–The words which will live in infamy

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor,
which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.


Here are the words which will live in infamy, and which will define the Obama Presidency for history. In his 2011 State of the Union address, President Obama said,

“. . . we have to confront the fact that our government spends more than it takes in. That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same.”

“A government that does the same”?? A government that sacrifices to live within its means? And exactly what is the government’s “sacrifice” to which he refers? Will our government be unable to pay its rent? Will our government lose its home and be forced to live in the streets? Will our government go to bed hungry and be unable to feed its children? Are those the government’s sacrifices?

Will our government lose its job? Will our government go broke, or be unable to send its children to college, or not have warm clothes, or be unable to afford medical care, or face old age without income?

Exactly what government “sacrifice” is he talking about?

There is no government sacrifice. Obama was talking about your sacrifice and my sacrifice – and by his premeditated twist of logic, he makes it sound as though the government heroically will sacrifice to protect you and me.

What unabashed dishonesty!

“Every day, families sacrifice to live within their means. They deserve a government that does the same.” That, in one succinct statement, is the expression of the Big Lie – the lie that the federal government’s finances are like yours and mine and like the states,’ counties,’ cities’ and euro nations.’

It is a lie, a Big Lie, because on August 15, 1971, the U.S. became Monetarily Sovereign, i.e. sovereign over the U.S. dollar. As a result of this enormous change, the U.S. government now can create as many dollars as it wishes, any time it wishes.

Unlike you and me, the U.S. government never can run short of dollars. It can pay any debt denominated in dollars. It never needs to ask anyone for dollars – not you, not me, not China. For that reason, the U.S. no longer needs to borrow its sovereign dollars from anyone or tax anyone to get dollars.

But Obama tells the Big Lie about the government needing to “sacrifice” and to “live with its means.” What are the “means” for a nation that has the limitless ability to pay its bills? What are the “means” for a nation that creates its sovereign currency simply by paying its debts?

Lie after lie after lie after lie, an ongoing litany of mendacity. The man has no shame and no concern for the American people. He is a traitor, doing more damage to America than Osama bin Laden ever could have hoped. Yes, a traitor. What better description is there for someone who intentionally injures his own nation?

Obama wants you to “sacrifice,” and for what? What do your sacrifices bring you? Poverty. Sickness, Homelessness. Unemployment. Lack of schooling. Recession. Depression. Yes, Mr. President, what reward will our sacrifices bring us?

For many years, I had labored under the misconception that the problem was one of ignorance, and if only we could educate the President, Congress, the Fed, the media and the mainstream economists, these intelligent people would see the error of their ways, and the problem would be solved. MMT still believes it.

But, I have changed my mind. It simply is not possible that the President of the United States, the Treasurer of the United States, the Chairman of the Federal Reserve Bank of the United States and other assorted experts do not understand how dollars are created and destroyed.

Bernanke is well aware of the truth. He already has admitted he creates dollars by pushing a computer key. Greenspan has said the same thing.

So the only question is: Why does Obama lie? Why does he pretend not to understand. Why does he intentionally and unnecessarily injure us Americans? And the only answer I can come up with is: He, and his accomplices are bribed to pretend, bribed by campaign contributions to the Democratic party.

No other conclusion makes any sense at all.

Who has both the money and the motive to bribe them? The wealthiest Americans have the money, and their motive is to increase the gap between the 1% and the 99%, and that is accomplished via austerity, i.e deficit reduction, with a focus on reduced federal spending.

Yes, reduced federal spending is the bullet into your heart and my heart and into hearts of all the 99%. Cut Medicare; cut Medicaid; cut Social Security; cut food stamps and all the various programs for the poor. Cut the agencies that monitor our food, our medicine, our investments, so the rich can get richer selling us bad food, bad medicine and bad investments.

Cut, cut, cut. That in the President’s double-speak, is how the government “sacrifices.”

MMT and MS have been fighting the battle on the basis of facts, logic and education. Our approach has been: “Because people don’t understand, we have to teach them.”

So we continually write articles trying to make the idea simpler and simpler, to the point where any high school freshman could understand it while simultaneously driving and texting. Only when you, the populace, get angry enough, write enough letters, and threaten the politicians with being voted out – will these liars take notice and change this cozy and unholy partnership with the rich.

Today, Obama and Boehner are discussing your future. They are deciding how much they can screw you without getting caught. Soon they will announce, to everyone’s great relief, that they have worked together to save America from the fiscal cliff they invented.

