French researchers have found the oldest known indirect evidence of gold refining.

Archaeologists originally thought gold refining began with the Lydians, a people group who lived in what is now Turkey. In the 1960s, researchers discovered a gold refinery dating back to around 600 B.C.E. According to Science.org, Lydian refiners combined gold ore mined from the nearby Pactolus River with salt, chalk, and animal urine.

“After heating the mixture to more than 800°C and letting it cook for several days, the process separates out impurities—including traces of silver naturally present in the ore—and leaves behind pure gold.”

Archaeologists have discovered gold artifacts that date far earlier than the development of refining—as early as 4,500-4,000 B.C.E. These objects were shaped from natural gold without refining using heating and hammering techniques.

With the advent of refining, people could extract gold from ore and separate it from other metals, creating higher-purity gold objects.

To better understand gold refining, a team of researchers led by Francis Albarède from École Normale Supérieure of Lyon (ENS Lyon) analyzed Egyptian and Persian silver artifacts.

They used silver artifacts because the metal is a common byproduct of gold refining. Natural gold ore typically contains between 10 and 40 percent silver by mass.

Albarède said four artifacts contained silver consistent with metal produced as a byproduct of gold refining. These objects are dated earlier than 1,600 B.C.E.

“It looks like what you’d expect from a gold ore deposit,” Albarède said.

This indicated people were refining gold some one thousand years earlier than originally thought.

Silver as Money

In a separate finding, a multidisciplinary study conducted by researchers at the University of Haifa discovered silver was being used as money in Israel 3,600 years ago, long before the invention of coins.

Researchers analyzed dozens of silver stashes dating back to the Bronze and Iron Ages.

According to Dr. Tzilla Eshel, “The evidence shows that despite the absence of coins, silver was regularly used as a payment method, stored for future transactions by both institutions and individuals.”

Archaeologists originally thought these silver hoards were jeweler surpluses, raw metal stockpiles, or religious offerings. But evidence indicates the silver served as weight-based currency.

Eshel said this reveals that sophisticated money-based economies evolved earlier than previously thought.

“The first coins appeared in the 7th century BCE, but monetary system principles—uniformity, value control and even forgery—operated here centuries earlier. The continuous use of silver points to a sophisticated economy that evolved organically within society.”

This supports Carl Menger’s theory on money. In his 1871 essay, On the Origins of Money, the Austrian economist presented a theory that money emerged spontaneously over time. It was not created by government decree or fiat.

Early cultures bartered goods directly but quickly learned that this was an inefficient process due to the double coincidence of wants. For a barter trade to occur, both parties must want what the other has at the same time. This led to indirect exchange. People realized they could trade for things they didn’t necessarily want, but that they could trade for things they did want later. For instance, a farmer might trade corn for salt, even if he doesn’t need salt, because he knows others value it and he can later trade it for tools or cattle.

Over time, certain commodities (specifically gold and silver) became more widely accepted and evolved into money because they satisfied the requirements for good money—scarcity, divisibility, durability, and recognizability.

Governments later monopolized coinage, but money emerged naturally long before.

The recent discovery in Israel supports Menger’s theory.

The bottom line is that gold and silver have been valued throughout most of human history, and of course, it is still valued today. People all over the world will accept gold and silver, even if they don’t want dollars, euros, or yuan.

This article was originally published on MoneyMetals.com.

The post Evidence Shows Silver and Gold Were Used Much Earlier than Originally Thought appeared first on Free the People.

The answer is simple—Uncle Sam doesn’t have a revenue problem. He has a spending problem.

Did Tax Cuts Pillage the Treasury?

A reader posed the question in response to an article I wrote about the recent budget deal and looming debt ceiling fight. He pointed out that “there are two sides to a balance sheet.”

“All you guys talk about is the runaway spending, ignoring the government cash flow problem.”

He goes on to claim that “taxation relief from Bush II and Trump have pillaged [the] Treasury.”

But have tax cuts really “pillaged” the Treasury?

The Bush Tax Cuts

In 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act, cutting the marginal tax rates for all income brackets and lowering the highest bracket from 39.6 percent to 35 percent.

Congress passed a second round of tax cuts in 2003 through the Jobs and Growth Tax Relief Reconciliation Act. This bill primarily reduced tax rates on dividends and capital gains to spur investment.

