It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders.
……………………………………………………………………………………………………………..
If you wish to rid yourself of those pesky excess dollars filling your bank accounts, but you can’t find a Nigerian Internet scam to meet your needs, you might wish to go to PayGov.
There, you will find an official U.S. government form that looks like this:
Gifts to Reduce the Public Debt
Use this form for contributions to reduce the public debt.
Paying online with Pay.gov is safe, secure, and the preferred method to make a payment.
To make a payment using one of the below accepted payment methods, please click the Continue to the Form button.Accepted Payment Methods:
- Bank account (ACH)
- PayPal account
- Debit or credit card
This is a secure service provided by United States Department of the Treasury. The information you will enter will remain private.Gifts to Reduce the Public Debt
Contact:
Customer Service Phone: 844-284-2676This form requires you to have a Pay.gov account.
Rather than going through the bother of setting your dollar bills on fire, or shredding them beyond redemption, you are given a handy way to destroy your dollars uselessly, courtesy of the United States government.
When you send money to the federal government, here is what will happen: They will cease to be part of the money supply. They no longer will be part of “M1,” “M2,” “M3,” or even of “L.”
They will cease to exist. Your dollars will be destroyed.
To “lend” to the federal government, you buy a T-security. You instruct your bank to move dollars from your checking account to your T-security account at the Federal Reserve Bank.
(When you buy a T-security, you automatically open a T-security account.)
So, the so-called “federal debt” is nothing more than the total of those deposits in T-security accounts. The worrisome “federal debt” is simply interest-paying bank accounts, similar to ordinary savings accounts.
Every day, the federal government pays off some of its so-called “debt” by sending the existing dollars in those T-security accounts back to the checking accounts of the T-security holders.
It’s a simple money transfer, similar to moving dollars from your savings account to your checking account. This does not burden the federal government, which easily could pay off the entire debt tomorrow, simply by transferring all those balances back to the holders’ checking accounts.
So, you might ask, if the federal “debt” is not a burden, what is the purpose of this government website?
Answer: To help make you believe that federal financing is like personal financing.
Our honest federal government wants you to believe that, like you, it can run short of dollars. It wants you to believe that, like you, it needs some form of income, in order to pay its bills.
But the federal government is what is known as “Monetarily Sovereign,” while you are monetarily non-sovereign. It creates its sovereign currency at will and so doesn’t need income. The U.S. federal government needs neither to borrow nor to tax, in order to spend.
Many dishonest writers talk about “spending taxpayer dollars.” But it is impossible to spend taxpayer dollars; these dollars are destroyed upon receipt. The federal government spends new dollars, created ad hoc, each time a federal agency pays a bill.
For instance, Social Security benefits are not paid with FICA taxes. When the government sends you your Social Security payment, it actually sends instructions (not dollars) to your bank, instructing your bank to increase the numbers in your checking account.
When your bank obeys these instructions (by pushing a few computer keys) new dollars are created and added to the M1 money supply.
Even if FICA collections were zero, the government could continue sending instructions, i.e. paying benefits, forever.
Similarly, even if the so-called debt (i.e. T-security deposits) rose to a trillion, trillion dollars, it still would not be a burden on the federal government. There is absolutely no need to pay down the (misnamed) “debt.”
Why does the government want you to believe federal finances are like personal finances?
Answer: The government is bribed by the rich to widen the Gap between the rich and the rest.
The Gap makes them rich. Without the Gap we all would be the same, and the bigger the Gap, the richer they are.
The rich want you to believe Social Security and Medicare are running short of dollars. They want you to believe the FICA tax must be increased. They want you to believe the government can’t afford to pay for housing, food and educational benefits for the poor and middle-income people.
(You will hear that because the Social Security “trust fund” — which does not exist – is running out of money, benefits must be cut. And because Medicare supposedly is running short of dollars, we must go to some sort of privatized system, to save the government money. And schools must go on a voucher system, also to save money for a government that has no need to save money.)
And the rich want you to believe that even if the government could afford these things, paying for them would cause hyper-inflation (Zimbabwe, Argentina, or the Weimar Republic are favorite — but false — examples).
In short, the rich want you to believe the Big Lie that austerity benefits the economy and that federal taxes pay for federal spending.
That lie is how they justify widening the Gap between the rich and you.
If you feel you have too much money, and your bank account is overburdened with dollars, you would be wiser to send some to that Nigerian prince who is about to inherit a billion or so.
At least the dollars would continue to exist somewhere, rather than being destroyed by the U.S. government.
Or better yet, send your money to me. I promise to do more good with it than the federal government would.
Rodger Malcolm Mitchell
Monetary Sovereignty
……………………………………………………………………………….
The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
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 can afford better health care than can 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 ANNUAL 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 benefitting 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-transferring 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 a 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.
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Off topic: Trump proposed that anyone who burns the American flag should lose their citizenship or go to jail. The Supreme Court has ruled burning flags as free speech protected under the 1st Amendment.
Trump also said, “The Second Amendment to our Constitution is clear. The right of the people to keep and bear Arms shall not be infringed upon. Period.”
In short, the 2nd Amendment is sacred; the 1st Amendment, not so much.
The dictator has spoken.
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Please Rodger. I was hoping that we had moved beyond this silliness.
Right-wingers and fake leftists both indulge in political correctness. For right wingers it manifests as chatter about abortion, flag burning, school prayer, and the Second Amendment. For “liberals” (i.e. fake leftists) it manifests as chatter about racists, sexists, bigots, homophobes, and so on.
Both forms of political correctness are designed to distract public attention from neoliberalism and the ever-widening gap between the rich and the rest. Democrats indulge in this distraction as much as Republicans. Both sides uphold the Big Lie. Both sides are mirror images of each other.
When we call Trump a “dictator” we delude ourselves that Democrats are better. This causes us to support Republican scams as long as Democrats endorse the scams (e.g. RomneyCare). It makes us reject anything positive as long as Republicans support it, such as your “ten steps to prosperity.” For you, your “ten steps” would only be good if Democrats enacted it. In truth, however, Democrats are no more in favor if your “ten steps” than are Republicans.
The Standing Rock protesters are pleading with Democrats to protect their water supply from Big Oil, including Philipps 66. Democrats ignore them, because Democrats work for Warren Buffet, who is the primary owner of Philipps 66, and who is a big donor to Democrats (especially Hillary and Obama).
