There is a lot of public concern in the US, about the “excessive borrowing” by the Government; it has to go on borrowing in order to continue in a spending mode, and Congress is locked in a debate: Republicans want to cut (some) spending, Democrats want to raise taxes. Neither side wants to budge on raising the National Debt Limit.
Part of the argument against increased borrowing is that “future generations will be burdened” by the future payment of the borrowed funds.
The main argument against government spending appears to be unmentioned.
The main argument goes like this: “Forget about future generations being burdened by the National Debt. Government spending is actually paid here and now, every day, by all Americans.”
Government spending is actually paid here and now, every day, because all government spending is a call upon present wealth. When government spends money, it is taking away part of the present wealth of all Americans, to use as it sees fit.
So out-of-control spending is actually impoverishing Americans every minute of every day. In this very real sense, government spending is making all Americans poorer, every day: they are paying for this spending today; not tomorrow, when the Bonds come due, but today.
If the American people were freely, of their own accord, purchasing Treasury Bonds out of their savings, the situation would be somewhat different – the government might be “crowding out” borrowers in the private sector, which would be negative for the health of the US economy, but not directly impoverishing the people.
But this is not the case. QE2 proved this fact. There were not enough buyers of US Government debt, to sustain the pace of spending, so the Fed had to purchase the Treasury Bonds, not out of savings, but with funds created out of thin air.
The printing of money to provide cash for the Government to continue its spending spree is a call upon the wealth of the American people, a disguised expropriation of a part of their present wealth. The unlimited spending of the US Government is today grinding the American people into poverty.
The payment of spending is going on now! Just as if a tax collector were going into every house and home in the country and carrying off its wealth.
Forget about “future generations” paying for today’s spending! Government spending is being paid for every passing minute, by today’s Americans. Americans are poorer today, than they were yesterday, and tomorrow they will be poorer than they are today.
Government spending is paid in the present! Dick Cheney said: “Deficits don’t matter” and he was right – the National Debt will never be paid in the future, so the deficits that create the National Debt don’t matter.
What does matter is that the Trillion dollar deficits are paid today, by the American people, as their wealth is sucked away by government spending.
Hugo Salinas Price
July 11, 2011