–Megan, Ramesh and Bloomberg, oh my! Keep your hand on your wallet at all times.

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.

“Megan McArdle is a Bloomberg View columnist who writes on economics, business and public policy.”

This says very little about Megan McArdle and even less about Bloomberg.

It’s sad, frustrating and angering that an organization like Bloomberg can have Megan McArdle as their economics writer. Here is her latest Bloomberg exercise in ignorance.

The Left Gets It Wrong About Social Security
APR 7, 2015, By Megan McArdle

Americans are underprepared for retirement. And given this sad fact, there’s a growing movement on the left saying we need a government solution, stat: specifically, an expansion of Social Security benefits.

Instead of reluctantly agreeing to a compromise where Republicans let some taxes rise and Democrats agree to entitlement cuts, (progressives are) demanding bigger tax hikes to fund bigger entitlements.

Get it? Americans don’t have enough money to retire in dignity, so Megan’s compromise “solution” is to increase FICA and reduce Social Security benefits. Huh?

Does it get any sillier than that? How in the name of common sense, will a FICA increase and a Social Security benefit decrease help Americans save more and have more for retirement?

(I should mention that since FICA does not fund Social Security benefits, the Democrats “solution” would be silly too, but at least it involves raising benefits.)

At the core of their argument is a good point: Americans really do need more money for retirement. Missing, however, is a realistic discussion of where that money might come from.

The (Social Security trust fund) trustees’ report predicts that by 2023, the gap between taxes collected and benefits paid will be almost $170 billion. The only reason that the system isn’t in the red already is the net interest the government is paying itself on the bonds in the trust fund.

Now, this should make any rational person stop and think: “Hmmm . . The government pays itself interest, and that interest has kept Social Security out of the red.

“Hmmm . . . again. If the government can do that, why can’t the government simply pay for Social Security and keep the whole program solvent?”

But, of course, that requires a rational person’s thinking.

If we want to pay Social Security beneficiaries more money than we are collecting in payroll taxes, the money has to come from somewhere, and ultimately, that “somewhere” is the United States taxpayer.

And there is where Megan McArdle, demonstrates her abject ignorance about federal financing. She simply refuses to understand or admit the fundamental differences between a Monetarily Sovereign government and a monetarily non-sovereign entity.

The former creates its sovereign currency, in this case dollars, ad hoc, simply by the very act of paying bills. The federal government, being Monetarily Sovereign, neither uses nor needs FICA. It does not need income because it creates dollars.

The latter is like you and me (and the states, counties and cities), which have no sovereign currency and do indeed rely on income or tax dollars to pay their bills.

State and local taxpayers do pay for state and local spending. Federal taxpayers do not pay for federal spending. It’s that simple.

How can an economics writer for a significant publication not understand the difference? How can the publishers of that significant publication not know the difference?

Beyond belief. And in fact, I don’t believe it. I do believe they know exactly what they are doing: Widening the Gap between the rich and the rest..

Then Megan goes on and on about where to get the tax dollars to pay increased Social Security benefits, and that it certainly should not come from rich people (like her employers)



And just when you thought Bloomberg couldn’t be more misleading, we come to the the following article:

Elizabeth Warren Is Delusional About Social Security
11 APR 8, 2015 By Ramesh Ponnuru, a Bloomberg View columnist, (and) a senior editor for National Review, where he covers national politics.

Social Security has a long-term funding gap that just keeps growing. Neither political party has a plan to pay for the promises we’ve already made to people contributing to the system. But Democrats are bringing a new idea to the table: make even more promises.

Liberals are exulting that (Massachusetts’s Elizabeth) Warren has shifted the politics of Social Security to the left: Where once we were debating cutbacks to the program, now we’re debating benefit increases.

Too bad that also means the debate is shifting further away from fiscal reality.

Yes, too bad indeed, for the fiscal reality is that the U.S. federal government has the unlimited ability to pay any debt denominated in its own sovereign currency, the dollar.

