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Economics is complex, so complex that we often do not know how to identify either cause or effect with much confidence.
The central reason is because economics is intermingled with such complex subjects as psychology, meteorology, Artificial Intelligence, game theory, and mathematics.
Even the language of economics is uncertain. Just by way of example, what exactly are “federal debt,” “federal deficit,” “austerity,” “wealth,” and “progressive”? You will hear many definitions, often contradictory.
But economics is simple, so simple that its entire structure rests on the answers to just two questions:
- Can the U.S. federal government unintentionally run short of U.S. dollars?
- Can the U.S. federal government control the value of the U.S. dollar?
I. Can The U.S. Federal Government Unintentionally Run Short of U.S. Dollars
The first question leads us to a discussion of Monetary Sovereignty (and monetary non-sovereignty).
“Monetarily sovereign” means absolutely sovereign over the currency the nation primarily uses.
The U.S. government and the governments of such other nations as the UK (pound), Canada (Canadian dollar), Australia (Australian dollar), Japan (yen), and China (Yuan Renminbi) are Monetarily Sovereign.
Each of these nations uses a currency it created and over which it is sovereign.
By contrast, the governments of Germany, France, Italy, and other members of the eurozone use the euro, a currency none of them created, and over which they have no control.
Similarly, Illinois, Los Angeles, and Idaho use a currency, the dollar, they did not create and over which they have no control.
So, the euro nations can run short of euros, and American states and cities can run short of dollars. They are monetarily non-sovereign.
The U.S. government created the first U.S. dollar more than two centuries ago, by creating laws. The laws, written by men, not by God, specified:
a) the number of dollars to be created and
b) the value of those dollars relative to precious metals.
Note that the U.S. dollar never actually was backed by precious metals. “Backed” implies collateral, but when the debtor has the unconditional power to change the collateral, one cannot say the dollar was backed by metals.
Those who pine for a gold-“backed” dollar must understand that even were we on a gold standard, the federal government has the uncontested power to change the dollar-price of gold at any time.
In short, a gold-“backed” dollar is impossible for our Monetarily Sovereign government. The only thing that backs the dollar — the only thing that ever has backed the dollar, even during gold standards — is the full faith and credit of the federal government.
It would be far more accurate to say the U.S. is on a “full faith” standard than ever on a gold standard.
Both a) and b) above were wholly optional. The men could have used any numbers they chose.
As federal laws are under the control of the federal government, the number of U.S. dollars, the way dollars are created, and the value of dollars can be changed at will, by the federal government.
Because all laws are created from thin air, dollars too are created from thin air. And because laws have no physical existence — they are ideas only — dollars too, have no physical existence. They are nothing more than numbers in balance sheets.
Just as pages in law books in of themselves are not laws — they merely represent laws — so too are dollar bills not dollars. They merely represent dollars. And just as you never have seen, heard, tasted, smelled, or touched
And just as you never have seen, heard, tasted, smelled, or touched a law, you never have seen, heard, tasted, or touched a dollar. Dollars are notations on balance sheets, ultimately controlled by the federal government.
So in answer to question #1, “Can the U.S. federal government unintentionally run short of U.S. dollars?, we respond, “can the U.S. federal government unintentionally run short of laws to create dollars?
Imagine an unlikely scenario, in which the U.S. government finds that current law somehow restricts its ability to create dollars, but needs to create more dollars to pay its bills. What would the government do?
Obviously. It simply would pass new laws that permit creating more dollars. The U.S. federal government never can be prevented from creating more of its own sovereign currency.
Dishonest websites and pundits that warn you the federal “debt” is unsustainable, or simply too high, must explain how our Monetarily sovereign government ever could find any dollar debt to be “unsustainable.” It never has; it never will.
II. Can the U.S. federal government control the value of the U.S. dollar?
Usually, when we describe the impossibility of the U.S. government running short of its own sovereign currency, or finding any debt denominated in U.S. dollars to be “unsustainable,” we are asked, “What about inflation.”
Then we are given examples of nations that have had hyperinflation: Weimar Republic, Zimbabwe, Argentina, et al.
