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Economics 101

Published: Wednesday, Sept. 26, 2012 5:30 a.m. CDT

To the Editor:

If you (or the government and others) want to spend money, you have to earn it. The government has only three ways to get money:

Tax it. Borrow it. Print it.

Tax It: (work for it if individual) you can only tax the rich person once. After he pays the tax, he will be poor. The smart rich person will move to another country and work on his computer.

Borrow It: If you borrow it, you have to pay it back with interest. In 2001, Argentina defaulted on its bonds. Now you can get 58 percent interest if you are willing to wait. At the current artificially low interest rates, pension plans are in trouble because of projected higher return over the years didn’t materialize. The U.S. government by the year 2020 will be paying 30 percent of revenue just in interest. (Estimated on today’s artificially low rates.)

Print It: This is the easy way out, and the way Germany took in 1923-24. Inflation went from four marks (their dollar) to 2 trillion marks to the U.S. dollar. You could pay off the entire U.S. debt with 7 sound dollars. People lost their savings, life insurance and paper assets. The destruction of the middle class was a major cause of World War II. Let’s hope it doesn’t happen here.

Walter Steffens


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