Why I am so tired of “doing the Semmelweis”

Does the name Ignaz Semmelweis sound familiar? I empathize with him and the memory of him exhausts me.

Here is a bit of history:

The year was 1846, and our would-be hero was a Hungarian doctor named Ignaz Semmelweis.

It was a time when physicians were expected to have scientific training.

So doctors like Semmelweis were no longer thinking of illness as an imbalance caused by bad air or evil spirits. They looked instead to anatomy. Autopsies became more common, and doctors got interested in numbers and collecting data.

Semmelweis wanted to figure out why so many women in maternity wards were dying from puerperal fever — commonly known as childbed fever.

When Semmelweis crunched the numbers, he discovered that women in the clinic staffed by doctors and medical students died at a rate nearly five times higher than women in the midwives’ clinic.

(After much research), Semmelweis hypothesized that there were cadaverous particles, little pieces of corpse, that students were getting on their hands from the cadavers they dissected.

And when they delivered the babies, these particles would get inside the women who would develop the disease and die.

So he ordered his medical staff to start cleaning their hands and instruments not just with soap but with a chlorine solution.

Semmelweis didn’t know anything about germs. He chose the chlorine because he thought it would be the best way to get rid of any smell left behind by those little bits of corpse.

And when he imposed this, the rate of childbed fever fell dramatically.

What Semmelweis had discovered is something that still holds true today: Hand-washing is one of the most important tools in public health. It can keep kids from getting the flu, prevent the spread of disease and keep infections at bay.

You’d think everyone would be thrilled. Semmelweis had solved the problem! But they weren’t thrilled.

For one thing, doctors were upset because Semmelweis’ hypothesis made it look like they were the ones giving childbed fever to the women.

Eventually, the doctors gave up the chlorine hand-washing.

Semmelweis kept trying to convince doctors in other parts of Europe to wash with chlorine, but no one would listen to him.

Even today, the Centers for Disease Control and Prevention says hand hygiene is one of the most important ways to prevent these infections.

Semmelweis failed because the establishment did not want to know the truth, and definitely did not want the public to know the truth.

Semmelweis ultimately died in an asylum. Women continued to die of childbed fever.

Now, 170 years later, people die of hospital-caused infections. Yet, you still have to remind careless nurses and doctors to use hand cleaner each time they visit your room.

When it comes to human belief, facts are far less important than emotion. Despite the absolute fact that hand cleaning prevented childbed fever, doctors didn’t want to believe it and didn’t want the public to believe it.

And that is why I empathize with Semmelweis.

It is an absolute fact that the U.S. government originally created the U.S. dollar from thin air, simply by creating laws from thin air. The laws made the dollar everything it is, and subsequent laws will make the U.S. dollar everything it will be.

The dollar is wholly the creation of U.S. laws, nothing more.

And just as laws have no physical existence, so too the dollar has no physical existence. You cannot see, feel, taste, smell, or hear a law. Similarly, you cannot see, feel, taste, smell, or hear a dollar. It is nothing more than a legal entity.

As the creator of the legal entity named a “dollar,” the U.S. government was, and is, sovereign over that legal entity. It created as many dollars as it wished by the stroke of a pen, and gave these dollars the value it wished, also by the stroke of a pen.

Still today, the government creates as many dollars as it wishes, this time by the press of a computer key. And still today it gives those dollars the value it wishes, also with a computer key.

The U.S. government has the power of Monetary Sovereignty, though it often has not used that power to help the populace.

It is an absolute fact that the U.S., a Monetarily Sovereign nation, cannot unintentionally run short of its own sovereign currency.

And it is an absolute fact that today’s establishment, like the doctors of Semmelweis’s day, do not want you to understand Monetary Sovereignty.

Because the public believed the doctors, who had authority, women did not understand the need for hand washing. So they died in agony.

And because today’s public believes the media, the politicians and the university economists, people do not understand Monetary Sovereignty, so we die the agony of economic deprivation.

