Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
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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Three years ago we published, “Federal Debt: A ‘ticking time bomb’.” The post listed article after article, going back to 1940, describing the federal debt as a “ticking time bomb.”
Now, after 75 years, the so-called “debt” has reached $17 trillion, and that “time bomb” still is ticking. It must have the slowest fuse in history. Those articles were written by people who either were ignorant of economics or were liars.
In the 1700’s, before the U.S. existed, there were zero U.S. dollars. Then, the U.S. government created from thin air, certain laws, and those laws created from thin air, the U.S. dollar. Poof! A few million were created from nothing.
The government could have created as many as they wished.
And that is how the U.S. dollar still is created: From thin air. Poof!
There is no legal limit to the number of dollars the federal government can create. Unlike you and me and the cities, counties and states, the federal government, being Monetarily Sovereign, has the legal right to create as many dollars as it needs.
The U.S. government never can run short of dollars. Reader Ian Winograd ruined my holiday weekend by bringing to my attention an article denying that fact. Thanks Ian.
Written by someone who undoubtedly knows better, and quoting someone else, who also knows better, this article is so filled with misstatements, lies and outright bullsh*t, that it’s stunning, even in this day of bribed media whores and paid-off political skanks.
The media whore, who wrote the article, is Terence P. Jeffrey, editor in chief of CNSNews.com. The political skank is Treasury Secretary Jacob Lew. They both either are ignorant of economics or are liars. In either event, they both should be fired.
Ponzi: Treasury Issues $1T in New Debt in 8 Weeks—To Pay Old Debt
Right from the very first word, media whore Jeffrey lies. There is nothing about the Treasury issuing new T-securities that in any way resembles a Ponzi scheme (a scam in which returns to early investors are paid with money from new investors).
Ponzi schemes eventually run short of money, when the flow of new investors runs dry. But the federal government never — NEVER — can unintentionally run short of dollars. Never.
Jeffrey merely is disseminating The Big Lie (the lie that the federal government can run short of dollars), and for spreading that lie he surely is not qualified to hold his job.
The U.S. Treasury has been forced to issue $1,040,965,000,000 in new debt since fiscal 2015 started just eight weeks ago in order to raise the money to pay off Treasury securities that were maturing and to cover new deficit spending by the government.
The Big Lie continues. When you “lend” to the federal government, you buy a T-security. You transfer dollars from your bank checking account to your T-security account at the Federal Reserve Bank. A T-security account is essentially a savings account.
The federal debt is nothing more than the total of T-security accounts (savings accounts held at a bank), in this case the Federal Reserve Bank. You essentially have transferred dollars from your checking account to your savings account.
Is this a cause for your concern? Do you fret when you make that transfer? Do you say, “My bank has too much in deposits; I better deposit less money?” And your bank isn’t even Monetarily Sovereign.
To “pay off” your T-security account, the FRB does what any bank does: It merely transfers dollars from your T-security account back to your checking account. No new dollars needed.
(Even if new dollars were needed, the government simply would create them from thin air, just as it already has created the $17 trillion dollars worth of “debt” dollars in existence.)
During those eight weeks, Treasury took in $341,591,000,000 in revenues — not enough to finance ongoing government spending let alone pay off old debt that matured.
More of The Big Lie. Federal taxes do not pay for federal spending. Even if all federal taxes fell to $0, the government, being Monetarily Sovereign, could continue spending, forever.
Here is how the federal government spends: It sends instructions (not dollars) to each creditor’s bank, telling the bank to increase the numbers in the creditor’s checking account. At the instant the bank does as it is instructed, dollars are created.
There is no limit to the amount of instructions the federal government can send. (Well, there is one limit: Inflation, but inflation is not an issue today, and the article is not even talking about inflation. It’s lying about ability to pay.)
In testimony before the Senate Finance Committee in October 2013, (Jacob) Lew explained why he wanted the Congress to agree to increase the federal debt limit—and why the Treasury has no choice but to constantly issue new debt.
“Every week we roll over approximately $100 billion in U.S. bills,” Lew told the committee. “If U.S. bondholders decided that they wanted to be repaid rather than continuing to roll over their investments, we could unexpectedly dissipate our entire cash balance.”
