10 Myths About Government Debt


ANTONY DAVIES: Myths about the government
debt. Myth number one, the government owes 20 trillion dollars. How much is 20 trillion dollars? Suppose you go to Germany, and in Germany,
you go to every town. In every town, you visit every store. In every store, you look at every shelf and
grab everything that is for sale. The amount of money you spend will not be
$20 trillion. If you go to Germany and then to France and
you go to every town, and within every town, you go to every store. In every store, you look on every shelf and
you buy everything. You still will not have spent $20 trillion. You can go to England and while you’re there,
you can go to the North Countries and buy everything that’s for sale, and you still
will not have spent $20 trillion. In fact, to spend $20 trillion, you have to
go to every country in Europe, visit every town, in every town, go to every store. In every store, look on every shelf and buy
everything. And then you will have spent about $20 trillion. But the myth is that this is how much money
the government owes. It turns out that there’s more, called unfunded
obligations. Unfunded obligations is money the Federal
Government has promised but which it does not and will not have the money to pay. Largely, this consists of promises of retirement
and medical benefits. If you would take the present value of all
the future promises of retirement and medical benefits the government has made and subtract
from that the amount of money that’s in the government’s Social Security and Medicare
trust funds, and then subtract from that the amount of money the Federal Government anticipates
collecting under the current law from future Social Security and Medicare taxes, you will
still have an amount of money left over that the government does not have. And that’s the unfunded obligations, an amount
of money the government has promised, which it does not and will not have the money to
pay. Estimates of unfunded obligations vary from
the astronomical to the unbelievable. On the low end, people have estimated unfunded
obligations to be about $80 trillion, on the high end, $200 trillion. This means that the Federal Government’s total
financial obligations range somewhere from 100 to $220 trillion. Let’s say, roughly speaking, the Federal Government
owes about $150 trillion. Myth number two, the government owes $150
trillion. Well, it turns out there’s more to it. There are federal agencies that don’t appear
on the Federal Government’s budget. There are government-sponsored enterprises
like Fannie Mae and Freddie Mac that don’t appear on the government’s financial statements,
and they owe another $8 trillion. There’s then state and local governments that
collectively owe about $3 trillion and have another 5 trillion in their own unfunded obligations. When we put it all together, the total US
governmental financial obligations total about $165 trillion. Myth number three, government borrowed from
the Social Security trust fund isn’t really debt because we owe it to ourselves. Well, it turns out there is no ourselves here. The trust fund belongs to current and future
retirees. So when people retire and the government does
not have the money that it has promised them, one of two things must happen. Either the government must increase taxes
on future workers to pay for the Social Security and Medicare obligations it has promised,
or the government has to cut the promised Social Security and Medicare benefits that
it had promised to retirees. Either way, someone must pay. Myth number four, the government can’t go
bankrupt. This is technically true because the government
promised to pay back a certain number of dollar bills. And so as the government starts to run out
of money, it can simply print more, thereby satisfying its obligation. But while that’s technically true, it’s effectively
false because when the government prints money, it erodes the purchasing power of dollars,
thereby creating inflation. For example, suppose you have a bunch of people
and these people buy things. They buy things from Wal Mart, from Mcdonald’s,
and Ford. In buying these things, they give these businesses
money. In return, they receive goods and services
from these businesses. The ratio of the dollars they pay to the goods
and services they receive, we call prices. We have the average price of a hamburger,
the average price of a pair of shoes, the average price of a car. Now, if the government were to print enough
money to double the money supply, we would have twice as many dollar bills floating around
but the same amount of goods and services. All that would happen is the prices of these
goods and services themselves would double. With twice as many dollar bills, a hamburger
now goes from a price of $4 to a price of 8. The car goes from $30,000 to a price of $60,000. One of the prices that will double is people’s
wages. Interestingly, you’re left with the following. Under scenario one, without the government
printing money, let’s suppose you earn $50,000 a year and the price of a hamburger, shoes,
and a car, things you would buy, are $4, $30, and $30,000. And then along comes a government who prints
lots of money, and in printing the money, it doubles all the prices, including your
income. So now, in scenario two, you’re earning twice
as much as you were before, $100,000, but the prices of the things you buy have all
doubled as well. If I ask you, are you better off in scenario
one or scenario two, the answer is you’re the same in both. It doesn’t matter to you whether you’re earning
$50,000 and a car costs 30, or whether you’re earning $100,000 and a car costs 60. It’s the same car. Now, there is a difference in the two scenarios,
and the difference shows up when you look at your savings. Let’s suppose, in scenario one, you had $10,000
in savings, you’re earning $50,000, and a hamburger costs $4. Along comes the government, it prints money. In printing money, all the prices double. That means that the hamburger now costs twice
as much, the shoes cost twice as much, you’re earning twice as much, but your savings is
the same. It’s the same $10,000 sitting in savings. What has happened, when the government comes
along and prints money, in effect, what it’s doing is draining away the purchasing power
of your savings. Economists say it this way, “Inflation is
a tax on savings.” When the government prints money and thereby
creates inflation, we get the same exact effect as if the government had imposed a tax on
people’s savings. The fact is that the government ultimately
pays for bankruptcy by taxing the purchasing power of people’s savings. Myth number five, the government can solve
