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•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•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.
•The single most important problem in economics is the Gap between rich and poor.
•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.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..
Here are a few shameless quotes from this month’s Congressional Budget Office bulletin, as written by America’s richest.
As of March 15 (2015), the Treasury has (had) no room to borrow.
The debt limit—commonly referred to as the debt ceiling—is the maximum amount of debt that the Department of the Treasury can issue to the public and to other federal agencies.
That amount is set by law and has been increased over the years in order to finance the government’s operations.
The statement is mathematically illogical and factually wrong. Those of you who already understand Monetary Sovereignty are aware the federal debt does not, and cannot, finance the government’s operations.
First the mathematics. Federal debt is the total of T-securities — securities bought by non-government entities and by government agencies. The “debt” is nothing more than bank deposits in T-security accounts at the Federal Reserve Bank.
From where do these buyers obtain the dollars with which to buy T-securities and make these bank deposits?
All dollars come from two sources: Federal deficit spending and bank lending.
But where do the banks obtain the dollars to lend? Yes, they create most, but they must begin with “reserves.” These reserves come from the public in the form of deposits, and from the Federal Reserve Bank.
From where does the public obtain dollars to make deposits?
Bottom line: The initial source of all dollars is the Federal government. It is the federal government that, back in the 1770’s, created the first dollars from thin air. And it is the federal government that continues to create dollars from thin air, simply by paying bills.
Were it not for federal deficit spending, U.S. dollars could not exist.
The government is able to deficit spend endlessly because it is Monetarily Sovereign, i.e. sovereign over its own currency, the U.S. dollar. Being sovereign, the government can do anything it wishes with dollars.
It can create dollars endlessly (via deficit spending). It can destroy dollars (via taxing). It can change the value of dollars (via interest rate control).
Being Monetarily Sovereign, the federal government never needs to ask anyone for dollars — not you, not me, not China.
Contrary to the CBO’s implications, the U.S. Treasury never can run short of dollars unless Congress wills it.
Although dollar bills technically are not in themselves dollars (They are titles to dollars, much like car titles and house titles), the federal government can print all the dollar bills is wishes.
Being Monetarily Sovereign, the federal government makes the rules. If it wished, the federal government could print a trillion, trillion $100 bills and distribute them tomorrow. These bills would be legal tender for all debts. In short, you could use them the same way you use the dollars in your wallet.
Yes, that could cause an inflation, and yes, that is not how dollars are created. But the point is, the federal government cannot run short of its own sovereign currency — unless Congress and the President want that to happen.
The fact that Congress is able to increase the debt ceiling every year is proof there is no limit to the government’s ability to create dollars.
If the federal government did not create dollars, there would be no dollars for banks to lend and there would be no dollars with which to purchase T-securities (aka federal “debt”).
How does the federal government create dollars by paying bills?
To pay a bill, the government sends checks and wires to the creditors’ banks. These checks and wires are not money; they are instructions, telling the banks to increase the balances in the creditors’ checking accounts.
The instant the banks obey those instructions, and credit the accounts, dollars are created. The money supply (M1 and M2) increases. The Treasury creates dollars by sending instructions to banks.
The Congressional Budget Office projects that if the debt limit remains unchanged, the Treasury will run out of cash between mid-November and early December.
This sentence more properly should read, “If Congress prevents the Treasury from creating dollars, the Treasury will run out of cash between mid-November and early December.
On March 16, the debt limit was reset to $18.113 trillion to match the amount of outstanding debt.
Translation: Congress decided it doesn’t want the Treasury to create any more money. The point is not that the Treasury is unable to create all the money it wishes. The point is simply that Congress, at the behest of rich donors, doesn’t want the Treasury to create money to pay for benefits to the middle class and the poor (the “99%”).
This is not a financial decision. It is a political decision. Congress essentially is stamping its feet and saying, “I’ll take my ball and go home unless you give me my way.”
The annual battle over the debt ceiling is an extortion game, in which one party threatens to shut down the government unless certain laws are passed. And these laws may have little to nothing to do with financing.
Whenever you read that certain federal spending is “unaffordable” or “unsustainable,” you are witnessing the Big Lie.
The purpose of the the Big Lie: To fool you into believing certain benefits must be cut — i.e. Social Security, Medicare, Medicaid, poverty aids, education aids, etc.
It is the wealthy political contributors who want your benefits cut.
What Makes Up the Debt Subject to Limit?
Debt subject to the statutory limit consists of two main components: debt held by the public and debt held by government accounts.
Get it? Congress has limited the amount of T-securities it can sell to itself!
Congress includes under the misleading term “debt,” the amount of money the government has “borrowed” from itself. The purpose: To make the “debt” look more ominous.
If your left hand borrowed $100 from your right hand, would you have any difficulty paying the debt? Of course not. But Congress wants you to believe internal debt is some sort of threat or burden.
Of the $18.1 trillion in outstanding debt subject to limit, $13.1 trillion was held by the public and $5.0 trillion was held by government accounts as of July 31, 2015.
So, not only is the misnamed “debt” a phony issue, but the $18.1 trillion debt is a phony figure.
If the debt limit is not increased, the Treasury will not be authorized to issue additional debt that increases the amount outstanding.
That restriction would ultimately lead to delays of payments for government activities, a default on the government’s debt obligations, or both.
By CBO’s estimate, the Treasury would most likely be able to continue borrowing and have sufficient cash to make its usual payments through mid-November or early December without an increase in the debt limit.
Translation: If Congress fails to increase the “debt” ceiling, that is tantamount to Congress voting to cut Social Security and Medicare payments, military salaries, all other federal salaries and all other payments.
The “debt ceiling” is Congress’s method for cutting benefits to the 99%, without leaving any fingerprints.
Your senators and representatives fear being blamed for benefit cuts, so they pretend the government can’t afford these benefits. The “debt ceiling” provides a handy, no-blame excuse.
Why would Congress do that?
Because that is what the rich of America want.
The rich are rich only because of the Gap between them and the rest of us.
If there were no Gap, i.e. if everyone had the same amount of money, no one would be rich. And the wider the Gap, the richer the rich are.
More than money, the rich want relative power. An easy way for the rich to increase their relative power is to decrease the wealth of the 99% — i.e. to take away your money.
So the rich pay Congress (via campaign contributions) to cut Social Security, cut Medicare, cut Medicaid, cut federal payrolls and cut all other federal benefits to the 99%, under the pretense these benefits are “unaffordable” and “unsustainable.”
They call it “fiscal prudence.”
And they call T-securities “debt” rather than more properly “assets of the economy,” (for that is exactly what T-securities are: Assets of the economy.)
The rich know you always want to cut “debt,” but never would want to cut “assets of the economy.”
So it all is a gigantic con game, with the CBO (being an agency ruled by Congress) as a player.
You are supposed to believe that federal “debt,” (even “debt” owed to itself), is imprudent and must be cut, when in fact, cutting the debt takes dollars out of your pocket and leads to recessions and depressions, while it widens the Gap between the rich and you.
And in a great feat of cynicism and irony, the politicians pretend your children and grandchildren will have to pay the debt, when in fact, your children and grandchildren will pay for the lack of federal deficit spending.
Your children and grandchildren will be punished by needless reductions federal deficit spending, all because the rich instruct Congress to tell you the Treasury is running short of its own sovereign currency, the dollar.
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
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.