Federal receipts initially declined by about 10 percent after the enactment of these cuts. But it’s important to note that the U.S. went through a recession in 2001, in the wake of the dot com bust. Declining economic growth in that period also contributed to the reduction in federal revenue.

In fiscal 2001, federal revenues came in at $1.99 trillion. In 2002, receipts dipped modestly to $1.85 trillion. In 2003, they dipped again to $1.78 trillion. But in 2004, federal revenues began climbing again, growing to $1.88 trillion. By 2006, federal receipts were higher than pre-cut levels.

This underscores one of the benefits of a lower tax environment—it tends to be more favorable for economic growth. When individuals and businesses keep more of their money, there is more capital available for investment and consumption. We can debate just how much impact tax cuts have on growth, but it’s certainly greater than zero.

Expanding economic growth benefits the Treasury. More economic activity means more money to tax, boosting federal receipts even in a lower tax rate environment.

As economist Arthur Laffer demonstrated, there is always a tradeoff between taxes, economic growth, and federal receipts. Looking at either extreme reveals this fact.

At a zero percent tax rate, the government gets no revenue because it collects no taxes. On the other hand, a 100 percent tax rate would also yield no revenue because individuals and businesses would have no incentive to work or invest if all of their income is confiscated by the tax man.

The point is that while tax increases raise revenues, at least in the short term, they come with a downside. In fact, tax hikes generally fail to raise as much revenue as projected due to their drag on economic activity. We can debate the scope of that downside, but it should always be considered when contemplating higher taxation.

As far as the Bush-era cuts, the CBO estimates federal revenues would have been higher had they not been enacted. But it’s impossible to say by how much or if the CBO calculations are even accurate, given that we can’t calculate how much economic growth the tax cuts spurred. It’s entirely possible that revenues would have been lower without the tax cuts and their positive impact on economic growth.

Regardless, even if we take the CBO’s guesses at face value, it’s clear that the Bush tax cuts didn’t “pillage” the Treasury. At worst, they caused a temporary dip in federal receipts.

The Trump Tax Cuts

When Donald Trump took office, Congress pushed through another round of tax cuts. Not only did they not pillage the Treasury, they didn’t even reduce federal revenues in dollar terms.

The Trump tax cuts went into effect in 2018. Federal receipts were flat during that fiscal year, nudging slightly higher from $3.31 trillion in fiscal 2017 to $3.32 trillion.

Revenues rose again in fiscal 2019, ticking up to $3.46 trillion.

It’s impossible to know how the tax cuts would have affected revenues in 2020 and 2021, given the government lockdown of the economy for COVID-19, but in 2022, tax receipts surged by 21 percent to just under $5 trillion. Tax receipts that year charted a multi-decade high of 19.6 percent as a share of GDP.

However, people today still blame the massive budget deficits on the Trump tax cuts. To be blunt, this is utter nonsense.

After dipping in 2023 off 2022’s record, Federal revenues were at record levels again in fiscal 2024, coming in at $4.92 trillion. Despite this, the Biden administration managed to run the third-largest budget deficit in history.

It’s The Spending!

Any objective look at federal revenues reveals the real problem—the ever-increasing spending.

Federal receipts have generally trended upward since 2001 despite tax cuts.

(Note the big drop in revenue in 2008 with the onset of the Great Recession. This highlights the impact of economic activity on federal receipts.)

While revenue has increased, government spending has gone up much faster. The Biden administration blew through $6.75 trillion in fiscal 2024 alone, a 10 percent increase over 2023 spending. Going back to 2023, factoring out the reversal of student loan forgiveness (expensed in 2022 but struck down by the courts), the Biden administration spent $6.46 trillion, an 8.8 percent year-over-year increase in actual spending.

We saw the same trend in the Bush era. As government receipts fell by about 10 percent between 2001 and 2004, government spending rose from $1.86 trillion to $2.29 trillion, a 23 percent increase.

Between fiscal 2001 and fiscal 2024, spending was up 273.1 percent. During the same period, revenues rose 155.3 percent.

This is why I focus on the spending side of the ledger. Until the government gets its spending problem under control, tax increases, no matter how substantial, aren’t going to put a significant dent in the growing national debt.

