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●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.
There is a group deceptively named, “Fix the debt.org,” whose sole mission is not to fix anything, but rather to cut the federal spending that benefits the poor and middle-income people (the 99%), and to modify tax laws to benefit the 1% richest among us.
At the end of this post, you’ll see the usual “widen the Gap” (between the rich and the rest) suspects — Bowles, Simpson, MacGuineas, Peterson et al.
As part of their well-funded campaign to justify their reverse Robin Hood — taking from the poor and giving to the rich — they have published Common Myths About the Debt.
Here are some excerpts:
Our nation’s debt has reached unsustainable levels, nearly twice the historical average and on track to grow even greater unless Congress acts.
They never mention what is “unsustainable” about the federal debt, which is nothing more than the total of T-security deposits in private accounts at the Federal Reserve bank.
Is your bank savings account “unsustainable”? No? Neither is mine. But, for reasons beyond logic, your accounts at the Federal Reserve Bank supposedly are “unsustainable.”
Why? To cut federal benefits — Social Security, Medicare, Medicaid, aids to the poor, aids to education, unemployment compensation and all other spending that benefits the 99% and narrows the Gap.
(So-called) “Myth”: Deficit levels are falling and therefore, debt is no longer a concern.
(Phony) “Fact”: Over the next decade, our debt is on track to grow by almost $8 trillion. Even though debt may remain stable as a share of the economy for a few years, its growth will accelerate after 2018 and exceed the size of the entire economy by the mid-2030s.
An ever-rising debt path will inhibit long-term economic growth, increase the cost of living, leave the government unprepared for national emergencies, and increase the risk of a fiscal crisis.
Real Fact: Yes, the total of deposits in T-security accounts might exceed Gross Domestic Product. So?
It’s like saying your deposits in your bank savings account will exceed your spending. So? In both cases, it’s a meaningless comparison, meant to scare us about nothing.
And exactly how will these deposits “inhibit long-term economic growth, increase the cost of living, etc., etc.”? Answer: They won’t. Quite the opposite, in fact.
Federal spending stimulates long-term economic growth, does not cause inflation (See: Oil Causes Inflation), and has nothing to do with government preparedness or fiscal crises.
(So-called) “Myth”: There is no harm in waiting to solve our debt problems.
(Phony) “Fact”: The longer we wait to confront our debt problems, the larger the required benefit cuts or tax increases will need to be for each individual. And it will be harder to protect the most vulnerable in society from bearing the burden.
Real Fact: No benefit cuts or tax increases are necessary. To “pay off” the debt (i.e. redeem the T-securities), the Federal Reserve Bank does exactly what any bank does: It takes existing dollars from the T-security accounts and transfers them to private checking accounts.
Even if the federal “debt” (total of T-security accounts) were $999 trillion, they still would not be a burden on the federal government, on you or on me.
As for the fake worry about “the most vulnerable in society,” these are the people who are most injured by austerity (aka deficit reduction).
(So-called) “Myth”: Deficit reduction is just code for austerity, which will ultimately hurt the economy.
(Phony) Fact: A comprehensive and gradual deficit reduction plan can replace austerity with more targeted and pro-growth reforms that promote economic recovery and accelerate long-term wage growth.
For example, the Congressional Budget Office found that a $4 trillion deficit reduction package would help the economy, increasing average income by $7,000 by 2039. Average income would be 9 percent higher than if policymakers allow debt to rise rapidly.
Real Fact: They actually don’t deny that debt reduction is, in fact, austerity, which never has worked to grow an economy, anywhere in the world. There is no known economic mechanism by which taking $4 trillion out of an economy would “help” the economy and increase average income.
(So-called) “Myth”: Deficit reduction will harm low-income and vulnerable populations.
(Phony) Fact: Every recent bipartisan deficit reduction plan has included progressive reforms that ask more from those who can afford it, protect low-income programs, and offer new enhancements for the most vulnerable.
Real fact: Note the carefully crafted words, “bipartisan” and “included.”
“Bipartisan” excludes all right-wing “screw-the-poor” plans. And “included” doesn’t mention that on balance, right wing plans always widen the Gap.
(So-called) “Myth”: The debt can be solved by cutting waste, fraud, or foreign aid.
(Phony) Fact: Even if we eliminated all waste, fraud, and foreign aid, we would still have not dealt with the long-term drivers of the debt. Specifically, we need to slow the unsustainable growth of entitlement spending, which currently makes up 60 percent of the budget.
Mandatory and interest spending will nearly double in the next 40 years due to population aging and rising health care costs.
Real Fact: Since the “debt” is not a problem, one should not refer to “solving” it or calling it “unsustainable.”