Sadly, Ponnuru either is intentionally or unintentionally ignorant about that basic fact in economics.

To them it is horrible that we’re not talking about cutting Social Security benefits, but rather we’re talking about (gasp) increasing benefits to our elderly. How awful!

Social Security is becoming a worse deal for each generation. Those now joining the workforce are expected to pay more into the system than they get out of it.

Of course, the U.S. federal government never needs to ask anyone for its own sovereign currency, so those above-mentioned expectations are on the part of those who don’t understand federal financing.

Warren’s plan is to shower more money on the current generation of retirees, but without increasing the deficit over the next 10 years.

If her real plan is not to increase the deficit, one must ask, “Why?” The midleadingly termed deficit” is, in actuality, a surplus to the economy. Because the economy, as a whole, is monetarily non-sovereign, and the federal government is Monetarily Sovereign, the economy needs continual inputs of money (aka “deficit spending”) from the federal government.

It may be that Sen. Warren, realizing that the public neither understands, nor would believe, the facts of Monetary Sovereignty, has decided not to tilt windmills, but just go along with popular myth — so long as she can accomplish the Social Security benefits.

Sad, but possibly true.

Social Security has always been a combination of forced savings and redistribution.

Wrong. FICA is not savings, and Social Security benefits are not redistribution. FICA is taking and SS benefits are giving. There is no connection between the two.

FICA could be collected without providing benefits (as with a person who dies too young), and benefits could be paid without FICA.

And now comes the pitch for the rich:

People joining the workforce now should be promised a flat universal retirement benefit set at a level that keeps all seniors out of poverty.

At the same time, they should be auto-enrolled in retirement savings accounts that would include an option to invest in index funds, with the mix of investments shifting from stocks to bonds as workers approached retirement.

And there you have it: The stock and commodity brokers’ and bankers’ college tuition and retirement fund.

All those delicious dollars just waiting to be handed over to your greedy banker or broker, so he can invest for you (with commissions, of course).

This has been the mantra of the rich for years, now. Bush II tried it, but things got a bit dicey when the stock market went south. And now, here we are again, with the same old story:

Just give us rich your retirement money, and after we deduct our fees and commissions, we’ll give some of your money back to you. Maybe.

(My relative of mine tried that with the Illinois college savings plan. When the recession came, she lost half her money.)

Megan, Ramesh and Bloomberg, oh my! Keep your hand on your wallet at all times.

By the way, if you sense that all this makes me angry, you’re right. I’m angry that the multi-billionaire owner of Bloomberg hires sycophants like McArdle, Ponnuru et al to brainwash the populace into supporting programs that will do nothing but widen the Gap between the rich and the rest.

My god, man, don’t you have enough money? Can’t you, at long last, help narrow that Gap?

Is greed all you have?

Rodger Malcolm Mitchell
Monetary Sovereignty

The 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. Federally funded, 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)

Initiating The Ten Steps sequentially 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.

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.


16 thoughts on “–Megan, Ramesh and Bloomberg, oh my! Keep your hand on your wallet at all times.

  1. Good article:

    OpEdNews Op Eds 4/7/2015 at 15:09:01
    How America Became an Oligarchy
    By Ellen Brown

    According to a new study from Princeton University, American democracy no longer exists.

    Using data from over 1,800 policy initiatives from 1981 to 2002, researchers Martin Gilens and Benjamin Page concluded that rich, well-connected individuals on the political scene now steer the direction of the country, regardless of — or even against — the will of the majority of voters.

    America’s political system has transformed from a democracy into an oligarchy, where power is wielded by wealthy elites.


  2. Very good article:

    How the Koch brothers and the super-rich are buying their way out of criticism
    By Robert Reich

    Not long ago I was asked to speak to a religious congregation about widening inequality. Shortly before I began, the head of the congregation asked that I not advocate raising taxes on the wealthy.

    He said he didn’t want to antagonize certain wealthy congregants on whose generosity the congregation depended.