The first answer is that despite massive deficit spending, wars, depressions, recessions and various natural disasters, the U.S. never has experienced hyper-inflation. So it seems odd that anyone would make the possibility of an event that never has happened the focus of financial concern.
Second, there has been no correlation between federal deficit spending and inflation. See: “Deficit Spending Doesn’t Cause Inflation; Oil Does”
Third, deficit spending in Weimar Republic, Zimbabwe, etc. did not cause hyper-inflations. In fact, the inflations caused the deficit spending.
Weimar’s hyperinflations were caused by the onerous financial punishments the allies put on the Germans after WWI.
The Zimbabwe hyperinflation was caused by Robert Mugabe, who stole farm land from farmers and gave it to non-farmers, which resulted in a food shortage. Argentina’s hyperinflation was caused by government criminality, leading to shortages of goods and services.
In each case, a desperate (and foolish) attempt to keep up with inflation by the government created additional money, which exacerbated the inflation.
Fourth, the belief that federal deficits cause inflation is based on a simple misunderstanding of algebra.
Inflation is the loss of value of money compared with the value of goods and services. The basic formula for value is: Value = Demand/Supply.
If Demand goes down, and/or Supply goes up, Value goes down. But those who fear deficits because of inflation, unknowingly use this formula: Value = 1/Supply.
In short, they view Demand remaining static, when dollars are pumped into the economy. But this is seldom the case. Think of what happens to those Social Security, Medicare, Medicaid, military, infrastructure and education dollars the government spends.
They are received, then spent by the public on food, housing, schooling, clothing, travel, etc. And the providers of those goods and services, upon receiving more dollars, spend them for payroll, equipment, real estate, etc.
So the very increase in dollars helps increase the demand for goods and services, which increases the demand for dollars.
But let’s say that the increase in Demand is not sufficient to balance against Supply, and inflation begins. What else can the government do to increase the demand for dollars?
The dollar is an investment medium, and as an investment, its Demand is based on this formula: Demand = Reward/Risk.
Further, Reward = Interest; Risk = Inflation.
To increase the Demand for dollars (and thus reduce inflation), the government must increase interest rates, and that is exactly what the Fed does, any time it gets even a sniff of impending inflation.
So for question #2, “Can the U.S. federal government control the value of the U.S. dollar?” the answer is “Yes, as a Monetarily Sovereign government, the U.S. can control the Risk, Reward, Supply, and the Demand for the dollar, and even specify the exchange value of the dollar against other currencies.
Therefore, whether or not you agree with all Ten Steps to Prosperity you should understand this: There is no financial reason not to implement them.
You might argue about whether “Medicare for all,” “free school for all” or “Social Security for all” are good economic ideas, but there is no rational reason to claim they are “unaffordable” or “unsustainable.”
Economics is complex. The science is filled with abstruse concepts, formulae, and opinions. But it all boils down to two facts:
- The U.S. federal government cannot unintentionally run short of U.S. dollars. Without collecting even one dollar in taxes, the U.S. government still could pay its bills, forever.
- The U.S. federal government has complete control over the value of the U.S. dollar? It not only can prevent excessive inflation, but it can set inflation at any level it chooses.
Keep these two facts in mind whenever you read an article or hear anyone say that some federal agency could be insolvent, or some expense is “unsustainable,” or the federal government cannot “afford” some spending.
Those comments all are part of “the Big Lie.”
The often-asked question about any proposed federal government initiative, “Who will pay for it,” should be answered by just three words: “The federal government.”
Rodger Malcolm Mitchell
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.
22 thoughts on “It all boils down to just two questions”
Well said, Rodger. It’s always a battle to not get tied up in knots trying to explain how money works. I have tried hundreds of times but still am trying to find words which cut through. One thing I don’t like about MMT is the use of the word theory. Mostly that signifies its not proven,like an hypothesis,so one has to explain that to others on top of everything else. It’s not a theory so it needs to be said its a Description of the reality about money. Mainstream economics in instead a theology,a belief system based on models that fail every time they get tested.
I can add to your two questions, by telling people tax Cannot fund federal spending simply because the government has to spend first to put money,or currency, into the economy. Then once that is done it can levy taxes. It cannot happen the other way round.
