–The Big Lie about tax reform. One day the eyes will open. Thursday, Jan 29 2015 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●Austerity is the government’s method for widening
the gap between rich and poor.
●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.
●Everything in economics devolves to motive,
and the motive is the Gap.
==================================================================================================================================================================

Here is a perfect example of how the Big Lie has replaced fact and common sense in our world.

First a bit of background:

In 1777, the original 13 colonies created from thin air, the Articles of Confederation.

These colonies were not physical entities. No one could see, smell, taste, feel or hear a colony. They were legal entities, represented by certain locations of land, water and air.

Nor were the Articles of Confederation a physical entity. They was created from thin air as a legal entity, represented by papers and ink, but the laws themselves had no physical substance.

In 1776 a legal entity known as “The United States of America” arbitrarily was created from thin air, to replace the 13 colonies. Like the colonies they replaced, the United States is not a physical entity. It is whatever existing law says it is.

You may see a hill, taste a river, feel a building, smell a lake or hear a seashore, but you cannot see, taste, feel, smell or hear the United States. The U.S. is just a collection of laws, as are all nations, all cities and all counties.

In 1787 the Articles of Confederation were replaced by the Constitution. The physical pages of the Articles continue to exist, but the laws, being non-physical, no longer do.

Instead, the laws of the Constitution (created from thin are, and having no physical existence) now apply.

Among those laws are laws that created the U.S. dollar. The dollar was arbitrarily defined as representing “371 grains and 4 sixteenths part of a grain of pure or 416 grains (27.0 g) of standard silver.”

Though the U.S. dollar continues to exist as a legal entity, its measure has changed many times. Like the nation and its cities, counties and states, and indeed like Congress and the Presidency, the dollar has no physical presence. You cannot see, smell, taste, feel or hear any of them.

That building in Washington, DC known as “Congress,” is not Congress. It is a building. And if ever it is torn down, or otherwise destroyed, Congress will continue to exist. The same could be said of the Supreme Court building.

Similarly, Barack Obama is not the Presidency, which itself is a legal entity.

Even a dollar bill is not a dollar. It is a piece of paper that represents the legal entity known a “dollar.” Tear it in half and the Treasury (also a legal entity) will send you another piece of paper.

Give that paper dollar bill to your bank, to be deposited in your checking account (a legal entity), and your bank will increase the numbers in your account. You no longer will have the paper dollar bill, but you still will own the dollar.

We have gone through this explanation to demonstrate two facts:

1. Our government, and all its agencies, and all it sovereign currency, were created out of thin air, and are legal, not physical entities. They are, in size and description, whatever our laws say they are.

2. The U.S. dollar, as our sovereign currency, exists in whatever amount our sovereign government arbitrarily chooses.

Thus, our government is said to be “Monetarily Sovereign” It is sovereign over the dollar.

It has the legal ability to create as many dollars as it wishes. It never can run short of dollars, unless it wishes to. It never needs to ask anyone for dollars, not you, not me, not China.

Compare this with monetarily non-sovereign entities (cities, counties, states, businesses, you and me), that have no sovereign currency, and can run short of dollars.

Those are the facts. But the Big Lie says our Monetarily Sovereign government, somehow can run short of the currency it originally created out of thin air.

Obama + tax reform = political firestorm
John Harwood

Without intending to, the Obama administration has just conducted an experiment in tax reform and deficit reduction.
The conclusion: very, very difficult.

Tax “reform” and deficit reduction are based on the Big Lie. They begin with the false assumption that federal financing is like personal financing, and that the federal government is not sovereign over the dollar.

When you begin with a false assumption, everything that follows is false.

The White House plan (was) to tax capital gains on new deposits in so-called 529 college savings plans. Just 3 percent of American families own such plans.

But the amount of money in them has mushroomed to $9.9-billion in 2011, from $1.3 billion in 2001 after the Bush tax cuts made those gains tax free.

At this point you may ask why a government, that from the very beginning, has had the unlimited ability to create its own sovereign currency from thin air, needs to collect taxes.

That is a perfectly logical, seemingly obvious, question, that not one American in a million bothers to ask. Since the U.S. government is the absolute sovereign over the dollar, why does it need to ask you and me for dollars?

