With the bailouts of airlines, and NYC and so forth... where is all this money coming from???

When do we give 65% of money to the gov't to pay for this????

Gosh, and Clinton wants us to give more aid to poor countries???? Heck sounds like we are the poor country

-- Anonymous, October 25, 2001

Answers

The War Bonds will pay for some of it, Yarrow, and private insurance will also pay for some of it. But, you're right, there's an awful lot of spending going on and proposed. Maybe the politicians will cut down on their other spending (I can't believe I said that). But I think state and local governments are going to be hurting with the extra expenses, if only for hazmat calls and materials. Don't be surprised if there are additional or increased taxes at the local level. If you plan to buy a large appliance, forinstance, in the not too distant, then I'd suggest keeping an eye on your city council and state legislature and buying it quickly if it looks as if sales taxs will increase. You can always buy good, used items and there's often no sales tax involved.

-- Anonymous, October 25, 2001

Yarrow, you're not supposed to ask that question. "Good" citizens of the US are expected to just accept that these bills will be paid, magically, and all will be well. Fact is, neither taxes nor war bonds pay for wars, or for massive social programs either. Inflation pays for it. The Fed has been pumping billions of dollars into the economy for the last two years, with more massive increases yet to come. When you hear about injection of liquidity, that's what they mean.

When there is a failure of basic business or banking the Fed just issues more fiat money, inflating the money supply. Then we all get to see prices rise across the board, especially in imports. So, actually, *you* and all of us will pay the big bills coming at us. We will do it with lost purchasing power, called inflation.

If you don't understand how this "magic" money works, don't feel bad. Most people don't have a clue as to how it is done, even though they have been living with it for their entire life. Why do you suppose that the present dollar is worth only 10% of what it was 75 years ago? I know you have heard about the loss of purchasing power, but have you ever really spent any time thinking about why that is, and how the government caused that to happen, and what it does to savings?

This is not really difficult to understand at all, it's just that very few people are the slightest bit interested in learning the facts. I have recommended a book before, The Creature From Jekyll Island, by G. Edward Griffin. You can get it from Amazon, or at least read the reviews of it there. It's an easy book to read and understand but it will show you things you may not wish to know.

War, for instance, has always been the classic government response to social and economic problems for all of recorded history. Old Europe, Hitler's Germany, even the US has engaged in this "solution" to our problems. The book will show you why this is the favorite way to deal with the problems of our society. So if you really want to know how the bills are going to be paid, read the book, if you have the heart.

-- Anonymous, October 26, 2001

The answer is really simple. They'll just print more money. ;)

-- Anonymous, October 26, 2001

They don't even bother printing more money anymore. Just a few key strokes on the Fed computers. Less than 3% of all our "money" circulates as paper and coins. The rest is all just digits, including your own checking account. Anyway, you're right, they just simply issue more money/liquidity. But there's a price to pay for that and it should be required education to understand what it then costs us all.

-- Anonymous, October 26, 2001

Gordon,

I am aware of all that you said. I was joking, thus the ;)

We're going to pay for all of this, the price will be high and we will pay for a long long time. :(

-- Anonymous, October 26, 2001

The War Bonds won't be issued for a while, as I recall. Hope that Social Security Lock Box is secure!

-- Anonymous, October 26, 2001

Brooks,

First off, war bonds are a fraud. They are only a psychological ploy to give the impression that the government is borrowing the money from the public to pay for the war expenses. It further encourages people to believe they are doing something patriotic. But, when you "loan" the government money by purchasing a war bond that money must be repaid by the government. How will they do that? Where will the money come from to repay the bonds? The government does not make any profits from anything they engage in, so all its budget money must come from either taxes or inflation.

Taxes will not cover these expenses. It's literally not possible to tax people enough to pay for the huge costs of a war, and never has been, anywhere, at any time. Inflation is the only true method available to cover such costs. Simply stated, the government will allow the Fed to inject 100s of billions of "new" fiat money into the system, which will then create loss of purchasing power (inflation) and loss of trust in the dollar as world reserve currency. That is how it has worked in the past, always, and it will happen once again. As I said before, the dollar is now worth only about 10% of what it was worth 75 years ago. Five years from now it will be worth even less, all due to the pumping of more "magic" money into the economy.

Second, Social Security will *not* go bust, period. Social Security is in reality just a welfare payment system that will continue to be funded by newly created money as the need arises. Forget about all the hype regarding protecting Social Security. It's protected by the political need to keep the payments flowing to the public, or else. It never was a fund from which to pay your future needs. It's a pay- as-you-go system, and always has been.

Back 20 years ago, during the raging inflation of the early 80s, I saw a reporter (on TV) ask one of the congressmen about how the government was going to manage to continue all the Social Security payments if the economy kept inflating like it was. The congressman was very blunt about it. He said that the payments would be made regardless of the economic situation. He said they would create new money in whatever amounts needed.

The reporter asked if that wouldn't then destroy the purchasing power of the money. Yes, was the answer, it would ruin the purchasing power (inflation) but at least the people would get a check each month in the amount promised to them. It made me think about the old story of going to the store with a wheelbarrow load of paper money in order to buy a few essentials. Except, in the case of "entitlement" payments, they don't keep increasing the volume of paper money sent to you each month, so you slowing get less and less purchasing power. You slowly get poorer and poorer. But you *will* get that check for some amount, count on it. That's how it works. What amazes me is that most people literally don't even pay attention to this simple inflation mechanism in their lives. I guess they are doing something more important than worrying about how the economy works, or doesn't work, and why.

This isn't really rocket science going on. It's just simple monetary manipulation that has gone on for centuries under the control of central banking. Our own "Fed" is merely our present central bank, specifically the one that was put into existence in 1913. If you really want to know how it works, how it has always worked, just read the book I mentioned.

-- Anonymous, October 27, 2001