Collection of Taxes as Credit from the People to Government

["Harry Veeder" <eo200@xxxxxxxxxxxxxxxxxxx>]

----------
>From: "William F. Hummel" <wfhummel@xxxxxxxxxxxx>
>To: pkt@xxxxxxxxxxxxxxxx
>Subject: Re: The Treasury: Public hoarding?
>Date: Thu, Mar 8, 2001, 10:56 pm
>

>>>HV:
>>>Why can't it borrow directly from the CB?.
>>>Why must it always borrow from the private sector?
>>>When I have borrowed money, securities weren't
>>>issued.
>
>WH wrote:
>>This gets back to the point I made earlier about an essential
>>property of a fiat money system.  There must be a mechanism to
>>control the scarcity of fiat money in order to maintain its
>>value.  That mechanism is the taxes imposed on the public, plus
>>the sale of bonds to the public to cover deficit spending.  The
>>Treasury only needs to borrow to cover its deficit spending.
>>When it borrows from the public, it recaptures all of its deficit
>>spending.  If it borrowed from the CB, there would be a net
>>increase of fiat money equal to the deficit.  The CB would have
>>to recapture that itself by selling Treasury bonds from its own
>>portfolio.  But the CB has a finite supply of such bonds to sell,
>>so that recapture mechanism cannot work indefinitely.
>
>The last sentence is incorrect.  The CB would not run out of
>bonds to sell since it is acquiring an equal amount from the
>Treasury in this scenario.  However the purchase of bonds from
>the Treasury and resale to the public is entirely equivalent to
>the direct sale of bonds to the public by the Treasury.  The
>point is that one way or another the public must end up buying
>the bonds that provides the funds that the Treasury needs to
>cover its deficit spending.
>
>William F Hummel
>

Ok.

I've been thinking more about the idea of Government borrowing directly
from the people and I realize now that taxation already partially satisfies
this role. Taxation is the collection of credit from the nation's people.
The "debt" is the government's obligation to spend its credit wisely.

However, for taxation to become people-issued-credit, the
government must also pay interest to the people while taking credit
from them. Otherwise the government is simply extracting money from the
the people without so much as a thank you.

The people in general should be receiving interest from the government.
Taxation without interest is offensive. The sale of bonds by the Treasury
is how the government should finance its interest payments to the people.

In a sense this represents a synthesis of Georgian, Creditary Economics
and Social Credit theory.

Harry Veeder