Saturday, July 3, 2010


Let’s say that there is a city with 1,000 people and only 10 of them have all the wealth and the rest of the 990 people work for these 10 people and get paid enough to live from day to day and have to borrow money from the top 10 to buy any extra goods. Let’s also say that the city has the power to print new money and each time the city prints new money that stock of money also goes to the hands of the top 10 people.

Now if the city government needs to build the infrastructure of the city to benefit all people and also to pay for expenses to defend the city, they have a few options as to how to get the funds to do that as follows:

1. Ask those 10 who have all the wealth to share the expenses among themselves (called progressive taxes)

2. Print new money and find a way to pass it on to the hands of the 990 people in the bottom so that they have capital to begin businesses and compete in a free market so that all people will be able to share the expenses of the upkeep of the city (called a Flat Tax).

3. Borrow money to pay for upkeep of the city and bankrupt the city.

Now multiply those numbers by thousands and you will see the situation is similar to what is going on in the USA and that the USA has chosen to follow the 3rd option.

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