Proverbs 6:6-8 – “Go to the ant, thou sluggard; consider her ways, and be wise”
Stimulus Checks: Who’s Stimulating You
Have you wondered about the stimulus checks: who’s paying for it? People are desperate for money right now.
The first round of stimulus checks back in April 2020 cost the U.S. government about $300 billion.
The money borrowed so it does not disrupt the value of the dollar itself.
The U.S. run a deficit, which means we spend more than we bring in. So where does all this money come from?
Well, in simple terms, we borrow it.
The Treasury issues bonds, bills and notes, which are essentially just IOUs.
This is a promise to pay back the borrowed money later, with a little bit of interest.
Does this impact personal finances
The government does not follow the rules of household finances.
Both private companies and foreign governments use American securities as a way to store capital.
The dollar functions as the world’s reserve currency.
If America paid off its debt, there would be no Treasury bonds to generate interest for foreign governments and no Treasury notes for companies to store value with.
This is one of the reasons why the U.S. can generally get very favorable interest rates.
The result is that America will pay off some of its debt. But global finance depends on the country never paying off all of it.
The U.S. has two main options for paying off debt:
- Tax hikes – taxes are the main form of revenue for the federal government. Spending cuts – cut back on how much it takes in and how much it spends.
2. Printing money – creates the money it uses to pay down debt.
In the U.S., the preferred process for paying debt is printing money.
Who pays for it
You and I pay for the stimulus checks. The tax payers, hard working people.
The constraint to monetary debt service is inflation.
While the value of money goes down, the principal on debt stays the same.
Without real financial education, most people do not realize the Federal Reserve Bank and the U.S. Tax Department are related, created in the same year, 1913.
Nothing is free. With more money to be spent, businesses tend to increase their prices.
So, who’s writing the checks? We the people are. Don’t be fooled.
Every time money is printed, you will pay more for goods and services.
DISCLAIMER: I am not a financial adviser. This site is for educational purposes only. It is imperative that you do your own research. I am sharing my opinion from personal research and experience with no guarantee of gains or losses on investments, finance etc.
AFFILIATE DISCLAIMER: this post contains references to products from our advertisers. Therefore, we may receive compensation when you click on links to those products at NO additional cost to you.
