–Why I love the National Security Agency

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●The more federal 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 ultimately 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.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive.


House Speaker John Boehner (R-Ohio) said of NSA whistleblower Edward Snowden, “He’s a traitor. The disclosure of this information puts Americans at risk. It shows our adversaries what our capabilities are.”

Sen. Bill Nelson (D-Fla.) told reporters, “I think it directly is (an act of treason).” Sen. Dianne Feinstein (D-Calif.), chairwoman of the Senate Intelligence Committee, also said that Snowden had committed an “act of treason.”

So we know Edward Snowden is a traitor, because he revealed secret information about our favorite government and its protection agency, the NSA — information the revelation of which compromised U.S. defenses. For instance, according to the President of the United States of America:

“We know that the intelligence services of other countries — including some who feign surprise over the Snowden disclosures — are constantly probing our government and private-sector networks and accelerating programs to listen to our conversations and intercept our emails and compromise our systems. We know that.”

Hey, wait a minute. “Other countries . . . who feign surprise?” What’s that word “feign” doing there? Are you saying, Mr. President, that “other countries” were aware of what Snowden disclosed to the American people? Are you saying that of the people on earth, the American people knew less about the NSA’s activities than did the people in other countries?

Are you saying, Mr. President, that quite likely the bad guys already know what we’re doing, and that Mr. Snowden didn’t reveal anything to them they didn’t already know?

Hmmm . . .

Well anyway, the NSA’s gathering of metadata has provided a powerful defensive shield against terrorist activities. It prevented the Oklahoma City and Boston Marathon bombings and . . . uh . . . you say it didn’t?

Well, what about the twin towers. Metadata could have prevented that. According to President Obama:

“The program grew out of a desire to address a gap identified after 9/11. One of the 9/11 hijackers—Khalid al-Mihdhar—made a phone call from San Diego to a known al Qaeda safe-house in Yemen. NSA saw that call, but could not see that it was coming from an individual already in the United States.

“The telephone metadata program under Section 215 was designed to map the communications of terrorists, so we can see who they may be in contact with as quickly as possible.”

So there it is. If NSA had been collecting data on everyone’s phone calls, it would have been able to connect the dots, seen that terrorists were planning terror, and stopped 9/11. Case closed, right?

Well, not exactly. According to Reason.com’s January 17th article titled, Obama Suddenly Realizes Mass Surveillance Threatens Privacy, by Jacob Sullum:

As ProPublica’s Justin Elliott pointed out last June, “U.S. intelligence agencies knew the identity of the hijacker in question, Saudi national Khalid al Mihdhar, long before 9/11 and had the ability find him, but they failed to do so.”

Furthermore, it is not clear why the NSA, having eavesdropped on seven calls between al-Mihdhar and the Al Qaeda safe house in Yemen, needed a database containing everyone’s phone records to identify the source of those calls.

The Justice Department “could have asked the FISA Court for a warrant to all phone companies to show all calls from the U.S. which went to the Yemen number,” former counterterrorism official Richard Clarke told ProPublica.

“Since they had one end of the calls (the Yemen number), all they had to do was ask for any call connecting to it.”

NSA, this giant, information-gathering monster, had all the information it needed and failed to act on it. So what possible purpose could be served by gathering even more information?

As ProPublica’s Kara Brandeisky notes, “Obama’s own review group concluded that the sweeping phone records collection program has not prevented any terrorist attacks.”

The NSA’s record: Billions spent. No terrorist attacks prevented. None. Zero. Nada.

O.K., so the NSA has stopped no terrorist attacks, but still Snowden is, if not a traitor, at least a criminal. Here’s why:

Geoffrey R. StoneEdward H. Levi Distinguished Service Professor of Law, University of Chicago, doesn’t think Snowden is a traiter. Instead, “He is most certainly a criminal who deserves serious punishment” (because he revealed classified information). Probably, he should have presented his concerns to senior, responsible members of Congress.”

I assume among those senior, responsible members of Congress would be John Boehner, Bill Nelson and Dianne Feinstein, who clearly are outraged, not by the spying on innocent Americans or the lying to Congress, but rather by the revelation to innocent Americans that they are being spied on and lied to.

