Fed Chair Powell pushes the economy over the cliff. Next stop: Stagflation

WASHINGTON (AP) — Intensifying its fight against high inflation, the Federal Reserve raised its key interest rate Wednesday by a substantial three-quarters of a point for a third straight time and signaled more large rate hikes to come — an aggressive pace that will heighten the risk of an eventual recession.

Barring the kind of miracle that allows Jerome Powell to come to his senses, we very soon will be in a stagflation — a combination of stagnation and inflation — and Jerome Powell will not know what to do about it.

The past interest rate increases have done nothing to halt or even moderate inflation. So, Chairman Powell does the only “sensible” thing. He keeps doing what repeatedly has failed, praying that somehow, in some way, magic will happen.

He is not “heightening the risk of recession.” He intentionally is causing a recession. He says so himself but uses oblique language to describe it.

Trust me. I’m doing this to cure your acrophobia.

The officials also forecast that they will further raise their benchmark rate to roughly 4.4% by year’s end, a full point higher than they had envisioned as recently as June.

And they expect to raise the rate again next year, to about 4.6%. That would be the highest level since 2007.

By raising borrowing rates, the Fed makes it costlier to take out a mortgage or an auto or business loan.

Get it? To fight higher prices, the Fed will raise the prices of mortgages, autos, and business operations — and just about every other thing you wish to buy.

And some people believe this nonsense.

Consumers and businesses then presumably borrow and spend less, cooling the economy and slowing inflation.

“Cooling the economy” is the Fed’s way of saying, “causing a recession.”

Here is the definition of a recession: “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

Sounds like “cooling,” doesn’t it?

Sadly, the Fed doesn’t have the courage or morals to tell the truth, which is that they want to cause a recession as a way to end inflation. So they say they are going to “cool” the economy”

What makes them feel the economy needs “cooling”?

One measure of the economy’s “heat” is unemployment. A “hot” economy should have low unemployment. According to the Fed’s metric, the Fed should raise interest rates when unemployment goes down.

Similarly, when unemployment rises, you might expect the Fed to cut rates We should see the unemployment rate and the interest rate move in opposite directions.

Is that what we see?

When unemployment (red) goes up, and the economy could use some stimulus, the Fed tends to raise interest rates (green), which is anti-stimulus. By the Fed’s own philosophy, interest rates should rise when unemployment goes down, But we see the opposite.

In short, the Fed is consistent. It consistently does exactly the opposite of what it claims the economy needs. The reason: The Fed focuses on the false premise that inflation is caused by low interest rates and is cured by raising interest rates.

And as far as the economy needing “cooling,” what exactly does it mean? What does it mean for an economy to be too hot?

Here’s an interesting graph:

It shows one of the prime measures of economic growth, the annual change in real per capita gross domestic product. If anything should measure the “heat” of an economy, this is it.

A year ago, in early 2021, one might have said the economy is pretty “hot.” No longer. The economy now seems to be growing at a normal rate. So why does it need “cooling”?

Notice what happens before we have a recession. The annual change drops, which is exactly what the Fed wants to happen now.

I’ve been at this for twenty-five years, and I still don’t know what it means for an economy to be too hot. What I do know, however, is what causes inflation: Shortages of key goods and services.

Today, we have those shortages, not because demand is too great, and not because interest rates are too low, and not because the federal deficits are too high. We have shortages because the confluence of COVID, the Russian war, and reduced oil pumping caused supply to constrict.

 

Falling gas prices have slightly lowered headline inflation, which was a still-painful 8.3% in August compared with a year earlier.

Think of it. The Fed has raised the benchmark interest rate almost 4 points — a massive change — and inflation didn’t budge, but falling gas prices moved the needle. That tells you something about the ineffectiveness of interest rate changes.

Here’s another interesting graph. It compares inflation to oil prices:

The parallels are stunning. Inflation follows oil prices because oil affects the price of every other product. The price of oil is determined by supply and demand. Increase the supply, and inflation will go down.

The same is true regarding demand. Decrease the demand for oil, and inflation will fall. But short of causing a recession, how does one decrease the demand for oil? The only answer is something we are just beginning to do: Find substitutes for oil. 

Most oil is used for energy, so businesses must expand production of solar, wind, nuclear, geothermal, and tidal energy sources — and this will require increased government spending and lower interest rates.