The answer: It doesn’t need to.

And because the federal government (unlike state and local governments) never can run short of dollars, why is the federal deficit a burden that should be reduced?

Answer: It isn’t. In fact, a federal deficit, which adds dollars to the economy, is necessary for growing the economy.

As it proposed some $320 billion in new spending as part of Obama’s push for “middle-class economics,” the White House called on Congress to raise $1 billion over 10 years by taxing those 529 gains.

The tacit (and false) assumption is that to spend more, the government must tax more, i.e. to send more dollars into the economy, it must take more dollars from the economy.

House Speaker John Boehner blasted the plan as a blow to middle class families trying to save for college. He had a point: A majority of families with 529 plans earn less than $150,000 per year.

Just a slight digression: This demonstrates that Barack Obama is not a liberal, but rather a conservative dressed in liberal clothing. He is the same Barack Obama who increased the most regressive tax in America (FICA), instituted the committee that suggested the damaging “fiscal cliff” sequester, and repeatedly has proposed his “Grand Bargain” which included cuts to Social Security.

As a result, Obama dropped the 529 plan, which a White House official called “a distraction” from the president’s larger budget goals.

The episode previews the difficulty of achieving tax reform, even though so many politicians say they favor it.

The outcry against a plan to eliminate the mortgage interest deduction or the deduction for charitable giving would dwarf the reaction to 529 tax hikes.

It also shows the difficulty of additional deficit reduction.

Obama has not dropped his planned middle- class spending increases. And though Boehner has ruled out any tax hikes, he hasn’t ruled out the middle-class spending increases, either.

Look through every past newspaper, every past telecast, every past speech by any politician, and you will be hard pressed to find any mention of Monetary Sovereignty.

The “need” to reduce the federal deficit is assumed as fact, just as geocentrism was assumed as fact before Galileo.

Most Americans understand that the dollar is a creation of laws. And most Americans understand that laws are not physical and can be created in unlimited quantities.

And most Americans understand that there are no dollar bills in their checking accounts, which themselves are not physical but rather legal entities.

And most Americans understand that the vast majority of dollars are electronic, not pieces of paper.

Yet, they seem to have difficulty understanding that those non-physical dollars, arbitrarily created from thin air, are not limited for the creator of those dollars, the U.S. government.

The reason: They have been told the Big Lie so often — by politicians, by news media and by mainstream economists and teachers of economics — what should be obvious has been obscured.

And what is the purpose of the Big Lie? It helps the rich limit the dollars owned by the rest (the so-called 99%), thereby widening the Gap between the rich and the 99%.

If ever the 99% understood Monetary Sovereignty, they would demand that the government cut taxes and increase spending to narrow that Gap.

One day . . . one day . . . the eyes will open.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually. (Refer to this.)
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–Why killing benefits for the disabled is only a small part of the plan for you. Monday, Jan 26 2015 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●Austerity is the government’s method for widening
the gap between rich and poor.
●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.
●Everything in economics devolves to motive,
and the motive is the Gap.
==================================================================================================================================================================

The Ebenezer Scrooge Party of guns, God and money is at it again. This time, the Tea/Republican Party wants trying to take benefits from the disabled.

But it’s only part of the plan for you, which I will describe at the end of this post. First, let’s list a few targets for Scrooge Party’s malice:

–The poor and middle income
–The unemployed
–The elderly
–The environment
–Science
–Gays
–Immigrants
–Blacks, browns, yellows, reds
–Women
–Non-Christians

In short, aside from guns, God and money, the Scrooge party sows hatred for pretty much everything. And now we can add the disabled to the list of shame:

GOP’s New Social Security Playbook: Pit The Disabled Against Retirees

Conservatives have long searched for an effective message against Social Security.

Remember that this is the party that wanted to enrich Wall Street and impoverish the retired, by forcing Social Security to invest in private securities.

Now, they seem to have found a new one to try as they set up a fight over the 80-year-old program in the coming Congress: The disabled are robbing the retired.

Social Security advocates describe it almost invariably as the “divide-and-conquer” strategy: Pit the program’s two funds — the retirement and disability programs — against each other.

