Why is it so hard to understand?

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For the first four billion years of the earth’s existence, there were no U.S. dollars.

Even as recently as the year 1770 AD, there still was no such thing as a U.S. dollar. Yet, only 20 years later, there existed millions of U.S.dollars.

Where did all those dollars come from?

It does not take much knowledge of history or finance, or even much intelligence, to realize that a group of men created laws out of thin air (All laws are created out of thin air), and among those laws were a few that created dollars, also out of thin air.

Laws have no physical existence. You never have seen, smelled, tasted, felt, or heard a law. Whether printed in lawbooks, written on parchment, or spoken by a judge or by a policeman, laws are nothing more than representations of rulers’ beliefs.

Similarly, the dollars created by those laws have no physical existence.You never have seen, smelled, tasted, felt, or heard a dollar.

Whether they are printed on paper “bills,” typed in bank passbooks, or represented on your bank’s website, dollars are nothing more than representations of the full faith and credit of the ruling issuer — in this case the U.S. federal government.

The issuer of laws can create unlimited numbers and kinds of laws, never running short of laws, and can give these laws any desired reward and punishment value.

By these laws, the issuer of dollars can create unlimited numbers and kinds of dollars, never running short of dollars, and can give these dollars any desired exchange value.

That is known as “Monetary Sovereignty.”

Recently, in Florida, on a day too rainy for tennis or the pool, my grandchildren set up a game of Monopoly©. At one point I, in my role as banker, ran short of Monopoly dollars.  So I cut up pieces of paper, and wrote “1s,” “5s,” “10s,” and “100s” on them, and continued the game.

I didn’t need to levy taxes on the players. I simply kept the game going by creating paper records of “dollars,” ad hoc.

I just as well could have drawn up a grid showing how much money each player had after each roll of the dice and subsequent transactions. or, I could have kept records in chalk on a blackboard.  Or I could have maintained accounts on a computer-based table.

Any of these devices would have represented Monopoly dollars.

The point is that the issuer of money — any money — never needs to run short of his money so long as he controls the laws that create money. No tax collections are necessary. No debt in that money is “unsustainable.” The issuer is sovereign over his money.

Is this difficult to understand? I suspect not.

Why then is “Monetary Sovereignty.” so difficult for the populace to understand?

The following article, from the January 2017 edition of Scientific American, addresses that issue. Here are excerpts:

How to Convince Someone When Facts Fail
Why worldview threats undermine evidence
By Michael Shermer

Have you ever noticed that when you present people with facts that are contrary to their deepest held beliefs they always change their minds? Me neither.

In fact, people seem to double down on their beliefs in the teeth of overwhelming evidence against them.

The reason is related to the worldview perceived to be under threat by the conflicting data.

Creationists, for example, dispute the evidence for evolution in fossils and DNA because they are concerned about secular forces encroaching on religious faith.

Anti-vaxxers distrust big pharma and think that money corrupts medicine, which leads them to believe that vaccines cause autism despite the inconvenient truth that the one and only study claiming such a link was retracted and its lead author accused of fraud.

The 9/11 truthers focus on minutiae like the melting point of steel in the World Trade Center buildings that caused their collapse because they think the government lies and conducts “false flag” operations to create a New World Order.

Climate deniers study tree rings, ice cores and the ppm of greenhouse gases because they are passionate about freedom, especially that of markets and industries to operate unencumbered by restrictive government regulations.

Obama birthers desperately dissected the president’s long-form birth certificate in search of fraud because they believe that the nation’s first African-American president is a socialist bent on destroying the country.

By coincidence (?) the next President of the United States is an “anti-vaxxer,” “climate denier,” “9/11 truther” and “Obama birther,” a fact that will support the author’s coming conclusions.

In these examples, proponents’ deepest held worldviews were perceived to be threatened by skeptics, making facts the enemy to be slayed. This power of belief over evidence is the result of two factors: cognitive dissonance and the backfire effect.

In the classic 1956 book When Prophecy Fails, psychologist Leon Festinger and his co-authors described what happened to a UFO cult when the mother ship failed to arrive at the appointed time.

Instead of admitting error, “members of the group sought frantically to convince the world of their beliefs,” and they made “a series of desperate attempts to erase their rankling dissonance by making prediction after prediction in the hope that one would come true.”

Festinger called this cognitive dissonance, or the uncomfortable tension that comes from holding two conflicting thoughts simultaneously.

Two social psychologists, Carol Tavris and Elliot Aronson (a former student of Festinger), in their 2007 book Mistakes Were Made (But Not by Me) document thousands of experiments demonstrating how people spin-doctor facts to fit preconceived beliefs to reduce dissonance.

In a series of experiments by Dartmouth College professor Brendan Nyhan and University of Exeter professor Jason Reifler, the researchers identify a related factor they call the backfire effect “in which corrections actually increase misperceptions among the group in question.