Speaking at a news conference, Chair Jerome Powell said that before Fed officials would consider halting their rate hikes, they would “want to be very confident that inflation is moving back down” to their 2% target.

He noted that the strength of the job market is fueling pay gains that are helping drive up inflation.

Powell, as an agent for the very rich, tells us that those nasty pay gains for the 99% are causing inflation. If only we could find a way to cut back on pay gains, all would be well.

“If we want to light the way to another period of a very strong labor market,” Powell said, “we have got to get inflation behind us. I wish there was painless way to do that. There isn’t.”

Translation: “The labor market is too strong. Unemployment is too low, and people are earning too much. So, I’m going to create a strong labor market by cutting economic growth. This will increase unemployment and cut salaries, which will be painful (to everyone but the rich).”

This is the logic that will help widen the Gap between the rich and the rest.

Fed officials have said they are seeking a “soft landing,” by which they would manage to slow growth enough to tame inflation but not so much as to trigger a recession.

Yet most economists are skeptical. They say they think the Fed’s steep rate hikes will lead, over time, to job cuts, rising unemployment and a full-blown recession late this year or early next year.

Job cuts, unemployment and a full-blown recession are exactly what the very rich want. Their incomes won’t be hurt. They won’t be fired. Their pay won’t be cut. And they’ll buy bonds paying higher interest.

Meanwhile, the working class will suffer, the Gap will widen, and all will be well with the world.

“No one knows whether this process will lead to a recession, or if so, how significant that recession would be,” Powell said at his news conference. “That’s going to depend on how quickly we bring down inflation.”

The way to bring down inflation is to cure the shortages that are causing inflation, not by causing a recession. The federal government needs to support farming, transportation, and the manufacturing and service industries.

One way: Cut business costs. Eliminate FICA and provide free health care insurance to every man, woman, and child in America. This would substantially reduce the cost of running businesses.

Eliminating FICA instantly would cut the prices of all goods and services. It’s a quick first step, easily done. Simply stop collecting the tax and have the government pay for Social Security and health care insurance.

In their updated economic forecasts, the Fed’s policymakers project that economic growth will remain weak for the next few years, with rising unemployment. They expect the jobless rate to reach 4.4% by the end of 2023, up from its current level of 3.7%.

This is the cure for inflation?? Weak economic growth and rising unemployment for years??? Some might say the cure is worse than the disease. That’s the best the Fed can do?

Historically, economists say, any time unemployment has risen by a half-point over several months, a recession has always followed.
Fed officials now foresee the economy expanding just 0.2% this year, sharply lower than their forecast of 1.7% growth just three months ago. And they envision sluggish growth below 2% from 2023 through 2025.

That gloomy forecast seems about right based on the reluctance to increase federal deficit spending and the plan to repeatedly increase interest rates.

Even with the steep rate hikes the Fed foresees, it still expects core inflation — which excludes the volatile food and gas categories — to be 3.1% at the end of next year, well above its 2% target.

Translation: “What we’re doing won’t help much, but it will hurt you, and most importantly, it will make you believe we’re doing something.

Powell acknowledged in a speech last month that the Fed’s moves will “bring some pain” to households and businesses.

Pain to the working class but not the rich — that’s the goal.

Inflation now appears increasingly fueled by higher wages and by consumers’ steady desire to spend and less by the supply shortages that had bedeviled the economy during the pandemic recession.

Utter nonsense. Prices can’t rise without supply shortages. But yes, reducing the cost of labor will help reduce inflation. And that can be accomplished by eliminating FICA while providing health care insurance to everyone.

Some economists are beginning to express concern that the Fed’s rapid rate hikes — the fastest since the early 1980s — will cause more economic damage than necessary to tame inflation.Mike Konczal, an economist at the Roosevelt Institute, noted that the economy is already slowing and that wage increases — a key driver of inflation — are levelling off and by some measures even declining a bit.

Part of the problem is a false belief that some economic damage is necessary to tame inflation — the false belief that the medicine must be bitter.

Even at the Fed’s accelerated pace of rate hikes, some economists — and some Fed officials — argue that they have yet to raise rates to a level that would actually restrict borrowing and spending and slow growth.

Translation: “The purpose of raising interest rates is to restrict borrowing and spending and to slow growth, but that won’t work.”

