Cryptocurrency: Borrowing and Tyranny

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A Case For Government As A Borrower To Limit Tyranny

by Gary Marshall from www.economart.ca to RCM

Many are resigned to the belief that salvation from the perpetual
destruction of wealth, property and life by those directing ruinous
government is a myth. But, an end of government tyranny is within our
grasp, and a little exercise in thought and reason should reveal the
solution to all our economic ills and slay this monster forever.

I have detailed two facts in Public Finance that most in the field
ignore perpetually and inexplicably. The first: that government is in
deficit to the whole of its expenditures, that it has no money or
funds with which to pay its bills, that taxpayers, rather resident
citizens, and specifically their property, assets, and incomes fund
government and all of it.

The second: that it makes no difference whether government taxes or
borrows from the collective of the assets, property and incomes that
comprise the source of government funds, that a superficial
equivalence exists between Taxation and Borrowing in raising funds for
public expenditures.

I use the phrase ‘superficial equivalence’ because Taxation and
Borrowing are not the same. Taxation bears immense costs in government
waste and in deterrence that disappear with Borrowing.

We are all familiar with government waste. Though government does
supply a small number valued public goods, the majority of funds that
pass into its control are squandered on politically useful, but
dubious, harmful, and barren undertakings. The politicians and their
employ eagerly institute regulations and laws for their own benefit,
favored voting blocks, and the special interests that dominate them at
great cost to us all.

But the greater and generally unaccounted cost inherent in Taxation is
its weighty and poignant role as deterrent. The same instrument,
essentially a fine or punishment, used to penalize speeders and
criminals is used to raise funds for public expenditures. As it is
with fines and the lawless, so it is with tax levies and the
productive. The ubiquitous scourge of Taxation persecutes and chases
away enterprising and hard-working spirits, and we are all poorer for
it.

With the institution of full Public Borrowing, with the financial
inducement of interest and eventual return of all principle these
costs shall disappear. With deterrence erased the productive class
shall thrive through full enjoyment of the rewards of their efforts,
not penalized with the loss of large fractions of income. Worthy
economic activities squelched, halted, curbed, delayed or concealed
will of a sudden re-emerge and resume. Firms and people having sought
tax refuge elsewhere will have every reason to return.

With a capital charge imposed, government must borrow funds instead of
eagerly and obnoxiously confiscating them by daily entering the
financial markets. The people, former taxpaying slaves transformed
into Public Bankers, shall become the arbiters of which public
expenditures are worthy and which are not. When private bankers fail
to adhere to prudent lending practices and endanger the financial
health of the institution, depositors withdraw and move funds
elsewhere. Government, perpetual dependence imposed, must embrace
sound financial measures, must embrace cost and benefit analysis in
all undertakings. If it should falter, government shall find itself
starved of funds until the perpetrators of waste or corruption are
replaced.

Suppose we have an economy producing 100 units per year with 40 units
allotted to government and the remaining 60 units left to the rest of
the people. With the institution of full Public Borrowing, one would
expect government expenditure to decline sharply.  I estimate that
about 75% of public expenditures go to waste. If correct, the size of
the government’s allotment should reduce from 40 units to 10.

I estimate the deterrent effect upon the economy at approximately 35%
in an economy with a 40% tax rate. If correct, the economy should grow
steeply in size, from 100 units to 135.

An economy of size 135 less 10 units for government would deliver 125
units to the people, beyond a doubling of the former allotment of 60.
This explosion in wealth and prosperity would have no precedent in
history. The same outcome repeats the following year and into
perpetuity, the initial explosion in wealth building upon itself,
compounding such that accruing assets always outpace accruing
liabilities by at least 4 to 1.

There may be some dispute about the size of government waste and the
effect of deterrence and, thus, the size of the incomparable
augmentation of wealth. But the direction and result is clear.

Some have argued that none would lend to a government bereaved of the
means of Taxation. By simple calculation, the increase in assets, 65
units, far surpasses the incurred liability of 10 units. How is a
community so enriched, its Public Credit so enhanced by the abolition
of all Taxation unable to provide security to or repay its lenders? It
would be as if lenders turned away the wealthiest corporation in the
world.

A learned community would never persist with taxing resident citizens
when enlightened as to its punishing costs. With the stagnant,
medieval fields of economics once again rendered fertile, a
declaration uttered by the authorities of a small town, city,
province, state, region or nation would set the many peoples of our
world, united in purpose, on a blessed and enriching path. Abolish all
Taxation and institute full Public Borrowing, and I guarantee the
meek, suffering poverty and tyranny, shall inherit the earth as
prophesied by a great man long ago.