Only two things keep people in chains: The ignorance of the oppressed and the treachery of their leaders
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.” ====================================================================
Perhaps no words more accurately and succinctly illustrate the confusion in economics than “Monetary Sovereignty.”
It is not a theory, hypothesis, or philosophy. It is a description of the way federal financing works.
A Monetarily Sovereign government has the exclusive and unlimited power to create its sovereign currency. Monetary Sovereignty is the foundation of economics.
The United States is Monetarily Sovereign. It has the exclusive, unlimited power to create the U.S. dollar.
China, Canada, Australia, the UK, and Japan are Monetarily Sovereign. They have the exclusive, unlimited power to create their sovereign currencies.
By contrast, America’s states, counties, cities, businesses and people all are monetarily non-sovereign. They are users, not creators of the dollar and not sovereign over its creation.
In the 1780s the U.S. government created the very first dollar from thin air, by first creating from thin air, all the laws and rules that made the dollar exist.
Being sovereign over the dollar, the U.S. can give the dollar any value it wishes. It can make the dollar equal to three euros, an ounce of silver, or a partridge in a pear tree.
The U.S. federal government can never unintentionally run short of dollars. Even if all federal tax collections totaled $0, the federal government could continue spending forever.
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.
Illinois, Cook County, and Chicago are monetarily non-sovereign. The dollar is not their sovereign currency, and they do not have the unlimited power to create dollars.
France, Germany, and Italy are monetarily non-sovereign. They do not have exclusive, unlimited power to create the currency they use, the euro. That power is owned by the European Union.
You, your business, and I also are monetarily non-sovereign. Even Bill Gates and Warren Buffet do not have the unlimited power to create dollars. They are monetarily non-sovereign.
Because our Monetarily Sovereign nation has the unlimited power to create its sovereign currency, it never needs to ask anyone for dollars.
The federal government doesn’t need to tax, and it never borrows dollars. It never can be forced into insolvency. It can pay any dollar-denominated invoice of any size at any time.
The federal government creates money by paying its bills. To pay its bills, the government sends instructions (not dollars) to creditors’ banks, instructing the banks to increase the dollar amounts in creditors’ checking accounts.
These instructions are in the form of checks or wires. The moment the bank obeys those instructions, dollars are created in creditors’ checking accounts, and the M1 money supply measure is increased. This is how the federal government creates dollars — not by “printing,” but by sending instructions.
The U.S. has created many trillions of dollars, simply by pressing computer keys, and it will continue to do so. It does not “owe” anyone for creating these dollars.
The U.S. government cannot live beyond its means; it has no means to live beyond. By contrast, if the debts of France, Germany et al, exceed their ability to obtain euros they, as monetarily non-sovereign nations, could be forced into insolvency.
They did not create the euro, nor do they have the unlimited ability to pay euro-denominated bills.
Everything you believe about your personal finances — debts, deficits, spending, affordability, saving, and budgeting — are inappropriate to U.S. federal finances.
For this reason, your intuition about U.S. financing likely is wrong.
Because the U.S. cannot be forced into insolvency, none of this nation’s agencies can be forced into insolvency. The U.S Supreme Court, the Department of Defense, Congress, Social Security, Medicare, and any of the other 1,300 federal agencies cannot become insolvent unless the federal government wishes it.
(All the talk about Social Security or Medicare running short of dollars is misguided. Even if FICA were eliminated, Social Security and Medicare would not need to default on their obligations, unless Congress wished it. They could continue to pay benefits.)
The unlimited ability to create money is an uncontested fact for Monetarily Sovereign nations although, at any given time, economic growth, inflation, deflation, recession, depression, and social factors may influence a nation’s decision to create money.
A Monetarily Sovereign nation even can choose to declare insolvency, for various reasons, but this would be an arbitrary matter of choice, not a forced necessity.
An example would be Congress’s failure to raise the useless debt ceiling. This could force the U.S. into insolvency.
There are those who do not (or do not wish to) understand the implications of Monetary Sovereignty. You never will see that term on such debt hawk websites as The Committee for a Responsible Federal Budget” or the Concord Coalition.
If you go to those sites you will see federal debt described in the same terms as personal debt – as an unsustainable obligation.
While debt can be unsustainable for you, me, businesses, states, cities, counties, and the monetarily non-sovereign EU nations, no dollar debt is unsustainable for the U.S. government.
Debt hawks suffer from Anthropomorphic economics disease — the false belief that federal finances are like yours and mine.
The U.S. was not always completely Monetarily Sovereign. Prior to 1971, the U.S was on a gold standard. It had a sovereign currency, but it did not give itself the unlimited ability to create that currency.
The government passed laws saying every dollar must be matched by an arbitrary amount of gold. No gold; no dollars.
The amount of gold needed to back the dollar was arbitrarily determined by Congress and the President, and that requirement could be changed at any time by Congress and the President, a fact often forgotten by gold lovers.
Even while on a gold standard, the dollar actually was backed by federal fiat, not by gold.
The EU nations are on a euro standard. Their ability to create euros is limited by law.
Our states, counties, and cities are on a dollar standard. Their ability to create or obtain money by borrowing or taxing is limited by local law, by voters, and by lenders.
The financial problems of the euro nations are due not to deficits and debt.
These nations’ financial problems are due to them having surrendered the single most valuable asset any nation can own — their Monetary Sovereignty — thus preventing them from servicing their debt by creating money.
Some debt hawks say that a Debt/GDP ratio exceeding 100% puts a nation on the brink of bankruptcy. Yet today, Japan has a Debt/GDP ratio above 200%, and that Monetarily Sovereign nation has absolutely no difficulty servicing its debt.
When the U.S. exceeds that magical 100% ratio, it too will have no trouble servicing its obligations.
The debt hawks, having learned nothing from this, continue to wail about the meaningless Debt/GDP ratio, which because it is a classic apples/oranges comparison, is devoid of significance (the numerator is a 200-year measure of cumulative T-securities outstanding; the denominator is a one-year measure of spending. The two are unrelated).
So-called federal “debt” is nothing more than the total of dollars deposited into T-securities accounts at the Federal Reserve Bank. These accounts are similar to safe deposit boxes. The government never touches the dollars in those accounts. The contents are owned by the depositor, not the government.
To “pay off” the federal debt, the Federal Reserve Bank merely takes dollars from these T-securities accounts and adds them to the holders’ checking accounts, the same way you take dollars from your safe deposit box and add them to your checking account.
No new dollars are needed.
Thus, Congress easily could eliminate all federal debt, tomorrow. That would require pressing a few computer keys. It would be a simple asset exchange, with no new money created and no inflation consequences.
Because a Monetarily Sovereign nation has the unlimited ability to create its sovereign currency, that nation needs neither to tax nor to borrow. Why would it?
Further, that nation does not use tax money or borrowed money to pay for spending. Federal income does not fund federal spending. Taxes and borrowing are unnecessary.
When the states, counties, cities, you and I spend, we transfer dollars from our checking accounts to some other checking accounts. When the federal government spends, it creates new dollars.
If U.S. federal taxes fell to $0, or rose to $100 trillion, neither event would reduce by even one penny, the federal government’s ability to create the money to pay any size bills.
The spending by Monetarily Sovereign nations had been constrained only by fears of inflation. However, since 1971, the end of the gold standard and the beginning of Monetary Sovereignty, there has been no relationship between federal deficit spending and inflation.
More about this at Inflation and at SUMMARY.
Because taxes do not pay for federal spending, FICA does not pay for Social Security benefits. FICA could (and should) be reduced to zero. Benefits even could be tripled or more, and this would not affect by even one penny the federal government’s ability to pay Social Security benefits.
Recently, the federal government made a profit on its purchase and sale of corporate stock (GM et al). All such profits came out of the economy, and therefore the government’s profits were recessive — harmful to the economy and useless for the federal government.
By reducing the money supply, federal profits = losses for the economy.
Federal surpluses = economic losses.
Unlike state and local tax dollars, federal tax dollars are destroyed upon receipt by the Treasury. Taxes come from private checking accounts, the contents of which are part of the M1 money supply measure.
But when the dollars reach the Treasury, they instantly cease to be part of any money supply measure. The reason: The Treasury has infinite dollars, so no measure applies.
Since the federal government neither needs nor uses tax dollars why does it tax?
- To control the economy by penalizing what the government wishes to discourage and by using tax cuts and loopholes to encourage what the government wishes to reward
- To guarantee demand for the U.S. dollar by requiring dollars to be used for tax payments.
- The rich, who run America, like taxes because they pay at much lower percentages (via tax loopholes) than you or me. This widens the income/wealth/power Gap between the rich and he rest, effectively making the rich richer.
On occasion, the federal government has “saved” money by firing, or reducing the pay of, federal employees. Those so-called “savings” are money not sent into the economy, and therefore, damage the economy.
The federal government, having the unlimited ability to create dollars, never needs to “save” dollars.
Politicians and the press do not yet seem to understand Monetary Sovereignty. However, no one intelligently can discuss national deficits and debt without acknowledging the implications of Monetarily Sovereignty.
The concept is the basis for all modern economics. Monetary Sovereignty is to economics as arithmetic is to mathematics.
The next time you go to any economics blog or website, see if the contributors understand Monetarily Sovereignty and use it in their discussions.
If they do, it might be a good site. If they don’t, the site is worthless. All debt hawk objections revolve around just two questions:
- How much money can the federal government create? Answer: Infinite
- How much money should the federal government create? Answer: As much as necessary to grow the economy and to narrow the gap between the rich and the rest.
Despite an astounding 50,000% increase in the federal debt from 1971 through 2020, we did not go anywhere near the point of uncontrollable inflation (which is controlled by procurement and distribution of scarce goods and services).
Ironically, the best cure for inflation is more federal deficit spending. The reason: Inflations are caused by shortages, usually of food and/or energy. Additional federal spending can cure the shortages that cause inflation.
Though the Federal Reserve is tasked with controlling inflation, only Congress and the President can obtain the goods and services, the scarcity of which causes inflation.
The Fed mistakenly uses interest rate increases to stem inflation, but those increases increase the costs for goods and services. Thus, contrary to popular wisdom, increasing interest rates exacerbates inflation.
Thus, most of our economic problems are caused by the politicians, the media, the economists, and the public not recognizing the implications of Monetary Sovereignty.
By crippling the federal government’s ability to grow the U.S. economy, the politicians have injured more Americans than terrorists.
I suggest you next read the data at Summary, for detailed answers to your questions.
Question of the day: How does a tax increase or spending decrease affect unemployment or economic growth? Answer: When the federal government taxes, dollars are removed from the economy.
When the federal government spends, dollars are added to the economy. A federal deficit is growth income for the economy.
Therefore, both tax increases and spending decreases reduce economic growth and increase unemployment.
Because GDP = Federal Spending + Non-federal Spending + Net Exports, a reduction in federal spending always reduces economic growth.
Money is the lifeblood of an economy. Cutting the federal deficit to cure a recession is like applying leeches to cure anemia. [For more on this subject, see: Free Lunch]
…………………………………………………………………………
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:
- Monetary Sovereignty describes money creation and destruction.
- 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:
- Eliminate FICA
- Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
- Social Security for all
- Free education (including post-grad) for everyone
- Salary for attending school
- Eliminate federal taxes on business
- Increase the standard income tax deduction, annually.
- Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
- Federal ownership of all banks
- 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 - Mitchell 
This entire blog is devoted to asking the very same questions. The U.S. became Monetarily Sovereign on August 15, 1971, yet the government acts as though that never happened.
Why?
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Rodger,
If the 99% understood MMT and knew they could be paid any amount of $$$ by the federal government without any restraints or consequences on the amount (yes, a $trillion would be inflationary)as you explain (even if it was just $10,000 to each citizen)- what would you think they would do then? Why would they go to work for $10.00 per hour if they knew the government could give them $10,000 without any need for someone else paying for it…ie taxes. I believe your MMT falls apart there. There are severe social consequences to MMT and to the seeming eutopia it paints.
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After reading your speech for Obama explaining MS and MMTand my $5000 check etc.. I decided to stay at home on my couch with the TV and my Iphone, and forget about picking up all of Malcolm’s garbage – and if I don’t get more money next time (cause I ain’t going to school – even if I get paid for it), I will make sure the other 99% who feel the same way – and there are a lot of us who know about this now thanks to ole Malcolm – vote someone in office that will do it – or we will burn the house down. So Rodg, pick up your own garbage, and don’t forget to pay for my cable. Good luck, DA.
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Apparently, you are a charitable and compassionate person, who knows that helping poor and middle class people encourages sloth.
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It’s not sloth that’s the main issue, its dependence. Once people get on gov’t dependence getting out becomes increasingly difficult. The result is generational poverty. The result of Monetary Sovereignty is a monetary collapse. This is already happening and has been happening since the Fed started printing up fiat currency in the early 1900s. The value of the dollar has declined by over 98% in just the last 100 years. Bankruptcy for a Monetary Sovereign nation doesn’t mean it can’t print more money, it means that the paper money they print becomes completely worthless. Countries are moving off the dollar as the reserve currency at an accelerated pace. Here’s an excerpt from an article.
So while Bernanke is teaching students it’s too much of a problem to mine and ship gold to the U.S. to fill our void, the Chinese are buying up the mines — in Africa.
China is mining gold, buying gold, buying gold mines and encouraging its citizens to buy gold. They are even minting gold coins in various sizes to make it easier for citizens to accumulate. Maybe we need to take another look at Zhaoxue’s statement. “…for the acceleration of renminbi internationalization…” And right now the renminbi is fiat like all other currencies, right?
Reports in the past have told us it would be years before the dollars’ place, as the world reserve currency would end. At one time economists speculated if the dollar were ever replaced, it would be by the euro. Not anymore. Following the world wide financial collapse in 2008, and the stresses by such countries as Greece, the euro continues to teeter. The world watches for the impact of more Euro zone bailouts; it’s not looking good. All eyes right now are on Spain, as a not “if” but “when” bailout.
And then there is the fiscal cliff Ron Paul has warned about in the U.S. Failure by our nation’s leaders to reign in spending on domestic social issues, tighten tax loop-holes that encourage off-shore banking and investments by the rich (Hello Romney), an out of control military industrial complex pushing U.S. imperialism all over the world, and of course the Bush era tax cuts that are getting ready to expire and the now loss of the petrodollar. Add to that, the never ending Federal Reserve’s QEs. How much more can the fiat paper dollar withstand, even if stacked a billion thick?
Many people just don’t realize how aggressive the competition against the greenback has become in just the last two years by the red renminbi of China. The remnimbi is positioning itself to be viewed as a real global reserve currency alternative. China is not one to make public most of their financial plans, but let’s look at some of the stories that have made it into the mainstream media:
Russia and China in 2010 decided to do away with debt exchanges using the U.S. dollar and instead trade directly in ruble and renminbi.
In December 2011, Japan and China announced they would be promoting trades directly with each other and sidestepping the dollar. Last year’s trades were about $340 billion. At the same time China announced a direct $11 billion currency swap with Thailand.
In January 2012, Wen Jiabao, the Chinese Premier, signed a $5.5 billion currency swap with the United Arab Emirates.
Then at the end of January there is an article from Forbes answering the question “Why is China buying so much gold?” Forbes simple answer; a substitute against capital flight. What? The Chinese Premier, Wen Jiabao is the one flying all over the world setting up all these currency swaps.
In late March 2012, according to Zeebiz, “The five major emerging economies of BRICS — Brazil, Russia, India, China and South Africa — are set to inject greater economic momentum into their grouping by signing two pacts for promoting intra-BRICS trade at the fourth summit of their leaders…” And, “The pacts are expected to scale up intra-BRICS trade which has been growing at the rate of 28% over the last few years, but at $230 billion, remains much below the potential of the five economic power houses.”
In March 2012, we learned Dubai-based Emirates NBD the largest bank is selling dim sum bonds, debt securities issued in the Chinese yuan.
Again in March 2012, China and Australia sign a $30+ billion swap agreement. According to the Reserve Bank of Australia, “The main purposes of the swap agreement are to support trade and investment between Australia and China, particularly in local-currency terms, and to strengthen bilateral financial cooperation. The agreement reflects the increasing opportunities available to settle trade between the two countries in Chinese renminbi and to make RMB-denominated investments.”
In April, we learn in a report from Forbes, that China will be avoiding U.S. financial sanctions against Iran by making oil purchases not only bartering goods, but also using gold.
In late June 2012, China and Chile agreed to strengthen their ties in a strategic partnership and double their trade in three years. The leaders of the two nations, Jiabao and Pinera, also announced the completion of negotiations on investment-related supplementary deals to a bilateral free trade agreement.
Also in late June of 2012, China and Brazil agreed to a $30 billion currency swap.
So while Monetary Sovereign, Keynesians such as yourself are fiddling, the US dollar continues to burn. MS is a pipe dream. A great theory that inevitably breaks down when implemented in practice.
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Free handouts from government certainly encourage continued dependency on that same governmental handout. Why is poverty the same now or worse with the greatest increase in government handouts in the history of the United States? You don’t even understand your own theory taken to its end – why would people work if they know the government can give them money anytime without the need to pay it back per your own theory. You are living in an unrealistic utopian theoretical mindset. So, go pick up your own garbage. The handout doesn’t necessarily encourage sloth – I just don’t want to pick up your garbage for $15.00 per hour because I can get the “money” for free by voting in the right “leader” since I fully understand what your MMT is all about. We 99%rs aren’t that stupid.
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Finally off the gold standard, but still the world watches for some reason, and now it so eveident that foul play is all that’s left with the “QE” programs even I almost want to expatriate and leave this mess behind, but will not desert this once proud country, the best example ever offered to mankind, as imperfect as it always has been IMO.
Deficits ? a sovereign country doesn’t have them ! if taxes and fees do not cover expenses of the government, the money is just printed….BUT, as I would have it overseen by the states with their powers of nullification/10th to make sure the overprint is valid and desireable, as in a disaster or properly declared war to save the country.
If not, the politicos are voted out, or worse impeached, investigated, etc. for corruption by public and private entites FOIA to resolve such problem in debauching the currency.
National debt ? reflects the above, and as I would have it, to be usued mainly for public benefit programs, including infrastructure replacement and SMALL retirement accounts like social security NOT large “investments” as now and esp. not foreign types and other influence peddling schemes AWA MIC back door schemes to impoverish the very soldiers that supposedly “protect and defend:” the dwindling Constitutional rights we once enjoyed (mostly). There simply would be no “lender of last resort” as now, with the private fed banks adjudicated and mostly out of business, with international, extraditive, retroacitve legislation to bring these “people” to justice for the last 100 years of malfeasance and usury, adjudicated one case at a time for veracity, validity villification, etc. with those found gullty suffering jail time and forfiture regardless of immunities, implied, granted or treatied, and we DO have the ISAF at our disposal to go get them don’t we ?, even if Patreaus isn’t there any more…was it that he couldn’t take all the corruption or did his deals go bad for him ?…that ME “woman” he has hung around with (no, not the West Pointer), really makes me nervous, as she is a true Mata Hari, and seems to get a lot of “traction/action” in white-Washingtown. these days.