We have poverty. We have sickness and unaffordable health care. We have hunger and homelessness. We have a corroded infrastructure. We have a corroded educational system. We have federal taxes.

And all are unnecessary and could be cured or at least ameliorated if people only understood Monetary Sovereignty.

Every day I see articles about the “unsustainable” federal debt. They are wrong.

The so-called “federal debt,” is nothing but the total of deposits in T-security accounts at the Federal Reserve Bank. It is utterly sustainable. It could be paid off tomorrow, simply by transferring the dollars that exist in those accounts back to the owners’ checking accounts, from whence they came. No new dollars required.

That is an absolute fact.

Every day, I see articles about “unaffordable” social programs like Social Security, Medicare, Medicaid, aids to the poor and aids to education. They are wrong.

Because the U.S. federal government is Monetarily Sovereign, and never can run short of its own sovereign currency, the dollar, it can afford anything that costs dollars.

Unlike states, counties, cities, businesses, you and me, all of which are monetarily NON-sovereign, the federal government doesn’t need or even use income. It pays its creditors by creating dollars ad hoc, from thin air.

Even if every federal tax — FICA, income taxes, luxury taxes, inheritance taxes et al — fell to $0, the federal government could continue spending, forever.

That is an absolute fact.

And every day, I see articles claiming that if the federal government taxed too little, or spent too much, we would have a Zimbabwean or Argentinian hyper-inflation. They are wrong.

Being Monetarily Sovereign, the U.S. government controls the value of its own sovereign currency, the dollar.

Originally, it exercised this control by ruling that each dollar was worth a certain weight of silver or gold, a ruling the government arbitrarily changed many times over the years. The more silver or gold backed each dollar, the more the dollar was worth.

Today, silver and gold no longer back the value of the dollar. That function now is fulfilled by interest rates.

The higher the interest rates, the more in demand are dollar-denominated bonds, notes, and bills, and the more in demand are the dollars with which to buy these bonds, notes, and bills. The increased demand for dollars increases the value of dollars, which is counter to inflation.

When the U.S. Federal Reserve senses inflation, it raises interest rates, and when it deems inflation too low, it lowers rates. By controlling interest rates, the Fed controls inflation.

These are absolute facts, just as true as Semmelweiss’s assertion that hand-washing helps prevent disease — and just as disbelieved by the public.

And as Semmelweis’s peers did not want the public to understand the truth about hand-washing, todays politicians, media and university economists do not want the public to understand the truth about Monetary Sovereignty.

Potential loss of prestige and power motivated Semmelweis’s peers to tell their big lie; potential loss of prestige and power is what motivates today’s BIG LIE in economics.

It begins with the rich. What makes them rich? The power and prestige Gap between them and the rest of us. If there were no Gap, no one would be rich and no one would be poor. We all would be the same.

So the rich want to widen the Gap. That is their primary motivation.

And to widen the Gap they bribe the politicians (via campaign contributions), bribe the media (via ownership of the media), and bribe the economists (via contributions to universities).

They bribe these people to tell THE BIG LIE, so all you read and hear is based on THE BIG LIE, and as a result, you believe THE BIG LIE.

What is THE BIG LIE? Here it is in just 5 words: FEDERAL TAXES FUND FEDERAL SPENDING.

Unlike state taxes, unlike county taxes, and unlike city taxes, federal taxes do nothing but remove dollars from the economy. They do not fund anything. Once received they disappear from the money supply. They are a net loss for the economy and for taxpayers.

Belief in THE BIG LIE has caused more economic damage than all the wars, all the floods, all the droughts, all the volcanic eruptions and all the crime in world history.

The absolute fact is: Federal taxes are too high and federal spending is too low.

My friend Stephanie Kelton, the chair of the economics department at the University of Missouri, Kansas City, understands Monetary Sovereignty well. She was hired by Bernie Sanders to be his chief economics advisor.

Yet, Bernie’s proposals are filled with commentary about how certain federal taxes would support his suggested federal programs.

