●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.
●Cutting the deficit is the government’s method for taking dollars from the middle class and giving them to the rich.
●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.
Google “Platinum Coin Solution” and you will see what correctly is being touted as a solution to the inane federal debt ceiling. One paragraph of the U.S. statute on money and finance (revised by Congress in 2000) reads:
The Secretary may mint and issue bullion and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
What this clearly and unambiguously says is: The Secretary of the Treasury (currently Tim Geithner) has the power to mint a platinum coin in any denomination. He can, if he chooses, mint a $1 coin, a $1 trillion coin or a $100 trillion coin.
The Platinum Coin Solution proposes that the Secretary mint a $1 trillion coin and deposit it with the Federal Reserve Bank as an accounting partial offset to the federal “debt.” No new dollars would enter the economy. There merely would be a balance sheet adjustment made in Federal Reserve Bank accounts. So there would be no inflation implications.
For those of you who think this somehow is “cheating” or accounting slight-of-hand, you are correct. It is both. Of course the so-called federal “debt” also is cheating and accounting slight-of-hand.
The reason: The federal debt is quite unlike your debt or mine or your state’s, county’s or village’s debt, or even the debt of Greece and Italy. Because the U.S. government is Monetarily Sovereign, it creates the dollars to pay its bills. It never needs to borrow the dollars it already has the unlimited ability to create.
So, its “debt” is nothing more than the total of deposits in T-security accounts at the Federal Reserve Bank. The so-called “debt” is created this way:
Someone (you, me, China et al) decides to buy U.S. T-securities. So they instruct their bank to transfer already existing dollars from their checking account to their T-security account at the FRB. I stress “already existing” to show there are no inflationary implications to the purchase of T-securities.
A T-security account essentially is a bank savings account, so the purchase of U.S. “debt” simply is a transfer of already existing dollars from a checking account to a savings account. To pay off the “debt,” the FRB merely transfers the already existing dollars back. The only new dollars: Accumulated interest. So there are no inflationary implications to paying off the “debt.”
The Platinum Coin Solution provides an internal (actually, needless in the real world) accounting justification for making the above transfer. In summary, the federal “debt” really isn’t a federal debt, and the debt limit is a nonsensical limit on the size of deposits in the Federal Reserve Bank.
(Why anyone would want to limit these deposits of existing dollars, is a testament to the power of myth and semantics. Mistakenly call something “debt” and everyone wants to limit it.)
The Platinum Coin Solution makes the mythical federal debt disappear, instantly solving the mythical debt crisis. That is the reason it has been recommended. But there are other good reasons for the PCS.
The discussion about the Platinum Coin Solution will reveal the truth about the federal “debt,” that it not only is meaningless, but concerns about the debt harm those of us not part of the upper .1% income group.
If the Platinum Coin Solution achieves the level of national discussion, you will see great outrage expressed by the media (owned by the .1%) and by all politicians who receive campaign contributions from wealthy donors — especially of course, Republicans who have vowed slavish allegiance to the wealthiest.
Not only will the Republicans not be able to hold the nation hostage to the nonsensical “debt ceiling,” but the discussion will open the way to ending the suicidal austerity plans promoted by the bought-and-paid-for politicians and media.
No more need to cut Medicare. No more need to cut Social Security. No more need to extract FICA (the worst, most regressive tax in U.S. history) from the pockets of salaried people. Instead of cutting the the programs that support the middle- and lower-income classes, the federal government would be able to support programs to grow the economy and reduce unemployment.
And this panics the upper .1%. The austerity the rich have brainwashed the public into supporting, actually has one purpose only: To increase the income gap between the rich and the rest. It is the gap that makes some people rich and others poor. Without the gap, no one would be rich.
Watch for it: The screaming, hysterical rantings by politicians and the media, the innuendos and outright lies, the predictions of doom.
But, no, the Platinum Coin Solution will not cause inflation. New dollars will not be created.
No, the PCS will not give the government free rein to spend endlessly. Congress and the President will continue to control the purse strings, just as they always have, and just as they control the mythical “debt” limit. Nothing changes their ability to spend or not to spend.
What the PCS will do is end the destructive drive for a program that never has worked anywhere in the world or at any time in history: Austerity, i.e. deficit reduction. And it will help narrow the gap between the rich and the rest. And it will reduce unemployment. And it will allow Medicare for everyone. And it will allow Social Security to pay a living benefit.
And it will increase research and development for improved, life-giving drugs, scientific progress and education. And it will allow for improvements in our roads, bridges and dams, air and water. And many, many other benefits.
The majority of suggestions see a $1 trillion coin. I suggest a $100 trillion coin, so the mythical federal debt disappears forever, never again to rise from its stinking grave.
Good riddance, federal debt, for all the damage you have done, and continue to do, to America. And good riddance, ultra-rich, to your lies that brought the austerity monster to our nation.
The only question is whether the Supreme Court, which also has a romance with the ultra-rich, will find some reason to overturn the clear reading of the law.
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