But if Snowden is a criminal, because he violated his oath not to reveal classified information, who else acted criminally?

Federal Judge John D. Bates, a judge on the FISC, wrote “(This was) the third instance in less than three years in which the government has disclosed a substantial misrepresentation regarding the scope of a major collection program.”

Let’s sum it up. NSA had information that could have prevented 9/11, but did nothing. Three times in three years, this federal agency that spends billions to prevent terrorism, but cannot point to a single instance of having prevented terrorism, has broken the law, and gone unpunished. (James Clapper Jr, the director of national intelligence, lied to Congress when he testified that the NSA was not collecting data on millions of Americans.)

Meanwhile, Edward Snowden, who objected to the NSA’s criminality and revealed the NSA’s unlawful and useless activities to the American public — activities known to foreign nations, but not to Americans — Edward Snowden is a traitor or a criminal or both, and should be prosecuted, while no criminals in the government did anything that should be prosecuted.

Does that about cover it?

But wait. What about the title of this post, “Why I love the National Security Agency”? Why do I love an agency run by lying criminals, that spies on innocent Americans?

The answer can be found above, in this phrase: ” . . . a government agency that spends billions . . .”

While Congress has been increasing taxes on the middle class (FICA) and cutting benefits to the middle and poor (Social Security, Medicaid, government employment, the sequester, etc., etc., it has not hesitated to spend billions on NSA.

And where do those billions go? Into the American economy — into the pockets of NSA workers and NSA suppliers, who in turn spend those billions on food, clothing, school, cars and all sorts of stuff.

And it doesn’t cost you or me or any other taxpayer a dime. Those billions are free economic stimulus, which we so desperately need.

So, Mr. President. Go ahead and spend billions of stimulus dollars on an agency that has accomplished very little. Just keep the guard dogs under control and prosecute its lawbreakers.

And please don’t hassle the one guy to whom we all owe a debt of gratitude, the guy who spilled the beans on malfeasance. I know you’re embarrassed and you should be. But don’t shoot the messenger.

Give him a medal.

And keep on spending.

Rodger Malcolm Mitchell
Monetary Sovereignty

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


10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

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:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

Monetary Sovereignty Monetary Sovereignty

As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise. Federal deficit growth is absolutely, positively necessary for economic growth. Period.


20 thoughts on “–Why I love the National Security Agency

  1. Of perhaps even more significance, a primary reason for NSA data collection (spying) is for the benefit of US Corporations, giving them competitive advantages over competitors, al la NSA data collection on Mexican govt.


  2. I know this is off topic, but I have to point out this article that was on The Week website that gave me a good laugh:

    “Does the United States need a sovereign wealth fund?”


    I commented to the author:

    Duh – The United States is a monetary sovereign and therefore by definition does not need a sovereign wealth fund!

    I suggest that the author google “Monetary Sovereignty” and read Rodger Mitchell’s excellent explanation of the subject matter.


  3. criticalthinker,

    This is the operative sentence, “For example, if the stock market and economy are overheating, then the sovereign wealth fund can sell stocks to calm the mania. If unemployment is too high, then the sovereign wealth fund can invest in companies to spur growth and hiring.”

    In short, they think it would be a good idea for the federal government to speculate in the stock market.

    I cannot imagine a nuttier idea.

    Today, unemployment is too high. So should the federal government “invest in companies”? Which companies?

    Not only is unemployment too high, but some say the stock market is overheating. So what should the government do? Buy stocks or sell stocks?

    It’s the kind of wild-ass idea only a university economics professor ( Miles Kimball of the University of Michigan and Roger Farmer of UCLA,) could dream of.

    You are right. They have no concept of Monetary Sovereignty, which is sad, since MS is the basis of modern economics. Can you imagine what their students are learning?


    1. From Farmers twitter feed:

      Roger E. A. Farmer ‏@farmerrf Jan 16
      .@UnlearningEcon @dandolfa ‘borrowing is just transfers from the unborn.’



  4. Regarding the NSA, I both agree and disagree with Rodger.

    I disagree because I wish that the $80 billion per year spent on 15 “intelligence” agencies were sent instead to average Americans. (See: “Nine steps to prosperity.”)

    I agree with Rodger because the “intelligence” agencies are one of the few areas in which austerians don’t attack federal spending.

