Taking the wrong path won’t get you to the right destination

Twitter: @rodgermitchell; Search #monetarysovereignty
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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..
Science is a search for facts. But often, agreed-upon facts can lead to diametrically opposing conclusions.Related image

Consider the differences between Monetary Sovereignty (MS) and Modern Monetary Theory (MMT). Both are attempts to demonstrate the superiority of facts over intuition.

They agree on the same set of basic economic facts, some of which seem to be so counter-intuitive, that even many economists are confused:

  1. The U.S. federal government is sovereign over its currency, the dollar. The U.S, cities, counties, and states are not.
  2. Being sovereign over its currency, the U.S. government cannot unintentionally run short of U.S. dollars. The U.S. cities, counties, and states can and do unintentionally run short of dollars.
  3. To pay its bills, the U.S. federal government needs no income.  The cities, counties, and states do need income.
  4. The federal government creates dollars ad hoc, each time it pays a creditor. The cities, counties, and states do not.
  5. Needing no income, the U.S. federal government does not need to tax or to borrow. Even if all federal tax collections were $0, the federal government could continue paying its creditors, forever.
  6. Unlike the cities, counties, and states, the federal government does not borrow. What misleadingly is termed “borrowing” and “debt” actually is the acceptance of deposits in T-security accounts by the Federal Reserve Bank, i.e bank deposits. The Bank pays off this “debt” every day, by transferring the dollars that already exist in T-security accounts, back to the checking accounts of the T-security holders. The federal government could pay off its entire “debt” today, if it chose, without creating a single, new dollar.
  7. Because the federal government never unintentionally can run short of dollars, no agency of the federal government can run short of dollars unless Congress and the President will it. Despite what you may have been told, Social Security, Medicare, the military, the White House, Congress, the Supreme Court et al, being federal agencies, cannot run short of dollars unless Congress and the President want them to.

These are the absolute Truths of the U.S. economy, on which both MS and MMT agree. Yet from these Truths, the two philosophies diverge, notably regarding what actions the federal government should take.

The very heart of MMT beats at the University of Missouri, Kansas City (UMKC), where the professors have created a monument to their beliefs, an organization called The Center for Full Employment and Price Stability.

As you might imagine, an organization bearing that title must foster the belief that the two most important problems facing the American economy, or any economy, are a lack of jobs and inflation.

Regarding jobs, consider these excerpts from an article in the May 27th, 2017 issue of NewScientist Magazine:

Technology for Tomorrow, a manifesto for change
Put workers before robots, p. 21 by Matt Reynolds

If robots aren’t already lining up to take your job, they will be soon. A much-cited study from the University of Oxford found that 47 percent of U.S. jobs are at risk of being automated over the next 20 years.

Automation is set to affect everyone from cashiers to credit analysts: even if your job can’t be fully automated, there is a good chance parts of it can be.

The implementation of Artificial Intelligence (AI), buttressed by “machine learning,” means that in the future, precious few jobs will not be done, wholly or in part, by machines — and this even includes the conceptual creation of those machines.

“Intelligent” machines already have taken jobs from humans, and will do so at an accelerated rate. If nothing is done, this looming lack of human jobs will impoverish the populace. So, what should be done?

MMT believes the problem can be stated very simply as “lack of jobs.”

MS believes the real problem is “lack of money.”

To solve what it considers to be the “lack of jobs” problem, MMT suggests implementing a “Jobs Guarantee” (JG) by which the federal government guarantees that everyone who wants a job will be given a job.

However, in reality, there is no shortage of jobs, nor has there been since the Great Depression. If you go to the Monster.com employment site and click “Chicago,” you will see: Jobs in Chicago, Illinois, 1000+ Jobs Found

The site doesn’t say how many more than 1000 jobs it lists, but the question is: Why are there so many jobs available if the problem is “lack of jobs”?

Is it because Chicago is such a big city?  Not really. Consider little Mullen, NE, pop. 501, and near no other cities. Here is what Monster.com said on June 11, 2017: Jobs within 10 miles of Mullen, NE:  65 Jobs Found.” 

Then we have the thriving metropolis of Harlem, MT, pop. 830, where 52 jobs within 10 miles were found by Monster.com.

Would you consider 65 jobs available within 10 miles of a town having 501 residents, or 52 jobs close to a town of 830, to imply a “lack of jobs”?

And these are not special cases. They are typical. Go to Monster.com, and prowl around.

And those are just the jobs listed on one web site, Monster.com. Think about all the other job sites, and the classified sections of newspapers and the employment agencies, and the charitable organizations devoted to helping people find jobs, etc.

Yes, there is no shortage of jobs; there are plenty of available jobs, thousands of jobs, millions of jobs. But, for any individual job seeker, the vast majority are not the right jobs.

Look at all the jobs in your local paper, and see how few are appropriate for you.

And therein lies the problem — or one of the problems.