Rather than tell the truth — that the federal government never can run short of dollars — the Secretary of the Treasury of the United States of America, perpetuates The Big Lie. He pretends that federal financing is like personal financing. He pretends so-called federal “debt” is a great burden on the government.
He doesn’t reveal that federal “debt” is bank deposits, which could be “paid off” simply by returning depositors’ dollars.
The Treasury has taken out what amounts to an adjustable-rate mortgage on our ever-growing national debt.
More bullsh*t. Jeffrey again equates federal financing with personal financing. He should know better.
If the Treasury were forced to convert the $1.4 trillion in short-term bills (on which it now pays an average interest rate of 0.056 percent) into 30-year bonds at the average rate it is now paying on such bonds (4.919 percent) the interest on that $1.4 trillion in debt would increase 88-fold.
And yet even more bullsh*t. When the government pays interest, that adds dollars to the economy. It is stimulative. If you own any T-bills, T-notes or T-bonds, you enjoy the interest you receive. You spend those dollars, thereby growing the economy.
In total, this article ladles bullsh*t on in a think paste, designed to cover the truth.
Why do Jeffrey and Lew tell The Big Lie? They are bribed.
The upper .1% income/wealth/power group wants to widen the Gap between them and the rest of us. It is the Gap that makes them rich. Without the Gap, no one would be rich, and the wider the Gap, the richer they are.
So the rich bribe the Jeffreys and the Lews and the politicians and the other scum of America to spread The Big Lie, that taxes must be increased (especially on the lower income groups that don’t get those big rich tax breaks) and benefits must be decreased (especially for social programs).
The bribes are in the form of well-paid jobs. “Just keep spreading the bullsh*t boys, and you’ll have great jobs forever.”
Bottom line, either the editor in chief of CNSNews.com and the Secretary of the Treasury of the United States are ignorant of the facts or they are liars. I don’t think they are ignorant of the facts, but either way, they are not qualified to hold their jobs.
It’s bad enough to be a whore — a liar for money — but what would you call people who lie, knowing their lies hurt America?
I’d call them traitors.
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. (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.
——————————————————————————————————————————————
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
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
#Monetary Sovereignty - Mitchell 
Great essay, Rodger. Shared.
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Thanks.
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This question has nothing to do with your article
But I was looking at the BoE ACCOUNT
If the BoE purchased 100s of billions of Govt debt. where does this show up in their accounts
Click to access 2004accounts.pdf
I assumed their would be an asset (T bonds) and offsetting liability (reserves held by banks)
Any help to explain this would be appreciated
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Rodger, you’ve made your point countless times, i agree wholeheartedly with your entire concept. My unfortunate situation, loosing everything in this financial coup de tat, allowed me to fortunately have the time and interest to question the crisis, and ultimately i came away feeling unfairly cheated , disagreeing with the solutions. No different than Morris Green berg, except he has the resources to fight for his rights, and all i can do is complain and bitch, ultimately having to accept that i’m just a financial casualty, as others are as well, except luckily for them they cant envision an alternative. The only problem with understanding your enlightening concepts, is that it drives home the fact that things dont have to be this way, Best analogy i can compare it with is to imagine a devoted theist, maybe living in the middle ages, sacrificing much , but understanding its for the best, a higher purpose, one he isnt meant to comprehend. Then one day he has a really strange epiphany, forget for a minute how or why, just pretend he hears some bishops laughing with their clergymen about the control their theology gives them. Detailing their undeserved power gained by manipulating peoples fears and hopes. This devoted man finally puts it all together and sees the larceny for what it is, at least in regards to the crooked organization,( dont mean to offend) Except now what, everybody he knows doesn’t believe him, or worst, they think he’s delusional. People preferring to believe in their fantasies,. His friends declare he’s undermining their glorious faith, being negative , and just selfishly complaining. Of course now the poor guy wishes he never overheard those bishops, the truth wasnt as liberating as he hoped it be. The real truth being the truth is irrelevant, all that matters is cohesion, hegemony, a pecking order that allows for an aggressive territorial animal to respect its dominant members. Before civilization this was brute force, now its societal memes and misinformation promoting orderly acceptance, submission to the wealthy classes rule.
