It was so warm and nice and wonderful in there, floating so peacefully, until all hell broke loose. Then came the big squeeze. Oh, trauma! Ahhh, bright! Burrrr, cold! Hey, not so rough! Slap, WAAAAA!
Welcome to the world!
That was it. First pain, original sin. And it was in that moment that from somewhere, perhaps from within those seven extra dimensions of that group of string theories collectively known as "M," an apparition appeared. The specter, brushing aside a looming dark wraith with a razor-edged scythe, announced himself as Uncle Sam. He hovered over me for just a brief instant, to anoint me in his shadow and to let me know that I was protected from lions and tigers and bears. He didn't linger, but the shadow he cast did; it remains to this day. His parting words were, "You owe me, kiddo."
It was a very straightforward proposition, really. From the workings of nature I got the asset of life, and accrued the liability of the living: death. As long as I live, I owe whatever part of the universe I occupy for my protection and my biosphere user fees - my taxes. Uncle Sam mentioned that there would be a lot more deals like this along the way. You get this, you give that. Trade-offs. If I'm lucky that will be it, but sometimes you get screwed and have to deal with lions and tigers and bears anyway because higher primates can be obligate stupids. Then, nature gets paid-off early.
So here's the deal. Uncle Sam measures my mundane obligations to him in units of his choosing, and he will exact that payment or else. He imposes his tax liabilities and he demands that I extinguish them using only the state's own monetary instruments called dollars. Nothing else will do. All of us become taxpayer units at birth, in certain and perpetual need of dollars - the only things in all creation that will extinguish the dreaded tax liability. And that is why, my fellow Americans, we all scratch around feverishly for dollars. Real dollars. Sovereign Tax Credits. Tax Liability Extinguishers
Well, life is not that hard. I'll gladly give some hours of my labor in exchange for some real dollars. Or I can make something useful or go prospect for gold or diamonds or other sparkly things that primates like, or gather roots and herbs for the market, or charge the thinking-impaired for clearer thoughts. If I do these things and earn more than I consume, I'll have real money left over to extinguish my tax liability.
The only problem I see in all this is that there has to be enough real money out there to go around, and if people are worried about being able to extinguish their tax liabilities, they may want to save their real money - some of 'em will probably hoard it away like squirrels! People thinking that way may not want to hire me or buy my gold and diamonds. My roots and herbs may seem a luxury in difficult times, and the weak minded in the grip of fear seldom seek wise consul.
When I follow that train of thought it makes me wonder. If nobody but Uncle Sam can create real money, what about all the affairs the government is not involved in. Seems like most transactions in the private sector economy don't use real money. They are done with checks, credit and debit cards, stocks, bonds (except treasuries), loans, mortgages, etc. All of these are accounting entries - credits offset by debits. They cannot extinguish a tax liability. They all total to ZERO. Made-up money. Cash and coins are real, bank reserves are real, but the everyday economy is largely credit money. I wonder how did the real money originally flow from the government that created it to the people obliged to use it to extinguish their tax liabilities?
It must be that some of those same people that I wanted to sell my labor to, and my gold and diamonds and other sparkly things that primates like, must have done some kind of work or made things like bombs and guns and roads and bridges that the government wanted. The government got their real stuff and gave them real dollars in return. Now when tax time comes those people will be able to extinguish their tax liabilities. So perhaps, If the government will pay me in real dollars I'll give Uncle Sam my labor. Or I can make something or gather data and statistics to trade, or perhaps charge his thinking-impaired bureaucrats for clearer thoughts. If I do these things and earn more than I consume, I'll have real money left over to extinguish my tax liabilities, too. This is good.
Thus it is, I am born to lifetime of tax liabilities because of lions, tigers and bears. I can make an asset (I can build it!) and trade it for other assets. But while I'm swapping around my assets, I've got to make sure I trade for enough real dollars to extinguish my tax liability. If I'm really good at swapping around my assets, like Mitt Rmoney, for example, or Warren Buffet, I might end up with millions or billions of tax dollar liability extinguishers. Way more than I will ever need. But that's something that probably happens to a lot of big-time asset swappers. We big timers probably shouldn't take as many dollars from the government as we do for the stuff we trade, but . . . taxes, don'tcha know, you gotta be prepared. And Uncle Sam still wants or needs more stuff all the time.
Well, they're just going to have to do something about all these extra tax dollar liability extinguishers that are piling up and sitting around gathering dust, doing nothing productive. Other people, friends and strangers, certainly need tax liability extinguishers. I suppose they could use some of mine if they promise to give them back. I might not get them back from everybody, though; that's a risk. It would be less risky if everyone gave back a couple extra extinguishers to make up for possible losses. That would make it worthwhile. It is a good plan. Borrow a bunch and kick in a few extra when you pay them back. We'll just demand that Uncle Sam does that, too. It's only fair, he's the one sticking me with all these extinguishers. We'll make a bond, Uncle and me. I'll trade my extinguishers for a promise that say 90 days from now I'll get all my extinguishers back plus a few extras, and we dissolve the bond. I don't think this does Uncle any good, because I don't think he has tax liabilities himself that need extinguishing, but this is certainly a better thing for me to do with my excess tax liability extinguishers while I wait to find somebody with something that I want to trade them for, like a mansion or an airplane or a farm or gold and diamonds and other sparkly things that primates like.
And so it goes. We live, we love, we die. It is all good.