–The federal government soon will run out of dollars!

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Twitter: @rodgermitchell; Search #monetarysovereignty
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Mitchell’s laws:
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
●Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●Austerity is the government’s method for widening the gap between rich and poor.
●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.
●Everything in economics devolves to motive, and the motive is the Gap.
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Yes, that’s right. The federal government soon will run out of its own sovereign currency, the dollar.

How do I know? I read it in the Washington Times:

Obamacare may not have enough enrollees to stay solvent
Fewer than 10 million projected; 13 million needed to stay solvent

The administration on Monday said fewer than 10 million Americans will enroll in Obamacare’s health exchanges this go-around, well short of the 13 million target congressional scorekeepers deemed critical to its economics.

The number of enrollees is key, because if too few take part in the exchanges, the pool of customers is too small, and it could skew the economics of Obamacare, forcing insurers to raise premiums and pushing even more people to forgo coverage, choosing to pay the tax penalty instead.

So there you have it. The U.S. Department of Health and Human Services, of which the Affordable Care Act is a part, soon will be insolvent.

And because the U.S. Department of Health and Human Services is an agency of, and embedded in, the United States federal government, its insolvency means the federal government itself will be insolvent.

In short, the federal government, which invented the dollar, soon will run of the dollars it invented — if Congress wants that to happen.

The new projection comes as Republicans prepare to take full control of Congress and redouble their efforts to repeal the law.

Repealing ACA would be a good idea — it’s a crappy law — if Congress and the President had a better idea.

For instance, a better idea would be to create a simple: Comprehensive, federally funded Medicare, Parts A, B and D, with no deductibles, for every man, woman and child in America.

The federal government, being Monetarily Sovereign and so having the unlimited ability to pay its bills, easily could fund such a Medicare.

But there is a problem.

It would benefit the lower- and middle-income groups, thus narrowing the Gap between the rich and the rest. And Congress and the President are not paid to narrow the Gap.

No, they are paid by the rich (via campaign contributions and promises of lucrative employment later), to widen the Gap.

You know about the Gap. It is what makes the rich rich, for if there were no Gap, no one would be rich, and the wider the Gap, the richer they are.

More than dollars, more than expensive toys, widening the Gap is what the rich crave most.

So Congress and the President will claim the government “can’t afford” to support Medicare, can’t afford to support Social Security, and surely cannot afford the ACA.

And when facts show that to be a lie (actually, part of the Big Lie), Congress and the President will warn us about hyperinflation.

And by the time facts show that also to be a lie, the people will be so confused, they will accept whatever their leaders tell them.

Yes, we will run short of the dollars the government easily could provide, and as usual, the lower 99.9% will be punished.

Meanwhile, the right wing Supreme Court will say money is nothing more than free speech. The rich will continue to “speak more freely”— right into the pockets of the politicians — than you and I.

And the politicians will use that “free speech” to buy elections and an opulent lifestyle — including blue ribbon, gold-standard health care — for themselves and their families.

And you will impoverish yourself trying to pay for your health care insurance, and health care itself — all because the federal government told you it has “run out of dollars.”

Seems impossible, but that’s how that works.

Rodger Malcolm Mitchell
Monetary Sovereignty

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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. (Refer to this.)
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
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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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
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 growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

Published by Rodger Malcolm Mitchell

MBA Northwestern, business turnaround expert, economist

Published

12 thoughts on “–The federal government soon will run out of dollars!”

  1. “And when facts show that to be a lie, Congress and the President will warn about hyperinflation.
    And by the time facts show that to be a lie, the people will be so confused, they will believe whatever their leaders tell them.”

    True. The same people that are afraid of hyperinflation are upset that technology is replacing labor, resulting in lower labor costs for companies. It’s confusing how prices will rise uncontrollably at the same time that labor costs are dwindling.

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  2. If it’s too good to be true it’s false. Such is the plight of MS and MMT. Telling people we can afford anything without taxing, borrowing, or inflation is just too good to be true.