its financial problems by raising taxes. Well, it turns out the government can’t raise
taxes at all, it can only raise tax rates. Taxes are what happens when the tax rate that
the government impose interacts with people’s behavior. This is perhaps the most interesting picture
in all of economics. It’s interesting precisely because it’s so
boring. What you’re seeing here is federal tax receipts. This is all tax revenue from all sources combined,
payroll taxes, income taxes, estate taxes, tariffs, everything, federal taxes, all sources
combined, as a fraction of GDP. What you see is, from 1950 up to the present,
this has remained relatively stable at about 17%. That is, over time, if you think of the economy
as a pie, the government has collected a constant 17% slice of this economic pie. Now, let’s superimpose on top of this, for
example, the top marginal income tax rate. Back in the 1950s, the top marginal income
tax rate was north of 90%. It dropped in the 1960s, reached an all-time
low during the Reagan years, goes back up during Bush the first, comes back down, goes
back up again. This is the top marginal income tax rate. When you talk about taxing the rich, this
is the rate that applies to the rich. But notice what happens here. In years in which we taxed the rich at a very
high rate, the government collected 17% of the economy as tax revenue. In years in which we lowered the tax rate
on the rich, the government still collected 17% of the economy as tax revenue. The same is true of, for example, the capital
gains rate. When capital gains taxes were particularly
high, the government collected 17% of the economy as tax revenue. When capital gains taxes were particularly
low, the government collected 17% of the economy as tax revenue. The same is true of the average effective
corporate tax rate. When corporations paid higher fractions of
their profits to the Federal Government, the Federal Government collected 17% of the economy
as tax revenue. When tax rates on corporations were lower,
the government still collected the same 17% of the economy as tax revenue. It didn’t matter whether we taxed the rich
or capital gains or corporations. It didn’t matter whether we taxed them a high
amount or we taxed them a low amount. Regardless of what the government has done,
historically, it has consistently collected the same 17% of the economy as tax revenue. Now, you might say, “All right, but we’re
looking at tax revenue as a fraction of GDP. Tell me what’s happening to tax revenue, straight
up.” Let’s look at what happens to tax revenue
as tax rates change. What you see here is the top marginal income
tax rate. This is data from 1940 to 2015. Across the bottom as we move to the right,
we’re taxing the rich at a higher rate. As we move to the left, we’re taxing the rich
at a lower rate. Up and down, we’re measuring tax revenue per
person, one year later. This is total federal tax revenue on a per
capita basis, one year after the tax rate goes into effect, and this is all adjusted
for inflation. The story we hear when we hear things like,
“Well, we need more tax revenue so we need to tax the rich more,” implicit in that statement
is as you increase the tax rate on the rich, we will collect more tax revenue. But if we actually look at the data, what
we see is a different picture. The actual data looks like this. On average, as we have increased the tax rate
on the rich, one year later, the Federal Government has actually collected, on average, less tax
revenue. There are exceptions to this but there’s also
a very clear trend that the tax revenue moves in the opposite direction that we think it
should. This is not just true of the top marginal
income tax rate. We also see it if we look at the capital gains
tax rate. Now, the relationship here is not as tight
but it’s disturbingly in the same direction. On average, as the government has increased
the capital gains tax rate, one year later, it has collected less tax revenue than it
did before. We see the same phenomenon with the corporate
profits tax. We see the same thing with the estate tax. In fact, of all the federal taxes, I’m only
aware of two which, historically, as the government has increased these tax rates, its tax revenue
has actually gone up. Those two taxes are Social Security and Medicare. The disturbing part of this is these are the
taxes that fall most heavily on the poor and the middle class. Myth number six, the rich aren’t paying their
fair share. What constitutes a fair share? What you see here is average market income
of various income groups in the United States as of 2013. We have the poorest 20% of Americans at the
top. Their market income, that is income they earn
from participating in market activities as opposed to money the government gives them,
their market income is about $15,800 on average. Here’s the middle-income Americans, their
average income is about $53,000, and the top 1%, just over $1.5 million. Let’s ask, what is a fair tax rate for these
people to pay? As we talk about tax rates, let’s talk about
effective tax rates. What I mean by that is after you have done
all of your legal and accounting gymnastics and write-offs and deductions and exemptions,
when all that’s finished, what fraction of your income did you end up paying to the IRS? That’s the effective tax rate. We can argue about what constitutes fair. A lot of people tend to answer the following
way, the poor should probably pay somewhere around 2%. A lot of people think that the middle-class
Americans should pay around 15%. And a lot of people think that the top 1%
should pay around 30% of their income as taxes. Now, we could argue about whether these things
are indeed fair but these seem to be numbers that lots of people will tend to agree with. Let’s look at what these groups actually pay. If we look at the federal taxes collected
from each of these groups, we see something like the following. The average household amongst the poorest
20% of Americans pays, on average, $800 in federal taxes. The average middle-income household in the
United States pay about $9,000 in taxes. The average household amongst the top 1% pays
about half-a-million dollars in federal taxes. Now, this isn’t the end of the story because
we don’t just pay money to the Federal Government, the Federal Government also gives money back. A lot of this comes in the form of the earned
income tax credit or Social Security benefits or unemployment compensation, but all of these
things are instances in which the government has first collected money and then turned
around and given the money back. Let’s account for this, and economists call
this transfers. Transfers are money the government gives to
people. The average household amongst the poorest
