Money isn't just sitting there

What's wrong with government grants? Isn't it true that "if we don't take them someone else will, so we might as well go for it? Let's find out by tracing what I'll call the "Life Cycle of the Government Grant."

1. Conception — Congress passes a bill containing authorization for a grant. For example, HR767 "Refuge Ecology Protection Assistance and Immediate Response Act of 2007": "Sec 4 (a) In General - The Secretary may provide — (1) a grant to any eligible applicant to carry out a qualified control project in accordance with this section." A new "bureau" is created to handle the grant applications. Has any money been spent, created, or changed hands yet? No.

2. Gestation — The Act gets distributed, the grant offer is dangled, and sooner or later Garth the Grant Guzzler zeroes in on it. He drools, then fills out the paperwork and files his grant application with the "bureau." Has any money been spent, created, or changed hands yet? No.

3. Birth — The "Bureau" approves the grant and requests the cash from the Federal Reserve to fund the grant, since obviously the "bureau" doesn't have any. The fed dutifully makes an electronic entry adding the appropriate value in Federal Reserve Notes to the "bureau's" account, and voila, money is created — out of thin air!

4. Growth, growth and more growth — Each succeeding year the grant is renewed. Each year more money is created, out of thin air!

5. Death? — The only way to kill this tax-inflating parasite once born is to "just stop taking it (the grant)." Or, if not yet born just leave it in gestation forever. The ideal solution, but the most difficult, would be to exercise birth control (throttle Congress).

In summary, the money is not sitting in a bank account just waiting for someone to take it. If no one takes it, it doesn't exist.

If someone does take it, it is created as new money (out of thin air) and your purchasing power is reduced. Thereby, you are taxed.

P.S. The current rate of inflation is 12 percent if calculated using the formula the fed used until 2006 when they changed their method of determination.

Ron Olfert

Plains