Dr. Martin Hash Podcast

There's an almost total misunderstanding of federal-level economics among the general population. Conservatives keep comparing it to home budgets, and Progressives get it mixed up with Marxism.

Money is imaginary, only made possible through Government. Would you really accept pieces of paper, or worse, computer numbers, if there wasn't an enforcement mechanism? Imaginary money is why you don't have to carry chickens around, and the machinations that a government can do to stimulate an economy is why those computers even exist. From this perspective, all money is government money.

I know Conservatives use the term "Tax & Spend" to deride modern economic theory: they confuse economics with how they balance their own budgets: get money, spend it; and they try to apply this misconception to a national economy, a total incomprehension, but they did almost get the name right: the correct order is actually "Spend & Tax" economics; governments SPEND money then TAX it back at the end of the year. It seems obvious that the two numbers should match.

The concept of Spend & Tax economics is actually quite easy to explain:
First step: Every dime spent by Government is a loan to America and it doesn't make any difference what the money is spent on. Money doesn't know who's spending it nor what it's buying.
Middle step: The only two inviolable rules are: production must exceed consumption, and the cycle cannot be broken; (for example, no Trade Deficit).
Final step: Every dime eventually ends up in somebody's bank account, so it's easy to identify who has to pay back the loan. The people who have the money.

Spend & Tax economics is a matter of simple accounting. Sometimes classically trained economists tout complex theories that sound enticingly plausible, and spout them with such conviction we all nod our heads in numbed agreement. But no matter how these fantastic constructions justify the wealthy accumulating all the money, or the lazy consuming it at other’s expense, I always remember the fundamental truism: you can fool me but you can't fool math.