Huh?

Many economists sound convinced that widespread layoffs will be necessary to slow rising prices.

Translation: “It’s all the fault of the working class. They are making too much money. We’ll have to starve them a bit to control inflation.”

Research published earlier this month under the auspices of the Brookings Institution concluded that unemployment might have to go as high as 7.5% to get inflation back to the Fed’s 2% target.

SUMMARY

Interest rate increases will not reduce inflation. They will cause stagflation, courtesy of the Fed, who will blame it on the working class making too much money. The Fed will not blame the very rich for making too much money. The Fed knows who their bosses are.

Rodger Malcolm Mitchell
Monetary Sovereignty

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

MONETARY SOVEREIGNTY

Recession: Not If, But When

Raj Subramaniam | FedEx
Raj Subramaniam

FedEx CEO says he expects the economy to enter a ‘worldwide recession’
PUBLISHED THU, SEP 15 20226:38 PM EDTUPDATED THU, SEP 15 20228:25 PM EDT
Krystal Hur

FedEx CEO Raj Subramaniam told CNBC’s Jim Cramer on Thursday that he believes a recession is impending for the global economy.

The CEO’s pessimism came after FedEx missed estimates on revenue and earnings in its first quarter. 

As we have been telling you for months (years, actually), Jerome Powell will fail to stop inflation and instead will cause a recession or depression. There are two reasons.

  1. He has no idea what causes and what cures inflations, and
  2. He doesn’t have the tools, even if he knows.

So, today he, in essence, is using a chainsaw to slice the wedding cake and applying leeches to cure anemia. And then, when the chainsaw and the leeches make things worse, what will Powell do? He will use a bigger chainsaw and apply more leeches.

As I predicted, his interest rate increases have failed to end inflation. So, what will he do? He will raise interest rates again and again, of course. (The definition of insanity is doing the same thing repeatedly and expecting a different result.)

He refuses to learn from failure.

The primary reason why prices — any prices — rise is scarcity. It would be quite rare for overall prices to increase because consumers suddenly have more money in their pockets and spend more on everything.

When something prevents the supply of any one product (other than oil) from growing, we have an increase in that product’s price. (Oil is a special case because it has universal use.) To cause inflation — a general rise in prices — a general restriction in supply is required.

And that general supply restriction was provided by COVID., which caused so many supply disruptions that recovery is difficult. And to some degree, the pandemic still is with us.

Our recovery from covid is delayed COVID partly because the GOP didn’t want us to recover. They denied the need for masking, and vaxing, so they continued to spread the disease.

They wanted to be able to complain about Biden and the Dems.

Not that the Dems are entirely innocent. They still join the GOP in promulgating the false notion that federal deficit spending causes inflation.

Not only does federal deficit spending not cause inflation, but targeted deficit spending, to acquire and distribute scarce goods and services is the only government solution to inflation.

Powell thinks consumer demand is causing inflation. He wants to force consumers to demand less by making borrowing more expensive. But demand less what? Should we demand less oil? Less food? Less housing? Fewer cars?

If he fails to quell demand, which is likely, inflation will continue. If he succeeds in reducing demand, we will have a recession, for that is precisely what a recession is: Lack of demand.

In short, Powell is trying to fight inflation by causing a recession. Stagflation next? Then depression?

Inflations are caused by shortages. PERIOD. The only way to cure inflation is to remedy the shortages.

Today, we face many shortages ranging from oil to food, computer chips, lumber, paper, and the entire supply chain, including shipping containers, port facilities, and labor.

Some of the foods in short supply (and therefore experiencing price increases) are meat, poultry, dairy, eggs, and many vegetables. Will interest rate increases cure those shortages? Of course not. 

Will interest rate increases cure the oil, food, computer chip, lumber, paper, supply chain, shipping container, port facility, and labor shortages?

The whole Powell concept is based on ignorance.

Interest rate increases will exacerbate shortages by making production more difficult. Businesses will be less likely to borrow for upgrading machinery or hiring more and better quality labor.

As a result, production will not grow sufficiently, which means more shortages.

It will be the “leeches-to-cure-anemia” situation, where the supposed solution makes the problem even worse.

Eventually, inflation will end, but not because of Powell (who will claim credit). Inflation will end because businesses will catch up and begin to produce more, sell more, and ship more.

