The Big Lie in economics is:
Federal Taxes Fund Federal Spending
Unlike state and local governments, whose taxes do fund spending, the federal government is Monetarily Sovereign. It has total sovereignty over the dollar. It can create as many dollars as it wishes, any time it wishes.
You read and hear the Big Lie almost every day.
Each time someone asks “Who’s going to pay for that?” when discussing a federal program, they express the Big Lie. The answer to their question is: The federal government will pay for it by creating dollars, ad hoc.
Obamacare is based on the Big Lie because it requires people to pay the federal government for services. The federal government neither needs nor uses such payments.
The Big Lie hides the fact that all federal tax dollars are destroyed upon receipt.
The federal government “has” no dollars. Rather it sends instructions to banks (in the form of checks or wires), telling the banks to increase the balances in checking accounts. When the banks do as instructed, dollars are created.
The concept, “federal taxes destroy dollars,” is counterintuitive and difficult to explain, particularly since state and local taxes do not destroy dollars. At first blush, the average person cannot imagine why the federal government taxes, if it destroys tax dollars.
(The reasons are psychological, and allow the government to control the citizenry by rationing services.)
Interestingly, I’ve found that everyone knows federal taxes destroy dollars, without knowing they know it.
Here’s the essence of a conversation I had just yesterday, with a friend:
RM: Federal tax dollars are destroyed as soon as they are received by the government.
Friend: No they aren’t. They are spent by the federal government. Taxes are how the government pays for spending.
RM: Do you think the federal government can run out of dollars?
F: No, the government always can print more dollars.
RM: If that is the case, the federal government doesn’t need to tax. It could stop taxing tomorrow and simply create the dollars it needs.
F: But that would cause inflation.
RM: Why would the end of federal taxation cause inflation?
F: Because if the government simply printed dollars, the dollar supply would go up, which would cheapen the dollar, and that’s inflation.
RM: So what you’re saying is: Federal spending causes inflation by increasing the dollar supply, and federal taxes prevent inflation by reducing the dollar supply.
F: Yes.
RM: Which shows you understand that federal tax dollars are destroyed upon receipt. If they still existed, they wouldn’t offset federal spending, and couldn’t prevent inflation.
And by the way, this isn’t true of state and local taxes, which are deposited in banks. Dollars exist only when they are circulating in the economy. The federal government has no dollars. It destroys every dollar it receives.
The fact that the federal government not only has no need for taxes, but actually destroys tax dollars upon receipt, is the single most important concept in all of economics.
It is the foundation of Monetary Sovereignty. It is what makes the Ten Steps to Prosperity (see below) possible.
Not understanding why the Big Lie (Federal Taxes Fund Federal Spending) is in fact, a lie, has led to the euro disaster. It’s why many states, counties, and cities teeter on the edge of financial disaster, while the federal government never has any difficulty paying its bills.
It’s why the UK was wise in retaining its pound, and not surrendering to the euro.
It’s why many states, counties, and cities teeter on the edge of financial disaster, while the federal government never has any difficulty paying its bills.
In short, everyone believes federal tax dollars are destroyed upon receipt. They just don’t know they believe it.
To claim that eliminating federal taxes would cause inflation is simply another way to say federal taxation destroys dollars.
It’s the first big step toward understanding economics.
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 EVERYONE Five 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
#Monetary Sovereignty - Mitchell 
Werent you a banker?
You seriously believe that banks “do as instructed”?
You go tell this nonsense to a banker and you will get laughed at, and if you are lucky they may wave the slap.
You know banks are audited by the sec, fdic, fed, etc. YET you somehow in your twisted mind the fed will ask the banks to simply mark up accounts. A banker would tell you thats a proof break and if found during an audit the bank would have to pay some hefty fines.
This logic of yours is not only wrong, you are intentionally misleading your readers when you know damn well its not the way it works.
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They mark up accounts to pay bills. Governments have to pay their creditors. You know, book keeping operations. RMM’s logic is impeccable.
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What do you think a check or a wire are if not instructions?
In another couple of weeks, my bank will increase the numbers in my checking account. Why? Because the SSA will send them a wire, instructing them to do it.
At the instant they obey those instructions, the money supply in America will increase. That is one of the ways dollars are created.
And that is damn well the way it works.