    I hate spending on war and militarism, but as long as federal spending goes to the real economy, federal spending of any kind is better than no spending at all.

    However, I oppose all federal spending for Wall Street bailouts, since it expands the financial economy at the expense of the real economy. I think that propping up speculative casinos is a waste of federal money. Yes, I said waste.

    Again, for me, wasteful federal spending is that widens the wealth gap.

    Non-wasteful federal spending is that which narrows the gap, or which boosts the real economy.

    Rodger says that NSA spending goes into the real economy. If true, then I support it. However, I also say the NSA helps the rich get richer by providing them with inside information.

    Thus, for me, NSA spending is a mixed bag.

    — Off topic –

    For amusement…

    What happens when you combine ignorance with religious faith?

    Last Thursday (16 Jan 2014) a group of Christian leaders and American Enterprise Institute figures denounced Social Security as “idolatrous” for increasing the “national debt.”

    They made these comments at the New America Foundation (NAF): a right-wing propaganda mill in Washington DC that was the nucleus of Obama’s “Committee for a Responsible Federal Budget” (a.k.a. the Simpson-Bowles Cat-food Commission, which later became the notorious “Fix the Debt” campaign).

    The NAF was also the birthplace of the “Go Big” campaign for maximum austerity. The NAF gets 70% of its funding from private donors such as Pete Peterson, and 30% from the federal government (i.e. rich people and politicians pay NAF hacks to write “scholarly” papers that justify inequality.)

    At the NAF presentation, a representative from the American Enterprise Institute said, “Idolatry is at the heart of the (“national debt”) problem.” Clergyman Jay Richards said Americans need more austerity because it is morally wrong to saddle future generations with the “national debt.” Another clergyman said that people of faith all agree that the “national debt” must be addressed via “tough choices” (i.e. more austerity). Another condemned the willingness of some churches to let the government care for the poor. Still another said that “sacrifice” (austerity) is at the heart of the Christian gospel.”

    And so on.

    All panel members complained that austerity cuts have not yet cut directly into Social Security, Medicare, and Medicaid, which they claim are the real “drivers of the debt.”

    “Men of god.”

    Misguided? Ignorant? Or spiteful little creeps? You decide.



    — Off topic —


    An editorial in the Washington Post says that austerity is counter-productive, because it ultimately requires the government to spend more money. Researchers have documented nearly 6,000 natural gas leaks in the Washington DC’s decrepit pipe system, including 12 spots where concentrations are at potentially explosive levels. Furthermore, there is an average of about 450 water main breaks each year, since most DC water pipes are 80 years old. Nationwide there is an unmet repair bill totaling hundreds of billions for water systems alone, and it is going up steadily, year after year.

    The editorial says that now is the time to spend on infrastructure, since construction costs, materials cost, and labor costs are lower than they will be if the economy ever picks up again. Every wasted day not investing in repairs and upgrades means more expensive and catastrophic failures.

    “Shelling out for maintenance now is dramatically cheaper than it is to wait until after the system breaks (and blows the street apart, as the case may be).”


    The editorial is a bit misleading, since the Washington DC pipelines are owned and operated by a private outfit called WGL Holdings, Inc.

    Still, austerity is relevant, since austerity encourages privatization.

    Okay, so the nation is crumbling. Why does austerity mania continue? Is the drive to widen the gap so blinding? Yes, because it is accompanied by an additional drive that I call “financialization.” Both drives reinforce each other.

    Wall Street players are compulsive gamblers whose losses are always covered by the “house” (i.e. backed by the US government). This obsession and impossibility of loss makes them continually search for new ways to steal and swindle, and to impose more austerity, since austerity leads to privatization, which channels more money toward gambling. For example, Social Security when privatized will send billions of new dollars to the casinos.

    Those who have this gambling disease want to indulge it more and more. They want to reduce all of society to a casino, and their instrument of “reform” (their wrecking ball) is austerity. That’s financialization. Why worry about the nation’s infrastructure when the dice are hot, the cards are stacked, and the house covers all bets?

    In short, austerity is FUN. By contrast, repairing infrastructure is no longer fun. In fact, all the old forms of capitalism have become boring, when compared to the casino.