A true leftist champions average people. A fake leftist champions Democrats and, by extension, their rich owners.
Obama never did anything positive for average Americans. He was no better than W. Bush. “Citizens United” happened during Obama’s term. Plus there was Obama’s “grand bargain,” his refusal to indict any Wall Street bankers, and his refusal to honor any promises he made when he first campaigned.
Do you really imagine that Democrats are any better than Republicans? Elections don’t stop the scams. They don’t change the game. They just change the players. This time around, Tweedle Dee is in the White House. Next time it will be Tweedle Dum. Neither one is more a “dictator” than the other.
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There is bad and there is worse.
Obama was right wing. The current Republicans are extreme right wing.
You will see this when the Republicans privatize Medicare, and voucher the schools.
Republican states engaged in voter suppression, which probably turned the tide for Trump. Blue states didn’t do this.
You also will see Trump stealing billions via his control over government contracts affecting his properties.
Stealing billions is worse than stealing millions.
Yes, both parties, and ALL politicians, mouth the Big LIe. The Democrats are bad, as are the Libertarians and the Greens. But, the Republicans are worse.
To say they all are equally bad is a false equivalence. There is a difference between jaywalking and murder, though both are crimes.
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Sophistry.
To claim that Hillary would have been any better is delusion. Hillary, owned by Wall Street, would have made it a priority to privatize Medicare and Social Security. And to pass the TPP and TTIP. And to carpet-bomb Syria, and perhaps trigger a war with Russia. Hillary boasted to CBS News that as president she would see to it that single payer healthcare would “never ever happen.” Her neoliberalism would have been camouflaged by people who insist that “at least she’s better than Republicans.” Nonsense.
You are so blindly pro-Democrat that when I say Democrats are the same in practice as Republicans, you interpret it as a defense of Republicans.
Regarding voter suppression, once again it is delusion to think this is worse than the DNCs dirty trucks to torpedo Sanders. This is one of the evil things the Democrats did that cost them the White House. Sanders would have easily beaten Trump, but the Wall Street thieves wanted Hillary, their lifelong servant.
Now Democrats are using Jill Stein of the Green Party to demand a vote recount on the grounds that “Russian agents” controlled the U.S. Electoral College. It’s pathetic. The Green Party itself has published a letter condemning Stein for working for Hillary.
Democrats are better? The DNC gave no support to genuinely progressive candidates like Russ Feingold. As a result, Feingold lost. For Democrats it was all about putting Hillary on the throne so she could pay back her Wall Street donors at our expense.
And I like this logic: All politicians equally echo the Big Lie, but Republicans are worse — i.e. Republicans are “less equal” than others. As though somehow the Big Lie isn’t so big when Democrats echo it.
You should be happy. After all, you will support any Republican crime as long as Democrats endorse it, which they always do. An example is your support for RomneyCare and for war. Now you will get the same evil, but without the camouflage. The honesty will be refreshing.
Obama had eight years. How exactly was he better than W. Bush? How exactly is Obama a mere “jaywalker” in comparison to Bush’s “murders”?
There are many topics abut which you are utterly cement-headed. This is but one of them. On this topic, trying to talk to you is like trying to talk to someone who insists that all money is created by banks as loans.
I thought we had made a bit of progress. I was hoping there has been a glimmer of light. Oh well.
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“Hillary would have,” the last defense of the alt-right, neo-Nazi movement.
We did not see Obama destroy Medicare, Social Security and ACA as the alt-right has promised to do.
But “Hillary would have.”
Bush sent many thousands of Americans into war to be injured and die. Trump wonders why he shouldn’t use atomic weapons, would “bomb the shit out of ISIS,” admires Putin, and threatened to put his opponent in jail. Obama brought thousands home from an existing war.
The “carpet bomb” reference actually was said by a conservative, Cruz.
But “Hillary would have.”
Progressives created Social Security, Medicare, ACA, and all our other social programs to aid the underclasses. Conservatives have created nothing, and have done their best to repeal the voting protections and social programs for the middle and the poor.
But “Hillary would have.”
This blog has criticized Obama repeatedly for his weaknesses, but there never has been anything as truly awful as Trump in American history. Never.
But “Hillary would have.”
Trump repeatedly said he would not accept the results of the election if he lost (Even winning, he still doesn’t accept the results). But when Stein asks for a recount of results that were razor thin, the alt-right screams, “Hillary, Hillary, Hillary.”
This blog has complained repeatedly about the total absence of true Progressives in American government — Progressives who would reveal the Big Lie for what it is.
But the alt-right, Trump/Bannon cabal has invented the all-purpose defense of Trump. No matter what evil he commits, all they need say is, “Hillary would have,” and that forgives everything.
It’s perfect alt-right, i.e. neo-Nazi, phony equivalence. “Hillary would have.”
Suffer the disaster of the next four years under Trump and his close advisor, Bannon, and the rest of the alt-right, neo-Nazis, and keep repeating the all-purpose excuse:
“Hillary would have.”
Hillary would not have.
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Calling me a Neo-Nazi is typical fake leftist nonsense, as is thinking in media buzzwords, e.g. “alt-right.”
Meanwhile I continue to admire your logic. You claim that “Hillary WOULD HAVE been better” while you condemn people for saying “Hillary WOULD HAVE been the same.”
We are still not sure what Trump will do. (Trump himself is not sure.) But we know for CERTAIN what Hillary would have done, since we have a 25-year track record.
And we know for CERTAIN that Democrats are the same as Republicans. More drone murders? Check. More wars? Check. More neoliberalism? Check. More giveaways to Big Pharma? More “war *of* terror? More spying on American citizens? Check, check, and check, right down the line.
Our worst enemy is not Republicans, but fake leftists who support Republican crimes by supporting Democrats who distract from those crimes, and who commit the same crimes.
Since you like murder analogies, how can you say it is more righteous for Democrats to stab you in the back, than for Republicans to stab you in the front? For you, if a Republican and a Democrat rob a bank, and slaughter everyone inside, only the Republican is guilty.
Obama led NATO’s destruction of Libya, which was okay with you. Hillary’s and Obama’s proxy war on Syria? Cool. Hillary’s threats to nuke Iran? Sweet.
Crimes are only crimes when Republicans do them.
