Tuesday, January 5, 2010
Why does the federal government bother with a budget?
A good question to be asked, since they borrow and create about as much "money" as they want to at present. The still must play-act at having a "budget" for a while longer. It's all done for appearances now. The Congress does set borrowing limits, but the word "limit" has absolutely no meaning in the sense that it's always raised as the need arises. The government couldn't give up on the pretense of a budget; if they came right out and said to the world, "We're just gonna print as much as we want and foo on you," then all the borrowers of the world would know the game was up, the dollar would go down the toilet completely, and what? They'd start all over again with a "new dollar" that would wipe out the existing one. The new one would stink too; no overseas investors would touch it, but it would wipe out government debt and they could start all over again spending money. Think this couldn't happen? It's happened many times all over the world and it's called "devaluation of the currency." Argentina has done it many times. Repudiate the debt, wipe out the currency, start spending all over again.