How Trump got outfoxed and conned by Foxconn Thursday, Jan 31 2019 

Is there anything much more satisfying than a nice, heaping plate of “I told you so”?

The story begins with the world’s greatest businessman and negotiator. I know he is, because he has told me so — many, many times.

Forget his multiple bankruptcies (How does anyone go bankrupt with a gambling casino?) Forget how he has put himself under the thumb of Vladimir Putin, and has been conned by Kim Jong-un.

Forget about that wonderful business, Trump University, for which he was fined $25 million.

And forget about all the indicted and found-guilty incompetents, with whom he has surrounded himself.

The story begins in September, 2017.

Wisconsin Gov. Walker to sign $3 billion incentive package for Foxconn

Image result for trump foxconn

Trump shovels for Foxconn

The Wisconsin Assembly sent a $3 billion incentive package for Taiwan-based Foxconn to Gov. Scott Walker on Thursday, signing off on a deal to lure the electronics giant to the state with the biggest subsidy to a foreign company in U.S. history.

This deal was handled with the usual Trump braggadocio and self-congratulations, which because he is the greatest businessman in history, guaranteed it would be a failure.

Here is an excerpt from a September 2017 post we published about the project, “Who put the “con” in Wisconsin? Foxconn, that’s who.”

This is what I predict:

    1. Foxconn never will hire 13,000 people. Not in a year, not in ten years, not ever.
    2. Many of the people it does hire, will come from neighboring Illinois, will shop in Illinois, and will pay taxes to Illinois. The Chicago commercial area is a must larger source of qualified workers than is the entire state of Wisconsin, and it is nicely convenient via road and commuter rail.
    3. Republican pols, upon receiving advance info about which land Foxconn plans to use, will buy it early, making out like bandits. They probably already have begun to acquire options.
    4. Foxconn, having demanded a direct line to a politically leveraged Wisconsin Supreme Court, easily will fend off any challenges to its sweet deal.
    5. Foxconn will pollute Wisconsin’s land and water, and if sued, will win its case in the highly political, dysfunctional, right-wing, pro-business, anti-environment Wisconsin Supreme Court.
    6. Screwed Wisconsin taxpayers, will pay big, and never will see any net benefit.

    “Walker joined President Donald Trump in announcing Foxconn’s plans to build in Wisconsin at a White House event in July, heralding it as a game-changer for American manufacturing.”

    So there it is. In addition to being a giveaway to big business and to greedy politicians, and a rip-off of the average taxpayer (the Republican standard operating procedure), the Foxconn deal provides endless bragging rights to Trump and Walker for all the non-existent jobs they will claim they brought to Wisconsin.

    Trump and Walker will be long gone from office by the time the Wisconsin taxpayers figure out they are enmeshed in this deal, forever.

Well, I was wrong about one thing. Trump still is in office, and still bragging and failing, but already the headlines are rolling in:

‘Foxconn Was a Major Con’: Backed by Trump Promises and $4 Billion in Subsidies, Company Admits Factory Jobs Not Coming
Posted on January 31, 2019 by Yves Smith

And:

TRUMP’S “INCREDIBLE” FOXCONN FACTORY DEAL WILL NO LONGER INCLUDE A FACTORY
Vanity Fair, Hive; BY BESS LEVIN
JANUARY 30, 2019 5:49 PM
The Taiwanese company, which received more than $4 billion in tax subsidies, is scrapping its initial plans, but will keep the money, thanks.

And:

Wisconsin is finally facing the reality of Foxconn’s plans
By Tim Culpan, Chicago Tribune, Jan 31, 2019

So Foxconn Technology Group may not make display panels in Wisconsin after all.

Those who’ve been following Foxconn for a long time won’t be surprised. Chairman and founder Terry Gou is as much a salesman as he is a manufacturer, having spent decades honing his pitch not just to clients but also governments.

Then-Gov. Scott Walker, backed by President Donald Trump, loved exactly what he sold: the promise of thousands of jobs to make stuff in the U.S. Walker loved it so much that he pledged as much as $3 billion in sweeteners, a deal that likely cost him his governorship.

Now, according to a Reuters interview with one of Gou’s right-hand men, such plans to manufacture display panels may be scaled back or even shelved.

Foxconn’s Wisconsin-made screens likely would have been put into televisions. Woo this week acknowledged that “in terms of TV, we have no place in the U.S. … We can’t compete.”

