, but I'm talking about the reality of it. In reality, the way I see money today is similar to what you are describing - though I don't see the $ in my pocket as debt.

Our currency is based on perception - I think we agree on that. It used to be based on gold/silver/etc., and therefore was backed by something tangible. Today, it is not backed by anything tangible; it's worth what everyone agrees it is worth. People tend to agree on a value based on the general economy - if we had a huge stock market crash, the little green pieces of paper would buy a lot less, because the general economy backing them would not be emotionally valued as high.

I think I am not putting words in your mouth when I say that we agree on that basic concept.

But, we don't just borrow money from other countries (which may or may not be backed by something). We don't just borrow money from the Fed, which is where the "imaginary" part of the money comes from, and we don't just borrow money from ourselves (T-bills, etc.), we borrow from all of that. So, while the "value" of the money may be just an agreement to view things a certain way, that's true of the value of the gold that used to back it, or the piece of property you are currently sitting on, or the car you want to buy. "Value" is much more in the eye of the beholder than beauty ever was. It has always been and likely always will be entirely arbitrary and inexplicable. I mean, who would you give $1M to first - an actor, or a nurse, based on the actual value of what is being done for you?

My point is, the debt matters. The deficit matters. Because if we end up with what people believe is an entirely unsustainable debt (aren't we reaching that already) then we will lose that suspension of disbelief and everyone will see our emperor has no clothes. The "value" will collapse, and we will have to start all over again.

So, the basic concept that "just pay for it" is a reasonable answer is entirely invalid. The basic concept that "debt doesn't matter", based on what you described above, is entirely invalid.

 

[TCROW]

Ok, now you've just explained that we would do BETTER is we just taxes everyone at 1% instead of "turn billionaires into millionaires". I'm all confused again.



I get that the "talk" is, but I'm talking about the reality of it. In reality, the way I see money today is similar to what you are describing - though I don't see the $ in my pocket as debt.

I have many thoughts but not enough time at this moment. I’ll pop back in this thread later on to see where it has gone.

BUT if you don’t see money at debt you are doing it wrong, and I don’t think there can be much progress here from discussing further. The model for our monetary system involves borrowing from privately owned banks at interest which needs to be paid back. That is the very definition of debt.

In short, this is why debts and deficits don’t really matter to me as a voter, citizen, or consumer. As long as that is our monetary model, we will quite literally always be in debt. Always.

In fact the entire concept of “national debt” is irrelevant. It’s an accounting ledger holdover from the days when we spent money in a currency over which we didn’t have complete control. I’m talking about gold. In modern times “debt” is a measure of how much money the government has spent and put into the economy.

To call for “paying down the debt” is literally calling for the government to spend less, i.e., one is saying “I am calling for the government to remove money from the economy” to reduce or eliminate an ancient accounting artifact.

This is simply borne of ignorance about how money works in a modern fiat system. I don’t use the word “ignorance” as a pejorative; most people just don’t understand because they haven’t looked into it. I don’t know all that much about 14th century Japan because I haven’t looked into it. Another way to put it is that I’m ignorant about that period in Japan’s history.

So yes, a dollar in your pocket is the very definition of debt.

 

[This_person]

So yes, a dollar in your pocket is the very definition of debt.

To whom?

How did we pay off the debt in 1835 if it is impossible to pay off the debt?

I see our currency as merely a way of making common the barter system. In other words, I barter my services/time with my employer and they give me little slips of paper that I can trade later for food and shelter. Otherwise, I would have to do things for the lumber mill and the grocer to get the same things. I may not have the skills or services or products a lumber mill wants, so instead we put out these little slips of paper that say, "for an hour of your time, you are worth 35 of these, or 50 of these, or 10 of these, or whatever. And, a gallon of milk is tradeable for a couple of these".

So, someone has to print those things up. One bank has been given the "right" to do so through the Constitution, Article One, Section Eight. They loan it out to other banks, which loans that out to people/businesses, who pay it back. Often, those people generate a surplus in value through taking $8 worth of material and generating $15 worth of product from it. Thus, they have an additional $7 to pay back the money borrowed, which is then paid back to the government-loaning bank, so it seems very likely that through this added value concept the debt could easily be paid back.