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You are confusing things to your convinience. Why do all us dollar payment pass through the fed? Why do all banks sending or receiving dollar payments have funded accounts at the fed?
Yes, i work for a bank.
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I have had that discussion over and over many times with those same naysayers. The argument they often throw at me is that federal “printing” of money (they mean “creating”) causes inflation, so the federal government intentionally avoids spending newly printed dollars by collecting and respending tax dollars. Of course the effect of taxing and respending (as well as the myth of borrowing) is given credence by the accounting sleight-of-hand associated with the government’s Treasury Tax and Loan (TT&L) accounts into which are recorded tax collections and treasury securities payment receipts for eventual transfer to the treasury’s general account at the Fed. And the debiting of the general account when the Treasury spends adds to the misunderstanding. None of those accounts are operationally necessary or actually meaningful, of course, but they help keep people fooled about the true nature of federal spending and taxes, and unfortunately, if they know about them, add fuel to their disbelief. It’s a clever disguise.
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“The Big Lie hides the fact that all federal tax dollars are destroyed upon receipt.” ~ RMM
Some people reject this part of Monetary Sovereignty, because they subconsciously believe that money is physical, limited, and is too precious to simply “destroy.” And yet it is indeed effectively destroyed.
Let me describe some details about what happens. Keep in mind that when all is said and done, tax revenues are indeed destroyed upon receipt.
When we pay a federal tax, does the money vanish like points on a sports scoreboard? Not exactly. The money “enters” the realm of reserves, which is not actually money, in that reserves (in this sense) cannot be spent or invested.
When you write a check to pay a federal tax (other than an income tax or a FICA tax), the federal government instructs your bank to debit your account, and to credit a Treasury Tax and Loan account (TT&L) at the same bank, or at some other bank. About 9,000 across the USA banks have TT&L accounts.
(Personal income taxes involve a special kind of TT&L account, which I will discuss below.)
For a bank to have a TT&L account, the bank must file an application with the U.S. Treasury, and must have collateral to cover any account at the bank that exceeds the $250,000 limit set by the FDIC. If the bank is a credit union, then in order to have a TT&L account, the bank must have collateral to cover any account at the credit union that exceeds the $250,000 limit set by the National Credit Union Share Insurance Fund.
REMEMBER that this is all a numbers game. Money is not physical. Money consists of accounting entries on spread sheets. Physical currency bills are not money. They merely represent money.
As I said, when your bank account is debited, and a TT&L account is credited, your money ceases to be spendable money, and becomes bank reserves.
“Reserves” are a secondary system that is used to (a) stabilize the financial markets by reducing uncertainty about the supply of reserves in the overall banking system and (b) simplify the Fed’s implementation of monetary policy.
“Monetary policy” means the Fed gives banks directives regarding reserve requirements. (Remember: reserves are not “money” in the usual sense, since reserves cannot be spent). These reserve requirements can limit the amount of regular money that a bank can create out of thin air as loans. For example, the Fed can tell a bank that, “You can only lend money that is equivalent to half of your reserves.” The bank can get more reserves by borrowing money from the Fed, but the Fed has limits and guidelines for that too.
So let’s retrace our steps. Remember that this only applies to FEDERAL taxation other than income tax or FICA tax…
[1] You write a tax check to the IRS. Corporations write a tax check to the IRS on a quarterly basis. (The federal government also collects excise taxes, estate taxes, customs duties, interest from government accounts at the Fed, called “earnings on deposits.” and so on.)
With FICA taxes, your employer withholds money from your paycheck. In this case your tax check is automatically “written” for you every time you get a paycheck. FICA tax revenues go into the “General Fund,” meaning they are destroyed upon receipt.
[2] In the case of non-FICA taxes, the IRS sends instructions to your bank to debit your personal account by the amount of the check, and to credit a TT&L account at your bank, or at some other bank.
[3] When this happens, your money ceases to be money, and becomes reserves. Why? Because if trillions in tax money went directly into regular bank accounts, and remained actual, spendable “money,” it could disrupt the banking system. With TT&L accounts, the money can stay in the banking system (including the Fed) while not actually being “money.”
[4] The U.S. Treasury then debits the TT&L account, and credits a U.S. Treasury account at the Federal Reserve.