20% received an average federal transfer of about $9,600 in 2013. The average middle-income household received
about $16,700. The average top 1%-er earned about $800, most
of that is likely coming from Social Security retirement benefits. But notice what happens now, if we calculate
the effective tax rate by accounting not just for what people pay to the government but
for the money the government pays them back, what we find is something astounding. We claimed that a fair tax rate for the poorest
Americans is 2%, and a fair tax rate for the top 1% is 30%. If we run these numbers, what we find is the
poorest 20%, on average, are actually paying -56%. That is, when all the dust settles, they’re
actually receiving more money back from the Federal Government than they paid in the first
place, making their effective tax rate below zero. This is true all the way up through middle-income
American. The average middle-income American is receiving
back 15% more from the Federal Government than he paid in, the top 1%-er paying about
34%. Here, we have an interesting conclusion. On average, and there are exceptions but on
average, only the top 40% are net payers into the Federal Government. This raises an interesting point because every
time someone says, “Well, we should cut taxes,” someone else responds with, “Well, you mean
tax cuts for the rich.” But in fact, our tax system, at least at the
federal level, has become so progressive that virtually every tax cut, by definition, is
a tax cut for the rich because on average, those are the only people who are actually
paying. Myth number seven, the government can settle
its debts by selling off its assets. The government has some debts and unfunded
obligations of about $150 trillion but it’s also sitting on a bunch of assets, 8,000 tons
of gold in Fort Knox, 500 million acres of land out in the West and Midwest, and then
miscellaneous assets on top of that. These total actually only about 2 or $3 trillion. When we’re done, even if the Federal Government
were to sell off all of its assets, we still have a shortfall of $147 trillion. Myth number eight, the government needs to
pay off its debts. The good news here is the government actually
doesn’t need to pay off its debt. Just as a household with a credit card does
not have to pay off the credit card, all it has to do is keep up with the minimum monthly
payments, so too the government only needs to keep up with its minimum monthly payments. We call this servicing the debt. The bad news is if we count all of the money
the Federal Government owes, $150 trillion, and the Federal Government currently pays
about 2.5% on its debt, to service the full $150 trillion of obligations, the Federal
Government would have to come up with $3.8 trillion per year. That is, to service the debt and obligations
the Federal Government currently has, it would have to pay $3.8 trillion a year in interest. Yet, the Federal Government’s annual income
is only about 3.3 trillion. That is, the Federal Government actually is
bankrupt right now. Even if it were to devote all of the tax revenue
it collects solely to servicing its $150 trillion in debt and obligations, it still would not
have enough money to service that debt. Myth number nine, well, the government could
just keep on borrowing. The problem here is the government has borrowed
so much money that it’s running out of places to find more. Currently, the American people, state and
local governments have loaned about $6 trillion to the Federal Government. Social Security, Medicare, Veterans Benefits
trust funds have loaned about $5 trillion to the Federal Government. Foreign governments have loaned another 4
trillion. The Federal Reserve has loaned 3 trillion,
and foreign people have loaned about 2 trillion. This is the total amount of money that people
the world over have loaned to the Federal Government. The problem with this is Social Security,
Medicare, Veterans Benefits trust funds have run out of money. They have no more left to loan to the Federal
Government. In fact, in the case of Social Security and
Medicare, they’re starting to pull back the money that they had loaned to the Federal
Government, which they now need to turn over to retirees in the form of benefits. Foreign governments and foreign people have
been slowing the growth of their lending to the Federal Government. The American people, state and local governments
have been slowing, and in some cases, actually cutting back on how much they loan the Federal
Government. That means that as time moves forward and
the Federal Government wants to borrow more and more money and these groups are all tending
to cut back on how much they loan, the one place left the Federal Government can turn
to for money is the Federal Reserve. The problem here is when the government borrows
from the Federal Reserve, unlike its borrowing from any of these other groups, it creates
inflation. Inflation is a tax on savings. In effect, as the Federal Government runs
out of places to borrow, it must turn to the Federal Reserve to borrow money. When it does that, it creates inflation, which
erodes the purchasing power of all of our savings. Myth number 10, there’s no way to fix this
problem. It turns out that there is. We could have a balanced budget within five
years if we followed this recipe. First, cut all spending this year by 10%,
no exceptions. If there’s some things you don’t want to cut
by 10%, then cut something else by more so that when you’re done, in total, you have
cut by 10%. When I say cut by 10%, I mean the word in
the way any normal human being uses it. When politicians say, “Cut the budget,” what
they mean is to increase the budget by less than they would actually like. This is a actual 10% cut. We spend 10% less than we did the year before. Then hold spending constant for four years,
don’t even adjust for inflation. What happens over these four years is as the
government holds its spending constant, the economy continues to grow. At the end of the fifth year, the economy
is now large enough that it can support the government that exists. At the end of the fifth year, we’ll have our
first balanced budget. Thereafter, the Federal Government can continue
to increase its spending if it likes, provided that the increase does not outpace the growth
rate of the economy as a whole. This solution stops the bleeding. It prevents the debt problem from getting
worse, but it doesn’t solve the debt problem. However, we can grow out of this. It took perhaps 100 years for our debt problem
to grow to the size it is now. If we can stop the problem from getting worse,
over the course of the next 50 or 100 years, the economy will grow enough that the current
$150 trillion debt won’t matter.

