Why you should contact Steve Chapman Sunday, Mar 29 2020 

There are important reasons why you should contact Steve Chapman. Let me explain.

Monetary Sovereignty is not a difficult concept. It simply says that the federal government, having created the first U.S. dollars from thin air, continues to have the power to keep creating U.S. dollars from thin air.Greenspan quote.png

You are not Monetarily Sovereign, nor am I. Nor is your city, your county, your state, or your business.

We all can run short of dollars. Even Jeff Bezos and Bill Gates can run short of dollars. The U.S. government cannot run short. Unless it wants to.

Even if the U.S. government didn’t collect a single dollar in taxes, it could continue spending forever.

Some countries are not Monetarily Sovereign. The euro nations are not. They did not create the euro; they merely use it. But the European Union, which did create the euro, is Monetarily Sovereign.Bernanke quote.png

Obviously, there are a lot of other pieces to Monetary Sovereignty, but that is the essence: The U.S. federal government’s infinite ability to create U.S. dollars. Simple. Straightforward. Direct. The U.S. government, being Monetarily Sovereign, can create U.S. dollars endlessly.

You might think that anyone writing about or discussing economics would at the very least, understand that simple “1 + 1 + 2” concept. And yet . . .

I’ve spent more than 20 years trying to teach Monetary Sovereignty to anyone who will listen, and even now I am amazed at the brutal, stone-headed resistance.

Much of it is intentional, because drill down through the facts of Monetary Sovereignty, you discover some things the rich, opinion leaders don’t like — for instance a narrowing of the financial Gap between the rich and the rest.

But some of it is just . . . how can I say this kindly? . . . just plain mental blindness.

During my 20+ years mission, I’ve come across some truly wrong, misleading, and downright misguided articles, but today I found one that must be in the top 3.St louis fed quote.png

It was written by a man who is not stupid; I’ve read other of his articles and found them to be enlightening. But this one is, as the kids like to say, awesome — in how wrong it is!

No, this is not the time for fiscal restraint  By Steve Chapman

Steve Chapman is a columnist and editorial writer for the Chicago Tribune. His twice-weekly column on national and international affairs, distributed by Creators Syndicate, appears in some 50 papers across the country. Chapman has been a member of the Tribune editorial board since 1981. A native Texan, he has a bachelor’s degree from Harvard.
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Fiscal discipline was once a durable American practice. But in the 1940s, it went out the window. The federal government embarked on a sudden, unprecedented binge of borrowing that put the nation in hock up to its ears.

WRONG: The U.S. federal government does not borrow. Having the unlimited ability to create dollars, why would it?

What erroneously is termed “borrowing” actually is the acceptance of deposits into Treasury Security accounts (T-bill, T-note, T-bond). When you invest in a T-security, you deposit U.S. dollars into your T-security account.

There your dollars remain, gathering interest, until the account matures, at which time the government returns the dollars in your account. The government never uses those dollars or removes them from your account.

The purposes of issuing T-securities are:

  1. To provide a safe place for unused cash, which stabilizes the U.S. dollar
  2. To assist the Fed in controlling interest rates, which helps control inflation.

The government does not issue T-securities to obtain dollars.

From 1940 to 1945, federal spending rose tenfold. The national debt increased sixfold. The public would have to shoulder the burden of paying down that debt for decades to come.

WRONG: The public has not shouldered, and will not shoulder any burden from the so-called, misnamed “debt.”

First, it’s not “debt” in the usual sense. It’s deposits, and the deposits are NOT paid back with taxes. The “debt” (deposits) are paid off merely by returning the dollars that exist in the T-security accounts.

Second, federal taxes do not fund any federal spending. In fact, all federal taxes (unlike state and local government taxes) are destroyed upon receipt.

When the federal government pays a creditor, it creates new dollars, ad hoc. The process is this:

Upon approving an invoice for payment, the government sends instructions (checks or wires) to the creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account.

At the instant the creditor’s bank does as instructed, new dollars are created and added to the nation’s money supply (M1). This is the federal government’s method for creating dollars. No taxes involved. No burden on anyone.

There was, however, a good excuse for this gross budgetary excess: World War II. For a government, as with a person, there is usually no difference between being frugal and being wise.

But when the nation’s survival is at stake, the risks of underspending are far greater than the risks of overspending.