[5] Some or all of that money in the U.S. Treasury account may then be zeroed out (i.e. destroyed) depending on the Fed’s and the Treasury’s needs.
How long does your tax money (which has now become “reserves”) sit in a TT&L account before the reserves are “forwarded” to the U.S. Treasury account at the Fed? If your tax payment is made electronically to a TT&L account, then by federal law the money must be forwarded (and changed into reserves) to the U.S. Treasury’s account the same day your own account was debited, and the TT&L account was credited. (Federal law requires companies with tax payments of over $200,000 per year to send in their taxes electronically.)
NOTE: Personal (i.e. individual) income taxes involve special circumstances. Here is what happens…
[1] You write a check to the IRS.
[2] The IRS instructs your bank to debit your account, and to credit special TT&L accounts at 160 “lockbox” commercial banks across the USA, which will collect about $1.6 billion by the end of FY 2016.
Depending on the U.S. Treasury’s wishes, your tax money will be “forwarded” to the Treasury’s account at the Fed as reserves, or sometimes it will be “forwarded” as actual money to the Treasury’s account at the Fed Bank in New York. In the latter case, tax money is NOT “destroyed upon receipt.” Instead, the Treasury uses it to fund government operations. The Treasury could simply create that money out of thin air, but by first taking it out of the economy, the Treasury avoids causing possible inflation.
So in one sense tax monies are not “destroyed” upon receipt” but are (mostly) transformed into reserves, which may be “stored” or destroyed as the Fed and the Treasury see fit. In another sense, tax monies are indeed “destroyed upon receipt,’ since reserves are not “money.”
It’s all a game of moving numbers around on spread sheets.
THE MAIN POINT is that the U.S. government can never become “broke,” Social Security is not “insolvent,” and the U.S. government does not run on loans or tax revenue.
The U.S. government has no need or use for tax revenue as INCOME, but the government does use tax revenue as RESERVES to help regulate and stabilize the banking system, and to help control inflation in the overall economy.
BOTTOM LINE: Are federal tax revenues destroyed upon receipt? If you look closely at the details, it may seem that the answer is no. But if you look at the overall picture, then, effectively, the answer is indeed YES.
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Are you saying that reserves are not created by federal spending but rather by federal taxing? When the treasury issues a payment are not the recipient’s deposit account credited and the bank’s reserve account at the Fed credited virtually simultaneously?
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”[2] The IRS instructs your bank to debit your account, and to credit special TT&L accounts at 160 “lockbox” commercial banks across the USA, which will collect about $1.6 billion by the end of FY 2016.”
Shouldn’t the above $ figure read $1.6 trillion?
Very informative summary. Thanks
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Good catch.
The U.S. government expects to collect $3.525 trillion in taxes for FY 2016.
46.7% of that (i.e. $1.6 trillion) will occur as personal income taxes.
Apologies for the typo.
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Elizabeth, can you please help me understand better the “reserves” situation associated with tax payments?
My understanding, when a person deposits a check from the Treasury to personal account st Bank-A, Bank-A credits that person’s account and the Fed credits Bank-A’s reserve account at the Fed. Then when a person writes a $100 check from his personal account at Bank-A to someone at Bank-B, Bank-A debits the person’s account by $100 and Bank-B credits the other person’s account for $100. Additionally, the Fed debits Bank-A’s reserve by $100 and credits Bank-B’s reserves by $100.
(The actual sequence or mechanics may differ, but I think the effect is the same).
Now suppose instead of writing a check to another person, our guy writes a $100 federal income tax payment to the Treasury?
1) Bank-A debits the person’s personal account by $100.
2) The Fed debits Bank-A’s reserves by $100.
3) The Fed credits a special TT&L account for $100.
Are you saying that the TT&L account is treated as a reserve? If so, belonging to whom?
Thanks.
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“The fact that the federal government not only has no need for taxes, but actually destroys tax dollars upon receipt, is the single most important concept in all of economics.” ~ RMM
That’s the U.S. federal government, which creates dollars out of thin air, and whose dollars are accepted worldwide.
In nations that use the euro, and which have a trade deficit, the government MUST tax, since the government must borrow all its money from bankers, and must pay back the bankers.
Anyway, for me, the most important concept in all of economics is that money is not physical. Money is strictly a mental construct, like points on a scoreboard, or numbers on a chalkboard. Therefore money is limitless.