Insofar as ‘prosperity for all:”, nothing beat the work ethic IMO. The results are plain to see with western civilization having no equal, mostly based on protestantism’s programs to allow people to read the Bible (and write), such that skilled labor could be transferred easily to the learned, etc. a great lession to the world, esp. the Islamic hard-liners who abuse womanhood so badly.
The state of the world worries me to a point where I am making modest preps for jan. 1, but hoping for better than I surmise as I hope youall do…more on my small blog…. http://usssaratoga2.blogspot.com/
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“If not, the politicos are voted out…”
‘There’s the rub…’
So who can find the 51% ? We have the greatest form of government,
we need only to “cast our secret ballot.
We need only to vote for those who will :
TAKE AWAY FROM THE PRIVATE FOR PROFIT BANKS THE RIGHT TO RAISE TAXES (REVENUE) ON OUR OWN CURRENCY AND GIVE IT BACK TO THE PEOPLE.
Amend the Fed, “QE 4 the people”, “QE4 WAR”
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51% ? We don’t have enough of that type apparrently ! Banking has been shown to be totally abused in private hands and should be federalized as my blog alludes to IMO, with the states using their powers of nullification/10th to keep the feds in line with printing new money in US dollars that has NO DEBT incurred as with the frn. Also, the bank of north dakota has as it’s legally binding mission statement that all profits must be plowed back into the state as valid loans or direct tax refunds to the people ! These two ideas would do much to break the chains that are now threatening to drag us over the cliff like Pol-Pott-ism….And as you say, go after the QE types, regardless of circumstances,..and much more on my blog…you got more ?
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You state that the US is monetarily sovereign and doesn’t have to borrow money. Well, our privately owned central bank, the Federal Reserve, issues our money, and does so by loaning it to us… with interest.
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If the USA is monetarily sovereign, then why does the natonal debt keep growing as we “borrow” money from the lender of last resort, the fed ?
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Rodger,
You also stated, “Because a Monetarily Sovereign nation has the unlimited ability to create its sovereign currency, that nation needs neither to tax nor to borrow. Why would it? Further, that nation does not use tax money or borrowed money to pay for spending. Federal income has no relationship to federal spending and so, taxes and borrowing are unnecessary.” If this is the case, why do we have an IRS or income tax system on the federal level?
Scorpious
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You just asked the central question of this blog: “Why do our politicians ignore the reality of Monetary Sovereignty.” You’ll find that question answered dozens of times in the articles linked on the left.
If our politicians understood Monetary Sovereignty, I wouldn’t write this blog.
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“If our politicians understood Monetary Sovereignty, I wouldn’t write this blog.” Maybe the word “politicians” will give you a clue.
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Okay… so how do you educate the politician since you’ll never be able to remove them?!
It seems as though this is the best kept secret between our government and its citizens…only because neither is educated on the subject!
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You STILL need to run for office instead of waste your time here IMO; wish I had it to do over again knowing what I do now.
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Me too.
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Scorpious,
Austerity is a method for widening the gap between rich and poor.
The politicians cannot be educated, because it’s in their own best interests not to know. They receive money from the wealthy, and will not vote against the wealthy.
The only hope is to educate the public, who then will vote in their own best interests. Admittedly, it is a distant hope.
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The USA is not a Monetarily Sovereign nation until Treasury makes the money and The private corporation Federal Reserve does not.
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The US uses the dollar and is sovereign over the dollar. Greece uses the euro, but is not sovereign over the euro.
Do you understand the difference?
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Good luck convicting Roger of that fact.
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John and Curt,
All domestic banks, not just the FRB, create dollars by lending, but that doesn’t make the U.S. monetarily non-sovereign.
Congress and the President create dollars by setting budgets for federal agencies, which write checks that are CLEARED by banks, including the FRB. Congress and the President can set budgets at any level they choose, endlessly, and no federal checks ever will bounce, which is what makes the U.S. Monetarily Sovereign.
If the government chose, it could set a budget of $900 trillion, and when federal agencies spent that $900 trillion, $900 trillion would be created.
(Greece, Illinois and Chicago, being monetarily non-sovereign, cannot write checks endlessly)
The instant a federal check or wire is deposited into any bank (including your local bank), dollars are created. The clearing process is merely an accounting function, not a dollar-creation function.
Contrast what the federal government can do with what the states, counties, cities and euro nations can do, and you will understand the difference between Monetary Sovereignty and monetary non-sovereignty.
Or better yet, read the above post.
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Nope, Wrong again Roger. The US Treasury has No Money. All US currency is controlled by the FRB. The FRB creates currency that the Treasury and Banks use. Banks need to the money to lead and invest. Treasury uses the money to pay bills and invest. Matter of fact most the TARP issued bail-outs was pure investments. Out of the 1407 TARP loans, there are less than 200 community banks who still owe Treasury money. Once everyone understands the evil the Federal Reserve Bank Act of 1913, then you’ll start to understand the US and in some sense the world economic position. BTW, we don’t really have a financial issue, but a credit issue. More on that some other day.
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Try explaining this one Roger -> http://dealbook.nytimes.com/2012/09/09/treasury-to-sell-18-billion-worth-of-additional-a-i-g-shares/
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Hi. I don’t know why but it was hard to understand what Mitchell was saying, and now that I do it seems perfectly clear. USA is sovereign by law but does not use its powers correctly.
One question arise though; is not government borrowing limited by the interest it will have to pay? The interest will accumulate so that in a short while most of the budget will be interest. The interest goes to private pockets. And I also hope we agree that it is immoral to charge interest on money created by the banks? No risk, no interest.
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USA =Monetary Sovereigm
Yes,agreed. Even I believe RMM would agree!
Federal Reserve may be a “privately held corporation” for direction purposes, but it must turn all it’s profits over to the US Treasury thereby making it very, very different than what would be “a for-profit private bank or financial institution.
When the Fed creates currency it is merely an operational arm of the Mon. Sovty -no conflict.
However where we have a problem (i call “major Flaw”) is when
“private for-profit banks and financial institutions create loans (money)
for their own gain. The Mon. Sovty do have a conditional unlimited issuance problem that could destroy its Sovereignty and that is “hyperinflation and moral hazard”. (here is where there may be some disagreement)
For private for-profit banks to be able to “issue currency” for their own
profit, what is to stop them from making bets, loans, and whatever in $100’s of trillions, even $1,000’s of trillions causing hyperinflation
or collaspe if “credit” the potential money they created is not made whole.
Justaluckyfool would ask, “Is a Monetary Sovereignty, really a monetary sovereignty if it allows by law a private for-profit financial institution
to issue, “print” “make electoric entry” its currency.?”
We go back to Frederick Soddy (becoming my fave) 1926,1933 “The Role of Money”
There are two kinds of loans:
Genuine (made by the sovereignty)
and Counterfeit ( made by for- profit banks)
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Inflation has settled into the Fed’s goal of 2% – 3%. The Fed actually fears a below-2% rate more than an above 3% rate, because a too-low inflation rate could lead to deflation, which they feel would be an economic disaster.
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RMM, as you ask ,”Where is the inflation”
Your chart shows it and the Fed is happy to have it at 2%-#5 range.
Everyone else is talking “fear of hyperinflatio” which of course
you chart proves “ain’t happening.
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Anton,
The U.S., being Monetarily Sovereign, has the unlimited ability to pay interest. It merely instructs the bond-holders’ banks to credit their checking accounts. It can do this forever.
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Yes, A Mon.Sov. has the unlimited ABILITY to issue its own currency.
BUT with self imposed restraints so as not to destroy “the good faith and credit of the sovereign nation” when such issuance would no longer be acceptable for redemtion for the goods and services of that nation (hyperinflation).
Yes, A Mon. Sov. has the unlimited ability to pay interest.
(BUT with self imposed restraints….) JUST a simple question.
WHY ? Why pay interest on your own creation? Isn’t that backwards ? Plain stupid?
Why pay the 1% an increasing portion of all the goods and services
of the sovereign nation, for doing something not wanted, not needed, and at the same time taking away our real wealth to us for their own self interest and not redistributed “for the general welfare”?
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Actually, the simple explanation is that you CAN’T create money to pay interest. Why? The money paid as interest will be UNPRODUCTIVE, meaning it will cause immediate inflation. Thus, every economy MUST be under a system of law, and there has to be a law REGULATING the money supply. The regulation would be based on a periodic issue/taxation in appropriate amount to keep unemployment low (<1%) and inflation non existent.
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The federal government creates dollars to pay interest every day. So where is the inflation?
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Where is the inflation? Everywhere. And since most of the money created today goes to nonproductive activity like speculation, hoarding and war you have both high unemployment and inflation. Remember the simple mechanics of economy; if you have unemployment, you have to little money in circulation. Ben Bernanke would not agree about that of course.
Too much money -> Inflation
Too little money -> Unemployment
If you have both the problem is that the money is not available to the people.
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Looking at our trade deficit it seems we export our monetary inflation and import goods made with cheap labor.
Domestically we suffer from health care and education inflation. These services cant be imported.
There is trmendous price ibflation
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Hi roger, this is the rest of my comment.i inadvertantlyhit post while fixing a typo.
There is tremendous price inflation in US Treasury bonds caused by exported dollars coming back as investment in our debt instruments.
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Please respond to this (link below) reality as the US loses its reserve curreny and no one wants US dollars any more. Debasement of the dollar will come much faster with your money presses going full speed. It may take a while – but it will happen. Interest rates will have to increase and oil prices along with it – but it won’t be due to higher oil prices – the debasement will come first.
http://www.zerohedge.com/contributed/2012-11-28/welcome-currency-war-part-5-dollar-gets-serious-competition
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The article to which you referred ended with this conclusion:
“That selling pressure will, other things being equal, lower the dollar’s relative value, which is another way of saying that the US might not be able to borrow infinite amounts of money going forward, forcing us to either cut annual deficits far faster than is currently planned or pay a higher interest rate on future borrowings, which would increase future deficits.”
Completely, 100% wrong. The U.S. is Monetarily Sovereign. It has the unlimited ability to create the dollar, its sovereign currency. That’s what “sovereign” means.
Thus the U.S. does not need to obtain dollars from anyone — not from you, not from me, not from China. It does not rely on taxes or borrowing. If both taxes and borrowing fell to $0, this would not affect by even 1 cent, the federal government’s ability to run deficits.
Further, interest on T-securities is not determined by the market, but rather by the Fed.
The author of the article is clueless about Monetary Sovereignty, and really should not be writing about economics.
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So when the rest of the world stops buying our debt and loaning us money – the Fed could have to monetize our debt 100% – as it can do because we are monetarily sovereign. And you don’t believe that will be inflationary and debase the dollar? Yea, I know, inflation is only due to high energy prices. Even now as a small business owner, I am seeing prices across the board, electricity. water, supplies, all going up. Yet, you say we are in deflation. That is a load of crap. That is the big secret the Fed doesn’t want out. One thing I do know, the Fed will continue to monetize our debt till the cows come home to try to keep interest rates low, regardless of what inflation does. It has no choice.
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Wait Rodger. You agreed earlier on in this thread that MS only works as long as other countries take our paper money but said that we will all be long gone before that ever happens. Now you have proof that countries are in fact moving away from the US dollar as the World Reserve Currency. As the Fed continues to churn out pieces of paper (or hits keystrokes) making them more and more worthless, what happens when other countries no longer want to take them?
The problem is Rodger that you don’t understand your own theory when taken to its logical conclusion both domestically and internationally. As was pointed out earlier, domestically speaking, as soon as the politicians & people fully embrace Monetary Sovereignty the people will ALWAYS vote for the candidate promising more free stuff. Internationally, countries will stop taking the dollar because it will be worthless. Why should they produce and give away their products in exchange for pieces of paper that are printed at will?
Monetary Sovereignty is an academic Pipe Dream, printing money is the last resort of a failed gov’t, and nations fail because of loose fiscal policy.
“The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”
― Thomas Sowell
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1.The U.S. government no longer needs to sell T-securities. It creates dollars by crediting bank accounts.
2. For the past 5 years, inflation has averaged 2% — exactly where the Fed wants it to be.
3. I said we are fighting deflation. In 2009 we were in a deflation.
If you want the facts, see: http://research.stlouisfed.org/fredgraph.png?g=df0
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You can make charts say anything you want – you are not living in the real world. I guess you need to tell the government they don’t need to sell T bills anymore – maybe they just don’t know what you know. Also, at the same time tell them to credit every one with a bank account a million dollars and lets just reset the whole monetary system – I am sure that will cure everything.
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Why read this blog if you already know everything and have zero desire to learn?
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I understand the concept of MS and that the US can not technically go bankrupt. But you haven’t explained the ramication of flooding the monetary system with unlimited dollars (ie… deficits that don’t matter anymore) and to what degree this will damage the US dollar’s reserve currency status. To say it will do nothing is disengenuous at best and a lie at worst. MS breaks down when foreign entities no longer want to want to hold our dollars and it is no longer the reserve currency.
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Max,
Economics works for a nation so long as that nation’s money is accepted — either by other nations or by its own people. So?
Monetary Sovereignty simply is a description of how things actually work,. not how they should work. As for evaluating it, I say it is better than monetary non-sovereignty.
But, there may be better systems out there. Bitcoins are an example of a different sort of money, currently evolving, that ultimately could (or could not) prove superior to U.S. Monetary Sovereignty.
You are correct that when people understand that the federal government can buy anything, they may begin to demand more. Initially, this will result in a better life for all Americans.
Over time, it also could lead to inflation, which the government always has the power to cure, by raising interest rates and or by refusing to spend more, as it already (and unnecessarily) is doing.
Rodger Malcolm Mitchell
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“You are correct that when people understand that the federal government can buy anything, they may begin to demand more. Initially, this will result in a better life for all Americans.”
All bubbles are great initially, however they seem not to end very well. Just ask everyone who lost their house to foreclosure how much better their life was when they were using their house as an ATM and buying stuff they couldn’t really afford. All bubbles collapse and MS is the king of all bubbles.
Also, I don’t think you understand the role interest rates really play. Interest rates is the price of money and what’s a price but a signal to the market of how much demand there is for that product. By artificially manipulating the interest rate, the Fed/gov’t is sending a signal to the market that says people have a lot of savings so money is cheap and therefore you should borrow and invest when the reality is that people don’t have savings and borrowing and investing when there’s no future demand will result in an even worse condition, ie. malinvestment (this is a very simplistic explanation of the business cycle).
In addition, the Fed can not indefinitely stave off inflation with interest rates, in fact all they can do is delay the inevitable. How much lower than 0% do you want to go?
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Max, today is setting a record for truly ignorant comments.
You said, “the Fed can not indefinitely stave off inflation with interest rates, in fact all they can do is delay the inevitable. How much lower than 0% do you want to go?”
Yikes! The government raises interest rates to fight inflation.
Do you actually read before you write?
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@Rodger – “today is setting a record for truly ignorant comments.” Well maybe that’s because you’re commenting more than usual. My point was that the Fed is keeping interest rates artificially low which is sending the wrong signals to the market, similar to what they did during the housing bubble (and every other bubble the gov’t has created). And thanks for ignoring the entire point of my comment which was an attempt to educate you on what interest rates really are for.
What’s truly ignorant is you defending a theory that you don’t even understand the consequences of, despite all the evidence staring you in the face. The world is moving away from the dollar as the reserve currency. Gold, which has been accepted as currency since the beginning of human history and despite the fact that it’s been shunned for the last 40 years, is now being widely accumulated by other countries because they have lost faith in the US dollar and the politicians who manage it. In addition, other currencies such as the Canadian and Australian dollar are officially being recognized as reserve currencies (that’s a fact), and countries are doing currency swaps in their own currency to get away from the US dollar. The value of the dollar is plummeting and the Fed is pumping 40 billion into the economy a month with QE4ever. The idea that we can print paper money forever and engage in loose monetary policy with no ill effects is exactly what has destroyed previous civilizations, the US is not immune.
Maybe you should go back to middle school and take the econ class where you learn that “there’s no such thing as a free lunch” because that’s exactly what you’re pedaling.
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John, your article is a perfect example of why I write this blog.
The Treasury never should lend; it only should give. In lending, and making a profit on its loans, the Treasury acts as though it were the treasury of a monetarily non-sovereign nation.
This blog contains almost 800 posts decrying the federal government’s ridiculous concerns about its deficits, its debt and its money supply. This is a first cousin to the silly debt ceiling.
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RMM,
“The Treasury never should lend; it only should give. In lending, and making a profit on its loans, the Treasury acts as though it were the treasury of a monetarily non-sovereign nation.”
********* One hellofva statement.
“the Treasury acts as though it were the treasury of a monetarily non-sovereign nation”…where did you get that ?
When the US Treasury adjust accounts on the positive side for unlimited amounts isn’t that a “loan on future goods and services to be redeemed by the good faith and credit of the American people”?
Or are we just “giving” those “electronic clicks”(scores) away ?
Perhaps you would clarify?
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Monetary Sovereignty is the greatest theory ever created. Marred only by the fact that it requires honest politicians and honest bankers to do the right thing for the country and not themselves.
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At least one reader claims the U.S. government is not Monetarily Sovereign, because it doesn’t create dollars, and instead the Federal Reserve Bank, a supposedly “private” institution does.
His confusion arises because dollar creation is part of a process that includes clearing by the FRB. The reader confuses clearing with creating.
Here is the process:
1. Congress and the President create budgets for each federal agency.
2. Using their budgets, the federal agencies pay their bills by sending Treasury checks to their creditors, or by sending wires to creditors’ banks. These checks and wires are federal instructions to the banks, to increase the balance in the creditors’ checking accounts.
3. The banks clear the checks and wires through the Federal Reserve Bank, which in turn, clears through the Treasury.
That’s the process. So at what point, and by whom, are dollars created?
The answer: Dollars are created when the Treasury checks are deposited in creditors’ checking accounts. Everything after that merely is a clearing function, over which the FRB exerts no control. Their role in this is simple accounting.
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could you use this step by step process to explain the opposite condition of how money is Destroyed when we pay taxes, i.e., neutralized?
Thanx
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1. You send your check (instructions) to the IRS
2. The IRS instructs your bank to reduce the number in your checking account and makes a note in its own books that you have paid.
That’s it.
The money in your checking account has ceased to exist. The entries in the books of the federal government are not part of the money supply.
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OK So this is one of those Econ 101 moments where were taught the money we pay in taxes goes on to the US treasury to help pay the nation’s bills, and MS & MMT say NOT, money is neutralized, +1-1=0 and poof– ceases to exist..However, this is not the case with state/local taxes collected??
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Correct tetrahedron720,
State/local governments are monetarily non-sovereign, just like you and me (and the euro nations). The Monetarily Sovereign U.S. government creates its sovereign currency.
You and I do not have a sovereign currency. We use the federal government’s currency.
You have just put your finger on the fundamental difference between Monetary Sovereignty and monetary non-sovereignty, which makes you one of the few people who understands what this site is all about.
Even the President and Congress don’t admit to understanding it, (though in reality, they do).