It’s simply a matter of economic reality. The same reality that existed when Trump was handing out red truckers’ hats and promising to Make America Great Again.

Foxconn’s U.S. panel project didn’t make sense, evidenced by a comment Gou himself made saying that such plans weren’t a promise but a wish.

Foxconn is now publicly conceding that manufacturing panels in Wisconsin isn’t viable.

In 2018, the first year of the Wisconsin experiment, the company couldn’t hit its employment target. Instead of creating a very modest 260 full-time jobs, Foxconn filled just 178 positions, Reuters reported.

And that, you folks who voted for Trump, is what $3 billion will buy you, if you have the world’s greatest negotiator working the deal and bragging about it, afterward.

I told you so.

Now, about that wall he promised, but never even asked for when he had a Republican Senate and a Republican House . . .

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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 The Ten Steps To Prosperity can 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 you.

MONETARY SOVEREIGNTY

Student debt: The intentional crisis. Tuesday, Feb 19 2019 

While America struggles with the Republicans’ $6 Billion, phony, “Wall crisis,” several real crises remain unattended, one of which is the Student Debt Crisis.

Back in December, 2015, we published, “Student loans and the unforgivable debt.” Today, more than three years later, the student debt has grown massively and remains even less forgivable.

Consider excerpts from the following article:

Student loan balances jump nearly 150 percent in a decade, By Jessica Dickler, CNBC

Over the last decade, college-loan balances in the United States have jumped more than $833 billion to reach an all-time high of $1.4 trillion.

The average outstanding balance is now $34,144, up 62 percent over the last 10 years.

In addition, the percentage of borrowers who owe $50,000 or more has tripled over the same time period.

A college education is now the second-largest expense an individual is likely to make in a lifetime — right after purchasing a home.

Many graduates have expressed buyer’s remorse regarding the cost of their education. To that point, 57 percent said they regret taking out as many loans as they did, and 36 percent said they would not have gone to college if they fully understood the associated costs.

That debt also has long-term consequences. From buying a car or a home to getting married and even having children, many millennials are putting off life’s major milestones because of their record debt.

Here are several observations regarding the above.

  1. The vast majority of American students attend grades K through 12 free, paid for by city and state governments.
  2. City and state governments are monetarily non-sovereign, meaning they do not have the unlimited ability to create money. City and state taxpayers fund city and state government spending, yet taxpayers, realizing the importance of education, willingly pay for K-12 schooling.
  3. By contrast the federal goverment is Monetarily Sovereign; it has the unlimited ability to create U.S. dollars. The federal goverment never can run short of dollars. Federal taxpayers do not fund federal spending. The federal government self-funds its spending by creating new dollars, ad hoc.
  4. In today’s, more sophisticated and competitive world, the education of young people, beyond high school, has become more important to America’s growth and success.
  5. Student debt discourages entrance to college, discourages finishing college, and discourages success after college.
  6. Student debt is unnecessary. Our Monetarily Sovereign federal government has no need to collect dollars from students. Rather than lending dollars to students, the government should give dollars to students, to pay for college. See: Ten Steps to Prosperity: Step 4: Free education for everyone  and Ten Steps to Prosperity: Step 5: Salary for attending school.e

In short, saddling students with federal debt, when the federal government has no need to collect the debt, makes no economic sense, and in fact is harmful to America’s future.

So why do we do it?

First, the American people do not understand the federal government’s Monetary Sovereignty. They wrongly believe that federal taxes pay for federal spending, so they resist efforts to increase federal spending, lest federal taxes increase.

Image result for greenspan

Alan Greenspan: Of course. Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency

The people do not know that though state and local taxes pay for state and local spending, federal taxes pay for nothing, and in fact, are destroyed upon receipt by the U.S. Treasury.

Thus, we have the incredible irony of Americans willing to pay taxes to fund grades K-12, but not to fund grades 13+, which would cost no tax dollars at all.

Second, the rich run America by bribing politicians via political “contributions.”

“Rich” is a comparative term. A person having $100 is rich if everyone else has only $1, but is poor if everyone else has $10,000. So, in order to become richer, one either must increase his own wealth, or decrease everyone else’s.

Image result for bernanke

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.

(Gap Psychology describes the human desire to widen the Gap below oneself, on any economic or social measure, and to narrow the Gap above.)

