–Is the U.S. truly Monetarily Sovereign?

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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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Is the U.S. government truly Monetarily Sovereign?

In one sense this may seem to be a question of semantics, but it goes deeper than that.

The citizens of a Monetarily Sovereign government primarily use for their money, the sovereign currency of that government. So U.S. citizens use the dollar, the sovereign currency of the U.S. And UK citizens use the pound, the sovereign currency of the UK.

By contrast, Illinois citizens use the dollar, which is not the sovereign currency of Illinois (Illinois has no sovereign currency). And citizens of France use the euro, which is not the sovereign currency of France.

So we say the U.S. is MS and France is monetarily non-sovereign.

That is not to say, however, that the U.S. always acts as though it were MS. We have the nonsensical debt limit laws, which can prevent the U.S. from paying its bills — just like a monetarily non-sovereign government.

And we have the nonsensical Congress and President, who continually try to cut federal deficits and debts, as though the U.S. were monetarily non-sovereign.

But there is even more monetary non-sovereignty buried in our MS government, and that has to do with banks. Dollars are created primarily in two ways: Private bank lending and the federal payment of bills.

Under any dollar definitions (M1, M2, M3, L, Credit Market Instruments), private bank lending creates the vast majority of dollars, about 80% (again, depending on definitions). So immediately, one could say the U.S. government is not sovereign of the dollar if private banks create most of the dollars.

But it gets even “worse.” When the federal government pays a bill, it sends instructions (not dollars) to the creditor’s private bank, telling the private bank to increase the balance in the creditor’s checking account.

At the moment the private bank follows those instructions (and not before), dollars are created. In fact, the federal government doesn’t send dollars anywhere. It sends instructions (checks or wires) and it sends receipts (paper dollar bills).

So in that case, who actually “creates” those dollars, the federal government through its instructions or the private banks by following those instructions?

Scott Baker wrote an article titled, “Is this the end of debt-money at last?”, that discussed money creation in general, but contained one sentence I found especially interesting: “No nation can be truly sovereign if it cannot create its own money.”

[Incidentally, there is a good explanation of money creation at this video: Money in a Modern Economy]

By that measure, the only way the U.S. could become truly (or more) sovereign over the dollar is if all banks were federally owned, which just happens to be Step 9 in the “10 Steps to Prosperity.”

There is no public purpose served by private banking. See: The end of private banking and How should America decide “who-gets-money”?

In summary, Monetary Sovereignty is a comparative, not an absolute. The U.S. is Monetarily Sovereign when compared with state and local governments, euro governments, businesses, you and me. But it could and should be more MS. That would require, for instance, federal ownership of all banking functions.

Equally important, it would require the President, Congress, the media and the mainstream economists to stop telling the Big Lie: the lie that federal deficits and debt are “unsustainable, and the lie that the federal governments spends “taxpayers’ money.”

The economy requires federal deficits. The debt is meaningless. And the government does not spend taxpayers’ money.

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

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