–Forbes, the magazine for the rich, posts the BIG LIE to widen the gap

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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Forbes is a magazine for rich people. And, rich people want to widen the gap between them and the rest of us.

So, Forbes dutifully publishes the BIG LIE — the austerity myth that our Monetarily Sovereign federal government could run short of its own sovereign currency, and therefore must increase taxes or cut spending (especially spending that benefits the non-rich).

Here is a particularly egregious example:

Increasing Social Security Benefits Would Wreck Retirement Security
Jeffrey Brown, Contributor

A number of Senate Democrats – including Senators Elizabeth Warren, Sherrod Brown, and Bernie Sanders, among others – have publicly supported increasing the generosity of the U.S. Social Security system.

Note that it’s not help for people who need help. It’s “generosity.”

Decades of research by academic economists, bipartisan and non-partisan commissions of experts, the Congressional Budget Office, and even Social Security’s own actuaries have proven beyond a reasonable doubt that the current system is financially unsustainable.

It is puzzling, therefore, that that any rational policymaker would suggest that the answer to the financial shortfalls is to increase benefits.

Total, 100% BIG LIE bullsh*t. Immediately, the author demonstrates ignorance (intentional?) of the difference between a Monetarily Sovereign government (the U.S., Canada, Australia, China, UK et al) and a monetarily non-sovereign entity (Illinois, Chicago, Cook County, Walmart, euro nations, you and me).

A Monetarily Sovereign nation cannot run short of its own sovereign currency. The U.S government cannot run out of dollars. Even if federal taxes fell to $0, the government could pay all its bills, forever.

A monetarily non-sovereign entity, like Illinois, has no sovereign currency, so it can run short of dollars. Simple as that.

Those who do not understand (or pretend not to understand) the difference, should be barred from writing for any widely read publication, and instead should be doing stand-up comedy at a local club. But of course, there is a motive, and the motive is to widen the gap between the rich and the rest.

How can any federal financial obligation be unsustainable? It can’t. Social Security benefits could be tripled, and the government could “sustain” them, even without FICA.

After years of playing defense on Social Security, some Democrats appear to have concluded that arguing for a benefit increase is the best way to avoid a benefit decrease. The problem is that trying to maintain the status quo is mathematically impossible and fiscally irresponsible.

Correct — but only IF the “status quo” is the continuing fiction that FICA pays for Social Security benefits.

Last year, President Obama acknowledged the need to reduce long-term expenditures when he expressed support for changing the cost-of-living calculation in a manner that many economists consider to be a more accurate measure of inflation (the chained CPI). In addition to being a smart technical fix, this action would reduce long-term Social Security expenditures.

The President is doing what always has worked for him, even back in his days as a Chicago politician: Do what the money tells you to do. How else do you think a guy who was a what? — a community organizer? — a guy who accomplished nothing, suddenly found himself as President of the United States of America?

He obediently did what the money told him to do.

Obama still does what the money (campaign contributions and promises of lucrative employment later + a big Obama library) tells him to do (Hello, Penny Pritzker). And the money tells him to widen the gap — to cut Social Security benefits and to increase FICA.

Unfortunately, the backlash from the liberal wing of his own party caused the President to drop this proposal from the budget.

How unfortunate that only FICA was increased. Too bad Obama also wasn’t able to decrease benefits, so he really could fulfill his side of his bargain with the rich.

To be fair, there are good policy reasons for Senators to feel strongly about preserving Social Security as the centerpiece of the U.S. retirement system. It is nearly universal. It offers benefits in the form of a life annuity and thus provides income guaranteed to last for life. Every January, benefits are adjusted for cost-of-living (even if done so imperfectly). It also offers important disability benefits, as well as benefits to non-working spouses of covered workers and, in some cases, other dependents.

Yes, but those are benefits to the middle classes and the poor. They don’t widen the gap.

The problem is that the system’s finances are not designed nearly as effectively as the benefits. Because of an ongoing collision between demographics and the program’s pay-as-you-go financial structure, Social Security is substantially underfunded. The program is already running cash flow deficits, meaning that the payroll and income tax revenues coming in to support the program are not sufficient to pay for the monthly checks being sent to beneficiaries. This problem is projected to worsen every year for the foreseeable future thanks to the Baby Boomers entering retirement in droves.

And there, people, you have in a few short sentences, the BIG LIE — the lie that our Monetarily Sovereign government can run short of its own sovereign currency, so must engage in austerity, to prevent those worthless “takers” from approaching the benevolent “makers.”

In the short term, the Social Security Administration has the legal authority and obligation to continue to pay full benefits. It will do so by redeeming the trillions of dollars of special-issue government bonds that it holds in its trust funds. But all reasonable projections indicate that these trust funds will be completely drained in another two decades or so (give or take a few years depending on the specific assumptions being made). When that date comes, Social Security will only have enough money coming in to finance about three-fourths of promised benefits.