With the phrase “as with a person,” Chapman reveals abject ignorance of economics, for he equates federal (Monetarily Sovereign) finances with personal (monetarily non-sovereign) finances.

Further, he alludes to “gross budgetary excess,” which may be appropriate to individuals, states, and businesses, but is completely irrelevant to the federal government, which has the unlimited ability to create its own sovereign currency.

Finally, Chapman refers to WWII as needing “overspending” but does not mention any adverse effect from the so-called “budget excess.”

US GDP-Components from 1929 to 2011

The vertical gray bars show total GDP (right scale). The other lines show % of GDP (left scale). The black dotted line is government spending.  The blue dotted line is personal consumption.

In fact, increased federal spending created a dramatic increase in GDP.

gdp federal spending.png

’39-’49

A similar imperative exists today, as the new coronavirus endangers lives and causes economic disruption on a scale not seen since — well, since World War II.

Last year, the federal budget deficit soared to nearly $1 trillion , at a time of sustained economic growth and prosperity. It was an atrocious figure, representing the latest fiscal failure by our political leaders.

Chapman does not understand that the “sustained economic growth and prosperity” was a direct result of the federal budget deficit growth.

Deficits pump dollars into the economy, and GDP (the usual measure of economic growth) is a dollar measure.

GDP = Federal Spending + Non-federal Spending + Net Exports

Thus, it makes absolutely no mathematical sense to decry federal deficits while also treasuring GDP growth.

And, in fact, the “economic disruption” demands deficit spending far in excess of the $2 trillion measure recently passed. A spending measure of at least $7 trillion would have prevented the coming recession.

But the spending package forged by Congress and the president to address the fallout of the pandemic will add up to more than double that amount, pushing overall spending to levels never imagined just weeks ago.

The rescue plan is probably only the first of a series of huge spending bills meant to reduce the devastation from a locked-down economy.

Here, Chapman really doesn’t get it. He correctly indicates that “huge spending bills” “reduce the devastation from a locked-down economy.”

Amazingly, he doesn’t understand why that is true.

Of course, the reason is that money grows the economy and federal spending pumps money into the economy. Chapman wants the economy to grow from a “locked-down” position, but he doesn’t seem to want it to grow from a “non-locked-down” situation.

Puzzling.

For more years than I care to remember, under presidents of both parties, I have been a consistent voice — OK, an insufferable scold — on the need for the government to be thrifty and responsible in its budget policy.

I have stressed the importance of living within our means, paying the full cost of what we demand of our government and not piling needless obligations on future generations.

There are many good moments for fiscal restraint. This is not one of them.

He has been insufferable because his scolding has been based on economic ignorance.

The Monetarily Sovereign government has no “means” to live within. It has the infinite ability to pay any bills of any size, instantly.

And with regard to “paying the full cost of what we demand,” Chapman is referring to a balanced budget, or as it alternatively is known, “austerity.”

Here is what austerity looks like:

Vertical gray bars are recessions which begin when federal deficit spending (red line) declines, and are cured by increases in federal deficit spending.

And, if Mr. Chapman prefers federal surpluses (economic deficits), he should look at this:

Every U.S. depression has come on the heels of federal surpluses
1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

Today, we face enormous dangers. One is that millions of Americans thrown out of work or otherwise deprived of income will be unable to pay their bills, put food on the table or keep their homes.

Refusing to help them through this crisis, which came about for reasons beyond their control, would exact a horrific human toll.

It would also create general chaos that would stymie economic recovery for months, if not years.

Likewise with businesses. In the absence of prompt federal aid, a wave of bankruptcies could wipe out companies that were healthy and profitable before — and have every prospect of being healthy and profitable afterward.

The businesses would be gone, and so would the jobs they provided. People and companies desperately need a bridge across this troubled water.

In Mr. Chapman’s world, apparently the government should wait until “millions of Americans are thrown out of work or otherwise deprived of income, will be unable to pay their bills, put food on the table or keep their homes” before adding dollars to the economy.

He opposes deficit spending to, for instance, institute the Ten Steps to Prosperity (below), grow the economy and/or narrow the Gap between the rich and the rest

Yes, the necessary measures will be shockingly expensive. Yes, they will have to be paid for with borrowed funds. Yes, they will enlarge a national debt that was already in the neighborhood of $24 trillion.

WRONG. They will not be paid for with borrowed funds. But yes, the so-called national debt — which since 1940 has increased 60,000% (from $40 billion to $24 trillion) while the economy has grown massively — will continue to grow.

