Hello, I was just looking at a chart, and I saw this: tax payer=>money to the government=>money at 1% of interest to private banks=>money to the tax payer at 5% interest rate. So, we put our money into the hands of the government and we receive from banks OUR money, at 5% of interest...is this so simple or I am here missing something? I guess I am.
so, is it your belief that the money which banks use to lend is only that which was received from the govt? Was the chart from the USA?
A bank loans money, and part of the interest they charge is passed to you. The government doesn't produce anything to earn money to pay that interest. So, where does this 5% come from, other tax payers - it is A PONSI SCHEME! Medicare pays out 1/3 of what was collected from payroll tax - the rest is made up with income tax. SSI pays out at a rate well above an equivalent amount put into a good 401k. The difference is from current tax payers - A PONSI SCHEME. If you believe otherwise, tell us where the government earns the "interest" it pays?
Clearly false. Given the inclusion of government spending in GDP, you'd have to assume complete crowding out. That would be a ludicrous position
Typical Reiver, vague and inflammatory. The government's spending tax dollars may contribute to GDSP, but it isn't production. What specifically does the government produce?
Just basic sense to a slice of invalidity The clue is in the vocab: gross domestic product. A government can in fact create additional output without even running a deficit. See the balanced budget multiplier effect.