By now, Jeffrey Brown’s nose must be three feet long. The government does not pay its bills by redeeming bonds. It pays by sending instructions to banks, which it can do endlessly. Bonds and taxes do not create dollars. Federal spending creates dollars.

Nor do so-called Social Security “trust funds” pay for benefits any more than military “trust funds” are necessary to pay for the army or Supreme Court “trust funds” are necessary to pay for justice’s salaries. Federal “trust funds” are an accounting fiction, that pay for nothing.

What happens if Congress fails to act before then? The Social Security Administration cannot spend money it does not have, and thus it will have to immediately slash benefits by 25% or so. This would wreck retirement security for an entire generation.

If Congress increases the generosity of Social Security benefits today, it will only make the day of reckoning come sooner and will require the size of future benefit cuts be greater.

See folks, it’s this way: The federal government, which 235 years ago, created its sovereign U.S. dollars out of thin air, by passing appropriate laws, suddenly and mysteriously has lost its ability to create its sovereign dollars — so you poor, ignorant slobs must suffer. Terribly sorry.

Twenty years is not a very long time horizon when the subject is retirement. About half of individuals claiming Social Security benefits today will still be alive when the trust funds run dry. Not to mention the tens of millions that will be retiring over the next two decades. It is difficult to explain why increasing the risk of substantial benefit cuts is a good thing for retirees.

But it’s oh, so easy to explain why cutting your benefits and increasing your taxes is a good thing for you retirees. All we have to do is repeat the BIG LIE, over and over, and soon you’ll believe it.

The intellectually honest debate this nation needs to have is not about whether to reform Social Security. Doing so is a necessity. The debate we need is about the mix of benefit cuts and tax increases that we want to impose on ourselves to restore fiscal balance to the program.

Now remember: Cut benefits; increase taxes; widen the gap. Cut benefits; increase taxes; widen the gap. Cut benefits; increase taxes; widen the gap.

This is a good thing for you and your children and grandchildren.

And let’s be clear – despite what politicians on both sides of the aisle may tell you, there really is no third way. Borrowing simply leads to bigger tax increases or benefit cuts down the road. Increasing the retirement age is simply a particular method of reducing benefits. And converting part of the benefits to personal accounts does nothing to solve the financing shortfalls.

Understand: Not only are “cut benefits; increase taxes; widen the gap” good solutions, but they are the only solutions. Don’t even bother trying to find a better solution, because there are no other solutions. So stop thinking, and just accept what we tell you. Got it?

And there lies the rub. Our elected officials would prefer not to discuss the relative virtues of cutting benefits and raising taxes, because both positions are unpopular with voters. But as policy makers, they have a responsibility to make exactly such decisions. Sadly, recent pronouncements suggest we are no closer to having that discussion than we were a decade or two ago. And yet the clock keeps ticking …

Oh, that ticking clock. Even back in 1940, the deficit was called a “ticking time bomb.” Now, it’s a “ticking clock,” which must be an amalgam of time bomb and the ever-popular symbol of the BIG LIE “debt clock.”

After all these years: Still ticking. Still lying.

And the populace: Still believing that BIG LIE, thanks to the likes of Forbes et al.

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
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.

#MONETARY SOVEREIGNTY

14 thoughts on “–Forbes, the magazine for the rich, posts the BIG LIE to widen the gap

  1. Excellent post, Rodger! I just tweeted it to Abby Huntsman, Ari Melber, Toure, and Alex Wagner. I didn’t tweet it to Krystal Ball because she understands economics. She’s actually going to be chairing a panel at Left Forum. Here’s their website: leftforum.org.

    Like

  2. The USA merely has its “national debt clock,” but the UK put their clock on the image of a bomb.

    http://www.debtbombshell.com/

    Incidentally the clown who put up that UK web site asks for donations, and claims that in London, “a decent ale costs about £3.50.” That’s US $5.80 for a glass of beer.

    Sounds to me like he needs to give up drinking.

    Oh, and since Rodger mentioned Obama, I see that Obama wants to privatize the Tennessee Valley Authority, which provides navigation, flood control, electricity generation, fertilizer manufacturing, and economic development for 9 million people in seven states. The TVA was created during the 1930s depression when average Americans wanted public ownership of utilities, particularly hydroelectric power facilities. Average Americans were tired of being gouged by private utility companies

    Obama claims that privatization is necessary to “relieve the federal deficit.”

    In reality the deficit is already plunging toward depression levels. Besides, the TVA doesn’t add to the deficit in the first place. The TVA is owned and operated by the US government, but is no longer funded by the US government. Instead it is funded by electricity sales and bond sales. Hence it has a debt that totaled $26.9 billion at the end of 2012. However this debt is not a problem for the TVA, since it has about $800 million per year in net income after all expenses are paid.