Political Considerations

There are also political considerations when trying to figure out how to close the gaping federal budget hole. Sure, you could hand the politicians more money through tax increases, but would that guarantee a decrease in budget deficits?

Of course not.

Because politicians with more money are going to find new ways to spend it.

It’s all about incentives.

A politician’s overarching goal is to stay in office. And most politicians aspire to higher offices. In other words, they want votes. And the easiest way to get people to vote for you is to give them stuff. Conversely, politicians will find themselves looking for real jobs if they cause their constituents pain.

So, the incentives drive politicians to keep spending so they can keep delivering goodies to their constituents. Deep down, they probably realize the borrowing and spending is going to morph into a crisis—someday. But why worry about it now when they can kick the can down the road and get reelected for another term? They certainly aren’t motivated to deliver tough love and slash programs their constituents love. (This is also why they don’t really want to raise taxes either—except on the rich. I’ve already shown that taxing billionaires is a red herring.)

You probably wouldn’t hand an alcoholic standing outside of a bar $100, right? Likewise, it’s not a good idea to shower money on politicians who haven’t addressed their spending addiction.

When the political class demonstrates an ability to legitimately slow down the spending train, we can talk about tax increases. Until then, I’m going to keep harping on the spending.

This article was originally published on MoneyMetals.com.

The post Why Not Tax Hikes to Fix the Budget? appeared first on Free the People.

We’re currently cursed to the tune of $35.9 trillion and counting.

To make matters worse, the size of the debt is exacerbating the debt.

Uncle Sam paid $1.13 trillion in interest expenses in fiscal 2023. It was the first time interest expense has ever eclipsed $1 trillion. In fiscal 2024, the federal government paid more for interest expenses than national defense and Medicare.

It’s easy to focus on the current whoever is in office at the moment. After all, the Biden administration ran the third-largest budget deficit in history in fiscal 2024. But the fact of the matter is the debt has continued to climb at a dizzying pace under the oversight of president after president.

How long has it been since the federal government has taken the borrowing and spending seriously?

The only time in U.S. history that the debt was fully paid off was during President Andrew Jackson’s administration. That was in 1835.

And in modern times, things just keep getting worse and worse. Every president since Calvin Coolidge has left the country in deeper debt than when he took office.

While many founders, including George Washington, recognized the need for occasional debt, they repeatedly emphasized the importance of repaying it in a timely manner. In his Fifth Annual Message to Congress, Washington put it like this:

“No pecuniary consideration is more urgent than the regular redemption and discharge of the public debt. On none can delay be more injurious or an economy of time more valuable.”

Good luck finding a person in power in Washington, DC, holding this view today.

In a letter to Abigail Adams, John Adams accurately predicted the impact of debt.

“I lament the introduction of Taxes and Expenses which will accumulate a perpetual Debt and lead to future Revolutions.”

All of the unconstitutional federal acts, regulations, and programs we live under today are a counter-revolution that flipped the entire constitutional system on its head.

Huge government debt also undermines national defense, as John Taylor pointed out.

“Hence it is obvious that debt, so far from being either strength or credit, is a diminution of both; and that freedom from debt is the only genuine source of national strength depending on revenue.”

Washington offered a similar take in his farewell speech, urging the country to “Cherish public credit,” calling it a “very important source of strength and security.”

Washington went on to say that debt should be used “sparingly as possible, avoiding occasions of expense by cultivating peace,” pointing out “that timely disbursements to prepare for danger frequently prevent much greater disbursements to repel it.”

Borrowing and Spending Is a Bipartisan Sport

Rather than figuring out how to cut spending and debt, today, excessive borrowing and spending is a bipartisan sport. It’s almost as if they’re competing to see who can be the worst.

And no one ever takes the blame.

The national debt has become a political hot potato. Republicans blame Democrats, characterizing them as big spenders. Democrats blame Republicans, also calling them big spenders at times but more often lamenting “tax cuts for the rich.”

So, who were the worst presidents when it came to growing the national debt since 1900?

1. BARACK OBAMA

In raw dollar terms, the biggest borrower-and-spender-in-chief was Barack Obama. The national debt grew by $8.3 trillion during his two terms.

Obama was the first president to oversee a $1 trillion annual budget shortfall. In fact, his administration ran four trillion-plus deficits in the wake of the 2008 financial crisis.

