–Thank goodness this guy didn’t get elected.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
Here is the text of a letter John McCain sent all over the country, in his never-ending quest to usher in a new recession to blame on Democrats:

My Friend,

Earlier this week, many of my Democrat colleagues in the Senate were quoted saying that the Republican budget cuts were “extreme.” One wonders what words they would use to describe our nation’s current economic situation. We are $14 trillion in debt . . .

No, “”we” are not “in debt.” The federal government created from thin air, T-securities, which it exchanged for dollars it previously had created from thin air. To eliminate this misnamed “debt” merely requires the reverse exchange, at the press of a computer button. But “we,” meaning you and I, are not burdened in any way, nor are our children or grandchildren.

. . . the 2011 FY budget has yet to be passed, and a government shutdown is looming in the future.

And who is causing it to “loom”?

We are mortgaging our children’s futures,

That part is true. All the various cuts that have been suggested will reduce our children’s future quality of life. However, there is no “mortgage,” and our children don’t owe the federal debt.

. . . but the Democrats are too busy pointing fingers instead of working towards balancing the budget and saving our financial future.

Balancing the budget, aka “ending the money growth necessary for a growing economy,” would destroy our financial future, as it has every time it has been tried. See: SUMMARY

America is hurting. We are in a time of economic crisis and should be cutting rather than spending. We cannot afford nor allow the Democrats to spend another dime. President Obama’s budget is full of the same spending policies and it must be stopped.

No, we (i.e. the federal government) should be spending, not cutting. Remember: Federal spending stimulates; federal cutting decimates.

In order to prevent spending policies from being passed, it is plain and simple: we need a Republican majority in the Senate that will vote for our shared conservative values of limited government and lower taxes.

Well, you got the “lower taxes” right. But you don’t need to limit government in order to limit government spending. How about if the government creates the dollars, and gives them to the states, and lets the states direct the programs? That would end “big government,” while continuing the benefits of federal spending.

Country First PAC is dedicated to supporting and electing Republican candidates to office. With your donation today of $25, $50, $100 or more, Country First will be able to support candidates across the nation and ensure that a Republican majority is maintained in the House and gained in the Senate.

The Democrats are already ramping up their efforts for 2012, and it is important that Country First-supported candidates have the funds necessary to run successful campaigns. Your immediate donation will send a strong message to the liberals in Washington that you are fed up with the continued spending.

Thank you for your continued support and generosity. Together we will be able to elect a conservative majority to Congress and put an end to the wasteful spending once and for all.


John McCain
Chairman, Country First PAC

Senator, I was just about to get out my checkbook, when I realized you’re against wasteful government spending, and burdening our children, so I assume that includes PAC spending which may be the most wasteful taxpayer burden there is. So, rather than worry about the federal government’s Monetarily Sovereign budget (which it has the unlimited ability to support), I think I’ll worry about my own monetarily non-sovereign budget and decline your Country First, Tea Party Patriots, flag-wrapped request.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity, nor grow without money growth.


12 thoughts on “–Thank goodness this guy didn’t get elected.

  1. You asked, “How do you explain . . . ” which typically means, “I’m not interested in your explanation; I just want to prove you’re wrong.”

    But in the off-chance you really are interested in learning, go to Cause of inflation.

    You’ll see that since we went off the gold standard, the cause of inflation has been oil prices.

    We were in a recession. During a recession, inflation falls. During periods of growth, inflation rises to a level the Fed finds acceptable.

    To cure a recession requires federal deficit spending. So the spending cures the recession, which restarts the inflation.

    The blog you references shows normal inflation for many years. You would not like a deflation.

    Rodger Malcolm Mitchell


  2. Rodger, you say, “Federal spending stimulates; federal cutting decimates.” Would it be the same or more accurate to say, “Federal dollar creation stimulates; reducing federal dollar creation decimates.”?

    What I’m getting at is does it require the federal government to spend it or can the fed simply create the dollars and the push them into private spending through banks or some other similar private lending/disbursement agency?

    I ask this because I think a lot of Republicans and Tea Partier’s are conflating the growth in federal spending with the creation of a larger and more intrusive government. If the net effect through private disbursement would occur, I wonder if the debt hawks would sing the same tune.


    1. You said, “I think a lot of Republicans and Tea Partier’s are conflating the growth in federal spending with the creation of a larger and more intrusive government.”

      Correct. There is no necessary correlation between federal spending and federal government size. Taken to an extreme, the federal government could consist of one person, who cancels the IRS, then each year pushes a button sending $5,000 per capita to each state, and the states take it from there. That would be an improvement over our current ridiculous system.

      Federal spending is the only “quasi-permanent” money creation, in that it is not a loan. So long term- it’s more stimulative than bank money creation.

      Rodger Malcolm Mitchell


  3. This is all plutocratic propaganda.
    The plutocrats want to drive unemployment up and pay down so that they get even wealthier.


  4. Kristjan,

    The Fed Funds rate is the rate at which banks borrow from each other or from the Fed, to maintain their reserves for borrowing. This rate is set arbitrarily by the Fed.

    By the way, because of this system, banks never run short of reserves (They always can borrow all they need), which means in a practical sense, there is no fractional reserve lending. What actually limits bank lending is bank capital.

    T-bills are not necessary for this process.

    Rodger Malcolm Mitchell


  5. I know that but if there is no treasuries how is the fed going to set the rate?
    Under current regime the fed manipulates the rate by selling or buying treasuries.
    So you would just allow overdraft and have banks pay interest on that?


    1. If the Treasury accepts bank checks for tax payments, it must allow banks discount window access and set a discount rate, which will be the upper bound of the fed funds rate. Otherwise the system can be short reserves, and the fed funds rate could be infinite. The natural fed funds rate is 0 (excess reserves) or infinity (deficient reserves). The Treasury and Fed work to get it to a small positive target rate. A nonzero lower bound could be set by the interest paid on reserves, or by T-bills.


  6. The Fed sets rates by setting the Fed Funds rate. This affects all lending rates, not just T-securities. If T-securities did not exist, the Fed still would set the Fed Funds rate, which still would affect all lending rates.

    Rodger Malcolm Mitchell


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