Bernie knows this is a lie, because Stephanie knows it is a lie. They know federal taxes do not fund federal spending. They know the federal government cannot run short of the currency it invented. They know our social programs are not financially “unsustainable.”

They know the federal deficit, far from being an economic problem is an economic necessity for growth. They know every depression in U.S. history has been introduced with federal surpluses, and nearly all recessions have been introduced with deficit reduction.

But in our climate of economic ignorance, Bernie and Stephanie are afraid to tell the truth to the public. It would be Galileo arguing with Pope Urban VIII.

Like poor, old Semmelweis, I’ve spent 20 years trying to help the public see what would benefit them, and the public has used those 20 years to respond with invective.

The facts are:
–The Gap between the rich and the rest is too wide and it’s widening. The middle class is decimated and the poor are in worse shape than they were 20 years ago.
–The Gap could be reduced greatly, and the economy could prosper, by recognition of Monetary Sovereignty and by the implementation of the Ten Steps to Prosperity (below).

Imagine you are a doctor with morbidly obese patients, who also smoke. You try to show them how and why to lose weight and to stop smoking. But they tell you you’re not only wrong, but angrily tell you’re stupidly wrong. And your patients keep eating, keep smoking, and keep sickening and dying too soon.

At what point do you grow tired? At what point do you ask, “Why should I care, if they don’t.” At what point do you surrender? After all, my wife and I already have Social Security and Medicare and belong to country clubs and enough money to last us.

But then I think of my children and grandchildren and the world they will occupy, all because of national ignorance and the refusal to learn — not just refusal, but angry, insulting refusal.

So I write yet one more article hoping that somehow this will be the one that causes the truth to prevail, but knowing it probably won’t — like the sucker hoping his lottery number will come through.

It’s not that I have nothing else to do. I can write fiction and poetry. I can paint. I can keep playing tennis and schmoozing with my friends.

I tell myself, this is more important.

But, I really, really am growing weary of telling my obese, smoking, refusing-to-learn “patients” how they can live better, longer lives, when they don’t seem to care about themselves.

I really, really am tired of “doing the Semmelweis.”

Rodger Malcolm Mitchell
Monetary Sovereignty

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Ten Steps to Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich afford better health care than the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-tranferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be an good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

9 thoughts on “Why I am so tired of “doing the Semmelweis”

  1. Human beings don’t like facts very much.
    Consider the implications of people understanding and applying the concepts monetary sovereignity.
    The economy would grow a lot.
    Suddenly, life would be far easier.
    Millions of people used to deprivation would have access to goods
    and services they never thought they could ever reach.
    I think this is very scary for the average people.

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  2. You might be tired Malcolm, but keep it up! There is a growing cohort of people, non-economists like me, who agree with your facts rather than the spin put out by mainstream economists and other paid shills.
    The internet is a powerful vehicle for spreading the truth [as well as lies]
    The people may not understand the economics but they sure can see that’s its all wrong, and as with Brexit, those with money voted in and those without wealth voted out.
    Here’s John Pilger;
    http://www.counterpunch.org/2016/06/24/a-blow-for-peace-and-democracy-why-the-british-said-no-to-europe/
    I think the rich parasites are very disturbed at this vote. Lets hope they see trouble ahead if they continue the way they have been with Neo-liberal ‘s toxic policies. Hillary is the IN vote, Trump the Out.
    Trump will gain. The more the establishment pushes for Hillary the more the dispossessed will vote Trump even if it is just a poke in the eye.
    There will be some rethinking going on from now on. We may get to see some benefits pre the election.

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  3. Tyler,

    I agree that working fewer hours would help improve quality of life for many people, and might reduce unemployment, since more people presumably would be needed to complete the same tasks.

    So that is a positive for the idea.

    I do not believe a shorter work week would reduce carbon emissions. Auto emissions actually could increase if more people are needed to travel to work, to accomplish the same results.

    Factory emissions would decrease only if production decreased.