In the spirit of cooperation, they heroically will cut the deficit. That is, they will reduce your savings. You will sacrifice to avoid their fiscal cliff.

The government will not sacrifice. Nor will the 1%, even with slight tax rate increases. You and I will be sacrificed on the alter of political contribution, by traitors to America.

And sadly, rather than being angry at the lies and deceit and the sacrifices, the brainwashed victims will cheer this bipartisanship. The cattle will march happily into the slaughterhouse, thanking their executioners.

“. . . we have to confront the fact that our government spends more than it takes in. That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same.” Remember those words. Remember those lies.

You’ll hear them again, as the “fiscal cliff, invented by the President and Congress, is “solved” by the President and Congress.”

They, and Barack Obama, will live in infamy and another four years of lies.

Do you care? And if you care, what are you doing about it?

Rodger Malcolm Mitchell
Monetary Sovereignty


Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

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 Imports


27 thoughts on “–The words which will live in infamy

    1. @ tetrahedron720 – “Ironically the big shots would do far better with MMT/MS than holding on to yesteryear.”

      Well, since MMT and MS deal not with how things should be, but with how money mechanics actually operate in the real world, I assume you mean that the 1% would be even more prosperous if everyone understood fiat money mechanics.

      If that is your view, then I disagree. In all societies throughout history, the One Percent’s power has relied on peasant ignorance. Public education is a somewhat recent phenomenon. For millennia, most people could not read or write. Most boys were taught their father’s trade, or were apprenticed to learn a trade. Peasants were told things on a “need-to-know” basis. The only people educated were sons of the rich, or of the aristocracy, or professionals such as scribes, physicians, and temple administrators.

      This was all by design, since control of information is the key to power. Western church clergymen communicated in Latin, so that only they could share information. Thomas More (1478-1535) had had half a dozen different publishers burned at the stake for publishing the Bible in English.

      Today, public education is common, yet most peasants remain illiterate regarding money mechanics. Thus, they believe and defend whatever lies the 1% tell them. And now if the peasants want to go to college, they must enter into a lifetime of debt servitude to the bankers and Wall Street.

      Our lament is perennial. Throughout history, would-be enlighteners who only wanted to help the peasants have always faced the wrath of both the peasants and their masters.
      This is a fact if life that we must live with, but what especially annoys me is when (some) MMT-ers pretend that bankers, politicians, and the 1% are well-meaning people who make “innocent mistakes” and “just don’t get it.” This is inexcusable.

      Many MMT people ignore or downplay the political power factor. Many liberals talk of nothing but the power factor, but they do not understand money mechanics. So it seems to me that our best audience is the young, since they are naturally rebellious. And don’t forget immigrants such as Latinos. I recently described the basics of money mechanics to a Mexican who spoke no English, and had no formal education. He grasped it immediately and effortlessly. The emperor has no clothes.


      1. Assuming MMT is the better design for a better economy, those in control would necessarily do better, because a better design is one which would raise the bottom (99%)without touching the top 1%. There can be no storming the Bastille.

        I agree there has been over the centuries a need to control information to keep everyone in the dark in order to superimpose control. But as you say young (and young thinkers) are our hope, just as it was the post ww2 youth who defied their parents and listened to the TV reports; and trusting the new technology more than their misled and misinformed parents/teachers, they said “GET THE HELL OUT OF VIETNAM.”

        Now we have the internet. Whether youth can push the MS-MMT agenda in time before the next big financial setback remains to be seen. We seem to emerge by means of emergency which is really too bad. You can only play at the edge of a cliff for only so long before it’s so long.

        Youth need to say now, “We can afford to do anything that needs to be done.” As I see it, MMT and MS hold that possibility without the 1% having to take a hit. They could have their cake and eat it too. We all could.


  1. Even in the face of facts and logic, even after reading “Free Money”, my friends and acquaintances refuse to believe anything other than what the “statesmen” say. One very smart local leader even assured me that I was wrong about there being no debt crisis because President Obama said George Bush took out a credit card with the Bank of China and borrowed money from China with it. A noted local college professor implored me to learn some economics by starting with von Mises. Even my wife tells me to just tone it down. I am almost at the point of thinking that people, the 99% specifically, deserve what they get with Obama and Boehner and the inevitable rising taxes.