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The US Treasury does Not create money, the Federal Reserve does. Roger seems to either lack this basic understanding, or refuses to admit it. Case in point, the 2008 TARP bailout money/funds/computer click was provided 100% by the Fed. I should know since I worked in the TARP office almost 4 years. I also built the system, in 2011 that captured all 1407 bailout financial institutions. Before I created the system, all data was kept on spreadsheets, pdf, word, and paper. All current TARP funds and repayments are processed by a single bank, Not the Treasury.
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Galt,
The Federal Reserve is only 99 years old. The U.S. government is 236 years old. Do you see the problem with your contention that the Federal Reserve, not the Treasury, creates dollars?
Anyway, you’re confusing an accounting function with “create.” Who would you say “created” my book, the guy who turned on the printing press or me? The Federal Reserve merely keeps the books; it’s not a creative function.
What you were doing was an accounting function — unless your contention is that you decided on TARP and you directed TARP payments.
Congress creates dollars by providing budgets and instructions to federal agencies to create dollars by sending Treasury instructions to creditors’ banks to create dollars by raising the numbers in checking accounts.
Dollar creation is a process, initiated by Congress, with many functions involved, but the dollar creation and spending credit goes to Congress.
You were just a little functionary doing your little functionary duty, then coming home and bragging, “Look how much money I created, today.”
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the Federal Reserve Act of 1913 changed how the US creates money. Do your history. The TARP office didn’t create money. Congress authorized us to allow others others issue it. We acted as a middle office and regulator. We kept no books, per say. The Fed gave us our money/credit or whatever you want to spin the term. A little history of TARP amy drive some of this home. When Congress authorized the TARP funds. the early TARP people didn’t know how to issue the money. One approach was to have the Mint print paper money and have it flown by helicopter to NY and have it issued the banks.
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I got to this point in reading all the comments and I had to stop…it is obvious most people do not understand what you are trying to tell them and I couldnt help feeling that wouldnt it put everything to rest if there was factual evidence of this process….and then I got to this comment. This comment sums it up nicely but is there a way to prove that this is exactly what happens? Isnt there some sort of legislation existing that explains this? That way no one can argue the point.
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http://www.federalreserve.gov/faqs/about_14986.htm
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I get it. Even though the Federal Reserve can create dollars, they do so with permission…much like a licensing agreement.
The US retains exclusive rights over the dollar.
By golly i think i have it! Do I?
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Curt,
Dollars are easy to create. You create dollars when you borrow. If you take out a mortgage, your bank creates X thousand dollars, which it puts into your checking account, from which you pay the owner of the real estates.
You also create dollars when you lend. If you make a formal loan to your brother, you deposit dollars into his checking account. But you are not poorer. You still have the dollars in the form of a loan document. This is what differentiates a loan from a gift.
A gift creates no dollars. A loan does. That is why a paper dollar bill actually is not in itself a dollar, but rather a loan document. It shows that the government owes you one dollar.
So what IS a dollar? It is an accounting notation, with no physical substance. You never have seen, touched, smelled or tasted a dollar. It is like a game score. It exists only as an measure, not as a physical reality.
We deal with such measures all the time. You never have seen an inch, a mile or a light year. You never have seen a ton or an acre. You never have seen “twenty.” A dollar is a similar measure.
The difference between privately created dollars and federally created dollars is the private dollars are limited by the borrowers finite ability to service loans. The federal government has an infinite ability of service its dollar loans. In that sense, the federal government is like a scoreboard, that can display any size score.
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Great first all this talk that now ones understanding how money works and then the saying that bernanke cant print as much money as he wants and that america can never be broken.
You sir dont understand how money works, money is just paper it should note how much are goods and services are worth.
yes Bernake can print as much money as he can, and yes maybe the money wont hit the market increasing inflation but the question is what can he buy with it at the end?? No one will give money to the goverment bills or what ever because everyone sees america has 100% debt and its increasing year for year.
Everyone is moving away from the dollar, america isnt even the biggest importer anymore more as it got replaced by the EU. No one wants to trade with america especially exporting to this country because they realized that they consume much more than produce and it gets backed up by us dollar. Thats why america tries now all of the sudden to export a lot in the last time, they realized they need to prove them self that their reserve currency deserves its name and thats why they need to go to war with iran and hold all the military presence there despite their debt to have the power in oil. America is on the brink of collapsing much worse than europe maybe not this year or next but soon in the near future.
http://www.rferl.org/content/China_Others_Urge_Move_Away_From_Dollar_As_Reserve_Currency/1516046.html
even your shitty free europe which backed by us goverment fed dollars reports it.
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Aren’t Federal Income Tax revenues applied directly to the defecit?
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Not sure what you mean by “applied.” The federal deficit is just a statistic. It is the arithmetic difference between taxes collected and spending.
This does not mean the government uses or needs taxes for spending. Even if taxes fell to $0, the government could continue spending — even triple spending.
If the Bears ran for 200 yards and the Packers ran for only 150 yards, the Packers had a 50 yard running deficit. But that does not mean the Bears “applied” Packer yards to anything. It’s just an arithmetic difference.
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The Income Tax Revenue will offset an equivalent amount of deficit. This is important to politicians and seems to be very important to voters.
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The fact that something is completely wrong, but still is important to politicians and voters, is the reason I write this blog.
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So the treasury creates the money digitally, and also materially as well by means of the Mint’s real printing press. And the Fed keeps the books on the money supply but is not responsible FOR the money supply other than accounting. The good news is that we-the-people aren’t going to be forced some day to pay back the national debt because we didn’t sign off on it, but congress did. How am I doing so far?
And, the states and localities keep coming after me jacking up my taxes on property and gasoline. And California is going bust. I could be wrong, but the soveriegn cat is going to be out of the bag pretty soon when the federal government will be forced to keystroke billions to bailout more than the banksters. They’re going to have to save California et al as there is not enough revenue otherwise and austerity will only kill us even faster.
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WE NEED TO TAKE AWAY FROM THE PRIVATE FOR PROFIT BANKS THE RIGHT TO RAISE TAXES (REVENUE) ON OUR OWN CURRENCY AND GIVE THAT RIGHT BACK TO THE PEOPLE.
What if that one issue were used as the basis for being elected ?
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You are saying that private banks have the right to tax us? That’s news to me ! have you studied the bank of north dakota yet ?
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“lucky”
if we take away the banks power to “tax” us, what will they derive income from? They will have to be nationalized, no?
Thanx
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Thank you for the question as that is how improvement can be made.
justaluckyfool.
“No to nationalization of banks for they are an important sector for a capitalistic society. They would only lose that income that they are now getting from “taxation”. They may continue to earn profits from banking, yes banking what they are supposed to do. Charge a fee for services. Make investments and charge a fee and maybe even charge a percentage of winnings as a bonus. BUT they most obtain permission from their shareholders not only how to distribute any gains, but also how to destribute losses as they must be on a 100% margin basis.
Thank you again. Please continue to challenge.
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Sopwith,
Understand the difference between “can” and “should.” The federal government can create infinite dollars. That does not mean the federal government should create infinite dollars.
If the federal government:
1. Eliminated FICA (Click here)
2. Provided Medicare — parts A, B & D — for everyone
3. Sent every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Provided long-term nursing care for everyone
5. Provided free education (including post-grad) for everyone
6. Paid a salary for attending school (Click here)
7. Eliminated corporate taxes
8. Increased the standard income tax deduction annually
9. Increased federal spending on the myriad initiatives that benefit America’s 99%
. . . then you and I and all Americans would lead far better lives than we do, today. Do you oppose this?
At some point, increased federal deficit spending would cause inflation. The government would fight this by doing as it always successfully has done: Increase interest rates. However, if that didn’t work, as a last resort the government might have to cut deficit spending.
Until that happens, your life would be greatly improved from what it is now.
What is there about this that you don’t like — or do you enjoy the miserable economy the current beliefs have given you?
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Please put an annual dollar figure on your points above. Fica and Medicaid ABD will be in the trillions alone. And, since all of us are also not contibuting to these programs – but will be paid out by the government anyway – this will inject even more money into the economy. Please count that as far as how much money will end up in the “system”. Do you have inflation yet?Remember, the hyperinflation of the Weimar Republic happened pretty quickly – although for different reasons. Trying to “gradually” control hyperinflation once it happens is a fallacy. But the worse part of your whole scenario is getting something for nothing and raising generations of sloths that will EXPECT and REQUIRE more and more. Something you don’t think will happen? Do you not know human nature? Maybe you don’t. Or maybe you don’t care because you may not be living to see it when the crap hits the fan. But as you see it,until that happens, I guess life will be improved. I am sure that is what any fledgling socialistic and communistic state thought initially. To much is given, much is expected. And, the government will expect much.
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Hyper Inflation also occurred in Germany when they started printing up money to pay workers on strike. They printed up so much money that it became completely worthless, children were folding it and using it for paper planes, while adults were burning it for heat. That was sometime in the 30s? Hmm, I wonder what happened next???
When you say something that never happens are you talking about every failed country with a loose monetary policy?
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All, you cannot print your way to prosperity. You must honor the work ethic first that built western civilization and justify your existance in it IMO. The Weimar republic example is not what we have with the QE crowd. They are printing for themselves only and have expatriated to world-wide “undisclosed locations” like Bush and Cheney, etal. and could give a rat’s butt about any of us period, like Blankface who is testifying before congress now, trying to say that the likes of the EARNED part of social security is the way to cut a deficit, etc. HOGWASH. Extradition of these malfeasant animals is what we should be doing like Iceland did, but we do not have national public referendum…yell at your congressmen like I do…schedule appointments to vent your grievances, etc. ; even if they refuse you, or grant a meeting, but are totally insulting at it, you have made the point which may be a NDAA head’s up but so what…are you going to live in relative ease forever and give up your country for your young as you see now happening ? I will fight in every legal way possible to keep my son from having to bear the brunt of such diatribe as Blankfein is delivering, even if he’s just an errand boy for the super-rich….much more on my small blog… http://usssaratoga2.blogspot.com/
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Are you saying that federal deficit spending does not grow the economy?
See: The graph titled “Federal Government Credit Market Instruments (above)
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Deficit spending artificially grows the economy which forms a bubble that eventually bursts. Monetary sovereignty doesn’t take reality into account and as I’ve pointed out before requires omnipotent angels with zero self-interest to perfectly control the amount of money created and spent. You point to your graphs and charts and show how the economy is booming when the gov’t is spending money but don’t understand that that’s when the damage is being done (the inevitable recession/depression is how the economy heals itself). If only we could find omnipotent angels with zero self-interest to control the economy then maybe even socialism would work.
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Actually, reductions in deficit spending have led to every depression in American history, and to most recessions.
Those are the facts. See: Points #3 and #4 at: https://mythfighter.com/2009/09/07/introduction/
What facts do you offer?
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Your facts are misleading and are a clear example of the statement, there are 3 types of lies; lies, damn lies and statistics. Your interpretation of statistics are completing wrong and causality does not equal causation.
“Recessions tend to come on the heels of reductions in federal debt/money growth”. Statistically true but that’s not what caused the recession that’s the inevitable result of unsustainable money printing that occurred prior to the reduction? That’s like saying that right before every car accident, the drive hits their brakes. As such, drivers should never hit their brakes and ignoring the fact that the driver was driving at 100 mph on a dimly lit road in a crowded neighborhood in the snow.
What happened in the years leading up to the reduction? Did the gov’t print endless amounts of money to create a bubble which inevitably burst? Did the housing bubble collapse because there was a reduction in gov’t spending or because my mom’s house that was valued at $150K in 2000 sold for $600K in 2007? Did you really expect home prices to rise by 10%+ per year indefinitely?
When the gov’t artificially inflates the money supply the economy expands and you praise it, but that’s precisely when the damage is being done. The inevitable recession has nothing to do with a slow down in gov’t spending, that’s merely one of the by-products (ie. hitting the breaks before you crash your car into a tree), it has to do with an unsustainable boom that eventually busts. The ensuing recession, as painful as it may be, is the economy healing itself from “pseudo-economists” and politicians who think they can centrally plan it.
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If citizens have unmet needs, like a lack of Health care, dentistry, cosmetic surgery, homes and home improvemens, self driving cars, personal care services, etc. Then how can there be inflation until these needs are met? Prices driven up by demand are not inflation, they are market signals to increase capacity.
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“If citizens have unmet needs, like a lack of Health care, dentistry, cosmetic surgery, homes and home improvemens, self driving cars, personal care services, etc. Then how can there be inflation until these needs are met? Prices driven up by demand are not inflation, they are market signals to increase capacity.”
Really, I guess you missed the housing bubble. Everyone wanted a house which is why my mother’s house went from a value of $150K in the early 2000s to selling for $600K in late 2006 (to a woman who worked at Wendy’s and made 11/hr but that’s another story). The gov’t printing presses were running at full-steam and home builders were selling houses a year before they ever broke ground but I guess that wasn’t inflation or a gov’t fueled bubble.
Also, I think you’re confusing “needs” with “wants” and citizens have unlimited “wants”. I want a 100 inch 4k TV, a yacht and someone to pick the crust out between my toes. My needs are limited but my wants are unlimited. The classic definition of inflation is an increase in the money supply not an increase in the price of goods and services. MMT is a Utopian pipe dream that suffers from the same problem as all other Utopian pipe dreams (aka. socialism), it only works if you have omnipotent angels with zero self-interest, zero-political interest and perfect information to print just the perfect amount of money… for every given second of every given day. Good luck finding those angels.
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Max,
One reason economics is confusing: Words have different meanings, depending on who uses them. “Debt” is one such word. “Inflation” is another.
Most people define “inflation” as a general increase in prices. Some Libertarians and others claim that is “price inflation”, while an increase in the money supply is called “inflation.”
Interestingly, when you refer to your mother’s house, you are talking about “inflation” or “price inflation,” depending on which definition you are using today.
To increase the confusion, a housing “bubble” is not in itself “inflation” or “price inflation,” since it neither is an increase in the money supply nor a general increase in prices.
Another confused word is “needs.” One could argue that the only needs are a minimal survival amount of water, food, and shelter. That definition seldom is used in economics, which instead conflates “needs” and “wants” into “demand.”
As for “government printing presses running full steam,” I assume you mean the money supply was rising steeply, as the government does not “print” money. I see no evidence of that steep increase prior to 2008.
Also, you seem to claim that the lack of “angels” dooms America to either “inflation” or “price inflation,” yet aside from the increase in home prices, America’s “inflation” or “price inflation” has been quite modest, particularly in the past decade.
Finally, you mention “socialism,” yet another confused word. Socialism involves government ownership, not just government spending. America never has had much in the way of socialism, and still doesn’t today.
Those who believe in “austerity” (i.e. a reduction in deficit spending) tend to cry “socialism,” every time there is an increase in federal spending, especially for programs that would benefit the poor and middle-classes.
Austerity repeatedly has proven destructive to every nation that has tried it. Economic growth requires money growth, though Libertarians and others of a similar ilk never learn that lesson.
In another comment, you said, “Statistically (recessions come on the heels of reductions in federal debt/money growth) but that’s not what caused the recession that’s the inevitable result of unsustainable money printing that occurred prior to the reduction?
Now think very carefully: How do we have unsustainable money “printing” at the same time we have reductions in federal debt/money growth?
I’m afraid you have come to this site with a conclusion, and are immune to fact that might change that conclusion.
Thank you for your observations.
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Nice try Rodger, I didn’t equate Socialism to MMT merely pointed out that both were pipe dreams with many of the same underlying assumptions and faults. Austerity has not failed, in fact at the end of WWII, the US gov’t actually cut spending (real cuts not fake cuts to increases in future spending) and every Keynesian said the economy would collapse but of course it didn’t.
Also, I see you ignored the reality of the housing bubble (or whatever you want to call it). My mom’s house was worth around $150K in 2000 and sold for $600K in 2007 (to a woman who’s only source of income was a part-time job at Wendy’s for $10/hr). Reality will eventually catch up to endless money printing both from a price side and a “benevolent angel” side.
I fully understand the utopian arguments for MMT, I just call bullsh*t on it’s implementation.
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Max says,
Except for the recessions of 1945 and 1949, just four years apart.
So your idea is, we increased deficit spending, then for years we cut back on deficit growth, but the recessions were caused by the increased deficits during those many years previous? That’s really your belief??
And have you noticed that every single recession is cured during increases in deficit spending? Or is your belief the previous deficit reductions that introduced the recessions actually cured the recessions?
Perhaps you believe that the Great Recession of 2008 would have been cured by tax increases and/or spending cuts??
I’m curious about your (and other Libertarian’s) theory: What is the mechanism by which reduced money growth increases GDP growth?
GDP = Federal Spending + Non-federal Spending + Net Exports
How does reduced federal spending increase those three factors?
How do increased federal taxes increase those three factors?.
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Are we going to rehash all of this again? I already got you to admit that you don’t even understand the long-term consequences of your theory when taken to its natural conclusion or maybe you do but your response is “we’ll all be dead by then”. MMT only works as long as everyone plays along with the charade and countries are already making adjustments. Other currencies are being added to the world reserve currency. China and others are stocking up on Gold. Countries are swapping their own currencies because they don’t trust the US to manage the money supply. A Bitcoin revolution is happening in South America (ie. Venezuela, Brazil, etc) where countries have printed so much money they’ve devalued their currency and made it worthless. Now, will I admit that it will take a while before the MMT money bubble bursts in the US, absolutely, but if we continue printing money it will and the consequences will be swift and dire. As I’ve said repeatedly, MMT is great in theory, it’s only when implemented in reality that it will be disastrous because it completely ignores human nature. Of course every time a country prints more money and collapses their currency the MMTs will blame it on something or someone else. Sorry Rodger, your theory is bullsh*t, time to spend your efforts on something else.
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The owner of this site is a liberal / progressive. No use trying to reason with him. Just know this, money doesn’t grown on trees and credit is only good if the other party is willing to give it to you.
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You’re right. There are things about MMT that are bullsh*t. Why not go to an MMT site and tell them that. You’re on the wrong site. This is an MS site.
You said, “. . . .every time a country prints more money and collapses their currency . . . ”
“Every time”??? Interesting. The U.S. has been creating (not “printing.” Money is not printed.) more money for at least 80 years and still no collapse. Mighty slow, that collapse.
I’ve been reading the same nonsense since 1940 (“ticking time bomb,” “unsustainable,” etc.) But here we are — still no collapse. Read: https://mythfighter.com/2016/02/10/from-ticking-time-bomb-to-looming-collapse/
Meanwhile, you still don’t get specific about MS and the Ten Steps to Prosperity. You said the “Implementation” is bullsh*t.” Well, the implementation is the Ten Steps. So, which Step(s) are “bullsh*t” and why?
Let’s discuss specifics.I’m giving you a platform. Anyone can spout off that the other guy’s ideas are “bullsh*t.” So far, the only specific you gave was that after the war, deficit spending declined, and that didn’t hurt the economy — except for the two recessions that immediately followed the war. OOPS!
Do be sure to read: https://mythfighter.com/2016/02/10/from-ticking-time-bomb-to-looming-collapse/
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John – I know who the site is run by. I usually ignore the nonsense but every once in a while I chime in with some reality.
