An alternative to popular faith
On March 20, the Wall Street Journal’s editorial, “The ObamaCare Crosswords” said, “The Congressional Budget Office estimates ObamaCare will cost taxpayers $200 billion per year when fully implemented and grow annually at 8% . . . Soon the public will reach its taxing limit . . . medicine will be rationed by politics. . . “
On March 22nd, the Chicago Tribune editorialized, “The health care reform legislation would raise, not lower, federal deficits by $562 billion . . .(there is time) to craft a more sensible compromise that extends health care coverage to more people without breaking the bank.”
Which bank? Do you mean the federal government, which has increased its debt in the past 30 years an astounding 1,400%, from $800 billion to $12 trillion, yet never has had, and never will have, any difficulty whatsoever in servicing its debt? Or do you mean the taxpayers, already suffering, but whom debt hawks will require to send additional money to a federal government that neither uses nor needs the money?
The Tribune’s solution: “Our choice would require insurers to take all comers but give them a big new customer base: American who now don’t have health coverage but who don’t need an overhaul this expensive in order to get it.” And who are these Americans? They fall into two main categories: Lower income people who can’t afford health insurance and people who have pre-existing health problems.
To assist the former would require insurers to lower rates, thus increasing premiums for everyone else. To cover the later would require insurers to accept greater risk and provide greater payouts, thus again increasing premiums for everyone else.
The strange belief that a federal government, which repeatedly demonstrates it has the unlimited ability to create money without inflation, suddenly would have difficulty servicing additional debt, has caused otherwise intelligent people to lose their ability to reason. Though our government continuously has proved it can service a debt of any size, taxpayers are limited in what they can service. So, why do respected media editors prefer tax increases to federal debt increases, especially when increasing federal debt stimulates the economy?
Contrary to media demagoguery and popular faith, taxpayers do not pay for federal spending. When the government spends, it merely reaches out and credits the bank accounts of its creditors. There is no limit to the government’s ability to activate these credits, which are not in any way affected by tax receipts. If all federal taxes were eliminated today, the federal government’s future ability to spend would not change by even one penny.
The confusion comes because the federal government is unlike you, me, companies and state, county and local governments. We all must obtain money to spend money, and we are limited in our ability to obtain money. By contrast, the federal government creates money out of thin air, with no limits. Taxpayers are not involved in the process.
Astute politicians are aware of the disconnect between taxes and spending, which is why Vice President Cheney, in an unguarded moment, famously said, “Deficits don’t matter.” But politicians, knowing the public believes taxes pay for spending, and not wanting to appear imprudent, go along with the myth.
We could have a health care program in which doctors, nurses and hospitals are well paid, pharmaceutical companies are incented to create new drugs, and all Americans receive optimum health care. Instead, wrong-headed budget concerns have taken precedence over human health concerns, leaving us with a crazy-quilt, inadequate health care bill.
The current plan is to take money from Medicare, from doctors, nurses and hospitals, from employers and from those who currently pay for health insurance. What a terrible, unnecessary human tragedy we have created, all because of ignorance about federal budgets.
Rodger Malcolm Mitchell
http://www.rodgermitchell.com
#Monetary Sovereignty - Mitchell 
Rodger,
These are certainly interesting times in which we live.
From a slightly conspiratorial perspective….
Is it true that the Federal Reserve is essentially a private banking system, controlled by some very powerful folks?
As a bank, they make their money by borrowers paying interest on loans (debts)?
If their Number One client is the United States Government, and they are the only supplier of money to that borrower (Uncle Sam), the more the government borrows (the bigger the debt), the more wealth and power the Federal reserve acquires over the government?
Having such power and control over the government, the big bosses behind the curtain, can essentially tell the government leaders what to do and have the unlimited ability to persuade, either by political, financial, or other means.
Another group of big bosses control a few other major international banks that ultimately collect interest from all of us “sheeple” on our mortgages, car loans, credit cards, etc…
When all is said and done, controlling every individual in our “free” society is not too difficult to do, especially if you can perhaps require everyone to have an ID chip or some other controlling mechanism that is the only way to prove identity, purchase anything, get medical care, travel, etc… They are pretty much already there, with the ability to track us, follow all of our digital activities, and so much more.
Having watched the actions of the past year, and longer, it sure looks to me like some very frightening things are going on right before our eyes.
A government, or any other organization or individual, with such power over us as is currently possible is historically destined to abuse that power. Other great nations have suffered tremendously when their governments got out of control and turned on their own people. What is to stop the USA from being as bad, or God help us worse, than any of those other disasters in history?
I have enjoyed reading your articles. You make good points and reasoned arguments, even though they are so opposite to what seems to be common sense. Do you fear the ultimate power of centralized government over its people in a nation founded on a Constitution that specifically set out to prevent that ultimate tyranny?
If the government can simply do everything it needs to do, without our tax dollars, why doesn’t it? Why does it need to tax us at all? Why doesn’t it simply encourage everyone to work hard, keep everything they earn, and be independent? The answer is obviously control.
I have no problem with people having health care. Our American health care system is amazing. As one who has worked in a medical related field for decades, I have never seen anyone not get the care they needed. Insurance is important and it would be great if there was a free market, competition driven insurance industry that could provide the most for the least to everyone across the country.