And further growth in the “debt” will mathematically be necessary for future economic growth.

How could we afford all this new debt?

Through the robust revenue-generating economic activity that will resume if we successfully navigate the crisis. The larger debt burden will be easier to bear in the long run than a smaller debt would be if we let a brief, severe downturn become a prolonged depression.

Mr. Chapman continues to demonstrate ignorance of the differences between federal financing and personal financing.

The federal government can “afford” any debt, simply by creating dollars. That is the way it pays all its debts.

It neither needs, nor uses “revenue-generating economic activity.” Federal taxes do not fund federal spending.

Debts have to repaid with dollars, and dollars are something the Federal Reserve can create in any quantity needed.

The worst case is that we will have to endure an eventual spell of inflation, which would be far preferable to an immediate and total economic collapse.

And there it is, the inevitable, but wrong, “The government always can print money, BUT this would cause inflation.” Again and again, we hear this from the economically ignorant, but NEVER do we see the evidence to back it up.warren buffet quote.png

Here is evidence to the contrary. It is an article titled, Only 450 words answer the question, “Does printing money cause inflation?”

It contains graphs showing that inflation is caused by shortages, especially shortages of food and/or energy:

Graph I Changes in the money supply M3 are NOT predictive of changes in prices (red).
Graph II Changes in the price of oil (which closely reflect supply changes) ARE predictive of inflation.
Graph III Food and energy inflation IS predictive of overall inflation.

After you look at those graphs, look at this one:

While federal deficit spending has risen dramatically (blue line) inflation (red line) has risen moderately, within the Fed’s target range.

Historically, the scarcity of food and/or oil has been the driver of inflation and hyperinflation. See: The Hyperinflation Myth Explained.

In most cases, our politicians deserve condemnation for spending money with wild abandon. In this moment, it’s the best thing they can do.

Steve Chapman, a member of the Tribune Editorial Board, blogs at http://www.chicagotribune.com/chapman .
schapman@chicagotribune.com
Twitter @SteveChapman13

Steve Chapman is widely read and influential. I urge you to contact him with the facts. Perhaps if he receives enough pokes, he may pay attention.

We desperately need more people of influence to spread the word, or we will have more recessions and wider Gaps between the rich and the rest.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

Mr. President, Members of Congress: WTF is wrong with you people? Friday, Mar 27 2020 

Mr. President, Members of Congress: WTF is wrong with you people?

Could it be that you really don’t know that:

1. The U.S. Government is Monetarily Sovereign. That means it has the unlimited ability to create U.S. dollars. The U.S. government never can run short of dollars. Even if all federal tax collections totaled $0, the federal government could continue spending, forever.

Who says so?

Well, there’s:
Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

And there’s:
Chairman Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

And there’s:
The St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e.,unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

2. And because the federal government has the unlimited ability to create dollars, federal deficit spending does not require tax increases. Federal taxes do not fund federal spending.

How do we know? Because since 1940, the federal government has spent more than $20 trillion that was not funded by taxes. That is how we came to have a $20 trillion debt.

And yet, over those 80 years, the economy has grown substantially, with minimal inflation.

3. The federal debt is no burden on taxpayers, and it is not an inflationary problem, either.

While the federal debt has risen dramatically, inflation has been moderate and within the Federal Reserve’s targets.

Those who predict that federal deficit spending will cause an inflation similar to the Weimar Republic, Zimbabwe, or Argentina are very simply not supported by history.

Inflations are not caused by federal government spending. Inflations are caused by shortages, usually shortages of food and/or energy (oil).

 

Mr. President and Members of Congress, you are sitting on an infinite pile of money, pretending you are trying to prevent a recession or a depression, but on the cheap.

And rather than just preventing a recession or a depression, you are not even trying to improve the lives of us people.

WTF is wrong with you people?

Why are you pulling FICA taxes out of our pockets, when even the originator of Social Security, President Franklin D. Roosevelt, knew that SS taxes are not necessary?

Luther Gulick, 1971: “In the course of (a) discussion (with President Roosevelt) I raised the question of the ultimate abandonment the payroll taxes in connection with old age security and unemployment relief in the event of another period of depression.

“I suggested that it had been a mistake to levy these taxes in the 1930s when the social security program was originally adopted.