. . The concept of monetary sovereignty seems obvious. The only problem is that hyper capitalism is becoming inverted totalitarianism. Goldman Sachs does run our economy,, and they used our countries monetary sovereignty to right themselves, and our financial system, just as they expected it to work. Everybody knew the obvious conflict of interest was just an unfortunate detail. Yeah right!! Moral hazard is only a problem regarding the poor masses, the privileged classes are sort of branded, they can always find or “earn” money anyway, or so long as the system stays in tact, .they can. . Its a nice fantasy we buy into, this rule of law, and its close second- equality before the law. Nobody would disagree that both concepts are just that, well intention ed , but obviously dependent on ones abilities to pay.
The simple concepts describing monetary sovereignty are logical , but counter intuitive respecting cultural and sociological expectations . Our hard times today are self derived,, reinforced by old memes supporting the privileged classes. Whenever i discuss monetary sovereignty with people, i get the same blank stares. Its as if my language went right over their heads. If someone really takes the time to listen, then you ultimately direct the conversation down to two points. The first is logical, INFLATION. . The second relates to the esoteric nuanced minutia concerning whether or not bank loans – representing private money, or treasury bonds – representing positive government issued monies, supersede the other. , ( no matter how hard you try, they keep wanting to see these treasuries as I.O.U’s from our government to private banks, individuals, and foreign countries that cant be paid without future tax revenues or more borrowing) . The ultimate source of that which we’ll define as transferable credits(money),is a topic that sends you down the yellow brick road. Especially when most people, the few whom even remember econ 01, spit out their incorrect assumptions about fractional reserve banking , money multipliers, and savings depositors determining bank capacities for loans.The idea that the loans actually make deposits is a bit strange for people to quickly grab. 99% of the population hasnt a clue, so its no wonder that when you explain the concept of monetary sovereignty , horns on your head might be easier. People are so damned misinformed about money creation. Plus it becomes such a long conversation, and then an argument, spinning around in countless directions and ultimately ending with some unrelated political commentaries. The old divisive left or right baloney. The rich are rich because they earned it, hard work pays off , everybody will expect a free hand, and we all know there aint no free lunches, bla bla bla.
No matter what , people get into all kinds of philosophical digressions defending their impossible positions, namely that money originates from the private sector. People have a difficult time detaching subjective notions of money from the value to value exchange functions their dollars obviously serve,so they cant see their labor , or natures resources, as anything separate from what they like to believe is some existential monetary system they have little control over. , Very difficult for people to not objectify money as something scarce, perfectly representing the real world as a measure of value , and so any idea suggestive to the contrary is sort of destabilizing. Technology has changed much quicker than culture, i dont think people want to deal with the obvious conundrums, or they cant because then they might have to just be kind. We seem to like hardship, believe it encourages competitive behaviors that are beneficial to us all. Maybe humans are sadomasochist .
Heck maybe im just mad as hell because i put value on animals lives, much more than most others would, in fact i’d go so far as to detach them from the label of property.. Obviously without a monetarily sovereign central government, our hyper competitive ,profit oriented, growth based economy, isnt going to place much value on something seen as a renewable commodity. Kindness towards others has to be universal. Is it affordable to be considerate of the lives we otherwise torture for profit in order to have a meat based western diet , demanding intensive industrial agriculture of enormous scale and efficiency, of course subsidized by our government . Certainly not sustainable or necessary, but extremely profitable , as they vacuum the seas, pollute the rivers, deforest the forests, and with support for these wonderful jobs contribute vastly to our nations health problems. Again the people choosing to support selfish behaviors that actually work against their better interests. But of course this is all just an opinion, and i’m obviously in the horribly small minority,
, At the end of the day, governments and corporations,are just made up of individual people. The government can and should be accountable, though this depends on constituents being educated with respect to operations, and knowledgeable of the issues.. But unfortunately most citizens arent aware of either, and probably never will be. . Multinational corporations arent,accountable to anyone other than their customers, and thats questionable after understanding the psychological power of marketing. , Plus a corps only goal is profit , or surplus extraction. I cant figure out why people feel more comfortable believing money is created through private banks rather then their hopefully representative and accountable government . Supposedly by , for, and of the people.
