The Truth about Federal Spending

Mosler for Senate

I know what you are thinking: ‘What about the lost Federal revenues?’ ‘Won’t that mean cutbacks somewhere else?’ ‘Won’t we have to borrow more from China for our children to pay back?’

This is why I’m running. I have the right answer to these questions, which is what sets me apart from the field and uniquely qualifies me to support my proposals.

I know how the payment system works. I grew up on the money desk at Banker’s Trust on Wall Street in the 1970’s, ran my own investment funds and securities dealer for 15 years, currently own a small Florida bank, and visit the Fed (Federal Reserve Bank) regularly to discuss monetary policy and operations.

I know for a fact, as do all Federal reserve ‘insiders’ as well as economists who understand monetary operations, that the role of taxes for the Federal government, unlike State and local government, is to regulate the economy—not to raise revenue.

It is an indisputable fact that when the Federal government taxes, it doesn’t actually get anything; it just changes numbers down in our bank accounts. And when the Federal government spends, it just changes numbers up in our banks accounts and doesn’t ‘use up’ anything. This may sound like a wild notion, but it was confirmed by Federal Reserve Chairman Ben Bernanke under oath as recently as May of 2009 in a public interview. When the Chairman was asked where the dollars came from that he was spending, he replied that the Federal Reserve just uses its computer to mark up numbers in bank accounts.

As a result, there is no such thing as the Federal government running out of money, and Social Security and Medicare cannot go bankrupt. Because the Federal government always makes any payment when it’s due by simply marking up numbers in our bank accounts, just like Chairman Bernanke described.

Because of this widespread misconception, the politicians in D.C. cannot comprehend the true meaning of taxes. That is why they take too much out of the paychecks of working Americans. That is why so many people are finding it more and more difficult to pay their mortgage or simply buy groceries. Our leaders don’t understand that Federal taxes are like the thermostat. When the economy is too hot, inflation too high, unemployment too low (something I’ve never seen in my 40 years of watching the U.S. economy) a tax increase might be a consideration. Not to raise revenue, but to cool down an economy running ‘too good.’ And when the economy is ice cold, like it is now, a major tax cut is in order to bring it back up to operating temperature. Like the ones I’ve proposed.