“FDR said, ‘I guess you’re right on the economics. They are politics all the way through. We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits.

“‘With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.‘”

Mr. President and Members of Congress, Roosevelt understood what you don’t seem to understand: FICA taxes are not economically necessary.

You could eliminate them today, at the stroke of a pen, and add well over a trillion dollars to the economy.

FICA tax totals.png

And that money would go to exactly the right place: We working men and women of America.

And it would be so easy. Just stop collecting it. No complicated laws are necessary.

Simply fund Social Security, Medicare, et al the same way you fund it now. The simplest thing you ever have done.

But you resist doing it. WTF is wrong with you people?

The sole purpose of government is to improve and protect the lives of the people.

And yet you resist funding free Medicare for All — free health care insurance for every man woman and child in America.

Some of you, to avoid your responsibility, apply the false epithet, “socialism,” to any federal funding of anything.

Wake up. “Socialism” is federal ownership and control, not simply funding.

Medicare is not socialism, though the Veterans Administration hospitals are socialism. They are owned and controlled by the government. See the difference?

So which do you prefer, and why do you snarl “Socialism!” every time Medicare for All is proposed?

What is your plan? For the middle classes and poor to do without health care? For millions of Americans to choose between financial destitution or death? For elderly people lacking money, to be denied even the bare comforts of a nursing home?

Is that your plan?

WTF is wrong with you people?

You all march around pretending to be a great friend to the common man. Yet, you keep reducing Social Security payments and availability, when you should increase them.

The Social Security tax system.png

The “system”: Send FICA to SS. Receive $ from SS. Pay income tax to SS.

You even collect income taxes on Social Security benefits, which is beyond ridiculous.

Why would any sane government first take tax money from the people, then provide those same people with money benefits, and finally take back some of the same money?

The whole process makes no sense.

The government easily could provide Social Security for All — every man, woman, and child in America, simply by lowering the age requirement.

It would take little more than a click of a computer key.

Yet you resist by claiming federal deficits are “unsustainable,” and all the while knowing the federal government can “sustain” any level of debt.

Who says so:

Warren Buffett: “Those who regularly preach doom because of government budget deficits (as I regularly did myself for many years) might note that our country’s national debt has increased roughly 400 fold during the last of my 77-year periods. That’s 40,000%!”

Warren Buffett knows it and you know it, too.

So WTF is wrong with you people?

And then we come to student debt. As you well are aware, America’s future depends on the education of our young people.

Yet, you do very little to provide free education for America’s youth. As for grades K-12, you force the costs to rest largely on the backs of local government taxpayers.

Local governments are not Monetarily Sovereign, and so do not have your unlimited ability to create dollars.

So we taxpayers must pay, and this impoverishes us, which results in poorer schools and poorer people.

And rather than providing free college for all, as you easily could, you offer loans, thus indebting millions of young people.

Look at this disgraceful graph:

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It shows that an astounding 51% of federal assets are owed to the federal government by America’s students. These are the young people who leave college with a giant millstone on their backs.

They should be spending their time and money creating new ideas, new businesses, new products — all to grow America.

Instead, they are spending their time trying to gather money and send it to a federal government that not only doesn’t need the money, but destroys it upon receipt.

If any enemy nation wished to ruin America, one of their first acts would be to impede America’s college students.

Which is your plan? To prevent people from attending college, or to prevent them from using their college education? You are doing both.

Is this the way you “improve and protect the lives of the people?”

Below, is a list of Ten Steps to Prosperity, which if taken would save America’s economy, yet you resist implementing any long term actions. Everything you do is limited to a few days or weeks.

That is the extent of your planning.

Mr. President and Members of Congress, at long last, WTF is wrong with you people?

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

What is the value of a human life? The Libertarians have calculated it. Thursday, Mar 26 2020 

Lest you believe (or hope) the world is coming to understand the foundation of Monetary Sovereignty (a Monetarily Sovereign government cannot run short of its own sovereign currency), we bring you sad news: The Libertarians.

They call themselves “Libertarians,” but in fact they are anarchists. To them, there is no amount of government that is not “too big,” and there is no level of government spending that is not “too much.”

Here are some excerpts from a Libertarian article you may find discouraging:

Trump Is Right To Worry About the Cost of Aggressive COVID-19 Control Measures
So far politicians have been acting as if only one side of the ledger matters.
JACOB SULLUM | 3.25.2020 12:01 AM

President Donald Trump is rightly worried that the “cure” for COVID-19—sweeping restrictions on travel, local movement, business activity, and work—could prove to be “worse” than the disease.