2. DONALD TRUMP

Donald Trump comes in second on our list. His administration added $8.2 trillion to the national debt. Notably, Trump nearly managed to break Obama’s record in one term versus two. More on that in a moment.

Pandemic spending, coupled with the government shutdown of the economy, exacerbated the budget deficits during his term, but you can’t blame it all on COVID-19. Trump nearly ran a $1 trillion deficit in 2019 and was on pace to eclipse that number in 2020 before COVID gave politicians yet another excuse to expand their unconstitutional spending programs.

3. JOE BIDEN

In less than one full term, Joe Biden has already reached #3, and by the time his current term ends in Jan 2025, he may rise even closer to the top.

To date, the national debt has increased by $7.3 trillion since he took office. At the current deficit pace, we can expect at least another $600 billion to be added by the end of his term. This would put him in the same ballpark as Trump and Obama. And, like Trump, he’s reaching these lofty heights in just a single term.

4-5. GEORGE W. BUSH/RONALD REAGAN

George W. Bush comes in fourth. He left office having run up $6.1 trillion in debt. Spending for the War on Terror bloated the Bush budget.

Ronald Reagan’s administration left the U.S. with the fifth-largest increase in debt. When he left office, the U.S. was $1.9 trillion deeper in debt than when he was elected.

SPENDING/YEAR

It’s interesting to note that the two most recent big spenders both hit the top five in raw dollar terms in just four years, while it took the other three in the top five eight years to match them. If we break it down by an average increase in debt per year, the top five looks like this:

1. Trump 2.05/year
2. Biden 1.95/year (Estimated)
3. Obama 1.04/year
4. Bush 0.76/year
5. Reagan 0.24/year

So, while President Obama set the record in terms of raw dollars, President Trump easily holds the record for the most debt per year, nearly doubling the rate of growth of his big-spending predecessor.

WHAT ABOUT INFLATION?

Looking at the growth in debt in dollar terms doesn’t account for the impacts of inflation. When we look at the presidents who grew the debt the most in percentage terms, the list looks quite different.

1. FDR

The biggest debtor in percentage terms was Franklin D. Roosevelt. He expanded the national debt by a staggering 1,047.73 percent.

He oversaw a massive increase in domestic spending during the Great Depression, including social programs that never went away. He then pivoted to military spending during World War II. This underscores the tremendous cost of war and reveals why James Madison warned that “Of all the enemies to public liberty, war is, perhaps, the most to be dreaded.”

“War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few.”

2. WOODROW WILSON

Another wartime president comes in second on the list. Woodrow Wilson’s administration grew the national debt by 722.21 percent.

3-5. RONALD REAGAN/G.W. BUSH/BARACK OBAMA

Ronald Reagan (186.36 percent), George W. Bush (105.08 percent), and Barack Obama (69.98 percent) round out the top five.

To date, the Biden administration has increased the debt by about 32 percent.

CONSEQUENCES

Even Alexander Hamilton, who called the debt “a national blessing” and “powerful cement for the union” and who believed it would “create a necessity for keeping up taxation to a degree which, without being oppressive, will be a spur to industry,” would have a hard time supporting this level of borrowing and spending, given his caveat—“if it is not excessive.”

In a letter to President Washington, Thomas Jefferson drilled down to the reason Hamilton was a fan of debt.

“I would wish the debt paid tomorrow; he wishes it never to be paid, but always to be a thing wherewith to corrupt and manage the legislature.”

In contrast to Hamilton’s sanguine view of debt, Brutus had a more realistic perspective. Warning that under the Constitution, the power to borrow money would be, in practice, “general and unlimited.” From there, he predicted exactly what would happen.

“Under this authority, the Congress may mortgage any or all the revenues of the union, as a fund to loan money upon, and it is probably, in this way, they may borrow of foreign nations, a principal sum, the interest of which will be equal to the annual revenues of the country. —By this means, they may create a national debt, so large, as to exceed the ability of the country ever to sink.”

This, of course, was for Brutus—a doomsday scenario.

“I can scarcely contemplate a greater calamity that could befall this country, than to be loaded with a debt exceeding their ability ever to discharge.”

And here we are.

The Tenth Amendment Center contributed to this report.

This article was originally published on MoneyMetals.com.

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