  2. Is there no one with sufficient economic base that could go to the White House? (Rodger – you? Even Paul Krugman with a watered down version would be worth the effort). Eddie Munster and Batshyt Bachmann spewed enough BS to fertilize the all of Iowa’s farmlands during the recent “campaign”. That said, the press, politicos and many voters take their garbage seriously and have a warped notion that these folk hold the key to truth. Goldwater and Nixon spoke the truth a great deal more than these two and the ultra-delusional Tea Party “Govmint you keep your hands off my Medicare and Social Security”


  3. Rodger – thank you for your succinct, albeit frustrated, post. I thought this was important enough to share with the 2 public banking FB sites I manage, and post a quicklink in Op Ed News (a top 100 blog), here: http://www.opednews.com/Quicklink/The-words-which-will-live-in-Best_Web_OpEds-121119-152.html

    One minor quibble, but an important one: I actually DO believe Obama is that ignorant, despite being a so-called constitutional scholar who presumably has read Art. 1, Sec. 8 and understands what “coin Money” means (well, it’s possible he doesn’t even understand, or hasn’t thought about, that either, but after all, he violates the constitution on a fairly regular basis – NDAA, Habeus Corpus, etc.). Of course, the Treasury secretary and Bernanke (and Greenspan) understand this better, but are unwilling to buck their banking masters to admit it. Just yesterday, Geithner said the Congress “absolutely” should get rid of the self-imposed “debt ceiling”: http://www.huffingtonpost.com/2012/11/16/timothy-geithner-debt-ceiling_n_2147748.html. And all of these characters have rejected dangerous anachronisms like gold-based currencies.

    But, whether by choice, or ignorance, this is why I say the U.S. is not fully sovereign. It COULD be. It SHOULD be. But it isn’t, for whatever reason.

    Europe is worse, and even the police are now striking in Spain: http://www.opednews.com/articles/Thousands-of-Spanish-polic-by-Scott-Baker-121118-259.html
    The end may be very near now, not just in Spain, but all of Europe and maybe beyond. When the police stop defending the corrupt status quo, regimes fall quickly – Russia, Tunisia, Egypt, etc.


  4. The lies continue:

    Pelosi says tax increases must be part of ‘fiscal cliff’ deal
    Posted by Aaron Blake on November 18, 2012 at 10:57 am

    House Minority Leader Nancy Pelosi (D-Calif.) said in an interview airing Sunday that tax increases must be part of any deal to avert the looming “fiscal cliff.”

    Asked by ABC’s Martha Raddatz whether she would accept a deal that capped deductions for high earners but left rates as they are, Pelosi said it would be unacceptable.

    “What you just described is a formula in a blueprint for hampering our future,” Pelosi said. “Just to close loopholes is far too little money.”

    She means “far too little money” taken out of the economy. She wants much more money removed from the public sector — from your pockets.

    Pelosi said that cutting those deductions would discourage investment and that there’s not enough money to be saved in those deductions to make the math work.

    Yes, cutting deductions will discourage investment, so Pelosi wants much deeper cuts — much more money removed from the economy.

    President Obama has taken a hard line with Republicans on tax increases early in negotiations. Republicans have said they are open to new revenue — in the form of closing loopholes — but have stopped short of embracing tax increases for the wealthy.

    What a conundrum. Should we take money out of the economy by raising taxes or with reduced spending? That is the discussion in Washington, DC. Notice, there is no discussion about how to increase GDP.

    The lies never end.

    Rodger Malcolm Mitchell


  5. A letter I received today (11/19/12):

    You know where President Obama stands when it comes to tackling our nation’s deficits. He’s committed to doing it in a balanced way, but not at the expense of the middle class. Time and time again, he’s argued that we have to combine spending cuts with asking the wealthiest Americans to pay a little more in taxes.

    David Plouffe
    Senior Advisor
    White House

    What could be more reasonable than doing things in a “balanced way”? It’s akin to cutting off your right leg, and then for “balance,” cutting off your left leg, too.

    So we should cut spending on Social Security, Medicare, Medicaid, aid to the poor, infrastructure, regulation of food, medicine and investments, etc., etc.. That’s the right leg. And then for balance, increase taxes on the rich, so to reduce the money supply. That’s the left leg.

    And together, this will send us into a recession that will hurt all Americans.

    That’s balance.


  6. @ tetrahedron720: “Assuming MMT is the better design for a better economy, those in control would necessarily do better, because a better design is one which would raise the bottom (99%)without touching the top 1%.”