Meanwhile, we’ll have to suffer through sky-high interest rates, continual nonsense from Congress and Powell, ever more inflation, and excuses for cutting benefits to the not-rich. (There still will be plenty of tax benefits for the rich. Deficit worries don’t apply to them.)

 

Recessions (vertical gray bars) follow reductions in federal deficit growth (red) and are cured by increased federal deficit growth.
There is no relationship between federal deficit growth and inflation (blue). Peaks and valleys do not come close to matching.

The GOP is hopeless. It has become a nut factory. But, perhaps I will live to see the day when the Dems begin to admit that federal deficits are beneficial because they add growth and scarcity-fighting dollars — i.e., inflation-fighting dollars– to the economy.

Congress does the bidding of the very rich, who want the wealth Gap to grow. The pols promulgate the Big Lie that federal finances are like personal finances, where debt is a burden. But debt is not a burden on the federal government.

This gives Congress the excuse to cut deficit spending.

So, we will continue to lurch from one recession to the next, with the occasional depression thrown in for flavor.

And as for the public ever understanding, don’t make me laugh. Seventy million people saw what Trump did for 4 years, then voted for him. That tells you all you need to know about the public’s intelligence.

Come to think of it, the insanity of providing the same truths time and again and expecting a different result applies to me, too. I’ve been ready to quit for several years, but then I think of the world my grandchildren will endure, and hope springs eternal.

Rodger Malcolm Mitchell
Monetary Sovereignty

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

MONETARY SOVEREIGNTY

The surprising connections among, taxes, religion, and Medicare for All

Background The federal government, being Monetarily Sovereign, neither needs nor even uses tax dollars. The Treasury destroys all the dollars it receives. It creates new dollars, ad hoc, each time it pays for anything.

Even if the federal government collected zero dollars in taxes, it easily could fund comprehensive Medicare for every man, woman, and child in America.

The sole purposes of federal taxes are:

  1. To control the economy by taxing what the government wishes to discourage and by giving tax break to what the government wishes to encourage.
  2. To assure demand for the U.S. dollar by requiring that dollars be used for paying taxes.
  3. To help the rich, who control America, get richer, that is, widen the Gap between them and the rest of us. This is accomplished by pretending the federal government can’t afford to fund such benefits as Social Security, Medicare, poverty aids, etc.

Because the federal government does not fund Medicare for All, most businesses pay for some part of a private healthcare insurance policy.

This gives the business great power, not only over your working day, and not only over your salary, but even over your health, just by the terms of the policies they provide.

The latest evidence of that power relates to religion. Businesses, more and more, are able to exercise religious bigotry, and the right-wing courts love it.

The federal government encourages charitable giving by providing tax deductions. According to the Internal Revenue Service, a charity involves these activities:

The exempt purposes set forth in Internal Revenue Code section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the prevention of cruelty to children or animals. 

The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

All but one of the above are for the benefit of the general public. That one is religion.

Religion is not charity in the true sense of the word “charity.” When you make a contribution to your religion, it’s tax deductible. But that gift goes to your own — what shall we call it — club, sect, group, creed, cult, faction, team, clan, clique, party, etc.

If, for instance, you happen to be a Catholic Republican who belongs to a country club and has season tickets for the Cubs, your gift to your Church is deductible, but your gift to the GOP, your country club, and the Cubs are not.

According to the IRS:

To define churches and other religious entities, some of the IRS guidelines consider whether or not an institution has:

  1. a distinct legal existence and religious history,
  2. a recognized creed and form of worship
  3. established places of worship
  4. a regular congregation and regular religious services, and
  5. an organization or ordained ministers.

 

The IRS doesn’t say who or what you must worship.

Based on that logic, I could start a group called, “MAGAs for Trump.”

From what I can tell, MAGAs are more worshipful of Trump than of any other “god,” I should be able to give tax-deductible gifts to the group.

And for sure, many football fans worship their team with much greater fervor than any god. So football tickets should be tax deductible.

Religion is something invented not by any supreme, magical entities in the sky but rather, by people.

Every culture down through the centuries seems to have invented religions. That is why there are, and have been, hundreds or even thousands of religions. Sun gods, moon gods, river gods, we have gods by the trainload. 