How is that possible? The disease causes human misery and death. How can anything be worse than human misery and death?

The Libertarians have the answer. It’s “the ledger.”

That may already be true, because politicians have been acting as if only one side of this ledger matters.

Economists are predicting that the official response to the pandemic could lead to a downturn as bad as or worse than the Great Recession of 2008–09, which cost Americans an estimated $22 trillion.

It is hard to see how a loss of that magnitude can be rationally justified.

When government agencies evaluate health or safety regulations, they routinely consider not only the number of deaths they might prevent but also the cost of doing so.

That makes sense, because finite resources spent to reduce one kind of risk, depending on the payoff, might better be spent or invested elsewhere, possibly in ways that would save more lives.

Here, the Libertarian argument begins to become a bit murky.

It is true that when resources are finite and scarce, they must be allocated to a “best use” situation. An example would be coronavirus test kits, hospital beds, even doctors and nurses.

But as you will see, those are not what the author, Jacob Sullum, is talking about. He is talking about the supply of dollars (which are infinitely available to our Monetarily Sovereign U.S. government) vs. the value of human lives.

A rough calculation based on the “value of a statistical life” (VSL) that the Environmental Protection Agency uses to assess proposed regulations suggests that the cost of COVID-19 deaths in the worst-case scenario, which assumes that containment and suppression efforts are largely ineffective, would be huge: on the order of $13.6 trillion.

But if the economic projections are right, the cost of aggressive COVID-19 control measures will be substantially higher.

A definition to keep in mind:

From STRATA: THE VALUE OF A STATISTICAL LIFE: ECONOMICS AND POLITICS
Government agencies design regulations that are meant to benefit Americans. However, each regulation also comes with costs. Ideally, agencies use benefit-cost analysis to decide whether a proposed regulation is worth the cost.

When policies are designed to reduce health risks, agencies use a metric called the Value of a Statistical Life, or VSL to estimate benefits. In the simplest terms, a VSL is an estimate for how much people are willing to pay to reduce their risk of death.

Think about it. The VSL estimates how much people are willing to pay to reduce their risk of death.

How much are you willing to pay to reduce your risk of death? The question becomes meaningful if expressed in more concrete terms:

–How much extra would you pay for a car that has side-window airbags?
–How much extra would you pay to have a full-time lifeguard for your swimming pool?
–How much extra would you pay to employ a full-time, on-site doctor at your company?
–How much would you pay for a bodyguard?
–How much extra would you pay for a medicine that has a 75% chance of saving your life vs. a different medicine that has a 50% chance of saving your life.

We could go on and on with examples, but buried in the questions are more fundamental questions, such as:

–What is the likelihood you (or someone I care about) will sicken or die if you don’t pay for the preventative?
–How soon would your death happen if you don’t pay?
–How long will you live, even if you do pay?
–Are we talking about your life, your loved one’s life, your friend’s life, a stranger’s life?

STRATA goes on to list the problems with VSL. These are just a few examples:

PEOPLE DO NOT ACCURATELY PERCEIVE RISKS. Individuals have cognitive biases that do not allow them to accurately assess the risks they face.
THE VSL MAY BE OVERESTIMATED DUE TO PUBLICATION BIAS. Publication bias occurs when journals are more likely to publish studies that find large or statistically significant VSL estimates, while studies with small VSL estimates are less likely to be published.
MANY STATED PREFERENCE STUDIES ARE UNRELIABLE. Stated preference studies ask people how much they would be willing to pay to reduce risk in a hypothetical situation.
AGENCIES HAVE INCENTIVES TO MAXIMIZE BUDGETS. Public Choice Theory suggests that government agencies are incentivized to use policies and procedures designed to maximize budgets.
POLITICAL OR BUREAUCRATIC CONSIDERATIONS MAY TRUMP BENEFIT–COST ANALYSIS. VSL estimates are subject to political pressure.

Ideally, using accurate estimates of the VSL would enable agencies to conduct cost-benefit analyses that correctly identify efficient policies designed to protect people from risk and improve health.

Mr. Sullum’s article goes on to describe why he is “skeptical of policies proposed by government agencies” (his words).