100 thoughts on “10 Myths About Government Debt

  • Hey everyone!

    We are very excited to announce that Learn Liberty is back! And producing new content! To get an idea of what's coming your way, check our brand new trailer! https://www.youtube.com/watch?v=EW99cN_Yjfk

  • at 15:18 he says "only the top 40% are net payers into the central government", but the way the slide adds up, it's the top 21%

  • This guys sounds like a party spokesman in George Orwell’s 1984! He is an ideologue. DOUBLE PLUS GOOD DUCKSPEAK “

  • What does production/revenue have to be to pay the average Subway restaurant worker $100,000 per year?  If taxes get really high, rich people will show $0 income and just live off of their wealth.  They'll shutter everything and stop investing.  NO job creation.  2.5% interest on servicing the debt?  That's a dream rate and is going to go higher, much higher at some point in time!  This is exactly why The Fed is doing "Not QE" again and bailing out the "repo" markets!  Buckle up…..it's almost over!

  • Keep wages the same for many years. Import cheap goods from foreign countries. The foreign countries become more powerful. The foreign countries by your debt. Be surprised when they cash in.

  • In the beginning of this video there is the implication that the U.S. government doesn't owe $20T (i.e., that it's a "myth"). Then, it quantifies $20T relative to all the products available in Europe, as if that has anything to do with whether the $20T is owed. That illustration is useful to help people get a handle on what $20T is; but it does nothing to prove it's a myth that it's owed; it's meaningless, to that end.

    So, it starts off creating confusion; but otherwise is pretty good.

  • I agree with most of it, but I find Antony’s explanation on the cause of inflation to be far too narrow. Can I ask what actually caused the inflation of the 1970s?
    Was it too much money created for the Vietnam War and other Government expenditures?
    Was it cost push inflation from the spike in oil prices?
    Was it the bargaining power of labour before globalization and monetarism took hold?
    Had low returns to capital led to lower investment and less productive capacity?
    Did capital controls under the Breton Woods system affect inflation?
    These appear to difficult questions for the economic profession to answer, so I remain open minded about the extent to which one has to be concerned with government debt. I am concerned with the inflation in prices for housing, healthcare, bonds, stocks, and education that appears tied to free money policies of central banks.

  • I just had a better and more effective set of ideas, but will save those for my grassroots Congressional, and later (I'm a 33 year old Iowan at this time) Presidential campaigns…

  • One trillion is an enormous number.. Jesus walked the earth about 63 billion seconds ago. One trillion seconds back is time is just under 32,000 years ago.. The government will never be able to pay off the debt in real money- just inflated, worthless fiat dollars.

  • Im in finance and im not convinced on his math. I would hate to use the fallacy of composition here, but if hes wrong on the obvious stuff, how can he be correct or accurate on the other items?

    It was the tabular chart showing 4 tiers…theres no way i pay 3% fed tax. I use accounting software and take every solid deduction i can and i am still paying 23% or more.

  • can someone explain to me how the government only took 17% from the economy despite increases in tax rates? I understand the rich just hide their money by lobbying for exemptions and using tax loop holes, but how did people hide their capital gains tax and how did corporations having a higher tax rate still result in the governmwnt only receiving 17% tax revenue from the economy?

  • We have an immoral and corrupt monetary system. There is overwhelming evidence we've been lied to and deceived for millennia on a grand scale about almost everything by a group of "elites," 13 families, council of 300 et al.

    A huge tapestry of deceit, greed & secrecy, to control and keep the true nature of humanity from ourselves, our history, true origin, destroy our pineal gland and keep us tied to debt, cause constant wars, confusion and tension for them to get more wealth, control and power over us until we and our descendants are eternally enslaved.

    From the Annunaki, Adamu, even our redacted, edited and corrupt bible, nibiru, monoatomic gold, religion, wars, Lincoln, Jackson, Garfield, JFK,  the federal reserve, USS Liberty,  giant skeletons, abduction/disappearances, pedophilia, PNAC, COFR, Tri Lat Comm to 911 and now the war on "terror." We ARE the terrorists. Let's stop these ridiculous, insane, self-created bankers wars!!!

    Peace and love to all except da kabal!

