The Power to Stop any Illusion of Problems: (Behind Economics and the Myths of Debt & Inflation.): The Power To Stop Any Illusion Of Problems

By August Clark

Are you tired of hearing people constantly complain and moan about a world problem, but offer you no solutions as to what you can do to help resolve this issue?

This might be from close friends or family constantly taking a negative view on this particular issue, or even from hearing about the problem on the news, but not hearing any potential solutions.

Can you tell what problem I am talking about yet? Of course, I am talking about the global economic debt.

Anyone who vaguely follows this topic will know that it is consistently increasing in the US, but many don't know that it is also increasing across most other countries.

So, what can you and I do to help improve the situation?

The Power to Stop Any Illusion of Problems will help offer an insight into how these situations occur, in simple and understandable terms, so that you don't get confused or demotivated by too much technical jargon.

It will then also show you ways that positive change can be made, rather than just telling you about all the negative impacts of global debt and making you feel as though all hope is lost.

You will be amazed at the content included in this book, and the detail that is provided for you to digest. But what really sets this book apart from its competitors is that the information is so well presented and easy to understand.

Inside The Power to Stop Any Illusion of Problems, discover:

●  An overview of the debt position in the US

●  An evaluation of government expenditure

●  How to understand the modern monetary theory

●  The implication of national debt

●  The petrodollar system

●  The fair tax system in America

● Strategies for reducing debt

And much, much more! This is a book you can't afford to not read.

Escape the paradox of being a total prisoner of the money game and discover a path to win wealth for Americans and increase global cash flow.

So what are you waiting for? Grab a copy of The Power to Stop Any Illusion of Problems, and change your life for the better today.

• Language: English
• Publisher: August Clark
• Release date: Dec 27, 2021
• ISBN: 9798201652142

Book preview

The Power to Stop Any Illusion of Problems一Behind Economics and the Myths of Debt and Inflation

Escape the Paradox of Being a Total Prisoner of the Money Game and Discover a Path to Win Wealth for Americans and Increase Global Cash Flow

––––––––

August Clark

© Copyright 2021 - All rights reserved.

The content contained within this book may not be reproduced, duplicated or transmitted without direct written permission from the author or the publisher.

Under no circumstances will any blame or legal responsibility be held against the publisher, or author, for any damages, reparation, or monetary loss due to the information contained within this book, either directly or indirectly.

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This book is copyright protected. It is only for personal use. You cannot amend, distribute, sell, use, quote or paraphrase any part, or the content within this book, without the consent of the author or publisher.

Disclaimer Notice:

Please note the information contained within this document is for educational and entertainment purposes only. All effort has been executed to present accurate, up to date, reliable, complete information. No warranties of any kind are declared or implied. Readers acknowledge that the author is not engaged in the rendering of legal, financial, medical or professional advice. The content within this book has been derived from various sources. Please consult a licensed professional before attempting any techniques outlined in this book.

By reading this document, the reader agrees that under no circumstances is the author responsible for any losses, direct or indirect, that are incurred as a result of the use of the information contained within this document, including, but not limited to, errors, omissions, or inaccuracies.

Table of Contents

Introduction

How the Federal Government Borrows

Chapter 1:  Debt Position in the US一An Overview

Brief History on the U.S. Debt

Causes of Federal Expenditure

Military Support

Social Security

Mismatch on Government Expenditure and Revenue Streams

Medicare and Health

Efforts to Increase Longevity

Insufficient Revenue

Effect of the Federal Debt

Lower Federal Savings

Reduction of Private Investment

Reduced Problem-Solving Capabilities

Reduced Production

More Money Is Printed

Reduced Opportunities for Americans

High Interest Rates

Loss of Confidence by the General Public

National Security Challenges

Measures in Place

The Simpson-Bowles Plan

Modern Monetary Theory (MMT)

Reducing Discretionary Spending

Evaluation of the Measures

Chapter 2:  Evaluation of Government Expenditure

Projected Expenditure for 2021 Budget

Categories of Spending

Mandatory Spending

Social Security

Medicare

Medicaid

Other Mandatory Programs

Does Mandatory Expenditure Affect the U.S. Economy?

