–There is one thing CNNMoney doesn’t appear to understand: Money

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

They call themselves CNNMoney Perhaps they should change their name to CNNMyth.

National debt: Washington’s $5 trillion interest bill
By Jeanne Sahadi | CNNMoney.com – 4 hours ago

Interest rates on U.S. bonds may be ridiculously low, but that doesn’t mean the country’s future interest payments on the national debt will be. Uncle Sam will shell out more than $5 trillion in interest payments over the next decade, according to the latest projections from the Congressional Budget Office.

That’s more than half of the projected $11 trillion increase in debt held by the public during that period. Those figures assume that a host of expensive policies such as the Bush-era tax cuts are extended.

Over the decade, more than 14% of all revenue the government is projected to collect will be sucked up by interest payments. That’s a lot of money that can’t be used on the country’s other priorities.

Ms. Sahadi (of CNNMoney) doesn’t understand the difference between Monetary Sovereignty and monetary non-sovereignty. She thinks the federal government is unable to continue creating unlimited dollars, as it has been doing for the 40 years since it became Monetarily Sovereign.

How discouraging that even a group with “Money” in its name, doesn’t understand money.

Indeed, between 2013 and 2022, estimated interest costs will be:
higher than Medicaid spending;
equal to half of Social Security spending;
close to what is spent on all of defense.

Translation: The interest payments by the federal government will stimulate the economy more than Medicaid, half of Social Security and close to what is spent on defense. This is a bad thing???

It’s unfortunate the rates are so low. With higher rates, we might be out of this economic slump, and unemployment would be lower.

The (CBO’s) estimated interest costs assume a fairly steady and moderate increase in rates over the decade. If it turns out that rates rise one percentage point higher than CBO projects, that could add roughly $1 trillion to interest costs over the decade.

That will put $1 trillion more dollars in the pockets of bond holders, who will spend those dollars. How else does Ms. Ms. Sahadi (of CNNMoney) think an economy grows?

However things turn out, a lot of the money paid in interest will go abroad, said Charles Konigsberg, president of the Federal Budget Group. That’s because more than 40% of the country’s public debt is owed to institutions and individuals outside the United States.

Agreed, that’s not as good as domestic dollars, but it’s still good. The U.S. federal government has the unlimited ability to create dollars, so those dollars go abroad at zero cost to us. But they do enrich other nations, who then become better trading/tourism partners. A wealthy world is a better world for America.

A recent analysis from the independent Committee for a Responsible Federal Budget estimates that three of the four GOP presidential candidates’ economic plans would increase deficits and interest costs, some substantially.

Newt Gingrich’s economic plan could raise interest costs by $900 billion over the next decade; Rick Santorum’s by $640 billion; and Mitt Romney’s by $40 billion. But that number could rise substantially if he doesn’t find enough measures to offset the costs of his latest tax cut proposals.

Hmmmm . . . Suddenly, I find the GOP more attractive. If only they weren’t hypnotized by the Tea/Limbaugh/religious fundamentalist groups, who seem to have little knowledge and even less concern about economics and the welfare of America.

Bottom line: Interest costs our Monetarily Sovereign U.S. government nothing, because the government pays interest at will, simply by pressing a computer key. But interest does enrich us monetarily non-sovereign people and monetarily non-sovereign businesses by adding dollars to the economy. That’s one of the reasons why, despite much of the interest going overseas, interest rate changes and domestic GDP growth tend to be parallel. .

Rodger Malcolm Mitchell

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports


4 thoughts on “–There is one thing CNNMoney doesn’t appear to understand: Money

  1. Hi Rodger,

    I also LOVED the CNN/Money article titled “A Painful Cure for Gas Prices: Recession.” The point of the article was that just as we’re seeing a surge in the price of gas, a well timed recession may coincedentally come along, surpress demand and thus lower the price of gas. The article makes no mention of the fact that the high gas prices will actually be the final ingredient to cause the recession in the first place. Talk about horse before the cart logic.

    Help me out here… Whenever I get into a discussion of national debt and who holds it, the conversation leads to a point where I end up saying “and so what if the Chinese hold 1 trillion dollars in bonds… we could convert that to cash tomorrow… if they decide to buy 10 million Ford pickup trucks with that money how is that bad for us???”

    I usually don’t get a response… the other person shakes their head and mutters off.

    In this extreme case, could this be construed as a bad thing for the US? Too many workers working to send resources overseas instead of using the production capacity for domestic use? Just curious to know how you think that would play out.


  2. Yes, amazing isn’t it?

    Actually, gas prices are dictated by Saudi Arabia, not by recessions. It works like this: The Saudis set the price as high as they can, until we fall into recession. Then they lower the price to keep us buying until the recession ends. Then they raise the price again.

    Check this graph. Notice how, for the most part, prices continue to rise, even after recessions begin. Then the Saudis lower the price until the recessions end. Then up, again.

    Monetary Sovereignty

    The Republican candidates tell their groupies they will “do something” about oil prices. If so, they better become very close relatives of Abdullah bin Abdul-Aziz Al Saud


  3. Broll, your question about paying the debt and selling trucks is a good one, but so-o-o-o complex. Here’s a way-too-short answer:

    To “lend” to us, China first deposits dollars into its checking account at the Federal Reserve Bank. Then China instructs the FRB to debit China’s checking account and credit its T-security account, also at the Federal Reserve Bank.

    A T-security account essentially is a savings account. It’s like your savings account at your local bank.

    To pay China, we merely debit China’s savings account and credit China’s checking account. (Visualize telling your bank to debit your savings account and credit your checking account. Does the bank care in which account you have your dollars?)

    We don’t need to care what China does with the money, because the U.S. government has the unlimited ability to create dollars. If China wishes to buy Fords, that’s fine. But the U.S. government, just as easily, could buy those Fords and give them to China.

    In short, the U.S. has the unlimited ability to create dollars, so does not need to obtain dollars from another country (which is holding dollars the U.S. previously created.)


  4. the government could print money and give the money to people who earned it or give it equally to all, like an mlk, thomas paine, or milton friedman citizen dividend, the flat, universal, and fair social program. collecting interest from the tax payer in your sleep is a sin the bible calls usury. it is also socialism for the rich.

    i suspect you live off social security and usury. if there was no national debt, you’d have to do something sin-free like buy real capital (corporate bonds) and create jobs instead of buying privileged and fictional financial capital.

    corporate bonds aren’t tied to the treasury bond rate. they should be tied to real lending rates, which are still quite high.

    you seem to have a definite bias in your articles in favor of high-yielding bonds, which makes me think you believe in socialism for the rich more than you believe in sovereign money. you seem to criticize low rates as bad for the economy. i think your bias as your correlation confused with causation.

    you don’t even touch on the other privilege source of unearned wealth, economic rent.

    i appreciate your appreciation for monetary sovereignty and your appreciation for inflation, but i detect a lot of error in your statements which conflate observations with reason, especially when it comes to the free lunch you steal in your sleep.

    monetary origination should benefit the public rather than the usurer.


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