Rodger – your people brought us all these things through the use of force and gov’t control. Things that could be delivered under the free market for less with better quality, oh thank goodness, where do I sign up for your other money wasting, poor quality, preposterous schemes? I appreciate the platform but as I pointed out, I already got you to admit that you either don’t understand the long-term consequences of the inevitable result of your endless money printing backed by nothing other than the “full faith and credit” of a gov’t with no restraint on money printing or that you don’t care because you’ll be dead and screw the great-grand kids.
Instead of rehashing the same old debate, I’m curious and I’ve asked this question to a bunch of Keynesians and MMTs, what would a market have to look like for you to finally admit that your solution doesn’t work? We always get, well the biggest stimulus in history would’ve worked if only we had spent more money. Let’s assume the gov’t printed up and spent 10X the amount of money and it still failed, would at that point you’d admit that gov’t spending doesn’t work to promote long-term sustainable growth or would you say, “if we only spent 20X, that would’ve fixed things.”?
Just like socialism, there’s a reason intellectuals have to believe in MMT, the models are just perfect.
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Max, you wrote:
You are not required to accept Social Security, Medicare, Medicaid, or the dozens of other progressive programs that benefit the middle and the poor.
You are required to pay taxes because people falsely believe that federal taxes fund federal spending. The fundamental purpose of this blog is to disabuse people of that believ.
I appreciate the platform but as I pointed out, I already got you to admit that you either don’t understand the long-term consequences of the inevitable result of your endless money printing backed by nothing other than the “full faith and credit” of a gov’t with no restraint on money printing or that you don’t care because you’ll be dead and screw the great-grand kids.
I’m not sure how much of an admission it is to recognize that prediction in economics is chancy. I have written how folks have been telling us that the federal deficit is a “ticking time bomb” since at least 1940, and so far, no explosion. You should read the article.
So you tell me. When will that ticking time bomb explode. What is the future?
I’m not sure why you feel the stimulus “didn’t work.” We were in the worst recession — almost a depression — in the past 75 years, with massive unemployment and business bankruptcies.
Now, we aren’t.
So how did we get out of the recession, if not for deficit spending? Magic?
And yes, we didn’t spend enough. If we had merely instituted Step 1 of the Ten Steps, we would have recovered far more quickly and more robustly.
We didn’t spend enough, simply because of people with beliefs like yours.
Have I answered the questions you seem to think are clinchers to your argument?
Oh, just an aside, I couldn’t help but laugh at your comment that “causality does not equal causation.” Actually, the phrase is “correlation does not equal causation.” Causality most certainly does equal causation. But hey, that is the least of your mistakes.
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OMG, you found a typo on an internet comments thread… well geez that means all the nonsense garbage you’re spewing must be true… unless I can find a misspelled word.
The middle class and poor don’t benefit from all the programs everyone is forced into, they grow dependent on them and can no longer be self-sufficient. Yeah I know, only progressives care about supporting the less wealthy through counter-productive gov’t welfare programs that keep the poor, poor. If only we could have a somewhat “controlled” experiment where we take an extremely wealthy city and have one party democrat, progressive rule for 50 years and see the results. Oh wait, maybe we should look at Detroit, a city that boasted the largest per capita income in the world and was called the Paris of the West. 50 years of nearly 100% single party progressive rule, implementing one dumba** progressive economic idea after another (because they’re great in theory as long as you don’t take human nature into account – hmmm, sounds a lot like MMT) and I bet Detroit is the shining star of the world… Oh wait, what it isn’t, well must be an outlier, so let’s look at every other major inner city that’s had exclusive democrat progressive rule for decades and see how well they’re doing. Chicago, Baltimore, DC, Philly, Atlanta, 1/2 of California. Wow, who could’ve imagined that getting poor people dependent on gov’t welfare would result in crime infested, poverty ridden sh*tholes? Let’s do for the rest of America what progressives have done for inner cities. Prior to the (not-so) “Great Society” poor people lifted themselves out of poverty at a faster rate than at any time since. In fact, since the War on Poverty, the gov’t has spent Trillions of dollars and the poverty rate has stayed almost exactly the same. Hmm from 1900 to about 1960 the US poverty rate went from 90ish% down to 15% with relatively little gov’t intervention. Fast forward nearly 60 years and Trillions of wasted dollars later and the poverty rate is still around 15%. The difference now is that gov’t welfare dependence makes it more difficult to get out of poverty.
It’s been a couple years since I commented but the nonsense just got too great so I figured I’d have a little fun. To be clear, I fully understand the theory of MMT and like socialism it’s clean and perfect as long as it ignores human nature, political and self-interest, and just like socialism if it was ever implemented it would fail miserably. That said, I hope you win Rodger. I hope the MMTs remove all constraint (real or perceived) from the gov’t printing presses and allow the gov’t to print as much money as they want with “no consequences”. That more than anything would usher in a wave of free market solutions (competing currencies, bitcoin, gold, silver, etc) to finally put the nail in the coffin of fiat currency and gov’t money printing (and hopefully intellectuals who look at their charts and graphs and completely ignore human nature but I doubt it as there are still intellectuals who support socialism).
Feel free to have the last word, as undoubtedly you will. Make sure to include some misleading graphs and more rhetoric about how only progressives want to help the poor (I’m assuming conservatives want to eat them or something).
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correct
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Max,
Please reject Social Security, Medicare, etc., because I don’t want you to become dependent on them.
Yes, and please do give black and Latin communities as your poverty examples, because as every conservative has been taught, the cause of poverty is laziness, not white bigotry against minorities which leads to unemployment, crime, bad schools, bad housing, fatherless families, drugs and negative family mores.
The poor are nothing but lazy sloths, and who could blame them. If you received food stamps, wouldn’t you prefer to live in a hell-hole rather than working for a living.
And by all means, do not give to charity, because those receiving charity are sloths — so-called “food-stamp-mamas” — who would rather lounge in a pig sty, than actually work for a living.
Every conservative knows that if we soft-hearted libtards will simply motivate these lazy good-for-nothings people with additional poverty, they will lift themselves by the bootstraps or starve to death.
Starve their kids, too. That’ll motivate them.
I simply can’t imagine how your family survived the dependence of Social Security and Medicare. Perhaps, you are simply superior beings.
Sickening.
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Sop,
1. Eliminate FICA — $1 trillion
(Wait one year to see if this causes inflation)
2. Medicare for everyone. Estimate: $250 billion
(Wait one year to see if this causes inflation)
3. $5,000 to everyone: $1.5 trillion
(Wait one year to see if this causes inflation)
(Continue 4-9, pausing one year between each, to evaluate inflation.)
Neither you, nor I, nor anyone on earth knows how much federal deficit spending would cause inflation. But you and the other debt hawks don’t want to do anything for fear whatever you do might at some unknown point possibly cause an inflation we can’t deal with.
You prefer to struggle along with unemployment, inadequate health care, poverty, poor schools, bankrupt cities and states, and repeated recessions (7 in just the past 40 years) rather than “risk” a hyperinflation — something the U.S. never has had.
As for the Weimar Republic, you’re right, it happened for different reasons — completely different reasons — which is why it never has happened to America.
Say, you forgot to mention Zimbabwe, the other debt hawk favorite. Fearing something that never happens rather than something that always happens. And if you give people health care and an education, they’ll turn into sloths? That’s called “debt hawk logic.”
Lord, I’ll love to talk with you when you can’t find a job and you’re sick and can’t afford a good doctor and hospital and expensive medicine. I want to hear you whine, “Help me, help me” — like a sloth.
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Medicare for everyone $250 billion? – way too low! – healthcare expenditures are 1/6th of a $16 trillion GDP. That comes to around $2.7 trillion expenditure in my calculator. And remember, for SS amd MC these are just payments OUT from the government – how about the money that stays in the system because the government isn’t taking and “destroying” it from taxes as you like you say. Way too low of estimates with money floating around – try again with the numbers.
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In your rush to disagree, you forgot that the government already pays to cover Medicare benefits for the most expensive users — those over 65 plus the disabled. Healthy people under 65 spend only a minuscule fraction of total medical costs.
Anyway, this has been your final comment. You are incapable of learning, and my patience is limited.
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and … you didn’t respond to the fact of human nature wanting more and more from the government. And to the : “too much is given – much is expected”. That is the real dilemma anyway isn’t it? You can’t put that in to some calculation. Again – who will want to pick up your granddaughters garbage after you are dead and gone? Oh and what about your statement – the government can slow it down or take the give outs back – that will cause true riots.
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This is heartbreaking, but typical. Your argument is that if the government gives people anything, these people will just want more and more. So don’t give them anything.
So, was Medicaid a mistake? By providing health care to people who can’t afford it, have we caused them to want more and more, when they really should just get out there and work, and not expect any handouts?
And undoubtedly food stamps just makes people lazy? Let ’em starve. And aid to the disabled just makes the greedy? And aid to education — forget it. Let them work for their knowledge.
And those ever-present garbage collectors (Why do debt fools continually mention garbage pickup?), yes they all will quit work unless you make them starve. Got to keep the riff raff down. Right?
You must have been raised by a very selfish, mean-spirited family, so today, you all give nothing to charity, because those needy people will just want more and more. Right?
I guess you voted for Romney.
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You need to Watch the movie Stew Peters WATCH THE WATER. COBRA VENOM IN JABAROO
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I get all my factual information from “Jackass: the movie.” It’s recommended by all right-wingers.
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Sopwith; I’m afraid that’s what they will do…I mean WS that owns America now, as Blankfein testifies or pontificates or whatever, so that once most people are on welfare, they’ll pull the plug and as that 19th century industrialist said infamously, “they’ll just send in the lower class goons to kill off the other lower class goons for us” or words to that effect…population reduction the hard way for us; too easy for them as usual. You DO know about Ludlow ? and the Battle of Blair mountain ?
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Roger most of what you say on this blog has been spot on.
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One of the themes that seems to pop out every now and then is the insatiability of human “nature.” Oh Dear, if the cat gets out of the bag about MS/MMT’s infinite fundability then everyone will want everything for nothing!
If there is any group of ordinary people that could be making $100/hr it’s the New York City sanitation workers. All they have to do is wait for a hot summer day and go on strike. They would have the politicians by the short hairs, right? But they don’t.They only ask for a decent wage for the very importance of what they do, and what they do is extremely important! Perhaps more important than what a highly paid bureaucrat receives.
This is the fallacy of scarcity, distrust and fear. We think if everyone has too muchpower = access to the vault = they will hold the country hostage. We are still thinking in ignorant, old fashioned terms, survival of the fittest, not enough to go around, panic, live for now, to hell with tomorrow.
It is a fact that we tend to nurture that which nurtures us. Or to put it another way, you don’t bite the hand that feeds you; you don’t shoot yourself in the foot, unless you’re on WALL STREET or somewhere else in the big money world..
It isn’t the working man/woman that can’t be trusted, it’s the Wall Street-get rich quick types that are the problem. These are the ones who Panic, who drive up the price of gasoline. These are the sociopathic, antisocial socialites blinded by numbers, who cannot see beyond the present moment. They do what they do whether we like it or not because they can, because it’s legal, because behind the scenes they are pulling the strings! (Pay no attention to that man over there behind the curtain!)
No, it’s not the average person we cannot trust. Ultimately, it’s a heavily skewed legal/financial system that is doing our undoing. Exactly what would be the result of MS/MMT as policy is hard to say, but I think we can trust the average person to do the right thing. If there is ever to be a system of economic democracy, it will begin with the reality of Modern money functioning and mechanics.
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There’s no fallacy of scarcity, it’s the first basic lesson of economics. If you can’t get past the first lesson then you shouldn’t be talking about economics. What would happen if the New York trash workers were to go on strike during a 100 degree day is that the people would be pissed. They wouldn’t just hand over $100/hr they would demand that the trash workers get back to work or all get fired. The reason the trash workers don’t get paid $100 per hour is not because they’re not asking for it, its because the value they bring to the job isn’t worth $100/hr and their skill set isn’t “scarce”. In other words they know they won’t get $100/hr and if they asked for it they’d all get fired. What they offer is manual labor and if they demand rates above market price they will get replaced with someone who can do the exact same job. In other words the reason Michael Jordon made 50 million per year is because there were very few people who could do what Jordon did, the reason the cashier at McDonald’s makes $7.25/hr is because there are millions of people who can do exactly what they do. That’s the basic lesson of scarcity in action.
In addition, if you think people won’t demand more “free stuff” from the gov’t you haven’t been paying attention over the last 100 years. Do some research on Wickard vs Filburn and then correlate that with the exponential growth of gov’t since then. Finally, this entire election was about “free stuff”. Free contraception, free entitlements, free Obama phone, free health care, free “fill in the blank”. And this isn’t limited to one party. Entitlements have unfunded liabilities in the 220 Trillion range and both Obama & Romney were arguing about who was going to spend more on Medicaid. People will always vote for the politician who offers them more “free stuff”.
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Perhaps I should have said relative scarcity of “funding”. And yes it is the first lesson of basic econ because no economist has yet developed an abundance “funding” model to deal with our situation locally or globally. MMT offers the beginning “seed” of abundance modeling. But so far, generally, scarcity wins by default. However, abundance is reality in the real world of technology and mass-production. Go shopping at Wal-Mart sometime.
As for those sanitation workers, we really don’t know what would happen in my hypothetical example. For sure people would be mad at the stench surrounding them, but the workers would get a substantial raise before it’s all over, because before you could hire and retrain new people to learn the job and deal with the pushback and sabotage from the union workers, let alone find new workers who would be willing to jump into that fray, the rotting food/rats aren’t going on strike and will continue to gag the homeowners. Time is on the side of the strikers. Besides, all they want is a decent wage. Clearly I exagerrated with my eg. of $100/hr. But what you get isn’t always what your worth; sometimes it’s what you can get from the pressure you exert.
Also you state: ” entitlements approaching 220 Trillion range and both Obama & Romney were arguing about who was going to spend more on Medicaid. People will always vote for the politician who offers them more “free stuff.”
Sounds to me like the average Joe is catching on to the corporate welfare/bailouts/loopholes/favoritism that’s been going on for decades. ‘Hey why not me too’ says poor Joe?
It also sounds like economists had better find a financial abundance model. The scarcity model of Econ 101 is going into the museum of obsolete practices, because it’s not at all equal to the task of Joe’s needs wants and desires. Joe watches TV and has the internet. Joe isn’t stupid or intimidated or as respectful of authority anymore as our grandfathers once were. Equality isn’t a pipedream. It’s a demand that will require an unprecedented political-economic breakthrough commensurate with the capacity of world-around, mass-production technology, that has yet to be fully tested.
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Granted it’s been a little while since I shopped at Walmart (I prefer Target) but last I checked Walmart doesn’t give away things for free. Every product they have has a price on it and that price is based on supply and demand. If Walmart was to price flat screen TVs at free or $1, I would bet my house that they would run out (scarcity) in a matter of minutes. I would also bet my house that no one would make flat screen TVs anymore because they’d lose money at that price.. You seem to forget that people work for this thing called money. And money is nothing more than a placeholder for goods. If you give people stuff for free what’s the point of working for it.
BTW, I’m 100% against corporate welfare/bailouts/loopholes etc, but that’s a failure of gov’t not corporations. Corporations can’t force a consumer to buy their stuff, only the gov’t can (indirectly through taxation and redistribution (see the Volt)). As such, corporations lobby/bribe the politicians who then legislate theft of citizens money. If gov’t didn’t have the power to steal then corporations would have to survive on the merits of their product or service not on how much money they can spend on lobbyists.
Equality of OPPORTUNITY isn’t a pipe dream, equality of RESULTS is – unless you want everyone to be equally poor, which is the inevitable result of monetary sovereignty when taken to its logical conclusion.
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“…yet progressives always believe that printing money will solve the problem.”
What then do you and Ayn Rand say about a solution to all the horrible problems we have encountered? The private sector left unchecked will only give us Upton Sinclair’s Jungle. Neither sector is without blame. State and local government is starved for tax revenue; business is starved for profit. The people pay and pay for both.
Nevertheless, the bottom line is government DOES help people. (What are you thinking?)
We know your complaint.
What is YOUR solution?
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Bottom line: Max has no comprehension of the differences between Monetary Sovereignty and monetary non-sovereignty, so he gives monetarily non-sovereign examples to disprove Monetarily Sovereign fact.
Ignorance is no shame. We all are ignorant. But ego-driven, Trumpian, intentional ignorance and refusal to learn, is a disgrace.
Max refers to the graphs and data disproving his ideas as “misleading.” So if you can’t change his mind with facts and data, what is left?
He has precluded learning. His mind is cement, and all he is interested in is winning an argument.
His only value now is as an object lesson to others.
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“Ignorance is no shame. We all are ignorant [especially you Rodger]. But ego-driven, Trumpian, intentional ignorance and refusal to learn, is a disgrace.” Ouch – I said I was done but I enjoy the ad-hominem attacks (ps. I didn’t vote for Trump and think his economic, especially trade, policies are ridiculous).
As I proved several years ago, MMT is a great theory (and yes, I understand the theory), but it’s the implementation that will be a complete failure because once again, it completely ignores human nature, personal and political self-interest and relies on all knowing, benevolent, selfless angels to create just the perfect amount of money to maintain full employment while staving off inflation.
MMT is a charade which requires all parties to play along and again, as I pointed out a couple years ago and you agreed with but didn’t care because “we’d all be dead by then”, printing money can’t continue indefinitely; and usually when a bubble bursts, it happens much faster than anyone predicted.
The nonsense of MMT sounds especially appealing to US intellectuals because the US holds a special place in the world when it comes to finances, but that is changing. A couple years ago I told you that because of the US printing presses other countries were going to move away from the US dollar. Since then the Canadian dollar has been added as a global reserve currency and the Chinese Yuan was added to the IMF reserve currency just last year. Countries are building up their stock piles of gold and albeit slowly crypto-currencies are gaining popularity (in fact, they are doing the best in several countries who have taken MMTs advice and printed money to the point that it’s not worth anything). Countries are also doing currency swaps among themselves to get away from trading in US dollars. Keep printing and devaluing the money. Hopefully you’ll be dead by the time the dollar bubble collapses but unlike you, I care about the welfare of future generations.
=========================================================================================================================================
Editor’s note. The writer “Max” has no idea what a “reserve currency” is, and believes that if other currencies are held in reserve, this is a problem for the U.S. Apparently no one has told him about the euro and the British pound.
Note to “Max”: For your interest, a “reserve” currency is nothing more than a currency banks keep in reserve to facilitate foreign exchange. It provides no special benefit to America to own a reserve currency. For your sake, I pray you live long enough for the dollar no longer to be accepted by the world. That would be a very long life, indeed.
Those who actually are interested in learning can go to https://mythfighter.com/2016/02/10/from-ticking-time-bomb-to-looming-collapse/ and see 77 years of fright warnings about the imminent collapse of the dollar. Yet the silly warnings continue.
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So guys,
if you received free health care, free education and didn’t have to pay federal taxes, you’d stop working?
And how do the “Nine Steps to Prosperity” listed in the post lead to a “logical conclusion” of poverty?