 

[LightRoasted]

If I may ...

To whom? How did we pay off the debt in 1835 if it is impossible to pay off the debt?

I see our currency as merely a way of making common the barter system. In other words, I barter my services/time with my employer and they give me little slips of paper that I can trade later for food and shelter. Otherwise, I would have to do things for the lumber mill and the grocer to get the same things. I may not have the skills or services or products a lumber mill wants, so instead we put out these little slips of paper that say, "for an hour of your time, you are worth 35 of these, or 50 of these, or 10 of these, or whatever. And, a gallon of milk is tradeable for a couple of these".

So, someone has to print those things up. One bank has been given the "right" to do so through the Constitution, Article One, Section Eight. They loan it out to other banks, which loans that out to people/businesses, who pay it back. Often, those people generate a surplus in value through taking $8 worth of material and generating $15 worth of product from it. Thus, they have an additional $7 to pay back the money borrowed, which is then paid back to the government-loaning bank, so it seems very likely that through this added value concept the debt could easily be paid back.

Well, he sold off some land out west and reduced spending greatly among other things. Plus we were on the gold standard then as well.

You are way incorrect. One bank wasn't given the "right" to do so through the Constitution. The Constitution was completely circumnavigated. Congress had no right to do what it did in 1913, short of a Constitutional amendment. The Federal Reserve System is made up of 9 private member banks. Banks order notes, $1 $5 $10 etc from the Federal Reserve that are then given to customers who want cash. Banks only lend to other banks when they are in trouble. The Federal Reserve is a bank's lender of last resort. Banks, on their own, each individual bank, every bank, every single bank in operation, in addition to the Federal Reserve, creates money on the spot out of thin air after a "loan" is approved and signed by the customer. The system was created to enslave this Nation, and every other Nation, to the bankers. You're thinking inside the old gold money standard paradigm. That thinking does not apply to our fiat monetary system and gets everyone confused. You must think from within the system. You are also forgetting about inflation which is a stealth tax by way of increasing the money supply that reduces the value of the dollar thereby necessitating the need for more dollars to purchase the same product or service.

 

[TCROW]

To whom?

How did we pay off the debt in 1835 if it is impossible to pay off the debt?

I see our currency as merely a way of making common the barter system. In other words, I barter my services/time with my employer and they give me little slips of paper that I can trade later for food and shelter. Otherwise, I would have to do things for the lumber mill and the grocer to get the same things. I may not have the skills or services or products a lumber mill wants, so instead we put out these little slips of paper that say, "for an hour of your time, you are worth 35 of these, or 50 of these, or 10 of these, or whatever. And, a gallon of milk is tradeable for a couple of these".

So, someone has to print those things up. One bank has been given the "right" to do so through the Constitution, Article One, Section Eight. They loan it out to other banks, which loans that out to people/businesses, who pay it back. Often, those people generate a surplus in value through taking $8 worth of material and generating $15 worth of product from it. Thus, they have an additional $7 to pay back the money borrowed, which is then paid back to the government-loaning bank, so it seems very likely that through this added value concept the debt could easily be paid back.

I wish you luck in your quest for knowledge.

 

[This_person]

I wish you luck in your quest for knowledge.

And I hope you begin to seek yours, as well.

 

[This_person]

Well, he sold off some land out west and reduced spending greatly among other things. Plus we were on the gold standard then as well.

But, as I said, the value of gold is completely arbitrary. Just like the current value of our money. If I'm hungry, and I have little slips of paper, I'll give you more of those slips of paper for your sandwich than your soft shiny rock. But, if I think other people will give me more sandwiches for the soft shiny rock, i'll give you more pieces of paper for that than the sandwich, thinking I'll get more sandwiches later trading the soft shiny rock.

So, the gold standard actually meant little more than not being on the standard does now.

You are way incorrect. One bank wasn't given the "right" to do so through the Constitution. The Constitution was completely circumnavigated. Congress had no right to do what it did in 1913, short of a Constitutional amendment. The Federal Reserve System is made up of 9 private member banks. Banks order notes, $1 $5 $10 etc from the Federal Reserve that are then given to customers who want cash.