  • Increasing the ease of which one can borrow money also increases inflation but what's worse is that now instead of having a higher wage and more money to spend, your wages stay the same and the prices go up a lot. Look at wages and prices from 1988 to 2010. Look at the spending and pricing now look at what happened in 2008. You will see that costs went up dramatically for everything. Houses, cars, education, food, fuel, etc. Education especially because from the mid 90s and on government backed student loans became easier and easier to get. Schools saw this and because the supply was being artificially inflated cost went up as well. The rate climbed four times faster than inflation. Schools did some other things as well that were pretty screwy. They added more required classes that one had to take to get a degree. They also offered degrees that they knew would have no practical application in the workplace.

    Look at the auto industry. When was the last time a new car company was created? Tesla technically does not count because for one they are still funded mostly by subsidies and crowdfunding and two they can't call themselves a car company or they will not be able to sell their own cars in their own stores. I bet you would not be able to name a single one or have ever driven a vehicle built by one of them. Why? Because the automotive industry is so regulated that they can't even get a foot in the door before they are wiped out. It is so bad that manufacturers never have to worry about new upstarts ever. If these regulations didn't exist and our government didn't bail them all out in 2010 when they all crapped out we would have seen newer companies show up with less expensive more reliable newly innovative vehicles. New companies would have competed driving prices down, highered experience workers picking up the former employees of these other dumpsterfiers, and AMerica would have been back on track to rehabilitation. INstead we cut a little bit of the cancer off put a bandaid on it and said see you again soon.

  • LOL @ 8,000 Tons of Gold in Fort Knox……. lets see it?

    "It is easier to fool people than to convince them they have been fooled" – Samuel Langhorne Clemens

  • A useless comment. The govt will not do what it needs to do. All politicians need to get elected. To get elected they must say what the people want to hear and nobody wants to
    hear about long term fixes that take such sacrifice, they just want 'feel good' speeches. The bottom line is, the majority of the people here are spoiled and not responsible.

  • So, where does the federal reserve get the money to lend? Oh…that's right, they literally create it out of thin AIR! Don't tell me outside of the realm of FANTASY! America or any other nation is insolvent when the fact is, they are playing a game backed by nothing! It's all monopoly money with nothing of real value giving it worth other than the faith people have place in it. In other words DO NOT tell me, Americans are bankrupt with all our natural resources (True wealth), all around us and that we owe so many trillions of dollars and are in debt to the Federal Reserve. In debt for WHAT, because they lent us THIN AIR! So NOW they can demand payment of real assets and resources in exchange for the NOTHING they lent us! Give me a break it's all fantasy, it's ALL a huge ponzi scheme to rob the nations of their resources, which is true wealth! They print money out of thin AIR and then are paid back with tangible resources…THAT IS THE BIGGEST RIP-OFF SCAM IN HUMAN HISTORY! This is WHY I HATE Bankers and BANKS! They are institutions with one main function, to STEAL the wealth and prosperity of the people of earth the WHOLE EARTH, and put it into the hands and under the control of a very select few; which is a crime deserving a capital sentence because the resources (which is the true wealth of this earth), were meant to be used and shared by everybody, but this scam has taken it away from the people and put it into the hands of the very, VERY few, so that they could RULE OVER US! and we call these people collectively government, but a better word would be SATANIC! Until the people at large wake-up in mass to this truth, we are doomed to continue to be SLAVES on their PLANTATION…and even those few awake to the situation are trapped because they more or less are forced to operate within the very system that was designed on purpose to enslave every human being accept the very few! For until a mass awakening takes place and a mass rejection of this system occurs, even the awake will be forced to deal with that system. SO YOU WAKE UP AS MANY AS POSSIBLE, eventually we will hit the hundredth Monkey effect, and then change will come!

  • To your concluding remarks, paying the debt down when you are working with an unconstitutional and illegal institution that creates money out of thin air and attaches interest to it, is the very reason you can never get the nation out of debt, until the Federal Reserves is removed you will not be working with interest free money and that is what is required to pay down the debt.

  • Fake news, US gov't debt is fraudulent therefore solutions to paying the debt perpetuate the fraud and lies. Why would a gov't mandated by the Constitution to issue currency borrow from a private entity the Federal Reserve with interest, FRAUD.

  • As our national debt rapidly approaches 23 trillion dollars nothing is as sobering as looking at the National Debt Clock. How much is on billion dollars? Let's make it simple, every 1 billion dollars spent by our government represents an outlay of roughly $3 for every person in America. More on this subject in the article below. https://brucewilds.blogspot.com/2019/10/the-magnitude-of-one-billion-dollars.html

  • 7:05
    It's a lie. There is nothing remarkable and innate about 17% of GDP as a tax revenue. The only reason this 17% figure appears to be more or less constant is that every time revenue goes above 17% government cuts taxes and revenue goes down back to 17%. It is not that government cant's raise tax revenue, it just won't. Raising tax revenue is easy. The government just needs to stop cutting taxes. Everyone can easily look up information about these tax cuts which make this lie even more baffling.