Why? “Because it threatens their worldview or self-concept.”

For example, subjects were given fake newspaper articles that confirmed widespread misconceptions, such as that there were weapons of mass destruction in Iraq. When subjects were then given a corrective article that WMD were never found, liberals who opposed the war accepted the new article and rejected the old, whereas conservatives who supported the war did the opposite … and more: they reported being even more convinced there were WMD after the correction, arguing that this only proved that Saddam Hussein hid or destroyed them.

If corrective facts only make matters worse, what can we do to convince people of the error of their beliefs? From my experience:

  1. keep emotions out of the exchange
  2. discuss, don’t attack
  3. listen carefully and try to articulate the other position accurately
  4. show respect
  5. acknowledge that you understand why someone might hold that opinion
  6. try to show how changing facts does not necessarily mean changing worldviews.

These strategies may not always work to change people’s minds, but now that the nation has just been put through a political fact-check wringer, they may help reduce unnecessary divisiveness.

The author submits that the desire to reduce the uncomfortable tension from holding two conflicting thoughts (“cognitive dissonance”),  prevents people from accepting clear facts.

And given that people have been trained to believe in the scarcity (for them) of money, a belief that is reinforced almost daily by authority figures, should their cognitive dissonance be surprising, when faced with the fact that money is not scarce for the federal government?

On the very next page of the Scientific American magazine, there appears a related article:

Data Deliver in the Clutch
Where does the shortstop play in a paradigm shift?
By Steve Mirsky

“A long habit of not thinking a thing wrong,” wrote Thomas Paine, “gives it a superficial appearance of being right, and raises at first a formidable outcry in defense of custom. But the tumult soon subsides. Time makes more converts than reason.”

Almost two centuries later Thomas Kuhn, in his 1962 book The Structure of Scientific Revolutions described how science moves along within a framework until anomalies require what has become a cliché term for a change in outlook: a paradigm shift. He stated that his “most fundamental objective is to urge a change in the perception and evaluation of familiar data.”

(He described) the problem a wide array of human enterprises face: Insisting on remaining stupid when becoming smarter is an option.

Nobel economist Daniel Kahneman said that “people can maintain an unshakable faith in any proposition, however absurd, when they are sustained by a community of like-minded believers.”

He could have been talking about the like-minded believers of the “Big Lie,” that the federal government needs tax dollars in order to avoid insolvency.

And then there’s Bill James, the former security guard who, in his groundbreaking writings, (said), “People horribly overestimate the extent to which they understand the world. The world is billions of times more complicated than any of us understand, and because we are desperate to understand the world, we buy into these explanations that give us the illusion of understanding.”

In short, people buy into a false description of federal financing that is the same as the description of personal financing, because it is familiar and sustained by like-minded believers. 

False belief gives us the illusion of understanding.

A better-informed electorate would have been deeply troubled by Mr. Donald Trump’s outrageous statement in March 2016 that the owners of the Chicago Cubs were doing a “rotten job.”

In fact, the team’s trajectory had been steeply upward over the four previous years—the direct result of bringing in new thinkers well versed in modern baseball’s scientific analysis.

So how was such an obviously misinformed Mr. Trump able to maintain his large fan base of “like-minded believers”?

A clue can be found in the actions of some of them after the first presidential debate. A few Donald devotees disliked newscaster Lester Holt’s performance as moderator. So they tweeted nasty comments at Cubs pitcher Jon Lester.

In any field, remaining willfully ignorant just isn’t a viable, long-term strategy.

The misunderstanding of Monetary Sovereignty — or should we say, the refusal to understand — is based on several converging factors:

  1. The truth is a threat to the worldview that “there is no such thing as a free lunch,” and “there must be a good reason why I have been paying taxes.”
  2. Politicians, the media, economists, and all my friends have said the same thing for many years.
  3. Economics is way too complex for most people, but I understand it because I know the federal government’s finances are just like mine. 

The pain of cognitive dissonance, the powerful urge not to be proven wrong, the equally powerful urge to win every debate, all combine to obliterate the simple truth of “Monetary Sovereignty.” :

The U.S. federal government can make its sovereign currency, the dollar, anything it wishes it to be — any quantity, any value, any laws.

The government doesn’t need to ask you or anyone else for anything related to the U.S. dollar — not taxes, not borrowing, not assistance with anything.

Is total, absolute, complete sovereignty over a currency really so hard to understand?  

After all, I had it in my Monopoly game.

Rodger Malcolm Mitchell
Monetary Sovereignty


The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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.
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.
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.
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.
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.

6 thoughts on “Why is it so hard to understand?

