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I have listened recently to a lot of uninformed people say that all the government has to do to solve all of our so called money problems is Print More Money! To these folks I say... Do you know where the goverment gets their money from? Economics 101. When the goverment floods the market with dollars, the value of the dollars goes down. Just like all other markets the currency market operates much the same way. If the oil market has excess oil available on the market, then the value of the oil is less because there is more oil available. The oppisite is also true, less oil available makes it more valuable and thus the price is higher.
The goverment derives all of it's budget from the power to levy taxes and borrowing on it's credit. For many years now it has been the borrowing part that has gotten us in so much trouble. During the Nixon years, President Nixon took us off the gold standard. At the time the country's debt had exceeded the amount of gold that we held in the reserves.
As for the Federal Reserve, The Federal Reserve act was passed in 1913, the act which created a central banking system.
President Woodrow Wilson before leaving office actually apologized to the American people for the laws passage claiming that he had been duped into supporting it.
A popular misconception is the the Federal Reserve is part of the Federal Government. It is not, The President appoints the Fed Chairman who is confirmed by the Senate, but the Reserve is not an actual arm of the Government.
Among other things, the Fed establishes the interest rate that it charges other banks to borrow money. the cheaper it is for the other banks to borrow money, the cheaper it should be for the consumer (we the people) to borrow money. This is why when the Fed Chairman speaks the stock market moves. Investors want to know if it will be cheaper for them to borrow money for there investments. Remember, the first rule of business is always use (OPM) Other Peoples Money.
The Goverment gets all of it's revenue from taxes (we the people) and tarriffs and of course borrowing.
The borrowing part is a loan and as such must be paid back. (By we the people) via taxes
which will have to be raised. Of course, that means less money for us in our pockets.
Remember, in the history of the world, no country or people have ever taxed themselves into prosperity ever.
So what actually spurs economic growth? Cutting taxes! it has been proved over and over again! Putting more money into the hands of the people who earned it always spurs economic growth. People with more money start businesses and invest,
and take risks. which causes people to be hired. Then, unemplyment goes down which causes the tax base (the amount of people paying taxes) to increase substantially. which means... more money in the treasury!!
Economics 102 rasing taxes slows economic growth. Cutting taxes spurs it!
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