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How is private debt service not taxes?

One argument that comes up repeatedly is the idea that taxes are some horrible, terrible THEFT of MY MONEY! It’s NOT FAIR!

So hell, lets just get rid of government. No more taxes. No more of that fraudulent fiat.

So where do you get money now? Banks rent money! They’ll lend it to your employer at some rate of interest–4 or 6% maybe, on *every single dollar.*

So isn’t that a tax? It’s a hell of a steep tax, actually. Chances are your employer will pass it on to you in lower wages. Grocery stores will tack it on to the price of food, on and on. When every single transaction carries an interest charge on every single dollar, the debt service burden on the economy will explode, and vastly exceed anything the government *ever* charged for the use if *it’s* money. Governments charge a small amount on just a portion of the income you get, and even then, you can often get out of most of it. States also charge some, and sales taxes on some goods exist of course. And entire classes of transactions have no tax on them at all, and many people pay no tax either. So the taxes charged by government are not on every dollar issued, only some of them.

And the best part is that you never have to pay the principal back. You can keep it forever, if you like.

So, if you add up all the taxes, they still amount to far less than the amount of debt service to private banks for that amount of money on every single dollar.

And crashes would be far more frequent, because, as I’ve mentioned many times, the banks don’t issue the money to pay their own interest. That has to come from somewhere else. Or it has to be written off in the mass bankruptcies that it would cause every couple years. Just sayin…

3 thoughts on “How is private debt service not taxes?

  1. And bank loans aren’t voluntary in an economy where there are no other options, of course. The Clinton surplus created the credit bubble economy that we have had ever since, because when government is in surplus, the private sector has no choice but to go into debt. Basic double-entry accounting demonstrates this.

  2. What complete and utter rubbish. Taxes are coerced. Bank loans are voluntary. Taxes flow to the state, pay for beaurocracy, and are used on something you have no control over, for example waging war on the neighbour – the historical origin of just about all taxes. Bank loans are specifically for the purpose you seek them out and are used by you, the loan receiver 100% for your own purposes. You don’t take a loan out, you don’t have interest payments. Additionally, your calculations above make no sense at all. Taxes increase the cost of doing business and the prices for items for everything. They are simply “passed on” to the consumer. Be it import duty, VAT, income tax, sales tax, capital gains tax – whatever. The money has to come from somewhere – and that is usually the consumer. Moreover, in a society where the government doesn’t license the monopoly to print money and gold and/or other measures of value exist, there would be a vibrant “money” printing industry where anyone could start a bank and where multitudes of currencies, based on gold or silver or diamonds or cryptology or whatever would compete against each other. There is so much wrong with your point, I don’t even want to continue commenting.

    • Certainly taxes are coerced. Taxes drive money. There would no reason to accept money if it wasn’t required to pay taxes. As for bureaucracy, corporations have much worse problems with it than the public sector does. In the last 10 years, the corporate health industry has hired so many “managers” that there are now 10 of them for every doctor. This is not efficiency. In fact, in every industry that is privatized, this happens. Management overhead, marketing costs, and other nonproductive layers skyrocket, while productivity falls and rates rise. Every privatized industry becomes *more* inefficient than the previous publicly-managed entity. This is very widely documented, and can be seen simply by attempting to file an insurance claim, contest a credit card charge, or a myriad other daily activities. As it stands now, the “taxes” we pay in nonproductive fees, surcharges, fraudulent “services”, inflated prices from wall street hoarding of commodities, on and on and on, now *vastly* exceed what we pay in taxes. Services that were cheap and reliable when operated by “bureaucracy” are now expensive and unreliable in the extreme.

      Our system is being operated as a faux “gold-standard” now by a congress that can conceive of no other–by restricting the supply of real currency, they have driven it’s price so high it’s being hoarded like gold now. Literally taken out of circulation in a Gresham’s dynamic. This is unnecessary and a political decision.

      Federal spending is the purchase of goods and services from the producers–that would be us. Bank money gives the bankers control of our economic life instead, choosing who to bestow it’s largesse on–and then demanding it all back, along with *additional* money they did not produce, and did nothing to earn. If there is no government spending to supply the additional interest, then what was produced with the loan must then be liquidated to pay the loan. This causes business cycles.

      The reality is, fiat is the most egalitarian money system ever invented. Money can be handed directly to the people producing the products, instead of being routed through a system that skims an ever-growing percentage of it off, creating declining incomes and GDP. Taxes *can* be deployed to reduce the destructive accumulations of the rich and promote real productive activity, if we choose. Again, this is a political decision, not a monetary necessity.

      As for multitudes of currencies, at one time America had over 30,000 of them. It was chaotic to do business, because they were not easily convertible from one bank to another, and the banks made out like bandits on conversion fees. Each was it’s own little local monopoly, which could dictate to business usurious fees once it took out a loan, because it couldn’t move it’s money to a better bank easily. This also required huge amounts of gold. Currently the entire stock of gold that has ever been mined constitutes a volume of a cube 21 meters on a side. Calculate how much gold that would be for each human being on earth. Hint: you’d need a microscope to see it. No gold standard system has ever survived the first war that came along, and discovery of new gold deposits created instant, massive inflation. The price of gold has nothing to do with the price of goods and services. It simply complicates it and is inherently deflationary.

      The problem with “competition” is that it is inherently wasteful and deflationary, inevitably leading to monopoly and price-gouging.

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