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I propose that we focus on what’s happening now.
Trump and his cronies are all neoliberals (just like Obama and Hillary). I propose that we focus on neoliberalism and the Big Lie.
If you want to attack Trump, I’m with you, as long as you do so as a true leftist. Not as a fake leftist who pines for Hillary, and who says the Democrats are better. The latter does not help us.
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By the way, as a New York Senator, Hillary introduced a bill in 2005 and another bill in 2006 that would have criminalized flag burning.
More than half of Democrats in the Senate backed her effort.
The bill earned 36 votes, mostly from Democrats.
But remember, Democrats are different from Republicans, and better.
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The Representative idiots in Senate and House we have hired should cut grants for nonsense studies, money for foreign student education at the cost to US citizens attending college, Obama Care no health insurance, funding green/clean energy spoofs, funding Planned Parent Hood for abortions and selling baby parts for profit program, ear marks for states to profit at the tax payers loss, Agriculture programs for non planting, funding a useless oppressive IRS, Homeland Security, NSA violating Constitutional privacy, and the (NEA) National Board of Education who push liberal, sexual gender education and socialist teachings on our youth. These items just scratching the surface of our bloated government.
From: #Monetary Sovereignty – Mitchell To: janetboston_49@yahoo.com Sent: Tuesday, November 29, 2016 10:48 AM Subject: [New post] How to destroy your excess dollars #yiv1990729907 a:hover {color:red;}#yiv1990729907 a {text-decoration:none;color:#0088cc;}#yiv1990729907 a.yiv1990729907primaryactionlink:link, #yiv1990729907 a.yiv1990729907primaryactionlink:visited {background-color:#2585B2;color:#fff;}#yiv1990729907 a.yiv1990729907primaryactionlink:hover, #yiv1990729907 a.yiv1990729907primaryactionlink:active {background-color:#11729E;color:#fff;}#yiv1990729907 WordPress.com | Rodger Malcolm Mitchell posted: “It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders………………………………………………………………………………………………………………If you wi” | |
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Readers may recall that during FY 2015 the Treasury Department claimed to have received $3.9 million in “contributions” toward “reducing the national debt.” This supposedly included a single payment $2.3 million in Sep 2015.
Either (a) some people are very stupid, or else (b) some people contributed $3.9 million in order to get $7.8 million in tax deductions, or else (c) the Treasury was lying about the whole thing.
I lean toward (c), since the Treasury refuses to say who supposedly made the single $2.3 million “contribution.”
At that time the so-called “national debt” (i.e. the national saving deposits) was $18.6 trillion. So if the “national debt” had only been $500 million, then the total FY 2015 “contributions” toward “reducing” $500 million would have been a single dollar. And even that dollar wouldn’t count since, as Rodger says, it would have been destroyed upon receipt. It would simply have been debited from someone’s account, and would have vanished. It would be like changing the number on a scoreboard from one to zero. Where did the point go? Nowhere. It was destroyed.
Suppose Bank of America had $20 trillion deposited in savings accounts. Would this be a “debt” that Bank of America needed “contributions” for?
REMEMBER: some people falsely believe that all money is created by banks as loans. For these people the U.S. government borrows all its money, and the “national debt” is what the U.S. government has borrowed. They have this false belief because the Bank of England lied to them. They say the Bank of England lies, but they adamantly believe this one lie. They want the U.S. government to issue “greenbacks” like the government did during the U.S. Civil War. They do not understand that the U.S. government continues to issue $4 trillion worth of “greenbacks” each fiscal year.
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He’ll learn. But much better is for us who are knowledgeable about Monetary Sovereignty to somehow get to discuss with him the way a federal government can achieve much simply by understanding what MS is.
Is anyone here reading able to get to contact Trump? I’m not in the USA so I am unable to do so, although I would write if I had an address.
How about it? Let’s not just sit on our hands.
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Here is a good exercise for everyone. Google the following question: “What programs have conservatives created?”
You might be surprised.
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Here is another food exercise for everyone. Google the following question: “Concerning war and neoliberalism, how are Democrats different from Republicans?”
Unless you are deluded, you will NOT be surprised.
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2016/11/30 at 12:47 pm: “I propose that we focus on what’s happening now.”
2016/11/30 at 4:53 pm: “By the way, as a New York Senator, Hillary introduced a bill in 2005 and another bill in 2006 that would have criminalized flag burning.”
Like Trump; like Trump excuser.
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Name calling is a childish ruse by the desperate.
Because I see no difference in practice between Republicans and Democrats, I am a “Neo Nazi” and an “alt right” person. And now I am “like Trump,” and a “Trump excuser.”
+++++++++++++++++++
By the way, I see that your beloved Washington Post is stridently vilifying Fidel Castro for having defied neoliberalism. Just like Hillary and Trump and Sanders do.
And yet you say that Democrats are “different and better.”
Hillary didn’t lose.
She just morphed into Trump.
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You like Castro??
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I’m sorry if i keep on bringing Cullen Roche up, but homeboy said this in the Q&A section of his blog:
“Govt’s need to finance their spending to prove to the private sector that they have credit”.
You can find that answer here:http://www.pragcap.com/ama/what-are-taxes-used-for-if-they-do-not-fund-government-spending/
I do not entirely disagree that a currency issuer needs a way to prove that their money has value, but is he right when he says this? I know that you, Mr. Mitchell, bring up the “Full Faith and Credit” clauses; but are those promises the only thing that drive the value of the dollar?
In my opinion, part of what gives the US Dollar value is what elizabethharris001 called “custom and tradition”. This is the way I see it – all of us alive today have been using the US Dollar for our entire lives; purchasing goods and services with it, and we know it has value because of that. The only people that needed to be assured that the US Dollar has any worth were people who saw the USA being born.
The other part is the large US-based multi-national businesses that only accept US Dollars. This gives foreigners the certainty that the US Dollar is a worthy unit since these entities accept it as a form of payment.
What do you guys think? Is he right? Am I right? Are we both wrong?
Oh and also, do you think that selling T-securities to foreigners helps establish a valuable reputation for the US Dollar overseas?
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Vato, many things contribute to the acceptance of the dollar.
It begins with full faith and credit, without which the dollar would have no value.
Additionally, “custom and tradition” now contribute as does foreign usage.
