sk47
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Hello; I know some of the answer. There are a few ways I know of and while I cannot give details, here are the general things I have some confidence about.Where does this money come from? If country continues to print billions it doesn't have our dollar will lose its place as the world standard and of course spur inflation.
First, of course, are the federal income taxes both personal and business types. As I understand it the federal tax code is thousands of pages of instructions. Then there are the fees the government can charge for goods imported into the country called tariffs. It is my understanding tariffs were the main source of income for the Federal government early on. Income tax came along later. There may be a few other smaller means of raising funds such as fees to enter a national park or get a passport.
I do not know the current numbers but in the past the "normal" amount of tariff, tax and fee income was just a bit over 50% of what was spent each year. My guess is this is way under 50% this last year. I may be wrong but last I heard we had a deficit of maybe four trillion in 2020.
The rest of the money the government spends is "sort of borrowed", but this is not exactly as simple as it sounds. The FED has auctions of treasury notes every so often each year. A person or other entity can buy these treasury notes in various time intervals, three year, five year and ten year, I think. There may be other forms as well.
For a three year note the government promises to repay you a small percent of profit if you hold the note full term. Five year and ten year notes promise a higher profit. So in theory the extra money, (beyond taxes, fees and tariffs), the government needs to pay for the programs the legislature enacts comes from the sale of treasury notes, bonds and such.
There are at least two catches I know of. One is not all the treasury notes get sold to entities or people outside the government itself. It is my understanding something like half the treasury notes are purchased by an "arm" of the federal government itself. My understanding of this means this portion of treasury notes actually bought by the government is in effect just making up dollars out of thin air.
The other catch is not so clear in my mind, but has to do with the Federal Reserve Banks. My take is these big banks are not exactly part of the government, but work closely with a government. They can issue money and can set interest rates. I welcome comments from those who can explain these things better.
For example, I was a saver. At a point in my adult life I began to do without so I could save for my old age. So for decades I saved with the calculation I would have a small, but decent, amount of earned interest income to add to my retirement life. Then the housing crisis of 2008 came to a bursting point. Since then the rate on interest has been set very low, less than one percent for most of the time. There was a very brief period last year when interest rates got up to a bit over 2%, but that is gone now. I figure inflation is now greater than what a savings account will yield.
So back to your comment. Yes we are headed for inflation. Hard to pin it to a number other than the inflation likely will be very bad. I had already been hearing of some big money deals not being made on USA dollars before the last year's troubles. I do not know how or if the dollar being the worlds standard will be affected, since the other countries have also been hit hard with the troubles.
One last point. The USA now has at least 24 trillions of national debt with some many more trillions of additional debt coming in the future for things already on the books. Problem is we do not pay a penny to reduce this debt. Every year a large portion of the money the government spends goes to pay only for the interest on that debt. The principal is never paid down at all. In fact each year more debt is added in the form of what is know as the budget deficit. The government will likely never default on the interest payments as they will in effect just print more dollars as needed. The dire side will be and currently is those dollars are becoming worth less and less day by day.
Hello; Don't have personal knowledge about this, but there were a few years ago some estimates that among the able bodied adult population of the USA only around half worked and the other half were on some sort of government program. Not sure if I am included in the latter half. I taught in public schools for over 30 years and get a small pension. Some tell me I earned my place, but the news often caries bad connotation of pensions. For what is is worth my state did not have a union and was at the lower end of the pay scales.who have siblings who have like 5 kids, no jobs, but they have healthcare, housing, food stamps, living comfortably. I don't get it. Paid more to do nothing, and tax you to death if you earn a decent wage. there is no middle.
I have known families with two adults who do not work and a few children who draw more a month than I do now. I do not want children to go hungry and do without, but am not so sure about the adults. I drove a school bus in Harlan County KY. I saw a lot of poverty. I bought jackets for kids who had to stand in the cold to wait for my bus. I was in the homes of some of those kids where the parents never went without smokes or beer. Sorry about my attitude but some things are not speculation.
Taking out a loan to go to college with the goal of doing better later on is an OK choice. I had a loan and did pay it off. That was the deal I made. I got some debt forgiveness because I took a job teaching in a poor rural area. I stayed in the area long after the forgiveness period ended. I do not think the sort of forgiveness I got is what is being proposed now.
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