Having a single payer system however, seems to me to be doomed to providing ‘standard” packaged care and not individual personal care as needed. When the focus is on money and insurance, it is not on care where it should be.
In my experience, lately the emphasis in health care has been more on collecting personal information about individuals than anything else. Who needs all this information and what do they need it for?
This is a lot to consider, and there could be plenty more to discuss, but I look forward to hearing your thoughts on the dark side that looms ahead.
BC
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The chairman of the Fed works at the pleasure of the President of the U.S. and the Senate. He can be fired at any time. I’m not afraid the Fed will take over the country.
You asked, “If the government can simply do everything it needs to do, without our tax dollars, why doesn’t it? Why does it need to tax us at all? Taxation is a relic of the gold standard, when the government did not have the power to create unlimited amounts of money. Most economists were educated before 1971, the end of the gold standard, or were taught by professors who were educated before 1971. They haven’t caught up with the current reality.
Clearly, a government with the unlimited ability to create money has no need for tax dollars. However, there is a belief that reducing taxes would put too much money into the economy, thereby causing inflation.
I agree that “too much” money could cause inflation. In fact, that statement is a tautology. So, what is “too much”? If you go to https://rodgermmitchell.wordpress.com/2009/09/07/introduction/, item 12, you’ll see an analysis of this question.
I don’t know how a single payer system would work, as there are infinite variations. Medicare, for instance, is a single payer system that works fairly well, and would work even better with some modifications.
Rodger Malcolm Mitchell
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Rodger,
You say you are not afraid of the Fed taking over the country. It is arguable that this has already happened long ago.
While the “face” of the Fed may be appointed by political leadership and can be removed at any time, the reality is that wouldn’t happen if the “bosses” didn’t want it to happen. In fact, wasn’t our Treasury Secretary (the savior of our financial system, who was given tremendous “unconstitutional” powers in the TARP acts) actually the head of the New York Fed? Who made sure that was the only choice?
Much like our president is elected by the people, the argument can be made that the “face” that we elect is one of the couple choices “provided” to us by the powers to be and their media. You can’t convince me that McCain and Obama were the two best leaders and statesmen available to lead our country in the previous election. Both were selected because they could be easily controlled by those who really want things to happen (ie: just read the tele prompter).
I know you are more into the economics, but do you not agree that there is more going on here than meets the average eye?
If taxation is a relic of the past, will there be an announcement at some point that the government has discovered that money and debt are a commodity and that they can produce it and control it in ways that keep inflation under control with or without taxes? Or is it more likely that more taxes with be taken from people? How much debt service can the USA sustain… doesn’t that take real money out of the hands of producers and give it to the lending institutions (the Fed)? Even Uncle Sam can’t just borrow from the Fed to pay the Fed, can they?
Freedom is so fragile. Very few in history have ever experienced what we have in our life times. Perhaps we have had too much freedom and will ultimately have to pay a price for that. Once freedom is gone however, who will come save us from tyranny as we saved the French and Germans, etc?
I hope we never have to worry about that happening, because Americans are the good guys and defend the principles of life, liberty, and the pursuit of happiness around the world… at least I think we used to.
I appreciate your ideas.
BC
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I don’t have much interest in conspiracy theories, not that there aren’t conspiracies, but because there always seem to be conspiracies.
Behind Bush there was Cheney. Behind Cheney there was Halliburton. Behind Halliburton there were the generals. Behind them, who knows? And on and on and on.
No one stands alone in a vacuum. There always is an advisor who has an advisor who has an advisor, and there always is someone who feels an advisor is the real power.
You asked, “If taxation is a relic of the past, will there be an announcement at some point that the government has discovered that money and debt are a commodity and that they can produce it and control it in ways that keep inflation under control with or without taxes?” One can only pray this happens. That’s why I wrote the book and my web site at http://www.rodgermitchell.com and this blog.
Rodger Malcolm Mitchell
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I hate to directly quote an entire paragraph from an article on the same page, but there are a lot of comments and this is the only paragraph I want to talk about:
“We could have a health care program in which doctors, nurses and hospitals are well paid, pharmaceutical companies are incented to create new drugs, and all Americans receive optimum health care. Instead, wrong-headed budget concerns have taken precedence over human health concerns, leaving us with a crazy-quilt, inadequate health care bill.”
You bluntly ignore the fact that, while the government can arbitrarily create money to pay for health care for all Americans, the health care itself requires *real resources* from our economy. The economy is approximated by measures such as GDP, but it is defined by the aggregate output of the people. We can only work so much, and our land can only yield so much.
If the government were to pay for a high standard of health care for all Americans, this would require a massive amount of resources redirected into the health care industry. We may need twice as many doctors, and four times as many nurses. What would those people have produced if they were not in the health care industry?
The real world involves trade-offs. Fiat money issued at will by the government may appear to be free but is subject to these real-world trade-offs, regardless of the accounting methods employed by the government.
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What is your formula for the “twice as many doctors” and “four times as many nurses”?
Start with 30 million uninsured Americans — 10% of the population. They already receive some health care through emergency rooms. So I speculate the additional resources necessary to bring these people up to what most insured Americans now receive, would amount to no more than a 2%-3% increase in health care resources.
Rodger Malcolm Mitchell
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