Have you ever played Monopoly? You know all you need to understand U.S. finances.

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Have you ever played the board game, “Monopoly”? Sure you have.

Since 1934, it has become the leading proprietary game not only in the United States but throughout the Western World. As of 1994, the game is published under license in 43 countries, and in 26 languages; in addition, the U.S. Spanish edition is sold in another 11 countries

Monopoly is about buying and selling real estate, and keeping score with Monopoly dollars.

What do Monopoly dollars look like? Your answer might be something like:

“They are rectangular pieces of printed paper, ranging in denomination from 500 dollars on down to 1 dollar. The 500’s are gold and the others are of varying colors, with the 1 dollar being white.”

And you would be wrong.

What you would have described are papers that represent Monopoly dollars. You have described Monopoly bills, not dollars.

You may have played Monopoly, but you never have seen Monopoly dollars. And I can prove it.

Here are two paragraphs from the official Monopoly rules:

Each player is given $1500 divided as follows: 2 each of $500’s,
$100’s and $50’s; 6 $20’s; 5 each of $10’s, $5’s and $1’s.
All remaining money and other equipment go to the Bank

The Bank never “goes broke.” If the Bank runs out of money, the Banker may issue as much more as may be needed by writing on any ordinary paper.

So now tell me, what do Monopoly dollars look like? 

If, to keep score, the Bank simply can write numbers on pieces of paper, it also can keep score simply by taking a single sheet of paper, dividing it into 4 columns and labeling each column with the name of a player.

Start each column with $1,500 (or whatever number you choose) and as the game is played, add or subtract from each column.

In the end, one player will have all the dollars in his column and the other players will have none.

I actually have played Monopoly this way, when we opened the box to find that many of the bills had been lost and damaged.

So now tell me, what do Monopoly dollars look like?

So far, you have learned:

1. Before 1934, there were no “Monopoly dollars.” They were created arbitrarily, out of thin air, by a man named  Charles B. Darrow of Germantown, Pennsylvania. He created as many as he wished.
2. The Monopoly Bank never can run short of dollars. It never can go broke. It can pay any bill of any size simply by creating more dollars. It does not need to “print” dollars. It simply can keep score without printing anything.
3. Monopoly dollars have no physical existence. They merely are accounting numbers that are recorded in any way the players wish.  They could be recorded on paper or on any electronic device. No one ever has seen, smelled, tasted or held Monopoly dollars.

What are those rectangular pieces of paper that you erroneously have been calling “dollars”? They are dollar bills.

You have seen an electric bill and a water bill. And you have seen a dollar bill. So what is a “bill”?

A bill represents a debt. The electric bill represents your debt to the electric company. The water bill represents your debt to the water company. The dollar bill represents the U.S. government’s debt to the holder of the bill.

What does the government owe you, the holder of a dollar bill?

Answer: The government owes you a dollar.

Let’s go back to the beginning. Just as with the Monopoly dollars, the U.S. dollar had a starting point. Before the creation of the United States, there were no U.S. dollars. They were created arbitrarily by a group of men, who created as many as they wished.

No one ever has seen, smelled, tasted or held U.S. dollars. They merely are accounting numbers that are recorded in any way the users wish.  U.S. dollars could be represented on paper (dollar bills) or on any electronic device. You can see your record of dollars (though not dollars themselves) by accessing your bank’s web site, and looking up your account.

Those numbers represent dollars, just as a U.S. dollar bill represents a U.S. dollar.

The Monopoly Bank never can go “broke.” Because the Monopoly Bank never can run short of Monopoly dollars, it can pay any debt of any size, and does not need to ask any of the players for dollars. To pay any amount, it merely can increase the numbers in any player’s column.

When the Bank’s outgo is greater than its income, the dollars go to the players, who are enriched by the Bank’s deficit.

Similarly, the U.S. government, the creator of the U.S. dollar, never can go “broke.”

Because the U.S. government never can run short of U.S. dollars, it can pay any debt of any size, and does not need to ask any of us for dollars. This means, U.S. taxes are unnecessary for paying U.S. creditors. Even if federal taxes were $0, the U.S. government pays creditors merely by increasing the numbers in the creditors’ bank accounts.

(Note: States, counties, cities and businesses can’t do this, because none of them were the original creator of the U.S. dollar, nor did the write the Official Rules concerning the dollar.)

You never will hear a Monopoly player worry about the size of the Monopoly Bank’s deficits. Monopoly players are smart enough to understand that the creator of the Monopoly dollar never can run short of the dollars it creates.

Unfortunately, many otherwise intelligent people, worry about the size of the U.S. government’s deficits. These otherwise intelligent people are not smart enough to understand that the U.S. government, the creator of the U.S. dollar, never can run short of the dollars it creates.

But what about inflation? Some people acknowledge that the U.S. never can run short of dollars, but their next comment often is, “But that would cause inflation.”

The Value of a dollar (i.e. inflation) is based on this equation: Value = Demand/Supply. An increase in supply would cause inflation unless there were an offsetting increase in Demand.

The game of Monopoly can reflect this. Though not exactly in the Official Rules, the way my family plays, we can buy or sell or trade properties from each other at any time. So when there is an increase in the money supply prices indeed can go up, as “richer” players compete for properties.

But if a player suddenly has huge debts, and his dollar needs (dollar Demand) increases, he may be forced to sell his properties at a discount. Prices go down.

For the U.S., Demand for dollars relates to interest rates. Interest is the reward for owning dollars. Higher interest rates stimulate investors to want dollar-related investments (bonds, notes, CD’s bank accounts, etc.) as opposed to other investments (stocks, real estate, etc.) The U.S. Fed fights inflation by increasing interest rates.

O.K., you now see that.

1. The U.S. federal government, like the Monopoly Bank, never can run short of dollars.
2. U.S. taxes, like Monopoly taxes, are unnecessary to fund U.S. (or Bank) spending
3. U.S. deficits, like Monopoly deficits, are beneficial because they put dollars into the pockets of Americans (players).
4. Since Value=Demand/Supply, inflation can be fought by decreasing the dollar Supply or by increasing the dollar Demand. For the U.S. this primarily is accomplished by increasing interest rates.

Now, when you hear that the U.S. deficit or debt are too high or “unsustainable,” or the government or its agencies (Social Security, Medicare et al) are “bankrupt,” think about the Monopoly game. Can the Monopoly Bank’s debt or deficit be too high or unsustainable? Can it ever go bankrupt?

In the Monopoly game, the Monopoly rules and the Monopoly dollars were created arbitrarily from thin air, and can continue to be created arbitrarily from thin air.

The same is true of the U.S. dollar and its rules.

You now know more than 99% of Americans, including politicians, the media and even economists.

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 Click here
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 grow the economy, and narrow the income/wealth/power Gap between the rich and you.
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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

THE RECESSION CLOCK

Recessions begin an average of 2 years after the blue line first dips below zero. A common phenomenon is for the line briefly to dip below zero, then rise above zero, before falling dramatically below zero. There was a brief dip below zero in 2015, followed by another dip – the familiar pre-recession pattern.
Recessions are cured by a rising red line.

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.

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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.
•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..
•No nation can tax itself into prosperity, nor grow without money growth.
•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)
•Deficit spending grows the supply of money
•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
•The limit to non-federal deficit spending is the ability to borrow.

•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 the rest..
•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..

MONETARY SOVEREIGNTY