Yes, entitlement spending is at the heart of this. The rich, and their toadies, don’t want you to collect on Social Security, Medicare, Medicaid, School Lunches, any aids to the not rich, etc.
Looks like we can forget about the right-wings desire to “protect the most vulnerable.”
The federal government being Monetarily Sovereign, Federal interest payments are no burden whatsoever.
Even were interest payments 100 times their current level, the government could pay them without difficulty. And those payments stimulate the economy, by putting dollars into consumers’ pockets.
(So-called) “Myth”: The debt can be solved with faster economic growth.
(Phony) Fact: Economic growth must be part of the solution, but it can’t solve the debt problem alone. The amount of growth required would be unprecedented. Productivity growth would have to be 50 percent higher over the next quarter century just to hold debt at its current record-high levels.
Real Fact: This is an intentionally confused statement, pretending to indicate that the federal government pays its debts with Gross Domestic Product.
Economic growth doesn’t “solve” a debt non-problem. The federal debt is not paid with GDP. The federal debt (aka T-securities) are paid with dollars that already exist in T-security accounts.
Interest is paid with dollars that are created ad hoc, by our Monetarily Sovereign government. Even if GDP were $0, the federal government could pay off any size debt, instantly.
(So-called) Myth: Taxing the wealthy more will solve the debt problem.
(Phony) Fact: Our debt problems are too large, and the top 1% too few, to solve the entire problem by raising taxes on the wealthy.
Our debt problems are large enough that they should be solved by both tax reform to reduce tax breaks and spending reform to slow the growth of entitlement programs.
Again, totally confused.
First: Federal debt is not a “problem,” not for you, not for me, not for the federal government. It is bank accounts, similar to saving accounts. Is your bank savings account a “problem”?
Second: Federal taxes do not pay for anything. Even if all federal taxes were eliminated, the federal government could continue to spend, forever.
Third: To the right wing, “tax reform” means some form of “flat tax” or “broadening the tax base” — taxes that for right-wing “fairness,” cost the poor a larger percentage of their income than the rich. Classic examples: FICA and sales taxes, both of which are highly regressive.
Fourth: There’s that “slow the growth of entitlement programs” mantra again, the real goal of the rich.
You don’t need Social Security and Medicare, unemployment insurance or food stamps, do you? And anyone who accepts them is a good-for-nothing sloth. Right?
After all, everyone knows that you people taking money from the government are lazy, do-nothing slackers trying to game the system. It’s the rich who work their fingers to the bone (washing their yachts, planes and limousines) who are the real Americans.
As mentioned at the start, here is that list of people who are oh-so-concerned about our most vulnerable — the poor, the sick, the elderly, the out-of-work, the school children — that they spend billions to reduce entitlements.
Why? Very simple. The Gap is what makes the rich rich. Without the Gap, no one would be rich, and the wider the Gap, the richer they are.
The following are just a few of those who tell the BIG LIE (that federal debt is “unsustainable), and who would like to push you down, then step on your back, to lift themselves up.
Recognize any names?
Campaign to Fix the Debt
Mayor Michael Bloomberg, Former Mayor, New York City, New York; Senator Judd Gregg, Former U.S. Senator, New Hampshire; Governor Ed Rendell, Former Governor, Pennsylvania
Erskine Bowles, Co-Chair, National Commission on Fiscal Responsibility and Reform; Senator Alan Simpson, Co-Chair, National Commission on Fiscal Responsibility and Reform
Governor Phil Bredesen, Former Governor, Tennessee; Senator Kent Conrad, Former U.S. Senator, North Dakota; David Cote, Chairman and CEO, Honeywell International; Senator Pete Domenici, Former U.S. Senator, New Mexico; Congressman Vic Fazio, Former U.S. Congressman, California; James B. Lee, Jr., Vice Chairman, JPMorgan Chase & Co.; Maya MacGuineas, President, Committee for a Responsible Federal Budget; Congressman Jim McCrery, Former U.S. Congressman, Louisiana; Senator Sam Nunn, Former U.S. Senator, Georgia; Congressman Jim Nussle, Former U.S. Congressman, Iowa; Michael Peterson, President and COO, Peter G. Peterson Foundation; Steven Rattner, Chairman, Willett Advisors LLC; Alice Rivlin, Former Director, Office of Management and Budget; Mayor Scott Smith, Former Mayor, Mesa, Arizona; Mayor Antonio Villaraigosa, Former Mayor, Los Angeles, California; Ambassador Robert Zoellick; Former President, World Bank
Rodger Malcolm Mitchell
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.