The woman replied and said that would be impossible because she still had a book full of checks.
Of course for us private citizens that is how things works. With out any money in the bank you can't write checks. Same for state governments.
But the Feds when they are broke they just roll the printing presses and print money like crazy. Something which would be illegal for you or me, or even for a state government.
While printing money may seem to make money magically appear out of thin air it is not FREE money. It is really an indirect tax on anyone who holds the same currency that the government is printing.
According to the laws of supply and demand printing money increases the supply of money, which decreases the value of each existing dollar due to the inflation it causes.
The members of Congress and the Senate want to convince us that we are not paying for all the pork they are spending money on and that somehow they have borrowed the money and it will be paid for our grandchildren or our great grandchildren.
That is rubbish. When Congress runs the printing presses and prints boatloads of money like they have been doing for years it causes inflation and IS an indirect tax that people who hold American dollars are paying as inflation devalues their money.
A good book on this subject is "The Creature from Jekyll Island : A Second Look at the Federal Reserve" by G. Edward Griffin
Don't worry it's not a book about monsters. Jekyll Island is a yuppie resort in Georgia where the folks that founded the Federal Reserve met and created the plan to create the Federal Reserve.
True state of the Union: broke
If President Barack Obama were being candid, he would have begun his speech on Tuesday as follows: “The state of our Union is … we’re broke.”
However, it is clear that Obama does not regard the financial condition of the federal government as the most important challenge facing the country. Instead, he regards additional government actions and spending to improve our global competitiveness as more important.
Moreover, the real message of the State of the Union address is that Obama is not going to provide presidential leadership to put the federal government on a sound financial footing until at least after the 2012 election. [Let face it NONE of the government thieves is going to put the federal government on sound financial footing]
The federal government, however, really is broke. According to the Congressional Budget Office, the federal deficit will reach $1.5 trillion this year. That will be three consecutive years of deficits in excess of a trillion dollars.
This year, for each dollar the federal government spends, it will borrow 40 cents of it. [Translations taxes pay for 60 percent of the operations of the Feds, and running the printing presses pay for the other 40 percent of the operations]
And it only gets worse from here.
So far, the Social Security trust fund surpluses have been helping to finance general governmental operations. That’s coming to an end. [The original concept of Social Security taxes was that they would be put in savings account to accrue interest for the owner to be paid back when the owner retired. Of course the thieves in Congress canceled that plan and decided to spend the money now and let somebody in the future worry about how to pay it back - with interest]
Benefits already regularly exceed income from dedicated payroll taxes for the Medicare hospitalization and Social Security disability programs. According to CBO, this year Social Security retirement benefits will also exceed dedicated payroll taxes. That deficit becomes chronic and growing beginning in 2016.
There are those who say, don’t worry, the Social Security trust fund is owed trillions by the general treasury for all those years it was running a surplus. That’s true. But the general treasury has no money to pay it back. The only way for the general treasury to get the money to pay its IOUs is to borrow even more. [Borrow more? That is government double speak for "print more money!"]
So far, despite the sorry state of its finances, the federal government has been able to borrow at cheap rates. That has to be coming to an end.
The dicey global financial conditions have artificially inflated the demand for the debt of the U.S. government. As investors gain more confidence in alternatives, loaning more money to an entity that is already borrowing 40 cents on every dollar is going to look a lot less attractive. [Translation - the Chinese who hold a good chunk of our T-Bills know Uncle Sam is about to stiff them]
The wisdom of Obama’s strategy of government investments to improve competitiveness can be debated. I’m dubious. But until the finances of the federal government are put on a solid footing, it doesn’t matter.
Obama appointed a debt commission to make recommendations about putting the federal government’s finances in order. It did a surprisingly good job. It produced a plausible blueprint on reducing spending and reforming taxes in a way that both raises more money and is better for economic growth. The only place it whiffed was on Medicare spending. [Jesus Christ every stinking election lying politicians promise to solve ALL of our problems, pay off the National Debt and make things down and our wonderful if we vote for them. Of course that never happens!]
Obama, however, has not embraced the recommendations of his commission. Nor has he offered any proposals of his own that make more than a minor dent in the problem.
Now, I have no idea whether Republicans are willing to get serious about truly fixing the federal government’s finances either. The assumption is that doing so will be hugely politically unpopular. Neither side wants to go first. [Come on now! The Republicans spend our money like drunken sailors just like the Democrats do.]
Until now, the notion that truly fixing the federal government’s finances would be politically suicidal was probably sound. But I sense that now is different, that the American people understand that the federal government has gotten in way over its head, and getting out is going to require big changes. The American people may now be ready to accept the sort of recommendations made by the debt commission or even the entitlement reforms House Republican Budget Committee Chairman Paul Ryan has proposed.
However, I also increasingly think it doesn’t matter. At some point, people aren’t going to be willing to loan the federal government huge sums at favorable rates. And then the politicians and the body politic won’t have a choice.
That ugly day is probably coming sooner rather than later.