The gap between rich and poor is not caused by shortages, but by mal-distribution, which in turn is maintained by lies and delusions.
On a different note, Rodger says the UK was wise to not adopt the euro. I’ll second that, because the UK has a huge trade deficit. If the UK adopted the euro, then the UK government would have to borrow all its money from bankers, like the Greek government does. Given the size of the UK trade deficit (about seven billion pounds per month, on average) then within five months the UK economy would plunge below even that of Greece. It would be a catastrophe.
As things are now, the UK government has no problem, since it creates its spending money out of thin air, and since that money (pounds) is widely accepted abroad.
For the UK government, austerity is strictly gratuitous. Its purpose is to widen the gap between the rich and the rest.
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Elizabeth, In Australia the Constitution sets up a Consolidated fund in Treasury into which all federal income is paid, not just taxes and fees. We don’t have intermediary accounts like TT&L. Not sure but probably, as money was finite in 1901, it was a checking account, but today it’s just an accounting ledger and it shows the budget balance continuously. It’s no source of spending.
In the UK the Lisbon Treaty restricted the UK’s monetary sovereignty. It mandates the UK take up gilts to match spending, and some say their Consolidated fund [which also has other intermediary named accounts] does recycle tax deposits. But I’m not certain. It will revert back on Brexit to full MS.
Good news Osborne resigned. A complete ignoramus in economics, of that there can be no doubt – and blinded by the Austerity disaster.
I’ve not heard US tax is used for reserves as you describe? Is there some official document? I have one which talks about depositing into TT&L accounts but not the next step you describe.
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A couple of items…
[1] With respect, money has never been finite anywhere at any time, since money has never been physical. Practically speaking, money-creation is only limited by inflation potential.
Coins and currency are physical, but they are not money. They only represent money. Essentially they are tokens.
What about the “gold standard”? This was a mere gimmick that politicians invoked when they wanted to pretend that the U.S. government had “no money.” When politicians wanted to create extra money out of thin air (e.g. for World War II) politicians ignored the “gold standard.”
Thus, the “gold standard” never imposed any real limit on the amount of money that the U.S. government could create out of thin air. It was a mere pretense that Nixon ended when he “closed the gold window” in August 1971. Nixon had several reasons for doing this, one of which was to silence his critics in Congress who said there was “no money” to continue the war on Vietnam.
Think about it. No government can realistically base its fiscal policy on the vicissitudes of private gold traders.
[2] “In the UK the Lisbon Treaty restricted the UK’s monetary sovereignty. It mandates the UK take up gilts to match spending, and some say their consolidated fund [which also has other intermediary named accounts] does recycle tax deposits. But I’m not certain. It will revert back on Brexit to full MS.”
With r4espect, the U.K. has never experienced any restriction on its Monetary Sovereignty. Indeed, in terms of degrees of Monetary Sovereignty, the U.K. is second only to the USA, because (a) the U.K. government creates pounds sterling out of thin air, and (b) those pounds sterling are accepted more widely than any other currency except the U.S. dollar.
(Pounds “sterling” means British pounds, as opposed to Egyptian pounds, or Lebanese pounds, or South Sudanese pounds, or the pounds of eleven other nations and territories.)
As far as creating gilts (i.e. U.K. Treasury securities) to match spending, this again is a gimmick. The U.K. and U.S. Treasuries can create as many or as few securities as they like. Supposedly this process is governed by laws, but such laws are suspended, modified, or ignored at will.
Treasury securities are purchased by investors, and also by the Bank of England and the Federal Reserve. If the UK government issues gilts, and no one buys them, then the Bank of England “buys” the gilts, using money created out of thin air. It’s all accounting sleight-of-hand; a game of moving abstract numbers around on spread sheets.
This is not the case with euro-zone nations. If they have trade surpluses, then they have euros coming in from abroad — but if they have trade deficits (like France and Greece) then they must borrow all their euros from bankers, who in turn are paid off by the ECB in Frankfurt. The ECB then exacts payments for the debts in the form of mandatory privatization in France and Greece.
The only reason why France has not (yet) been destroyed like Greece is that the French economy is 12.4 times larger than the Greek economy. Thus the damage in France is not (yet) as obvious as in Greece, but it is accelerating. During the last twelve months, France has had an average monthly trade deficit of 773 million euros, which means that France goes 773 million euros further into debt each month.
