–The BIG LIE, small government and the American banana republic. Who’s next?

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, and the motive is the gap.

Readers of this blog know the U.S. federal government (unlike state, local and euro-nation governments) is Monetarily Sovereign. It has the unlimited ability to create its own sovereign currency, the dollar.

The U.S. government never can run short of dollars, so never needs to ask anyone for dollars — not you, not me, not China. Neither taxes nor so-called “borrowing” support federal spending.

The twin notions that federal spending is “unsustainable” and that less federal spending (i.e. “small government”) somehow is beneficial, are part of the BIG LIE. It is a lie promulgated by the very rich, right-wing owners of the media and of the politicians. The purpose: To widen the gap between the rich and the rest.

Look at one example of where the right-wing sponsored BIG LIE has taken America:

Detroit Shutting Off Water to Thousands Every Week as Desperate Citizens Appeal to U.N. for Help

The Detroit Water and Sewerage Department (DWSD), itself millions of dollars in debt, has begun shutting off water to 3,000 people a week, and could soon cut off access to drinkable water for 150,000 Detroit residents who have failed to pay recent water bills.

This despite an acknowledgement by DWSD spokeswoman, Curtrise Garner, that most of those who have not paid simply cannot afford their water bills.

Crippling unemployment, a focus on corporate interests and institutional racism in Detroit are partially to blame, as is the fact that water rates in Detroit are nearly double the national average at $75 per month (as compared with $40 per month for most Americans).

In addition, the Detroit City Council just raised the price of water by nine percent, exacerbating an already dire situation.

monetary sovereignty

Think about it. The poor of Detroit cannot afford potable water. The federal government has the unlimited ability to create dollars, never can run short of dollars, and does not use tax dollars to pay its bills.

An American would say, “We can’t let our fellow Americans, including helpless children, die of thirst and disease, especially since the federal government could pay for the water, and most especially since it won’t cost the rest of us one dime.”

But the right-wing would say, “The poor are at fault for their own misery. They are lazy “takers.” They should just get jobs and work for the money they need. Let ’em suffer.”

The right-wing also would say, “The federal government, which could supply the needed money at no cost to any of us, actually is a burden on us, so spending should be reduced, even if it means people will die.”

Let’s get this straight. Federal taxing is a burden, which is why FICA, the most regressive tax in American history, should be eliminated. But federal spending is not a burden, which is why Social Security, Medicare, Medicaid and other social programs benefit America.

So why do the right-wingers object to federal spending? After all, it costs them nothing. Because the right-wing is owned by the rich, and they want to widen the GAP between the rich and the rest of us.

By falsely claiming the federal government “can’t afford” social spending, and even more falsely claiming that helping the middle and the poor will cause Weimar hyper-inflation, the right wing has been widening the GAP.

This is right-wing America, where businesses and the rich thrive, while the middle and the poor slide down, down, down.

I don’t blame only the rich for their cruel selfishness. They couldn’t do it without the collaboration of the middle — those ignorant and mean-spirited, who happily accept the BIG LIE so long as those below them on the income scale are punished more.

Without the participation of the middle, the rich wouldn’t have been able to turn Detroit into a banana republic.

Who’s next, middle?

Who’s next?

Rodger Malcolm Mitchell
Monetary Sovereignty

Ten 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. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)


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

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

Monetary Sovereignty Monetary Sovereignty

Vertical gray bars mark recessions.

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.


28 thoughts on “–The BIG LIE, small government and the American banana republic. Who’s next?

  1. Maybe we shouldn’t call it a “federal deficit” anymore. What about referring to it as a “private sector surplus?” Is that more palatable to people?


    1. Yes, that is exactly what it is – income for the private sector.

      Perhaps we also should stop talking about “federal taxes” and call them “losses for the private sector that don’t do a damn thing to support the government.”


      1. Yes. And can we PLEASE stop using phrases like “paid for on the backs of taxpayers”? Taxpayers pay for nothing at the Federal level. Nothing.


