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Let's have a serious talk about money. The Republican Party in the US is obsessed with money and wealth. They are concerned about debt. There are some real concerns: interest on the national debt and inflation. We need a strategy to avoid these two problems.
There are other things to be concerned about: unemployment, climate change and terrorism.
I believe these issues are related. Capitalism is the best economic system so far devised; but, it relies on allowing some members of society to suffer so the majority of the citizens can do well. I consider this to be unjust. I also believe this problem with the economy fuels terrorism. While many people hold strongly felt religious beliefs which put them at odds with the life style of the "west", I believe it is the failure of government to ensure the active participation of all citizens in the benefits of technology that drive terrorism.
Many of the wealthy see government as a threat to their goal of building wealth and have convinced many in the middle class that taxes are a bad thing. This is a false idea.
There are two main segments in the economy: the profit making products and the expense related products. In order to maximize the strength of the economy, we need to properly balance these two segments with a well structured tax policy.
The real issues are: how much money should be in circulation at any point in time and what should be the interest rate. Another issue is why should money be borrowed? I believe it is a mistake to fund consumer demand by borrowing except for housing and transportation. These two items are both expensive and necessary for a reasonable life style.
Now for the questions:
Q. What happens when there is too much money in the economy?
Q. What happens when there is too little money in the economy?
Q. What happens when the wealth gap increases in an economy?
A. The rich bid up the price of necessities above the price low income earners can afford.
Q. What happens when the wealth gap decreases in an economy?
A. More people can afford the necessities of life.
Q. How much money should be in the economy?
A. Enough to provide Full Employment and a Living Wage for all.
Tax and save or borrow and spend. That should control the money supply. Control inflation with a national sales tax managed by the central bank by product class.
Leave the interest rate near zero. Make profit by building things not leading money!
The purpose of money is to establish the relative value of one type of labor against all other types of labor. Money is a means to an end. It is not the end itself.
Thoughts about money
Money is a concept - it is not real. It does not grow on trees and you can not dig it out of the ground.
Money is not a finite resource. Time is a finite resource.
No one owns money. Money can be earned; but the value is not fixed.
Money can be saved. Money can be invested. Money can be spent.
The value of money depends upon many factors. If you have a problem with this concept, just invest your money in the stock market and see if it belongs to you or to society.
Money is just a way to keep score like football scores that have no lasting value.
You have none at birth and you take none with you at death.
Life is not about money. It is about what you do to serve others. The more you serve, the more others serve you.
Time is real. How to best use the time you have.
It is not whether you win or lose, it is how you play the game.
You can never have too much money. Even Warren Buffett just keeps making more. As long as you are honest in your dealings with others.
Money Management: The objective is to build wealth.
Life Lessons: Success is not measured by what you have; but, by how you use what you have.
How is money created?
Money and the individual:
At the individual level, there are two problem with money: having too little and having too much.
The lack of a good job can cause having too little money. The solution to that problem is guaranteed employment for any that want to work to earn income.
Very few individuals would agree that having too much money could possibly be a problem. True at the individual level. At the macroeconomic level, if individuals have too much money relative to the supply of goods desired, inflation occurs. The solution to that problem is a national sales tax which can be rapidly adjusted up and down based upon the inflation for any given product class.
Whether rich or poor; set aside ten percent of everything you earn (after Income Taxes) in savings for a buffer against hard times [Save for a rainy day].
Please see a new social contract - a way to achieve Full Employment and control inflation.