I know this comes as a shock to everyone reading this diary. But sometimes it becomes important that even the choir needs to be reminded of the obvious. The US government prints the money in your wallet. So choir, now that you are armed with this epoch revelation go forth and spread the news to the independents and conservatives. Conservatives especially seem to believe that they print their own money, except for Ron Paul who has to hold his own 'mini-convention'.
But all joking aside, I offer this diary as a frame against the braindead conservative argument that it's your money and don't let the government take any more!! Really, my money? So after reading Bonddad's brilliant diary about inflation and policy maker's alarm about inflation the only thing I should worry about is taxes? So with the government's power to print money, the real threat is taxes? Now, the rate of taxes are as important as to how the taxes are spent but one must also keep in mind that the government prints the money. The value of the money in your wallet can inflate and deflate without changes to tax policy. A change in the tax rate is the most direct way you would notice how much money is or is not in your wallet. However, $4 gas and the across the board inflation of everything from milk to bread also affects how much money is in your wallet.
So how has the government used its power to print money? Well, I would argue, in a very destructive way. Back in 2006, the editor of inflationdata.com alerted to anyone listening that the government would stop publishing M3 data.
by Tim McMahon, Editor Updated- March 16, 2006
I'm surprised we haven't heard much in the news about this but as of March 23rd 2006 the government will no longer be publishing the M3 money supply data. Most people probably say "Who Cares?" Right?
But you should care! And here's why:
"The Federal Reserve tracks and publishes the money supply measured three different ways-- M1, M2, and M3.
..
But that is all small potatoes, M3 includes all of M2 (which includes M1) plus large-denomination ($100,000 or more) time deposits, balances in institutional money funds, repurchase liabilities issued by depository institutions, and Eurodollars held by U.S. residents at foreign branches of U.S. banks and at all banks in the United Kingdom and Canada."
In other words, M3 tracks what the big boys are doing with the money. This includes US dollars held in banks in Canada and the UK (called Eurodollars) not to be confused with the Euro which is the standard currency of Europe.
So the question immediately arises why would the FED stop tracking this? The reason they give is that:
- it will save money
- That all the money that it tracks is tracked by other indicators.
...
With all its efforts at "Tracking Inflation" most everyone agrees that the last thing the Government really wants is for the general public to know how much it is stealing out of your pockets through inflation.
Inflation has been called "the hidden tax" and that is exactly what it is. When the Government "prints" extra money what do you think it does with it? It spends it of course!
What would happen if you started writing checks (creating money) from an account that was empty? You'd end up in jail! But that is exactly what the government is doing when it creates money out of thin air.
...
The writing is on the wall. When the Government starts hiding data the problem is big! If this trend continues, inflation is going to come roaring back big time. We will see the late 70's all over again. The war is Iraq and the Billions in Hurricane damage have to be paid for somehow and the "hidden tax" is the easy way out.
Now is the time to begin stocking up on inflation hedges.
So this was predicted over two years and to the credit of many here on DailyKos, many people have seen the coming train wreck of inflation coming for quite a long time.
So the government prints the money and it can choose to tell us or not tell us how much it prints. Accountability and transparency are required and must be demanded from the government. I think more and more citizens are starting to grasp the fact that fighting tooth and nail to keep taxes down is almost useless since the government controls the printing of the money. The value of that money truly resides in the trust and credibility of the government that backs that currency. Now with US credibility tarnished by the fiasco in Iraq, torture, immigrant bashing and various other techniques used to galvanize political support, the value of the US dollar has suffered. Just about every American now feels the searing effect of $4 gas and across the board inflation. Political support gained by threatening the specter of higher taxes has led to broad mismanagement of the taxes that have been collected. Large deficits have forced the government to borrow even more money and whatever consumer spending power was gained by lower taxes has been erased two-fold by the destructive effects of rapidly rising inflation.
So when conservatives argue that liberals and Democrats want to just raise taxes remind them that it's the government that prints the money. High taxes or low taxes, if the government isn't trusted and if the government isn't credible, then the value of that money in their wallet will continue to fall. Bad energy policy, bad foreign policy, bad domestic policy, bad trade policy will all do as much if not more damage to your finances as any change in taxes. If we are not mindful of how our taxes are spent on the war in Iraq, or on the prescription drug benefit or any number of items then inflation will rob the economy of any benefit that the spending should have provided. Government spending is an important component of any economy. Government spending on transportation improves the economy, government spending on the military can create jobs but if done in a gluttonous, wanton fashion then it spells out the kind of trouble we are now encountering.
As progressives and liberals, we must engage conservatives head on over the tax issue. Make accountability and transparency an essential component of government policy. The government prints the money, the most we can do to keep more of it in our pocket is by making the US government credible again through accountability and transparency. The Bush administration has severely weakened US credibility over the past eight years. Another damning effect of choosing to go to war, war spending does not make for an economy.
Thanks to Bonddad for inspiring this diary and if only four people read it, thanks. And if a Princeton economist reads it and thinks I'm full of crap, well write your own damn diary.