That comparison assumes government intervention will be completely successful at preventing those deaths, which is certainly not true, and it uses a VSL that is arguably excessive in this case, since COVID-19 fatalities are concentrated among the elderly, meaning fewer years of life lost on average.

The true case fatality rate (CFR) for COVID-19 is likely to be much lower than the rates suggested by the official numbers, which include only confirmed cases.

Based on data from the cruise ship Diamond Princess, John Ioannidis, an epidemiologist and biostatistician at Stanford University, calculates that “reasonable estimates for the case fatality ratio in the general U.S. population vary from 0.05% to 1%.”

There is a great deal of uncertainty about these projections, and public officials may think they are erring on the side of caution. But that is true only if you ignore the potentially devastating impact of disrupting economic transactions, shutting down businesses, and depriving millions of people of their livelihoods.

If the CFR for COVID-19 is much lower than many people fear, “locking down the world with potentially tremendous social and financial consequences may be totally irrational.”

In settling on an appropriate response to COVID-19, there are no easy answers. But wise policy starts by recognizing the tradeoffs that politicians so far have been inclined to ignore.

There is one key point Mr. Sullum ignores. There is no cost for federal money.

There is no cost for federal money.

Zero. Zilch. Zip. And no, not even inflation.*

If you were to ask someone, how much extra would they pay for side-window airbags or for a medicine that has a 75% chance of saving their life (vs. a 50% chance), they would receive varying answers, depending on among other things, their personal wealth.

But if you asked a person the same kinds of questions, but said, “The federal government would pay — it would be free to you; do you want it?” — the vast majority would say, “Yes.”

In short, if we are talking about money cost, the VSL is meaningless when the Monetarily Sovereign federal government is the payer.

Unlike state and local governments, and unlike businesses and individual people, the federal government is Monetarily Sovereign. That means it has the unlimited ability to create dollars. It simply cannot unintentionally run short of dollars.

No matter how many dollars the federal government spends, it has no need to raise taxes. Federal money is absolutely free to all taxpayers. Federal spending could double, triple or increase by a factor of ten, and not one additional penny of federal taxes would be needed.

(Federal taxes serve two purposes: To help the government control economic activity and to fool the public into not asking for benefits. See: A Monopoly™ story, why you can’t see dollars, and why federal tax dollars are destroyed.)

When Mr. Sullum writes about, ” . . . the potentially devastating impact of disrupting economic transactions, shutting down businesses, and depriving millions of people of their livelihoods” he is referencing money, which the federal government has the unlimited ability to create.

*Though the public has falsely been told that federal spending causes inflation, the fact is that it would be the shutting down businesses that creates the unavailability of goods and services, and the resultant shortages are the real cause of inflation.

The best cure for inflation actually is increased federal spending for, and dissemination of, the goods and services whose scarcity caused the inflation.

In summary:

The coronavirus crisis can be addressed by massive federal investment directed in three fundamental directions.

  1. Increasing the supply of medical resources: research/development, equipment, drugs, facilities, and personnel.
  2. Increasing the supply of human resources — food, clothing, housing, education, transportation, infrastructure, etc.
  3. Increasing the buying power of the public.

The Value of Statistical Life (VSL) is meaningless in discussions of federal Monetarily Sovereign spending, which is limitless and comes at no cost.

Please give all of the above information to your favorite Libertarian.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

Who or what is John Kass and why is he promulgating the Big Lie? Wednesday, Mar 25 2020 

John (Jack) Kass is a far-distant, way-out, right-wing columnist.

Jack Kass

As such, he is a follower of Trump (who himself is neither right-wing nor left-wing, but rather wing-ding).

Kass really should write for Brietbart or sit glassy-eyed on the Fox News couch defending Trump’s latest lies.

Instead, he conducts his mischief by writing for the formerly right-wing, but now having adopted a bit of morality, middle-wing, Chicago Tribune.

Here are some excerpts from Kass’s March 25th Tribune article:

From the animal farm in D.C.: A $2 trillion sausage
When governments frantically throw more money than they can afford at a crisis — and we’re throwing trillions (yes, trillions) at the desperate war against the coronavirus with that federal relief package out of Washington — two truths are self-evident.

One was famously expressed by Rahm Emanuel. And the other was proclaimed by Comrade Napoleon, the talking pig from George Orwell’s “Animal Farm.”

Before we go further with Jack’s opus, we should get to the very heart of his claim, which is: The U.S. government is “frantically throwing more money than it can afford” at the virus crisis.