This is why the euro-zone will eventually break up. The European Commission and European Central Bank will try to stall this breakup by declaring war on Russia, but they will only postpone the inevitable.
[3] Regarding George Osborne, he didn’t resign. Yesterday the new Prime Minister, Theresa May, dismissed Osborne as one of her first acts, and replaced him with Philip Hammond.
Don’t get your hopes up. Philip Hammond is as pro-banker and pro-austerity as was Osborne, and he has vowed to continue Osborne’s campaign of deficit reduction (i.e. austerity for the masses, and profligacy for the rich).
Hammond repeats the Big Lie that national government finances are the same as private finances, and he says that without continued austerity, the U.K. economy will go into a recession. This is the exact opposite of the truth.
(Meet the new boss; same as the old boss.)
The corporate media outlets are seeking to placate the British masses by falsely claiming that Hammond will “scale back” austerity. This is like claiming that Hillary will “scale back” the wars. If you read what Hammond actually says, you will see that he has no intention of reducing austerity.
TAKEAWAY POINT: The US and UK governments do not rely on tax revenues (or on borrowing) for their spending money. Instead, they create money out of thin air, like banks do when they make loans.
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You put words in I did not write here. That’s not respect. When I said money was finite in 1901, it was shorthand for it being backed by metal. It wasn’t a definition of money. Same again for the UK. It doesn’t have, or cannot exercise full Monetary Sovereignty as Clause 123 of the Lisbon Treaty puts in restrictions and obligations , but it’s still way better than for Greece or Italy with the “foreign” Euro. Monetary Sovereignty is not a hard and fast either/or concept, in case you didn’t know. With the UK in the eurozone we believe tax has to be recycled,from the consolidated fund,via the National Loans Fund and only after that is done can new money be created.
If you can show proof that this is wrong then your opinion will be backed up.
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“Monetary Sovereignty is not a hard and fast either/or concept, in case you didn’t know.” ~ ejhr2
Wrong again. The US and UK governments have Monetary Sovereignty, whereas US states and UK counties do not, nor do euro-zone nations.
In this context, Monetary Sovereignty is indeed an either/or phenomenon.
Among national governments there are varying degrees of Monetary Sovereignty, as I wrote above. If a nation has a trade deficit, and if that nation’s currency is not accepted outside the nation’s borders, then the nation must borrow foreign currency in order to obtain imports. In that case, even if the nation’s central government creates its own money, the government does not have full Monetary Sovereignty over all the money it uses, since some of the money consists of borrowed foreign currency. However the government has full Monetary Sovereignty over its own currency.
Incidentally the U.K. is not in the euro-zone, in case you didn’t know, and national governments with Monetary Sovereignty do not “recycle” tax revenues in the way that you claim.
How can something with no physical existence be “recycled”? Are points on a sports scoreboard “recycled”?
Furthermore I repeat that (contrary to your delusion) money was not limited in 1901, or in any other year, since money has never been physical.
I suggest that you discuss this topic with young children, since they are able to grasp simple concepts that geniuses like you find unfathomable.
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You just contradicted yourself. It is an either/or phenomenon in the second paragraph, then it isn’t in the third. So which is it? I don’t see why I have to repeat the obvious, just because you fail to get it. The UK has a compromised monetary sovereignty because of the Lisbon Treaty it signed.
Full monetary sovereign countries do not have to borrow or save their currency, and when trading they don’t have to save foreign currency to pay for their imports. They can do so if they so choose but it’s not absolutely necessary. They can buy the foreign currency on the spot market using their own currency available in infinite amounts.
The rest of your comments are beneath contempt, and libellous as well.
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@ejhr2015: Thanks for the heads up. I meant to say that, “Among national governments other than the UK and US government, there are varying degrees of Monetary Sovereignty.”
As for the rest of your comments, they are as idiotic as ever. Please read all of Rodger’s posts and enjoy the learning experience.
On second thought, never mind. You are already a genius — i.e. not teachable.
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Is inflation really as bad as we have been led to believe?
I always thought that inflation was a good thing, as it transfers wealth from creditors to debtors, thereby narrowing the gap!
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