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Yes! Just to prove that there is No Free Lunch. Someone always pays. The perfect way to crush liberalism is to Stop producing. Make the liberals try to make things on their own. HINT: They Can’t!
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But that’s what you seem to fail to understand Rodger, it doesn’t stop at “free” education & “free” healthcare. Once the people get that they’re going to vote for the politician who gives them “free” food (food stamps), “free” housing (section 8 subsidized housing), “free” cell phones, “free” transportation vouchers, “free” internet, “free” cable TV, “free” clothes, “free” toys, “free” everything. THERE IS NO SUCH THING AS FREE!!!
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So your theory is, “Don’t give people health care or education, because that will make them want other free things, and we will be helpless to refuse them, because we gave them healthcare and education.”
Sort of like, “Don’t give them military and homeland protection, roads, bridges, dams and all the other myriad services provided by the government, because now we are helpless to refuse them.” Right?
But wait. You don’t still believe federal taxes pay for federal spending, do you? No, that wouldn’t be possible. Or would it?
By the way, if “there’s no such thing as free” (in all caps so I can read it), what’s your concern?
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What I’m saying is that you don’t understand the long-term consequences of your theory. Giving people “free stuff” is great in the short run but is unsustainable. Just like robbing a bank or being a drug dealer is great in the short run; it’s the long term consequences that suck. You keep arguing that printing up lots of fiat money will make people happy immediately. I don’t dispute that but the result will be a monetary collapse and we’ll all pay the price later. And what I’m saying isn’t a theory, it’s reality that has come to fruition countless times over the course of human kind (remember Nero fiddling while Rome was burning). As I’ve said before, printing money is the last resort of a failed gov’t who’s run out of all other ideas, with the result almost always leading to the collapse of a nation. We’re already seeing the signs of it now, with other countries moving away from the US dollar as the reserve currency and private investors moving into hard currency.
My concern is that this nation is heading towards a monetary collapse where the dollar becomes worth nothing (not hard to imagine since the dollar has already lost 98% of its value in just the last century). My concern is that for the first time in America my children’s generation will be worse off than mine (which again isn’t theory but actually the current consensus), because of loose fiscal policy.
And as far as giving people free stuff, I’m fine with private organizations doing it but I’m completely against the gov’t doing it, because the gov’t has proven that they are a colossal failure. As Friedman said, “Almost all government programs are started with good intentions, but when you look at what they actually achieve, there is a general rule. Almost every such program has results that are the opposite of the intentions of the well-meaning people who originally backed it.” or if you prefer Mises, “Gov’t interventions create unintended consequences that lead to calls for further intervention, and so on into a destructive spiral of more and more gov’t control”.”
The bottom line is that the gov’t doesn’t help people. They create programs that are meant to help people but since the gov’t has no comprehension of the Law of Unintended Consequences nor the foresight to look past the next election cycle, the result is always the opposite of the intentions. In other words, instead of lifting people out of poverty, gov’t poverty programs breed dependence and keep people in poverty. Instead of making housing more affordable, gov’t housing subsidies raise the cost of housing. Instead of making higher education more affordable, gov’t subsidizing education has skyrocketed the cost of higher education. Instead of making health care more affordable and higher quality, gov’t health care programs make health care more expensive and less efficient. We have 1/2 a century of results to gauge the failure of gov’t programs, yet progressives always believe that printing money will solve the problem.
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No problem. When you are 65, don’t accept Medicare or Social Security and for now, don’t drive on any federal highways. Don’t want you to suffer the “long-term consequences.”
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RMM,
I’m sick of it. These people who come on here like chicken little saying the world is going to collapse if free stuff is handed out to people. They don’t understand human nature. People like/want to work and would do so in any case. If nobody works the food won’t get on any tables of all households everywhere. We have to work or society will collapse for sure whether or not we live in a utopia. This is in evidence whenever there is an emergency and people come to the rescue of strangers and asking for nothing in return. Yes, government creates problems and so does industry. We all create problems. We all solve problems too and as a matter of fact we all solve more problems than we create. If the naysayers don’t think MS/MMT will work then they can put their solution on the table and watch how fast it gets picked apart. There are no perfect solutions.
All we want is a practical idea that will float. But for now it seems the politicians keep wanting to cut and slash our way out of the debt-jungle. As we all know by now, the biggest problem in economics is the inability to comprehend the difference between limited nonsovereign budgets and limited-only-by-inflation, sovereign monetary plenitude, i.e., as long as demand is = or < supply we have no problem.
So far there is no way to test capacity short of all out world war III. And I don't think the powers that be want (us) to know the truth as to just how much capacity there really is. Heaven forbid if it got out that all that machinery and automation could never be exhausted and everyone could have a good life without the wealthiest having to take a hit in the least.
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Not Mentioned by either side so far: The Govt. ought to be for,by and with the people (masses). Beyond politics and law making- Govt has a role to play in creating new revenue/wealth for the people(Nation). Govt. has unlimited powers/tools to raise the standard of living- Natural resurces, coop ownerships, cottage industries, innovation, taxes. The Capitalist corporate led system has failed to bridge the gap between the rich and the poor. It is time for a new system.
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You need to understand that the Government doesn’t have the understanding how to grow anything except their talk, staffs, and their own budget. I worked as a federal employee and before that as military careerist. Interesting, the military is very conscience about using tax payers money, but it just the opposition in the federal space. The military may buy a few $600 toilet seats, but on the federal side, they will buy millions and never use them. If you think capitalism has failed, then ask yourself who made those toilet seats, your car, your clothes, your bank, your vacation spot(s), etc. It wasn’t any government, not do they have the understanding, yet alone, the capacity to make the examples I just mentioned. If you want a clearer understanding how capitalism really works (and well I will add), look at this short clip -> http://www.youtube.com/user/IPencilMovie?feature=watch
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yea, and it is called Communism
That sure has worked everywhere hasn’t it? – and don’t tell me about China – you would be an itinerant farmer in China with no hope of elevating your place in society… or maybe you would be one of the elite communist bosses?
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Actually sopwith, China is a great example of what Capitalism can do. China is far from a Capitalist society but the introduction of Capitalism over the last three decades has lifted more Chinese people out of poverty than at any time in the 5000+ year history of China. Just loosening the economic reigns a little bit has resulted in a massive decrease in poverty and an increase in quality of life for the Chinese people. China has a long way to go but just a little bit of Capitalism has done more for the people of China than anything else the gov’t has done throughout China’s storied history.
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Hey Max – I totally agree with you about China- a litlle capitalism can work well where it is allowed to work unfettered – and where they allow it – it works better than it does in the US in many instances. The problem is: they allow it to work where they want it at the desires of the huge ruling elite. The descrepancy between the city benefactors and the rural working class is so lage that most in the US can’t fathom. China is still communist – and the ruling elite has a firm control on who benefits from that control.
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Capitalism has lifted more people out of poverty and increased the quality of life for more people across the entire world in the last 200 years than every other economic system combined over the last 5000+ years. Capitalism has allowed the poor in America to live better than 90% of the rest of the world. What’s happened to Capitalism over the last century is that it has been infected with “progressivism (aka socialism)”. When socialism infects Capitalism the result is the massive expansion of gov’t, the destruction of personal liberty and Crony Capitalism. Capitalism hasn’t failed, it’s been destroyed by all the well intentioned “do-gooders” working through the unaccountable gov’t that have failed.
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The author is WRONG.
US Government do not have the power to print Dollar, only the Federal Reserve ( which is a private organization) has.
US Government borrows money from the Federal Reserve and pays interests.
These are internal debts of US government in addition to the Treasury bonds it sells to the public and foreign countries ( External Debt).
Similarly the UK Government borrows from the Bank of England, who prints the money. Germany or Greece borrow money from the European Central Bank; Japan Government borrows money from the Bank of Japan.
The independent central banks are there to control the politicians from printing money whatever they want.
Only the Soviet Gornment had the right to print as much Roubles as it wanted ; however, it had the restriction imposed upon itself by a balanced budget every year. As there was no tax on anything or on anyone, the USSR Government could spend only what it could earn from exports and what it could produce. As a result, it had no foreign or domestic debt.
Other Government do not have that freedom today; they are restricted by the independent Central Banks.
Prove me wrong, I am ready to learn new things which I do not know.
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National debt is really national “saving” by foreign/domestic pur”chasers” of the debt looking for a safe haven. We-the-people did not sign off on any loan. That’s crazy! We don’t owe. The owing is between the treasury and the bond holders, that’s all.
Sovereign USA doesn’t “borrow” IN THE USUAL SENSE. Currency is legally and digitally invented into existence to the extent of the deficit shortfall. China, et al purchases our debt as safe haven, we (treasury) owe them only the interest and principle upon maturity if they don’t roll it over. As a sovereign entity we can easily meet the cashout or interest.
AND the deficit is not a deficit; it is supplementary investment injected into the private economy as dictated by the U.S. budget and by emergency measures authorized by Congress. That spending becomes net wealth and stimulus to the private economy without negative offset.
FEDERAL Taxes are not spent; they are what reduces the surplus-i.e., poof!, neutralized–money from thin air and back to thin air. Your bank’s reserves are debited, and simultaneously your account is debited. +1-1 = 0. Excess reserves are soaked up by the FED to maintain their target rate. The “spending” is keystrokes from the Fed to the Treasury; and what the Fed or treasury can’t sell as T-notes, the Fed buys up, expanding it balance sheet. The Fed has no printing press, only a keyboard press.
Therefore, national “debt” keeps growing because taxes are totally insufficient and always will be as automation takes over employment more and more. What is growing is bondholder savings that are safe. When they mature they will always be paid off due to USA’s monetary sovereignty.
Debt and deficit affect local-state government, firms-households. They borrow and spend as they USE the currency, not issue it. Only a sovereign can issue or else you go to the slammer.
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Hello Rodger. What limits how many nations and or states can be monetarily sovereign? Obviously individuals can’t be monetary sovereigns. But can towns? States? Obviously some countries are. But why don’t all countries pick up the idea since it seems to allow so the country so much more flexibility. Many thanks for the excellent info.
Lyndo
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Good question.
Chicago could be Monetarily Sovereign. So could Illinois. Only laws prevent such freedom, and the theory is that a unified national monetary system is stronger than a system containing myriad forms of money.
Europe was doing better with the myriad forms of money than it now is doing with the euro.
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Constitution gives the money power to the Federal Government. The Federal Reserve Act on 1913 transferred that power to the Federal Reserve. The Federal Reserve owns the US monetary system.
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Still promulgating the myth about the Federal Reserve being a private organization, that creates money at its whim, and is not in the control of the federal government? It gets so boring. Maybe you should turn your attention to area 51 if you enjoy myths.
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I’m pretty sure that the Federal Reserve remits its profits to the Treasury. However, I do not think this is the case for private banks. The are able to privatize the profits made off the creation of a public good (money). Which to mean seems very unfair. It would be like giving private individuals the power to tax others.
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Lyndon,
You think its unfair for a lender to charge interest? Would you lend money without charging interest?
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No it is not unfair for a lender to charge interest so long as he has not ‘created’ those US dollars. If he has ‘created’ those US dollars (as is the case in modern banking), then he should not be able to charge interest.
What I am saying is that there is HUGE DISTINCTION between a man working productively and saving up money, and then lending it out at interest, and another man (having somehow?? gained the privilege) creating money out of thin air at no effort at all, and then lending it out at interest. It seems the ambiguity in the word ‘interest’ has clothed naked villainy in seeming legitimacy.
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The method banks use to create money, is lending.
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Exactly. And this is to be distinguished between the lending which
does not involve the creation of money. For example: that which takes place on LendingClub.
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I wasn’t familiar with LendingClub, so I looked them up. Here’s what a Wikipedia article said:
Here’s what LendingClub says about itself on its own website:
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Are you saying that peer2peer lending is not full reserve? Or are you saying that full reserve lending still involves money creation?
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Peer2peer lending does create money, since the debt document is a form of money.
But in the case of LendingClub: “All loans are made by WebBank,a Utah-chartered Industrial Bank, Member FDIC.” So it really isn’t even Peer2peer lending.
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Rodger, many thanks for the responses. I appreciate your expertise. I see now (upon closer examination) that lending club is not really peer2peer lending. Seems like kind of a fraudulent business model to be promoting themselves as peer2peer when in fact they are not… (Thanks for pointing that out).
But your comment: “Peer2peer lending does create money, since the debt document is a form of money.” mystifies me. Can you explain this? Or point me to some information that would explain it? In my mind peer2peer means (in simple terms): I have saved $1000 dollars, someone else needs $1000, so I lend it to them directly based on the (perhaps written) agreement that they will pay it back plus interest at a later date. Where is the money creation in this process? I’m not seeing where a net new sum of money has come into existence. All I’m seeing is that my -$1000 dollars has become someone else’s +$1000, with the whole thing summing to zero. Am I missing something obvious?
Thanks,
Lyndon
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I’m going to let you think this one out for yourself.
Think of all the financial differences between giving someone money and lending someone money.
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Such a tease! I see differences but I don’t see wherein money is created… Unless we are considering the loan agreement money…?
Let me try to highlight the distinction I am trying to make in a different way in order to illustrate my confusion. Since money represents demand for ‘real things,’ let me substitute in the real things.
In order for me to lend a dude 3 cows I must first have the cows in my possession. So, in order to lend I must first produce. I must exert effort and raise the cows by the sweat of my brow. When I lend, I go without the cows for a year and he consumes them while doing the necessary productive work (raising cows) to pay me back
But the lending action itself has not created any new cows. The cows were already in my possession. Now they are gone. They are in some one else’s possession. There are not now 6 cows because of my lending. All that has happened is a substitution.
However, with banks it is as though they simply create cows out of thin air by magic. When a bank lends cows, it does not first have to possess them the cows first.
So the difference is, I have earned my cows. The bank has not earned its cows. Therefore I deserve interest payments. The bank does not.
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The loan agreement is money. The lender can use it in exactly the same way he uses any other form of money. All money is a form of debt
Money has no physical existence. So all money is “created out of thin air.”
A bank earns the money it lends, by providing services. You may not respect that line of work, but it is the same “sweat” you mentioned. The bank is not just given the money as a charitable act.
It then lends the money and deserves compensation for lending it. If you lent your cows, wouldn’t you expect some compensation?
There is zero difference between earning money by digging ditches, raising cows or providing bank services. What do you do to earn money. Is it in some way “better” than what a bank does? Is it as good as raising cows?
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“The loan agreement is money. ”
Please tell me where I can take the unpaid loans I have that the people can no longer afford to pay; where do I get “the good faith and credit” of the Monetary Sovereignty to redeem them for “goods and services”.
Oh wait a minute, isn’t that QE 3 ? The Fed buying MBS’s, using our cash to purchase their buddies “toxic bets”.
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“QE” disease is eating us alive, and you don’t see any AGs or judges lining up to prosecute do you ?
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The whole MMT enterprise (indeed its raison d’etre) is to draw a distinction between users and creators of the currency. Mosler, Kelton et al. repeatedly warn against treating the government (currency issuer) the same as the household (currency user). They state in no uncertain terms that the distinction is that the issue is not subject to the same constraints as the user. The difference being that the users (households) cannot create money – they must save before they spend where as the issuer can create money and therefore does not need to save before spending. Are you denying this distinction?
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that is the big one of course, but as I would have it…a bit different…
– adjudicate each case of fed printing for 100 years for validity of invested funds, not from thin air or illegal funds,
and prosecute accordingly with jail time and forfeiture like Iceland, etc.
– Do NOT pay of the national debt as it comes due, but follow the above…NOT Kucinich’s HR6550/2990/NEEDS
– Us National bank issues money without debt for it’s bills when there is not enough tax and fee revenue under strict scrutiny by all branches of gov., and the states with their powers of nullification
– Private and public banks would compete for validity, with private enterprise being given first preference if they held to federal and state statutes for the sake of the American private enterprise system
– these banks would apply for loan money to the federal central bank for the no-debt money
– They would pay back the principal as it came due and paid so it could be used by the federal gov. for it’s bills
– that way taxes could be reduced, and the system benefits at both ends ! ……..thoughts ?
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I cannot create money, I am not a monetary sovereign. I can only use money that has already been created. How can you equate my lending to a neighbor to the banks lending. They are two different things. The banks are utilizing the monetary sovereign privileges (which they somehow co-opted) from the government to turn massive private profits, and putting the rest of us in the poorhouse.
Why are you equivocating all forms of lending? Clearly there is the kind of lending money issuers do and the kind of lending I do when I loan my buddy a hundred dollars and ask him to buy me a 6 pack of beer for my troubles…
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I worked with the Fed while at Treasury and CFPB over 10 years. From direct experience I know what I am talking about. Do you have my experience?
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I’m so impressed with the thousands of flunkies who work at the Fed, and have no clue about Monetary Sovereignty. Did your boss understand it? Did his boss? How far down the chain were you?
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I was reading another blog where the author was a proponent of Monetary Sovereignty and one of his recommendations was in times of depression/recession the gov’t should repeal counterfeiting laws and let everyone with a printer print themselves a couple grand. Said you could download a program from the gov’t that lets you print a set amount of money (he’s recommendation was $3,000 per person).
What’s your thought on that Rodger?
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If the government set a specific limit on how much each person could print, I’d have no problem with the concept. While there would be significant problems with the physical execution, the idea of each person being given say, $3,000, is excellent.
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I only have one question about it.
Given via our Declaration of Independence: “That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,”
So if We The People gave government the power to create unlimited dollars, how can we give this power to government unless we have ourselves?
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By writing laws, the same way we gave the government all its other powers.
The authors the DoI and of the Constitution had the unlimited power to create laws. Money is one product of those laws.
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The problem with monetary sovereignty is it violates our econ 101 upbringing. Life is supposed to be a struggle, to work your whole life, pay taxes and then retire, if you make it to retirement. The powers that be want to keep everyone in the dark about money creation as if it’s a bad thing. People are afraid to talk intelligently about Monetary Sovereignty for fear of loss of job or credibility. Few get it. Cash and coin are not money anymore than your representative in congress is you. Paper and metal represent wealth albeit very poorly. Rabbits are real; the Easter Bunny isn’t. Real wealth is knowhow as reflected by science and engineering. Money, so far, is only loosely attached to abundant Knowhow. Scarcity is a political contrivance held over from pre-industrial times.
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Reblogged this on 2wholeminutes LLC and commented:
Be woke
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Hi I’m quite impressed at what you have for informatiom. I’ve learned some things I didn’t know. I believe your missing some key points like every us Bill we print the government pays interest on. Simply because the federal reserve is a private entity which is made up of a number of banks which loans (or prints) money to the us government. Those banks make up a world bank called the imf ( international Monterey fund). So yes there is a limit to how much you can print simply because the more you print the less each dallor worth.like I said the us borrows from these international banks which make up the federal reserve which isn’t federal at all. It was formed on a island in the early 1900 which actually was when we went from the gold standard. So we pay private banks to print money out of thin air and we the american people pay interest on it by our money being worth less and also being in debt to them forever. It’s a simply fact the us government doesn’t own the money it spends at all. The international banks do. So that’s where you get national debt.