Being Monetarily Sovereign, the federal government can afford to spend any amount of dollars. ANY amount. In fact, the federal government’s primary method for creating money is to pay bills.

Thus, the U.S. federal government never can run short of dollars. Even if all tax collections fell to $0, the federal government could continue spending forever. There is zero relationship between tax collections and federal spending.

The notion that the U.S. federal government “can’t afford” two trillion, or even fifty times that much, is what is known in economics circles as “The Big Lie.”

The Big Lie is the false claim that federal taxpayers fund federal government spending.

If you don’t believe it’s a Big Lie, read what Chairman Alan Greenspan, Chairman Ben Bernanke, and  Billionaire Warren Buffet said at: Economic rescue bill — far too little and way too late.

Continuing with excerpts from the Kass article:

“You never let a serious crisis go to waste,” said Emanuel. “And what I mean by that it’s an opportunity to do things you could not do before.”

He perfectly described House Speaker Nancy Pelosi’s cynical leveraging of human misery and fear as she used the coronavirus in a push for more political power.

And Napoleon the pig offered that other self-evident truth, proclaiming that “All animals are equal, but some animals are more equal than others.”

Pelosi, true to Emanuel’s Rule of power politics, didn’t waste the coronavirus crisis. She stalled a Senate bipartisan coronavirus relief package.

Pelosi caused the delay, dumping the Democratic Party platform that she never could have passed on her own into the relief package.

It contained leftist Green New Deal ridiculousness on climate change provisions for airlines, race- and gender-based regulations on business, even federal cash for more wind and solar energy.

To Kass, “cynical leveraging of human misery and fear, means helping the poor by providing them with some food, clothing, housing, and medical care.

Oh, how cynical. In Kass-world, it would be less cynical to deny them food, clothing, housing, and medical care, as the GOP repeatedly tries to do.

Image result for wind and solar energy

To Kass: Ridiculous

Like a true conservative, Kass hates anything that might save the world for our children.

He thinks climate change provisions are “ridiculous.” He thinks gender-equality regulations are “ridiculous.”

He even thinks investing in wind and solar energy is “ridiculous.”

But what he really, really hates is Pelosi’s stalling of the Trump money-grab that would have given Mnuchin $500 billion to distribute secretly, as he saw fit, with no one the wiser. (How do you say, “Have a bucketful of cash, Mr. Trump, for your failing hotels” in Congressese?)

For reasons unknown, Trump’s personal assurance that he would oversee the money distribution just didn’t cut it for that old meanie, Pelosi.

Here, Jack explains his objection:

One feature of the compromise Democrats wanted was congressional oversight of a $500 billion fund managed by the U.S. Treasury Department to help struggling businesses with loans and loan guarantees.

Such oversight sounds reasonable. What wasn’t reasonable was the hideous partisan rhetoric from the hard left about corporate bailouts and slush funds.

That was irresponsible.

Oh, poor little Jack Kass had his tender feelings hurt by the insinuation that Honest Don Trump (of the Trump University and Trump Foundations scams, plus at least four bankruptcy scams plus his many criminal associates) might fill his grubby little hands with secret federal money to save his on-life-support hotels.

Who could imagine such a thing, other than everyone with a brain?

So Jack decried the “hideous partisan rhetoric that said, in essence, “Don’t put that proven crooked Fox in charge of the henhouse.”

How hideous! How partisan! How irresponsible!

The American economy wasn’t hamstrung by bad management. The economy was booming.

The mass unemployment and business losses are a direct result of government shutting down commerce to stop the spread of infection.

No, they are a direct result of the infection and the government’s tardy acceptance that the infection is real.

In essence, Kass’s objection is like complaining, “The jails are filled with criminals because the cops are catching them.”

With trillions being thrown around, and human nature being what it is, it is inevitable that some who’ll pass out the government cash, those at the receiving end or perhaps those in the middle will act like greedy piggies and oink their way into deals.   jskass@chicagotribune.com, Twitter @John_Kass

Kass’s hypothesis goes like this, folks: “Our government is not only dead broke, but cursed with human nature, which is to lie, steal, and insult like you know whom.

“So that being the case, why not just let an experienced liar, stealer, and insulter take charge of the money rather than those Democrat amateurs?”

I can only summarize this article in one way.

You don’t know Jack.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

 

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