    But that is precisely what the 1% don’t want. As Rodger says, the sensation of “wealth” is entirely relative. It is a product of the gap between the haves and the have-nots. To increase this gap, I can make myself richer, or others poorer. Either way increases my “wealth.” Personally I think it is easier to make others poorer. Just cut federal spending, and raise taxes. Voila.

    On a different note, Tim Geithner says he wants to leave his post as Treasury Secretary. There are unconfirmed rumors that Robert Rubin may replace him. If that happens, then we may get another wondrous Clinton surplus, in which case we are truly doomed. Republicans who justifiably wailed about the Clinton surplus now say the surplus was wonderful. The 1930s depression dragged on for 12 years. If the current depression is the same, we will not get out of it until 2020, when we perhaps go to war with Russia and China. And today’s depression is even more gratuitous than the 1930s depression, since the USA is no longer bound by any gold standard.

    @ JimG: “I am almost at the point of thinking that people, the 99% specifically, deserve what they get with Obama and Boehner and the inevitable rising taxes.”

    Yes, I have often cynically implied that the public deserves to be enslaved. Most people are only happy when they are miserable. Most people would rather be “right” than be prosperous.

    I am a newcomer to all this, but Rodger has spent at least 15 years crying out in the wilderness, “We don’t have to suffer and die!” Where Rodger gets the courage and stamina to keep going is unknown. Perhaps it’s an abiding charity for mankind, despite man’s wretchedness.

    My only comfort at this point is to read the commentary of Rodger and others here. It’s like waking up from a nightmare.

    @ FredBassett: “Is there no one with sufficient economic base that could go to the White House?”

    It isn’t just the U.S. government. Gratuitous austerity is a global epidemic among politicians (with a few exceptions, e.g. South America). Even the Israeli and Iranian governments are imposing needless austerity on their people. Even the governments of Gaddafy and Assad started drinking the neo-liberal kool-aid, thereby creating enough misery and divisiveness among their people for NATO to attack them. I’m afraid that humanity is living through a Dark Age.

    @ scottonthespot: “I actually DO believe Obama is that ignorant.”

    I don’t. Furthermore I think we add to the problem when we say that politicians “just don’t get it,” and they make “innocent mistakes.” We don’t think that way with regard to murderers. Why do it with politicians and banksters?

    “Whether by choice, or ignorance, this is why I say the U.S. is not fully sovereign. It COULD be. It SHOULD be. But it isn’t, for whatever reason.”

    Oh, it is monetarily sovereign all right, but the 1%, Wall Street, and their puppet politicians pretend that it isn’t, so they can increase the gap between rich and poor. Incidentally, I’m glad that you, as a representative of the public banking movement, visit Rodger’s blog. Most people in the public banking movement have problems accepting MMT / MS. Many of them also believe in myths, e.g. that banks still engage in fractional reserve banking. Many focus only on the banksters, while overlooking the equally criminal politicians.

    “The end may be very near now, not just in Spain, but all of Europe and maybe beyond. When the police stop defending the corrupt status quo, regimes fall quickly.”

    The banksters will not really start to worry until the police officers call for dumping the euro currency, and returning to monetary sovereignty. Until they do that, they will remain as ineffectual as the Occupy kids in the USA. The Troika can always impose Europe-wide martial law with soldiers on their payroll. And even if Europeans do shout “Dump the euro!” it will not be enough. England doesn’t use the euro, and its government is imposing gratuitous austerity.

    @ Rodger: Tax increase are part of the “fiscal cliff.” To avoid the “cliff,” Pelosi wants tax increases. Flawless logic, aye? Some reader comments in that Washington Post article say that deficit reduction is part of a “socialist program.” Others say the deficit is “holding the economy back,” and politicians don’t want to cut it. It’s an invasion of the brain snatchers. We are surrounded by Pod People. They are EVERYWHERE.

    Oh, and when politicians talk about increasing taxes on their rich contributors (who don’t pay taxes anyway) they really mean “broadening the base,” i.e. increasing taxes on the middle and lower classes. Why don’t they simply eliminate food stamps for 46 million Americans who rely on them? Better yet, why don’t they just round up 315 million Americans and confine them in labor camps? Just get it over with.


    1. “@ scottonthespot: “I actually DO believe Obama is that ignorant.”