    I doubt you’d opt for a reduction in GDP as a good economic solution. I disagree with the article’s notion that people consume too much.

    And the shorter work week could widen the gap between the rich and the rest.

    The rich would continue to earn the same as before, while salaried people would earn less (unless business is required to pay more per hour, which in itself has negative consequences.)

    All of the above said, it would be interesting to see an experiment with a 35 hour week. It not only would improve quality of life for a segment of people, but might even improve efficiency.

    People become weary toward the end of each work day, and this weariness probably leads to errors and omissions.

    There has been some research on a “compressed” (i.e. 4-day) work week, leaving 3 days for holiday.

    Dan Hamermesh an economics professor at the University of Texas at Austin and thought leader on the topic of the compressed work week considers its trade-offs.

    “If everyone starts working fewer hours, less work will get done economy-wide, and collectively employers aren’t going to pay workers the same amount for that reduced output,” Hamermesh said in said in the same interview with CNN Money.

    While hours easily are measured, they are not exactly what businesses pay for. Most businesses actually buy accomplishment.

    A vast number of people are not paid hourly, but rather, for accomplishment. Business owners and business executives, artists of all types, athletes, traders — the list could go on and on.

    In 55 years of working, I myself, never have been paid hourly.

    I suspect the trend will not be to pay for fewer hours of work, but for more work-at-home and/or for accomplishment pay.

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  4. Rodger It has taken me a while to understand all the nuances of Monetary Soveregnty such that I can easily address questions and criticisms. I’m trying to make a difference, despite the odds.

    I have actually met with some Congresspeople on the subject. One (Rep. Ron Kind – D-Wis) was very sharp and “got it”. Then he went right back to figuring out how he can “pay for” the various good initiatives on his plate. So the usual frustrations.

    The CBO “scores” the impact of higher public debt as negative for real growth in the long run. This is based ENTIRELY on the “crowding out” hypothesis.

    Since this is wrong, every longer-term tax and spending proposal is scored incorrectly and offers ammunition for the austerity crowd – as they cite the “non-partisan” CBO.

    I currently am attempting to communicate with selected CBO economists. No responses so far (surprise, surprise). However, my thinking is that finding an open mind at the CBO could potentially have a more meaningful impact than would finding a sympathetic and understanding politician, editor, academic, etc. So I will keep trying to cause some disturbance of the status quo.

    My point is that without the inspiration and education from people like yourself, I (and others) would not be doing this. So hopefully that fact helps your own frustrations..

    This article was a “keeper” brief summary of MS. Thanks!

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  5. Thanks, Charles.

    Whether the CBO is “non-partisan” makes little difference; both parties tell the “Big Lie.” But consider this:

    The Speaker of the House of Representatives and the president pro tempore of the Senate jointly appoint the CBO Director

    The rest of CBO’s staff, including the Deputy Director, are appointed by the Director.

    Does that sound “non-partisan”?

    As for “crowding out,” the ironies never end. The term “crowding out” can mean different things, all ignorant.

    Often it means that federal spending supposedly “crowds out,” i.e reduces, private spending.

    But federal spending adds dollars to the economy and enriches the businesses that sell to the government. These businesses not only spend money with other businesses, enriching them, but all these businesses hire personnel.

    Supposedly then, adding dollars to the economy and increasing business profits negatively affect the economy — a truly crazy idea.

    “Crowding out” also can mean federal borrowing “crowds out” private borrowing, by using up the availability of lending funds, thereby increasing interest rates.

    However, federal “borrowing” is much different from private borrowing. The federal government does not borrow from banks.

    Federal “borrowing” merely is deposits in T-security accounts at the Federal Reserve Bank. (You are a lender to the federal government, if you invest in T-securities.)

    By contrast, private borrowing creates lending funds. When you borrow from a bank, the bank first makes a deposit in your checking account at that bank. That is how banks create dollars.