Motivated by Gap Psychology, the rich wish to distance themselves from the not-rich.

One of the many ways the rich do that is by indebting the not-rich. Because the rich pay for their children’s college simply by writing checks, while the not-rich pay by borrowing, the student loan debt is a perfect device for widening the Gap between the rich and the rest.

(The rich also widen the Gap by such actions as:

  1. Cutting Social Security benefits on the false claim that Social Security is “insolvent.”
  2. Taxing Social Security benefits
  3. Collecting FICA and limiting collection to salaries below $132K
  4. Requiring everyone to pay for Affordable Care Act (Obamacare), even when well.
  5. Taxing salaries at a higher rate than other forms of income most received by the rich.
  6. Allowing for tax shelters most used by the rich
  7. Requiring Medicare to be incomplete, i.e. not covering coinsurance, deductibles, and copayments.)

Bottom line: Student debt is an unnecessary, harmful program, perpetuated by the rich to widen the Gap between the rich and the rest.

To advance the interests of the United States, the federal government should eliminate student debt and provide a free college education for all who want one.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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 The Ten Steps To Prosperity can 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 you.

MONETARY SOVEREIGNTY

The Social Security screwing. Save us from our friends. Thursday, Feb 14 2019 

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.”

Alan Greenspan: “Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency.”

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.

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When the best intentions are based on the worst assumptions, the result will be chaos.

Background

Keep the following three facts in mind as you read the referenced article:

1. The U.S. federal government, unlike state and local governments, is Monetarily Sovereign. It invented the U.S. dollar, and it originally created millions of U.S. dollars from thin air, by creating appropriate laws from thin air.

Today, the U.S. government continues to be sovereign over the dollar and to create U.S. dollars at will.

Image result for unlimited money
The U.S. government cannot run short of its own sovereign currency, nor can any agency of the U.S. government, unless that is what Congress wants.

2. The U.S. government never unintentionally can run short of its own sovereign currency, the U.S. dollar.

Therefore, no agency of the U.S. government can run short of dollars unless the government wants that to happen.

3. Social Security is an agency of the U.S. government.

Therefore, Social Security cannot run short of dollars unless the government wants Social Security to run short of dollars.

Now for excerpts from the article:

Why Social Security Expansion May Stiff the Poor,  By ANDREW BIGGS, February 13, 2019

On January 31, over 200 House Democrats jointly introduced the Social Security 2100 Act, legislation that would expand Social Security both by raising the 12.4 percent payroll tax and by phasing out the current $132,000 cap on taxable earnings.

Immediately, you see a problem. Question: If Social Security cannot run short of dollars, and the government wants to expand benefits, why is it necessary to raise the payroll tax and the cap on taxable earnings?

Answer: It isn’t. In fact, the federal government could completely eliminate the payroll tax (Federal Insurance Contributions Act – FICA), and still expand benefits to any desired level. See: The Ten Steps to Prosperity: Step 1. Eliminate FICA

Social Security Works, an activist group that was key to making Social Security expansion the de facto position of the Democratic party, crows that the Social Security 2100 Act would allow “no retiree to fall into poverty.”

Not only is that claim untrue, but this budget-busting expansion of the federal government’s already-insolvent retirement program may leave low-income retirees disappointed.

Because the U.S. government has the unlimited ability to create U.S. dollars, it cannot become insolvent, and no agency of the U.S. government can become insolvent (i.e run short of dollars with which to pay its bills).

The Social Security 2100 Act is the brainchild of Representative John Larson (D., Conn.), who took the progressive impulse to expand Social Security and turned it into detailed legislation.

Larson deserves credit for his efforts. With most members of Congress from both parties willing to go their entire careers without proposing anything to fix Social Security’s $10 trillion–plus funding shortfall, any congressman who does — to say nothing of one who attracts 80 percent of his own party to co-sponsor the bill — should be applauded.

“Funding shortfall” is the incorrect term the author gives to the difference between FICA and benefit payments. 

However, FICA is not the source of benefit payments. All FICA receipts are destroyed upon receipt. 

In theory, the Social Security 2100 Act would provide the low-income workers with Social Security benefit increases of up to 44 percent, a startling figure. In reality, many would see little difference in their benefits. For one thing, about 20 percent of the lowest-income quintile of U.S. workers fail even to qualify for Social Security benefits, owing to short working careers and Social Security’s ten-year vesting period.

