Mike Norman, anchor, HardAssetsInvestor.com (Norman): Hello everybody, and welcome to HardAssetsInvestor.com. I’m Mike Norman, your host. Well, don’t vote for anybody who wants to balance the budget―so says my guest today. His name is Warren Mosler, and he is a declared candidate for president in 2012. Warren, thank you very much for coming on the show; I really appreciate it.

That is your slogan: “Don’t vote for anyone who wants to balance the budget.” Why? Explain that. And I should say that Warren’s views are not of the mainstream when it comes to economics. It doesn’t make him wrong. I happen to think they're right. But, what do you mean by that?

Warren Mosler, declared U.S. presidential candidate, 2012 (Mosler): Well, first things first. My first proposal is that we swear in all candidates for office, so that, if they don’t tell the truth, it becomes perjury and is a criminal offense. So, I solemnly swear to tell the truth, the whole truth, and nothing but the truth, so help me God.

To understand that, Mike, first you have to understand why government taxes. And the best way to understand that is to … let me give you a couple of examples. If you were to go pay your taxes with actual cash, you took dollar bills … let’s say you were a waiter, and you went to the Fed, and you said you wanted to pay your taxes, or the Treasury; they would take your cash, they’ll give you a receipt, and they’ll say, “Thank you very much for paying for Social Security or the war in Iraq.”

And you walk out the door, paid in full. And, as soon as you leave, they take that cash and they throw it in a shredder.

Norman: They destroy it.

Mosler: They destroy it. And you can actually buy shredded money in Washington from the Fed. So, the question is, how does taking your money and throwing it in the shredder actually pay for anything? And the answer is, it doesn’t. So, the point of collecting taxes is not to get something to spend. Otherwise, they wouldn’t be throwing it away. Now, if you pay by check, what happens? They change the number down in your bank account. You could watch it on your screen. You have a certain amount of money. You send a check in.

Norman: You get a debit.

Mosler: Yep. And, when that check clears, your balances goes down.

Norman: But, doesn’t the government get a credit?

Mosler: Right. And so, there’s no gold coin or anything that jumps out. Yes, they account for it. They write down something on their spreadsheet that says, “Warren Mosler or Mike Norman has paid $1,000.”

Norman: So it’s an accounting entry.

Mosler: Right.

Norman: It’s not as if the money is stockpiled somewhere, in some big warehouse, and that is money that is needed by the government to spend.

Mosler: Right. The important thing is that the government never has or doesn’t have any dollars, OK. So, let’s look at government spending to show you that. So, when the government spends, what do they do? They change the number up in your bank account. And so, you're watching your screen, and you have a one and three zeroes. And you’ve got a $2,000 check coming. All of a sudden, the one changes into a three.

All they did was type in a change on your number. They didn’t take a gold coin and hammer it into the wire. Now, we’re talking about today. I mean, the gold standard would be different. We won't go into that now. But, in today’s arrangements, they're just changing numbers on bank accounts.

Now, where else do you see that happen? You go to a football game and somebody kicks a field goal, and they get three points on the scoreboard. Where did those points come from? Where did the stadium get those points? They don’t get them from anywhere. I mean, do you think we should limit the number of points? Or, should the stadium have a reserve of points to make sure they don’t run out of a high-scoring game? Or, should we limit the number of points so we have points left for our children, and so they can play football?