  • Ha! It would have been really nice if wages would double, but they dont. If they would the real earnings would stay constant (wage increase : price increase = 1:1). But in fact they decreased, mostly because of taxes and fees.
    Because this video "only" (its still loads of good information!) shows the income taxes and not consumer taxes. Everyone of us needs to pay for food, fuel, electricity, etc.
    Therefore inflation and tax increases do not only affect our savings purchasing power, but also our paycheck's real value.
    Furthermore i think this high amounts of federal transfers is EXTREMELY optimistic. Because most ppl dont even know what they can get back due to tax returns not talking about being able to afford a tax consultant and I also think most ppl do not take advantage (or know) of all gov. services they are entitled to benefit of. Mostly because of the exessively bureaucratical administration, whereas bureaucracy itselfs sucks up most of the available fundings which leads to shitty quality – just take a look at the public education system.
    All of this – of course – on purpose in order to get hold of peoples money.
    I think this fed transfer is nothing more than a beautiful number (=BS), at least for the poor and the "oddly" fading middle class – my opinion.

    Government is the problem. Nothing easier than pissing other peoples money up the wall without having to face any consequences but getting a big fat check for it.

  • the fact is President Trump rated Langley CIA an FBI offices the first 6 months in office in the CIA office alone he found 12 trillion dollars in cash. later we did an audit on the Rothschild pedophilia Federal Reserve. There we found out that the Federal Reserve has ripped off the American taxpayers to the tune of 43 trillion dollars. Guess what we proclaimed all that money. So in actuality we have no real dead anymore we have a surplus. It pays to have friends in high places know your enemies always do your research

  • Today I learnt that the top 1% makes money out thin air, and poor people consume all the tax money generated countrywide. By conclusion, if all poor people get killed the problem will autamatically be solved. We will be living in a paradise on earth. What a genius.

  • Why are households compares to the federal govt insofar as financing, but businesses are not? And no one questions this oversight.

  • We need to get back to the basics on taxes. The Bible talks about Tithe, which is a 10% proportional income tax with no deductions. That is fair, and government should be able to run on that.

  • Government spending is like heroin to a junky, there's no effective rehab for it.
    But, society has been brainwashed to believe that common people are too small-minded to manage their own affairs, and therefore must rely and surrender their rights to an "almighty" daddy government authority figure.
    If you got rid of both government and central banks, true free market (with the innovation of the common people) would find its natural path to create a prosperous and sound economy.

  • Some questions of the myths he presented.
    1st: Why does the income from taxes go down when you tax the rich but up when you tax medicare? He stated it does but not why. You would think a person wanting to limit the amount of medicare they get would lead to more people untreated or under-treated which could hinder their ability to work and effect their ability to pay taxes or participate in economic growth and lead to Doctors, Drug Companies, Surgeons, and Pharmacists making less money. I recall another economist claiming that things like sales tax, taxes on pay cheques, and taxes on things like education and medicare were negative growth taxes and taxing the rich is positive growth, as low taxes for middle and poor classes encourages more spending, leading to a better economy and if sales tax is present (even if it's low), more money for the government, while rich people often out earn their means and would spend the same amount regardless or just hold onto it. Unfortunately I cannot remember who it was who stated that, but it seemed to make sense.

    2nd: How is it you cannot raise taxes? If you were to add another tax is that not just more income and a larger slice of the economy pie being taken at the expense of economic growth? Would that not mean it is also impossible to lower taxes? If he means you cannot take a larger portion of the economy I would assume you could by raising sales tax, which would potentially lower economic growth, meaning you did take a larger portion of the pie.

    3rd: How is it that poor pay negative taxes? When I was younger and made much less some years I got $1000 back. I am Canadian and we have higher taxes (But then again, how can we have higher taxes if you cannot raise taxes?), but it wasn't $16 000 back like he showed. Is that suppose to include government services used by those people? Is he talking about welfare?

    As is I have my doubts about the information he presented, although I think his solution to the US national debt makes sense, but I am not an economist, hence why I am asking. Stating that it happens is not enough, he should state why that is, even if he has to simplify it as I know explaining an entire system can be a long process. It would also be handy if he could state his sources too. I have no idea where someone would find said information but if I did, I am sure his sources would elaborate on each bit of information he got it from which would be very useful.

    Lastly, what is the point where it is just better to default on the loans? I know that would lead to allot of mistrust from investors which would hinder the economy, and it would only take a few careless politicians to bring back the problem. Lol, what about a nation wide scam (joking of course). Get all of the US to separate from a small broke county. The county is what remains of The United States of America, the rest is just the United States. Let the county go bankrupted then change the name back to the USA and annex them back.

  • The fake government (US CORPORATION = legal fiction = not a Republic)
    does not print money – the FEDERAL RESERVE (private banking cartel) does.