They want to prevent their government from competing against them , and of course winning, but if they really believe in all that of, by, and for the people nonsense, well then they are the government, and the government winning is really them winning, and isnt that exactly whats happening. The only problem is that our government is only representing wealthy interests, always has and always will, until divided ,brainwashed ,and distracted citizens begin a populist movement demanding accountability and , fairness. Forget about using our financial system as an international destabilizing agent managed through multinational corporations. We fell asleep, and now our government delegates its monetary sovereignty to a cabal of financial institutions. All of which have bought and paid our politicians to do their bidding.
The new norm is work harder, worker longer, and work for allot less since there’s a hungry younger nit wit ready to do it if your not. We have facebook, twitter, and super hero movies, what more could we want. What a great world, stop complaining, work harder , work longer, and dont worry about the money, it’ll come, look at all those celebrities, they made it . Hell Paris Hilton and the Khardarsghians make millions, if you put your mind to it, you can as well. Folks there’s always the military, except after 35 they wont take you. If your in a jam after 35 , well get a job at wall mart or a fast food factory. This is our brave new world. All this wonderful productive technology , and we’ve decided to rename Homo Sapiens- Home Economus, the working ape.
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Good commentary. Larry.
If the public understood one bit of information — the differences between Monetary Sovereignty and monetary non-sovereignty — what a finer world this would be.
And if the public understood a second bit of information — how the rich bribe the politicians, the media and the mainstream economists, in order to widen the Gap between the rich and the rest — this world could be a paradise.
Sadly, the public resists learning about the former, and doesn’t recognize the later, so the turkeys continue to vote for Thanksgiving.
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Is there an MMT economist that writes on the UK situation. I,m having a battle with 2 anti MMT posters. One has fallen back on but MMT applies to the US not the UK
Thanks
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Neil Wilson is great, although he does not blog every day:
http://www.3spoken.co.uk/
Richard Murphy at Tax Research UK
http://www.taxresearch.org.uk/Blog/
Adair Turner says all the same things in principle as MMT\MS, just to connected to mainstream to be as forthright and honest about it.
Ralph Musgrave is in paradigm at Ralphonomics, although I personally dont like his full reserve banking\Positive money ties.
http://ralphanomics.blogspot.com/
If I think of more I will let you know.
On a side note, MMT describes the monetary operations via legal authority and accounting, this is in no way a US Centered framework, MMT.
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Thanks. Its Positive money that you have posted on at times.
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https://www.fms.treas.gov/fmsweb/DTSFilesArchiveAction.do?qtr=4
https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=a&fname=13093000.txt
Great piece Rodger, as always.
Here is some important ammo for us, and it might be worth it for you to do a piece on it. Above are links to the Daily Treasury Statements. If you look at Table III-A:
DAILY TREASURY STATEMENT PAGE: 4
Cash and debt operations of the United States Treasury
Monday, September 30, 2013
(Detail, rounded in millions, may not add to totals)
___________________________________________________________________________________________
TABLE III-A Public Debt Transactions
You will see the total “debt issued” and “debt redemptions” for FY 2013 ending Sept. 30, 2013. Those lines include the numbers:
“Total Issues $ 252,545 $ 3,336,936 $ 62,163,479”
And:
“Total Redemptions $ 252,795 $ 3,337,402 $ 61,491,537”
Which means that in FY 2013 alone, the federal Govt (Fed\TSY) issued and redeemed over $60 TRILLION worth of “debt”, and nobody even knows. So not only did $60 TRILLION worth of “debt’ being rolled over not hurt anybody, didnt cause the nation to “implode”…
NOBODY EVEN FUCKING NOTICED. $60 FUCKING TRILLION!!!!!
This stuff hurts my soul. How people can be so corrupt, ignorant and stupid is beyond my comprehension.
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H.L. Menkin:
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Rodger, Could you clear something up for me? You may have covered this before…I don’t understand why the Federal Gov’t needs to issue T-Securities to spend. For instance, if they wanted to spend the $1T+ to update our infrastructure, why would they have to issue T-securities to spend from the treasury? Couldn’t they just credit the accounts of the various construction firms tasked with rebuilding our infrastructure directly? I understand why it would benefit me to invest in them…It just seems like an extra unnecessary step for the Monetarily Sovereign Gov’t. Sorry if this is a rehashed topic, thanks for any clarification.