      I don’t. Furthermore I think we add to the problem when we say that politicians “just don’t get it,” and they make “innocent mistakes.” We don’t think that way with regard to murderers. Why do it with politicians and banksters?”
      Well, for one thing, there is no dedicated lobby advocating the rightness of murdering, like there is for Austerity, paying off the debt, etc. And yes, I really do believe Obama is that ignorant. What he knows about economics wouldn’t fill a thimble.
      I actually DO have some problems with MMT/MS, which Rodger is well aware of, though I certainly believe they are closer then the mainstream economists, Keynesians included.
      I wouldn’t be so sure about Euroland calling out the troops. See here:
      The police are now also protesting austerity. This may be the beginning of the end, which can come very swiftly, as examples form East Germany, Tunisia, Egypt etc. show.
      See my solution for the Euro crisis here:


      1. Scott Baker writes, “Yes, I really do believe Obama is that ignorant. What he knows about economics wouldn’t fill a thimble.”

        >>>Cool! So Obama isn’t in the pocket of Wall Street after all! Perhaps Obama means well, but he “just doesn’t get it.” If only Obama could be “educated,” then his inner Keynes would come out, yes? Of only he were a bit brighter, then Obama would cease to be a politician, and he would start to speak the truth, yes?

        Well Scott, I envy you. I wish I could live in your universe. Beam me up! (My sarcasm is meant to be good-natured, not insulting.)

        Elsewhere on the Internet you write: “The U.S. does not have total monetary control, but it is closer in at least having its own national currency, albeit one issued by a private central bank — the Federal Reserve Note.”

        Many people make your same error. They think that all money comes from banks. They make this error because they stubbornly cling to the belief that all banks are inherently evil. In order to cling to this fantasy, they refuse to acknowledge several facts.

        In FY 2012 for example, the U.S. government spent $3.796 trillion. That money was created as government spending, and came through banks, but not from banks. Banks are certainly oppressive, and the U.S. government has certainly delegated far too much power to banks to create the part of our money supply that exists as bank loans. However, if banks were as omnipotent as you fantasize them to be, then banks would not need constant government bailouts. Granted, some of those bailouts come from the Fed as QE, but in other cases (e.g. TARP) it comes from the Congress. Moreover the Treasury (independently of the Fed) has several options it can use to drop billions here and there, e.g. the Federal Financing Bank, which is the Treasury Secretary’s own personal piggy bank with about $60 billion in assets. The Treasury Secretary uses banks like the FFB to bail out government agencies, e.g. the FHA, which allegedly has a $35 billion in un-funded insurance obligations. The Treasury Secretary’s bail-out money does not exist as loans, although it can be tangentially related to the T-securities process.

        It is true that all fiat money, including government-created money, only becomes operational when it is digitally logged on the balance sheet of some bank somewhere. Banks change their own balance sheets when banks make loans, but in the case of government spending, banks change their balance sheets per instructions from the U.S. government. Since this still involves a bank, you erroneously think that banks issue all currency. The only money that banks issue is loans.

        Another area where you may be confused is that, as Rodger has often explained, all money is debt, but that does not mean that all money originates in banks. Money is not physical. It is a unit of account; a claim to ownership of a digital value in some bank’s computerized spreadsheet. When you take a loan from a bank, you are in debt to the bank. When you make a deposit in a bank, the bank is in debt to you. Banks have their own creditors. They are in debt to the government, to each other, and to depositors like you. Money that originates in banks (i.e. loans) carries an interest burden. Money that originates in government spending does not (e.g. a Social Security disbursement). True, the government sells T-securities, but that is by choice, not necessity. Moreover, as is the case with any bank, the $16.2 trillion in “national debt” is also $16.2 trillion in Fed credits, i.e. assets. It comes from investors, some of which are banks, and some of which are individuals, corporations, and even government agencies.

        When a foreign company sells a million dollars worth of goods to the USA, and deposits that $1 million in a Fed account, thus putting the Fed in debt by $1 million (plus interest), do you think that $1 million came from a bank? No. It came as proceeds from a sale.

        Contrary to your belief, the U.S. government is indeed monetarily sovereign, although bankers, politicians, and most economists pretend that it isn’t. They pontificate about the (non-existent) “debt and deficit crisis” in order to make the public grovel before bankers and politicians alike. They want the public to remain confused and bickering, so that bankers, politicians, and mainstream economists remain in power.