And no god is better or worse or more realistic than any other god.

The Romans and Greeks had many religons. Currently, we have such religions as Confucianism, Shinto, and Taoism. There are Japanese religions, Chinese, Korean, Mongolian, and Vietnamese religions.

We have invented Buddhism, Neo-Buddhism, Hinduism, Jainism, Sikhism, Baháʼí, dozens of types of Christianity, Druze, Islam of various types, Khawarij, and Judaism of various types. And did I mention Mandaeism and Yazdânism?

Each little tribe hidden in the jungles of Africa and South America has its own religions. And by IRS definition, contributions to any of them would be tax deductible.

But why?

Why does the federal government wish to encourage these clubs, sects, groups, etc? Few of them are charities in the true sense of the word.

Most religions are nothing more than political groups hawking their gods, no different from the Dems and the GOP, selling their candidates.

The only thing that differentiates religions from Trump’s GOP is that religions are devoted to preaching myths. Hmmm. On second thought, maybe Trump’s GOP is a religion.

Judaism teaches that there are eight levels of charity. Look it up. The highest level is helping someone stand on their own gwo feet so they won’t need charity. The lowest level is to give unwillingly.

The other six levels involve different degrees of anonymity for the giver and for the recipient. For example, giving under the condition your gift will be announced to the world is a much lower level than giving anonymously.

But every level of charity involves giving to someone else, not to yourself. No level of charity involves giving to your own group, cult, clan, etc.

I’ll interrupt this discourse by saying I have no objection to charitable tax deductions. In fact, I consider all federal tax deductions to be economically beneficial.

The federal government has no need for your tax dollars so, in that sense, all deductions are good deductions. They all add stimulus dollars to the economy.

But if the primary purpose of federal taxes is to control the economy, I suggest that tax-deductible giving to religions is wrong.

It’s economically wrong because religions (most of them) are no different from advertising agencies or political parties.. They do everything agencies and political parties do and more. Religions often combine book and media publishing, radio stations, TV stations, real estate holdings, and speaking into massive income. 

But unlike secular publishers, broadcasters, real estate holders, and speakers, religions can receive tax-deductible contributions, giving them a huge economic advantage.

It’s legally wrong because giving preferential treatment to religious donations violates the Constitution’s establishment clause.

But most importantly, and ironically, it’s morally wrong because too many religions have a terrible moral history of murder, torture, various forms of corruption, and above all, bigotry.

And here is the latest immoral example to come to my notice. 

From Slate Magazine, Mark Joseph Stern, USING GOD TO DENY BASIC HEALTH CARE

Placing a boss’s claims of religious objections ahead of access to lifesaving medication is “morally and intellectu­ally repulsive,” said Mark Joseph Stern.

But a federal judge’s ruling last week that the government can’t require employers to cover PrEP antiretrov­iral drugs, which prevent HIV, could portend something far worse: bans on mandates for “almost any preventative care.”

A group of Texas plaintiffs argued that the Affordable Care Act’s rules made the complicit in potential “homosexual behavior,” drug use, and extramarital sex, violating their religious beliefs.

District Judge Reed O’Connor, known for trying to strike down the entire ACA in 2018, endorsed that argument.

But he also went further and ruled that the government agencies that decide on ACE requirements for preventative care lack the authority to create such policy.

The decision will be appealed. But it can give the Supreme Court’s conservative supermajority “the opportunity it craves” to hobble these agencies.

All sorts of treatments — HIV tests, breast cancer screening, heart medication — could be next.

That would “shred the ACA,” and cause “grievous harm to millions of Americans.”

For example, if you are gay, and your boss’s religion bans gay sex, your company’s health insurance policy could refuse to cover any disease that came from your gay partner –not just AIDS but any disease. 

You go to the hospital for monkeypox? Your company insurance won’t cover it because you caught it from your gay partner, and your boss’s religion doesn’t recognize gay couplings.

And how far is this from denying insurance for someone of a different religion? After all, Muslims don’t recognize Hindus.

The Catholic hospital won’t accept you because you’re Hindu? The baker won’t bake your cake because you’re living together without official marriage? Here it comes.

THE BOTTOM LINE

Tax deductible gifts to religions cost the federal government money, just as Medicare for All would cost the government money.

