Neo-Reformation
On The Corrupt Sales of Indulgences & Treasury Bonds
I. Introduction
This essay explores parallels between the historical Sale of Indulgences and the contemporary Sale of Treasury Bonds. Both mechanisms illustrate how priestly classes manipulate perceptions of reality. The Sale of Indulgences was a corrupt financial practice in which the Church collected payments for sin forgiveness. The Sale of Treasury Bonds is our modern version of wealth extraction under misleading pretenses. By examining these practices, this essay brings us one step closer to a much-needed Neo-Reformation…
II. The Sale of Indulgences
During the Middle Ages, the Roman Catholic Church ran a financial scam where you could buy forgiveness from your sins by cutting a check to the Church. It was a lucrative racket; the great cathedrals of Europe were raised by the proceeds.
The scam was possible because Medieval people thought of the Church as their only connection to God. That uncritical belief created a spiritual monopoly the Church couldn’t resist monetizing. And so it set up a highly profitable toll booth on its perceived route of access to God.
To our modern minds, paying for sin remission is such a transparent scam that it’s hard to believe the people of the Middle Ages fell for it. But our own uncritical beliefs have landed us in a very similar predicament…
III. The Sale of Treasury Bonds
Our unexamined belief is that the US Government must borrow money to cover each year’s Federal Deficit. The Treasury virtually never takes in enough tax revenue to cover all the expenses in the Federal Budget. So it raises the missing cash by auctioning off Treasury Bonds.
In other words, we fund our government by borrowing money from those who are already rich. And paying them interest for the pleasure. This year, regular American taxpayers will fork over some $870 billion in interest payments. It will cost us more than the military in 2024, and not one penny of these payments is actually necessary.
It’s not enough to notice that we could’ve saved ourselves that $870 billion—plus the entire principal—by simply taxing the money we need off the rich instead of paying them to borrow it. To achieve escape velocity and see this scam for what it truly is, we must realize that dollars are just units of measurement…
IV. Units of Measurement
The idea that the Federal Government could ever go broke is like the idea of a carpenter running out of inches. It doesn’t make logical sense. If a carpenter claimed to be out of inches. You’d question their sanity. But if they paid to borrow inches from another carpenter, you’d realize they’ve sadly fallen victim to a scam.
And yet this is exactly how public finance works at the Federal level. Inches and dollars are both merely units of measurement, nothing more. Just as we may allow ourselves all the inches we need to frame up a house, we can also have all the dollars we need to adequately measure the economy. Paying to borrow dollars is every bit as crazy as paying to borrow inches. Or paying to have sins forgiven. History bears this out…
V. The Greenback
To cover the exorbitant cost of the Civil War, Abraham Lincoln sought a loan from the European banking house of Rothschild. But that bank quoted him an exorbitant, knee-slapping interest rate. So Lincoln simply printed the currency he needed instead and called it “The Greenback”.
Our modern economists are today’s priestly class. Their job is to sell the rest of us on a version of reality that’s profitable for the elite. During the Middle Ages, priests reinforced the idea that hell awaits anyone whose sins aren’t forgiven. Today, modern priests reinforce the notion that printing money (without first borrowing it off the rich) will land us in a hell of hyperinflation.
But the Lincoln Administration printed the money they needed and blew off the part about first borrowing it from the already-rich. And yet no hyperinflation came home to roost…
VI. Inflation
Fear of inflation is the wall that traps us inside a paradigm where we owe the rich $870 billion. It’s the modern threat of hell for those who fail to pay the church. Today’s priesthood assures us that flooding the economy with too many dollars will upset the delicate ratio with the value of goods and services. Therefore we cannot print money. Instead, we must borrow it from the rich to preserve the volume of dollars in circulation and prevent price inflation.
But comparing dollars to inches allows us to see through this ruse. To measure an object that’s growing in size, we need an increasing number of inches. To measure an economy that’s growing in value, we need an increasing number of dollars.
If the government prints money and uses it to purchase something renewable—like hours of child care—then it has expanded the overall size of the economy by adding to it the value of that new service. At the same time, it’s also expanded the dollars in circulation by the precise value of that new service. In all such cases, the precious ratio between (1) dollars in circulation and (2) the overall value of the economy is preserved by definition. (For the purposes of this essay, we’ll leave aside the special cases of limited commodities and limits on economic capacity.)
The big secret—kept by the priests in our economic discipline—is that we don’t need to borrow from rich people. We can just print the money. Just like old Honest Abe did during the Civil War. And the principle method to keep this secret is an intentional conflation of the way household budgets work with the way the Federal Budget works…
VII. Household vs Federal Budgets
A household must have income before it can spend its first dollar. But the money printer makes the Federal Budget the exact opposite of a household budget: it must spend dollars into the economy before it can claim its first dollar back as tax revenue.
A budget surplus means the Feds collected more in taxes than they spent. That means dollars were actually removed from circulation. Since there can’t be negative dollars in circulation, we must run a deficit over the long haul. The economy, as it’s currently conceived, simply cannot function without an ever-growing pile of Federal Debt.
And yet our politicians love treating us to hand-wringing about this debt. But their oh-so-serious pleas for “fiscal-responsibility” fall curiously silent whenever tax cuts for the wealthy or military expenditures are on the table. That’s how we know it’s all an act. Their campaign donors want to reserve the opportunity to loan us their money so they can collect interest. They don’t want us to realize we already have access to as many dollars as we need for free.
VIII. Conclusion
Paying the rich to borrow their extra dollars is as futile as the Medieval practice of paying for sin remission. That corrupt practice was the chief complaint of Martin Luther. Having no internet, Luther protested by nailing his complaints to the door of his local church. This act touched off the Protestant Reformation, shattered the spiritual monopoly of the Roman Catholic Church, and ushered in the Modern Era.
Now that our Modern Era has grown long in the tooth—and our authorities have once again lapsed into self-serving corruption—it’s high time for a “Neo-Reformation”. This essay seeks to revive the ghost of Martin Luther by once again exposing, in a public forum, the graft of the authorities.