The supremacy law that establishes the federal government establishes that the state governments must be subordinate to the federal authority. In line with this law, whenever the interests of the federal government collide with those of state governments, the interest of federal government shall always supersede.
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When government borrows money from citizens, they would
return this money back to the person the same way a bank would. They would give it in the form of bonds that can
be sold to speculators. Problem is that it would be sold at a lower value.
Actually the real answer is the second and first world war pouring money into the us economy for output. If that is not an option it would be the invention of the steam engine and the 1800's locomotive industry.