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The Value of money = Demand/Supply. Your comment doesn’t take Demand into consideration.
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Well that’s when the business cycled happen. When the federal reserve see that the amount in savings and checking accounts across the board are up. They use interest rate to control supply and demand. When people are saving money which means they aren’t spending it. They lower interest rates to get them (us) to spend money. If national savings accounts are down they increase interest rates. What also happens is when people pay off loans which eventually makes it’s way to “the fed” they burn some of that money or erase it digitally which increases demand. The whole sovereignty thing is right but the international banks are what control almost every form of major money. The point I was trying to make is yes there is national debt you can’t print your way to prosperity especially when you don’t own those dallors.
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Also I’d like to say remember money historically was silver or gold then government’s replaced them by paper dallors. Then they were undermined by bankers which shifted money making powers from the
Gov to private banks (IMF). Also removing the gold from the equation. If you really know economics then you’d know there’s no reason to print more money other then control over people’s buying power.it doesn’t matter if your population goes up or down. We need to remember real wealth is gold, silver, land and hard assets etc. Money is a way to transfer wealth rather then paying someone in silver. So paper money is a more fluid transfer of wealth it isn’t wealth itself. Our money and buying power is undermined everyday by people in the banking system. They can’t print houses, land, gold therefore these things have “real wealth”. Notice that federal reserve dallors are traded as commodities. So remember paper money could be thought as a stock its only worth something until you print it out of value reducing the demand then ultimately the value.
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Gold and silver are not money, never have been money and never will be money. Nor will platinum, wampum, palladium, paper, lead, nickel, uranium, diamonds, pearls, glass beads, wheat or whale blubber.
All are barter commodities.
Money — every form of money — has no physical existence. All money is a form of debt, and debt has no physical existence. Money is created by laws, which also have no physical existence.
A dollar bill is not money. It is a title to a dollar, just as a house title is not a house and a car title is not a car.
While the dollar bill has a physical existence, the dollar itself does not.
Money can be equated to a game score. While a scoreboard may show the score, the score itself has no physical existence. The runs in a baseball game and the points in a football game are similar to money. They have no physical existence.
Please read the above post if you have not, already.
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Hi Rodger,
Based on what I have read and studied on Chartal money, your website, and others on monetary sovereignty, it makes sense what you are saying.
Would I be correct then if I was to assume that if any non-profit organization was to receive grants from the government (the federal), that these grants are not actually funded by tax-payers, because as Chartal money suggests, when taxes are received by the federal government they are destroyed.
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That is correct, Dean. When tax money is sent to the federal government, it ceases to be part of the money supply. It is gone.
By contrast, when tax money is sent to state and local governments, it remains in the money supply.
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Thanks Rodger,
I was wondering if any of your material or other such material could be used within a court procedure as evidence? I have noticed a lot of frustration with non-profits and charities having to ‘compete’ over grants, which if do not come from tax-payers makes a complete mockery of the whole concept of having to compete over them. If they don’t come from tax-payers then how does the tax-payer as a whole get to dictate how much government can grant non-profits?
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Tax-payers don’t decide government actions. Paying taxes has nothing to do with what the President and Congress decide.
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I’m just wondering if we can agree that the money that the federal reserve prints isn’t government money? The government buys bonds from the federal reserve (which is a private off shore Corp). Then in turn the “Fed” gives the treasury that amount in bonds in “federal reserve notes”. Bonds for money which like you said is debt that creates money. Here’s the key, the government or you could say the tax payers pay interest on these bonds ( they are not free). The government isn’t in the business of printing money the federal reserve is. Ya in theory you could print enough money for all the government programs and have no debt. The problem is our money is owned by private banks and not the United states by any means. The more money you print the more you owe and with interest TO PRIVATE BANKS not the government itself.
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Maybe its different in the US.
The tax-payers/voters/property owners here in Australia determine who they will vote for depending on how and where the potential government will spend. Thereafter, all monies spent have to be appropriated by an Act first before they are spent, and then afterwards scrutinized both by law through auditors or other means such as the press, although the latter is usually allegations of guilt until proven otherwise.
A politician in our country can’t sneeze without the public demanding to know if the tissue they used was bought with private or public funds (just this week a federal mp had to step down until an allegation of improper use of travel expenses has been investigated). These same people also complain when the budget allocates anymore than a mere scrap for non-profit organizations. Comes across as tax-payer dictating to me, but anyway, you didn’t answer my first question.
Some of the things I have accumulated over the last few years which seem of interest:
All the ‘common law’ countries of the world also all happen to be exercising monetary sovereignty. I wonder why this is? Common law countries don’t operate solely on legislation and/or codes (unlike civil law countries). It could just be a co-incidence but I do find it striking. I think Japan is the only country which is not a common law country but which exercises monetary sovereignty.
I found a definition of ‘credit’ in a law dictionary which states among other things…The credit of a government is founded on a belief of its ability to comply with its engagements, and a confidence in its honor, that it will do that voluntarily which it cannot be compelled to do.
Does a country which exercises monetary sovereignty do so because in the end it can be trusted, but trusted to do what exactly?
According to Bell, taxes and all other government receipts including sales of treasuries, are done solely to drain money out of the system which enables the currency to remain stable – something bond holders and property owners (or creditors) obviously need and require. Debtors on the other hand apparently would prefer a weaker currency.
I viewed a video on youtube where an economist by the name of Palley criticized the proposal of mass injection of money into South Africa economy to help the lower classes on grounds that ‘the property owners of South Africa will be adversely affected and they are not going to allow this to happen’
Based on my research into the history of politics in England and here in Australia, parliament existed solely for the property owners, and if you weren’t one you didn’t vote. In Australia you are required by law to vote but you are exempt by choice if you are an indigenous, supposedly on grounds that being indigenous your custom is not to treat things as property.
Seems like the indigenous peoples of our country get to choose whether to treat things as property or not. We anglo-saxons don’t get that choice. According to an article of the history of inflation in England, land ownership for people like you and me is relatively new, and in fact it was not until the 1920’s that the average Joe like you and me began to buy land (real estate) in England, thanks to the introduction of laws regarding rents which were so cumbersome to the big land owners that they felt it was more profitable to start selling land rather than renting. Since then we have created a massive middle class.
I do wonder if the concept of monetary sovereignty should be confined to the field of politics. The legislature only make up one of three branches, and really only represent those who own property. The other two branches represent all many other duties of government and it is from these other two branches where our common law comes from, which means it is these other two branches which represent the whole community, including those who whether by choice, custom, law or ignorance, do not exercise rights of property.
I firmly like this idea of monetary sovereignty as a tool for making meaningful change, even if just for my own family first, but I think I would be steering well clear from politicians as my means to do it. The common law exists for everyone, not just property owners, and is the bed-rock of the great countries that exist today which exercise monetary sovereignty, but it seems to me that too many people don’t care enough about their own common law roots and would rather have politicians pass laws on their behalf.
Just some thoughts Rodger. Keep up the good work
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Dean, you asked, “Does a country which exercises monetary sovereignty do so because in the end it can be trusted, but trusted to do what exactly?”
The answer is: Trusted to exercise its full faith and credit. In short, this means:
A fuller explanation is at Understanding federal debt
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Everything listed seems to be exactly what property owners would want. I would add to these many other duties also, including providing markets, regulations, laws, courts, tribunals, bodies, boards, and any other act, matter, or thing a government must do or provide in order for there to be an economy.
I have often wondered why people use the term ‘tax-payers money’ when talking of government spending if the theory of monetary sovereignty is correct, unless, instead of looking at it from the perspective of taxing first and spending second (which in itself is illogical) we look at it from the perspective that once a government spends, even on welfare (because welfare is treated as income for tax purposes here in Aust), that the money becomes tax payers money. In essence, its only ever tax-payers money when it is in the hands of a tax-payer, and not otherwise.
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The term “taxpayer’s money” is used as a method to advance the Big Lie, which in turn is used as a method to support cutting social benefit spending.
Many people don’t want “their tax dollars” spent on those “lazy poor people.” They don’t realize that social spending actually puts dollars in their pockets, too.
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Ryan, I’m trying to find a single sentence in your comment with which I could agree.
You write of “government” money. If you mean federal government money, it scarcely exists. Virtually all dollars are in private hands or in the hands of other nations’ governments. The U.S. federal government doesn’t own anything that is part of the money supply.
I am not aware that ” the government buys bonds from the federal reserve.”
I am not aware that the federal reserve is a “private, offshore Corp.”
I am not aware that “the ‘Fed’ gives the treasury that amount in bonds in ‘federal reserve notes’.
I am not aware that “tax payers pay interest on these bonds.”
Wait, here is something with which I agree: “our money is owned by private banks and not the United states,” which is what I wrote in the 2nd paragraph, above.
None of the money supply, whether described as “M1,” “M2,” “M3,” “L,” or some other designation, is in the hands of the federal government.
The federal government creates dollars ad hoc, by paying creditors. To pay any individual creditor, the federal government sends instructions (not dollars) to the creditor’s bank, instructing the bank to increase the numbers in the creditor’s checking account. When the bank does as instructed, dollars are created.
So literally speaking, the bank creates the dollars, though practically speaking, the bank merely follows the instructions of the government. That is why the federal government does not need to own dollars. It merely creates them by paying bills.
Among the creditors being paid as above are holders of T-securities who receive interest.
Of course, most dollars are created by bank lending, which includes things like mortgages, car loans, business loans and credit card usage.
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Reader “John Galt” has returned with another comment: “The owner of this site is a liberal / progressive. No use trying to reason with him. Just know this, money doesn’t grown (sic) on trees and credit is only good if the other party is willing to give it to you.”
He said that in connection to a discussion with reader “Max” who claims the U.S. “prints” too much money.
See the confusion? The trite phrase, “Money doesn’t grow on trees” means that money is scarce, while Max says money is too plentiful.
And they both agree that this site is wrong — for exactly polar reasons.
So which is it guys? Is money too scarce or is money too plentiful.
Oh, and John, you are right about one thing. I am a progressive, meaning “my people” brought you conservatives stuff like Social Security, Medicare, Medicaid, aids to education, voting rights laws, and lots of other things you conservatives voted against.
Damn right I’m a progressive.
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BTW Rodger, if all these progressive policies, Social Security, Medicare, Medicaid, etc., that “your” people brought us are so great why do they require force to implement? I know progressive intellectuals believe they’re smarter than everyone else and need to tell others how to live their lives but what if I wanted to opt-out of all your great and wonderful social welfare boondoggles, not pay taxes, not be thrown in jail and provide for myself, would that be ok? If you answer no, that doesn’t sound very “progressive”.
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Thank you, thank you, thank you for making my case.
If you ever bothered to read the Ten Steps, you would have seen Step 1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare
and
Step 7INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
But do you know why you pay federal taxes? Because people believe in austerity.
My goodness, you have become a Monetary Sovereignty adherent. Welcome to logic.
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I have always understood that MMT doesn’t require taxes but this is NOT an MMT question, this is a question regarding how great all these social welfare programs are that “your” people implemented. If your progressive programs are so great why must they be implemented by force? Despite not “requiring” taxes the gov’t still takes them and as such why can’t people opt-out? The mere mention of allowing individuals to opt-out of these social programs and keeping their tax dollars typically send progressives crazy. So, while granted this is NOT an MMT question, if “your” programs were so great, why do they have to be implemented through force?
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I knew that years ago, so surprise. I just want to Alert everyone else. For those whom like a different (and intelligent) take on money here is an article you may want to read -> https://hallingblog.com/2017/01/16/how-central-banks-create-inflation-intellectual-capitalism-part-4/
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OMG! The man thinks Democrats are socialists. Clueless. Doesn’t understand the difference between a socialist (government ownership) and a progressive (government support for the less wealthy). Totally different.
And he says, “If you or I “spent money into existence” it would be called counterfeiting and would be considered theft. Somehow when the government does this, it is okay and according to MMT stimulates the economy (creates wealth).”
Yikes! It’s O,K. because that is the law. But what this guy doesn’t recognize is: You and I do spend money into existence, every time we use a credit card, every time we take out a mortgage, and every time we use a travelers check.
Further, you are perfectly entitled to create your own money, call it “Galts,” and spend it as you wish. You only must get people to accept your full faith and credit, which is exactly what all money requires, whether it be dollars, pounds, lira, yen, etc.
No law against “Galts.” Companies create their own money by issuing coupons.
And as for confusing money with wealth, in economics, everything depends on definitions. How does he define “wealth”? If you had a trillion dollars, would you be wealthy?
Oh, the hits keep coming. He said, “My earlier article on Banking shows that banks create money when they create loans, which any MMT advocate should know.” Name one MMT advocate who doesn’t know this.
Dumbest statement yet: “I pointed out that legal tender laws were necessary for the government counterfeit money.” He better look up the word “counterfeit.”
Clearly, the author is confused. Sadly, the author is confusing his readers.
Economics is a protoscience where every damn fool with no background or education, has a strong opinion. This article is a perfect example.
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“Economics is a protoscience where every damn fool with no background or education, has a strong opinion. This article is a perfect example.” Says the guy who wants gov’t politicians and bureaucrats to print endless amounts of paper money and believes there would be no negative consequences.
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Editor’s Note: Misquoting is typical for scare-mongers. No one, not MMT or MS, ever has said anything about “printing endless amounts of money.”
First, money is not printed, as MMT and Monetary Sovereignty repeatedly teach. Dollar bills are not in themselves money. They represent money, just a car title is not in itself a car and a house title is not in itself a house.
Second, and far more importantly, when I am asked “What is the limit to money creation,” I answer: The limit to money creation is an inflation that cannot be controlled with interest rates.
America never has had such an inflation, but if ever we did, at that time we simply would do what the scare-mongers have suggested for the past 77 years: We would cut deficit spending.
Until then, however, deficit spending not only grows the country, but when used properly (See the Ten Steps to Prosperity), narrows the Gap between the rich and the rest.
Cutting deficit spending would be a last resort, not a first.
Ask the euro nations about the problems with cutting deficit spending, also known as “austerity.”
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I can’t seem to find it in the posts, and I deleted my emails, but I am sure Max said something about his mother owning a house that went from $100k to $650k in short time?
I am curious as to the long term appreciation of real estate in America. Historically, real estate in Australia doubles every 7 to 10 years, at least in more urban areas. Would this be correct for the US?
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The answer isn’t more money or less money or more jobs or lower taxes, etc . The here and now use of economic scarcity as the underpinning foundation of all economics, progressive or conservative, is the culprit. Until an abundance model based on science and engineering is implemented on a global scale, the current political scarcity model is doomed. We will argue til the cows come home and no one wins! Yes such a model will need many more years or even decades to implement, but a nationless, one world economy is the only way out of eternal back and forth bickering.
The solution is not more money or jobs; more money is never enough and more jobs requires more money from stingy legislators who now are playing the “block the other side game.”
The solution is lower prices and I mean so low that you could live on 20 dollars a year handsomely. Far fetched? Not if you’re thinking scientifically.
You can keep posting back and forth forever, or you can google bfi.com and search their website for two out of print books: “Nine Chains to the Moon” and
‘Critical Path” to learn how this is all technologically possible…right now. Warning: You may be strongly discouraged from political thinking and end up logical at heart.
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reavis1963,
To achieve lower prices, what do you suggest would be the first step?
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Historically technology, especially in electronics, has been the best price reducer, i.e., doing more with less.
First step would be for the United Nations General Assembly to recognize the importance and viability of a global electrical network (GEN), and to vote on the cooperation needed for its implementation. Updating national grids with superconducting lines is a must. Political leaders will have to cooperate in planning & preparation. (Trump could be an evolutionary assist IF he is able to befriend Russia, China and the rest of the industrialized world). The 3 main gaps in linkage are the Bering Strait where the Americas would link with Asia and Europe, then Africa (through Gibraltar), and to Australia from Southeast Asia through the Indonesian chain.
GEN is an organic growth, supply side, energy abundance model. Once fully realized, with night side generators wheeling to day side, the cost of electricity world wide will drop to around 1 cent/kwh. Utilities will still profit from great volume while transitioning to only sun, wind and hydroelectric power.
Most importantly, this basic rate of 1 cent/kwh will initiate a true economic system of standardized costing and pricing for all labor, goods and services as determined by unbiasedly programmed, computer analysis of energy and effort, both animate and inanimate. Mechanical efficiency will reflect prices to tiny fractions of a kwh per unit of output, thus enabling the dollar @100 kwhs, and all units of currency, to explode in purchasing power. Money will be underpinned by the kwh and fractions thereof, watts, ergs, dynes, etc.
Government and industry will join as a single, transparent, cooperating sector. Trillions of dollars now in circulation will magnify to multi-multi quadrillions wiping out debt forever, leaving ONLY CREDIT. No need for any insurance, any loans, any worry. We will work for the love of the work, not money.
Sure this is a fantastic pipe dream but it’s also possible. In the mean time, we’re stuck in a holding pattern of scare-city economix, Democrat vs. Republican, Me vs. you and oblivion on the horizon.
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What is an example of credit without debt?
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What is an example of credit without debt? In a word, Mind.
The above sentence….” Trillions of dollars now in circulation will magnify to multi-multi quadrillions wiping out debt forever.” I.e., the scientific Mind’s expansion of true value will dwarf debt, because it won’t be allowed to expand proportionately with revalued currency. Why? because credit is naturally mindful and debt is mindless. There is no debt-lie in the natural universe. Only truth-credit can therefore expand as evidenced by science.
The remaining dollars after debt is paid off by revaluation becomes credit by default. The equation for credit without debt would be : eimq – ctod = req, which stands for: expanded into multi quadrillion$ minus current trillion$ of debt = remaining expanded quadrillion$…
This is more than sufficient to care for 7 billion people, plus the GEN is continually regenerating accounts. Banks will only be needed to service the economic system. No more loans if everyone is essentially wealthy by default of the money-debt system.
So our negative, seemingly unstoppable, gap/debt system would be inverted. Instead, we’d get unstoppable and mounting credit, which is realistic and totally in line with unstoppable and mounting technological progress. Money and economics will be backed as intended by the “good faith and credit” of our collective mind rather than the lack of it.
Again, Rodger, I realize how this comes off as too fantastic, too futuristic, etc., but what can be more fantastic than life in a Universe that seems to want us to succeed in spite of ourselves.
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I wish I was clever enough to understand what you’re talking about, but I’m not. Sounds like total gibberish to me. Sorry.
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Credit is what you’re given naturally. Thinking is what separates us from everything else and what gives us economic progress. Debt is what is taken away. This is a fundamental mistake of the monetary system. Nothing can be created or destroyed in reality. Of course this happens all the time legally. But legal isn’t real. All I’m saying is until economics takes “brain power” directly into account– reflected through efficiency gains in mechanical work, costing, pricing,–we remain where we’re at, i.e., political scarcity and struggle, no end in sight.
Wealth begins with we.
Science gives way to technology and efficiency which leads to mass production which moves society and economics. This can all be reduced to an accounting system capable of extending universal credit; a single payer system w/o need of onerous debt. Don’t know what else to tell you other than keep doing what your doing. I understand you.