    For the rich, the thrill is not the money (which is just a way to keep score) but the gap and the game, both of which are supported by austerity and its servants (politicians).

    Financialization is destroying society. But as long as the casino remains open, the players are happy.


  5. Regarding high unemployment, we need a federal guaranteed jobs and job training program (I believe Warren Mosler talks about this). It’s better to have a pool of EMPLOYED workers, rather than a pool of unemployed workers, for the private sector to draw from (employers do not like to hire unemployed people). This would not be a wasteful “make-work” scheme or compete with and crowd out the private sector necessarily – there is always work to be done somewhere doing something to benefit society (like healthcare services for the needy and poor in remote areas, services for elderly, fixing and maintaining roads and municipal buildings, etc.). Funds provided for this stuff would stimulate the economy as well. It’s a shame that people do not understand Monetary Sovereignty and how powerful a tool it could be in improving society.


    1. Agree wholeheartedly. MS provides an escape hatch of abundantly available funding for infrastructure maintenance and repair, especially urban blight. There are so many opportunities for healthy workers to be employed in the urban renewal area if only the political will existed.

      This whole idea of scarcity and austerity being somehow good for us is the biggest crock since my uncle once told me if your cat won’t eat its food put it in the closet for 3 days and then let it out and see what happens. Or if the medicine is not bitter it must not be good.

      These old fashioned, totally obsolete ways of thinking are self-destructive.
      Sacrifice and “no pain no gain” …etc. are supported only by the selfish as long as the pain doesn’t apply to them. One of these days the principle of abundance via MS is going to make more sense than the old scarcity model; when I don’t know, but it better be soon. I fear we may (and this is one of my recurring themes) have to wait til we’re at the cliff edge before we realize the magnitude of our mistakes. Emerge by emergency.


      1. Piggy-backing on your thoughts, it will be helpful to accept that neo-Malthusian scarcity WAS appropriate in the past – there arguably wasn’t enough to go around. But, through human ingenuity and resulting technology improvements, there now are sufficient resources (money) to meet everyone’s physical and security needs.

        Whether the issue goes all the way to the edge (or not), it’s critical that we all do what we can to establish the abundance/prosperity paradigm.


    2. To rethink my previous post, I’ve come to believe that a fed. gov. managed guaranteed jobs program would not be beneficial.

      I agree with Rodger:


      “Rather than attacking unemployment directly, by offering government, make-work jobs, I suggest the government stimulate the overall economy (via increased federal deficits), enabling the private sector to offer more jobs. A stimulated private sector will provide more meaningful and economically beneficial jobs than will a government bureaucracy offering jobs to anyone who wants one.”

      But how should the funds be best introduced into the economy?:

      What about a guaranteed basic income (and abolishing the minimum wage to give employers more flexibility in hiring)?

      And giving money for higher education and training, and a stipend?


  6. –Off topic —


    Truly the rich live in an alternate universe, with its own bizarre laws of economics. Consider an editorial this week by Bill Gates titled, “Three Myths on the World’s Poor.” It appeared in the Wall Street Journal, and is part of the forthcoming annual letter of the Bill & Melinda Gates Foundation.

    For Gates, there is no widening wealth gap, or income inequality. On the contrary, the wealth gap is narrowing worldwide, and the poor are enjoying unprecedented luxury.

    “By almost any measure, the world is better off now than it has ever been before. Extreme poverty has been cut in half over the past 25 years, child mortality is plunging, and many countries that had long relied on foreign aid are now self-sufficient.”

    Gates’ delusion gets worse….

    “Incomes and other measures of human welfare are rising almost everywhere—including Africa.
    Take Mexico City, for instance. In 1987, when we first visited, most homes lacked running water, and we often saw people trekking on foot to fill up water jugs. It reminded us of rural Africa. The guy who ran Microsoft’s Mexico City office would send his kids back to the U.S. for checkups to make sure the smog wasn’t making them sick. Today, Mexico City is mind-blowingly different, boasting high-rise buildings, cleaner air, new roads and modern bridges. You still find pockets of poverty, but when we visit now, we think, ‘Wow—most people here are middle-class. What a miracle.’ You can see a similar transformation in Nairobi, New Delhi, Shanghai and many more cities around the world.”


