●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
Here is an article in the Canada Free Press, demonstrating the incredible misinformation that has been, and is being, shoveled into the minds of the public. In one article, you will see just about every idiotic comment, concerning our economy, that ever has been made.
National Debt Is Still the Biggest Threat to Our National Security
Dr. Ileana Johnson Paugh
Americans are in denial about the simple fact that our national debt is the biggest threat to our national security.
Fact: Americans aren’t in denial. They actually believe this nonsense.
National debt grew exponentially from Washington’s profligate deficit spending, recessions, and wars.
Fact: The national, so-called “debt” is nothing more than the total of T-security accounts at the Federal Reserve Bank – no threat to anyone. The “profligate” (The word means “wildly extravagant, completely given up to dissipation and licentiousness”) spending is necessary to grow the economy.
When I looked today at the national debt clock, each taxpayer owed approximately $142,000
Fact: We taxpayers don’t owe the amounts in T-security accounts at the Federal Reserve Bank. To liquidate these accounts, the government merely debits them, while crediting checking accounts. No new dollars needed, and we are not liable for anything.
Perhaps the debt figure would become more real to Americans and take on dire significance if each taxpaying citizen would receive a bill for $142,000 payable in full right now, no kicking the can down the road to our children and grandchildren in exchange for our current comfort.
Fact: Deficit reduction is what “kicks the can down the road” (Have you become weary of that banality?), to our children and grandchildren, because it cuts back on their food, housing, education, fresh air and water, inheritance and the thousand of other benefits austerity will force them to forego.
It is true, our national debt is measured in dollars, which we can always print in order to meet our payments. This is called monetizing the deficit.
Fact: “Meeting our payments” requires nothing more than debiting T-security accounts at the Federal Reserve Bank and crediting the checking accounts of T-security holders. No new dollars are “printed.”
Doing so, however, creates inflation, as too much money is chasing too few goods.
Fact: Where did “too few goods” come from? The author must have heard that expression somewhere and felt compelled to use it. Anyway, since paying off the “debt” requires no additional dollars, it has no effect on inflation.
A responsible government should never print money in outlandish excess of GDP, the amount of final goods and services produced in a year. If they do, hyperinflation will occur, and severe devaluation of the currency.
Fact: She doesn’t explain exactly what “outlandish excess of GDP” means, but the U.S. never has had hyperinflation, not even during the Great Depression or WWII. Anyway, while federal debt is only $9 trillion and the federal deficit this year is but $1 trillion, GDP is a huge $16 trillion. Not much danger in exceeding this invented criterion of “outlandish excess.”
“Since 1971, U.S. borrowed $50 trillion to produce only $13 trillion of goods and services in a 40 year period.” Egon von Greyerz, a financial analyst with Matterhorn Asset Management AG in Zurich, Switzerland, said, “From 1971 when President Nixon ended the gold-backing of the dollar, virtually all of the growth in the Western world has come from the massive increase in credit rather than from real growth in the economy.”
Fact: If federal “debt” is $9 trillion, how did we “borrow $50 trillion”? Von Greyerz must mean the total of, “borrowed, repaid, borrowed, repaid, borrowed, repaid” which truly a strange measure.
And if the GDP this year is $16 trillion, how did we “produce only $13 trillion of goods and services in 40 years”? Perhaps Von Greyerz neglected to count goods and services produced in 39 of those 40 years.
The mantra that the “rich are not paying their fair share” promoted by the MSM sound bites and the Democrat ruling party prompted many to calculate what would happen if we were to confiscate every millionaire and billionaire’s wealth, what impact would have on our national debt, the accumulated budget deficits of previous years. All the U.S. accumulated wealth would last a mere two months.
Fact: O.K., I admit it. Aside from the gratuitous “Democrat ruling party” jab, I have no idea what this paragraph means nor, I suspect, does the author. No one I know has spoken of confiscating all billionaire’s wealth, much less confiscating millionaire’s wealth.
Though I disagree with all federal tax increases (aside from “sin” taxes), it’s difficult to get too exorcized about a 4% increase in the top marginal tax rate – a rate few billionaires ever pay (Ask Warren Buffett.)
There is a difference between income and wealth. The Democrats are talking about taxing the rich (income), not taxing the wealth – big difference which voters clearly do not understand. Taxing income will result in “spreading the wealth” from producers to takers in the name of “social justice” and the subsequent consumer spending, with no tangible assets created. Excessive tax discourages capital formation and job creation, stifling economic growth. Perhaps that is the political intent of the ruling party.
Fact: Dr. Paugh’s comment favors taxing wealth, i.e. property taxes, vs. taxing income. Oh, really? Her wealthy backers surely won’t like that. And she hints the “ruling party” wants to stifle economic growth, but provides no motive for her belief.
Taxing the rich already brings in the lion’s share of revenue to the Treasury. If the rich are taxed too much, who is going to create manufacturing jobs, the government?
