Re: Latest Rant from Warren Mosler

From: The Trucker (mikcob_at_verizon.net)
Date: 12/17/04 

Date: Fri, 17 Dec 2004 10:04:27 -0800

William F Hummel wrote:

> On Thu, 16 Dec 2004 18:59:14 -0600, "smithaa02" <asdf@asdf.net> wrote:
>>
>>William F Hummel <wfhummel@comcast.net> wrote in message
>>news:aeu1s09jkaek9iti0jojvdg7h70jrqhojn@4ax.com...
>>> OK, give me an example of a tax payment by check that does not cause
>>> the payer's bank to lose reserves (government liabilities).
>>
>>A deposits at monopoly bank Z. A pays taxes to government. Government
>>turns around and deposits the tax money in monopoly bank Z because of
>>Treasury Tax and Loan. Bank Z's reserves stay the same as would there
>>other
>>bank liabilities and credit. Where were you going with this?
>>
> From the FRBNY website: "Individual income tax payments do not go
> directly to collector option depositories. Rather, these tax payments
> go from individuals to the Internal Revenue Service, which forwards
> the payments to about 160 "lockbox" commercial banks nationwide. The
> lockbox banks process the checks and forward the payments to the
> Federal Reserve Bank of New York. If the Treasury does not need the
> funds immediately, they are transferred to the TT&L program and
> placed, when possible, in note option depositories."
>
> There are now 11758 depository institutions participating in the TT&L
> program. What are the chances that any given check will be credited
> back to the depository it was written on? Virtually nil.

But the overriding consideration here is the transfer of reserves from
the taxpaying private sector into the furnace. That is what is suppose
to happen when taxes are paid. The scarcity of money and its value
are dependent upon this erasure of money. It would appear from the
scenario above that the money (the government liability) does not get
extinguished as it should. Go back to the beginning when the liability
was created by government spending. Taxes are supposed to erase that
liability, erase that money. So if the Treasury is not in need of funds
then the money should be erased as opposed to accounted to the TT&L.
The only way to erase the _real_ liability is to tax in excess of
government expenditures and burn the money in a furnace. 

-- 
"I know no safe depository of the ultimate powers of society but
the people themselves; and if we think them not enlightened enough
to exercise their control with a wholesome discretion, the remedy
is not to take it from them, but to inform their discretion by
education." - Thomas Jefferson.  http://GreaterVoice.org

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