    I had a similar exchange last year with the president of a small college who had invited me to give a lecture that his board of trustees would be attending. “I’d appreciate it if you didn’t criticize Wall Street,” he said, explaining that several of the trustees were investment bankers.


  3. We hear this all the time..”the money has to come from “somewhere.”

    “Somewhere” is another word for “people,” but not the people who’ll be offended, just those without influence.

    What happens if austerity (sell) hits the stock market? and if prosperity (buy) hits the stock market? Is not what’s good for the goose also good for the gander? How is the economy not also similarly effected? Leaches can’t cure anemia. So how can austerity stimulate capitalism?


    1. “the money has to come from somewhere”.

      That statement assumes dollars cannot be created and that there is a fixed amount of dollars in the system. The US politicians pretend that the statement is true when it fits their interests.

      I often tell people that the US cannot waste dollars. Even if it were to build an outdoor water park in Alaska, the dollars would not be wasted. One could argue that the labor was wasted, but the laborers got paid, so they shouldn’t feel that way. Of course, most people believe “the money has to come from somewhere”, so under that premise, dollars can be wasted.


  4. Money, greed, power are behind the gridlock

    I’m reminded of a statement in Napoleon’s Think and Grow Rich, one of the most important insights I’ve ever read regarding money and it is at the very core of the problems in Washington and Wall Street.

    “Animals prey on each other physically. Man, with his superior intelligence doesn’t prey on his fellow man physically, but rather financially. Man is so avaricious that every conceivable law regarding has to be passed to protect man from his fellow man regarding money!”

    Our democracy is grinding to a halt from the corrupting influence of money, not honest differences in ideology or political views. Big money is behind all of our major stumbling blocks.

    Big business is not creating jobs because it can make huge profits without them. Global robber barons don’t need an educated, employed, middle-class America to make their billions. They keep transactions too complicated to understand, regulations and taxes too weak to restrict them and their businesses too big to fail.

    America is always at war somewhere, not just because of national defense or ideology but excessive profits of a military-industrial complex that President Dwight Eisenhower warned us against.

    Our health care system was developed to provide corporate profits, not health care. It is far more expensive than that of other developed countries because of lobbyists from insurance and pharmaceutical companies. They don’t want us to know that the single-payer, Medicare system is best by far.

    Social Security is not insolvent, doesn’t increase the deficit and is weakened only because the fund was raided to pay for other programs. Privatization would only boost industry profits at our expense.

    Tax laws are grossly unfair, too complicated and favor the rich, but they won’t be reformed anytime soon because they are written by corporate accountants, lawyers and lobbyists who benefit from the status quo.

    We can’t solve our education problems because real solutions are not quick political fixes but complex, expensive and long-range. Billionaires no longer need educated American consumers, voters and workers to make their money. They make more by keeping the public ignorant and poor.

    We can’t require business practices that protect our environment and natural resources because the rules are written by lobbyists from coal, gas and big oil. They protect their obscene, record-breaking profits at our expense.

    The real opponents of gun control are makers and distributors of profitable guns and ammo. Wayne LaPierre does not represent the National Rifle Association majority, which favors background checks. He is a straw man sent to divert attention from the industry by stirring up ideological controversy.

    The news media is not the guardian of truth, which is often too complicated, time-consuming, expensive and boring. They are in business to make money, through paid advertising and sensationalism. “Balanced” reporting of talking heads is not fact-finding journalism that produces an informed public.

    Most corruption has been in Washington, where the money is, with state and local governments inheriting the loss of federal dollars. Now power brokers realize the key to influencing the national agenda is control at state and local levels — not only of who gets elected but who gets to vote.

    Phony political crises hyped by news media are a farce to distract us from important, difficult issues not being addressed, such as jobs. A good example is Internal Revenue Services’ scrutiny of tax-exempt applications. No political group should have tax-exempt status to take huge, secret contributions, while we pay their operating expenses.