Fact: Again, though I oppose tax increases, that proposed 4% marginal increase, which hardly any rich people pay, is not going to eliminate manufacturing jobs. And manufacturing jobs are not provided by rich people, but rather by manufacturing companies, which are not slated for tax increases.
Average earners and small businesses that pay taxes at the personal income tax level are now the rich
Fact: No fact here, just a great big HUH? No idea what she’s talking about.
Mark Steyn calculated that, if everyone’s tax indebtedness would go up according to (the) Buffett rule, the deficit created by the Obama administration in 2011 would be paid off in 514 years and we would still have the deficits created in the other three years of this presidency.
Fact: The federal government does not “pay off” deficits. They are the arithmetic difference between taxes and spending. Paugh probably is confused between “deficit” and “debt.” To pay off the debt the government merely debits T-security accounts and credits checking accounts.
The national debt has exceeded $16.3 trillion but Gross Domestic Product (all the final goods and services produced in a year domestically) is only $15.3 trillion, one trillion short.
Fact: The national debt is the total of outstanding T-securities sold since the beginning of America. The GDP is the goods and services produced in one year – completely different measures. It’s like comparing the sweetness of apples and airplanes.
The problem is not that Americans, rich or poor, are not paying enough taxes, the problem is that Congress and this administration are spending too much money. Spending to GDP ratio is 41 percent.
According to the formula: GDP=Federal Spending + Non-federal Spending – Net Imports, Federal Spending increases GDP.
We have paid so far in 2012 almost $4 trillion in interest from excessive borrowing when our money supply from cash and savings is $10.3 trillion.
Fact: Federal interest payments are part of Federal Spending which increases GDP. Being Monetarily Sovereign, the federal government neither needs, has or uses a “money supply” to pay its bills. It creates dollars, ad hoc, during the bill-paying process.
Our current policy seems to be putting pressure on the U.S. dollar until two options remain – default on the U.S. debt, or monetizing it by printing more money. If we default, as in any case of bankruptcy, creditor nations would demand payment in American assets – our oil fields, mines, land, parks, monuments, buildings, military bases, and even the indentured servitude of generations of taxpayers.
Fact: Being Monetarily Sovereign, the U.S. cannot be forced into bankruptcy and can pay any debt of any size. The statement about “oil fields, mines, indentured servitude,” etc. is too stupid to warrant further comment.
Defense Secretary Leon Panetta said: “One of the national security threats is the question of whether or not the leaders we elect can, in fact, govern and can, in fact deal with the challenges that face this country.” (Emelie Rutherford, Defense Daily, November 26, 2012)
Fact: True, but this has nothing to do with the federal budget. Anyway, Panetta is no budget expert.
Panetta acknowledged that budgeting “can’t just be about cutting, it’s got to be about investing, investing in space and cyber, investing in unmanned systems, investing in the kind of capability to mobilize quickly if we have to. And most importantly, maintaining our defense industrial base in this country so that we are not in a position where I’m forced to contract out the most important defense capabilities that I need. I can’t do that. I can’t just contract those out to another country. I’ve got to have that capability here in the United States.”
Fact: Paugh says, “National debt is the number one threat to national security. If we keep squandering trillions of dollars borrowed from our potential foes and have nothing to show for our spending, except increasing dependency of our population on welfare, food stamps, and entitlements, if we cut NASA and rent space on Russian flights, if we spend so much that we are no longer able to invest in infrastructure, technology, medicine, space exploration, industry, manufacturing, and defense, our integrity as a powerful nation is severely threatened and damaged.”
She wants a decreased deficit, and decreased taxes, but increased spending on “infrastructure, technology, medicine, space exploration, industry, manufacturing, and defense.” Hmmm . . . wonder where decrease in deficit money will come from.
Oh, I know. Being right wing, she’ll take it from “ welfare, food stamps, and entitlements.” Isn’t she a sweet one?
And that, my friends, is in total, is the most idiotic article you ever will read – except for one thing. It isn’t idiotic at all. It’s a calculated element of the 1%’s brainwashing of the 99%. Making you believe the deficit should be reduced, is part of the master plan to widen the gap between the rich and the rest. Why else do you think Donald Trump is stumping for it.
And the plan is working. Ask anyone.
Dr. Ileana Johnson Paugh is a freelance writer (Canada Free Press, Romanian Conservative, usactionnews.com), author, radio commentator (Silvio Canto Jr. Blogtalk Radio, Butler on Business WAFS 1190, and Republic Broadcasting Network), and speaker. Her book, “Echoes of Communism, is available at Amazon in paperback and Kindle. Short essays describe health care, education, poverty, religion, social engineering, and confiscation of property. A second book, “Liberty on Life Support,” is also available at Amazon in paperback and Kindle. Her commentaries reflect American Exceptionalism, the economy, immigration, and education.
Visit her website, ileanajohnson.com. Dr. Johnson can be reached at: firstname.lastname@example.org
Rodger Malcolm Mitchell
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports