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.
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Reader DanB wrote:
Rodger! Truly fascinating blog! You’re now attracting myriad folks with incisive, insightful views. Lively give and take! But, then, so what?
Rodger, you’re the ‘Moses’ figure here! It falls to you to devise the way to effectively ‘shock’ America into ‘MS consciousness’. How, wise man?
Nicoli Tesla also suffered ‘market-phobia’. Brilliant, but, commercially,
an idiot-savant. Thus, a towering genius died relatively unknown …..
I’ve already suggested YouTube spots. But, think you need a pro Ad-Man to ‘dump your goods, spread your word’! Otherwise, it’s a pleasing blog….
This post is my response:
You’re right about the need for marketing. A few months ago, I suggested to Professor Stephanie Kelton, Economics Department Chair at UMKC, a program with which they could educate lobbyists.
She, in turn sent me to their Marketing Department, and I prepared the following summary plan for them:
Nice talking with you. As promised, here is an outline of what I propose:
Summary
UMKC is the nation’s leader in teaching Modern Monetary Theory and Monetary Sovereignty (MMT/MS), an accurate description of modern economics. Yet, because MMT/MS not only is counter-intuitive, but actively denied by opinion leaders (politicians, media and economists), UMKC does not receive the acclaim it deserves.
The solution is not merely for UMKC professors to reveal the truth (which they have been doing for years), but to enlist opinion leaders to tell the truth.
The opinion leaders are influenced by money, and the primary sources of money are the richest 1% and major corporations. Therefore, the sources of money must be shown why MMT/MS is beneficial to them.
While facts can be presented in a classroom setting, the richest 1% and corporate executives are unlikely to attend classes. One group, however, might be persuaded to attend such classes: Lobbying agency executives.
Lobbying agencies essentially are law firms and advertising/PR agencies, whose primary motivations are to please and impress current clients, and to secure new clients. They do this by demonstrating superiority over competing agencies.
Superiority can include having special knowledge or abilities to further client’s causes. Using facts from MMT/MS can support clients by providing a reasonable and factual rational for client requests, and by countering arguments opposed to client requests.
The following proposes soliciting lobbying agencies to attend 3-day classes at UMKC.
1. The Goals:
a. Promote UMKC as having the nation’s #1 Economics Department
b. Improve America’s economy with an understanding of MMT/MS.2. Background:
a. UMKC’s Economics Department is nation’s (the world’s?) leader in teaching Modern Monetary Theory (MMT/MS), which says such things as:
i. The U.S. government created the laws that created the dollar
ii. The U.S. is Monetarily Sovereign. Its laws give it the unlimited ability to create its sovereign currency, the dollar, which it does, simply by paying bills. It never can run short of dollars.
(1) By contrast, monetarily non-sovereign entities cannot create unlimited amounts of sovereign currency, as they do not have a sovereign currency.
(2) Examples of monetarily non-sovereign entities are: Cities, counties, states, the euro nations, businesses and individualsiii. Neither taxes nor borrowing are necessary to pay for federal spending. Even were both eliminated, the U.S. could continue to pay all its bills. Taxpayers do not pay for federal spending.
iv. Federal “debt” is not like personal debt. It is nothing more than T-security accounts at the Federal Reserve Bank. The so-called “debt” could be paid off instantly, merely by transferring the dollars in these accounts to checking accounts – zero burden on the government or on taxpayers.
v. Not only is deficit reduction (austerity) unnecessary, but it is harmful to the economy.
b. Austerity requires a combination of tax increases and spending decreases.
i. The greatest burden of austerity falls on the middle- and lower-income groups (aka the “99%.”) Austerity leads to:
ii. Tax increases disproportionately punish the 99%.
(1) FICA
(2) “Broadening” the tax base
(3) Sales taxes
(4) Value Added Taxes (VAT)iii. Spending decreases also disproportionately punish the 99%.
(1) Medicare cuts
(2) Social Security cuts
(3) Federal employment cuts
(4) Cuts in any federal spending, which otherwise would increase employment.c. Since the greatest burden of austerity falls on the 99%, it widens the income/wealth gap between the 99% and the upper 1%
i. Wealth is a comparative, not an absolute
(1) If one has $1 million, but everyone else has $1 million, that person is neither wealthy nor powerful.
(2) If one has $1 thousand, but everyone else has but $10, that person is wealthy and powerful.
(3) So the upper 1% is more interested in widening the gap than in absolute dollars. This is why so many wealthy people support austerity.d. The 1% support of austerity takes several forms;
i. Support of politicians via campaign contributions
ii. Promises to politicians of lucrative employment (the famous “revolving door.”)
iii. Ownership of the media, which endorse austerity
iv. Large contributions to universities to teach the mythical “need” for austerity.e. The public, being brainwashed that the government:
i. Needs to cut the deficit
ii. Can run short of dollars
iii. Will be unable to pay its bills.
iv. The public also has been taught, our children owe the federal debt and government finances are like household finances.f. If the public were taught the beneficial facts of MMT/MS, and if UMKC were responsible for the revealing these facts, credit would accrue to the Economics Department, with the potential for Nobels.
3. The fundamental idea.
a. The primary sources of propaganda – the politicians, media and universities – are controlled by money. Countering the false information requires money.
i. To influence politicians to vote against austerity
ii. To influence the media to speak out against austerity
iii. To influence university economics departments to teach MMT/MSb. The primary sources of propaganda money are:
i. Rich individuals
ii. Corporations
iii. Large organizations (AARP, AFL-CIO, chambers of commerce)
iv. Corporate lobbying agenciesc. The reasons corporations would benefit from supporting MMT/MS are:
i. Reduced personal income taxes for corporate executives
ii. Reduced federal corporate income taxes
iii. Reduced state taxes
iv. Reduced FICA costs
v. Reduced health insurance costs
vi. Better health for everyone, including employees
vii. Reduced unemployment compensation costs
viii. Superior employees via free education
ix. Improved infrastructure and ecology
x. Reduced crime
xi. More customers with money to spend
xii. Better controls for inflation, deflation, recessiond. To educate and motivate contributors to politicians, media and universities
i. A 3-day “Executive Summary of Economics” course taught by Stephanie Kelton and other UMKC professors
ii. Considering the four primary targets – rich individuals, corporate executives, organizations and lobbying agencies – the lobbying agencies may be the most receptive to attending a class(1) Provides information lobbying agencies don’t currently have, that would benefit clients
(2) Provides a selling point for lobbying agencies to solicit new clients and maintain existing clients
(3) The course also could provide a gateway for UMKC to gain the other three targets as students
(4) Could provide a direct Public Relations gateway to politicians and the media4. A Plan
a. Create a 3-day course that teaches:
i. The differences between Monetary Sovereignty and monetary non-sovereignty
ii. Why the U.S. government cannot run short of dollars and needs neither taxing nor borrowing to support spending
iii. Why federal deficits are necessary
iv. Why austerity is bad for business and for the nation
v. Why deficits do not cause inflation, and how inflation is controlledb. Obtain lists of major lobbying firms, their top executives and contact information
i. See Top 50 lobbyists: http://www.washingtonian.com/articles/people/hired-guns-the-citys-50-top-lobbyists/
ii. See Lobbyingfirms.com: http://www.lobbyingfirms.com/Directory/browse_locations.php
iii. See: Lobbying Firms: http://www.sourcewatch.org/index.php?title=Lobbying_firms
iv. Top firms that can be Googled for contact information:(1) WPP Group
(2) PMA Group
(3) Interpublic Group
(4) Williams & Jensen
(5) Van Scoyoc Assoc
(6) Livingston Group
(7) Akin, Gump et al
(8) BGR Group
(9) Blank Rome LLP
(10) Patton Boggs LLP
(11) Tiber Creek Group
(12) Duberstein Group
(13) Mehlman Vogel Castagnetti Inc
(14) Dutko Worldwide
(15) Cornerstone Government Affairs
(16) Alpine Group
(17) Ben Barnes Group
(18) Podesta Group
(19) Ryan, Phillips et al
(20) DLA Piperc. Additionally, check with UMKC personnel for corporate and donor introductions.
d. Market the course via direct postal mail and telephone, in six steps
i. Send personalized letter to top executives at major lobbying agencies, from Professor Kelton, on UMKC stationery.
ii. Letter also to include a course flyer.(1) Sample letter:
Dear [Mr.] [Name];
It isn’t only who you know. Often it’s what you know.
That is why the University of Missouri, Kansas City offers the 3-day course designed especially for lobbyists: Economics For Politics.
It will provide you with little-known, but powerful economic rationales for the requests you make of politicians.
The information you receive from Economics For Politics will give your clients a lobbying edge and will give you an edge when soliciting clients.
Please contact me for further information about this valuable addition to your lobbying arsenal.
Sincerely,
Stephanie Kelton, Ph.D.
Chair, Department of Economics
University of Missouri, Kansas Cityiii. Two weeks later send a second letter
iv. Two weeks later make a phone call
v. Two weeks later send a third letter
vi. Two weeks later send a fourth letter
vii. Two weeks later make a second phone call
Nothing happened. A marketing person might have seen this as an opportunity to promote the UMKC name, but the UMKC marketing department didn’t respond.
The fundamental problem is: Marketing requires money and desire, but the people with money don’t desire to reveal the truth.
Previously, I had made several offers to the “Occupy” movement, to teach them how to focus their demands. No response. Also, I contacted leaders of AFL-CIO and AARP. Nothing.
Bottom line: I’m too old any more to fight battles. I enjoy writing the facts, but if the people most affected can’t bring themselves to get off their mental sofas, I’m not Moses to carry them to the promised land.
(At least he had God working for him.)
About the best I can suggest is for those who understand the truth, to band together into an organization that will pepper politicians and the media with repeated notes, Emails, phone calls and whatever. Or gather money and hire a lobbyist.
If you are younger than me (Isn’t everyone?), use your youthful energy to keep battering against the door. When you finally break through, and the populace sees that MS will benefit them, they will join you and say, “We knew it all the time.”
Rodger Malcolm Mitchell
Monetary Sovereignty
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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. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (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
THE RECESSION CLOCK
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.
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
@ Rodger Malcolm Mitchell
You are visibly and by your own admission frustrated by a wall of resistance to your message of monetary sovereignty. Something is missing in your presentation on money and it is not money. And that is the irony that points to a solution to the money problem for in irony there is hidden wisdom. The answer is not “out there” for it is not a lack of FRNs that is the problem. The spiritual mind is of a higher rationality than the rationality of the material mind and resistance to that higher rationality is the root cause of the wall of resistance.
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@RMM: here are other recommendations:
1. Keep contacting journalists, other writers, financial bloggers, and very calmly and politely explaining to them MMT/MS. (I know this is already being done, but keep expanding, never give up.)
2. Write and try to educate local and state level politicians about MMT/MS (after all, they grow up eventually to be big-boy (or girl) national level politicians; also, younger people tend to be more receptive to ideas.)
3. Educating receptive high school teachers who teach economics to introduce MMT/MS. Are any readers here on PTA’s or serving on school boards, etc., to introduce MMS/MMT? (Again, target the youth.)
Ignorance is the main problem. People with absolutely no proper education and training in economics think they know what they are talking about:
http://www.americanthinker.com/2014/02/putting_social_security_on_solid_footing.html
Misconceptions abound here. Where to begin with this article?
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If folks who read this blog want to band together to educate the masses and “market” MMT/MS I am game! We might be able to get a chat room associated with Roger’s blog going as a start?
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Regarding the diffusion of innovation (or ideas such as MMT/MS in our case): It’s actually harder than you think and can take time. It is an uphill battle that will not be easy, so patience and persistence is key in spreading the knowledge of MMT/MS. Humans can be very illogical and resistant to new ways of thinking even when faced with the facts supporting a new innovation or idea that can clearly improve their lives. In our case, when you consider that there are malevolent people who do know better but seek to exploit people’s ignorance about MMT/MS to try and benefit themselves, it just makes things harder to educate people about the truth.
I thought the quote from the below cited article was interesting.
“Much of the reason for the lack of success is because the social norms and standards of acceptance into society greatly outweighed the idea of taking on this innovation, even at the sake of the health, well-being, and greater levels of education”
See:
http://en.wikipedia.org/wiki/Diffusion_of_innovations#Rate_of_adoption
“Failed Diffusion
Rogers, in his “Diffusion of Innovation” writings, discussed a situation in Peru involving the implementation of water boiling to obtain higher health and wellness levels of the individuals living within the village of Los Molinas. The residents of the village have no knowledge of the link between particular sanitation and reduced levels of illness. The campaign was working with the villagers to try to teach them how to boil their water to make it healthier for consumption, as well as to burn their garbage, install working latrines, and report cases of illness to local health agencies. In Los Molinas, a stigma is linked to boiled water as being something that only the “unwell” consume, and thus, the idea of healthy residents boiling their water prior to consumption was frowned upon, and those who did so wouldn’t be accepted by their society. Thus, the two-year campaign to help bring more sanitary ways of living to this village was considered to be largely unsuccessful. Much of the reason for the lack of success is because the social norms and standards of acceptance into society greatly outweighed the idea of taking on this innovation, even at the sake of the health, well-being, and greater levels of education to the villagers. This failure better exemplified the importance of the roles of the interpersonal communication channels that are involved in such a health-related campaign for social change. Burt, R.S. (1973) also looked at the process of diffusion in El Salvador and asks: Is there a differential influence exercised by social integration on participation in the diffusion process and is such influence, significant above that exerted by other important diffusion relevant variables?”
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The problem may also be real life testing. The electric car, laser, DNA breakthroughs are readily accepted by humans even without knowing what the scientists know. All people know is “hey, it works… I want it!”
Can MS be tested and replicated anywhere under similar conditions? I don’t think so, because it’s not a physical invention, rather a legal one. The only way to test an abstract invention is by ‘mental’ experiment and intuition. Getting a real world situation would require a revolution.
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Tetrahedron720 asks: “Can MS be tested and replicated anywhere under similar conditions?”
MS is tested and replicated a billion times a day. MS explains how the federal financial system actually works in the real world, here and now.
Contrast this with the fantasy known as Big Lie, whose defenders imagine that the US government is “broke” and “in debt.”
What we need is not a new system, but mass understanding of the existing system. Such an understanding would be a miracle.
A “miracle” is simply a shift in consciousness, such that we realize what had been true all along, right in front of us. (Any sufficiently advanced technology is indistinguishable from magic.)
For example, in past centuries, manned flight would have been miraculous and supernatural. Finally humans learned the laws of aerodynamics, which had been true all along. By acknowledging what had already existed, man developed flight, and even space flight.
Likewise, if enough people acknowledged the facts of MS, then we could have changes in society.
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“Likewise, if enough people acknowledged the facts of MS, then we could have changes in society.”
IF is half of life. I agree MS is currently operating within our– and all –sovereign economies. But it is being suppressed by those with vested interests. The vested interests don’t want recognition of MS. They’re doing fine with the general public’s ignorance of the subject. What they fear is the public’s grasp of the subject. Should that happen, they think they will somehow lose their advantage. To them advantage = public ignorance and it’s nothing new. It goes back to the Holy Roman Catholic Church’s desire to keep the world at the center of the solar system, and Rome at the center of the world and the Vatican at the center of Rome, i.e., the universe must revolve around an infallible Pope. Thus Galileo was stymied and imprisoned.
Democracy is too powerful a force once it is given the truth. In my opinion, this is why there is so much takeover of the media, Citizens United and the influence of billionaires in general. I feel this is their last stand, their last gasp of air. They are competing against evolution and history.
If you and I don’t win we all lose. If the billionaires don’t win, everyone wins, including, ironically, the billionaires. They just don’t see how they can possibly win unless everyone else is a loser, i.e., they know no other way except zero sum. I’m not so sure it’s the “gap” they want as much as it is zero sum. Zero sum leads to the gap, not the other way around. Zero sum is cause, the gap is effect. That’s the problem– and the solution –for billionaires.
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as I said last week, i called thom hartmann, a “progressive” with a radio/tv gig and numerous books to his credit, and when I challenged his statements regarding the funding of federal spending (specifically social security) he cutoff my mic, wouldn’t let me speak as he pontificated to his acolytes. tv is the key, regrettably, but good luck with that. I remember when phil donahue was fired from his gig at msnbc ,when he had the highest rated show on the network, all for not being a warmonger. same with ashleigh bansfield. and now you want to blast how the 1% is taking all of us for fools. not saying it cant be done, but something like this needs to be grassroots. kinda like a 50 state strategy a la harold dean (and we see how the “mainstream” media shut his ass down). ive been telling people for the better part of 10 years that the only way for things to change in this country on a substantive level is for there to be a major economic disruption. such, that groups that have been immune reimagine their positions, nationally and globally. we are seeing this in europe and south/central america, but not yet in the supposed richest nation on earth. cant wait for the implosion…..
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@RMM: Are you familiar with the progress (?) of MMT awareness in Europe, i.e., Italy, Hungary and Poland? I remember hearing about Warren Mosler (and Wray and Kelton, and some others too?) doing some talks on MMT in Italy I think a while ago, which were well received from my impression.
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Yes, I knew about that. “Well received” at the moment. Have you heard anything since? Have any minds been changed, to your knowledge?
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RMM,
Perhaps, as Einstein said, “Make it simple”
or perhaps:
“The issue today is the same as it has been throughout all history,
whether man shall be allowed to govern himself or be ruled by a small elite.”– Thomas Jefferson
2014,
Quote Roger MM (Monetary Sovereignty), “You are a Monetarily Sovereign nation, with two major assets: The unlimited power to create your own sovereign currency, and the unlimited power to determine your economic fate.
Obviously, you don’t want such a burden. You’d rather be a slave nation. So what do you do? You voluntarily surrender those most valuable assets, and you put your nations fate into the hands of some unelected, foreign bureaucrats called the EU.
Surprise! That hasn’t worked out so well:…”
May I, “Justaluckyfool” paraphrase:
America ,you are a Monetary Sovereign nation…..
(read above)…SO what do you do ? You give to the Private For Profit Banks the sovereign rights to CREATE SOVEREIGN CURRENCY and the POWER TO TAX that currency giving the PFPBanks unlimited power to determine your fate!
We have legislated self destruction by allowing Private For Profit Banks to issue our sovereign currency and also allowing Private For Profit Banks to tax that issuance. This is their weapon of mass economical and political destruction that allows inequality, injustice and servitude.
We MUST separate our central bank from the private for profit banks.
Heed the advise of Keynes, Minsky, Desoto, and Soddy as well as many others. Use a SIMPLE plan: Amend The Fed; Create a Central Bank Working For The People (CBWFTP)
instead of for Private For Profit Banks (PFPB).
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1. Banks do not levy taxes.
2. The US government does not borrow its spending money from anyone or anything. Instead, the government creates its spending money out of thin air by crediting bank accounts. In order to widen the gap between the rich and the rest, the government imposes austerity (i.e. deregulation, privatization, spending less, and taxing more).
3. “Monetary Sovereignty” (MS) means a nation’s central government creates its own currency, and taxes in its own currency. MS is held by the U.S. Congress and the Executive branch.
Banks create money in the form of credit, but banks do not have true MS. Reason: if the US government disappeared, then so would the US currency. Banks would have to nominate their assets in some other government’s currency.
4. The central government has Monetary Sovereignty. The central bank does not. However, both entities share monetary authority. (Monetary Sovereignty is not the same thing as monetary authority.)
The central bank oversees monetary policy (i.e. it sets benchmarks that affect interest rates nationwide).
The central government oversees fiscal policy (i.e. how much to tax and spend).
Both forms of authority become involved when a government decides to devalue its currency. This is done by lowering a currency’s rate of exchange with some foreign reference currency.
5. That said, I agree that private-for-profit banks have far too much power, and that the Fed works for the rich, not for the people. (So does the federal government.) Politicians gave that power to the banks.
Ideally every state should have its own state bank like North Dakota’s. That way we could still have private-for-profit banks, but state governments would not have to borrow from private banks, or pay interest to them. State banks could create money to lend to themselves, and all the interest would go to the state bank. Also, states would be less enslaved by the US Federal government.
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CORRECTION:
“State banks could create money to lend to themselves…”
That’s illogical.
I meant that state banks could create money to lend to state projects, with all interest paid to the state bank, and thus to the state.
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North Dakota’s bank is not a central bank – it’s a financing institution – like any other treasury department at other states. North Dakota’s bank cannot issue it’s own notes, like the Fed.
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“1. Banks do not levy taxes.”THEY JUST CHARGE INTEREST ON THE SOVEREIGN CURRENCY THEY CREATE “OUT OF THIN AIR.”
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Even though I’m at the other side of the spectrum, I admire your tireless attempt at making folks understand these theories. Never give up on what you believe, I sure won’t.
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“quatloosx says:
1. Banks do not levy taxes.”
Please explain to me, if you would, how raising revenue from currency issuance is not a tax ?
Banks may issue ‘new money’ via “loans”. Were they to issue zero interest “loans” it would be a non-revenue raising issuance;no taxation.
Revenue raised from the issuance of currency is a taxation.
Banks call it “Interest Income”. How wonderful is the English language when by its usage everyone could be ‘misdirected’. Interest income is revenue raised via money already in existence and may be considered as compensation for the temporary loss of its rights and maybe even its permanent loss..
-For a loan, if it is a genuine loan does not make a deposit, because what the borrower gets the lender GIVES UP, and there is no increase in the quantity of money, but only an alteration in the identity of the individual owners of it. But if the lender gives up nothing at all what the borrower receives is a new issue of money and the quantity is proportionately increased (is a fictitious loan)….”
“These vast sums of money are entirely of the banks creation…When the bank pretends to lend their money they do not reduce the amount of the claims of the owners to goods and services on demand by a …(CENT). They do not inform them that they can no longer draw it out as it has been lent to others! “
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http://www.zerohedge.com/news/2014-02-18/china-sells-second-largest-amount-us-treasurys-december-and-guess-who-comes-rescue
This is a possible stupid question from a newbie: What effect, if any, do foreign holders (or any holder) of U.S. Treasuries have if they decide to sell their holdings (that is, a very big chunk or all of their bond holdings)? Does the Treasury department just exchange and give them dollars for the bonds? What if nobody wants to buy Treasuries? The federal government doesn’t actually need to issue Treasuries, correct? The government can just issue more dollars to fund any of it’s functions, even if it stopped creating new Treasuries? If my understanding is correct, what is problem? Why are people worried and what am I missing here?
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” . . .what the borrower gets the lender GIVES UP, and there is no increase in the quantity of money, but only an alteration in the identity of the individual owners of it.”
You’re describing a gift, not a loan. There is a huge difference.
In a gift, one person relinquishes title to money and another person gains title to money. In a loan, the borrower gains title to money and the lender gains title to the borrower’s note, which also is money.
This describes all kinds of money lending — not just bank lending — so long a note is created.
That is how lending creates money while gifting does not. Lending has created about 80% of the money in U.S. circulation.
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Roger, please reconsider your reply, surely you recognize that when someone GIVES UP their ownership as a LOAN it means that it is not a GIFT, rather it carries a demand for its return.
And , “In a loan, the borrower gains title to money and the lender gains title to the borrower’s note, which also is money.”
Please , please tell me where I can deposit the thousands of dollars of notes I have accumulated, just as if they were MONEY and not “toilet paper” which seems to be their only present good use.
Please lend me a million, you can give me just 100 and I will sign for the million. Deposit the note and use “that note money” to fund your marketing.
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Oh good lord!
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” Lending has created about 80% of the money in U.S. circulation.”
Translation: 80% of the money in US circulation..was issued by the Private for Profit Banks at no cost to them and they legally charge a tax on that 80% of all money which they call interest. They raise revenue to use any way they chose.
“The issue today is the same as it has been throughout all history,
whether man shall be allowed to govern himself or be ruled by a small elite.”– Thomas Jefferson
2014…
Quote Roger MM (Monetary Sovereignty),
“You are a Monetarily Sovereign nation, with two major assets: The unlimited power to create your own sovereign currency, and the unlimited power to determine your economic fate.
Obviously, you don’t want such a burden. You’d rather be a slave nation. So what do you do? You voluntarily surrender those most valuable assets, and you put your nations fate into the hands of some unelected, foreign bureaucrats called the EU.
Surprise! That hasn’t worked out so well:…”
May I, “Justaluckyfool” paraphrase:
America ,you are a Monetary Sovereign nation…..
(read above)…SO what do you do ? You give to the Private For Profit Banks the sovereign rights to CREATE SOVEREIGN CURRENCY and the POWER TO TAX that currency giving the PFPBanks unlimited power to determine your fate!
We have legislated self destruction by allowing Private For Profit Banks to issue our sovereign currency and also allowing Private For Profit Banks to tax that issuance. This is their weapon of mass economical and political destruction that allows inequality, injustice and servitude.
We MUST separate our central bank from the private for profit banks.
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When the holder of a T-security sells a T-security, he simply sells it for the best price he can get.
If the holder of a T-security redeems a T-security, the Federal Reserve Bank debits the holder’s T-security account and credits the holder’s checking account. No new money is needed (aside from interest).
A T-security is very much like a bank savings account. When you wish to withdraw dollars from your savings account and deposit them in your bank checking account, it simply is an asset transfer. No problem for the bank.
The federal government doesn’t actually need to issue Treasuries, correct?
Correct.
The government can just issue more dollars to fund any of it’s functions, even if it stopped creating new Treasuries?
Correct.
If my understanding is correct, what is problem? Why are people worried and what am I missing here?
You have just identified the Big Lie, the falsehood promulgated by the rich to create austerity, which widens the gap between the rich and the rest.
If all federal taxes and all federal (misnamed) “borrowing” fell to $0, this would not change the federal government’s ability to spend — not even by one penny.
The ONLY realistic limit to federal spending is an inflation that could not be controlled by raising interest rates. To my knowledge, the U.S. never has had that kind of inflation, though such an inflation is theoretically possible.
The federal government cannot run short of dollars.
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“The ONLY realistic limit to federal spending is an inflation that could not be controlled by raising interest rates. To my knowledge, the U.S. never has had that kind of inflation, though such an inflation is theoretically possible.”
I’m not sure I understand this last paragraph above: What kind of inflation could not be controlled by raising interest rates? Are you referring to price inflation in a specific product or commodity, like oil (How could this be controlled if at all possible or at least reduced)? What are other ways to control inflation in the economy (imposing or increasing federal taxes?)?
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If the federal government gave every American $1 trillion, I suspect there would be an inflation that could not be controlled with interest rate increases.
Inflation can controlled by:
*Strengthening the dollar (i.e increasing interest rates)
*Weakening demand for goods and services (I.e. removing money from the economy by reducing deficit spending)
*Reducing production costs (reducing the price of oil)
The Fed uses the first method.
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@MMT/MS-Newbie: May I add my two cents’ worth?
When most people think of inflation, they only think about the money supply. Hence they think that “money printing” causes inflation. These are errors. They are part of the Big Lie, which says, “We must have austerity because the US government is broke and in debt, and because we must avoid inflation.”
In reality, inflation arises from the ratio between (a) the supply of money and (b) the demand for money, goods, and services. Inflation happens when the ratio becomes too misaligned. If demand rises with the money supply, then there is no inflation, since the ratio does not become misaligned. However, if demand rises far faster than the money supply, then there is misalignment and inflation. A sudden rise in demand is usually caused by a natural or artificial shortage of some kind.
For example, the USA had very high employment during World War II, but also had shortages of consumer goods, because of rationing and the war effort. Therefore everyone had pockets full of money from their jobs, but nothing to spend it on. The result was hoarding of goods, plus speculating in goods, and other factors that caused price inflation, and thereby hindered the war effort. There were strict laws against hoarding and speculating, but such laws are almost impossible to fully enforce in the real world, since smugglers and hoarders are too clever. Further, when natural or artificial shortages become extreme, the result is a crime wave. (The US government learned all this during the days of alcohol Prohibition, 1920-1933.)
Therefore the US government controlled inflation supply during WW II by reducing the money. This was done in 1943 by introducing the federal withholding tax, in which money was deducted from every paycheck. (Corporations had to pay federal taxes on a quarterly basis.) It had the added benefit of supporting the Big Lie that the US government actually needed tax revenue.
To use a different example from today, Venezuela has high inflation, even though the money supply is constant and strictly regulated. The corporate media falsely claims that the inflation is caused by government spending on social programs. This lie is to be expected, since corporate media outlets are owned by the rich, who love austerity, and hate social programs. Austerity widens the gap between the rich and the rest. Social programs like Venezuela’s narrow the gap. If a government actually cares about its average citizens (and not only about the rich), then the corporate media denounces the government as “communist” and / or a “state sponsor of terrorism.” The media claims that the government is “bribing” the citizenry. This is “evil.” (Bribing the rich is “good,” as is serving the rich at the expense of the masses.) Most people believe these lies, since most people believe whatever the corporate media tells them. They claim to be skeptical, but they are endlessly gullible.
The reality is that Venezuela’s inflation is, once again, caused by a misalignment between the money supply and the demand for money, goods, and services. In Venezuela the rich are deliberately causing shortages in order to sustain price inflation. This brings massive profits to the rich, and also destabilizes society, which is part of the elitist campaign to destroy Venezuela’s government.
At first the rich tried to cause shortages by shutting down their manufacturing operations. However the government simply nationalized (requisitioned) those operations. Furthermore, shutting down operations is not as profitable as the smuggling and hoarding of goods.
Therefore rich people now play a cat-and-mouse game with Venezuela’s government. The rich keep moving their warehouses full of illegally hoarded goods deeper and deeper into the jungle, or into foreign countries. They pay corrupt contractors to build hasty bridges across rivers and gorges on the boundaries between Venezuela and its neighbors (e.g. Colombia). Then the rich pay smugglers to takes the goods across the bridges via mules or motorcycles. The goods are then hidden in secret warehouses abroad. The government destroys the bridges by day, and the rich rebuild them at night. It’s an economic war. Now the rich are digging tunnels under the national borders. The cat-and-mouse game keeps expanding.
Motorcycles? Mules? Tunnels? Yes, the rich are desperate to sustain shortages in Venezuela, and thus, high inflation. It’s highly profitable, and it harasses society and the government. Furthermore, engineered shortages sustain a very high crime rate in Venezuela. Think in terms of Prohibition or the “war on drugs,” except we are talking about consumer goods, not alcohol and drugs.
Corporate media outlets in Venezuela (most of which is owned by the rich) use every lie and every trick to make the shortages and the crime rate seem even worse. This keeps the masses anxious, submissive, and desirous of relief, even if it means they must go back to poverty and slavery under the rich.
The government responds by maintaining a shortage of paper for newsprint. The government and the rich blame each other for this shortage. And there is still the TV news, most of which is owned by the rich. The TV news tells the masses that the crime rate, and the long lines at supermarkets (caused by engineered shortages) are caused by the government, by immigrants, by Cuba, by everything except the rich. Much of the population believes these lies, especially the middle and upper middle classes.
(Actually there is a high crime rate in most Latin American countries. It is a consequence of the gap between the rich and the rest.)
Therefore, when you look for the cause of inflation in a given circumstance, do not look at the money supply, as most people do. This will only cause errors and confusions. Instead, look at the supply and demand of goods and services. Where there is inflation, there are almost always shortages.
Hyper-inflation arises when there are more than shortages. There is a breakdown of government and the banking system. Do not think of hyper-inflation in terms of money, but in terms of social collapse. Forget money, and instead think in terms of the availability of services and hard consumer goods. Then you will see through the media lies, and find the real reasons for the hyper-inflation.
Rodger often speaks of using interest rates to control inflation. He is referring to the demand for money. Here again, inflation is caused when the supply of money becomes misaligned with the demand for money. If the money supply rises faster than the supply of goods and services, there can be inflation. The money supply, and the inflation, can be controlled by taxation (which is always inefficient, unfair, and undesirable) or by increasing interest rates, which makes credit more difficult to obtain. However, neither measure is needed if the supply and demand for goods and services rises along with the supply of money. In a comparatively stable country like the USA, a massive increase in government spending would trigger a massive increase in demand and supply. As a result, stores, restaurants, and small businesses would open up again. Unemployment would be eased. Average people might smile on occasion. And there would be no inflation. In short, if a government has Monetary Sovereignty, and if the supply of money remains aligned with the demand for money, goods, and services, then government spending does not cause inflation.
In the USA, inflation is primarily caused by the supply of and demand for energy (e.g. oil, coal, natural gas, etc.). Everything in life – EVERYTHING – depends on energy. When the price of energy goes up, the price of everything else goes up, including the price of food. If the money supply does not rise with prices, then the masses become impoverished.
This is exactly what rich people in the USA want. They seek to reduce the money supply in the real economy, in order to widen the gap between themselves and their “inferiors.” The rich do this by paying their toadies (professors, politicians, and media pundits) to push for more austerity (always more), using the Big Lie as an excuse.
In the USA the problem is an engineered shortage of money. In Venezuela the problem is an engineered shortage of consumer goods. Both shortages cause the masses to attack each other, rater than unite against their real enemies: the rich.
TAKEAWAY POINT: When you think about inflation, do not come at it from the money side. Instead, come at it from the other side: the demand for money, goods, and services. Inflation almost always involves shortages in money, or in consumer goods and services. Find the shortages and their causes. In this way you will see through corporate media bullshit.
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What are the differences between modern monetary theory and monetary sovereignty (I initially thought that these terms referred to the same ideas)? I think the differences are slight, for example, the view on the Jobs Guarantee or having a national income (also, the view on the need for federal taxes is different as well?)? If this has already been covered on this blog, just a link would be helpful.
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Jobs Guarantee is one. Cure for inflation is another.
The presentation of the facts is the same. The differences are in the implementation of ideas.
See: https://mythfighter.com/2012/12/23/why-mmt-frustrates-the-hell-out-of-me/
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There is also a difference in presentation.
Rodger speaks honestly and plainly. Every point follows from the previous point, creating a tapestry of logic. If he is torn or undecided, or if he doesn’t know somethimg, he candidly says so.
By contrast, MMT types never say in five words what they can say in fifty, using needlessly technical terms. They generally speak the truth, but in a “scholarly” manner that puts readers to sleep, and keeps their audience tiny.
I say “generally speak the truth,” because MMT people are flat dishonest when they claim that there is “no evidence” that the 1% bribe politicians to impose austerity. I regard this as an insult to my intelligence.
Fortunately MMT people stopped believing media lies about Venezuela. Unfortunately they still believe the lies about Zimbabwe.
Oh well. All of us believe in one nexus of lies or another. That’s okay as long as our compassion for others outweighs our hate and our selfishness.
The 99% are hurting, and the pain gets worse every day. Most people live from paycheck to paycheck. In reaching them, I say that presentation is as important as content.
In my opinion, MMT people need to take lessons from Rodger in presentation. At the very least, they should learn to write like they speak. Bill Black, for example, speaks clearly and succinctly during interviews, knowing he has only a few seconds. However his writing extends to fantastic (yeah Herculean) lengths that no one ever reads. He would do better to treat his reading audience like he does his viewing audience.
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@quatloosx:
Where do you get your news? I’m not seeing any of that Venezeula stuff here on the U.S news websites as far as I can tell. What are the other foreign news sites to read?
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Rodger, UMKC,s non-response? Why, they’re your professional rivals! You see, their logo is MMT– not MMT-MS. Kinda like the Edison/Tesla (direct/alternating current) wars. But, now we all know who “posthumously” prevailed!
Like Tesla, you’ve asked perhaps your stiffest competition to market your wares! ‘No’, is no surprise, wise man! Please rethink your options — there’s lots — for all our sakes ………….
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Nah, they aren’t competition. MS agrees with the facts supporting MMT.
Where we differ is in the implementation of anti-inflation, anti-unemployment, anti-recession, pro-growth ideas.
The problem is that UMKC has a “Marketing Department” that thinks “marketing” means going to the grocery store.
I like and respect Stephanie, but she’s stuck in a university environment. I would love to see UMKC become famous for MMT. Anyone who understands MMT will be comfortable with MS.
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While im no fan of his, i think jon stewart would be an excellent vehicle…
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The Kansas House passed a bill that would deny services to gay couples (http://www.nationalmemo.com/seriously-wrong-kansas/), but the Kansas Senate voted against it.
Adam Liptak wrote a piece for the New York Times in which he said: “It is becoming increasingly clear to judges that if they rule against same-sex marriage their grandchildren will regard them as bigots.”
Perhaps therein lies a possible direction for overcoming the Big Lie. Let the politicians, media and mainstream economists know:
“Federal deficit spending is the only way to grow the economy. If you continue to vote for, or encourage, austerity, your grandchildren will regard you as a fool and a crook.”
Perhaps that will get some of them thinking, and acceptance of Monetary Sovereignty can begin, just as acceptance of gay marriage has begun.
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Stating the fact re: deficit spending is repeating the argument that the Big Lie continues to win. Every time I’ve brought this up in a discussion, crickets.
I suggest a better argument could be formed around the question, “Why should the US Government borrow money from anyone, when it has the Constitutional right to create a national currency and spend it into the economy?”
Though not technically correct according to MS theory, convincing people that debt is ok is too difficult to grasp. Instead, with a sense of wu wei, accept (don’t agree with) the argument that debt is undesirable. But instead of cutting program spending, cut the spending on interest. Use the high debt issue as a lever to nationalize the currency and spend that currency directly into the economy.
I think it’s relatively easy to get folk to understand that the US is monetarily sovereign if they could see that the US has the right to create currency instead of borrowing it. As much as Rodger, et al, have convinced me re: monetary sovereignty, I still think an approach similar to HR2990 could be the step that creates a critical mass for change.
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[1] @ Jeff Rudisill: Which HR 2990? Do you mean the “NEED Act” introduced on 21 Sep 2011 by Dennis Kucinich?
I was fond of Kucinich, but he never understood Monetary Sovereignty. He thought that when the US Congress passed the Federal Reserve Act in 1913, the Congress “delegated the sovereign power to create money to the Federal Reserve System and private financial industry.” (Quoted from HR 2990.)
As I explained before (above), the Fed has monetary authority, but not true Monetary Sovereignty. (Authority is different from Sovereignty.) Only the US government has true MS.
Kucinich’s own bill says that “The authority to create money is a sovereign power vested in the Congress under Article I, Section 8 of the Constitution.” (Actually the executive branch can also create money, but the general budget is overseen by the US Congress.) Kucinich wrongly thought the US Congress had “ceded this Constitutional power” (his words in HR 2990) to the Fed and private banks.
He further thought that, “Money comes into existence primarily through private bank lending.” That’s true, but Kucinich wanted to abolish banks, i.e. “Abolish private money creation.”
HR 2990 said, “The creation of money by private financial institutions as interest-bearing debts should cease once and for all.” In the next sentence Kucinich showed that he thought that banks create ALL the money in the US economy, which is not true:
“Reclaiming the power of the Federal Government to originate money, and to spend or lend money into circulation as needed, eliminates the need to treat money as a Federal liability or to pay interest charges on the Nation’s money supply to financial institutions; it also removes the undue influence of private financial institutions over public policy.”
Thus, Kucinich believed that all our money is lent by banks. He also believed the Big Lie about the “national debt.” Kucinich wanted the US government to issue money directly (which the government ALREADY DOES).
Here is the simple key to sorting this out…
When you falsely believe that all our money is lent by banks, you misunderstand the nature of money. The US Constitution, Article 1, Section 8, clause 5 says, “The authority to create money within the United States shall hereafter reside exclusively with the Federal Government.”
And yet, banks also create money. What gives? The answer is that banks can only create money as credit, i.e. as loans. Banks can only lend. The US government ALONE has the power to create new money out of thin air and distribute it without charging any interest. That’s Monetary Sovereignty.
HR 2990 would have eliminated bank lending altogether. This would never work in the real world.
Kucinich failed to understand these simple facts. So do Ellen Brown and her disciples. So does Stephen Zarlenga with his “American Monetary Institute.” They all think (incorrectly) that banks have total control of the US monetary system. They want this control given exclusively to the US Treasury. They think (incorrectly) that all money in the US economy is lent by banks, and they staunchly resist any attempt to clear up their confusion.
There were many more errors in HR 2990, but I won’t go into all of them here. Kucinich meant well, but HR 2990 was not workable. In any case, it died (and Kucinich retired) when the 112th Congress ended on 3 Jan 2013.
Don’t misunderstand; I like Kucinich. I wish that all congressmen were as populist and humanitarian as he was. The money powers tried to get rid of him for years, and they finally did it by gerrymandering (redrawing the boundaries of his congressional district). They abolished his district, after which Kucinich, a Democrat, was replaced by Republican Mike Turner.
[2] Jeff writes, “Instead of cutting program spending, cut the spending on interest. Use the high debt issue as a lever to nationalize the currency and spend that currency directly into the economy.”
The US government already does that. It’s called federal spending.
Regarding the spending on interest, do you mean the US government should stop selling T-securities? I agree with that, but perhaps T-securities serve a purpose. Perhaps they encourage China, for example, to keep accepting dollars for Chinese goods, since China can put those dollars in a Fed account (i.e. buy T-securities) and earn interest. I don’t know about this.
In any case, remember that the US government does not borrow ANY of its spending money from ANYONE. Not one penny. Therefore the “national debt” is a trivial side show.
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RMM,”When you falsely believe that all our money is lent by banks, you misunderstand the nature of money. ”
When does an accusation become a truth?
Where is it written that, “. Lending has created about 80% of the money in U.S. circulation. ” could be not only believed by the named parties, but also be perhaps the main reason for seeking to amend our monetary system.
Having 80% of our currency in circulation means we are paying the Private For Profit Banks a tax called interest for the use of our own money.
They make a profit, sometimes as in mortgages 100%.
Why would you not want that money raised become money to be used by Congress for appropriations and maybe, just perhaps for the ……..
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)
NOT needed- 3.IF 1 and 7 are done. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (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)
X-6. Counter productive..
7. Increase the standard income tax deduction annually ($100,000)
8. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
Change 9. Federal ownership (SEPARATION) of all(Private for Profit) banks (Click
Roger, please note. In my opinion you have the greatest of intentions
and I feel your desire “for the betterment of mankind”, for that reason
I feel obligated to repeat the 70% of what I believe you got RIGHT.
The 60% Brown got right,the 60% HR 2990, and many others.
The greatest respect for AMI, which may have 90% right and having had the Preface of “The Role of Money” read to its membership may well get it 100% correct
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Great stuff, quatloosx! Thanks. Lot to think about, and I’ll have more comments to come, maybe tomorrow, after a good night’s sleep. As a proponent of HR2990 and follower of Zarlenga and Brown, I’m working to sort this all out.
For now, what do you think is the biggest impediment to implementing a monetary policy that reflects an understanding of MS and MMT?
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@quatloosx, this is the conversation I’ve been wanting; an analysis of HR2990 (yes, NEED Act). Though I still haven’t analyzed all of your points above, I don’t disagree with any of them, given my growing understanding of MS.
Granting that, from an MS perspective, each point is correct; no argument here. But let me propose that reality is not truth, it’s perception; i.e., the US is not PERCEIVED as a monetarily sovereign nation, and probably will never be so as long as We, the People, believe we are in debt and have to borrow from the Financial Aristocracy to survive…debt slaves. Ergo, the “national debt” is NOT a trivial side show, it is a significant contributor to denying US monetary sovereignty.
How can this be changed? Arguing the facts of MS doesn’t seem to be working. It seems to result in smug responses from the economic community, apathy, and, in my experience, crickets. As long as “debt” is perceived as the only source of money, how can the US EVER be seen as monetarily sovereign?
My point in the above response is to accept this mis-perception, and use it as a lever to invoke what most people can understand as MS, wherein the US can be perceived as the originator of all money. Though I haven’t reread HR2990 recently, I remember that it would permit bank lending, with interest, but eliminate fractional reserve banking. Would this destroy private banking altogether? I don’t know. And if it did, would that be terrible? Again, I don’t know.
One final point: besides not being consistent with the truth of MS, would passage of something similar to HR2990 be a positive step toward the goals of MS?
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OMG,Jeff Rudisill, are you saying, ” reread HR2990 recently, I remember that it would permit bank lending, with interest, but eliminate fractional reserve banking. “…..Have the Fed, Central Bank do for us what they do for the private banks? Issue money they don’t own (it’s the peoples money) as ‘loans and tax it (that’s called interest). Maybe,perhaps reducing the inequality gaps and actually completing the sets to prosperity.
Surely any 6th graders could prove that if Our Central Bank were to issue loans for $16trillion with a low rate that would produce a repayment schedule of $32trillion: that would produce a REVENUE for the people of $16trillion. Money that MUST be returned to the people to mantain quality and contity control.
It must be too good to be true?
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@justaluckyfool, I’m having trouble following your train of thought here. I said I HAVEN’T reread the bill recently, but don’t remember seeing anything that would eliminate bank lending altogether, as feared by quatloosx, but it does have a provision to eliminate fractional reserve banking. Maybe that’s what quatloosx believes would eliminate bank lending, since they couldn’t loan more than their deposits?
I also understand that the bill would also move the operation of the Fed into the Treasury Dept, out from under the direct control of private banking by, I would have to assume, removing bank selected Board members, reducing the number of foxes guarding the hen house.
So, as I understand it, the Fed would not necessarily loan commercial banks OR ordinary people any money. Money would be created, as it is now, by Federal govt spending directly into the economy instead of through issuing of what appears to the general public as debt (T-securities), and it would be apparent to everyone that creation of money is the sovereign right of We, the People. We don’t have to pretend to borrow money from the private sector. We could end this charade. We could make it clear that the Emperor Has No Clothes.
Sorry I also don’t understand your scenario about lending $16T, since I don’t see the Federal govt. in the lending business. That business remains with commercial banking.
I’m not sure this would directly reduce inequality, but then I’m beginning to question the premise of inequality as a significant argument. First of all, eliminating inequality, I believe, is not possible, nor desirable. Eliminating financial discrimination IS desirable, ESPECIALLY as it applies to meeting human survival (physical and security) needs. People should not be denied survival needs because of their financial situation. This is a fundamental human right, and one that needs to be at the forefront of all economic and political decisions.
WARNING! PHILOSOPHICAL RANT: The currently applied neo-Malthusian model of scarcity to our 500+ year old financial system is obsolete. Based on a zero-sum model of “not-enough-to-go-around, therefore-I-have-to-get-everything-I-can”, it no longer serves humanity, only the aristocracy – those who have acquired sufficient wealth and power to convince everyone else that everyone else “needs” this aristocracy to live. This model has been practiced from early kings and other royalty (divine right), through mercantilism, industrialism, and now financialism; the ultimate drain on human productivity. The masses always have, and probably always will, submit to this model, AS LONG AS THEY (WE?) HAVE SURVIVAL NEEDS.
Once these survival needs are met, as they generally were for most US citizens (slaves and American Indians were the exception) shortly after the establishment of the US in the mid-18th century, the excess of human production was used to create tremendous financial growth. If we WOULD (not could…we can), today provide the survival needs for all citizens, imagine the tremendous release of human potential and productivity, and the resultant economic growth (BTW, economic growth can and should be directed toward a sustainable future, which is not now and rarely, if ever, has been generally accepted in the Western model of economic growth).
One way this could be done is by a Federally funded Guaranteed Living Income, along with locally administered, Federally funded programs for continuing education, career and life planning, and support for entrepreneurial development and Employee Owned Enterprises. But first we have to convince the American electorate that we indeed are Monetarily Sovereign. I think the best way to do that is stop hiding behind the complicated fiction that we are, instead, a debtor nation.
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What would be better: A government job guarantee or a national income and why? What about having both?
My own thought is having a national guaranteed income would appear to be best (and abolish the minimum wage). My reason is that it would remove any involvement of inefficiencies of government (like management, what jobs to provide?, incompetence, etc.).
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Agreed. Lack of jobs is not the problem. There are millions of jobs. Look in the newspaper classified ads or in Monster.com. Employers are spending a great deal of money to find people to fill those jobs.
They just happen to be the wrong jobs in the wrong place under the wrong conditions and at the wrong salary — exactly the kind of jobs JG would offer.
The problem is: Lack of income.
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Rodger says the problem is not lack of jobs, but lack of income.
I agree.
I say that as long as you depend totally on a job for your income, you remain a disposable slave. Your wages keep getting cut until you finally live with no wages at all, on a plantation of one kind or another (assuming you can even score a place on the plantation).
He who pays you, owns you. (I do not include self-employed people.)
I say give everyone a basic income so that he tastes freedom. There will always be a desire to augment one’s income by entrepreneurial creativity. And there will always be workers, but there is no need for workers to be slaves.
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@quatloosx, I have to reemphasize my agreement with your perceptions. I would offer one modification re: self-employed people, having been one myself. Self-employed people don’t own their business: rather, their business owns them. 🙂
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Regarding a national income, now the question becomes how much for each person (also is it just for adults 18 or 21 years old?)? Should people with disabilities be given larger incomes? If the amount is too large, human nature being the way it is I think, it could inhibit people to get jobs or become entrepreneurs. It would have to be implemented carefully so that a nation of slackers is not created.
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Let’s say it was a flat $6,000 ($500 per month) to every man, woman and child in America. Is that enough on which to retire? No.
So, would it create a nation of slackers? Hardly.
But it would add nearly $2 trillion to the economy, which immediately would stimulate buying, which would stimulate businesses, which would, stimulate hiring, which would stimulate lending, all of which would stimulate GDP growth.
Bottom line: The amount needn’t be enough to make recipients retire and become “slackers.” It needs only be enough to stimulate the economy and to close the gap between the rich and the rest.
And I wouldn’t complicate things by having means tests, health tests, age tests, education tests or any other tests (although knowing Congress, it might evolve to that).
And unlike the incredible stupidity of Social Security, the benefits of which are taxed (Why, for heaven’s sake?), I would not tax these payments.
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I believe that Rodger’s $6K per person is a bar too low – a half measure. It doesn’t come close to a living income, and therefore doesn’t address the wage slave issue. It’s akin to telling Southern plantation owners that they have to give their slaves one day a week off. It would, as Rodger says, increase the money supply, but not as much as a fully guaranteed living income. Would a fully guaranteed living income – let’s officially call it a Citizens’ Dividend of say, $18K – $30K per family, depending on number of people and geographical location be too much and create inflation? I’ll leave that for Rodger and others to answer.
RE: how much for each person, there has already been much work done on defining a living wage for various geographical and family situations. See http://livingwage.mit.edu/
Then, as you mention, there is the moral hazard of “too much free money creating a nation of slackers” (sic). Here’s where I think a form of Job Guarantees would be helpful. Although instead of job guarantees, I would recommend a Federally funded, locally administered program that would provide access to professional life planning and job counseling. Local programs that would promote entrepreneurship and employee owned enterprises would also be necessary. I think giving people a Citizens’ Dividend without any opportunities for personal growth would be disastrous.
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Rodger! If you cede your life’s most pressing challenge, “U.S. Embraces MS”, you’ll die a ‘Tesla’! No doubt, you scare intellectual hell out of UMKC’s best. Erudite BS ‘ers versus a resourceful genius! They’re beholden to their workplace, UMKC. Understandable that you’re not!
BlackSocialist’s ‘Jon Steward’ suggestion is fascinating! JS’s smart, rebellious, current, and he fancy’s himself a latter day soothsayer wrapped in smart comedic banter. If willing and facile with the subject matter, JS may well be a backdoor way into “their hearts and minds”!
Of course, Rodger ‘d do extensive coaching and fill in all the blanks! Cheerfully! Cheers!
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Get him on the phone, and I’ll talk with him 🙂
Seriously, I agree with the concept of someone famous and believable spreading the word. The question is, how?
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Is it possible to have MMT/MS (or something similar) without government involvement or State-support? Like an MMT/MS-based system that is voluntary. What about having competing currency systems?
A common, and I think understandable, criticism of MMT is that with government involvement, there is always the possibility of usurpation of the government by a few people serving their own or serving other interests (sort of what is apparently occurring now with the 1% people).
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Yes, anarchy is possible — not recommended, but possible.
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Every time my local newspaper runs an article or editorial about the deficit, I write a letter to the editor pointing out that the deficit is not the problem, unemployment is. Sometimes they even print them. I send a copy to my congressional delegation. These folks need to hear this, and understand that a growing number of voters recognize the reality of monetary sovereignty.
You can “frame” stuff all you want, but J. K. Galbreath pointed out that ideas are not defeated by other ideas, they are defeated by a mass of circumstance with which they cannot contend. Keep hammering away.
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@Creigh Gordon, I support your hammering away, and I think the deficit vs unemployment argument, though a good one, isn’t strong enough. I propose a more direct uncovering of the MS reality by asking the question, “If debt is that bad, then does the US govt borrow money from private Banksters when it has the Constitutional right to create a national currency and spend it into the economy without creating debt?” I admit, according to MS theory, money isn’t borrowed, but everyone thinks it is, since that’s what creates the national “debt”.
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Jeff:
“If debt is that bad, then (*why*) does the US govt borrow money from private Banksters when it has the Constitutional right to create a national currency and spend it into the economy without creating debt?”
I think you meant to ask *why*?
Anyway, asking this is I think over the head of your avg American. And if you ask it of a sophisticated econ prof or any other know-it-all, you’ll get a blank stare or no response.
The idea of spending without causing debt is outrageous. Heaven forbid we should get away with something for nothing. But back up a step to “create a national currency.” That would only spark a most lively debate and name calling that would never be resolved. The implications are too worldly and existentially threaten the power structure. Toying around with the money system is like trying to get an alcoholic to quit drinking. The inebriation of lending and easy interest is to rough a habit to break. Say goodbye to that expensive pinstripe suit, the club membership, etc.
You saw what happened to Kucinich. Gerrymandered out of existence. They always find a way. Nevertheless, time is running out for them and us. Soon they’ll have to acknowledge the truth of MS or something close to it. It is after all their system, not ours. To save it, they’ll have to get out of the way and let the truth rule.
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@tetraheadron720, thanks for your considered and considerate response. I did indeed mean to ask “why does the US govt borrow…etc”. Actually, I don’t think this is too complex for the average US citizen, given the alternative presented that the US is, in our parlance, monetarily sovereign; i.e., has the constitutional right to create money. Let’s try it, and each ask ten “average” people, and see what the responses are.
I do agree that this would be the greatest “battle for freedom” ever fought; financial freedom – the freedom that the Founders let slip through their hands with the establishment of the First National Bank, followed by the Second National Bank, followed by the Federal Reserve Act of 1913, as a compromise to the Aldrich bill, which would have given complete control of the monetary system to private banking interests. Because of the personal dangers inherent in promoting such an idea, it would only survive through massive public support, enhanced by the new tool of the Internet. In this regard, Kucinich “got off easy” with his life. Had he been more vocal (most folk have never heard of the bill), it’s questionable if he would still be with us. But such is the price of freedom.
I’m not sure I agree that this is “their” system. Since it affects us all, then, really, isn’t it our system as well? I recall the story of a plane going down near Greenland; the co-pilot smiling and saying to the pilot, “Boy, do you have a problem!”
You suggest that, “To save it, they’ll have to get out of the way and let the truth rule”. Yet it’s not clear to me why, if they resist so vehemently in your earlier statement, they would SOMEHOW recognize their “addiction”, by themselves, and make the change. Seems improbable to me. Addictions are best addressed by all those involved. Is this just another way of saying the problem will resolve itself, and all we have to do is chat away online 🙂
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Sorry, I meant it’s ‘their’ system in that they are the primary beneficiaries. So they would have the greatest incentive to use their connections- which we don’t have- to keep legislation favorably tilted in their direction. Their influence is day to day (lobbying) and ours is every 2 years at the polls.
I agree with your excellent pilot-co-pilot metaphor, and here’s why: We are all in this together, but the pilot is rich and the copilot is poor and they have no parachute or ejection seat. But by working together they figure out that one of the fuel tanks has been switched off and they agree to switch it on. They had plenty of knowhow and “fuel” all along. Crashing was not inevitable and was avoided. They emerged by understanding the nature of the emergency, thus avoiding the emergency room.
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See:
http://home.hiwaay.net/~becraft/RUMLTAXES.html
Beardsley Ruml gave this speech in 1946 on federal taxes for revenue are obsolete, which is before 1971 obviously. If this was the reality of federal taxation prior to 1971, what further specific changes did Nixon’s action in 1971 impart to how the U.S. money system functions (if any)?
“In 1945, Ruml made a famous speech to the ABA, asserting that since the end of the gold standard, “Taxes for Revenue are Obsolete”. The real purposes of taxes were: to “stabilize the purchasing power of the dollar”, to “express public policy in the distribution of wealth and of income”, “in subsidizing or in penalizing various industries and economic groups” and to “isolate and assess directly the costs of certain national benefits, such as highways and social security”. This is seen as a forerunner of functional finance or chartalism.”
See:
http://en.wikipedia.org/wiki/Beardsley_Ruml
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Excellent resource, Newbie. Thanks for your contributions.
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