The federal government’s finances are different from yours. They also are different from your city’s, county’s, and state’s finances.
Before the U.S. existed, there was no dollar. The U.S. dollar is an arbitrary creation of U.S. laws, which in turn are arbitrary creations of the U.S. government. The dollar is exactly what the government’s arbitrary laws say it is.
At various times, U.S. laws arbitrarily have valued the U.S. dollar at .0515616 tr (troy ounces) of gold, .0483742 tr, .0483091 tr, .0285714 tr, and other weights.
These official weights were part of gold standards.Today, there is no official dollar evaluation relative to gold.
While we say that gold backed the dollar, in reality, the U.S. government could have removed that backing any time it wished — and it did several times, the most recent on August 15, 1971, when President Nixon finally and permanently took us off the gold standard.
We stressed the word “arbitrary” to show that gold never has provided safety for dollars. Gold backed the dollar only at the whim of the government.
Unlike you and your local governments, the U.S. government never can run short of its own sovereign currency, the dollar. It creates dollars at will. It is Monetarily Sovereign.
So long as the government can create new laws, it can create new dollars.
(And it can prevent/cure inflation by increasing the Demand for dollars via interest rate control.)
In summary, the U.S. has total control over its dollar supply and the value of its sovereign currency. It never needs to ask anyone for dollars. Which brings us to the following article:
“You know we have a treaty with Japan, where if Japan is attacked, we have to use the full force and might of the United States,” Donald Trump said.
“If we’re attacked, Japan doesn’t have to do anything. They can sit home and watch Sony television, OK?”
Trump added that the United States protects Japan, South Korea, Germany, Saudi Arabia and other nations, and “they don’t pay anything near what it costs.”
“They have to pay. Because this isn’t 40 years ago. It’s got to be a two-way street.”
Japan’s alliance with Washington has been the bedrock of its defense since the end of World War II, and the country still hosts 47,000 US troops.
Trump stirred international concern in April by stressing that NATO member states should begin paying their “fair share,” and that Japan and South Korea must be prepared to arm themselves to deter a threat from North Korea.
“It could be that Japan will have to defend itself against North Korea,” Trump said Friday. “You always have to be prepared to walk. I don’t think we’ll walk, I don’t think it’s going to be necessary. It could be, though.”
We don’t invest in our allies out of the sheer goodness of our hearts. There are many political, military and strategical advantages for the U.S. to protect NATO nations and our other allies.
They provide air bases, and rocket sites, as well as financial and military cooperation in isolating rogue nations and fighting other enemies. Aid to our allies is a very good investment, indeed.
Unfortunately, Donald Trump, the man who refuses to ask for advice because he “has a very good brain,” the man who claims to know more than our generals — this man apparently has no understanding of why the U.S. invests in our allies.
He wants to make them think we’ll “walk” at any time, so they will have no trust in us.
Not living up to his promises is the way Trump always has done his business — cheating those who invested their time and their money in him.
Perhaps not paying laborers their salaries, and not paying creditors their due, worked in Trump’s businesses, but cheating fellow nations wouldn’t work for us.
After time, we would be branded as unreliable, and find ourselves isolated in the world.
More importantly, we don’t need the money Trump wants our allies to pay. Unlike Trump, who needs income to support his lavish lifestyle, the U.S. is Monetarily Sovereign. We can continue spending forever, and never ask taxpayers for one additional dollar.
In fact, even if all federal taxes fell to $0, the U.S. government could double spending and still never run short of dollars.
So giving our allies an ultimatum that offers no benefit for us, displays monumental ignorance — not just ignorance, but dangerous ignorance.
Trump relies on the ignorance of the public, but ignorance has its penalties.
Trump would “make America weak again.”
Rodger Malcolm Mitchell
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.