Borrowing

     My yard used to be shaggy—but in my defense, that wasn’t a conditioned result based on my own laziness—rather a giving attitude towards my next door neighbor. Did you ever have a neighbor who began “borrowing” a cup of sugar, then the trend continues pretty much exponentially? That’s Jerry, and he’s out of town a lot.
     That’s what I think about when I see the borrowing practices conducted by the U.S government, allegedly on “our” behalf. Here’s why:
     The medium of exchange used in America is the Federal Reserve Note (FRN for short). Most people think of the “note” as a “dollar” but don’t realize the deceptive dichotomy between those words—which is important if we want to understand borrowing in terms of what is borrowed, from whom it is borrowed, and how the debt is satisfied in this context.
     Along with the recent financial crisis one may notice media references to the “monetized debt.” For those who don’t know what that is, I think it prudent to explain what lawful money is supposed to be in this country. The U.S. Constitution at Article I Section 8 gives Congress the power to “coin money and regulate the value thereof.” The legislature did that very thing when passing the U.S. Coinage Act of 1792. The monetary unit was named “dollar,” which was primarily defined as 25.8 grams of gold and therefore, un-inflatable.
     For decades, banks issued promissory notes that weren’t really money but were “backed” by real money, meaning that one could exchange the notes at a bank, receiving the lawful amount of metal coins in return. Today, the Federal Reserve “notes” aren’t redeemable for gold or silver coins because they are no longer backed by precious metals that have their own value.
     If you look up the definition of the word note, you’ll discover it is simply debt. What we commonly refer to as a single dollar is nothing more than a dollar’s worth of the national debt—which is said to be about 12.7 trillion dollars now. When we trade the inflatable FRN-dollar for a loaf of bread (as if), we’re obtaining that bread by exchanging debt or a somebody-owe-you. The question naturally arises, “If I’m getting something substantial with what is essentially an I.O.U., then isn’t that just passing along a debt?” and “who’s responsible for the final payment of that debt?”
     As it turns out, we can buy stuff without discharging the underlying debt, but our liability—for the privilege of buying without paying—is limited. The liability for payment of this debt is accounted for in bulk as each of us has the dubious distinction of being responsible for an equal portion of the entire national debt. I’ve heard claims that individual citizens’ division of that debt could be anywhere from 42,000 dollars to 68,000 dollars each.
     In a manner of thinking, America has bee borrowing from Peter to pay Paul due to the monetized debt thing. True gold money as a commodity has its own intrinsic value apart from its express statutory worth. Conceptual dollars (FRN’s) are the only thing actually traded at the end of the day. That’s why the trade deficit is such a hot topic for officials, but everything financial is still measured in dollars.
     What all this means for the American public is that the value of FRNs are directly related to the GNP or the products of citizen labor. Extrapolating that idea further:
     1. We own our labor, which we trade to employers for notes that are secured by our own labor in the first place.
     2. We trade our notes to obtain goods that we produce.
     3. For the privilege of using the notes, which are worthless without our own labor as surety, we’ve charged interest by private bankers who don’t have any tangible products themselves.
     What happens if production were to shut down? How much would the “notes” be worth then? When you think about it, the concept of a people paying for stuff they already own, the whole idea is as unconscionable as my memory of borrowing my own lawnmower from Jerry. I wish Jerry wouldn’t take advantage of me in that way. If only he were more responsible in returning my property. Or, perhaps Jerry could at least provide for me to have equal access to the mower.
     I also wish that the problem—our governments’ ad infinitum practice of borrowing money into existence with the knowledge that the national work product is limited—would be as easy to solve as the neighbor issue. I do have an equal access suggestion, however:
     Nobody wants to think about what might happen when the Federal Reserve notes become completely valueless and America’s creditors demand payment in something more valuable than dollars. Will the GNP be sufficient to service the debt? If we default, then each and every American would be responsible for paying from 42,000 to as much s 68,000 dollars apiece out of their own pockets. Is that fair? Should someone who only make 20,000 a year be liable for a 60,000 dollar debt? N the other hand, should someone who makes 100 million a year be liable for only 60,000 dollars of debt?
     I propose that whatever circumstances the future brings, that the individual citizens’ debt liability should be determined by their participation in the capitalist system as measured in dollars. It’s no secret that the billionaires in American receive substantially greater benefit from the system as compared to those people living at a subsistence level. Ho many corporate executives contribute to the campaigns of politicians who, in turn, see to it that the generous companies are awarded beneficial legislation of outright contracts? That benefit does the common human receive?
     Clearly, the access to system benefits are inequitable. So, the debt liability should be inequitable as well, right? Measured in dollars, the affluent who hold, some say, 95% of the wealth should be responsible for paying 98% of the debt. The other folks could pay the rest. From the perspective of the individual to the system—you pay for what you get.
     We could start this plan today, balancing the economic system. I’d wager that if we did this as a nation, the affluent would be less cavalier about their borrowing practice.