    Folks, I have LIVED (not visited, LIVED) in the slums of Mexico and India, and I traveled extensively in both countries. Two and a half years in India, and 2.5 years in Mexico. I don’t know what “Mexico” Bill Gates visited, but it wasn’t the actual one in this universe. And today Mexico is much worse than when I lived there. Mexico is a war zone. (Literally). I haven’t dared set foot there since August 2011. (And by the way, in August 2011, I was still, “trekking on foot to fill up water jugs.” If I wanted any water for bathing or for washing dishes, I had to walk 200 yards with a five-gallon bucket to a well that was usually dry, since the neighbors had sucked it to the bottom.)

    Let’s pick a country at random to see how well the masses are doing. I’ll choose a place out of my hat. How about Cambodia, where garment workers work 10 hours a day, six days a week, churning out brands like GAP, Dockers, Nike, and Levis. Some 320,000 of them toil in 270 garment factories, and they dare not miss a single day even when sick, or they will be fired. Over 90% of the workers are young women in their teens and twenties. If they get pregnant, they must get an abortion, or they will lose their jobs. They try to send money home to their families in rural areas, where 85 percent of Cambodia’s 14 million people live in absolute poverty — but they cannot send money home to their families, since the workers are all in debt. Even with 6 or 8 girls sharing a room, they are not paid enough to afford the rent, so they must take loans of about 50 dollars each month, and can only pay 10 dollars interest on the loan. Since the interest compounds, the loans stretch out forever.

    As the workers toil and die, falling ever deeper into debt, the Western media (e.g. the Economist and the Financial Times) celebrate their suffering, and crow about Cambodia’s export boom, plus its “windfall” growth in (horrendous sweat-shop) jobs.

    Workers were making $80 per month, and they agitated for double that. In late December 2013 the Labor Ministry finally approved an increase to only $95 dollars a month. So the Cambodian workers held a strike, and began marching in the streets. They were joined thousands of monks, and by impoverished, desperate people from the countryside. On 2 Jan 2014, Prime Minister Hun Sen responded by sending his private military to attack the demonstrators. When the workers remained peaceful, the soldiers used provocateurs to throw Molotov cocktails at the soldiers. (The police forces of every country use false-flag infiltrators against worker demonstrations.) The government-paid provocateurs gave the soldiers an excuse to open fire. So far they have shot 30 people, killing 5. The soldiers have jailed thousands, and have banned public gatherings of 10 or more people.

    In the impoverished rural areas, 80 percent of the population barely survives on subsistence farming, while the other 20 percent are landless, because the government steals their land and leases millions of hectares to giant multinational corporations.

    Two-thirds of the population is functionally illiterate. Their only sources of information are TV and radio, which is totally owned by either the Cambodian People’s Party (CPP) and by Prime Minister Hun Sen’s family and associates, who have ruled with an iron fist for 28 years. Opposition outlets are denied radio and TV frequencies. The ruling Cambodian People’s Party (CPP) currently holds 90 out of 123 seats in parliament.

    And that’s just one country, Cambodia, chosen at random. However this country (indeed, this entire planet) does not exist in Bill Gates’ universe.

    Gates writes, “By 2035, there will be almost no poor countries left in the world. Yes, a few unhappy countries will be held back by war, political realities, or geography. But every country in South America, Asia and Central America (except perhaps Haiti) and most in coastal Africa will have become middle-income nations.”

    Wow! In Bill Gates’ universe, there is no widening inequality. There is no expanding drought, or Fukishimas, or rising unemployment, or tyrannical plutocracy. Everything is wonderful, and getting better all the time.

    Gates’ second “myth about the poor” is that foreign aid is a big waste.

    “Foreign aid is a phenomenal investment. Foreign aid doesn’t just save lives; it also lays the groundwork for lasting, long-term economic progress.”

    Yikes! The purpose of foreign aid is to plunge nations into debt. Local rulers pocket the loot, while they dump the debt on their citizenry, who must pay back the debt via austerity, privatization, increasing poverty, and surrendering their natural resources.

    But in Gates’ world, none of this happens.

    Gates doesn’t just live on the summit of Olympus. He lives in an utterly alien dimension.