The reason for a ten-year vesting period, or any vesting period, is to pretend that taxes fund benefits. This would be true if the federal government were monetarily non-sovereign, like city, county and state governments.

But, because Social Security is a federal program, there is no need for a vesting period. Ideally, every American would be vested on the day he or she is born.

These Americans end up relying on Supplemental Security Income, a means-tested welfare program that provides sub-poverty-level benefits while effectively prohibiting beneficiaries from working or accumulating savings.

Because Social Security benefits actually are funded by the federal government, and are not limited by tax collections, there is no reason why Americans must rely on other government programs.

Further, means-testing is an unnecessary cost-saving device. The federal government, having the unlimited ability to create dollars, does not need such cost-saving devices.

But even many low-income workers who qualify for retirement benefits won’t see much of an increase under the Social Security 2100 Act. Here’s why.

First, the Act’s advertised 44 percent benefit increase applies only to low-income workers who work for at least 30 years. Low-wage, long-career workers are unusual, making up only about a tenth of the retiree population.

For low earners with shorter careers — the ones most likely to land in poverty in old age owing to a failure to build savings — the Act offers a benefit increase of just 4 percent.blockquote>

Again, the 30-year requirement is an unnecessary, cost-saving device, based on the false linkage between FICA taxes and benefits paid.

And even these modest benefit hikes may prove to be illusory. Almost 40 percent of very low earners currently receive a supplemental benefit based on a spouse’s earnings.

For these “dually entitled” retirees, who are almost by definition low-income, the Social Security 2100 Act may increase the benefit check in their mailbox by very little or nothing.

For instance, imagine a couple where the husband’s earnings brought him $2,000 per month in Social Security benefits while the wife’s earnings brought her only $750.

Social Security’s spousal benefit would top her monthly check up to $1,000, half her husband’s check. Now imagine that the Social Security 2100 Act boosted her base benefit by 10 percent, to $825 per month. But that $75 per month increase would be deducted from her spousal benefit, leaving her with the same $1,000 total as before.

For many of these very low earners, the extra benefits won’t be enough to compensate for the nearly one-fifth increase in payroll taxes they’ll be hit with as the Social Security 2100 Act gradually boosts the current 12.4 percent rate to 14.8 percent.

The above contains additional unnecessary linkage between taxes collected and benefits paid.

The article goes on to describe other features that benefit the rich more than the poor, and then finishes with the following:

Yes, Social Security faces a significant funding gap. And yes, higher taxes are one way to fill it.

There is not funding gap, and federal taxes do nothing to assist funding.

But the Social Security 2100 Act imposes tax increases well beyond what’s needed simply to pay promised benefits in full, which itself is well beyond what is truly needed if we gradually scale down the growth of benefits for middle- and upper-income retirees.

No taxes are needed, and the last thing America needs is to scale down the growth of benefits for middle-income retirees.

It’s not at all clear why the nation should levy higher taxes on rich and poor alike merely to reshuffle most of those dollars to middle- and higher-income retirees.

Even from a progressive standpoint, isn’t there a better use for higher taxes than this?

Unlike state and local government taxes, which do fund state and local government spending, federal taxes have a completely different purpose: To encourage and discourage various activities, and/or to benefit the wealthy political donors.

For instance, when the federal government wished to encourage home ownership vs. rental, it gave a tax break to mortgage interest, but none to rental payments.

When the federal government wished to discourage cigarette smoking and liquor consumption, it taxed these “sin” activities.

The lower taxes on capital gains vs. salaries, were to benefit wealthy, political donors.

The purpose of federal taxation is not to fund federal spending. FICA does not fund Social Security. Benefits should not be limited by tax collections.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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 The Ten Steps To Prosperity can 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 you.

MONETARY SOVEREIGNTY

Duck! The sky is falling and the “debt” is rising! Wednesday, Feb 13 2019 

Here we go again: The same old story — the same old lie — we have documented since 1940. Nothing has changed and nothing has been learned.

National debt tops $22 trillion for the first time as experts warn of ripple effects by Michael Collins, USA TODAY Feb. 12, 2019

WASHINGTON – The national debt surpassed $22 trillion for the first time on Tuesday, a milestone that experts warned is further proof the country is on an unsustainable financial path that could jeopardize the economic security of every American.