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The government no longer needs to issue T-securities. They are a relic of gold-standard days.
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So they keep them around to perpetuate their continuing farce?
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Exactly. If the government ever admitted it doesn’t need to “borrow” the dollars it already created, the public would begin to understand Monetary Sovereignty and see all this worry about federal spending was total bullsh*t.
Then the “great unwashed” might demand the 10 Steps to Prosperity.
Those in power don’t want that.
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So TSY Securities are just Savings accounts at the Fed?
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Of course they aren’t exactly the same, but quite comparable. Perhaps a bit closer to CDs in terms of liquidity.
The point is: When you wish to liquidate a T-security, a savings account or a CD, the appropriate bank always takes the same action: It transfers your dollars from one of your accounts to your</i. checking account.
In no case are additional dollars created. It’s just an asset transfer.
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I think I read in one of Warrens books that the Govt issued bonds to achieve a targeted reserve interest rate. Is this correct?
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The Fed sets the Fed Funds rate by fiat. This establishes the floor for short term debt.
The rates on longer term debt are set by the market, as are the rates for all debt. The existence of T-securities doesn’t change that. So far as the market is concerned, they are just one more form of debt.
T-securities do have two beneficial functions, however:
1. They force the federal government to pay interest dollars into the economy, which is stimulative.
2. They provide the safest possible interest-paying investment, for those who want that (large pension funds, for instance).
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Thats one way the Fed hits it’s target interest rate. It can also pay Interest on Reserves which is the policy it must use now after having done QE.
Any time there are more reserves than the banks need for clearing and legal requirements, the reserve lending rate goes to zero. How much can you charge to lend someone reserves if they dont want anymore? Zero.
One of the problems with not issuing TSY securities would be the interest spending subsidy going only to banks.
Say there are 2 US Govts that have both deficit spent $20 Trillion.
In one example, the Govt has issued $20 Trillion in T-securities to accompany this spending
And in another example, the Govt has simply issued $20 Trillion in reserves.
In both cases, the amount of Govt liabilities outstanding is exactly the same: $20 Trillion
Now lets say that in both examples the Govt has a 5% FFR.
The Govt with the TSY securities outstanding would be paying $1 trillion in interest to various securities holders, private pension funds, state and local Govt pension funds, individual savers, foreign trading partners, insurance companies etc.
The Govt with ZERO TSY securities outstanding would be paying $1 trillion in interest only to banks and other depository institutions with access to reserve accounts at the Fed.
Now, we have to remember in this example that private banks would have $20 trillion more in customer deposits (Bank liabilities) that the banks would be spending interest on, but banks pay less interest to their customers then they reserve on their reserves, so even if the banks paid off 4.5% to their depositors, they would still be getting a $100 billion guaranteed subsidy per year free and clear.
So the optics of not issuing “debt” might actually be worse than issuing “debt”. Just something to think about.
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Yes, Congress can change the laws so that TSY can simply overdraft at the Fed and not issue securities. Hell, Congress can make the TSY and Fed one Govt agency, Congress makes the laws. Thats the definiton of sovereignty, especially when it comes to national currencies. Who has the authority of the national currency? In the US, per the Constitution, that would be We The People thorough our elected representatives aka Congress.
But Issuing TSY securities is not borrowing in any meaningful sense, so its not as if we need COngress to change some procedural laws in order to deficit spend more money.
You can only buy TSY securities with Reserves (US Currency)
The Fed is the reserve monopolist
The Tsy is the T-security monopolist
Therefore, the Govt is already self funding, no matter what anybody says. The Fed provides the reserves to the big banks and primary dealers that then use the reserves to clear the TSY securities purchases.
Which is why this truism holds:
“The funds to pay taxes and buy T-securities come from the Govt”
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“Yes, Congress can change the laws so that TSY can simply overdraft at the Fed and not issue securities. Hell, Congress can make the TSY and Fed one Govt agency, Congress makes the laws. ” Auburn
To do exactly what with the money? Let me guess… give wealthy friends more lucrative contracts (military), to complete creating the Walmart monopoly via welfare programs, give union members higher wages, give fraudsters even more chances to steal….
All while the regular worker gets his head handed to him/her.