    No wonder the rich are trashing the planet as fast as they can. They don’t even live here.



  7. Hey Rodger, I’ve been thinking about your oft-stated comments, one coming from the “recession graph” about the Govt contribution needing to not just remain high but also increase every year (or something like that, please forgive my poor recollection) and the other about the “first use” of money.

    I like Cullen Roche’s Prag Cap site because it makes me constantly question my assumptions (something you regularly make me do, so thanks for that). Anyways here goes my thinking that I believe supports your above paraphrase:

    Lets start off by assuming away interest payments, so this I.E. is done from a permanent ZIRP POV to illustrate my point.
    From this starting point, the size of outstanding T-bonds is completely irrelevant. The reason why has to do with operations. All current deficit spending nets to zero wrt bank deposits and reserves (thats why T-bonds are NFAs). This is well understood, but what is not often mentioned is that those initial bank deposits that were traded for T-bonds can NEVER be regained in the aggregate (as long as we maintain a deficit). If I hold a T=bond to maturity, sure I get my deposits back, but someone else takes my place as new T-bonds are sold to replace the my maturing one.

    In other words, the size of our “national debt” can not be relevant to inflation and output. Just about everything purchased in with bank deposits, so money deposited at the Fed in securities accounts can never be used to buy anything (impact GDP or economic activity). Therefore, the only thing that matters is the current flow of deficit spending, and never the “debt” itself (which is a stock).

    In summary, because the “debt” is irrelevant to spending, only the current year’s contribution matters for the economy. Said another way, when it comes to Govt deficit spending (because of our current T-bond financing model), only the “first use” of the spending can have a net positive macro impact on the economy.


    1. Correct. The size of the national debt is not a driver of inflation or of output.

      But don’t semantically confuse the “first use” question (which involves the actual use to which money is put) with the question of the money supply.

      The government’s “first use” does create dollars, but those dollars are used again and again. Many people mistakenly equate “first use” with “only use.”


      1. Technically, Govt spending does case bank deposits to be created, but an equal amount of bank deposits are always (unless T-bonds are purchased directly by banks) destroyed.

        So there is no NET increase in bank deposits when the Govt spends.

        The “first use” economic effect of Govt spending is the different propensity to spend between the previous and new bank deposit owners.

        If you take $1000 from someone making $20K in taxes and then give someone else making $20K in equivalent amount of new bank deposits, the economic impact is likely to be zero/

        If you take $1000 from someone making $1M through taxation and then give $1000 in bank deposits to the $20K earner, the economic activity is likely to be greater because the new deposits owner if more likely to spend the $1000 on consumer goods and services.

        Now, when we deficit spend, the millionaire still loses his $1000 bank deposit, and the $20K earner still gets his new deposits. But instead the $1M earner gets a $1K T-bond instead of simply having her money destroyed and given to someone else.

        But once those initial bank deposits are at the Fed in securities accounts, in the aggregate they can never leave until we run a budget surplus.

        If Govt spending (in a T-bond model) doesn’t add bank deposits (it does add financial wealth, but we cant spend T-bonds) to the system, then we can’t increase spending in the aggregate.


  8. Auburn,
    “Technically, Govt spending does case bank deposits to be created, but an equal amount of bank deposits are always (unless T-bonds are purchased directly by banks) destroyed.”

    Why do you think so? The only ways dollars are destroyed are:
    1. Federal taxes
    2. Repayment of private loans


    1. You are 100% correct.
      If spending aka creating dollars is $1T and taxation is $1T,
      the net amount of new bank deposits created is obviously zero.

      If spending is $1T and taxation is only $500M, the net amount of new bank deposits created is ALSO zero.

      They don’t just give that $500M in T-bonds away. You have to trade $500M worth of bank deposits to deposit into securities accounts at the Fed.


  9. Yes, foreign governments feign surprise. But no, they are NOT the adversary – not China, not Russia, not Brazil. You appear to know that, but still you think you presented an argument here?

    Yes, the exposed secrets shutdown monitoring of adversaries. And a lot of what was exposed was NOT known to many foreign governments. Of course they all knew in general terms that we were working on stuff. But they did not know details.

    [Note: A series of meaningless, personal insults has been deleted from this comment, as they add nothing to the conversation.]


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