  • How does this guy explain wealth inequality then?
    So maybe the answer lies in a wealth tax, as forwarded by the "illustrious" current president of the United States about 20 years ago when he suggested a one time 14% wealth tax on fortunes over 10 million dollars which would have raised 6 trillion dollars at the time, and I suggest would raise double today.
    What this idiot is saying is tax rates don't matter. If that is true, why not Tax the wealthiest 1% zero and the poor 100%? Because he is talking crap. GDP increased when Obama lifted tax on the wealthy, and the deficit subsided. The poor spend all their money which benefits the economy, the rich save it, which benefits it less.
    THIS GUY IS AN IDIOT.

  • I do believe this plan was successfully executed by President Calvin Coolidge.
    I think he cut it by 50% across the board.
    If we don’t return to the Founding Principals of this once Great Nation, were doomed anyway. The Money is just a symptom.

  • The solution is wrong. All you need do is put an end to the debt based monetary system that enslaves us to private bankers (especially the private Federal Reserve) in the first place. Then you can repudiate most of the debt as it's odious debt. You then move to a credit based monetary system where money is issued by the government without interest so it doesn't have to be paid back to anyone, of course you'll need controls on the quantity. For those that want to know more just watch the documentary 'Secrets of Oz' by Bill Still.

  • This guy is the biggest gaslighter i have ever seen, he acts like we r still on the gold standard. We r a free floating non convertible fiat currency. Learn MMT it is a lens 2 view r current economic system. Inflation only happens when we don't have enough real goods and services 2 meet demand and production can be ramped up. The federal government spends $ into existence and taxes it out, FEDERAL TAXES DO NOT PAY 4 FEDERAL SPENDING. pUBLIC SPENDING IS PRIVATE SAVINGS. tHE GOVERNMENT CAN PAY 4 ANY DEBT HELD IN DOLLARS. THE STATES R CURRENCY USERS (LIKE A HOUSEHOLD) NOT CURRENCY CREATORS. THIS GUY IS TELLING U THE LIES THAT KEEP THE RICH RICH AND STOPS GOOD THINGS LIKE M4A. PROOF WHAT I SAY IS TRUE IS tRUMP GAVE 2.1 TRILLION IN TAX CUTS 2 THE TOP 1% AND INCREASED THE MILITARY BUDGET BY 80 BILLION A YEAR. THEY NEVER ASK HOW R U GONNA PAY 4 IT WHEN IT'S TAX CUTS 4 THE RICH AND RAISING MILITARY SPENDING. tAXES AND BONDS ( LIKE WAR BONDS IN WW2 WHEN PRODUCTION WAS AT 120% AND ALL EXCESS GOODS WERE GOING 2 THE WAR AND VERY LITTLE 4 CONSUMERS IBONDS STOPPED HYPERINFLATION BY TAKING PEOPLES $ OUT OF THE MARKET TILL THE BONDS MATURED AFTER THE WAR) R USED 2 CONTROL INFLATION AND BEHAVIORS.

  • Taxes rates tend to go up when the country is in trouble. Everybody’s income is down. When times improve the tax rates tend to decrease. Numbers are numbers but the environment changes the number and how the comprised.

  • When Trump collects 10 billion from China its actually 10 billion, So myth # 12, The Dems ever gave 2 shits THAT USA was broke, when Trump does. Trump 2020. Allow him to cut the spending 15 % over 4 years. Balance the budget by downsizing government, oil independence, food independence, building material independence, welfare independence by making everyone that can actually work. There done in 20 years, I'll be dead you kids have fun 👍

  • I does not matter what this guy claims, when Inflation gets to the point that ppl can't buy food they are coming for the rich. It will be revolution and blood in the streets. Their 34% tax for the rich is like 2 dollars for regular people, thats how 34% effects their lives, like us giving 2 bucks….. Still they try to shelter it.

  • I didn't see student debt listed as an asset. I thought the government was owed enough to qualify as its largest asset. Please clarify.

  • Debt just hit $23 trillion. Congratulations America!
    We need a balanced budget amendment, and it should order a severe reduction in foreign aid, it should tax all money leaving the U.S. to support people’s families in other countries, and it should require the government to only spend 90% of the funds it brings in. The other 10% would go to pay down the debt. Tariffs should be imposed on all products, to put us on an equal footing with other countries and help bring manufacturing back to the United States. Trump is in the process of doing just this.
    In addition, I see no reason to give a multi-million dollar tax break to people like LeBron James, or Tom Cruise, or Ellen DeGeneres, or ant CEO making tens of millions per year. There should be two higher tax rates. One would be 40% and the next would be 45% for income earned over $250,000.

  • Many say inflation is a thing of the past and MMT pundits claim endless printing and debts don’t even matter. I don’t agree but reality has been put off for the time being.

  • Nice facts based analysis… Missing one key component: offshoring wealth. This looks at taxes that were actually paid and not at taxes that were legally avoided by rich people. I know this because all of my wealth is reinvested in other companies I own as subsidiaries to my main one and they are incorporated in three small countries with their own financial and legal systems. This means that I effectively pay ~10% of my income in the UK totally legally. This might seem unfair but I'm only dancing to the tune set by our legislators and they are happy to allow this so obviously I'm going to do it.
    This analysis completely misses this wealth that is taken out of circulation and I'm just guessing, but I reckon the lions share of wealth is removed from the economy in this way. Truly rich people's incomes are not what is written on federal receipts, I can assure you.