I agree. The term “theory” does confuse people. I use “Monetary Sovereignty,” which to some, sound like gobbledegook, but at least does get to the heart of the subject.
By the way, in science,” theory” is something that is accepted and supported by data, like the Theory of Evolution or Quantum Theory.
“Hypothesis” would be the correct word for something proposed, but not yet scientifically accepted. Few people understand that.
One thing that has been moderately successful: When I’m in a discussion with a “doubter” I ask “Do you really believe the federal government can run short of its own sovereign currency?”
Usually, they say “No,” and then I ask, “So what is the purpose of taxes?”
That settles the “unsustainability” and “affordability” issues, and it gets us into the discussion of inflation.
RMM, “One thing that has been moderately successful: When I’m in a discussion with a “doubter” I ask ‘Do you really believe the federal government can run short of its own sovereign currency?’ ”
Surely no one can doubt that the federal government can never run short
of its own currency. What is doubful is the value of that or any “large over run
of the currency because surely no one can doubt the federal government can “issue” MILLIONS of TRILLION DOLLAR bills.
BTW, so can the Private For Profit Banks that are members of the Federal Reserve- they have proven that they can fulfil the reserve requirement
AFTER THEY DEPOSIT the money.
You preach some of the BEST for the BETTERMENT of Mankind.
But even you, some day must realize that the US is NOT a Monetary Sovereignty (because they have legislated the right to issue to another entity)
and also because you can not define “What is money”.
RMM, ask, “So what is the purpose of taxes?”
It is the ways and means by which the government can legally appropriate
money (real or fictitious) in order to maintain the quality and quantity of its currency.
Please, concentrate.. As Soddy would say, “So elaborately has the real nature of his ridiculous proceeding been surrounded with confusion by some of the cleverest and most skilful advocates the world has ever known, that it still is something of a mystery to ordinary people, who hold their heads and confess they are ” unable to understand finance “.
It is not intended that they should.”(The Role Of Money)
PLEASE: “Believe nothing merely because you have been told it…But whatsoever, after due examination and analysis,you find to be kind, conducive to the good, the benefit,the welfare of all beings – that doctrine believe and cling to,and take it as your guide.”- Buddha
I don’t need to get into a semantic whirlpool argument about “What is money?”
I merely need to say that the U.S. government is sovereign over the U.S. dollar.
It makes all the rules regarding the U.S. dollar, including who can issue it — the government, the banks, the credit card companies, all creditors and travelers’ checks issuers.
That power is what makes it Monetarily Sovereign.
Taxes do nothing to maintain the “quality” of the dollar. Didn’t you read the post?
As for Soddy, your endless quotes indicate he is a sophist blowhard, who makes grand pronouncements signifying nothing. Please: No more Soddy quotes.
“They view demand as static” rmm
Not sure where the formula came from but you are putting words in our mouths. We also dont know whether demand is “static”, and neither do you.
We dont know whether demand will be static in the future either, and neither do you.
There is no “mistake”, its a matter of view.
Your view is that there is nothing wrong with the government allocating supply (AFTER IT IS PRODUCED), we see that as theft.
Therefore the 2 points you outline is far from being the basic questions in economic.
The single basic questions are:
1) Can any economist prove that anything is free?
2) if the answer to the above is no, is it more efficient for the government to allocate the resources that have being produced via non tax ways (i.e. devaluation)?
If your answer to #2 is yes, congratulations – you believe in slavery. And to top that off, people would be really pissed off if they found out that they are as poor as they are because of the government.
Actually, the answer to question #! is “Yes.” The U.S. dollar is free to the federal government, which always had produced them at will. Today, the government could produce a trillion dollars by pressing a computer key.
None of this involves your “devaluation.” The formula for value is Value = Demand/Supply. If you believe increases in Supply reduce Value, then algebraically, you must believe Demand is static or at least moving less than Supply.
This says nothing about your personal beliefs. It is straight algebra.
If Demand goes up, the Value goes up, and your “devaluation” hypothesis goes down the toilet.
The federal government controls the Demand for dollars via interest. Interest is the Reward for owning dollars. The higher the interest rate, the greater the Demand.
The fact that you’re not sure where the Supply/Demand formula came from tells all one needs to know about your economics ignorance.