    These controversies are just to keep us from understanding how bad things really are — while politicians enjoy attention, fame and fortune. The revolving door between big business and government allows the same people to remain in power, whether influencing from the outside or within. Politicians accept money to gain and keep their jobs. Even our votes aren’t sacrosanct anymore, as our will is now routinely ignored.

    This cozy business-media-political partnership will continue only as long as we remain ignorant, complacent and compliant.

    (Socail Security Trust Funds

    The very use of the term trust fund when applied to federal trust funds is misleading. As the government puts it in In Analystical Perspectives FY 2015-P.454

    The Federal Government uses the term “trust fund” differently than the way in which it is commonly used. In common usage, the term is used to refer to a private fund that has a beneficiary who owns the trust’s income and may also own the trust’s assets. A custodian or trustee manages the assets on behalf of the beneficiary according to the terms of the trust agreement, as established by a trustor. neither the trustee nor the beneficiary can change the terms of the trust agreement; only the trustor can change the terms of the agreement. In contrast, the Federal Government owns and manages the assets and the earnings of most Federal trust funds and can unilaterally change the law to raise or lower future trust fund collections and payments or change the purpose for which the collections are used. only a few small Federal trust funds are managed pursuant to a trust agreement whereby the Government acts as the trustee; even then the Government generally owns the funds and has some ability to alter the amount deposited into or paid out of the funds.

    Just as I incur no debt by issuing and IOU to myself, neither do I decrease my .iabilities or increase my assets by canceling such and IOU

    The same is true of the federal government. The government acknowledges this in Analystical Perspectives FY 2015-P.457

    From the perspective of the trust fund, these balances represent the value, in today’s dollars, of taxes, fees, and other income that the trust fund has received in the past for the purpose of funding future benefits and services. trust fund assets held in treasury bonds are legal claims on the treasury, similar to bonds issued to the public. like all other fund assets, these are available to the fund for future benefit payments and other expenditures.

    Click to access spec.pdf


    1. Excellent comments.

      I would only add that federal taxpayers do not pay for federal spending. The government creates the dollars to pay its bills, ad hoc, by the very act of paying.

      Federal “trust funds,” as you say, are nothing more than balance sheet account numbers, and the federal government can change the numbers at will.

      You are correct about federal trust funds. Contrary to popular myth, the Social Security “trust fund” is not a trust fund and does not lend dollars to any federal agency.

      The federal government merely raises and lowers numbers in various account, to simulate lending. But there is no loan and there is no debt.

      It’s all just a computer keyboard exercise.

      Thus, neither Social Security nor Medicare can run short of dollars unless Congress wishes it.

      Even were FICA to be eliminated, Social Security and Medicare could continue paying benefits — even triple benefits — forever.

      Congress, having been bribed by the rich (via campaign contributions and promises of lucrative employment later), pretends Social Security is like a private insurance company, that needs income to pay benefits.

      But the federal government creates dollars at will, and needs no income, neither tax income nor borrowed income.

      The purpose of the charade is to fool the public into believing that dollars are scarce to the federal government, so benefits to the poor must be limited.

      It is all part of the plan to widen the Gap between the rich and the rest.

      The Supreme Court justices, whose vacation friends are rich, enables the lie by claiming dollars are speech, so contributions to politicians are unlimited.

      Try telling this to anyone, and they will become furious. The public wants to be conned and cannot bear to view the truth.

      To quote H. L. Mencken, “No one ever went broke underestimating the intelligence of the American people.”


  5. I actually found a place that gives free food. They say its good for dogs, but i’ve been eating it for years, no issues. Its meat waste, they get free disposal, i get free meat.

    Maybe we can have doctors provide free services like the meat waste, since they charge a Porsche for minor services, even an aspirin.

    Do you believe your own theory, is there a motive hidden somewhere?


    1. There absolutely is a motive:

      Cutting federal spending helps widen the Gap between the rich and the rest.

      Most federal spending benefits the middle- and the poor (the “99%”) far more than the rich (the “1%”). Consider how much is spent on Social Security, Medicare, Medicaid, food stamps and other similar benefits to the 99%.