        1. Amen.

          It can be visualized by imagining we have two, separate federal governments.

          One federal government collects tax dollars and destroys them by removing them from the money supply. It is a giant vacuum, sucking dollars out of the economy.

          The other federal government creates dollars by sending instructions to banks, telling the banks to increase the numbers in creditors’ checking accounts. It is a giant horn of plenty, adding dollars to the economy.

          monetary sovereignty . . . <– –>. . . monetary sovereignty

          There is no financial connection between the two, separate federal governments.


        2. [1] “Can we please stop using phrases like ‘paid for on the backs of taxpayers’”?

          Yes, that would be nice. I would also like to see people stop using the phrase “government spending,” since the US government does not spend. Nor does the US government borrow the money that the US government creates. Nor is a US government “trust fund” actually a “fund.” Nor does the US government have a “budget” in the usual sense. Nor do taxes at the federal level constitute “revenue” (as in “Internal Revenue Service”). Nor does the US government “print money.” (Coins and currency bills are not money.)


          [2] The most effective lies are those that everyone on all sides uses for his own ends.

          For example, Leftists complain about “tax dollars” being used for war, and so on.

          Rightists complain about “tax dollars” being used for social programs.

          Neither side wants to hear the truth. Both sides gang up on you if you try to tell them the truth.

          And so, the gap between the rich and the rest widens more each day.


        3. Wikipedia

          Blood letting is the withdrawal of blood from a patient to cure or prevent illness and disease.

          It was the most common medical practice performed by physicians from antiquity until the late 19th century, a span of almost 2,000 years.

          Do you think it will take another 2,000 years to educate the populace that federal taxes do not fund federal “spending”?


        4. There’s one difference between blood-letting and austerity. In the past, even the rich believed in bloodletting. Today, only the peasants believe the Big Lie.

          Today, the 1% and most of their servants know they are lying when they say that austerity brings prosperity for all.


        5. the government does indeed “spend” and for all intent and purposes, coins and bills are money. representational, but money. some distinctions are worthy of minute details, others are not.


        6. No. Sorry. The government does not spend money. The government creates money. Huge difference. Money and spending only exist and occur in the private (non-government) realm.

          These are the facts. When you deny the facts, and you falsely claim that the government “spends” money, you uphold the Big Lie that a money creator is the same as a money user. Therefore you defend poverty and inequality.


        7. quatloosx ,

          You are correct that phrasing is important, but sometimes the re-phrasing can be clumsy and artificial.

          How would you rephrase this sentence: “The government bought 10 airplanes”?

          “The government created the dollars that were exchanged for 10 airplanes”?


        8. I would phrase it, “The government credited X bank accounts sufficiently to take possession of 10 airplanes.”

          The correct terminology may seem clumsy and artificial, but it is necessary to disabuse people of their brainwashing. Terminology that seems less clumsy may be convenient, but it supports the Big Lie. What’s “artificial” is the Big Lie.

          Two things I wish people would understand are

          1. Money is not physical.
          2. The US government has no money, and does not spend money. It creates money.

          I remind you, Rodger, that everything I know about Monetary Sovereignty (and I mean EVERYTHING) I learned from you. All my comments, regardless of subject, are simply applications of what I learned here on this blog, and from your book “Free Money.”


        9. quat – spare me your lectures. we are talking semantics. if you believe im “upholding the big lie” you are a fool, as ive posted on numerous occasions in support of MS (on this site and others), and i am fully knowledgeable of what it entails. we are talking semantics, hence my quotations around “spend”, or did you not see that.


        10. Our choice of terms is crucial when we speak of money and national finances. If we use any terminology of the Big Lie, then we give support to the Big Lie. This includes the false claim that the US government “spends.”

          The reality is that the US government has no money. Therefore how could the US government “spend”?

          You are like a right-winger who spouts the lie that, “We must have more austerity because the US government is in debt.”

          When I prove that this “debt” is a misnomer, he responds, “Let’s not get side-tracked by semantics.”


