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The “Big Lie” is the statement that federal taxes fund federal spending.

It is a lie that easily is debunked:

Unlike the euro nations, and unlike U.S. cities, counties and states, the U.S. has a Monetarily Sovereign (MS)government, which is:

  1. A government arbitrarily having passed the laws from thin air:
    • That created, also from thin air, its sovereign currency, and
    • That specified by decree, the value of its currency.
  2. A government continuing to retain the power to:
    • Create again from thin air, more of its sovereign currency, and
    • Continue to control the value of its currency.

Based on the above, the U.S. government never unintentionally can run short of dollars. It neither needs nor uses tax dollars or borrowing to pay its bills. And. it can control inflation at the level it chooses.

Therefore, even if all tax collections fell to $0, the federal government could continue paying its  bills, forever.

The “gap” can be described as the distance between two or more groups. Examples of group members are:

–A citizen of a country
–A resident of some area within a country
–A member of a religion or a non-believer
–An employee of a company
–A member of a team
–A person with a certain level of income
–A person with a certain level of wealth
–A person with a certain level of power

So addicted to group formation are we, that we continually multiply groups.  Judaism begat Christianity which begat Protestantism, which begat multiple denominations, in an ever-continuing process of group creation.

Members of groups tend to believe they are superior, in some way, to members of other groups. Given any group of two or more persons, there is a great likelihood that some in the group will be considered “lesser” by some measure, thus creating an additional group — a “lesser” and a “greater.”

The distance between the lesser and the greater is the “Gap.” In any population, there can be many such Gaps.

The U.S. Census Bureau, for instance, tracks income levels in $5,000 increments: “Under $5,000; $5,000-$9,999; $10,000-$14,999 . . . $200,000 and over.” The income “Gaps” represent the distance between any two income levels.

Some years ago, we concluded that the first law pertaining to all Gaps is:

People wish to narrow the gap above them and to widen the gap below them.

When applied to money income, money wealth, and political power:

First Law: The poorer wish to narrow the Gap vs. the richer, and the richer wish to widen the Gap vs. the poorer.

This leads to the:

Second Law: Every income level believes those below them should not be allowed to close the Gap.

Reader Elizabeth Harris recently has suggested the term “Gap Dynamics” for this rule, and though the term also is used in other contexts,  it is appropriate and helpful in this setting.

Based on the Big Lie, politicians make such false austerity claims as:

–Social Security is “going broke.”
–Medicare should be privatized
–Taxpayers pay for all benefits to the poor and middle-classes
–The federal government can’t afford to [fill in the blank] 

Despite the fact that the Big Lie easily is debunked, politicians, the media, and the university economists, all having been bribed by the rich (via “contributions”), feel free to make false claims, because the public accepts the laws of Gap Dynamics.

Yes, the concept, “Cutting one’s nose to spite one’s face” comes to mind. But, the people’s emotional need to keep those below them down is more powerful than their own desire to rise up.

This phenomenon is known as “Loss Aversion.”

In economics and decision theory, loss aversion refers to people’s tendency to prefer avoiding losses vs. acquiring equivalent gains: it’s better to not lose $5 than to gain $5.

Some studies have suggested that losses are twice as powerful, psychologically, as gains. Loss aversion was first demonstrated by Amos Tversky and Daniel Kahneman.

For most people, a narrowing of the Gap below — that is allowing the poorer to come closer — is felt to be a personal loss, even when there has been no change, or even an improvement, in one’s own finances.

Loss aversion —-> Willing acceptance of the Big Lie —-> Widening of the Gap 

At any given level, a benefit to the poorer offers them a greater reward than the same benefit offers the richer. For instance, five thousand dollars means more to a person earning $10,000 a year, than the same five thousand dollars means to a person making $20,000.

If everyone were to receive the same benefit, all Gaps would narrow, but very few people, rich or poor, want the Gaps below them to narrow.

So powerful is this feeling that the populace angers when the Big Lie is explained to them. The end of the Big Lie would mean federal benefits could bring the poor closer to those above them. 

On a personal level, if you believe your taxes pay for federal spending, and Medicare and Social Security are going broke, and the poor receive too many benefits, you are helping to perpetuate the Big Lie, and you are helping to widen the distance between you and those “above” you.

In short, the Gap above you grows because you accept the Big Lie.

“Therefore, send not to know
For whom the bell tolls,
It tolls for thee.” 

Rodger Malcolm Mitchell
Monetary Sovereignty

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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.

MONETARY SOVEREIGNTY