The Mandatory Budget Dilemma From 2021 to 2030

National Debt Interest Payments

Effects of Mandatory Expenditure on Inflation

Discretionary Spending

Discretionary Budget Myth Busters

Effects of Excess Expenditure on Unemployment

Effects of Expenditure on Inflation

Benefits of Excessive Spending

Expansion of Welfare Programs

Public Works Development

Taxation

Standards of Living in Developed and Developing Countries

Chapter 3:  Understanding the Modern Monetary Theory (MMT)

Characteristics of MMT

There are no Limits on Government Expenditure

Money Can Be Borrowed From the Reserve Bank

The Central Bank Buys the Treasury Bonds

MMT Supports Desirable Social and Economic Agendas

MMT Promotes Reduction of Tax

MMT Enhances Economic Growth

MMT Eliminates Unemployment

Benefits of MMT

Stabilizing Failing Markets

Enhancing Federal Spending on Social Security

Boosting Public Spending on Infrastructure

Establishing Investments in Third World Countries

Increased Prosperity and Standard of Living

Lowering Interest Rates

Creating Employment

Possible Elimination of  Foreign Debt

Disadvantages of MMT

Inflation

Political Misuse

Inapplicability in Small Economies

Overestimated Revenue

Overrated Importance of Monetary Policy

Overestimated Capability to Control Inflation

Inability to Clear the Actual Debt

Dependence on Reserve Banks

Evaluation of MMT

Chapter 4:  The Implication of National Debt

Domestic and Foreign Debt

Positive Implications of Debt on Emerging Economies

Promoting Long-Term Economic Growth

Human Capital Development Investment in Developing Countries

Supporting Sustainable Development Goals (SDGs)

Stabilizing Short-Term Macroeconomic Fluctuation

Advantages of Debt in Developed Countries

Enhancing Economic Growth

Boosting Gross Domestic Product

Disadvantages of Debt in Developing Countries

High Costs of Servicing the Debt

Increased Vulnerability

Down-Turning Government Response Constraints

Slowing Down Investment and Growth

Negative Implications of Debt to Advanced Countries

Disputes on Debt Settlement

Tools Used for Debt Reduction

Monetization

Manipulation of Interest Rates

Cutting Down Expenditure to Reduce the Impact of Debt

Raising Taxes

Bailout or Debt-Relief Funds

Defaulting the Debt

The Global Debt Crisis

Implication of Debt on International Relations

Chapter 5:  The Petrodollar System

The Emergence of the Petrodollar

The Middle East Supplier of Oil Products

Countries That Use the Petrodollar

Recycling the Petrodollar

The History of Recycling the Petrodollar

Advantages of the Petrodollar to the US

The Collapse of the Petrodollar System

The Repercussions of Petrodollar Collapse

It Will Cause Global Crisis

The Unfolding of the U.S. Debt

China and the Petrodollar

The Potential Repercussions of the Petroyuan System

Trade and Economic War Between China and the US

China Shanghai Future Agreements

Disadvantages of the Petrodollar

The Oil-Producing Countries Rely on the Host Country

Relies on Efficient Distribution of Petrodollars

The Surplus Cannot Stand Alone as the Driver of Economic Growth

Global Demands in Environmental Sustainability

Depleting oil Reserves

Causes of Global Imbalances

Effects of The Continuous Rise in the Price of oil

How to Clear Current Account Imbalances

Promoting Savings in the United States

Opening Economy Promotion

Promoting Local Spending

The Role of Oil-Exporting Companies Economies in Global Development

Chapter 6:  The Fair Tax System in America

Characteristics of Federal Sales Tax

The Higher You Consume, the Higher You pay

It Is Paid Per Transaction

Regressive Tax

Categories of Regressive Taxes

Other Types of Tax

User Fee/Toll Fee

Payroll Taxes

Property Tax

Proportional Tax

Deeper Analysis of Proportional Tax

Progressive Tax

Advantages of a Progressive Tax

Disadvantages of a Progressive Tax

Regressive Tax Versus Progressive tax

Flat Tax System Versus Progressive

The Economists’ View on Progressive Tax Rates

Advantages of Fair Tax System

Eliminating Annual Tax Preparation Headaches

More Accurate

Eliminating the Internal Revenue System (IRS)