        Your insistence that banks are omnipotent is what keep banks in power. Since you refuse to accept the objective fact that about 24% of the US GDP comes from government spending (not from bank loans), you bow to bankers as unchallengeable Gods. And since most people make the same error that you do, most people think it is inevitable that they must live with crushing debt from bank loans. But imagine how life would change if the public realized that the emperor has no clothes — i.e. that a lot of our money comes not from banks, but from the government. The public would demand that more money come from the government.

        As long as you think the emperor is omnipotent, all is hopeless. Only when you finally see that the emperor is not all-powerful do you have a chance to overthrow the emperor.


        1. Mark is practicing an irritating example of what’s become a common practice in online discussions like this, so common it’s actually boring. He sets up “straw men” that I never said, then sets about debunking them, as if he’s proving me wrong. This gets me “back in the game” countering his misrepresentations over and over.
          I’m not going to play that game.
          Here, in summary, is what I said, in case there is any legitimate confusion:
          1. Obama IS in the pocket of Wall Street. They don’t want him to “get it,” so he doesn’t.
          2. To paraphrase Forrest Gump: “Monetary Sovereignty is as Monetary Sovereignty does.” If the Austerians take over and convince the government that they must cut expenditures, that money is going to “run out”, that we must “live within our means,” then we might as well be ruled by a private central bank and outside creditors or “bond vigilantes.” A power not exercised is not a power at all.
          3. We have a >$15 trillion dollar economy. The federal government has a budget of a bit over $3 trillion. Where does the other $12 trillion come from? From the private sector, and it’s the private banks that supply that amount, ultimately. Now, they are aided and abetted by a QE-crazy Fed (not “some” of the money as you write, but nearly all of it – $16 trillion according to a recent Federal Reserve survey, or $29 trillion in revolving loans, according to MMT co-founder L. Randall Wray. Funny, I’d have thought you’d be shouting that from the rooftops, to prove that money is not finite, a central tenet of MMT/MS. Is your heart not in it?), doing imperfectly what the Federal GOVERNMENT failed to do for the general economy, outside the FIRE sectors. Many people want to blame Bernanke. I don’t – he’s the head banker, paid by the bankers, doing what the bankers want him to do. He is legally enjoined from, say, buying up municipal bonds, even though the amount would be a fraction of the money he’s showered on the banks. He’s doing his job, and is so steeped in false monetary history that he probably doesn’t even know that what’s good for the banks may not be good for the country (I’m feeling generous today – tomorrow, I may ascribe nastier ulterior motives to him).
          4. All money is NOT debt. This is the fundamental fallacy of both MMT and MS. Read Stephen Zarlenga’s “The Lost Science of Money.” I met with Zarlenga and a nascent group of AMI supporters just a couple of nights ago. He confirmed that double-entry accounting – what turns a loan into both an asset and a liability – is not a God-given natural law. It is a construct of Man, and can be repealed by rewriting the nation’s accounting laws. Then, debt-free money can be issued in a way that even bankers and MMTers can understand. It is already legal to do so, as I and AMI, and most of the public banking advocates, and MMT/MS have already observed, guaranteed both philosophically under sovereignty principles, and under the constitution’s art. 1, sec. 8, as Lincoln did first in 1862.
          Now, I have to prepare for a lecture on public banking I am set to give Dec. 5 at the Henry George School at 6:00pm. Come to it if you are in NYC that day. you might learn something.



          1. Rodger – coins are not debt, under the 1792 coinage act. United States Notes are not really debt either, though absolute purists like Byron Dale might disagree. But they don’t, if taxes were understood the way I and MMT understand them, have to be paid back, so they are not debt obligations either. Federal Reserve notes ARE debt, and Treasuries have to be issued to borrow them – an unnecessary anachronism, as we’ve discussed before.


        2. Scott, notes are debt, which is why they are called “notes.” So, you may ask, if they are debt, what is owed?

          Collateral gives debt its value. Without collateral, debt has no value. So, what is the collateral for coins, notes and indeed every form of government-issued money?

          Answer: As I describe at: https://rodgermmitchell.wordpress.com/2010/02/23/understanding-federal-debt/ :

          The collateral for federal debt is “full faith and credit.” This may sound nebulous to some, but it actually involves certain, specific and valuable guarantees, among which are:

          –The government will accept U.S. currency in payment of debts to the government
          – It unfailingly will pay all it’s dollar debts with U.S. dollars and will not default
          – It will force all your domestic creditors to accept U.S. dollars, if you offer it, to satisfy your debt.
          – It will not require domestic creditors to accept any other money
          – It will maintain a market for U.S. currency
          – It will continue to use U.S. currency and will not change to another currency.
          – All forms of U.S. currency will be reciprocal, that is five $1 bills always will equal one $5 bill and vice versa.

