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A lot of that tax money goes to pay interest payments on government bonds which are owned by the rent collector class. The more money the government borrows to
by narrator 9y ago
A lot of that tax money goes to pay interest payments on government bonds which are owned by the rent collector class. The more money the government borrows to pay for health care and such, the more money the rent collectors make. They've effectively hijacked the progressive impulse to create a way for their vast wealth to earn interest. The regular bond markets would never be able to soak up such enormous amounts of money and pay risk-free interest on it.
China creates their own debt free money as needed. The U.S government must borrow it. You ever notice how economic pundits have been predicting an economic crash in China for the last 30 years that never seems to come? It's because the government just endlessly bails out the economy in a debt-free way that never sticks the taxpayers with the bill.
- colefichter 9y ago> China creates their own debt free money as needed. The U.S government must borrow it. You ever notice how economic pundits have been predicting an economic crash in China for the last 30 years that never seems to come? It's because the government just endlessly bails out the economy in a debt-free way that never sticks the taxpayers with the bill. That's.... not how it works. USA consumers purchase lots of imports from China, which causes massive flows of capital from the USA to China. China uses these capital flows to purchase treasuries from the USA which (in part) funds the federal deficit. At no point is China just "creating debt-free money". The exact same thing happens in other countries with large trade surpluses. Part of the reason for the Greek crisis was that Germany exports a lot of goods to Greece. This capital flow drives down the price of money (the interest rate) in Frankfurt and drives up the price of money in Athens. The Germans, seeing that they could get 1% at home or 7% in Greece (in the early 00's) then used the capital flows to purchase securities in Greece, such as bonds, CDOs and CDSs.
- narrator 9y ago>At no point is China just "creating debt-free money". I didn't say debt free dollars. Of course China can't create dollars. I meant debt-free RMB.
- baursak 9y agoYou should check out this video: https://youtu.be/TDL4c8fMODk https://youtu.be/TDL4c8fMODk
- candiodari 9y agoIf you call pensioners "the rent collection class" (which to an extent is true), then yes. But pension funds are the big owners of government bonds.