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The problem is not debt or credit, or too much or too little of either, the problem is property itself. It’s not mathematically possible for everyone on earth to have the right to both occupy or possess a block of land, and at the same time have a right to treat that land as a commodity.
The World Bank shows on their website that the amount of arable land per person ‘worldwide’ is more than 1 acre per person. This is an insane fact considering how many people do not have access to land itself, let alone 1 acre for their whole family!
If you can show me mathematically how every person on the planet could ‘own’ a block of land, and by ‘own’ I mean, has the right to sell it, lease it, encumber it, and therefore ‘profit’ from it, without it affecting the right of every other land owner to sell, lease, encumber, or otherwise profit from their land, then I will bow to you. But I doubt that is possible, because every dollar of wealth, or credit, or legal asset, or whatever you want to call it, only exists because it is a claim against another. The only true assets are those that self-reproduce, but we have lost sight of this and now only treat claims against others assets.
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Dean,
Land is not the only asset, nor even the most important asset.
Land does not self-reproduce.
There are many assets that do not self-reproduce.
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I used land as an example. But you are right, land is not self-reproducing, either is money, stocks, bonds, gold, silver, choses in action, foreign currency, central bank reserves, claims against others, etc..but yet we all treat these things as assets and as if they can grow in ‘value’ by themselves, or we conveniently ignore that to make one of these assets grow, we must extract it from another
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Ideas and uses make assets grow in value. Bare land grows in value if you farm on it or build a city on it.
You have left the human brain out of your philosophy. A plain canvas has little value, but a Picasso is worth much.
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there are assets also in choosing ‘not’ to do things.
The IRS presented a great article on ‘lessening the burdens of government’..it’s quite amazing how contorted our view is of what it actually takes to ‘contribute to the community’
Believe it or not, this actually supports your thesis.
The middle class, home owner, full time employees, are now an overcrowded scene. It has become too big. This is not to berate it, but to say, its simply overcrowded
I like the idea of ‘working’ the land, and this is what I do, but I have no intention of ever owning the land as property..it does nothing for the community for me to ‘own’ it.
But anyways, this was more directed at your friend reavis and his concept, which seems to be no less utopian than capitalism , socialism , or any of the other politically driven ideals
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Sorry, but I’m not talking politically driven ideals. I’m talking a scientifically driven ideal. I’m talking a model based in abundance, not scarcity. Mass-production stems from science, not politics. Mass-production and engineering and laws of nature are Apolitical.
By the way, land is only 25% of the surface. It is not impossible to build cities on the ocean. All that needs to be done is expand the concept of the ocean liner, or Carnival cruise ship. How then do you apply the piece-of-paper enforced, land baron racket of real estate ownership.
Addendum: In this context, the terms “real” and “realty” don’t come from “reality” The etymology is derived from Spanish meaning “royal.” Land ownership, deeds, decrees, etc., have their origin in the Rights of Kings (royalty) supported by the priesthood and by extension God, making it all seem justifiable.
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My apologies, but aren’t you asking that everyone agree to this model? Can it work if many people don’t want to do it? And what if the only way to get it to work, was, to pass legislation to force those who don’t want to do it, to do it?
Too many people out there like the idea of chasing wealth, and succeeding at wealth needs sheople to strip it from.
also you said:
We will work for the love of the work, not money.
May I ask what it is you mean by this? What sort of work are you referring to? And does this work ‘require’ selling labour for credit? Must someone work according to some policy framework which determines what ‘work’ is? Will work only mean within the confines of what is known as an ‘economic activity’? Will people still be competing for jobs? Can I choose how to define what the definition of work is? Can I bring philosophy into it? What if I believe one does more for the community by not selling his labours than one who does?
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Do you agree to your eyesight, heartbeat, or breathing? If no one works, whether or not money exists, then we all perish. In the future we’ll work where we want, and fit in best. If there is no work for you then you go about doing something else until you’re called up. Income will be guaranteed.
There will always be people who enjoy demonstrating competence applying their knowhow; it’s called volunteerism. That will be the new normal, not the exception.
Automation primarily, and expatriation of employment will force a rethinking of economics. We’ll have no choice but to accommodate hi-tech evolution with an abundance-based, SOCIO-economic model. Continuing on with survival-of-the-fittest scarcity, forcing working for a living, the GAP, crime, drugs, nuclear stockpiling, etc., is planetary suicide.
Work is what you love to do and if it fits in with what society “needs” to be done in order to have order, then all the better. If you wish to stay out of the way of the mainstream of necessary work, then you should be paid not to get in the way.
We now have people who DON’T belong in the work place, i.e., misfits. We would be better off if they were paid well to remain at home, go back to school, or on an extended vacation where they won’t throw a wrench in the works. Their absence would actually payoff more than there presence or as you put it, “one does more for the community by not selling his labor than one who does.”
So yes, practically all will agree to this model as it is generally inclusive and accommodating. In this scenario, those who are chosen (hired) to do the work of the world will be the most prestigious individuals, and that would include the Arts and Entertainment. And those who, for whatever reason, find themselves on the French Riviera doing nothing, sipping champagne, will be of secondary importance; in the grand scheme, a 180 degree reversal of today’s mentality. Take your pick: Utopia or annihilation.
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“If there is no work for you then you go about doing something else until you’re called up. Income will be guaranteed.” – Woohoo, more promises of a socialist Utopia. All of these theories are great as long as you discount human nature and assume no one has any self-interest (can I not work and get a Ferrari and a beach house with a hot tub)?
Posted an article about two weeks ago on another one of Mitchell’s threads from the Wash Post where the gov’t granted 7 Billion dollars to a handful of poor performing schools (which according to Mitchell are grossly underfunded, like every other social gov’t program). The results are in and after blowing an additional 7 Billion, the schools had no discernible increase in performance. I’m sure according to Mitchell, if the schools got 20 Billion more then they’d be turning our Rhodes scholars. Who gets to decide how much free money everyone gets?
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Max:
1. Are you one of those people you wrote about — the people who if given $1,000 a month would quit work and live on the dole? Or is that just “other” people?
2. Which schools did I say are “grossly underfunded”? I don’t recall saying that.
3. Contrary to your claim, the Ten Steps to Prosperity does not advocate granting money to schools.
4. Also, contrary to your comments, socialism is government ownership of production and resources, not just government support. The latter is progressivism.
Thank you for your comments.
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1) “… All of these theories are great as long as you discount human nature and assume no one has any self-interest…”
You’d be a fool to discount human nature; but you can Count on it by accommodating it. Human nature is such that if you repress it with austerity you’ll eventually get backlash. By accommodating it, you’ll eventually get cooperation in return, and throwing a few crumbs out is not accommodating it. It’s in everyone’s self interest to make the world work…or else it’s curtains.
2) the poverty rate to fall from 56 percent in 1900 to 13 percent in 1967…..”
Yes, with a lot of help from 2 World Wars, New Deal, and a lot of other “peacetime” military contracts and spending for Korea, Vietnam. Thanks home front Taxpayers for helping keep us safe!
3) If only the gov’t would get out of the way……
Then what? Well just ask Erin Brockovich and every whistle blower that saw the fox in the henhouse.
4) how did Bill Gates impoverish the poor….
Automation is responsible for freeing the worker from dangerous, repetitive motion employment. This is why government must pick up the slack as the private sector has no motivation except to automate even more and rid of unions!! Education is going to become the biggest business–Mind incorporated over muscle.
5) poor lifted themselves out of poverty for 67 years without gov’t giving them “free stuff”….
The private sector got the free stuff (see 2) and pulled the worker in its wake, i.e. indirect socialism; gov’t supports the private sector without ownership.
6) giving people free gov’t stuff makes them dependent on gov’t …
yea, just like the huge, never ending military-corporation, tit sucking complex and, not coincidentally, never ending wars to supposedly keep us free.
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I don’t recall writing that specifically but people value leisure time over work, which is why when economies grow and people get wealthier they tend to trade-off work for leisure. I’ve owned small businesses (convenience store, liquor store, bar & deli) in poor neighborhoods for over 20 years (I currently own a strip shopping center with a convenience store in a poor neighborhood. Other tenants are pizza parlor, BBQ restaurant, liquor store, and consignment shop). 90% of our customers are unemployed and on the gov’t dole. Able bodied 20 year olds who the gov’t has relegated to generational poverty. Whenever you’re interested, I’ll be happy to offer you a job. Come spend a month in my store and see what gov’t handouts do to people.
You mentioned schools in a different article and how they’re grossly underfunded (I posted the Wash Post link on that). Are you saying gov’t schools aren’t underfunded?
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90% of your income is coming to you from govt spending then?
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Well Dean, I don’t want to say 90% since I haven’t sat up in my ivory tower doing empirical studies on the exact % of the income my business earns that comes from gov’t handouts and don’t want Rodger to freak out, so let’s just say the “majority” does. I’ve seen the conditions that my customers live in as the result of being dependent on the gov’t for a majority of their income. I’ve also seen what happens when these same individuals get jobs and earn their income vs. getting a handout. As I’ve said from the beginning, that’s the problem with Rodgers theory, it doesn’t take human action into account. It doesn’t take into account how individuals respond and change their behavior when gov’t gives them more and more “free” stuff vs. the individual working for and earning their “stuff”. Work ethic, pride and self-worth are real things. When gov’t gives away “free” stuff, it takes that away from people and the results are devastating.
Thx Max.
I agree that for a majority of people, that the definition of the words ‘work’ and ‘earn’ would be similar, and I do not believe that many of those who receive welfare want to be on it, and would rather earn their money. Of course, I am assuming when you use the words, work and earn, you mean to sell something, and not actual hard labour itself.
If using this definition of work and earn, then I do not agree that everyone is either 1. equipped to be able to sell something, at least not without the assistance of men of industry, 2. nor is it mathematically possible for everyone to earn an income.
Taking the 1st point, I do not see the difference between one who receives a handout from government and another who works in a factory or other job which without a man of industry to create that job for him would never be able to have such work. Taking this further, I have two sons who have special needs, both of whom, although having very exceptional skills in some areas, lack very rudimentary and social skills, the type which are essential in a competitive world. If I was to die, these boys would have no chance and will always be reliant on somebody who has no real interest in them, but their own pockets.
Taking the second point, what would happen if those ‘majority’ which you speak of were all of sudden able to set up the exact same business as you have right next to yours, and instead of there being only one or two, now there was 10 businesses all next to each other selling the same things? How would your business go? Do we really believe that every person out there can find a new niche market? What’s more, it is not mathematically possible for there to be 100% solvency. Until every entity out there were to all agree that the terms of trade/accounts were to be all the same (say 60 days) then those who can stretch out there expenses further, but demand their incomes sooner, will always squeeze out to the point of bankruptcy, those who cant.
We could have 100% employment, but this will only ever happen if many full timers gave up some of their hours to the unemployed. GDP would not have to increase, employment would just be shared more – but this would never happen, for most people who have full time jobs do so out of necessity because of their levels of debt they have to service. So, is it really the fault of those who can only find part time, or no work at all, or is it the level of personal debt most middle class people are carrying?
But my biggest gripe, and this is not with you, is this concept that our human needs are to be treated as property rights. I can tell you now, from experience, that my need to access housing, clothing, and food, is not a right I have to earn, it is in fact my legal duty. I dare anyone to go with all three for a few days or weeks and see how long it is before you break a law and are fined and/or arrested. Trespass, public nuisance, indecent exposure, begging, dumpster diving, etc. Worse, if you have children and do not provide at least these three you will be guilty of negligence. If I ever get told to my face by some economist, lawyer, or other ‘know it all’ that my need for housing, clothing etc are rights I have to earn I am likely to punch this person in the face and show him a bunch of fines, which I could never pay!!!!
It’s a fact of law, that my human needs are duties, not rights, but we are being told from an early age to treat them as commodities. Why? Simple – because this is the only way you can lose them; but more sinister is that the only way anyone can earn an income is to extract it from another, and this requires the other to have something they can give up. You cannot give up something you are by law required to have, but you can give up something which you treat as property.
Every human, not only needs to, but should, make a choice. You either treat your needs as commodities/property, or you dont. If its the former, then you must pay for them also, but there is no limit as to how much you can compete with others and accumulate – its all just a game and always has been. If you choose the former, then you should not have to pay for your needs, but at the same time you are also prohibited from pursuing wealth or treating anything as property. And to make sure you don’t, you do not receive your needs in the form of welfare, they are provided to you directly from the government in the form of real resources, not money, and which you can’t then treat as your own.
This way, no one is then able to complain, because it was your choice!
I might add, my experiences as homeless was only short lived, but I know many who spent many years on the streets. Add to this, I have always been a hard worker, including owning my own businesses, and self-taught musician, and hobby-farmer. But, I have never enjoyed earning money. In fact, as a musician (who became more successful than I had expected) gave up performing because of money – as soon as money becomes involved in anything I do, I no longer enjoy it.
But this is me. It took me many years of soul searching to realize that I am just one particular type of person out of many different types in the world, who would better serve the world by not pursuing money or property but at the same time I have to accept that I can never own anything. At the same time I would never dream of telling anyone else they should follow me.
Can you or anyone else understand this concept? Just because you see as the only way to earn one’s place in the world is to earn money, does not mean it IS the only way. Can you understand this?
Put it another way, if we take a monopoly game with 20 players, 5 of which decide they do not want to play. But each of those 5 is handed one property space. This spaces, for these 5, represents ones human needs in the form of tangible access, not money or welfare. All the other spaces, for the other 15, represent things they can buy and sell and exploit for wealth.
Now my question is, does the fact that 5 pieces are now no longer able to be used as commodities, diminish any of the other 15 players chances of winning? (in fact, hasn’t their odds of winning increased from 1 in 20, to 1 in 15?)?
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So you own a store in a poor neighborhood, and because of that, you have collected statistics showing that “90% of your customers are unemployed and on the gov’t dole.”
Please let me know how you managed to collect those statistics. I’d like to hear your research methods.
Also, is it your point, that these people are such lazy good-for-nothings they would rather live in the misery of poverty than work? But you, being a superior human being, would not want that life for yourself.
And you don’t believe in charity, because it makes people lazy? Right?
Oh, and I have no idea what your reference to “government schools” is. Some schools may be underfunded, but the Ten Steps to Prosperity does not suggest support to schools. Read the Ten Steps.
The irony is that you protest aid to the poor — aid that doesn’t cost you a cent — and there you are earning your living off that aid.
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As usual you’re all over the place here.
1) You’re confusing gov’t dependence programs with private charity. I support private charity 100%, I oppose gov’t welfare dependence programs 100%.
2) Would it make you happier if I said the “majority” of my customers instead of 90%? And while you’re correct that my personal experience is anecdotal, I’m confident if you actually spent some time in inner city Chicago, DC, Detroit, (or my store) you would see the generational poverty and destruction of gov’t welfare dependence.
3) It’s not irony, it’s human nature. People will always pursue their own self interest so if the gov’t is giving away free money then people will take it. I’d much rather have people paying with money they earned because I’ve seen the consequences of “free” money and what it does to the human spirit and work ethic but I’m a selfish human who will take all the “free” money I can get. This is why MMT and Socialism always fail. The theory is sound as long as you ignore human nature – ie. praxeology.
4) What time you showing up for work?
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1. Max says that government charity makes people lazy but private charity does not make people lazy.
2. Max confuses 90% with “majority”
3. Max admits his information is anecdotal and wants me to come to his store to collect anecdotal information.
4. Max still equates MS, with socialism, though SOCIALISM IS GOVERNMENT OWNERSHIP, NOT JUST GOVERNMENT SUPPORT, which is not proposed by MS. But perhaps by shouting, I can get him to read.
5. Max continues to insist that people would rather live in poverty so they can collect government assistance. However, although Max knows such assistance also is available to him, he prefers to work, because he is a superior human being. Max knows, the poor, being inferior to him, prefer sloth.
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1. Max says that government charity makes people lazy but private charity does not make people lazy. – Exactly, the goal of private charity is to make people self-sufficient, the goal of gov’t welfare is to make people dependent. I encourage you to educate yourself on public choice economics and see how the private sector charity is rewarded vs. how gov’t welfare dependence programs are rewarded. Hint; in the private sector if a charity fails to produce meaningful results it typically fails, in the public sector when gov’t programs inevitably fail, progressives claim they’re underfunded, and they get more money.
2. Max confuses 90% with “majority” – Nope, no confusion, merely clarifying.
3. Max admits his information is anecdotal and wants me to come to his store to collect anecdotal information. – Yep. My guess is you’re hanging out in your ivory tower, plotting your graphs and charts and have absolutely zero comprehension of how people actually respond to your theories. I’m offering you the chance to experience first hand the destructive results of your gov’t welfare programs but as expected, you’d rather sit in your ivory tower and theorize how great things would be if smart men like you planned the economy for 350 million plus people.
4. Max still equates MS, with socialism, though SOCIALISM IS GOVERNMENT OWNERSHIP, NOT JUST GOVERNMENT SUPPORT, which is not proposed by MS. But perhaps by shouting, I can get him to read. – Nope, as I pointed out I’ve never conflated socialism with MMT. I was merely pointing out that they’re both theories that sound great in principal but have been complete failures in practice because both theories (again not saying they’re the same theory) don’t take into account human action – ie. praxeology. I’ve read just about every article on your site and as I’ve said, I understand the theory of MMT (just like I understand the theory of Socialism) I just realize that they will both lead to poverty and destruction in practice because again, they don’t take into account real world responses by individuals pursuing their own self-interest.
5. Max continues to insist that people would rather live in poverty so they can collect government assistance. However, although Max knows such assistance also is available to him, he prefers to work, because he is a superior human being. Max knows, the poor, being inferior to him, prefer sloth. – Nope, wrong again. I never said people would rather live in poverty. I said gov’t welfare creates dependence making it harder for people to get out of poverty and while some people do in fact break the chains of gov’t dependence, many people do not. And with every successive gov’t welfare program, the gov’t makes it more and more difficult to break those chains.
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First Max babbles nonsense about majority being a “clarification” of 90%.
They Max says private charities — you know those soup kitchens and clothing sites — somehow get people out of poverty while federal charities — like food stamps and school lunch programs — put people in poverty.
Max has no evidence of this, but presumably, he received his “alternative facts” from Trump University.
Max claims that Medicare, Social Security, the GI bill, the VA, the FDA, FEMA, FAFSA, federal highways and the other federal services make us all dependent and “in chains.” So he wants them abolished — except for him, of course.
Deep in his heart, Max feels he is superior to the poor who are “chained” by the help they receive, though Max, being superior, is not chained by the federal help he receives.
Max agrees with Donald Trump, who also feels being a mean-spirited bast**rd is the excuse to starve unfortunate people, so as to “free” them from their chains. We all hope the poor appreciate Max’s compassion.
Max, being superior, says he needs no federal aid though he considers his eager grabbing of federal aid shows he is “smart.”
By contrast, the impoverished people’s acceptance of federal aid is a sign of their moral weakness and desire to be in “chains.”
Bottom line: Max is free and smart. Poor people are in chains and lazy.
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I believe a lot of what you are describing can be implemented by any individual on their own. It needs no legislation, and in fact could be implemented without any ‘property’ owner even knowing your doing it.
