292 Government Deficits Explained

<p style="margin-bottom: 0in;">Money is imaginary, just numbers in a computer. Every year Government spends the imaginary money. Someone who receives that money puts it in the bank which then loans 10x that amount of money to more people, who then buy things, and the people who get that money put it in the bank which loans out 10x as much, over-and-over, so that the original money multiplies itself. Government then asks for its original money back as taxes and we all win because life gets better and better, and some people accumulate more savings. As simple as that sounds, and as easy as it is to implement, the budget doesn't balance because almost everybody misunderstands what's going on, either because it's not explained well, or due to self-interest. As Upton Sinclair said, “it is difficult to get a man to understand something when his salary depends on his not understanding it.”<br /><br />Assume the pretend money spent by Government is painted red, white & blue. It bounces around in the economy like a pinball machine, with each bounce generating new money, however, this new money is not painted red, white & blue. At the end of the year we all look in our bank accounts to see how much red, white & blue money we have so we can send it back to Government. Obviously, people without bank accounts have none of the red, white & blue money and people with big bank accounts have lots of it. It's not a matter of fairness, or ideology, it's simple math: if the people who get the red, white & blue money spent by government don't pay it back then there's a deficit. Worse, there is an ever-increasing money gap between them & people without savings. They are basically enriching themselves at the expense of everybody.</p>