All are part of the story, but if the U.S. government would decide not to offer its full faith and credit, acceptance would disappear.
That is how the dollar began and that is how it is.
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If I may add a comment, when we overcome the myth that taxes fund the federal government, we confront a secondary myth that federal taxes maintain the integrity of the federal currency. According to this myth, the federal currency would collapse without federal taxes.
MMT people cling to this falsehood when they claim that “taxes drive money.” Their reasoning is that in the USA, for example, you must have dollars, because federal taxes can only be paid in dollars.
Their error sounds reasonable until you realize that some countries have their own currencies, but no income tax, such as The Bahamas, or the five of the sic Gulf oil sheikhdoms. Likewise some territories (not countries) have their own currencies but no income tax (e.g. Hong Kong, Bermuda, and the Cayman Islands).
Therefore taxes do not “drive money.”
The source of a currency’s integrity is habit, custom, convention, and laws, plus a government willing and able to enforce those laws. U.S. law is printed on every currency note: “this note is legal tender for all debts public and private.” This would apply even if the USA had no federal taxes.
Regarding habit, custom, and convention, when a young nation’s government issues its currency, the government must convince people to use it. Governments do this via a combination of laws (as I noted above) plus lies and tricks. Governments falsely claim that this currency note is “backed by” gold or silver. For instance, the U.S. government used to sell “gold certificates” and “silver certificates” that looked almost the same as regular currency. If you presented your certificate to a bank in exchange for gold, the bank would use legal tricks to stall you, and would pay prominent members of society to ridicule you for doubting the nation’s currency, and therefore subverting the nation. What are you, a foreign agent? If you kept pressing, you would eventually get your gold, but the bank would mark you down as a customer it did not wish to do future business with, and would inform all other banks about you. All behind the scenes, of course.
Average people value convenience. If everyone is using dollars, then it is easier to “go with the flow” and use dollars, rather than challenge a dollar’s legitimacy. And is you counterfeit, the Secret Service will grab you, and a judge will imprison you.
When a nation is as well-developed as the USA, we can call a dollar “fake money,” but we will nonetheless cling to our “worthless” dollars. This is the habit custom, and convenience part. No taxes are necessary to sustain it.
Why then do we have federal taxes? Rodger and I have surmised that federal taxes are the ultimate means whereby the federal government maintains political power over us as individuals. We may get away with some things in the name of liberty, but no one (except the rich) gets away with not paying taxes. Thus, taxes are not about the dollar. They are about sheer power and authority.
Yes, federal taxes help keep the nation and its monetary system intact, but taxes are not indispensable. At this point we can live without federal taxes.
REGARDING CULLEN ROCHE, I was okay with his comments until he started claiming that the central bank “finances” central government spending, and “Governments need to finance their spending to prove to the private sector that they have credit.” I will forgive him if he using the word “finance” to mean the central government must work through a central bank. If this is not what Roche means then, as usual, he is in error.
Then we see this: “The fact that a Central Bank can issue money in perpetuity does not mean they don’t need income sources to finance their spending.”
Huh? Banks do not “spend” or “issue money” like the central government. Banks issue loans. This kind of foolishness suffuses all of Roche’s attacks on MMT.
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I forgot that at end the end you asked, “Do you think that selling T-securities to foreigners helps establish a valuable reputation for the US dollar overseas?”
In my opinion yes. (I don’t know if Rodger agrees.)
China sends us goods, and we pay them in US dollars. Since U.S laws limit what U.S. assets the Chinese can buy with their U.S. dollars, the Chinese buy some U.S. assets, but deposit many of their U.S. dollars in U.S. savings accounts where the dollars “earn” interest. That is, the Chinese buy T-securities. Since the dollars “earn” interest, this adds to the desirability of U.S. dollars worldwide.
Many people in the world don’t like the USA, but their dislike is outweighed by their desire for convenience in international transactions. People like to be paid right away in a currency they know is good everywhere, directly or indirectly. By directly I mean that local people accept U.S. dollars as payment. We see this in some of the border cities of Mexico, for example. In Tijuana, some stores will accept ONLY U.S. dollars. By indirectly I mean you can always find a local bank or currency exchange place that will gladly exchange your U.S. dollars for the local currency. However they will not exchange your Bhutan ngultrums, or Laotian kips for the local currency.
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The original, and still the primary, support for the U.S. dollars is the full faith and credit of the U.S. government.
Although habit and custom may play a small role, without the full faith and credit of the U.S. government, the U.S. dollar would be worthless.
Quoting from Understanding Federal Debt. Full Faith and Credit:
All debt requires collateral. The collateral for federal debt is “full faith and credit.”
This may sound nebulous to some, but it actually involves certain, specific and valuable guarantees, among which are:
A. –The U.S. government will accept only U.S. currency in payment of debts to the government
B. –It unfailingly will pay all it’s dollar debts with U.S. dollars and will not default
C. –It will force all your domestic creditors to accept U.S. dollars, if you offer them, to satisfy your debt.
D. –It will not require domestic creditors to accept any other money
E. –It will take action to protect the value of the dollar.
F. –It will maintain a market for U.S. currency
G. –It will continue to use U.S. currency and will not change to another currency.
H. –All forms of U.S. currency will be reciprocal, that is five $1 bills always will equal one $5 bill and vice versa.
The reputation of the U.S. dollar depends on the reputation of the U.S. government and its full faith and credit.
Although some like to claim that the U.S. government is “crooked” (to borrow a term from one crooked politician), the fact that you use the U.S. dollar is proof that you trust the full faith and credit of the U.S. dollar.
In those nations where such trust does not exist for the government, the people use a different currency.
MMT is wrong about the need for taxes to give value to the dollar, as are all those who search for new reasons why people accept the dollar.
The answer, the whole answer, the only answer is this: The full faith and credit of the U.S. government. Period.
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Perhaps you are right. Just now I looked at U.S. currency bills expecting to see the words “full faith and credit of the United States,” but there is no wording like that on either side.
Nonetheless I say that habit, custom, and convention play a bigger role than you say they do. When the average person pays a dollar for bag of popcorn, he doesn’t think about the U.S. government, or federal laws, or “faith and credit.” He just wants his popcorn. He uses a dollar because everyone accepts it.