The disability fund won’t be able to pay its full benefits starting in late 2016, and House Republicans passed a rule earlier this month stating that they won’t allow a transfer of tax revenue from the retirement fund to cover the shortfall, as has been done multiple times on a bipartisan basis, most recently in 1994, unless Social Security’s overall solvency is improved.

Remember also that the entire “Social Security solvency” concept is phony. The U.S. government uniquely is Monetarily Sovereign. It never can run short of its own sovereign currency, the dollar.

Thus, no federal agency can be insolvent unless Congress and the President wish it. If all federal tax collections fell to $0 today, the federal government could continue to pay all its bills, forever.

There is no “transfer of tax revenue,” and never has been. Tax revenue ceases to exist once it is received by the Treasury. There is no SS insolvency, and never has been. The past reductions in SS benefits were unnecessary.

Republicans intend to use the need for reallocation as leverage to force a debate about the disability program — and perhaps, some conservatives hope and Democrats warn, Social Security as a whole.

See how the false “need for reallocation” is accepted as a given. This moves the argument to: “How to reallocate,” rather than, “Why does a Monetarily Sovereign government need reallocation?”

It’s like ocean sailors arguing about the best way to ration salt water.

“Social Security retirement funds have been raided far too many times for far too many years,” Rep. Tom Reed (R-NY), who co-sponsored the House rule, said in a statement.

“My intention by doing this is to force us to look for a long term solution for SSDI rather than raiding Social Security to bail out a failing federal program.

Retired taxpayers who have paid into the system for years deserve no less.”

How many cynical lies can one paragraph hold? Let us count them.

1. Social Security retirement funds are an accounting fiction; they do not exist before they are paid. If you receive benefits, the Treasury sends instructions (not dollars) to your bank, telling your bank to increase the balance in your checking account. At the moment your bank follows those instructions, dollars are created — not before. The dollars did not exist before your checking account was increased.

2. Non-existent funds cannot be “raided.” Even if FICA were eliminated (which it should be), the Treasury could continue paying benefits ad hoc — even double or triple benefits — forever.

3. The “long-term solution for SSDI” does not require cutting benefits, as Reed wishes, but rather the recognition that the United States federal government has the unlimited ability to pay any dollar-denominated debt.

4. No federal program ever “raids” or is “bailed out” by another federal program. Congress and the President merely decide how much each program will spend. Period. The Treasury cannot run short of dollars. If the White House (a federal agency) runs short of money, it doesn’t “raid” the Supreme Court (another federal agency) for dollars. Congress simply makes the allocation.

5. Retired taxpayers unnecessarily have “paid into the system” based on the Big Lie that in some mysterious way, the federal government, which created the dollar out of thin air, somehow can run out of dollars.

6. “. . . deserve no less.” What retired taxpayers deserve is honesty and morality. Pitting old people against disabled people is the most rotten, lowest, filthiest gambit imaginable. One would hope even the Scrooge Party would be repulsed.

It’s easy to demonize the DI program,” Nancy Altman, co-director of Social Security Works, told TPM recently.

She referenced the conservative attempts in the ’80s and ’90s to push for changes to Social Security by playing the young and still working against the old and retired. But Republicans at the time quickly learned that the elderly are difficult to attack.

It’s simple math: 48 million people receive retirement benefits versus 11 million receiving disability. People are less likely to balk if the disability fund is the hostage being taken.

THE PLAN FOR YOU:

It is the old “divide-and-conquer” game. Create hatreds by:

–Playing the middle class against the poor by talking about “food stamp mamas,” and claiming the poor are cheating the system.

–Playing the young against the old, by claiming the old are rich, lazy takers, being supported by the hard-working young.

–Playing the old against the disabled, by claiming the disabled are cheating the system and taking money from the old.

–Playing the workers against the immigrants, by claiming the immigrants are criminals who are cheating the system and “taking your jobs.

–Playing the whites against the blacks, by claiming the blacks are criminals, and a danger to the white community.

Who plays this game? The rich. Being a tiny minority (1%?), the rich need to make the poor and middle classes fight among themselves. That is the plan for you; that is how the 1% controls the 99%.

See the pattern? Someone always is accused of criminality and of taking your money, so you will have reason to hate them. Then you will forget it is the rich who really are cheating the system and taking money from you.