Yes, way, way back in 1940, the federal budget was a “ticking time-bomb which can eventually destroy the American system,” said Robert M. Hanes, president of the American Bankers Association. Image result for time bomb

Every year since then, the self-proclaimed experts have told you the federal debt either is a “ticking time bomb,” “unsustainable,” “a threat to the economic security of every American,” or some other bit of scare nonsense.

In 1940, the so-called “debt” (It actually is “deposits,” but why be accurate when you want to fool the public?) was only $40 Billion. Today, it is about $17 Trillion, a gigantic 45,000% increase.

(The $22 Trillion figure includes internal debt, money one department of the government owes another department of the government — left pocket owes the right pocket. The debt scare-mongers use the larger number so as to scare you more.)

Despite that massive debt increase in the past 80 years, where is the “threat to economic security?” Why has that “ticking time bomb” not exploded? Eighty years is a long time to keep ticking and nothing happens.

The Treasury Department reported the debt hit $22.012 trillion, a jump of more than $30 billion in just this month.

The national debt has been rising at a faster rate following the passage of President Donald Trump’s $1.5 trillion tax-cut package a little more than a year ago and as the result of congressional efforts to increase spending on domestic and military programs.

The nation has added more than $1 trillion in debt in the last 11 months alone.

“Reaching this unfortunate milestone so rapidly is the latest sign that our fiscal situation is not only unsustainable but accelerating,” said Michael A. Peterson, chief executive officer of the Peter G. Peterson Foundation, a nonpartisan organization working to address the country’s long-term fiscal challenges.

Here is all you need to know about the Peter G. Peterson Foundation, an organization devoted to spreading the “Big Lie,” that the federal government’s finances are like state and local government finances, and the debt is “a ticking time bomb,” etc., etc., etc.

These folks never seem to be embarrassed about being wrong, wrong, and wrong yet again, year after year. They just keep on making those wrong predictions as though reality means nothing.

The “unfortunate milestone” is the kind of milestone banks boast about: An increase in total deposits.

For Americans, the growing debt should be a concern, experts said, because over time it can push up interest rates for consumers and businesses.

The higher rates can ripple through the economy, nudging up rates for mortgages, corporate bonds and other types of consumer and business loans.

The above two paragraphs are so far out of touch with reality, they are laughable.

First, if the growing debt could “push up interest rates,” why hasn’t the 45,000% increase in debt already pushed up interest rates, which today remain quite low?

Second, the Fed controls interest rates by fiat. When the Fed wants low rates, it mandates low rates. When it wants high rates, it mandates high rates.

If it wants to issue T-securities at a certain rate, and the public doesn’t buy them, the Fed simply can buy the T-securities, itself.

Being Monetarily Sovereign, i.e. sovereign over the dollar, the government can do anything it wishes with the dollar.

Third, higher interest rates actually grow the economy by increasing the number of interest dollars the government pumps into the economy.

The most common measure of the economy is Gross Domestic Product. GDP = Federal Spending + Non-federal Spending + Net Exports. Notice the words “Spending”? They include interest.

Fourth, private interest does not inhibit an economy; it merely circulates dollars. The borrower pays interest to the lender. It’s a cost to one, and income for the other. The total of dollars stays essentially the same.

Then, we come to the biggest lie of all:

A big national debt can also make it harder for the government to increase spending to combat the next recession or devote more money to retraining workers and helping the poor, among other programs.

Here, Peterson confuses federal finances with monetarily non-sovereign state and local finances.

The number of dollars deposited into T-security accounts has no effect on the government’s ability to spend. The government doesn’t touch the dollars in T-security accounts.

When the federal government spends, it sends instructions (not dollars) to a supplier’s bank, instructing the bank to increase the balance in the creditor’s checking account.

When the creditor’s bank does as instructed, brand new dollars are created and added to the money supply measure, M1.

Peterson attributed the growing national debt to “a structural mismatch between spending and revenues.”

The biggest drivers are the aging population, high healthcare costs, and growing interest payments, combined with a tax code that fails to generate sufficient revenue, he said.

“Structural mismatch” is Peterson-speak meaning more dollars are spend than are received in taxes.

But this has no effect on the federal government’s ability to spend. Because the federal government creates brand new dollars, every time it pays a bill, it could continue spending forever, even if total tax collections were $0.

In fact, tax dollars are destroyed immediately upon receipt by the U.S. Treasury.