And if you want to get technical, the full faith and credit of the U.S. government is predicated upon the full faith and credit of the citizenry toward the government. The latter involves habit, custom, and convention. The items you listed above (A through H) are part of the “laws” aspect that I mentioned before. For you, these laws are all that is needed to maintain the integrity of a currency. For me the laws are necessary, but for a dollar to be 100% trusted, it must also become part of the everyday world. It must become a habit. For humans, our reality is largely defined by our habits.
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As a thought experiment, pretend the opposite of A through H were true. Then ask yourself whether anyone would use U.S. dollars.
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One of your personal habits is to consistently refuse to read what I write. I said that laws are necessary but not sufficient.
As a thought experiment, pretend that A through H were TRUE, but that everyone is totally habituated to using some currency other than the dollar. Then ask yourself whether anyone would automatically accept dollars for everyday transactions without being continually forced to.
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CULLEN ROCHE: “I am saying that tax money is most definitely spent. This idea that taxes don’t fund spending is wrong.”
No, ROCHE is wrong, at least at the federal level.
Again…
“Fiat money is like a theater ticket. The government determines what ticket will get you into the theater, but this does not mean the ticket is valuable just because the government says so. The production must be well done in order for the tickets to have value.”
Wrong again. The value of the ticket will get you into the theatre regardless of the value of the production.
If Roche is so consistently wrong about everything, then why do people read him? The reason is that average people cling emotionally to the Big Lie, and Roche seems to offer reasons to do so. No one understands what Roche says, since Roche himself doesn’t understand it, but for many people his techno-bullshit sounds good on the surface. It lets people chant together, “MMT is a conspiracy theory!”
It’s like people who falsely claim that banks create all the money. They don’t know what they are talking about, but they enjoying claiming that, “The Fed controls everything!”
If Roche were to debate Rodger or me, Roche would hide behind meaningless techno-gibberish, while he smugly pretended that we were dunces for wanting clear logic and plain English. If that didn’t work, then Roche would just withdraw in defeat, while congratulating himself for “winning.”
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If U.S. federal taxes were needed to fund spending, then the U.S. government would be like state and local governments and the euro nations: Monetarily non-sovereign.
Perhaps, Roche believes the U.S. is exactly like Greece and Illinois and Peoria, but he should explain why these governments routinely run short of the currency they use, while the U.S. never runs short of dollars (except for those times Congress when gets into a snit and intentionally limits dollars.)
I wonder whether Roche even knows what the terms “Monetary Sovereignty” and “sovereign currency” mean. Perhaps someone might ask him.
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He has acknowledged that the US is not like Greece. He said that Greece has “outsourced its monetary sovereignty”; I can’t find the exact article I saw that in, but he does not believe in the US federal gov will go bankrupt.
I think I may have fallen for Cullen Roche’s rhetoric. He definitely sounds like he knows his shit, but yeah, as homegirl elizabethharris001 said, his use of technical terms can be used to confuse people.
Thanks for the response amigos.
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http://www.pragcap.com/modern-monetary-theory-mmt-critique/
Cullen Roche : A master of ‘circulus in probando.’
CR uses confounding notions to define “credit.” His definition of “credit” is wonderfully derived via equation. Unbelievable. Here goes: Output + wages = credit
CR calls MMT “Marxist,” whatever that means. To me it means he’s instantly discredited. MTT/MS = descriptive, NEVER prescriptive.
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“Outsourced its Monetary Sovereignty”? What the hell does “outsourced” mean in that context?
Right, the U.S. can’t go bankrupt. So why does it need tax dollars?
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I suppose he meant that Greece surrendered its monetary sovereignty.
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Im surprised and not surprised by what i see here on themis blog.
Im surprised that somehow without any connection in our way of thinking, i and elizabeth come to the same conclusion – that there is little difference between democrats and republicans. Aside from that, i cant seem to figure out how in her twisted mind, the parties are “right wing” when the growth of social programs across the last 40 years can be attributed to both. I think i know why though, in her mind, nothing bad can come out of being a leftist / socialist / communist. In her mind, the end result is always good because after all they are doing it for a good cause. She may never see it, but she is wrong and no matter how many times clear explanations are provided, she will ignore for ever.
Not to go off topic here, but i was trying to explain the healthcare situation to a loved one and she just could not grasp reality. In her world, healthcare is an unlimited resource – not bound by human limits, just like liz “thinks” (but doesnt really). I tried my best explaining how in most cases (just like almost all else in a controlled economy), what is given to one is taken from someone else. She fought me tooth and nail until i gave a real life example. Her father had a liver transplant. He was very fortunate to live, doctors told him he had days to live. We thought he was done given that he was way down on the donor list, we were sure there was no way. One day near christmas, a nurse pulled us aside and told us they had a liver and would give it to our relative – i distinctly remember her saying that the doctors had seen how close we were and that the doctors had made the decision to give it to him.
What i explained to this person is that there were other people on that list and that they did not get the liver and most likely died a long time ago. She did not want to hear this left the conversation there. To her, it was all good because our relative got to live, but she will never come to grasp with the fact that someone most likely got kicked down the list and perhaps died because of the liver.
Liz only sees the patient getting the liver, she completely ignores the fact that someone had to die for the liver and that someone else that was waiting for the liver did not get it. In her world, food, clothing, education, healthecare, shelter, etc is all unlimited and we cant have them because daddy government is naughty. But i believe she knows, she just choses to ignore reality.
Im not surprised that rmm “thinks” democrats and republicans are different. And that he “thinks” that the democrats will some day “save” us. He had “made up his mind” and that will never change.
Come to think of it, rmm and liz are the same. They want the world “to do good”, but do it in the way they think its right. They are both so sure this will work, they will block anything that contradicts their believe.
Get ready to either be called names or be ignored if you hit that nerve. I’ve hitted many times and i have never gotten a coherent answer.
30 years ago everyone hated communism / socialism and the followers were pretty silent. Today, its the flip side – you are an outcast if you are not a liberal. Who would have thought?
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“I tried my best explaining how in most cases (just like almost all else in a controlled economy), what is given to one is taken from someone else.”
Your error is to assume that money is physical and therefore limited, like human livers.
Money, like points on a scoreboard, has no physical existence, and therefore no limitation. Therefore money is not a zero sum game. If I were the U.S. government, I could effortlessly credit your bank account with 100 trillion dollars without taking a penny from anyone.
