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Reflection on Where the Stimulus Money is Coming From

Updated on May 4, 2020
Anne Matthews profile image

Anne has a bachelor of science degree in Behavioral Science, and is interested in a diverse variety of subjects which includes economics.

I am sure that many people are very concerned about stimulus money creating a huge amount of debt, and I have several observations on this topic. The problem as I see it is that you are not gong to learn the truth from politicians because those on the left will promise you free programs and those on the right will promise to limit Government spending. Both left and right are mainly concerned with playing upon your concerns to get your vote. This applies to the mainstream media also, as they promote their chosen political viewpoint rather than reality.

When it comes to economics theory, the economy of a country depends heavily on consumer spending. When consumers spending dries up, it is metaphorically like a system of streams and rivers during a drought- they dry up. Currency flows from consumers to many forms of retail traders, which in turn goes to factories and businesses, which pay consumers. So you see that it is circular. If consumers do not have disposable income to buy goods and services, ultimately the factories and businesses close and consumers lose their jobs. Or, the circle can go the other way around, which is that if businesses move out of the country, or downsize, and layoff workers, and the workers do not have disposable income to buy goods, the economy goes into a downward spiral.

So by economic theory, the means to stop a country's economy from crashing is to give money to all of the consumers to spend on goods and services within that country. So the question then is, where is all of this money coming from? Are we borrowing it? Are we getting deeper into debt? Well, since 1913, with the setting up of the Federal Reserve, the American Government has been buying its currency from this company, and the American people have been paying for it in taxes. The Federal Reserve sounds as if it is part of the Government but it is not. It is an independent company. The Federal Reserve prints currency and distributes it to a system of Central banks all over the world, and sells currency to the American Government.

Well, historically, nations ruled by Kings or Emperors, and who were the government of those countries, dispensed money from their treasuries in the form of metal coins. The most valuable coins were made of gold, and the less valuable of lesser metals like silver and copper. So by this system the wealth emanated from the government to the people, usually through soldiers that were paid by the king or emperor. The soldiers spread the coins throughout the kingdom, and then tax collectors took them back from the people to the treasury. Where there were skilled artisans who created beautiful and useful goods, and traders who sold them overseas, wealth came into the country from foreign trade, and went to the government as taxes on trade. The wealth of a nation was dependent on gold, and so there was an era of world exploration when the Kings of countries financed explorers to go and seek gold, and when pirate ships stole the gold that they discovered.

The point that is being made here is that governments did not buy their currencies from a third party, they manufactured them out of precious metals, and therefore did not get into debt unless they borrowed money from another country. So currency was not based on debt. American Federal Reserve dollars are a debt based currency because they are bought and then distributed, and we the public pay for them in taxes. The country is not deep in debt simply because it spends more than it generates in taxes, but because it buys its currency from an external company that charges interest .

So, what occurred recently to change this picture is that the Federal Reserve was according to some sources, absorbed into the United States Treasury Department, and currency is now being issued by the Treasury, which means that it is not debt based. This shift from debt-based currency to credit-based currency is monumental, and perhaps the most huge event of the twenty-first century in America. You did not hear about it in the mass mainstream media but that does not mean that it did not happen. It means that this information was suppressed.

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