    The supposed limit to bank lending is reserves, which is where the misleading term “fractional reserve” lending comes from. However, no bank ever runs short of reserves, because all banks can get as many dollars as they need from the government or from other banks or investors.

    I owned a company that lent millions of dollars to our bank, for reserves, in what are called “overnights.”

    The real limit to bank lending is not “lending funds,” but rather bank capital — the difference between bank assets and liabilities.

    Bank capital is not reduced by federal “borrowing” (the total of T-securities outstanding).

    “Crowding out” also can refer to the supposed need for the federal government to raise taxes to pay for projects — except the federal government, being Monetarily Sovereign, does not use taxes to pay for anything.

    Finally, “crowding out” can refer to federal projects supposedly crowding out private projects. For instance, if the government builds a bridge, a private contractor can’t build that bridge — except the government doesn’t build bridges. It hires private contractors, thereby enriching the contractor’s employees and enriching the economy.

    In short, every use of the term “crowding out” is a demonstration of economic ignorance. Federal spending does not “crowd out anything. Quite the reverse. Federal spending stimulates the economy, because the federal government creates dollars, ad hoc, when it pays bills.

    I may write a post on this subject.

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  6. Thanks Rodger. The “serious” economists at the CBO like to point out that:

    Investment = Savings
    or:
    Investment = Private Savings + Public Savings

    Therefore, to them (and most economists) it is “obvious” that a decrease in public savings ( a higher deficit) will, all else equal, result in lower investment. However, what they overlook (and one of the things I attempt to explain) is that all other things are NOT equal. Specifically, a decrease in public savings will result in an increase in private savings – leaving investment unchanged.

    Manipulating their equation:

    Private Savings = Investment minus Public Savings
    or:
    Private Savings = Investment plus Public Deficit

    In words, private savings is equal to the savings created by investment PLUS
    the public deficit.

    To the extent deficits improve economic growth, this will have a beneficial impact on investment – outside of the “neutral” impact of the static identities.
    In any case, investment is obviously not decreased.

    With respect to this issue, it appears that the economics profession has been hoodwinked by an equation where they do not understand (or choose not to understand) the underlying interactions.

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  7. Charles, Lots of semantic confusion, here.

    If by “public,” we mean the only the federal government (as opposed to all other domestic governments), there are no “public” savings.

    The federal government, being Monetarily Sovereign, has no money. (Anyone who disagrees is welcome to tell me how much money the federal government has. You will not find that information, anywhere.)

    A Monetarily Sovereign government, unlike state and local governments, and you, and me, does not have a store of dollars from which it pays bills. It creates new dollars, ad hoc, every time it pays a bill.

    All dollars flowing to the federal government (including all federal taxes) are destroyed upon receipt, and are not included in the money supply.

    On the issue of “crowding out”: Contrary to popular intuition, banks do not keep a store of dollars, from which they lend. Banks create dollars, ad hoc, by lending.

    (If you lend someone money, you take money from your savings and lend it. Banks operate differently.)

    All a bank does is credit a borrower’s checking account. Dollars are not transferred from one account to another. Dollars are created from thin air.

    So bank lending never has precluded future lending. Since lending creates dollars, lending increases the capital used as a basis for future lending.

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  8. Thanks Rodger. Of course, the “government” has no money. The term “public savings” is just an accounting entry to make a balance sheet balance. For example, net private saving does exist (when we receive more in federal spending than we lose in taxes) when the public sector runs a deficit To make the nation’s balance sheet balance, this net private savings is offset by public sector “dissaving” – the latter is just an accounting entry reflecting that the government spent more dollars into the economy than it took away in taxes.

    If economists understood that the government has no money then they might understand that “Public Savings” can not have any impact on Investment – which was my point. .
    .
    And you are right. Savings doesn’t finance investment . Investment creates savings. Loans create deposits, not the other way around. Thus the “mainstream” view that deficits “crowd out” savings, and therefore reduce investment makes no sense in the first place. .

    So, as I understand it, both public sector deficits and bank lending increase the supply of money.

    Like

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