“Nothing is certain but death and taxes” – Benjamin Franklin November, 1789. “Nothing is certain but taxes” – T. Edward Westen February, 2019

Did we escape the certainty of taxation over the past 230 years? No, but, we could if we made one minor change in how governments create new money. Not that we we could immediately do away with them, but as the sole basis for providing for the collective goods and services in a society we could take the first step in their elimination. That first step would be to monetize citizens or to put it differently, put new money in the hands of every citizen rather than funneling new money to the small group of financial players whom the Federal Reserve Bank of the United States currently uses to put new money into circulation and, and this is an important and, at the same time put new money in the hands of the governments according to the numbers of their citizens. For a fuller treatment of how this could be done you can read earlier editions of this blog or read Democratize Money—Monetize Citizens on Kindel: https://www.amazon.com/Democratize-Money-Monetize-Citizens-Proposal/dp/1549614487

The thing is the way we currently create new money is an anachronistic carryover from the days in which new money was created by the discovery of new veins or washes or gold or silver (in them that hills). Taxes, on the other hand, appear to this writer to be an anachronistic carry over from the days when burly men with clubs extorted crops, domestic animals and precious metals from farmers, shop keepers and less burly citizens. Yes, early government was a protection racket, more or less. While much has been waxed eloquent about social compacts, and human beings in a state of nature, the noble savage, the evidence of how, at least in the feudal era and after in Europe and the dynasties and after in China government were formed, and replaced is the model gangs use and have used throughout history. Governments, and gangs, rule by intimidation, fear and the application of violence and extortion. Nowhere is this more true today than in the way monetary systems put new money into circulation. Money is distributed to those who already have money or resources that could be converted to money—security dealers and financial institutions.

While justly maligned by populists an workers, the mantra for justifying the practice of giving new money to those who already have wealth is called “trickle down economics.” The idea is if one gives new money to those with resources they will create things that people will buy. Notice, for people to buy things, they have to have money. No problem says those perpetuating the mantra, those with resources will uses some of the new money to hire worker to produce goods and services so those workers can buy things (the goods and services they are producing?). Yet, production of goods and services is based upon markets—firms produce goods and services for which they is existing or developing demand. Demand can exist in the abstract, but it a whole lot more real if those demanding a good or service have money to pay for the good or service.

Indeed, estimates of how the economy works is that 70% of domestic product is consumer driven. Yet. 100% of new money goes to producers and not consumers. Go figure. Something other than economics must be the driving force behind the current method of putting new money into circulation—ideology and the greed of the haves in every society.
The halves behave as if they skipped Kindergarten in which people learn to share. No matter, the haves have the state, an organized protection racket, to keep them in power and to keep the current political, societal and economic problems alive to justify the protection racket. After-all, we have to protect property from the poor and yet we need to tax a bit to provide welfare for those who do not have and can not get because trickle down economics only works up to a point. Then, it fails.
If the gentle reader review other postings in this blog or reads the Kindle book, Democratize Money—Monetize Citizens, the gentle reader will notice an increase in stridency in the tone of this piece compared to all the others. Yes, this writer has been radicalized by his inability to get his elected representatives to respond, even negatively at that, to his presentations. Those in power could head off the next revolution by listening. But then protection rackets only seem to understand their power to compel compliance with their edicts and distorted economic applications with threats of violence, incarnation or seizure.

I do hope that verbal stridency is all that is required, for a call to the barricades in this day and age with the weaponry available to the thugs in power will be very, shall we say, uncomfortable for those of us in the the masses. An the chief thug today, has shown every sign he would welcome a bloody display of his power.

As a post script, this writer contends that taxes can be eliminated over time if we implement the simple change in how new money is put into circulation proposed in Democratize Money–Monetize citizens. Indeed, most of the welfare state will, as Marx put it, wither away and die.

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Democratize Money – The Paperback

Not withstanding that Zachary Karabell debunked the very existence of the Laws of Economics in The Atlantic, (https://www.theatlantic.com/business/archive/2013/04/the-laws-of-economics-dont-exist/274901/ ) economic laws like supply and demand, Gresham’s Law, the law of self-interest and the law of competition do exist and have an immutability to them. How money is created is not an economic law, but an institutional arrangement that has changed over time and is subject to future change.