Both those costs are economically beneficial because they leave money in the economy rather than taking money from the economy and giving it to the federal government, which destroys it.

Having the federal government pay for health care insurance is economically wiser than having businesses or individuals pay. When the government pays, it pumps growth dollars into the economy.

Further, the absence of comprehensive Medicare for All incentivizes businesses to pay for healthcare insurance, which gives them “moral” and religious power over employees.

We are seeing the return of government-backed bigotry disguised as “freedom of religion.”

Rodger Malcolm Mitchell
Monetary Sovereignty

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

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

MONETARY SOVEREIGNTY

The Big Lie for suckers is all crap to widen the Gap.

Stated simply, the Big Lie in economics is: “Federal taxes fund federal spending.” Suckers believe it.

The Big Truth in economics is: Federal taxes don’t fund a damn thing. In fact, they are destroyed upon receipt at the Treasury.

No federal tax dollars are spent. The federal government creates new dollars, ad hoc, to pay all its bills.

The federal government never can run short of dollars. It has infinite dollars. Even if the federal government didn’t collect a penny in taxes, it could continue to spend, forever.

Tax Preparation Services for Individual | Green Tree Tax | Tax Help
From the TV show 60 Minutes: Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

To the federal government, which created the first US dollars from thin air, dollars are not physical things.  They simply are numbers on balance sheets, and the government controls the balance sheets.

The government can put any numbers it wishes on those balance sheets. In short:

  1. The government never can run short of numbers
  2. The government never can run short of laws.
  3. The government never can run short of dollars.

If you sent $100 trillion dollars to the federal government, it wouldn’t help to pay for anything, not even one little bit.

Twenty-two Republican governors have signed a letter sent to President Joe Biden calling on him to withdraw his student loan forgiveness plan. 

In the letter, dated Monday, the governors wrote that they “fundamentally oppose (Biden’s) plan to force American taxpayers to pay off the student loan debt of an elite few.”

Calm down, fellow taxpayers; we won’t pay any of that student loan debt. 

So why does the GOP claim it? Because they want you to help them widen the Gap between the rich and the rest of us

Note the words “elite few” in their letter? That’s part of the GOP con job. The party that gave a giant tax break to the rich wants you to believe they are all for the poor.

No, they don’t want the poor and middle classes to be able to afford college at all. They want the only people to afford college to be the “elite few.”

They create a phony culture war to make you believe the federal government can’t afford to pay for your benefits.

The rich falsely claim Social Security is going broke; Medicare is growing broke; the government can’t afford food stamps and other anti-poverty measures — and it’s all crap to widen the Gap.

Why widen the Gap? Because it’s the Gap that makes the rich rich. Without the Gap, no one would be rich, and the wider the Gap, the richer they are. Widening the Gap is a way for the rich to become richer.

The Republicans, including Texas Gov. Greg Abbott and Florida Gov. Ron DeSantis, also claimed that Biden’s plan would harm low-income families – writing, “hourly workers will pay off the master’s and doctorate degrees of high salaried lawyers, doctors, and professors. … Simply put, your plan rewards the rich and punishes the poor.”

What an ironic sham. Essentially, they say, “Federal aid to the middle and poor harms the middle and poor.”  And people believe it!!

White House spokesperson Abdullah Hasan said, “These same Republican governors didn’t seem to object when their Republican colleagues in Congress passed a $2 trillion tax giveaway for the rich or had hundreds of thousands of dollars of their own small business loans forgiven.”

“While Republican elected officials try to keep working middle-class Americans in mountains of debt, President Biden is committed to delivering relief to the borrowers who need it most,” Hasan wrote in an email sent to USA TODAY Wednesday afternoon.

Hasan is absolutely correct. But so long as people believe the Big Lie that federal finances are like state and local government finances, and specifically, that federal taxes fund federal spending, the BIG LIE will continue to be told.

Federal taxes have three purposes:

  1. To help control the economy by discouraging what the government wishes to limit and by encouraging what the government wishes to increase.
  2. To provide demand value to the US dollar by required taxes to be paid with dollars.
  3. And the most important one: To help the rich become richer by providing tax breaks available only to the rich. (which is how billionaire  Donald Trump paid less taxes than you did.)

Hey, it works. The rich keep getting richer, and the suckers keep voting against federal spending that would help them.

Rodger Mitchell