Smoothening Tax Remittance

Boosting Revenue for the Government

Increasing Consumer Spending

Offering Long-Awaited Tax Relief

Eliminating Corporate Income Taxes

Doing Away With Federal Payroll Taxes

Abolishing Inheritance and Capital Gains Taxes

Enabling Retirees to Enjoy Their Pension

Rebating Sales Tax for the Poor

Abolishing Unnecessary IRS Audits

Harmonizing the Tax Collection Process

Attracting Foreign Direct Investment

There Is No Taxation on Education Spending

Reducing Wastage of Resources

Disadvantages of the Fair Tax System

Penalizing the Lower and Middle Classes

The Increasing Potential for Tax Evasion

Eliminating Tax Deductions and Credits

A Bigger Burden for High-Income Earners

Depending Much on Spending

Increasing Costs for Immigrants

Congressional Findings That Triggered Adoption of the Fair Tax System

Income Tax Retards Economic Growth

Reduced Standards of Living Among Americans

Impeding International Competitiveness.

Income Tax was Unfair and Inequitable

Imposing Unnecessary Administrative Costs

Intruding with the American Citizen’s Privacy.

The Findings by the Congress on the Federal Payroll

Federal Payroll Raise the Cost of Employment

The Federal Payroll Destroys Jobs

The Federal Payroll System has an Adverse Impact on Low-Income Earners

Chapter 7:  Strategies for Reducing Debt

Justification of International Debt

International Debt is Disbursed in a Stable Foreign Currency

International Debt Is Likely to Come in Flexible Terms

International Debt Come With Conditions

Disadvantages of International Debt

Some Countries Politicize the Debt

International Debt Might Be Difficult to Repay

International Debt Causes Dependency Syndrome

Advantages of Local Debt

Local Debt Enables the Borrowing Country to Have Total Control of the Debt

The Local Debt Is Usually in Local Currency

Disadvantages of Local Debt

Debt Reduction Strategies

The Snowball Method

Prioritizing Debts With High Interest Rates

Creating a Debt Repayment Plan

The U.S. Government Should Take Control of Its Finances

Adopting the Debt Avalanche Strategy

The Debt Snow-Flaking Strategy

Debt Consolidation Strategy

The Debt Management Strategy

The Debt Settlement Strategy

Accommodating the Debt in the Fiscal Budget

Cutting Down on Expenditure

Negotiating for Lower Interest Rates

Pure Savings

Increasing Taxation

Filing Bankruptcy

Adopting the Modern Monetary Theory

Comprehensive Annual Financial Reporting

Components of the CAFR

The Importance of the CAFR

The Green Hilton Agreement and Debt Resolution

Conclusion

References

Introduction

Globally, government debts have been an important instrument for driving national structural change and infrastructural establishment in low- and middle-income countries. All governments borrow both locally and internationally. Debt can also be referred to as functional finance as it is used to fund bigger projects that anchor the national economy. There is nothing inherently wrong, then, with government debt as long as it serves its purpose, but there should be a balance between government debt and the employment rate in the country (Chowdhury, 2009).

The global inflation rate projection indicates that there has been an increase in inflation from 3.2% to 3.5% between 2020 and 2021 (Statista, 2021). When inflation increases, the amount borrowed will lose value that is beneficial to the borrower. On the other hand, if inflation decreases at a lower rate, as was the case between 2018 and 2020, repayment of the debt will be very difficult. This is because the currency gains value when inflation decreases.

Some scholars believe that the fact that deficits will burden the next generation is only a myth. However, this notion is controversial given what happened in 2016 in the United States. After seeing the increase in the deficit, the federal government increased the taxes to finance the deficit. Ultimately, the deficit was placed on the shoulders of taxpayers. 

People are skeptical about the continuous increase in government debt in the U.S. A lot of questions are crippling people, who are seeking answers that explain what is going on. Is the U.S. government going to settle its debt based on the debt size? When will the U.S. pay off its debt? Interestingly, there is a mismatch between expenditure and revenue coming in, which could be the best explanation as to why the debt keeps rising. The U.S. government is spending more