But not to worry – there is one god watching over us Auburn – and we pay for our deeds here, in this world.
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The regular workers are getting their heads handed to them, because they don’t understand what’s happening to them. They don’t understand that FICA doesn’t pay for SS or Medicare, and that the federal deficit is too low, not too high.
Instead, they believe what the rich-owned media and the rich-owned politicians tell them, and when we try to explain the facts, they argue, disagree and dispute.
Sound familiar?
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Im an Atheist so your God reference is meaningless to me, just like the rest of your commentary.
We are the Govt, it can only do what we want it to do. Its ignorance like yours that has led us to the very situation we find ourselves in.
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Amen.
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“It just seems like an extra unnecessary step for the Monetarily Sovereign Gov’t.”
See my reply to RJ below as to why issuing TSY securities might not be as bad as you think
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Jason,
The government can credit accounts of constructions firms directly to build the infrastructure – but they do not as you say. As Rodger says, the government “technically” does not have to borrow because it can create as much money as it wants.
The government; however, does not create the dollars (and I’ve argued this with Rodger in the past to no avail – with proof from the Fed and the Treasury). To fund operations the government uses tax money (YES IT DOES) as well as money borrowed via T-securities.
The way it works is the government creates IOUs (T-securities) and investors (via broker dealers) buy them with dollars. The process in which money is lent and re-lent within the system, which leads to the purchasing of boats, cars, clothing, food, T bills, etc.. creates the dollars. Money that is used to purchased T Bills has for sure being used to purchase something else (debt).
IOUs not purchased by the public are purchased by the Fed, this is creation of money – rarely done because there is no need – money is already created when investors purchase the T Bills.
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Perfect example of why “regular workers are getting their heads handed to them.” Knowing very little to nothing about economics, they are absolutely 100% positive they have the answers.
But, if you don’t believe me, read this: http://goo.gl/PDOQ8d
Knowing you won’t bother to read it, my advice is: Each time your head is handed to you, be sure to say, “Thank you, Mr. Mitchell, sir.” (I am one of the 1%.)
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Reserves are the only thing that can be used to settle T-securities purchases with, and reserves are supplied exclusively by the Fed.
So as usual, you are completely wrong.
The Fed is the reserve monopolist
The TSY is the T-securities monopolist
Therefore the Govt is necessarily self funding, regardless of any accounting maneuvers necessary to make it happen.
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I hate to say it roger, but your incorrect in a lot of your major points here.
The US treasuries primary debt holders are actually outside of the US, and therefore MUST generate more USD in order to allow for the central banks to conduct transactions with other foreign central banks.
The foreign powers buy our treasury notes in their currency, not ours, and then our central bank converts their purchased treasury currency from their digital currency to our digital currency, by means of the international currency exchange, which equates X dollar for Y dollar.
Then we end up with the T Note value of currency fro m their currency to our currency, and we now owe them the T Note plus Interest.
Once this occurs the money is spent, on whatever you want to fill in the blank with, mostly is usually a rollover of old debt, which is in fact, a ponzi scheme by definition.
We are consolidating debts with more debts, and also paying off debts with new debt. You cant do that in america, literally. Collection agencies are legally not allowed to accept credit cards as payment on debt.
Once the T Note is called for redemption, as in the time expires and the notes full value plus interest is to be paid, its supposed to be paid.
However, due to our deficit, we dont pay it, we simply “Kick the can” down the road, so to speak, and sell more T Notes to cover the balance.
That is why things are so bad, especially with our credit rating, because countries are realizing we no longer have the GDP we once claimed, and have outsourced our manufacturing for the overwhelming part, which gives us a large portion of our GDP.
We are a vast importer of goods and services, not an exporter.
Our primary importing partners are thailand, germany, China, India, and mexico.
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Sam,
This sentence is correct: “We are a vast importer of goods and services, not an exporter.”
Everything else you wrote is incorrect, including the spelling of my name.
A T-security must be purchased in U.S. dollars. When anyone purchases a T-security, their U.S. dollars become part of their T-security account at the Federal Reserve Bank.
To redeem the T-security, the FRB simply transfers U.S. dollars from that T-security account to the holder’s checking account. No new dollars are created.
What is the source of your “information,” or did you just make it up?
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