Imagine! Debating economics with someone who is not familiar with the Supply/Demand formula. It’s like debating astronomy with someone who never has heard of stars.
There really is a limit as to how ignorant about a subject a person is allowed to be and still have their viewpoint published. You have exceeded that limit for weeks.
THE WORST AUSTERITY IN THE WORLD
On Thursday a new constitutional amendment will go into effect that freezes Brazilian government spending on social programs for two decades. Spending will not increase if the economy grows. It will not increase as the population ages. It will not increase as Brazil’s population grows. Therefore the same level of spending will be divided across ever larger numbers of people for the next 20 years.
In some ways, Brazil’s austerity is the worst in the world, since it is now mandated by Brazil’s constitution. The measure, introduced by Brazilian coup leader Michael Temer, includes a clause saying austerity cannot be modified in any way for at least 10 years. If the Brazilian Congress wants to stop the austerity, then Congress will need a tree fifths majority. This will be nearly impossible with Brazil’s fractious party system (although the austerity amendment passed by a tree fifths majority).
Temer himself was never elected. When he led the coup against Dilma Rousseff in mid- 2016, Brazil had the worst recession in a century. (Brazil’s economy, which relies on exports of commodities, went into a recession when world commodity prices fell.)
That severe recession has been made much worse by Temer’s austerity policies. Temer says that only austerity can stimulate an economy, and that only severe austerity can cure severe recessions. He says that Brazil’s recession was caused by deficit spending, and that “fiscal responsibility” will restore “investor confidence’ (i.e. will return workers to slave status).
Rich Brazilians favor Temer’s attack, since it is designed to widen the gap between the rich and the rest.
Sadly, the Brazilian people will pay dearly for their ignorance of economics, just as the American people will pay dearly for their ignorance of Trumpanomics.
The question for both: “Will you learn from the pain?”
It would be interesting to hear the Committee for a Responsible Federal Budget’s opinion of this; it is exactly what they propose for America.
“The question for both: ‘Will you learn from the pain?'” ~ RMM
Yes, this is the central question.
As I see it, people never learn anything until they are unable to obtain food because of scarcity and / or high prices. Only with physical starvation do average people start to ask questions. Until that point, they submit to ANYTHING. They may march, riot, demonstrate, and engage in and “occupy Wall Street ” sit-ins, but they will never question the Big Lie until they are literally starving. They will not have the slightest interest in it.
This is why the rich in the USA allow some of the peasants to have Food Stamps.
America’s rulers know that America’s peasants will never question the Big Lie as long as the peasants have something to eat.
When has the populace EVER questioned the Big Lie?
Even when they riot in the streets, they don’t understand the simple truth that the federal government never can run short of dollars.
In fact, they get angry if you suggest the solutions to their problems.“Nothing is that simple,” they say. “There is no free lunch.” They let aphorisms do their thinking.
There is an interesting psychology to people not wanting to hear that their problems easily could have been solved, but all these years they were too ignorant to understand how.
“Nobody ever went broke underestimating the intelligence of the American public.” H.L. Menkin.
Of the 196 national governments in the world, I cannot think of one that does not participate in the Big Lie. A handful of governments try to be somewhat populist, yet they too echo the Big Lie in order to maintain power over the citizenry.
Despite this, I continue to place most of the blame on average people, since average people (most of them) voluntarily choose to participate in the Big Lie. Twenty percent deny the truth. Eighty percent don’t care. Either way it is a choice of poverty and slavery. Naturally people deny this, in order to pose as “victims.” I do not mean people at the bottom of society, who are often trapped, whether they choose it or not. I mean average people.
Somewhere I recently saw a blog where ones beliefs, if made available at an early enough age, become so ingrained as to be almost impossible to shift. This is not just religious beliefs, it is also the spin about economics. Spin it enough and it becomes “truth”!
Changing peoples minds has little to do with facts.
Developmental psychologists say that 80% of our emotional makeup is developed by age 8. The other 20% is developed during the rest of our lives. Our emotional makeup is derived from our culture and from our personal experiences. It determines our core beliefs, which in turn are rationalized by our intellect, which includes our delusions.