The rich, repeatedly try to demonize some smaller groups, so the majority will fight that group, and do the rich’s dirty work.

It’s rotten. It’s disgusting. It’s the lowest form of politics. It worked for Hitler. It worked for Stalin. It worked for Mao. It’s the plan every despot has used to control a populace.

If you fall for it, your punishment will be of your own making, for one day, you will find yourself in the minority being demonized.

Meanwhile, make sure you or any of your loved ones don’t have an accident and become disabled.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually. (Refer to this.)
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–Will beat-down Greece become the leader of Europe? Sunday, Jan 25 2015 

Mitchell’s laws:
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●Austerity is the government’s method for widening
the gap between rich and poor.
●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.
●Everything in economics devolves to motive, and the motive is the Gap.
==================================================================================================================================================================
“Because of the Euro, no euro nation can control its own money supply. The Euro is the worst economic idea since the recession-era, Smoot-Hawley Tariff. The economies of European nations are doomed by the euro.” (Rodger Malcolm Mitchell, speech at UMKC, June 5, 2005)

Will beat-down Greece become the leader of Europe? The opportunity is there. They have taken the first step.

Syriza Rides Anti-Austerity Wave to Decisive Victory in Greece
By Eleni Chrepa and Marcus Bensasson Jan 25, 2015

Alexis Tsipras’s Syriza brushed aside Prime Minister Antonis Samaras’s party to record a decisive victory in Greece’s elections, after riding a public backlash against years of budget cuts demanded by international creditors.

Even with a razor-thin majority or in a fragile coalition, the result still hands Tsipras, 40, a clear mandate to confront Greece’s program of austerity imposed in return for pledges of 240 billion euros ($269 billion) in aid since May 2010.

The challenge for him now is to strike a balance between keeping his election pledges including a writedown of Greek debt and avoiding what Samaras repeatedly warned was the risk of an accidental exit from the euro.

No, the risk is staying with the euro, which demands a continuing austerity — an austerity that has not worked and cannot work, simply because national deficit cuts never have, and never will, grow an economy.

Very simply, state deficits increase a nation’s money supply, and a growing economy requires a growing supply of money. Austerity “helps” an economy the same way applying leeches “helps” anemia. (This is a lesson America has yet to learn.)

“The Greek people punished New Democracy for governing in the petty manner of the old regime’s political parties,” Aristides Hatzis, an associate professor of law and economics at the University of Athens, said by phone.

“Most Greeks voting Syriza don’t expect a spectacular change but a marginal one. A marginal one would be significant for them.”

In other words, “We economists screwed up big time. Austerity has been a total disaster. But please don’t make any big changes.” That would be embarrassing for us.

“Overwhelmingly the Greek people voted against austerity policies,” the (Syriza)party said. “This result can be the first step for progressive developments throughout Europe.

The government will implement its political program addressing the humanitarian crisis and begin the real negotiation with our European partners.”

This is Greece’s opportunity to rid itself of the bloodsucking euro, a program that stole Greece’s Monetary Sovereignty and made Greece subject to the whims of Germany and the rest of Europe.

If Greece fails, whether by timidity or ignorance, to take advantage of this opportunity, the nation will continue to slide ever deeper into depression.

Then, their European masters will claim, “See? More and more austerity is necessary,” (i.e. more and more suffering is necessary).

Greece’s collapse is officially worse than the US Great Depression

The Greek economy has been through hell over the last few years. Unemployment is an atrocious 27%. And roughly 25% of the economy has been destroyed since the peak in late 2007.

That collapse in economic output puts the Greek recession right up there with the worst depressions in recent memory.

At its trough in the first quarter of 2014—which was revised lower in today’s report—the decline in Greek GDP was roughly 33% from the peak.

That’s actually worse than the US peak-to-trough GDP decline of 27% between 1929 and 1933, during the most acute phase of the Great Depression.

monetary sovereignty

A “marginal” change (whatever that means) is not what this disaster needs. A bit less of the austerity poison will not end the suffering.

A monetarily non-sovereign government can survive long term only if it has a positive balance of payments. Like a business or an individual (which are monetarily non-sovereign), more money must come in than goes out.