The current monetary creation institution, fractional reserve banking, at least partially causes some empirically observable generalizations (a fancy way to say laws or consequences, without being quite so rigid): contractions (as far as recessions and depressions) and expansions (as far as booms)–the business cycle, money attracting money (wealth accumulations), poverty, and political inequality (as Boss Tweed said, he didn’t care who had the right to vote as long as he got to pick the candidates). Now, not all of these consequences of the way we currently create money are independent of one another, but they all can be ameliorated if we changed how we created money to monetizing citizens. I spell all of this out in my Kindle Book, Democratize Money Monetize Citizens A Proposal. https://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Daps&field-keywords=democratize+money+monetize+citizens+a+proposal

Perhaps of more interest to most, is that Democratizing Money provides a way to fund a tax-free, basic income. Available in e-book and now paperback versions.

This is a book your elected representatives should read.  Tell them you will be testing them over it in each November.

Democratize Money to Provide a Basic Income for All

basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” (http://basicincome.org/basic-income/ )

The ongoing discussion about Basic Income out in the ether takes place under several names: Basic Income, Guaranteed Annual Income, Citizen’s Dividend to name the most obvious. If one googles any of these terms one will get a plethora of hits. Two websites that are particularly rich in information are http://basicincome.org/ and http://www.universalincome.org/ . I have read some of what is out there; and, what I have read lays out reasonable arguments for providing all a basic income. What seems to be the issue that holds it up from becoming reality is the question of how to pay for it. I have stayed back from that discussion up to now. However, democratizing money, as described in this blog beginning with the first of the 27 blogs to precede this entry is a viable way to pay for or fund a universal basic income, at least in the United States of America. The only catch is that democratizing money requires citizens to vote, serve on juries and perform normal citizen duties. So, it has a condition.

We, America and the world economy, is approaching a point where the current economic growth (expansion or period of a bull market, the terms are not quite equivalent but close enough) will come to an end. All growth cycles do. Economic growth cycles end partially because of the way money is created. We create money by putting new money in the hands of those who already have money or have a sufficient probability of having income over a period of time to pay off a loan. You see, money in the US is created by debt. Every dollar in every wallet, bank account or piggy bank was created by debt instruments. For a full treatment, you will find Banking and Currency Texts, or the other entries in this blog detail how money in the US is created by debt instruments. Or google it.

The role money creation plays in the ending of a growing economy is that for any reason whatsoever investors, entrepreneurs, consumers, bankers and even my grandmother decide that the economy is weak, over heated, or the like. When that happens, people stop borrowing money. When borrowing stops, currency creation stops. Recall the end of the Bush administration when the economy came to a stop, the Bush Administration pumped money into banks (they practically forced financial institutions to take money to invest). Unfortunately, the financial intuitions did not invest (loan). No new debt means there is no new money.

The slow down of borrowing will happen, it always does. The last slowdown caused a lot of pain for the average citizen and practically nothing but a decline in the rate at which those with money increased their money supply—only a slowdown for the wealthy.

Historically, the rich have convinced us that money into their hands creates jobs and thus results in income for all. Its name is “trickle down economics.” Pay attention here, “trickle” is exactly what happens, if you and I are lucky. Unfortunately, they are largely wrong. This is not an effective way to stimulate economy—a rising tide does not rise boats that are not seaworthy (the poor drown instead of getting richer).

Historically consumer spending is responsible for over 70% of economic acclivity in American. So, I would argue that the way to stimulate an economy that is not creating enough money through borrowing is to put money in the hands of where it will do the most good—in the hands of citizens and not just the wealthy.

I would argue a citizen who is one part of the sovereign deserves an equal shot at full participation in the economy along with every other citizen who is a sovereign. Democratizing money provides that and pays for itself. BBesides democratizing money is the only way of paying for a periodic cash payment . . . delivered to all on an individual basis, without means-test or work requirement.” that does not take money from one person to pay another.  https://democratizemoney.wordpress.com/2016/05/01/one-reason-private-money-should-be-excluded-from-politics/