    Modern monetary mechanics will be a long hard slog. I hope to be able to live long enough to see how the Big Lie shakes out. I have a gut feeling it won’t be blogger education via internet as much as national/world problems getting ever worse and ever more insoluble by the usual method of hitting up the people for more taxes or shifting money away from social programs. A Republican senator-elect was just on Morning Joe saying our 17T debt is hurting our nation’s defense and some programs will have to take a hit.

    Something will have to give. Traditional scarcity economic thinking has to be made passe or else all-out civil unrest/war in the streets will be the result …..everywhere.

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    1. “Telling people we can afford anything without taxing, borrowing, or inflation is just too good to be true.”

      Rodger has never said that we can afford anything without any inflation. If we wiped out poverty tomorrow by giving everyone $500,000, of course we would see inflation.

      We can afford anything without taxing and borrowing. And if the demand for purchases was so strong that businesses raised prices, we could then use tools such as raising interest rates or taxes to temper the demand. Even this inflation would not be terrible as there would be corresponding wage inflation as businesses would complete for hires.
      And it would take a lot of demand to create enough inflation to offset the deflationary forces at play, specifically technology replacing labor.

      The debate should be how much inflation the country willing to tolerate to narrow the income gap. Instead the debate is how to avoid passing along the debt to our children and grandchildren.

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      1. Somehow you think we can simply wipe away poverty by giving people bills – poor soul….

        We would not have any poverty if that was the case.

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  3. @RMM: Do federal governments that are monetary sovereign actually have to tax? (I think prof. Randall Wray asserts that taxation is a major requirement to maintain legitimacy of the currency.)

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    1. He and I debated this many years ago. I disagreed then and disagree now. Perhaps, he has changed his mind.

      I do not understand how the federal government, taking dollars out of the pockets of the citizens, provides legitimacy for the dollar.

      The federal government neither needs nor uses tax dollars, Randy even wrote an article explaining how the government destroys dollars upon receipt.

      So what possible legitimacy is provided by impoverishing the populace and destroying the dollars? It makes no sense at all.

      In any event, I finally ended the discussion by reminding him that state and local governments tax enough to provide all the “legitimacy” he could want — and he agreed!!

      Write to Randy; tell him what I said; and ask him if he still believes federal taxes are necessary for legitimacy, and if so, why.

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    2. I’m trying to imagine how ridding fed taxes also rids legitimacy. Currency is legitimate (legit = legal) so it’s accepted by it’s legal nature. Yes you have to have it to pay taxes, but you also have to have it to buy what you need and pay bills. Isn’t that enough?

      If taxes disappeared tomorrow, the ability to make money and fund everything would still exist as a rightful and legal function of the federal system’s sovereignty. Electronic instructions for deposit would still go out from treasury to the banks as needed. Nothing need be deducted or borrowed from any existing accounts anywhere on earth.

      As Dr. Stephanie Kelton of UMKC has stated, “Government is a currency issuer not a currency user.” If government could not issue money, it would be forced to take it by taxing or borrowing. But it’s not forced federally.

      Taxing doesn’t legitimize currency; it legitimately robs the currency and us.

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      1. I believe Randy’s argument is: Levying taxes forces taxpayers to demand dollars with which to pay their taxes. This built-in demand is what gives dollars “legitimacy.”

        All nations tax, so by that reasoning, all currencies should have “legitimacy.” But, of course, they don’t. There are, and have been, many currencies nobody wants, despite taxes.

        This “taxes-provide-legitimacy” idea has been a basic part of MMT, and despite its obvious shortcomings, those folks are not going to let go of it now. It has become a religious belief.

        From Wikipedia:

        The Bahamian dollar is pegged to the U.S. dollar on a one-to-one basis.

        The Central Bank of The Bahamas states that it uses reserve requirements, changes in the Bank discount rate and selective credit controls, supplemented by moral suasion as main instruments of monetary policy, the objective of which is to keep stable conditions, including credit, in order to maintain the parity between the U.S. dollar and the Bahamian dollar while allowing economic development to proceed.

        It would be quite difficult to demonstrate that Bahama’s minuscule taxes are what provide “legitimacy” for the Bahamian dollar.

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