Net borrowing is not sustainable for an entity that does not have the unlimited power to create its own currency.
Greece must return to Monetary Sovereignty. It must re-adopt its own sovereign currency. Greece must regain control over its money supply.

Let us pray that Greece’s leaders have the knowledge, the honesty and the courage to throw off its leech creditors, give the finger to those who wish to keep it in bondage, and save the nation.

A prediction: Within two years of re-adopting its own sovereign currency, Greece will have a more viable economy than that of any euro nation.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually. (Refer to this.)
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–No greater disappointment than from those you love Friday, Jan 23 2015 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●Austerity is the government’s method for widening
the gap between rich and poor.
●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.
●Everything in economics devolves to motive,
and the motive is the Gap.
==================================================================================================================================================================

There is no greater disappointment than from those you love.

I love MMT (Modern Monetary Theory). It is the only, absolutely factual, description of federal financing, i.e., Monetary Sovereignty.

So it is particularly painful to read articles in which MMTers depart from fact and begin to theorize, falsely. For example, their “Jobs Guarantee” (JG), formerly named “Employer of Last Resort (ELR),” demonstrates how otherwise clear-thinking people can go wrong.

The name change only hints at the confusion. (At first, the federal government was the ELR. When that idea proved flawed, they thought up a fix, in which private industry would be the ELR, and changed the name to JG.)

I’ve read many descriptions of JG, all different (Ask any 10 MMTers, “Exactly how does JG work?” and you’ll get eleven different answers.)

Perhaps it is the simplicity of the words “Jobs Guarantee” that MMTers find so enticing. Hey, “if people lack jobs, just give ‘em jobs.”

But to be truthful, they should call it the “Low-Pay; Crappy-Jobs Guarantee,” for if you dig under the surface, you learn that by necessity, the jobs must be at or below the lowest legal pay, and almost surely will be the dregs of jobs.

MacDonald’s would be thrilled.

Then there is the ongoing MMT theory that federal taxes are necessary to give value to dollars. Once, I mentioned to Professor Randy Wray that not only was there no proof than any taxes were necessary for that purpose, but there already were plenty of local taxes. No federal taxes needed.

At the time he agreed. But since then I’ve not seen a correction to the “federal-taxes-are-necessary” theory. Perhaps I missed it.

And now the latest, painful disappointment comes from that solid MMTer, Yves Smith (actually Susan Webber), who authors the excellent blog, Naked Capitalism, where she published “Removing the Social Security Tax Cap Would Benefit Most Workers”.

Lord save the middle class folks from well-meaning, but economically ignorant, souls who wish to help them. Susan writes:

As Nicole Woo discusses in this Real News Network interview, one simple fix, that of eliminating the cap on who is subject to the tax, would solve most of the gap that is anticipated in long-term projections.

The Social Security tax, as now constituted, is regressive and thus promotes inequality, so lifting the cap also moves the tax system toward being more progressive.

That’s before we get to the MMT issue that “taxing” to fund any government activity is a political mechanism that is a holdover from the gold standard days, and not how government functions are funded operationally.

Eliminating the cap would “solve” virtually none of the gap (i.e. the gap between taxes collected and benefits paid), because the wealthiest of us collect very little in salaries. And for the same reason, lifting the cap would give only the illusion of progressivity.

And anyway, that gap does not need to be “solved.” Only problems need solutions, and that so-called gap is not a problem.

Susan even says it: “. . . taxing to fund any government activity is a political mechanism that is a holdover from the gold standard days, and not how government functions are funded operationally.”

She says it, then completely forgets is, because the rest of the article pretends that FICA funds Social Security.

. . . with more and more promised pensions being slashed, and investment returns flagging thanks to QE and ZIRP, the notion that ordinary people can save enough for their retirement is a chimera.

Thus preserving and strengthening Social Security is more important than ever.

Yes, QE and ZIRP have been an economic negative, but with the stock market up about 15% annually for the past 5 years (plus dividends), investment returns are far from “flagging.”

Her point, that Social Security needs to be strengthened is true, but raising taxes won’t strengthen Social Security one iota. That kind of belief has done nothing but punish the middle class.

The rest of the article contains Jessica Desvarieux of The Real News Network interviewing Nicole Woo, the director of domestic policy at the Center for Economic and Policy Research in Washington, D.C. “Her new paper is titled Who Would Pay More If the Social Security Payroll Tax Cap Were Raised or Scrapped?