By the way (a trivial medical point) a liver transplant is not like other kinds of transplants. You can survive with few or no symptoms even if 80% of your liver is destroyed. With proper diet the liver, unlike any other organ, can regrow and regenerate. Therefore if it is not happening now, it soon will happen that people’s lives can be saved with partial liver transplants, while donors do not need to die. (Like I said, this is trivia.)
By the way, I am not a “liberal.” I am an authentic leftist.
“Liberals” hate me as much as right-wingers do.
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You still cant see it.
Is the willingness (dollars) to get livers limited? Do you really believe that giving people money will somehow magically create more livers, houses, food, shelter?
Lmao, wow liz. I believe i’ve seen you point out supply and demand before – does that only apply to cases where you need to make a point? What about money supply?
What would doubling the money supply do? Would prices not double? I bet they would at a minimum. What that means is that if the government did indeed double the money supply, it would be appropriating (read: stealing) half of the country’s production/gdp.
This is pretty basic algebra folks.
Liz, i’m a libertarian (right wing nut in your book) and i do not hate any liberals or leftists. What is the difference between a leftist and a liberal?
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How about giving researchers and doctors money so that, for instance, livers can be 3-D printed (They are working on that, now).
And are you saying money doesn’t help build houses? Money can’t help keep more farmers in business and/or create new kinds of crops that grow more food, and to feed the hungry?
By the way, after you learn what “Monetary Sovereignty” means, let us know with which of the “Ten Steps to Prosperity” you disagree and why.
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No it is not money. Its what the money represents.
Would you rather have 10 dollars that can buy 1 mansion or 5 trillion dollars that can buy a hut?
You choose to ignore as i’ve said. You know the truth.
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Rodger is not the only contributor having trouble with your ideas. I am at a loss to get around them, being nonsense. Are you trying to be a troll?
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OMG!
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QUESTION: “Do you really believe that giving people money will somehow magically create more livers, houses, food, and shelter?”
ANSWER: I said the U.S. government could credit your account with 100 trillion dollars without taking a penny from anyone. That is a fact that you cannot negate with sophistry and distraction.
It is an entirely different matter to discuss what your $100 trillion dollars would do to the economy if you chose to spend that $100 trillion.
QUESTION: “What would doubling the money supply do? Would prices not double?”
ANSWER: It would depend on whether the supply and demand for goods and services rose to meet the supply of money. If everyone is flush with cash, but has nothing to spend it on, then we face the danger of price inflation. We had this problem during both world wars. Everyone had jobs, but nothing to spend their salaries on, since many consumer goods were sent overseas for the war effort. The U.S. government offset inflation by getting money back out of the economy. The government did this by encouraging people to buy “liberty bonds” and “war bonds.” This was easy, since the Big Lie was in operation even back then. The government lied to the public by claiming that proceeds from the sale of “war bonds” were needed to “fund” the war. Messages to “buy war bonds” were ubiquitous.
The government could have taxed the excess money out of the economy, and it did to some extent. (Personal withholding began during WW II.) But since no one liked to pay taxes, the main emphasis was on “Buy war bonds!” The bonds paid interest, and they “funded” the war for “democracy” (which itself was nonsense, but that is a different topic).
Today, federal politicians keep the money supply too small to effectively stimulate the economy. Politicians do this intentionally, in order to sustain the ever-widening gap between the rich and the rest, and to force us to seek loans, so that we become debt slaves. Consequently half of the peasants have no work, while the other half has too much work (toiling ten-hour days for peanuts). All of them are impoverished and / or loaded with private debt. Yet they are grateful for their misery, since they falsely think that the trivial public “debt” is even worse, even though the public “debt” consists of mere savings deposits.
You in your feeble delusion think that the US is back in World War II. You think the economy is already at full capacity. You think that unemployment is already zero. You think there is no such thing as gratuitous austerity. You think the world would end if the U.S. government created one more penny that it does now. You pray to the hyper-inflation bogeyman, who sings you the lullaby of, “Zimbabwe, Weimar, Zimbabwe, Weimar.”
Are there people that need work? Yes. Is there work to be done? Yes. (An example is infrastructure repair and upgrades.) To get this going we need to increase the amount of money in circulation. You deny this because you are trapped in lame comparisons of dollars to livers.
You are trapped in your cocoon of delusion, your house of mirrors, because you are a Libertarian, which means you favor a gargantuan, tyrannical, and anti-liberty government, so long as the government does what you personally approve of. For you, “small government” means a huge government (the bigger the better) that is limited to doing what you alone benefit from. Screw everyone else. Indeed, what infuriates you about MS is that many people (not just you) would benefit if everyone accepted the truth.
As for the difference between a leftist and a liberal, I have covered this repeatedly in my disagreements with Rodger. You didn’t read it then, and you will not read it now.
Thank you for your questions.
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“What is given to one is taken from someone else. ”
Thank you for your “liver” example, which demonstrates the falsity of your point.
Years ago, no one received liver transplants. Now, some people do.
So your loved one’s father did not take a liver from someone else. He received a liver that years ago would have been available to no one, and tossed in the garbage.
Your big mistake is believing the world has a fixed amount of assets, so if one person receives better health care, some other person must receive worse health care.
Obviously wrong.
And as repeatedly mentioned, there is a vast difference between socialism (government ownership) and progressivism (government support).
Your refusal to understand the difference is puzzling.
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Rmm,
You completely changed what i said. My loved one’s father got a liver from a person that died. First, a person had to give the liver for her father to get one. Aside from that, there were others whom in fact were higher on the list that died. The father of a good friend died shortly after this.
Your mistake is in thinking that assets are unlimited. Yet, i bet anything i have you know they are limited and no amount of money will change that. And to clarify further, you make a very bague “less healthcare” statement to throw off your readers. Will double the money supply double the amount of doctors, hospitals, etc we have in a day? The answer is clearly no – so how good is your money.
Now, i dont believe we live in a zero sum game economy. Not at all. When capital is invested efficiently, there is a gain for society.
Example is automation. 20 years ago, it would have taken a huge amount of human effort to produce a car. Today, that effort is pretty minor.
What monetarists, keynesians, etc miss is that if you live money alone and let markets decide, these efficiency gains would be spread across the economy. However, lower prices (the spreading of these gains) are the enemy of mainstream economists and everyone on the left. According to them, this causes depressions.