          That is very powerful collateral for coins, bills, notes and every other form of government-issued money. It is what gives money its value.

          If you, for instance, were personally to issue some form of money — for instance coupons — your money would be less accepted than U.S. money. Why? Because your collateral — your full faith and credit — is not as valuable as the federal government’s full faith and credit.

          All money is nothing more than the debt of the issuer, backed by the issuer’s full faith and credit.

          By the way, this has nothing to do with the issuance of T-securities, which no longer are necessary and could be eliminated, tomorrow.

          Rodger Malcolm Mitchell


          1. Rodger – agree to all your points. I especially like the last line, “the issuance of T-securities, which (are) no longer are necessary and could be eliminated, tomorrow.” Please let me know when the Federal Reserve agrees to this, as well as the member banks. We should then make a new holiday. Call it Sovereign Money Day. 🙂


        3. Scott, I’m sorry that you took offense at being corrected, but your notions are absurd..
          1. For you, Obama “just doesn’t get it” because Wall Street controls his brain. Anything to cling to your fantasy that Obama is innocent and not a politician, huh?
          2. For you, if politicians pretend that the USA does not have Monetary Sovereignty, then it’s a fact. Presumably, if politicians pretend that 1+1=3, then this too is a fact.
          3. For you, the $3.76 trillion spent by the government in FY 2012 is irrelevant. Government spending itself is irrelevant.
          4. Regarding your claim that all money is NOT debt, you are confusing debt-as-bank loans (with interest) with debt as a claim of ownership. Rodger has explained this so often that I won’t go into it again. If you genuinely desire to learn, then I recommend that you peruse Rodger’s past posts, or perhaps pick up a book on MMT. The money-as-debt factor is fundamental to all forms and systems of money. Even a bar of gold is a debt if I use it as a form of exchange (unless I trade it via straight barter). The money system gives gold its value, not the other way around.
          5. Regardless of your strange fantasies, fiat money is as infinite as the numbers you can type on your computer.
          6. I’m sorry if facts and hard logic upset you, but you might as well shake your fist at the fact that circles are round, and triangles have three sides.


          1. Mark – I’m done with you. You purposely mischaracterize my positions, attempt to build a wall between me and Rodger, who knows from previous conversations that I agree with 90% of what he says already, and state lunatic analogies like “if politicians believe 1+1=3 it must be true” as if they have anything to do with what I’ve said. Time for me to move on to people who actually want to learn something.


    2. But that is precisely what the 1% don’t want…

      Yuh think? Given the choice between bloody revolution, kidnappings, ransoms, barb wired property, etc. or a peaceful transition toward everyone and everything getting on better than ever, I’d bet the 1% would go for a system that embraces the success of the 99 without the few having to worry about their future safety.


      1. The current depression is only 4 years old. I see no evidence that it differs from the 1930s depression, which lasted 12 years. In Europe, most people still support the euro currency that is killing them. In the USA, most people still cling to the lies that are impoverishing them (e.g. the USA must shrink its deficit). Okay, a few policemen held a demonstration in Spain. Are policemen demonstrating anywhere else?

        On a related note, I’m guessing that you have never lived in a “third world country.” (I have, several times.) The human capacity to endure opppressive social structures is (almost) limitless. I wish you were right, but I think you’re fantasizing.


    3. @ Mark
      “..But that is precisely what the 1% don’t want. As Rodger says, the sensation of “wealth” is entirely relative. It is a product of the gap between the haves and the have-nots.”

      I don’t want to bring the bottom up to the level of the top; just bring them up, eradicate poverty, two classes, the haves and the have more, no more have not. We have the technology and know how, and now we have the understanding/affordabilty of MS and MMT. What is missing is the application of policy, a comprehensive design to trigger/implement this.


  7. Today’s letter from Nancy Pelosi:

    Friends —

    Voters sent a clear message to Republicans in the election: we must stand up for the middle class and ensure the wealthy pay their fair share.

    It’s critical that we stand with President Obama in this fight. Will you add your name in support of ending reckless tax cuts for the rich before Congress returns to work next week?