DESVARIEUX: So, Nicole, who would actually pay more if this tax cap were raised or scrapped?

WOO: . . . the top 6 percent. So the people who are at the very top of the income scale are the only folks who would have to pay more if this payroll tax cap were raised or eliminated.

DESVARIEUX: And how high would that payroll tax cap have to be raised?

WOO: There are some proposals to eventually slowly phase the cap out entirely. And that would mean that the wealthiest people among us would pay the same rate as the rest of us, which seems kind of fair.

If Congress were to pass a bill like that, the Social Security shortfall that we’ve seen in the future would be reduced by about 70 to 80 percent.

A pants-on-fire lie. Even if Congress raised FICA to 100% of all salaries, the wealthiest among us never would pay the same rate as the rest of us — and Woo knows it. The highest income people have only a tiny fraction of their incomes in salaries.

Many of the upper 1% receive $0 in salary.

And there is no Social Security shortfall. Repeat, THERE IS NO SOCIAL SECURITY SHORTFALL. An honest and knowledgeable interviewer would have screamed “Bullsh*t Nicole. FICA does not pay for Social Security”

DESVARIEUX: But should we really be concerned about Social Security, since it’s solvent and currently has close to $3 trillion in its trust fund?

More bullsh*t. There is no trust fund and there is no money in that non-existent trust fund. It’s an accounting fiction, and the federal government controls the accounting.

WOO: Right now the Social Security trust fund does have a lot of money in it. And that’s because back in the ’80s Congress . . . decided to sort of pre-fund Social Security.

So since 1983, workers, American workers, have been putting more into Social Security than has been coming out. It’s their money that’s in the trust fund.

More bullsh*t. FICA dollars, like all federal taxes, disappear from the economy. When the government wishes to spend, it creates brand new dollars, ad hoc.

WOO: What has happened since the ’80s is actually inequality has increased. So more and more of the wages in this country are above the payroll tax cap–they’re above what’s right now $118,500.

That cap has been moving up with inflation every year. But as the income gaps have gotten wider, more and more of the wealthy’s income has been shielded, which is part of why the trust fund isn’t quite as big as we needed it to be.

Social Security will be fine until about 2033. After that point, Social Security will be able to pay about three quarters of the benefits promised, and nobody wants to see a cut of 25 percent. But that’s still significant money.

More scare-mongering bullsh*t. It means, “If you suckers don’t pay more FICA the federal government will run short of dollars to pay Social Security benefits.”

Do you believe the U.S. federal government, which creates from thin air, millions of dollars every day, somehow can run short of dollars? It’s part of the BIG LIE, funded by the upper .1%.

DESVARIEUX: So, Nicole, are you saying that if we were to do away with this cap, then we wouldn’t run into that issue?

WOO: Some of the bills out there that were in the last Congress would slowly eliminate the cap entirely, and that would take care of 70 to 80 percent of the shortfall. [I.e. the non-existent shortfall]

There are some other bills that raise the cap, like, from 118,000 to 250,000 or to 400,000, and that would mean people would pay the payroll tax, but not on all of their income for the wealthiest,.

And, of course, those bills would take care of less of the shortfall. As people talk about ways to shore up Social Security, this is one of the most effective ways to take care of it.

Even more bullsh*t. Raising taxes does nothing to “shore up” Social Security.

Unlike the state, county and city governments, which are monetarily non-sovereign, and do use tax dollars, the federal government neither needs nor uses tax dollars for any purpose whatsoever.

Even if all federal taxes fell to $0, the federal government could continue spending, forever. (See Step #1 in the Ten Steps to Prosperity.)

And, again, it’s about fairness. It’s about making sure that all workers pay the same rate in their Social Security taxes.

What’s really depressing is not that someone like Woo, who is paid to slather the bullsh*t wide and deep, earns her ill-gotten gains.

No, what’s depressing is that someone like Susan Webber, who knows and supports the facts, chooses to provide a forum for these harmful lies.

There is no greater disappointment. This truly is painful.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually. (Refer to this.)
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

Next Page »

Follow

Get every new post delivered to your Inbox.

Join 621 other followers