I get it, it's not a single bank and a single location, but the concept is the US government (not states, not local businesses, etc.) is the only one authorized to create money IAW Article One, Section 8. Congress said, as they often do for most every thing, "you do that for us" to the Fed.

Banks only lend to other banks when they are in trouble. The Federal Reserve is a bank's lender of last resort. Banks, on their own, each individual bank, every bank, every single bank in operation, in addition to the Federal Reserve, creates money on the spot out of thin air after a "loan" is approved and signed by the customer.

But, there are rules about that. They can't loan money they can't back up. I can't say, "I'm a bank now, and I loan you $3,000,000" and just put $3M in your bank account and let you draw off of that. That's NOT how banks work.

The system was created to enslave this Nation, and every other Nation, to the bankers. You're thinking inside the old gold money standard paradigm.

I'm actually not. I'm thinking the value of our money is arbitrary based on a common agreement that a little slip of specially-formulated paper, if printed just right, is exchangeable for goods and services. We all know nothing backs it except for our common belief that the paper has value. The common agreement of the value of the paper is backed only by confidence that everyone else continues to have the same belief in the paper's value. Generally speaking, in broad terms, if our economy is going well the paper is believed to have a slightly higher value than when our economy is generally weak.

That thinking does not apply to our fiat monetary system and gets everyone confused. You must think from within the system. You are also forgetting about inflation which is a stealth tax by way of increasing the money supply that reduces the value of the dollar thereby necessitating the need for more dollars to purchase the same product or service.

But, what drives inflation? If everyone agreed that we would not pay more than $1 for a home - EVERYONE agreed - then the value of a home would be $1. But, when there are more people working, the value of a home is greater because no one is making any more land to put homes on. So, when we went from single income homes to dual income homes, we couldn't have a plumber and a secretary - whose combined income is more than the doctors and lawyers, living in the same neighborhoods as doctors and lawyers. So, the doctors and lawyers all agreed their homes were now worth a whole lot more, and the plumbers were left paying a lot more for the same house they lived in when it was just the plumber working instead of him and his wife. The cost of everything rose, because there were more slips of paper out there in everyone's hands. The slips of paper have no greater actual value, but since more people had them people who had a "thing" they wanted to sell could ask for more of those pieces of paper in exchange for their thing.

The core question is why people think the debt doesn't matter. It matters. It matters a lot. Because, based on perception the debt will destroy us. We'll have to go back to growing food and bartering some service of value for other services of value, instead of giving our slips of paper to people because they wear bikinis on Instagram.

 

[transporter]

If I may ...


Well, he sold off some land out west and reduced spending greatly among other things. Plus we were on the gold standard then as well.

You are way incorrect. One bank wasn't given the "right" to do so through the Constitution. The Constitution was completely circumnavigated. Congress had no right to do what it did in 1913, short of a Constitutional amendment. The Federal Reserve System is made up of 9 private member banks. Banks order notes, $1 $5 $10 etc from the Federal Reserve that are then given to customers who want cash. Banks only lend to other banks when they are in trouble. The Federal Reserve is a bank's lender of last resort. Banks, on their own, each individual bank, every bank, every single bank in operation, in addition to the Federal Reserve, creates money on the spot out of thin air after a "loan" is approved and signed by the customer. The system was created to enslave this Nation, and every other Nation, to the bankers. You're thinking inside the old gold money standard paradigm. That thinking does not apply to our fiat monetary system and gets everyone confused. You must think from within the system. You are also forgetting about inflation which is a stealth tax by way of increasing the money supply that reduces the value of the dollar thereby necessitating the need for more dollars to purchase the same product or service.

Actually you are the one who is "way incorrect".

Congress had every right to do what it did. We had made other attempts at a central bank in the past.

There are 12 not 9 Federal Reserve Bank branches.

The Federal Reserve does not print money...the US Mint does.

You are completely ass backwards on bank lending. Banks lend to other banks everyday, all day long. Banks don't lend to other banks that are or are perceived to be in trouble...this can lead to a credit crisis and was what made the last recession so bad.

The system was not created to "enslave this Nation". (Guess you read The Monster from Jekyll Island and are basing your opinions solely on that tin foil hat garbage?) No one forces you or anyone else to borrow money to buy things.

You aren't thinking at all.