What’s more, the information presented on this website would prove beyond any shadow of a doubt in a court setting, that the employment of such a model even by one individual would benefit the community more so than if the person was out competing against everyone else for a job or for money. Provided the individual does not treat resources as commodities and instead holds them as custodian in trust for the community as a whole.
In other words, the person is benefiting the community ‘because’ they are not selling their labours and not creating property, and has nothing to do with what positive or affirmative actions they may do throughout the day, if any. They benefit the community because they consume, but only if they keep their consumption of goods and services local.
But so as not to offend, the person employing this model would do affirmative labours anyway – its in their nature – the key difference is they don’t do it for money. I don’t know too many people who are sloths. I really don’t know where this concept came from. It’s like the theory of barter. Economists throughout history rely on this and yet there is no evidence anywhere that large communities ever bartered except in those occasions after a currency system collapsed. So this theory that people will not actually work their hands or mind is bullshit, unfounded, and without merit.
The difficulty lies not in implementing the model so to speak, but in the mindset of the individual who sees property as the only mechanism to security. It is fear based. We create property out of a fear of the unknown, a lack of trust, and a lack of understanding.
However, getting back to your model being implemented individually, recent events in the US regarding your president and the courts demonstrates that we do not need ‘all’ to be in agreement, or democracy, or legislation, or politics to exercise ones rights or as I prefer, one’s duties in life.
I don’t like to use the term ‘human rights’ because in reality, human needs such as housing, clothing, food etc are not rights, they are individual legal duties, but the property owners of this world have had to convince us to treat them as rights in order that they can be stripped from us.
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Here’s an interesting thought. According to Fee.org “56 percent of families in the United States were poor in 1900. By 1947, even after the economic shocks of the Great Depression and World War II, the percentage of families in poverty had been reduced by more than half, to 27 percent. By 1967, the percentage was halved again, to 13 percent. Notably, the decrease in poverty between 1900 and 1967 occurred before the advent of the greatly expanded welfare state. In other words, it was the free market, not government welfare, that caused the poverty rate to fall from 56 percent in 1900 to 13 percent in 1967.”
Then what happened, the War on Poverty was declared and over the next 50 years the gov’t spent Trillions of dollars on anti-poverty programs. What’s the result been, well according to UCDavis.edu and a quick Google search the poverty rate today is roughly 14%. So before gov’t declared a war on poverty, under the free market,the poverty rate fell from 56% to 13% and after spending Trillions upon trillions 50 years later the poverty rate is 14%. Sounds like money well spent.
Now, imagine if it was the other way. Imagine if in 1900 the gov’t declared a war on poverty and over the next 67 years the poverty rate fell from 57% to 13%, then us evil free marketers elected a bunch of conservatives and they eliminated nearly all gov’t welfare spending. After doing that the poverty rate flat-lined for the next 50 years. How loudly would progressives (and may others) be screaming to go back to what worked? Of course, despite the obvious failure of gov’t welfare programs, all we get from progressives today is “make gov’t bigger” and “spend more”. What’s the definition of insanity again?
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Three definitions:
The definition of “poverty” has changed markedly over the years. The official poverty definition uses money income before taxes and does not include noncash benefits such as public housing, Medicaid, and food stamps.
Get it? Does not include government benefits. Today’s poor are much less impoverished than yesterday’s, partly because of the benefits they receive. That is exactly the purpose of federal benefits.
However, the Gap between the rich and the rest (GINI ratio) reached its low point during the Lyndon Johnson administration — the last of the progressive Presidents. Now, with a continuum of right-wing Presidents (including two right-wing Democratic Presidents) the GINI ratio has skyrocketed).
The definition of “insanity” is believing that providing the poor with food, clothing, education and affordable housing actually puts them in “chains,” while starving and forcing them cold into the streets, helps them free themselves.
And now another definition: “Mean-spirited, selfish bast**rd”: All those in the religious right who pretend to care about the poor, but who insist that whipping these unfortunates actually cures them of their laziness.
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The definition of “poverty” has changed markedly over the years. Today’s poor are much less impoverished than yesterday’s. – Agreed, and of course the definition of poverty didn’t change between 1900 and 1967, everyone was still riding horses around their farm. Thanks to the free market the US poor live better than 80% of the rest of the world. If only the gov’t would get out of the way, imagine how low the poverty rate would be today.
However, the Gap between the rich and the rest (GINI ratio) reached its low point during the Lyndon Johnson administration — the last of the progressive Presidents. Now, with a continuum of right-wing Presidents (including two right-wing Democratic Presidents) the GINI ratio has skyrocketed). – Spoken like someone who views the economy as a zero-sum game. The economy has gone global so it’s no surprise that the top will get wealthier because they have the whole world to sell to. That said, how did Bill Gates impoverish the poor? He got wealthy by providing more value to billions of people around the world.
The definition of “insanity” is believing that providing the poor with food, clothing, education and affordable housing actually puts them in “chains,” while starving and forcing them cold into the streets, helps them free themselves. – Did you miss how the poor lifted themselves out of poverty for 67 year without gov’t giving them “free stuff” and since then that rate has stagnated (even if the definition has changed like it did from 1900 to 1967).
And now another definition: “Mean-spirited, selfish bast**rd”: All those in the religious right who pretend to care about the poor, but who insist that whipping these unfortunates actually cures them of their laziness. – I was waiting for this one. Anyone who disagrees with your failed policies (and they have failed by every measure), must be a mean-spirited, selfish blah, blah blah who voted for Trump or Romney, etc (btw, I didn’t vote for either of them – and I’m an athiest). It couldn’t possibly be that we both want to fight poverty but we believe in different ways of doing it. You believe that throwing even more money at every failed gov’t poverty program, which we’ve already spent Trillions on will work (last I checked the 2015 budget was around 3.8 Trillion, or roughly 12,000 for every man, woman and child in the US and the debt was around 20 Trillion – yes I know debt doesn’t matter – we can print money with no consequences) will fix things and I understand real economics and praxeology and advocate for free market solutions. The same free market solutions that have lifted people out of poverty around the world.
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Your ignorance of the GINI rate would be shocking if it were not so expected. ” . . . it’s no surprise that the top will get wealthier because they have the whole world to sell to. That said, how did Bill Gates impoverish the poor?”
That clearly is one of the least informed comments to hit this site. I showed it to one of my associates and she laughed, “Who is this boob and why are you bothering with him?”
Anyway, you still are sticking with the “poverty rate,” when you don’t even know what it is.
I’ll tell you though, it won’t help. It’s computed by determining a minimum food diet (whatever the heck that is) and multiplying it by three. How’s that for scientific?
No allowance is made for geography, so a guy living in Manhattan and a guy living on a West Virginia mountain, a judged by the same number.
Oh, it gets worse. At https://www.census.gov/population/censusdata/table-4.pdf you’ll see a table that shows our rural population has dropped from 36% in 1950, after WWI, to 25% in 1990. So if nothing changed, the poverty rate would go up. But, after WWII, we had millions of GIs and their wives and their children receiving benefits
But wait, it gets even worse. The same table shows the previous definition of poverty as 40.4% in 1950, more than 10 points different.
These definitions must have been created by the same guy who thinks 50% is a “clarification” of 90%.
If you ever, ever, EVER bother to read, rather than spouting pure nonsense, you would have discovered that the Ten Steps to Prosperity (which appears conveniently at the end of most of the recent posts on this site) does not “throw money at failed government programs” (unless you consider Social Security and Medicare to be “failed” programs.)
Go to the most recent post and look at the Ten Steps and tell me which ones “throw money at failed government programs.”
Only after you have done that will your comments be published.
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Yes, I read it all. Boils down to more gov’t spending.
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Sorry Max, but you switched from “throw money at failed government programs” to “gov’t spending.”
Completely different subjects (though I understand why you switched, your having been proved wrong about the former).
If you are arguing against failed programs, indicate which ones the Ten Steps advocates throwing money at.
If however, you are arguing against government spending, you’ll have to explain why federal spending on the Ten Steps is bad for America
If you do, I may print your comments in their entirety.
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1. ELIMINATE FICA (Ten Reasons to Eliminate FICA ) – Agreed, most regressive tax imposed by the gov’t and primarily hurts the poor.
2. FEDERALLY FUNDED MEDICARE — Eliminate Medicare and turn healthcare over to the private sector where quality will go up and costs will go down. You will NEVER fully fund medicare because when something the gov’t gives something for free the costs always skyrocket, especially healthcare.
In 1965, the House Ways and Means Committee estimated that the hospital insurance program of Medicare – the federal health care program for the elderly and disabled – would cost $9 billion by 1990. The actual cost that year was $67 billion.
In 1967, the House Ways and Means Committee said the entire Medicare program would cost $12 billion in 1990. The actual cost in 1990 was $98 billion.
In 1987, Congress projected that Medicaid – the joint federal-state health care program for the poor – would make special relief payments to hospitals of less than $1 billion in 1992. Actual cost: $17 billion.
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS – Aka – Guaranteed Monthly Income (GMI) – Again we differ on what happens when you give free money to people. I don’t know how else to say it than please visit “the projects” in any inner city and see what “free” gov’t housing, food, education, healthcare, etc have done to those communities.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE – We have that now from Pre-K to 12th grade and poor inner cities are graduating students who are functionally illiterate. And of course the worst gov’t schools are predominantly in poor, minority neighborhoods.
5. SALARY FOR ATTENDING SCHOOL- Does everyone get the same salary? Are you going to pay the same thing to mechanical engineers as gender studies majors. Part of the problem with college today is that too many people attend college, who don’t need to. The other problem is because of gov’t loans the cost of college is completely disassociated with the value. Gov’t has distorted college costs to the point where we have a massive college loan bubble (yes I know, the gov’t can just wipe out the debt).
6. ELIMINATE CORPORATE TAXES – Agreed, corporations don’t pay taxes only people do. Any tax imposed on a corporation is passed through to individuals in the form of higher prices, lower salaries or lower dividends.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. Agreed, but I’d take this a step further and eliminate the income tax. Anything you tax you get less of, so why tax income and production.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE) – This goes back to the Gini co-efficient (not sure why you freaked out on that. Unless I’m mistaken, the Gini co-efficient measures the amount of inequality in a society (or if you want to get technical – is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation’s residents, and is the most commonly used measure of inequality.)). I don’t care about inequality, it’s red-herring. As I said, if Bill Gates makes another 10 Billion, it doesn’t affect anyone else. As long as the economy as a whole is getting wealthier, especially the poor then (in)equality is an irrelevant statistic. In fact, in a free society with free markets, we should all accept wide ranges in “equality” while at the same time the standard of living increasing for nearly everyone.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?) – This goes back to not understanding praxeology and human nature. Individuals will pursue their own self-interest and don’t all the sudden become selfless automatons when they work for the gov’t. In fact, the exact opposite happens, which is why I recommend learning about public choice economics. That said, I’ll give you Federal ownership of all Banks if you eliminate all public tender laws and allow for competing currencies. If you think your fiat currency wins then you should have nothing to fear. However, my money (pun intended) will be on hard currencies winning out. Deal?
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% – I think we’ve exhausted this topic. You think giving people free gov’t hand outs makes them richer. I think giving people free gov’t stuff makes them dependent on gov’t and makes it harder for them to lift themselves out of poverty. Let’s just say that we both want to help the poor but come at it from completely different perspectives.
Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it. Most American schools don’t teach economics at all, and when they do it’s almost exclusively Keynesian which is much closer to MMT than Austrian.
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2. “Eliminate Medicare and turn healthcare over to the private sector where quality will go up and costs will go down.”
Healthcare already is in the private sector and Medicare doesn’t change that. So, I assume you meant turn healthcare insurance over to the private sector, but we already have that too. It’s called “healthcare insurance,” and it is a disaster.
Unaffordable for all but the upper-income levels. Affordable for the masses only if they happen to work for a company that pays for it. Almost impossible to get for pre-existing conditions. Insurance companies acting as cost- increasing middlemen and ripping off their customers.
Why do you think we have Medicare??
3. “Again we differ on what happens when you give free money to people.”
So you oppose Social Security? A very large percentage of people receiving Social Security continue to work for years. What happened to them? I personally worked for 8 years while getting SS. Does that make me superior?
4. “We have that now (free education) from Pre-K to 12th grade and poor inner cities are graduating students who are functionally illiterate.”
So your example of America is “poor inner cities.” According to your logic, America would be better off if K-12 were not free! Then, the kids not able to afford school would be better educated??? Yikes!
My kids went to free K-12, and they are able to read quite well, thank you. Did you go to a free K-12? Can you read?
And also, according to your logic, paying for college will make college students functionally illiterate. Strange.
5. I have no idea what point you think you are making, except you feel too many people attend college.
The purpose of Step #5 is to make it possible for poor kids to attend college. Are you opposed to that? Is college only for the upper-income kids?
What you don’t seem to realize is that many kids can’t afford to attend college, even when it is free. Their families need them to stay home and bring in a salary. This happens quite often in your “inner city.”
7. This doeseliminate the income tax, only not all in one year. Note the word “annually.”
8. I “freaked out” on the GINI coefficient?? You’re the one who thinks it only measures the distance between the top (Bill Gates) and the bottom. Try reading up on it again.
“As long as the economy as a whole is getting wealthier, especially the poor then (in)equality is an irrelevant statistic.”
You do realize that the above sentence makes no sense in light of the fact that the GINI is rising, don’t you? As I said, you don’t seem to understand GINI, even after looking it up. Rather than just copying and pasting, try reading.
9. “Individuals will pursue their own self-interest.”
Right. And what is the self interest of a private banker? What is the self interest of a federal employee? Does the word “profit” come to mind?
“Eliminate all public tender laws and allow for competing currencies.”
Apparently you believe it is against the law to create your own currency. Not only is it legal, but there are many private currencies in existence. Randy Wray (MMT) has been using a private currency for many years. I think it’s called “Roo bucks,” or something.
In addition to bitcoin, here is a partial list of other private currencies: https://en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States
Additionally, all coupons function as currencies.
You yourself can create “Maxies,” and your only problem would be acceptance (the same problem all currencies have.)
,i>”If you think your fiat currency wins then you should have nothing to fear. However, my money will be on hard currencies winning out.”
Here, you have gone completely overboard. Now, you no longer are talking about government spending but have switched to whether we should go back on a gold standard or something????
And you actually want to make a bet on it. Truly nuts.
First, there is are important reasons why not a single nation on earth wants to tie its currency to the results of mining a mineral.
And second, and naturally you won’t understand this, there is not, and never has been a “hard currency.” All money, through history, has been fiat. Gold, silver, and grain always have been fiat (Look up the word.)
Here’s your problem, Max. I have been studying this for almost 20 years, and writing about it for 15. I’ve heard all your specious arguments plus dozens more.
So unless you have more knowledge and experience than you have demonstrated so far, why not sit back and try to learn something rather that merely trying to win an argument?
In fact, I’ll help you. I won’t print any of your responses for at least a month. That should give you time to settle down, read slowly and absorb.
It will be far more valuable to you than winning.
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My apologies, a couple of grammer errors also krept in
I dare anyone to go with all three for a few days
should read
I dare anyone to go without all three for a few days
accumulate – its all just a game and always has been. If you choose the former, then
should read
accumulate – its all just a game and always has been. If you choose the latter, then
Now my question is, does the fact that 5 pieces are now no longer able to be used as
should read
Now my question is, does the fact that 5 spaces are now no longer able to be used as
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Faux Progressives blatantly ignore the fact that MMT is predicated on a nation-state achieving Monetary Sovereignty, of which there are only handle full in the world, as listed in this article.
Monetary Sovereignty isn’t an intrinsic entitled right of nationhood(…at this point in history), it is forged, forcibly from economic, political and military dominance, MMT is inherently rooted in imperialism!
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JB, any group can form a nation, simply by writing laws. And any nation can be Monetarily Sovereign, simply by writing laws creating a sovereign currency.
You are correct, however, that a small nation may be unable to enforce its sovereignty, either monetarily or territorially.
Since most large nations on earth have engaged in some form of imperialism, we have very few examples of a non-imperialist nation large enough to enforce its sovereignty.
Iceland, for one, is not a “large” nation but it is large enough to enforce its Monetary Sovereignty, and to my knowledge, it is not imperialist.
Monetary Sovereignty does not appear to be the deciding factor regarding whether or not a nation is imperialist, and imperialism certainly is not the deciding regarding whether a nation is Monetarily Sovereign.
I see no necessary relationship.
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I’m not sure if it is purely co-incidental, but all countries which use the ‘common law’ system as its law base all exercise monetary sovereignty. There are civil law based countries which exercise MS also but I don’t think there are any common law based countries which don’t exercise MS. A co-incidence maybe?
I also found this on the subject of MS, which has some good info on it
https://academic.oup.com/ejil/article/24/3/797/481576/The-Concept-of-Monetary-Sovereignty-Revisited
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Before they became euro nations (monetarily non-sovereign) the euro nations were Monetarily Sovereign.
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interesting…which begs the question, why did they all choose to give it up?
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Ease of trade, military inter-dependence. Similar to why the original 13 colonies decided to give up their sovereignty.
Unfortunately, the EU, which is Monetarily Sovereign, does not recognize its duty to deficit spend into the euro nations. So it forces many euro nations into austerity, a financial disaster.
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Interesting…based on some research from some time ago, the concept of ‘trade’ and exchange economics is relatively new, at least from a cyclical point of view (it seems to flourish and then wane over 500 or 1000 year periods). Even only a couple of hundred years ago the majority of the population were not merchants at all. The common law was forced to adopt the commercial code of the merchants and bring it under its wing purely because the number of people moving out of agrarian lifestyle into exchange economics became too large for the common law to ignore. I’m not sure how the civil law countries dealt with it, I’ll have to check that out myself. From a macro-perspective, it seems that the sheer quantity plus dependency of trade as a calling in life could possibly be the very thing which restricts sovereignty in the end. I mean, it is suggested that even those countries which exercise MS are somewhat restricted on account of obligations to the IMF, an institution which exists in order to try and lubricate an ever growing global system which is exchange economics. It seems we are all trading ourselves out of any ability to remain sovereign and creating a need for more military.
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Capital investment didn’t make goods better and cheaper. Knowhow of science did. Investors are merely the people who take advantage of the scientific goose that lays down the inventions of genius.
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What makes products cheaper is being able to make more of them with the same labor (ie. increase the supply). The way to do that is invest in capital equipment. If you don’t like investors then think of the govt. They build roads and infrastructure is a capital investment. With roads it’s faster and cheaper to transport goods. This lowers the cost of getting goods to consumers. Scientist coming up with ideas is fantastic but the way products get cheaper is by making more of them at a lower cost. Capital investment (machines, infrastructure, warehouses, trucks, tools, etc) is how to do that.
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There’s business and there’s industry. The former relates to money matters; the latter relates to matters of scientific/ hi-tech application. The eggs are in the R&D depts. There’s no progressive dept. of money-research. Also, money and ideas don’t come from thin air; money comes from the inanimate world of machines and electricity, while ideas originate only animately from brains and experience.
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