    So whichever of Obama’s cronies takes personal ownership of the TVA will enjoy $800 million per year in profits.

    Furthermore the new owner will use the $26.9 billion debt as an excuse to triple the rates that 9 million Americans pay. So his personal profits will be well over a billion a year. (Natually Obama will expect a contribution toward his future presidential library.)

    The TVA includes three nuclear power plants, 19 coal or gas-fired power plants, 49 reservoirs, 29 hydroelectric dams, and one pumped storage facility. Most of the workers in all these facilities are still unionized, and most will be laid off with privatization. Sweet!

    This is in the “bible belt” (southeast USA). Land of hate-filled preachers and psychotic bible thumpers.

    Like

    1. Many Southern (nearly ALL Republican) Congress critters are adamantly against the “de-federalization” of the TVA. How ironic is that?

      Like

  3. Average Americans were tired of being gouged by private utility companies. Even more – people in areas like those served by the TVA, many rural areas – were tired on not even being allowed to be gouged by any utility company, private or public. Of not being allowed to enter the 20th century because supertimid private utility companies would not even electrify areas and sell overpriced power if they couldn’t get a guaranteed excessive profit. And fought public power like the TVA tooth and nail. Robert Caro’s multivolume bio of Lyndon Johnson is worth reading just for the fascinating story of public power including the TVA – it was like pulling teeth for even a super wily politician like Johnson to get his own district electrified.

    Like

  4. Lyin’ Ryan peddled the same garbage last year for cuts to Railroad Retirement Benefits: even if the US were monetary non-sovereign there are “funds set aside” for RRB. We know the whole argument is specious at best but at least the Dems are less toxic to the 99.9%. It’s interesting that the Conservative Party in Canada is to the left of the Dems here, even if they too crank out the same “balance the budget” trash. I lived there 5 years and enjoyed the country’s single payer health care for the entire time (I even had 2 urgent care issues that would break the bank here). No one in Canada, of any political stripe, would accept the schlock health care bandied here. That said, Obamacare is a long ways beyond better than nothing.

    Like

  5. I love it, so many tweet and facebook their silly mundane common experiences, while their remaining neurons are satiated with vampire, zombie, and pretend reality dramas on the tube, completely oblivious to the overt propaganda encouraging ambivalence , complacency, and sadly, self persecution. After long hard days working their monotonous, and or tedious , increasingly redundant low paying jobs, horrified at the prospect of dismissal , the remaining time committed to intimacies and other familiar obligations, there simply is no time left to discover that an opportunistic and vile wall was erected, where things dont actually mean what you thought they did, and what you think is good is really bad. . That those whom are extremely wealthy, knowledgeable, charismatic, and influential benefit from this alice in wonderland dystopia assures its perpetuation . , Because of their position in society, are in the end , the only ones able to change it , unfortunately relegating reality and truth to nothing more than fantastical perceptions.

    Like

  6. I’ve got two items. With regards to Social Security, I am attaching the following link.

    Click to access Soc-Sec-Reform-Options_Monograph_03-03-2014.pdf

    Basically this is a non-partisan view of how to fix Social Security, with the assumption that Social Security is a closed system between payroll taxes and benefits. The concept of Monetary Sovereignty is not considered. Of course, if Social Security cannot become insolvent, the study is of little merit. Actuaries want their jobs.

    The second item is that Sochi is a ghost town, and the reader comments are similar — “What a waste of money!!” People must think that those rubles were worth something that cannot be replaced! Of course, money cannot be wasted — the only argument is that the labor could have been better allocated. But in 2014, with so much unused labor, the case can be made that the labor could not have been better allocated — even if the buildings are ultimately torn down.

    https://sports.yahoo.com/blogs/olympics-fourth-place-medal/just-weeks-after-olympics–sochi-is-already-a-ghost-town-175729872.html

    Like

  7. The vast majority of american citizens are so misinformed and intellectually stifled that they cannot connect the dots even when presented with things completely obvious. They cannot make a very simple connection when it comes to the federal government’s ability to create all of the dollars needed at any time and for whatever purpose. They cry about the bank bailouts where upwards of $14T was created to re-capitalize giant banks and at the same time cannot understand that an equal sum could be created in exactly the same way, almost out of thin air, to serve public purpose.

    Like

  8. As if one Big Lie – that we can run out of our own sovereign currency – wasn’t bad enough, there is a Second Big Lie – that Social Security is actually a drain on the economy. On the contrary, because of the multiplier effect, it’s a net GAIN for the GDP. See more here, including a study cited by AARP that supports this thesis:
    http://www.opednews.com/articles/Asking-How-to-pay-for-Soc-by-Scott-Baker-Banking_Social-Security_Social-Security_Social-Security-Cuts-140330-949.html

    Like

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