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.
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There are crooks and then there are Crooks. Congress falls in the later category, and lest you think I am exaggerating, let’s begin with unfunded mandates. A federal unfunded mandate is a legal requirement that the states, counties or cities provide some service or product, for which the federal government provides no reimbursement.
The purpose of an unfunded mandate is to make Congress look financially prudent, while tossing the cost into the laps of the states, counties and cities. It’s a Congressional con game.
One might think if a Monetarily Sovereign government – a government with the unlimited ability to create dollars and pay any bill of any size – if that government wanted something done, it would budget for it and pay for it. Certainly, one might not expect a Monetarily Sovereign government to force monetarily non-sovereign governments, which cannot create money, to pay for federally-desired projects. But that is exactly how Congress operates.
According to The National Conference of State Legislatures:
The Unfunded Mandates Reform Act of 1995 (UMRA) was adopted in an effort “…to curb the practice of imposing unfunded Federal mandates on States and local governments.” According to the Congressional Budget Office (CBO), UMRA defines a mandate as any provision in legislation, statute, or regulation that would impose an enforceable duty on state, local, or tribal governments or the private sector, or that would reduce or eliminate the amount of funding authorized to cover the costs of existing mandates.
Since 1995, CBO has identified eleven laws that contain intergovernmental mandates which exceed the UMRA threshold ($50 million in 1996 dollars; adjusted annually for inflation, $69 million in 2009).
Intergovernmental Mandates under UMRA that Exceed the Threshold (listed by date of enactment):
* an increase in the minimum wage (P.L. 104-188, 1996)
* a reduction in the federal funding to administer the Food Stamps program (P.L. 105-185, 1998);
* a provision preempting state taxes on premiums for prescription drug coverage contained in the Medicare Prescription Drug and Modernization Act of 2003 (P.L. 108-173, 2003);
* a preemption of state authority to tax certain Internet services and transactions (P.L. 108-435, 2004);
* a requirement that state and local governments meet certain standards for issuing vital-statistic documents (P.L. 108-458, 2004). Driver’s license requirements were repealed and replaced with the REAL ID Act (P.L. 109-13), which under UMRA is not considered a mandate that exceeds the threshold.
* a provision that eliminates federal matching funds for administrative expenses funded by incentive payments to states as it relates to the child support enforcement program (P.L. 109-171, 2006);
* a requirement that all government entities, including state and local governments, withhold 3 percent on certain, non-essential government payments for property or services (P.L. 109-222, 2006);
*an increase in the minimum wage (P.L. 110-28, 2007)
*a preemption of state authority to tax certain Internet services and transactions (P.L. 110-108, 2007);
* a requirement that public transportation agencies and rail carriers implement various security measures and vulnerability assessments, and institute training programs and background checks for certain employees (P.L. 110-53, 2007);and
* requires commuter railroads to install train control technology (P.L. 110-432, 2008).
Congress has shifted at least $131 billion in costs to states over the past five years, according to NCSL’s Mandate Monitor
Yes, that’s $131 billion in expenses that are forced on monetarily non-sovereign governments by a Monetarily Sovereign government.
But it gets worse. The federal government collects money from the residents of states, in the form of taxes, and in the case of 14 states, returns less money to those states than it collected.
State / Fed Spending Per Dollar / State Budget Shortfall
/ of Fed Taxes /
Florida $0.97 $3.6 B
Texas $0.94 $13.4 B
Oregon $0.93 $1.8 B
Michigan $0.92 $1.8 B
Washington $0.88 $2.9 B
Wisconsin $0.86 $1.8 B
Massachusetts $0.82 $1.8 B
Colorado $0.81 $988 M
New York $0.79 $9 B
California $0.78 $25.4 B
Delaware $0.77 $377 M
Illinois $0.75 $15 B
Minnesota $0.72 $3.9 B
New Hampshire $0.71 n/a
Connecticut $0.69 $3.7 B
Nevada $0.65 $1.5 B
New Jersey $0.61 $10.5 B
So here we have $131 billion + in unfunded mandates, plus many billions more taken from states in the form of unreturned taxes. I call it outright theft, and for no reason. The federal government doesn’t need the money; it’s Monetarily Sovereign. It creates money.
Years ago, some parents of child movie stars stole the money their children earned, rather than putting it away for the children’s futures. Laws were passed to protect the kids. The parents were simply disgraceful, but while they were crooks, at least they had a use for the money. Congress is worse. It steals the states’ money and doesn’t even have a use for it. It destroys the money it steals.
That truly is evil.
Rodger Malcolm Mitchell
http://www.rodgermitchell.com
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No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.
Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up my future.”
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Rodger,
You may also want to read and comment on Ellen Brown’s two articles Feds To States: “drop Dead.” State Bank Movement Picks Up Steam and What A Public Bank Could Mean For California/a>
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And by the same token, who would expect a Monetarily Sovereign government to force monetarily non-sovereign people, who cannot create money, to pay for federally-required insurances? But that is exactly how ObamaCare operates. Talk about unfunded mandates!
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Fields and Clonal,
Exactly. We, as people, are monetarily non-sovereign. The government should pay for federally-required health insurance.
Those who want the federal government to run a surplus actually are saying we should send the federal government more money than the government sends us. Talk about backwards thinking!