  • Why does he apply the debt interest rate of 2.5% to the unfunded liabilities and then say the government is bankrupt because it owes $3.8T in annual interest? There is no interest paid or accrued on anything other than the (now) $22T bond and treasury debt, or about $600B/ annual. Things like future SS obligations might cost more when paid, but there is no current interest paid or accrued for.

  • Wow, I can’t say I know anyone around my middle income level who retrieved government transfers back in excess of taxes paid. I’m dubious of that statistic.

  • Part of the problem with the bottom 50% is that they don't participate in equity ownership (the stock market). They see it as gambling, or the next bubble collapse will take all their money. Equities, over time, have proven to beat inflation by a large factor and have always bounced back from significant declines.
    I've had long term employees that have started at near minimum wage and then made high five / low six figures and they still would run out of money in six months if they lost their job. They all want to buy a house, which is fine, but after paying for their large mortgage, they spend all their money on fun and games. It is hard to get them to even contribute to their 401k.

  • The government doesn't "print more money"….the government BORROWS MORE IOUs FROM THE FEDERAL RESERVE and the FEDERAL RESERVE allows more monopoly money notes (IOUs) to be printed. Research The Creature from Jekyll Island to learn about the biggest scam and left of the American taxpayer. Federal Reserve is about as "federal" as Federal Express….the Federal Reserve is a handful of POWERFUL ELITE FAMILIES….the richest people on the planet

  • There is no gold at Fort Knox 🤣🤣🤣🤣 we went off the gold standard back in the 1960s and the PRIVATELY OWNED Federal Reserve (a handful of powerful families–the richest families in the world) took all the gold as collateral on the U.S. fiat dollar 🤣

  • A government (ESPECIALLY U.S.A.) CANNOT!!!! go bankrupt!, BEEECCCOSSS, U.S.A. is Rich!! in resources, e.g. crude oil; natural gas, minerals, timber, commoditie, etc., that can be earned in International Trade, AND!!!! the government has revenue from TAXES!!!

  • Oh when I used to be an ancap, everything was so simple.. I thought this video was going to really explain govt debt, but no, it's more simpleton Austrian theory that isn't relevant to real life.

  • 15:00: In computing effective tax rates by income distribution, he fails to account for military spending to protect the foreign interests of this upper class.

  • Major flaw the same flaw that the most recent tax reform bill had was the assumption that the economy is going to grow when spending is cut.

  • 10% cut in government spending won't be enough to reduce the deficit. Plus, the decrease in spending will crash the economy, thereby killing tax income. There is no solution. At least not without severe pain and crash.

  • Lets cut the bs. Everyone who works full time should live a life where they can have a home, car etc unless they are blowing it on gambling etc. All hard working people deserve this as a minimum long before anyone else deserves another jet , yault etc as they often get that money from exploitation and loopholes . All the rest of this balancing 17 % and transfer nonsense going on in this video is simply noise. Their are countries where banks getting bailed in by tax payers is legal, we need the same system where the rich are forced to bail in if economic disparity is out of control, which is fair, since that is the system when the rich are able to leech the most to begin with.

  • do you want to learn real Liberty? Go read Dave Champions book entitled "Income Tax: Shattering the Myths".

    This is not an advertisement for his book as I am just someone who has a copy of his book and had read it thoroughly from cover cover. It is the premier book on the topic for anyone to understand who the income tax actually has been imposed on by Congress and why the average guy was never included in the law as being someone who the tax was imposed on. Spoiler alert, there are only three classes of persons that have the income tax imposed on them. They are non-resident aliens and foreign corporations with US domestic Source income and US citizens who reside abroad with foreign earned income. There are no other classes who have any income tax liability except if you are a US person who is in control or has receipt, custody, disposal or payment of any item of income belonging to a foreigner that is subject to withholding. At that point if you are in possession of money belonging to a foreigner after a transaction has taken place on US soil which would be considered a US domestic Source transaction, you are required by law to report that income usually on a W-9 and pay a tax to the treasury Department before you hand the remainder of the money over to the foreign entity that it now belongs to.

    And just another little side note as to why Congress could not include the average American in the income tax scheme is because they did not have that power. If they did have that power the law would be very clear. Instead of being very clear about who is liable for the tax or who it has been imposed on, the law actually leads you down a very shaky path of understanding about who the income tax has actually been imposed on. If the law said what most people thought it said then The law would start out with something simple like the following by saying there hereby is a tax imposed on the accrued ordinary income of US citizens weather from sources within or without the United States. But the reality is the law doesn't say anything of the such.

    Hopefully you decide to research this on your own and realize most Americans never owed a dime in income tax and have been being scammed for well over a hundred years now about a tax that most Americans never owed but most Americans pay the tax out of ignorance not out of knowledge or truth of what the tax is. Because truth be told, most Americans have never read one word of tax law to determine they were the subject of the tax.

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