      Then add to that aids to education (the rich can pay for their own education).

      Finally, go to the List of Federal Agencies, and see how many provide services to the 99% — services the 1% either don’t need or easily can pay for.

      So, cutting federal spending widens the Gap, and the Gap is what the rich care about far more than mere income. It is the Gap that makes them rich. Without the Gap, they wouldn’t be rich, and the wider the Gap, the richer they are.

      So all that talk about cutting “Big Government,” merely is an attempt to make the rich richer, by widening the Gap.

      Why do you think the Koch brothers and Pete Peterson spend billions to cut federal spending?


    1. Dave, yes the subway token analogy is perfect.

      In fact, the U.S. federal government has even less risk of running out of dollars, than the N.Y. subway system has of running out of tokens.

      Tokens, being physical, presumably can be in short supply. But dollars, being nonphysical numbers in a balance sheet, are infinite.


      1. I love the subway example as well. The NYC subway system now uses metrocards which contain fare balances. So running out of tokens is no longer an issue.

        If Congress ran the NYC subways, they would limit the amount of metrocards sold, because they would be afraid to pass the metrocard debt to their grandchildren. They would say that if the balances become too high, the subway system will be forced into bankruptcy. This is no less ridiculous than the US Govt with dollars.


  6. If GDP goes up by 300 billion a year and outstanding debt also goes up by 300 billion – how much did the economy grow?

    Answer: ZERO


    1. Wrong! In your example, the economy rose $300 billion.


      The economy does not owe federal debt. You don’t owe it; I don’t owe it. No one in the economy owes it.

      So who owes it?

      The Federal Reserve Bank.


      Because all federal debt is nothing more than deposits in T-security accounts at the Federal Reserve Bank.

      All bank deposits are debts of the bank accepting those deposits.

      For instance, your checking account and savings account are debts of your bank.

      And by the way, the Federal Reserve Bank “pays off” federal debt by transferring already existing dollars from T-security accounts to the checking accounts of T-security holders.

      No new dollars needed.


  7. Why dont you ever talk about how the bankers, those that committed fraud, should be prosecuted?

    I bet that if these banks went out of business, our goverment wouldnt be deficit spending. Yeah, i know what you’ll say: the government can pay bills even if tax receipts fell to zero, yada, yada.

    Lie, the government funds itself via issuance of bonds which are normally biught by…….ding…ding.the big banks. Im 100% sure you know. Procecuting the executives and big banks would kill the spigot. I know what you will say but i know you agree..


    1. I am so impressed about how thoroughly you read this blog.

      Oh, except for your comment about my not talking about the bankers, which I discuss here:
      and here:
      and here:
      and dozens of other places, including point #9 of the Ten Steps to Prosperity.

      And I also am impressed with your knowledge of Monetary Sovereignty, when you say, “Lie, the government funds itself via issuance of bonds,” which is true for state and local governments, but laughably wrong for the federal government.

      Anyway, spouting off about things of which you have no knowledge, is not a crime, though wrongly spouting off with attitude and spouting off on this blog when you don’t know the difference between Monetary Sovereignty and monetary non-sovereignty — that should be a crime..


  8. As absurd as your article makes clear, the total SS situation is even more absurd. That’s because for every $1 spent on SS we actually get back as much as $2 in economic activity. I cite a study by AARP in my widely published article, including here on Huffington Post: http://www.huffingtonpost.com/scott-baker/paying-for-social-security_b_5059050.html (also on Opednews, and Global Economic Intersection). A more recent version in my just-published book, “America is Not Broke!” https://tayen-lane.squarespace.com/america-is-not-broke cites a second study (since people criticized me for citing the AARP as a non-disinterested party) from the Southern Rural Development Center that says we get back $1.80 for every $1 spent. So, seen that way, we should not only abolish the regressive payroll tax entirely, but fund SS out of Sovereign Money and give every Senior a raise (at least until they become net savers of SS funds, at which point they will not be consumers stimulating production and commerce). This is exactly what I suggest in my article and book.


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