American politics is a sham. A distraction from the real game being played.
If you’re a Republican or Democrat, you might not think so. You might think that the other party is evil and if your side doesn’t take power, it will be the end of the Republic as we know it.
“Another 4 years of Trump, and we’re doomed.”
“If those radical Democrats get power, our country will look just like Venezuela.”
Your side might be right. Or, more likely, both sides are wrong in the sense that one side will not save while the other destroys. Whether they know it or not, both parties are actually playing for the same team.
If you ask most of the players, however, they won’t see it that way. But actions speak louder than words, and the logical ends of each parties actions have and will hurt the common citizen.
What in the world am I referring to, you ask?
A Debt Problem
Spending, deficits, and debt.
Let me explain.
In case you’re unaware, our government currently owes over $21 trillion dollars. That equates to nearly $180,000 per taxpayer. The cause of this massive amount of debt comes when the government spends more money than it takes in. Politicians get elected when they make promises that the economy will do well, people will be safe, and the country will prosper if you vote for them.
They lose or are removed from office when the opposite happens.
This creates a race to the bottom. Whoever can make the most promises and do the most stuff for the people will most likely be elected.
The only difference between the two sides is what kind of spending they advocate.
Republicans are often known for their emphasis on military and defense. Defending the citizenry is a directive in the Constitution. Fair enough. But is policing the world?
It is said that there was a time where the sun never set on the British empire. However, that statement is now more true of the United States than it ever was of Great Britain.
Republicans have often championed themselves as budget hawks, but clearly, that is not the case. The U.S. currently spends around $900 billion on military and defense while maintaining 800 military bases throughout the world.
Democrats are often known for their emphasis on social welfare programs. Promoting
In 2016, Social Security spending alone was nearly $1 trillion, and entitlement spending sits around $3 trillion or more than two thirds of the overall budget. None of this includes ‘unfunded liabilities’ which are promises the government has made.
So how do these politicians pay for their pet projects?
By spending them into existence.
If you or I were to run our own financials this way, we would be well on our way to financial ruin and would never be taken seriously from any creditor. But the proponents of this system say that it’s ok for the government to operate this way, because they’re the ones in charge of our economy.
But the debt still remains. And how do you get rid of all that debt?
Well, there are two main ways. Taxation and inflation, which are really just the same.
Politicians can either massively increase taxes to fight the debt, or their good friends at the Federal Reserve can inflate the dollar to bring the value of the debt down, which is really just another form of taxation on consumers.
The Money System And The Federal Reserve
Did you know that the Federal Reserve is not part of the government? Well, it is, but it’s also not at the same time. It’s a mix between an “independent” government agency and a private entity.
The Federal Reserve controls the money supply by “creating dollars.” How do they do that? It’s very complicated. And it’s intentionally so. I’ll see if I can break it down as simply as I can.
1. Government Creates IOUs
When politicians need money to pay for their programs, they have the Treasury create IOUs (also known as bonds). These bonds are how we get the national debt.
2. The Magic Currency
The Treasury sells these IOUs to the banks, who then sell them to the Federal Reserve. The Federal Reserve then writes a check (another IOU) on an empty account. (It’s important to note here that if you or I did this, we would go to jail.)
When the Federal Reserve buys the Treasury IOUs with its own IOUs, *poof* currency is created, aka the mighty dollar. The banks then send this currency back to the Treasury for the politicians to allocate.
3. Spend, Spend, Spend
The government then spends this currency on the various social programs, public works, and the military industrial complex. These government employees then deposit their currency into the banks.
4. Banks Fudge The Numbers
Banks take currency and multiply the numbers.
Did you know that your bank (most likely) does not actually have your whole deposit account? This is because of what is called fractional reserve banking. This means that the bank only has to hold part of your deposit.
For example, if you deposit $1000 into the bank, the bank most likely only keeps $100 and loans out the remaining $900 to someone else. That person who received the $900 loan can then take it and deposit it in a bank. That bank would then only keep $90 and loan out the other $820. But the banks still have to guarantee that if the person wants his money back, he can get it. So they write themselves an IOU in case you ever want to take your money out! So the first bank would have $1900 and the second bank would have $1720 on their respective books.
Yes, this is legal.
We work hard to get some of this currency created by the Federal Reserve and the banks, all while it is losing value from the constant creation of more currency.
Then Uncle Sam comes along and wants his cut. The IRS takes the portion they think belongs to the government and sends it back to the Treasury so that the Treasury can pay the principal plus interest on the IOUs at the Federal Reserve.
6. The Debt Secret
The biggest secret in all of this? The debt will NEVER be paid down.
In order to create a 1 dollar, the government must go into debt. This requires that they promise a dollar plus interest. So for every dollar that is created, there are two dollars that need to be paid back! (This isn’t exact, but the principle is the same).
There system is designed to require continual borrowing.
7. The Owners Take Their Cut
As I mentioned previously, the Federal Reserve holds the Treasury bonds. So the Treasury pays back the Federal Reserve. And if you remember, the Federal Reserve is an interesting beast It is what many would consider the unholy union between business and government.
This may seem a bit confusing, and it is intentionally that way. Most people will tune out when confronted with the nitty gritty details. They have to focus on making money to take care of their family and pay their taxes!
If you want a good visual representation, I highly recommend this video.
Back To You
So how does this actually affect you?
As mentioned previously, inflation crushes your purchasing power. Instead of being able to buy a week’s worth of groceries with $20, it now costs $100.
Actually, the Federal Reserve said it best:
“The decrease in purchasing power incurred by holders of money [YOU] due to inflation imparts gains to the issuers of money–[The Fed/Government].”St. Louis Federal Reserve Bank, Review, Nov. 1975, p.22
When the supply of an item increases, the value of that item goes down. In this case, it’s the dollar.
Just look at how consumer prices have increased since the inception of the Federal Reserve.
Consumer prices are now nearly 30 times higher than they were in 1913. Before the creation of the Federal Reserve, there were always times of inflation, but the economy typically normalized through periods of deflation.
To compound this problem of inflation, beginning in 2008, the Federal Reserve instituted a program called Quantitative Easing (QE) in order to try and save the financial system from collapse. They did this by flooding the system with currency (more inflation and debt).
Recently, the Federal Reserve began a program of Quantitative Tightening (QT), or destroying the currency in the market. But that led to the near 20% drop in the stock market, so they stopped. Now, it appears that they may have to continue this program of QE (creating money out of thin air) forever.
What will the result be? Most likely more inflation or stagflation (inflation plus a stagnant economy).
Democrats are right when they say they say the economy is rigged for the rich and the elite. What they leave out is that they are part of the elite. Indeed, under this kind of system, the rich get richer, and the poor get poorer.
Does that mean we need to redistribute the wealth and enact more socialistic policies?
Redistribution would only exacerbate the problem under this kind of monetary system. The rich would get richer; the poor would get poorer. The elite would
So as we bicker over the President’s incendiary tweets, the radicalism of Democrats, and the continual political circus, we ought to wonder if those things are really immediately important. Are those the hills we are willing to die on? Or are those things merely a distraction from the true issues at hand?
Although gradual, change only happens when citizens are well informed.
Maybe rather than dividing into tribes to support whichever politician or party promises to keep us “safe” we ought to pay attention to the larger issues at hand. Because while they may seem ideologically different through their words, their actions suggest that they really play for the same team.