The notion of the monetarily non-sovereign supporting the Monetarily Sovereign is beyond foolish. It’s . . . (What is the right word?) . . . It’s mainstream economics.
Rodger Malcolm Mitchell
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M**nstr**m *c*n*m*cs – Rodger, I thought this was a G-rated, family-friendly blog!
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Ellen Brown’s concept of state-owned banks is interesting, though filled with the same difficulties as federally-owned banks, just one step down. It partly solves a problem that shouldn’t exist: The monetarily non-sovereign states keep running short of dollars.
Her “state solution” doesn’t solve the problems with the counties, cities and villages, all of whom are in the same relationship with the states as the states are with the federal government.
Recently my village, Wilmette, was denied funds by Illinois — funds for which we were taxed — because Illinois has a budget problem, some of which was caused by outright thievery. Now Wilmette must struggle unnecessarily.
State-owned banks is a move born out of desperation, because the federal government fails to do its primary job — supplying sufficient dollars to its citizens to allow them to grow their states’ economies. Perhaps county-owned banks? City-owned? Neighborhood owned? Could be. I haven’t thought through the implications.
Rodger Malcolm Mitchell
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I suppose we’ve just discovered a way to finance your 2012 campaign – Rodger-owned bank! 😛
If state-owned banks can save states, why can’t Bank of Greece save Greece?
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The difference between BND (Bank of North Dakota) and the Bank of Greece and Greek Banks is in their charters. BND acts as an “Economic Development Bank.” The whole idea is to develop the economy of the State of North Dakota, this results in state tax money being reinvested inside the state, and not outside of it. See FAQs of the BND
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Greece as a sovereign country surely could create a national bank in such a way that all of its taxes and assets are the assets of the bank. So could Ireland, Portugal and Spain. The eurozone crisis would be over in no time.
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Clonal,
I’ve begun to give some thought to the notion of, not state banks, but city banks. I live in a fairly upscale village (about 25,000 people) where taxes are high. Your comments have made me wonder whether a village-owned bank would be beneficial.
Much depends on banking laws, of course, but those aside, I see several advantages. I expect such a bank, well-run, would be profitable partly because, presumably it would not pay federal taxes.
I suspect it would attract many village residents, not only because of village loyalty and the realization the profits would help cut village taxes, but also because (I assume) interest from accounts and CDs would not be federally taxable.
I’ve written to the village president, to determine whether this idea had been explored, and if so, the findings. From a purely business standpoint, the idea seems to have interesting possibilities for a monetarily non-sovereign government.
Rodger Malcolm Mitchell
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Rodger,
You might find useful information at – The Public Banking Institute blog e.g. Take Action
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If every village had its own bank, what would happen to the commercial banks?
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Fields,
I neither know nor care. That’s not going to happen within my lifetime or yours.
My question is: What are the implications of Wilmette, Illinois having its own bank?
Rodger Malcolm Mitchell
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I know you don’t care about what’s going on outside your village, but that doesn’t change the fact that if a Bank of Wilmette with all those advantages can happen in your lifetime, it won’t just have local implications.
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You misunderstand my meaning. I don’t care, because I am quite confident every village will not have its own bank. The classic, “What if everyone did it?” kinds of questions sometimes can be a digression, especially if there is no chance everyone will do it.
I assume that a Wilmette bank would provide stiff competition for the 7 national and local banks already here. But that does not mean it would replace all of them.
Rodger Malcolm Mitchell
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Sorry, maybe not every village, but since state bank movement is picking up steam, who is to say the same thing won’t happen at county, city or neighborhood level?
What bank could compete with not only village loyalty and potential village tax cuts, but also the assumed tax-free interest?
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Clonal,
At Mother Jones (http://motherjones.com/mojo/2009/03/how-nation%E2%80%99s-only-state-owned-bank-became-envy-wall-street), one advantage of the state-owned banks is explained: “. . . we are the depository for all state tax collections and fees.” This could be true for my Wilmette, too.
Again, much depends on state and federal banking laws. Does anyone know of any city- or village-owned banks?
Rodger Malcolm Mitchell
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Unlike states, cities are allowed to have their own currencies, so that a city owned bank sounds possible. However, any candidate who ran on a ticket that advocated that idea would surely face stiff opposition and be branded a socialist.
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Min
Cities already are “socialist” in that they own, and often charge for, many things: Hospitals, schools, roads, parks, bridges, concert venues, pools, skating rinks, beaches, etc., so I’m not sure why owning a bank would be considered too socialist. Then again, the beliefs of people never fail to amaze me, so perhaps you are right.
The key to a bank is not the ability to create a currency, else there would be almost no banks.
Rodger Malcolm Mitchell
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Fields,
Private banks can’t compete if the city bank offers the people something better. That’s a good thing, right?
Suggest it to your city.
Rodger Malcolm Mitchell
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Yeah, it’s marvelous until you realize the too big to fail banksters won’t let that spread or they’re dead.
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I care not what puppet is placed on the throne of England to rule the Empire, …The man that controls Britain’s money supply controls the British Empire. And I control the money supply. – Some Rothschild Guy
The few who could understand the system will either be so interested in its profits, or so dependent on its favours, that there will be no opposition from that class, while on the other hand, the great body of the people mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests. – John Sherman
http://en.wikipedia.org/wiki/John_Sherman_%28Ohio%29
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