The debt eclipsing $22 trillion “is another sad reminder of the inexcusable tab our nation’s leaders continue to run up and will leave for the next generation,” said Judd Gregg and Edward Rendell, co-chairmen of the nonpartisan Campaign to Fix the Debt, a project of the nonpartisan Committee for a Responsible Federal Budget.

Let us dispense with the “next generation” nonsense. The “next generation” didn’t pay for the $40 Billion debt of 1940. The “next generation” didn’t pay for the $3 Trillion debt of 1992. And today’s generation is not paying for any past debt.Image result for the end is near

Taxpayers do not fund federal debt. The deposits themselves are returned upon maturity, and the interest on those deposits is paid by new dollars created by the federal government.

No tax dollars involved. They are destroyed.

Also, let us dispense with this “nonpartisan” nonsence. These guys are rabidly partisan. The root for the rich and against the poor.

They want taxes on the rich cut, and benefits for the poor cut. How much more partisan can you get.

With deficits rising and gross debt scheduled to jump by more than $1 trillion annually, Congress must take action to put the country on a more sustainable path, Gregg and Rendell said.

“The fiscal recklessness over the past years has been shocking, with few willing to step up with a real plan,” they said. “We need responsible leadership to fix the debt, not a worsening of partisanship.”

And that is exactly what the debt fear-mongers have been saying for the past 80 years.

Pretending federal finances are like state and local government finances, or like personal finances, is designed to fool the public.

Because few people understand the basics of economics, the plot seems to have worked.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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 The Ten Steps To Prosperity can 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 you.

MONETARY SOVEREIGNTY

Should the minimum wage be lowered? Saturday, Feb 9 2019 

The federal minimum wage rate is $7.25 an hour. It applies to hourly employees and has been in place since 2009.

The states also set minimum wage rates that are above or below the federal rate, and several states have no minimum wage rate at all. In those latter states, and in those states with no minimum wage laws, the higher rate is supposed to apply.

Here are a few facts about the minimum wage:

(By Debbie Lord, Cox Media Group National Content Desk)

The Fair Labors Standards Act of 1938 established a federal minimum wage or the minimum amount a person must be paid by the hour. It was created to help stabilize the country following the Great Depression of the 1930s.

A single person under the age of 65 is considered to be living below the poverty level if they are making less than $12,486.

The act applies to around 84 percent of the U.S. labor force or 130 million workers.

The states also can set minimum wages that are above or below the federal rate. In those states the higher rate is applies.

I mention all this because my home state, Illinois, plans to raise its minimum wage to $9.25 per hour next year and to $15 per hour by 2025, and the usual controversy has begun.

Why do we have minimum wage laws?

These laws tacitly acknowledge that at the lower end of the wage scale, employees have much less negotiating power than do businesses.

These laws also acknowledge that many, if not most, businesses will pay workers as little as necessary to attract workers, and this amount frequently leaves workers in poverty.

Minimum wage is an anti-poverty effort, but like virtually all anti-poverty efforts, it is disdained by the conservative side of the political spectrum:

Ten reasons economists object to the minimum wage

Mark J. Perry @Mark_J_Perry

December 8, 2015

1. Proposed minimum wages are almost always arbitrary and never based on sound economic analysis. Why $10.10 an hour and not $9.10? Why $15 an hour and not $16 an hour?

#1 is fundamentally true, though it is a red herring, mostly because such an analysis is impossible. There are far too many too many competing variables.

Some people will benefit; some will be injured, and by varying degrees. Some businesses too, will benefit and some will not. How would the competing benefits and injuries be weighed?

But all of the above is true of most laws. Should the fine for speeding be $50 or $100? Should a jail term for a crime be 1 year or 10 years? How is that determined?

Although America has many thousands of city, county, state, and federal laws, very few are subject to “sound economic analysis,” for the same reasons as our own personal decisions seldom are subject to “sound economic analysis.” Too many competing and non-comparable variables.

2. A uniform federal minimum wage may be sub-optimal for many states, and uniform state minimum wages may be sub-optimal for many cities. A one-size-fits-all approach to the minimum wage is really a “one-size-fits-none.”

#2 also is true of most laws, particularly federal laws. But federal minimum wage law merely is a bottom, from which cities and states may deviate upwards. Image result for minimum wage

In that sense, it is more flexible than are most federal laws.

3. Minimum wage laws require costly taxpayer-funded monitoring and enforcement mechanisms, whereas market wages don’t.

All laws require monitoring of some sort. The objection really is an objection to any minimum wage laws.