However, not one can explain how that is, and how inflation provides an economic benefit. I challenge anyone to prove it.
Adam Smith was a genius.
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OFF TOPIC
One of the ways that politicians sustain the Big Lie is to relegate things to the state level when necessary.
For example, Trump has convinced United Technologies (which owns Carrier Air) to not move all its Carrier jobs to Mexico. United Technologies will move only half its jobs. In return, United Technologies will get breaks on its state taxes, and will get added federal contracts.
United Technologies, which also manufactures aerospace and military products, received the seventh-highest level of federal funding among private companies in fiscal 2015.
Trump could have offered breaks on federal taxation, which would have hurt no one. However a federal tax break would threaten the Big Lie, since it would cause average people to ask, “What about federal tax breaks for us too?”
Therefore, to sustain the Big Lie, the people of Indiana will be forced to give many of their tax dollars to United Technologies. And they will be forced to live with added austerity. And half of Carrier’s jobs will be moved to Mexico anyway.
In this way, Trump will “save jobs” while screwing workers. Sweet!
Doubtless this is just the beginning of Trump’s campaign to “save workers” by screwing them. Trump calls it “supporting the business community.”
He campaigned on a promise to cut federal corporate taxes from the current 35% down to 15%. I favor federal tax cuts, but in real life, big corporations pay little or no federal taxes anyway. Their tax breaks usually occur at the state and local level — as with United Technologies. Thus, average people are screwed once again.
Or I should say that average people screw themselves once again, by clinging to the Big Lie.
Indiana businesses have sent 3,660 jobs overseas since the middle of 2015.
(Please no “would have” comments about Hillary. I’m focusing on Trump, who we must now cope with.)
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CONGRATULATIONS TO THE TAXPAYERS OF INDIANA. You just paid Carrier $700,000 to keep some of those Carrier jobs in Indiana. The sole purpose: To make Donald Trump look like a great negotiator.
By the way, it wasn’t even Trump who did it. He doesn’t have the power. Trump repeatedly criticized states that bribed companies not to leave.
No, Trump told your governor, Mike Pence to pull that little trick — you know, the same Mike Pence who didn’t yet resign as governor, just so he could retain the power to screw the taxpayers of Indiana.
This is going to be a wonderful four years of treachery (“It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders.”)
But as I repeatedly have been told, “Hillary would do the same.”
……………………………………………………………………………………………………………………………….
Oops, sorry. Did I say you taxpayers will spend $700,000 to demonstrate Trump’s great negotiating skills?
Spending $7 million to lose 700 people seems like great negotiating — by Carrier.
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I agree – this is a stupid move by trump. But, im completely surprised you are now talking about tax payers money.
As far as i could, you’ve never cared about all the money wasted by your state of Il. Whats the difference now?
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Oh, dear.
You still don’t understand the differences between Monetary Sovereignty (the U.S. government) and monetary non-sovereignty (the Illinois government).
Before you comment further, please read this post describing Monetary Sovereignty.
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RMM continually rails against the Illinois plague of political waste & corruption.
Though you’ve whined and moaned on this site for YEARS, perhaps you neglected to query the following (in reference to IL):
https://mythfighter.com/page/3/?s=illinois
https://mythfighter.com/2015/07/29/the-fundamental-flaw-in-u-s-democracy-no-term-limits/
https://mythfighter.com/2015/06/10/the-two-most-misused-misleading-mistaken-words-in-all-of-economics-taxpayer-dollars/
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Hey Steve,
I can’t reply to your comment above. That ‘Marxist’ stuff that CR referred to also raised a red flag for me. In today’s political discussions (on the internet at least) there is a tendency to label some left-wing ideas as ‘Marxist’. I see it all the time and it is not an argument as much as its a pejorative.
While I do not immediately discredit his arguments because of that, I do see it as a cheap shot and an ad hominem. Not to mention he also used Zimbabwe as a hypothetical when criticizing MMT. I’ve always looked at his economic philosophy with a skeptic eye, but now he is throwing everything into the toilet by being a disingenuous homeboy.
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If only we had a Democrat president like Bill Clinton with his four years of budget surpluses. If only we had another Democrat like Obama. Things would be so different. We would have prosperity and equality, like we’ve enjoyed for the last eight years.
Oh wait…
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And no, that is NOT — I repeat NOT — a defense of Trump and Republicans. Anyone who thinks it is, is a sucker. A fool for the duopoly.
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Despite a Republican Congressional headwind voting against everything Obama, here is a note from Bloomberg Markets:
Well, we certainly don’t want that to continue.
Now we’ll have a chance to see what Trump does, with a Republican Congress at his back. Pence’s cave to Carrier (after Trump repeatedly railed against such caves) gave us a hint.
But “Hillary would have done the same.”
[I do agree they are equally bad in one important respect: They both spread the Big Lie. Unfortunately, even Bernie does, too.]
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Hillary might not have done the same. But she would have been just as bad in her own ways. Just like W. Bush who signed CAFTA and participated in the 9-11 false flag. And Bill Clinton with his NAFTA, and his ending of welfare, and his changing of laws that allowed the consolidation of media companies and caused the filling of prisons with black people. And Obama with his TPP, and his destruction of Libya and his drone assassinations and indefinite detention of U.S. citizens.
Bill Clinton was elected during a recession, and promised “hope and change.” He made things worse.
Obama promised “hope and change.” He made things worse.
Trump promised “hope and change.” He’s not even in office, and he’s already making things worse.
Even Jill Stein and Sanders have sold out.
Tweedle Dee and Tweedle Dum.
Each the same as the other one.
Sorry but that’s reality, son.
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“Obama promised ‘hope and change.’ He made things worse.”
Worse than what? Even with a Republican Congress, whose sole mission was to oppose anything he did, today’s data release doesn’t don’t back up your claim.
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Knowing your big opinion of Trump, you might appreciate this opinion;
http://www.yesmagazine.org/new-economy/in-stripping-away-our-hope-maybe-trump-has-done-us-a-favor-20161130?utm_source=YTW&utm_medium=Email&utm_campaign=20161202
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Nothing good will happen until the Big Lie is exposed. It is the Big Lie that stands in the way of all that could be good in America.
