Who Is Paying For All This?

$700,000,000,000 ($700 Billion) for the bank/Wall Street bailout last fall (TARP)

$20,000,000,000 ($20 Billion) for Detroit auto-makers (or whatever it ends up being)

$1,000,000,000,000 ($1 Trillion) for economic "stimulus". (Yes, that is 1 million times 1 million).

Have you ever stopped to think "Who is paying for all this?"

Well, I hate to be the bearer of bad news... but it's YOU!

Surprised?

Contrary to what some folks think, the government can't just "create money". It receives current income from taxes (income, corporate, etc..). If that is not enough to cover its needs, it borrows money by selling government bonds. Those bonds are paid back with taxes collected in the future. (Think about yourself. You earn money by working and if you can't pay your bills, you borrow by not paying your credit card balance in full or getting a loan).

What happens when the government is not able to borrow enough money?
(Well, what would you or I need to do?)

Get more income (for the government, this means increasing taxes), cut spending or declare bankruptcy.

The government does have another option that we do not. It can "print money".

This creates inflation (more money chasing the same amount of goods and services, thereby raising prices). This is good for the government, because it can pay off its debt without increasing taxes or cutting spending. It's a bad thing for everyone else, because our money has been devalued. In reality, inflation is just another form of taxation.

Remember, it's your money!

It's our responsibility to ourselves, our children, grand-children and future generations to ensure that it is used wisely.