    Help us reach 100,000 strong backing up President Obama’s call to end the Bush Tax Cuts for the top two percent

    Er, ah . . . excuse me Nancy, but how exactly will increasing the taxes on the rich help the middle class?

    Oh, never mind.


  8. From the media that I follow I am completely convinced that they do NOT get it. Time after time I hear how countries in the EMU just have not enacted the reforms needed to become competitive along with all the cutting. The only rational for this would be that corporations like to operate with out any oversight, so the promotion of small and an ineffective government is a must from the *right’s* perspective. They will slowly kill their own businesses but that is a small price to pay for a broken ideology.


  9. Reading the comments on this post refresh the spirit. I have unfortunately never discussed modern economics and politics with any one whose remotely understood the sovereign monetary concept. There seems to be a grand self limiting insane delusion peculating in the minds of Americans. When i try to explain monetary sovereignty to friends and family I am looked at in a funny way, people are so sure money is backed by something real, they cant comprehend the rather simple process of money creation in our fiat system, nor do they understand how we are going to pay our public debts. The idea that the government doesnt have to balance its budget like a business or person is an anathema. If you want to really push the agenda try explaining why the congress should simply spend money into existence through appropriations rather than borrowing from itself. After a presidential election,, which stressed the economic concerns of the public ,failed to mention any hint that the deficit was helpful for stimulation and a balanced budget would entertain trouble, one can plainly see pandering on a unprecedented level. Are the international bankers really in control? Is America just the domicile for large corporations who need our military might but not our labor or markets? Why are people so blind to their own interests? As long as currency is used for value measurements,and we are a importing country of the worlds consumer goods and an exporter of dollars, that hemorrhage will have recessionary impulses unless more dollars are put back into the system. Austerity measures and tax increases will cause hardships. We should be living in the greatest age of prosperity known, instead of this self limiting quagmire the public is too stupid to see. How the hell can there be no one in a position of power who realizes this. Inflation is the boogey man, and outside of special circumstances very unlike our own, has no historical precedent. The rich want the poor to suffer, that selfishness makes them feel wealthier, but that doesnt explain the vast ignorance of a subject so important to every citizens life. We still act as if our currency is constrained by some other entity we are all beholden to. I think this ignorance is fostered through religion. Money and priests and holy men of all sorts of insane sects have always held a close proximity. Maybe the rich and theyre beholden politicians are just taking a copy of that old playbook. The powers that be are too scared that without Gods there is no objective morality, and with out the appearance of scarce funds people wont be productive ( what ever that means) , chaos will ensue.


    1. Larry – you wonder why people act against their own self interest, but also say “The rich want the poor to suffer.” The problem is ‘the poor (and middle class) want the poor (and middle class) to suffer too.’ How can that be? Everyone is fighting for their slice of the pie….and that is the problem. Americans, and people in general, are so conditioned to think “there’s no free lunch” and “you can’t get something for nothing” that they simply cannot accept that money in a fiat economy like ours is something that can be just created out of, well, nothing. Of course, they’ll disguise their hostility to sovereign debt-free money by claiming to be worried about price inflation (even though money pumping into the FIRE sector as the Fed has been doing, causes far more price inflation than any kind of money pumping into the real economy for jobs can ever do…because the latter would result, at most, in corresponding wage inflation too,something long overdue for 90% of the population that hasn’t seen a real raise in 40 years).
      If I convince people that inflation is not caused by what they think it is, they get this funny look on their faces (I’ve had this experience many dozens of times now, in my role as an economic activist), and they try to change the subject, bring out other false flags and spurious arguments, and generally avoid looking into their own psyches.
      I am more and more convinced the problem is psychological. People in the middle and lower classes are so conditioned to believe that you should work hard for a living that they believe that’s how things actually work.
      The wealthy know better: They know that you can make far more money collecting economic rent, using other people’s money for leverage, than you can ever make working hard or even devising a better mousetrap. It’s convenient for them to let the rest of believe otherwise, but their actions are of the rentier variety and always have been. The masses are too ignorant and too steeped in false puritan ethics, misplaced in a society that doesn’t reward them, to demand the changes that are necessary. THIS is why we don’t have true monetary sovereignty in PRACTICE, and not just in theory and in the constitution (art. 1, sec. 8).
      Until people understand how money is truly created, and how the wealthy have manipulated that system since the dawn of capitalism, they will continue to be screwed into a system of neo-feudalism.


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