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WARNING – OFF TOPIC COMMENT:)
An MMT advocate told me that JG is better than a basic income/guaranteed income because a BI/GI would have inflationary tendencies. His/her argument was that a BI/GI would be functioning at the same time as the business cycle expands; the private sector would be creating jobs, making investments, and taking loans, and having the gov put money into the economy would only be detrimental.
I gotta say – It sounds reasonable. However, I think having a reasonable tax system that taxes the rich and having relatively high interest rates on T-securities can offset inflation. Maybe the Fed keeping the interest rates on reserves relatively high as well can influence good interest rates in the private sector; but I don’t know.
Anyway, I would love to hear your opinions.
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“His/her argument was that a BI/GI would be functioning at the same time as the business cycle expands;. . . ”
1. There is no “business cycle.” There are growth periods and recessionary periods, but they are not cyclical. They each have different causes and different timing.
2. INFLATION IS NOT AN UNCONTROLLABLE THREAT TO THE UNITED STATES. The Fed has absolute control over inflation.
3. Did you read the posts listed in point #3 of the Ten Steps to Prosperity?
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Yeah, I read them. I just wanted to know what you thought of the business cycle argument.
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Some quick thoughts…
[1] Social Security works fine, and would work even better if benefits were increased. Social Security brings benefits to everyone in the economy, whether or not they personally receive SS payments. A basic income guarantee is simply an expansion of Social Security.
[2] Basic income has been tried, and it functioned well. People with a basic income actually worked more, not less. And they didn’t have to settle for awful jobs. Meanwhile all manner of social ills fell (alcoholism, domestic violence, medical illnesses, etc etc). An example was the “Mincome” experiment in Canada.
By contrast, the JG has never been tried, and never could be tried, since it never could work. If you want to create more jobs, then just say, “The government should create jobs like it did during the New Deal.” Or, “The government should put more money into circulation so that jobs are created automatically.” MMT people are obsessed with a jobs “guarantee” because it lets them chatter endlessly about nothing.
[3] Regarding the inflation bogeyman, the U.S. economy is nowhere near full capacity. On the contrary, more and more Americans are idled each day. Stores close because no one has money to spend. Department stores and shopping malls that used to cater to the middle class are now facing extinction.
What do you think would happen if you and everyone around you had more money to spend? Would we collapse from hyper-inflation? Or would we move back toward some semblance of sanity? Would we have more student loan debt or less? More stores, restaurants, and other business, or fewer?
The inflation bogeyman is childish. MMT people cling to it to justify their equally childish “jobs guarantee.”
[4] Rodger says there is no “business cycle.” I agree, if Rodger means that growth and recessions do not occur in a cyclical and predictable manner like winter and summer. However let’s be clear. Originally the term “business cycle” referred to a process whose time interval was not fixed. As businesses grew, they took on more and more debt in order to keep growing. When their aggregate debt payments exceeded their aggregate revenues, businesses had to downsize, causing an aggregate recession. This occurred in a manner that was cyclical, but not precisely predictable. No one could say when each tipping point would occur.
Today this schema is no longer applicable, since the financial economy has become king. (Wall Street over Main Street.) Big corporations are sitting on mountains of cash, which they use for playing in the Wall Street casino. And since the government will bail them out no matter what, they can’t lose. Hence there is less need to engage in traditional industry.
In any case the so-called “business cycle” is not a valid reason for rejecting an expansion of Social Security.
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“As businesses grew, they took on more and more debt in order to keep growing.”
The notion that growth leads to recessions simply is not true.
The transition from one to another is caused by some government action, usually the lack of (or increase in) deficit spending.
Recessions have been preceded by reductions in deficit growth.
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Business debt has nothing to do with it? I need more convincing. However I agree that austerity (i.e. deficit reduction) is also a factor, and a major one.
By the way your chart shows the so-called “national debt,” not the federal deficit.
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Elizabeth,
No, the graph actually shows federal debt. For some reason, FRED uses ridiculously small type for its titles.
If you need more convincing, here is a chart of business debt growth vs. recessions:
Not a strong relationship, but if there is any relationship at all, it seems to be that business debt growth declines in advance of recessions.
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The federal government has debts? Please explain.
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Huh??
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>>EXACTLY.<<
Huh?
All this time you have claimed that the "national debt" is a misnomer.
Now you have apparently reversed yourself.
HUH????
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And when you discuss federal deficit spending, you illustrate it with a chart that shows federal debt (whatever that is).
When I ask for clarification, you are baffled and dumbfounded.
Whatever.
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“Federal debt” is the term commonly used to refer to the total of deposits in T-security accounts at the Federal Reserve Bank.
Changes in “federal debt” reflect deficits.
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“Changes in ‘federal debt’ reflect deficits.” ~ RMM
Oh? I’m not contradicting you, but perhaps you could post a FRED chart which showed the direct or nearly direct correlation between (a) the amount of federal deficit spending and (b) the amount of Fed savings deposits. If one exists, it would clarify a lot for me.
I myself am not good at coming up with FRED charts. I mean that sincerely, not sarcastically. The web site confuses me. I wish I had a tutorial.
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New to all this so forgive me. Can someone explain the difference between the so called federal debt and national debt?
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Some people use them interchangeably and some believe “national debt” should include non-federal (private) debt as well as federal debt.
The other confuser is that over time, changes in the federal debt reflect the federal deficit.
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Reader “Elizabeth” snarked,
My response was:
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My question was legitimate, not a snark. You devoted countless blog posts to dismissing the “federal debt,” only to suddenly affirm that there is in fact a “federal debt.” When I asked for clarification, you said “Huh?” You also distinguished between the federal deficit and the “federal debt,” only to suddenly regard the two as one and the same thing.
Anyway thank you for the chart above. It makes things clearer.
I say we should be careful in our use of terms. Perhaps you THINK you are being clear, but sometimes you are not. I have often seen you say that the “debt crisis” is a hoax, without distinguishing between public and private debt. I mention this because most people are looking for any excuse to dismiss the facts of MS.
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The Federal Debt exists but it’s an accounting device. Your savings deposit at your bank is the bank’s debt, it owes it back to you. $14Trillion is investor deposits willingly stored at the Fed because it’s government guaranteed and earns interest. $5T is “intragovernmental” debts, unspent money set aside for payments to Social security etc.
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