The beliefs we develop by age 8 form our world view and our sense of personal identity. When our beliefs are challenged, we take the challenge as an attack on our psyches. We do this even in adulthood.
In addition to this factor, we have a moral character. A weak moral character makes us cowardly and selfish. It makes us indulge in Gap Dynamics, in which we vote for austerity in order to crush people below us on the social ladder of wealth and power.
The combination of faulty beliefs and poor moral character makes us support the Big Lie.
Regarding Brazil’s austerity, another class of people who support it is economics professors, since their jobs depend on supporting austerity. They do it by echoing the Big Lie.
For example, Laura Carvalho, a professor of economics at the University of Sao Paulo, and a columnist for the Folha de Sao Paulo newspaper, says that austerity will cause government services to deteriorate.
Carvalho is correct. However she supports the Big Lie by saying that the way to cure Brazil’s recession is to raise taxes on the rich and on corporations.
In this way, professors and politicians pose as leftists and populists, while they intentionally kill average people by supporting the Big Lie. (It’s the same with Democrats in the USA, and with Labor Party members in the UK).
The conservaitves also support the Big Lie, but don’t even bother to pretend. Republicans are first, last and always the party of the rich.
Welcome to the brotherhood, Donald Trump.
Social Security, Medicare, Medicaid, civil rights bills, federal aids to education, federal aids to the arts, public broadcasting, rural development, the Voting Rights Act, the Immigration and Nationality Act, gun control, The Wilderness Act, all are the work of progressives who, like every politician in American history, also spoke the Big Lie.
Sadly, there have been no progressive Presidents since Lyndon Johnson.
Quote RMM, “I don’t need to get into a semantic whirlpool argument about “What is money?”
I merely need to say that the U.S. government is sovereign over the U.S. dollar.
It makes all the rules regarding the U.S. dollar, including who can issue it — the government, the banks, the credit card companies, all creditors and travelers’ checks issuers.
That power is what makes it Monetarily Sovereign.”
You, yes you have always asked about “The Big Lie”
Would that be: “The U.S. Dollar is MONEY.” NO, repeat NO government can make all, all the rules regarding money.Period.
The U S government may be US Dollar Sovereign, but truthfully NOT Monetarily Sovereign.
The “lie” is intended to hide the truth.
The US Dollar when “created out of thin air” may be legal but it is NOT real money.
Agreed. It’s like when I’m at a football game, and I shout to everyone in the stadium, “They may note each team’s points on the scoreboard, but those are not real points!”
When I scream this over and over, everyone looks at me like I’m an idiot, when in fact everyone BUT ME is an idiot.
The points are not real, since there is nothing to back them except everyone’s agreement that the points are real. Likewise, words and numbers are not real, since there is nothing to back them except everyone’s agreement to use them.
Therefore all dollars are worthless, but no, I will not give you any of my worthless dollars. They’re too valuable to me.
They’re too valuable to you because you are dealing with “score believers” when even they no longer believe; you will no longer feel any value, no matter what number is printed on them; they become “that which was used to create them-“THIN AIR”.
BTW: This proves as RMM said Value =Demand/Supply.When there is no longer any Demand, even if Supply is Trillions there is no value.
Goodbye Monetary Sovereignty, or should I say, “Thin Air Sovereignty”
Elizabeth, don’t even try.
Actually that individual makes a valid point…
“Dollars are too valuable to you because you are dealing with ‘score believers.’ When even they no longer believe; you will no longer feel any value no matter what number is printed on them. They will become that which was used to create them: THIN AIR.”
Correct. If people worldwide lost all faith in the dollar, then the dollar would become worthless. Of course, that could only happen if the U.S. government and society ceased to exist. Likewise the money is the Monopoly board game has no value when there is no board game. Points on a football scoreboard have no value when there is no football game. Words and numbers have no value or meaning when there are no people on earth.
Until these things happen, I’ll take all the “worthless” dollars that anyone cares to give me.
In the year 2500, when the debt is $800 trillion, Pete Peterson’s ancestor will say “The US cannot keep passing the debt down to our children and grandchildren — it is unsustainable.”
Why not? The Big Lie has worked all these years. Might as well keep it going.