  1. Speaking of cognitive dissonance, here’s an example from a Forbes magazine article.

    “If (interest) yields rose, the federal government would find it more difficult to service the debt, pushing the deficit higher. If the deficit rose, the total debt burden would accelerate and, unless demand for U.S. debt were to increase, it could get ugly. Will this transpire? It’s not too likely. At least not for the foreseeable future anyway.”



  2. Forbes, of all magazines, should be honest about finances. Unfortunately, honesty seems not to be a Forbes strong point.

    1. The federal government never, NEVER can have difficulty servicing its debt. Never has; never will.
    2. Demand for U.S. debt (i.e. T-securities) never can be “ugly,” The U.S. doesn’t need to accept deposits in T-security accounts, and in any event, the FRB could buy them all if it chose to.

    Yes, Forbes, it’s “not in the foreseeable future.” So why the BS? Answer: It’s what the rich want.


  3. [1] “Anti-vaxxers distrust big pharma and think that money corrupts medicine, which leads them to believe that vaccines cause autism despite the inconvenient truth that the one and only study claiming such a link was retracted and its lead author accused of fraud.” ~ Michael Shermer

    This is insulting. Money DOES corrupt medicine. Severely. Allopathic medicine focuses on treatment, since it is more profitable than prevention. And don’t get me started on pharmaceutical price gouging.

    Moreover no vaccine ever cured or conquered any disease anywhere at any time. All progress against epidemics has been made via improvements in hygiene, nutrition, and sanitation. Vaccines are a scam to bilk people of money, nothing more.

    Regarding autism, Dr. Andrew Wakefield and the fifteen other doctors who published that paper in “The Lancet” never once claimed that “vaccines cause autism.” NOT ONCE. All of them have been professionally re-instated, and their findings vindicated — but the corporate media outlets don’t report this.

    [2] Michael Shermer’s claim about “9-11 truthers” is too insulting to respond to. I’m surprised he didn’t attack “holocaust deniers” like he did in his 1997 book “Why People Believe Weird Things.”

    I agree about MS, but I do not agree with Shermer.


  4. You are correct that money does corrupt medicine — as well as corrupting almost every other human endeavor.

    “Moreover no vaccine ever cured or conquered any disease anywhere at any time. All progress against epidemics has been made via improvements in hygiene, nutrition, and sanitation. Vaccines are a scam to bilk people of money, nothing more.”

    You believe that smallpox, measles, mumps, polio, and influenza have been prevented by hygiene and nutrition, not by vaccination? What are your sources for this claim?

    “Allopathic medicine focuses on treatment, since it is more profitable than prevention.”

    Yet, vaccination is prevention. So which is it? Does corrupted medicine favor prevention, or treatment?

    Wakefield applied for a patent on a measles vaccine that in part states, “It has now also been shown that use of the MMR vaccine results in ileal lymphoid nodular hyperplasia, chronic colitis and pervasive developmental disorder including autism (RBD), in some infants.”

    Is it possible that you saw the film, “Vaxxed: From Cover-Up to Catastrophe”?

    The so-called “vindication” of Wakefield had to do with a claim of unethical methods, not the truth or falsity of his claim of a relationship between vaccination and autism. To my knowledge, no one else has found this relationship to be true. (http://cid.oxfordjournals.org/content/48/4/456.full)

    “Michael Shermer’s claim about “9-11 truthers” is too insulting to respond to.”

    I’ve never known you to be too insulted to respond to anything. I’d like to see your comments.

    “I’m surprised he didn’t attack “holocaust deniers” . . .”

    Not sure what this means. Are you defending holocaust deniers?? Are you a holocaust denier? What exactly is your point?


  5. Not a gold standard.
    Most Americans do not understand the most elementary basics of money and debt at the national level. It is widely held by the great majority that the United States government is running out of money and is about to be strangled by debt. This is not at all surprising since we are bombarded with this information by senior public officials, Congressional leaders, the President and all of the mainstream media. This is not to suggest, however, that most of those spreading this misinformation are just as confused and misled as are the rest of us. It is easily the most persistent and destructive myth of our age. The biggest error people make is comparing the federal budget to a household budget – they are not at all similar in construction or operation.
    So why is it that we have come to believe that the government is broke and strangled by debt? The fact is that it would be true if the United States was on a “gold standard” where public money is concerned. However, the U.S. went off the “quasi-gold standard” completely in 1971 when Richard Nixon terminated the Bretton Woods Agreement which governed monetary issues since the end of World War II. But, even then, it was not really a “gold standard”. It was a “Dollar standard” in which the United States agreed to back the Dollar by gold and all its currency to be redeemed for gold by those holding it. This was a stop-gap at the end of the war since the U.S. possessed virtually all of the available gold reserves at that time and had the only viable economy coming out of the conflict. No other developed nation possessed any meaningful gold reserves at the time


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