    2. Stephanie Kelton of the UMKC and a poster at New Economic Perspectives, refers to it as “global US savings.” There is a picture of one of those “national debt clocks” and her son here (she has just explained the “debt” to him as global US savings:


    1. To answer your question of 2,000 years above: I liken this to the early centuries when people had to be convinced that the earth revolved around the sun and not the other way around. Nobody believed the few people who were trying to teach what was correct because every “learned” person and every book and every religious figure at the time said they were wrong. Will it take 2,000 years? Maybe not, but it wouldn’t surprise me if it took at least 100. And of course by then, we’re all doomed.


    1. I hope your comment is not to be taken as sneering at impoverished, desperate people who have been abandoned by their local and national governments, and have nowhere to turn.

      I hope you have not adopted the oh-so-smug, right-wing attitude that says the poor are lazy and at fault for their own misery.

      I hope your “pathetic” comment was directed at a federal government that, with the press of a computer key, could help these poor men, women and children, but fails to do so.

      That is what I hope.


      1. i see you didnt post my comment….. ok, so i will answer again…. yes that is exactly what i meant…… those stupid poor people deserve everything they get….. i believe everything the right wing says….. the federal govt doesnt owe those “pathetic” worthless poor people anything….. i hope they all starve to death….. i pray to jesus, god, and muhammad (even though im an atheist), that the rich keep getting richer….


  2. blacksocial,

    You said, ” . . . for all intent and purposes, coins and bills are money. representational, but money. some distinctions are worthy of minute details, others are not.”

    Actually, no form of money ever has been physical. All forms of money always have been conceptual.

    Gold, for instance, never has been money. It either was a barter commodity or as a coin, it was representational of money.

    The same is true of every coin and every paper bill in history — all just representational.

    A bank check is not money; a CD is not money; a bank wire is not money; a traveler’s check is not money. All are representational.

    Unless you understand that no money ever, EVER, has had a physical presence, you will not be able to explain, for instance, how the U.S. government has the unlimited ability to pay any bill of any size, instantly — and without taxing or borrowing.

    Money is a measure. You can see a representation of a score on a scoreboard, but the number on the scoreboard is not the score. Nor is the score what is printed in the sports’ pages. Nor is it the words a TV announcer tells you.

    I can tell you the score, but my words are not the score.

    There are no reasons to think of money as physical, and important reasons not to.

    This is not a minute detail. It is fundamental to your understanding of money..


    1. Throughout history, the rich and powerful have held on to their positions by manipulating language. Consider the sentence: “The government spent a trillion dollars.”

      Life would be very different if we changed a single word, and correctly said, “The government created a trillion dollars.”

      Confucius (551–479 BC) said, “The beginning of wisdom is to call things by their proper names.”


    2. once again, i dont need lectures about what MS, or what money, is all about. daniel graeber wrote a great book on debt a few years back, one of many books i have read about money and debt. you and quat think you are talking to a novice, with your basic assumptions and examples. and it is obvious you dont understand my posts, as it has become a recurring fact.


      1. blacksocialist,

        Are you going to use your knowledge to make useful and informative contributions to this site, or do you plan to limit your comments to personal, sarcastic rants?

        I hope the former, but if the later, I won’t post any more of your comments.


  3. Rodger, I think you have to explain what Money is a measure of. What does it represent? How do we measure the “what.”? Is it at heart only a relationship, like a score is a relationship between two numbers. Money isn’t one number or the other; it’s the difference between two “somethings.” The something or side with the bigger number is the winner and the bigger the gap the bigger the difference of the relationship.


      1. The measure of two somethings is a general way of saying that when we measure anything we involve a minimum of two points like a ruler measuring distance between points a and b, or a micrometer measuring thickness between one side and the other of a metal rod. What are the two points between wealth, two points between income, two points between value, two points between rarity, demand, debt, econ growth– that money measures? I suspect your answer will be simply supply and demand.


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