| | A cheerful man on TV last night, in one of those 15 second news announcements, gave us the good news that 'the Fed is 'releasing' more money into 'the economy.'
Imagine the joy that brought to hundreds of millions of Americans. Mo' money! In the economy! And then, no doubt, they went to their doors and are waiting for it to arrive, to make their burdens easier.
He then whispered the fine print, though who ever listens to that. "The Fed is buying more government bonds."
So I looked at my wife, who helps manage bond issues for a local school district, and she wasn't smiling.
Because she knows that a secretary in government somewhere is printing out a piece of paper. This piece of paper is a promise to tax us all more in the future. Then, someone gave this piece of paper to the Fed, who punched some numbers into a computer terminal, and suddenly awarded a brand new increase in current accounts-- cash -- from nowhere to the entity who sold them the bond-- the government. Now, the government has mo' money to spend in the economies--and no additional current value was created anywhere, unless we include the artistic value of the artwork on the bond. A government bond is a pre-spending of the future value that those whose actual creation of real value in the future will be taxed. Until then -- until those bonds are paid off with future taxes and future value creation-- all of our current money is now worth that much less. The existing dollars have been diluted in terms of actual value. A phantom tax on all of us, eventually to be doubled down by a future actual tax on our kids.
But GDP is defined to include government spending, and so, 'the economy' now has 'more money.'
But ... all the nation heard on TV last night was all the good news; mo' money in 'the economy.'
What do we expect? A smaller federal government? Belt tightening in all those Georgetown Bistros? Caravans of moving vans heading out of Northern VA?
Why, when we can tell a secretary to print out paper on a laser printer?
What aspect of human nature makes us believe that we are going to see anything other than a run downhill, if that is tolerated?
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