Said another way, the author implies that minimum wage should be $0.

This directly contradicts his earlier objections: (#1: “Why $10.10 an hour and not $9.10?”) Why $0? What is his “sound economic analysis” that shows minimum wage should be $0?

And (#2: “A uniform federal minimum wage may be sub-optimal for many states . . .”) A $0 minimum wage surely will be “suboptimal for many states, counties and cities.”  But what prevents powerful employers from paying starvation wages to weak, desperate employees?

4. Minimum wage laws discriminate against unskilled workers in favor of skilled workers, and the greatest amount of discrimination takes place against minority groups, like blacks.

Low pay, including $0 pay, “discriminates against unskilled workers in favor of skilled workers, and the greatest amount of discrimination takes place against minority groups, like blacks.”

Again, this begs the question, what level of pay is acceptable in today’s America, or is the author suggesting we should return to slavery?

5. Adjustments to total compensation following minimum wage laws will disadvantage workers in the form of reduced hours, reduced fringe benefits, and reduced on-the-job training.

“Adjustments to total compensation following minimum wage laws in the form of reduced hours” means the people will work fewer hours for the same pay. Is this a bad thing??

6. Many unskilled workers will be unable to find work and will be denied valuable on-the-job training and the opportunity to acquire -jobexperience and skills.

On-the-job training for minimum wage jobs generally is itself, minimum, and most often is of scant value. Handing off a burger or greeting a customer at the door, does not provide valuable on-the-job training.

Again, the author does not explain what level of pay is necessary to provide that training. Presumably, no level of pay is low enough to satisfy his criteria.

7. Minimum wage laws prevent mutually advantageous, voluntary labor agreements between employers and employees from taking place.

Minimum wage employees do not have the economic power or expertise to negotiate “mutually advantageous, voluntary labor agreements.

8. To the extent that higher minimum wages result in lower firm profits and higher retail prices, that’s a form of legal plunder by workers from employers and consumers that is objectionable.

The author may not realize it, but his #8 can be rephrased: “To the extent that any wages result in lower firm profits and higher retail prices, that’s a form of legal plunder by workers from employers and consumers that is objectionable.”

Even a 1 cent minimum wage fits that description. Once again, the author naively opts for a $0 minimum wage.

9. Market-determined wages are efficient, whereas government-mandated wages create distortions in the labor markets that prevent labor markets from clearing.

No definitions are given for “efficient,” “distortions,” and “clearing.” Is it “efficient” for a person to work 40 hours a week and still not be able to afford life’s necessities? Are markets distorted when a low-paid person makes one thousandth what a highly paid worker makes?

Similarly, when unions strike for wages and benefits, is that an example of “market-determined” efficiency?

10. Like all government price controls, minimum wage laws are distortionary. If you trust government officials and politicians to legislate and enforce a minimum wage for unskilled workers, you should logically trust those same bureaucrats to set all prices, wages and interest rates in the economy.

Realistically, if you agree that those economy-wide price controls would be undesirable, then you should also agree that the minimum wage law is also undesirable.

Forgetting for a moment that government price controls set maximums, and minimum wage sets minimums, the government already does many things to set prices on things. Medicare, for instance, one of the most popular social benefits in history, already sets maximum prices on thousands of procedures and drugs, by virtue of its compensation schedules.

Many state and local government set maximum prices on electricity, water, parking, and the largest single expense we all pay: Taxes. The notion that governments are incapable of setting a minimum on wages simply does not square with the facts.

Minimum wage laws benefit America, because allowing powerful companies to pay starvation, or even below-starvation, wages is not in the best short-term or long-term interests of America.

Minimum wage (red line) has not kept up with inflation (blue line).

The sole question is not “whether” there should be minimum wage laws, but rather “at what levels” those wages should be.

I suggest that no one ever should be paid at a poverty level.

Though all of America is subject to various levels of minimum wage, the nation’s economic growth has been impressive, while unemployment is low.

This belies the author’s contention that minimum wage laws, in of themselves, are harmful.

Of course, minimum wage laws would be much less needed if the nation adopted the “10 Steps to Prosperity, below.

The Ten Steps would cost businesses and taxpayers nothing, and would not discourage hiring.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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 The Ten Steps To Prosperity can 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 you.

MONETARY SOVEREIGNTY

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