The MMT JG program does not, cannot offer the right jobs; it just offers jobs, any jobs.

There is no possible mechanism for JG to offer the right jobs to every resident of Mullen, NE and Harlem, MT, and every other Mullen and Harlem resident in America, who wants a job.

Think about the staffing and design of a federal agency capable of:

  1. Finding and offering the right job for every job seeker in every Mullen and Harlem around America
  2. Watching over those jobs (for ongoing working conditions, comparable benefits and pay, etc.), and most importantly,
  3. Making sure those are additional jobs, not just replacement jobs.

As technology reduces, year-by-year,  the availability of those “right” jobs, JG will look less and less like a solution to anything.

And the MMT folks know it.

So why do they persist with JG? Here is what the article’s author, Matt Reynolds, says, and what MMT believes:

Work isn’t just about money. It gives us a sense of purpose and identity, which is why using technology to track workers to enforce optimal performance is so dehumanizing.

There you see a mashup of the nonsense promulgated by the rich: You masses cannot feel a sense of purpose and “identity” (whatever “identity” means) unless you labor. Presumably, the harder you labor, the more “purpose and identity” you will feel.

The rich, by contrast, feel just fine minimizing their own labor by employing people like you to do the work, while they lounge on yachts. Apparently, we should be thankful to the generous rich, who forego their own “purpose and sense of identity,” and give it to us workers.

And, if work gives us a sense of purpose and identity, why is tracking workers to enforce optimal performance “dehumanizing”? Wouldn’t optimal performance be what provides that purpose and identity?

And by the way, why do you buy labor-saving devices if labor gives you a sense of purpose and identity?

Yes, some jobs — jobs that make people rich, famous, and revered — can provide some measure of purpose and identity, but for the vast majority of us working stiffs, jobs are for money and hobbies are for pleasure, and we still look forward to weekends and vacations away from work.

Not many people on their deathbed say, “I wish I had spent more time digging in the coal mine or sitting in my office cubicle, answering ‘Yes, sir’ to my boss.”

The MMT professors seem to believe, deep within their souls, that the poor need to labor to fulfill their destinies, so they should be thankful to receive any job, no matter how onerous or empty.

The MMT professors are creatures of graphs, numbers, and formulas: A thousand unemployed and a thousand available jobs; put them together and poof(!) problem solved.

No, MMT, the problem is not a lack of jobs; the problem is a lack of money.  And that is what the Ten Steps to Prosperity is designed to address,  Particularly Steps #1, 2, 3, 5, and 7.

Finally, we must mention two comments from the article:

Bill Gates has suggested a robot tax, for instance, which firms would shell out when they supplant humans with machines.

Gates’s suggestion is a perfect example of why money and brains don’t always go together. A robot tax simply would hinder the development and implementation of robots, a bad idea for many reasons. (Why not a tax on all machinery, not just robots, so that thousands of people must be employed to do what a handful do now? Back to the pre-industrial age.)

As the author says:

The EU rejected a robot tax proposal in February, and such simplistic measures don’t get to the heart of the problem.

That’s partly why a universal basic income — a guaranteed small monthly income from the state — has been gaining interest; it lets people pursue their own priorities, including caring for relatives or running their own business.  We have preliminary evidence that this can work.

That suggestion is Step #3 of the Ten Steps to Prosperity.

The MMT professors understand the facts of the economy; they should teach them to the populace. If only MMT would forget about JG and join MS in promoting the Ten Steps. Taking that path would lead to a better world.

And MMT, please begin your trip into the 21st century by changing the name from The Center for Full Employment and Price Stability to the Center for Prosperity.

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 A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) 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 EVERYONE Five 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.
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce 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 business 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.


14 thoughts on “Taking the wrong path won’t get you to the right destination

  1. Sorry, but you have misrepresented MMT. Yes, there are jobs now, but that is not typically the case. So the MMT JG is designed to expand or contract, depending on job demand in the private sector.

    The JG would likely focus on producing public goods, not unlike the New Deal programs that planted 2 billion trees, built over 100,000 miles of roads, and constructed 125,000 public buildings.


  2. Robert, there always are jobs, millions upon millions of jobs. The problem is that for any individual job seeker, they are the wrong jobs in the wrong places.

    That is why people are unemployed. They can’t find the right jobs.

    The idea of putting unemployed people to work on construction jobs is the “beggars can’t be choosers” idea — the idea that the unemployed should be ready to accept any job, no matter how onerous, unfulfilling or physically demanding.

    Are you sending your wife to dig trenches?

    It is classic sneering at the unemployed for being unemployed. Should they be grateful for anything they get?

    1. What about people who physically can’t handle construction?
    2. Are there any construction jobs available in Mullen or Harlem? No, really. Tell me. Are there any? If you don’t know, how will the government know?
    3. Does someone on JG able to select from a variety of jobs? How?
    4. How much do JG jobs they pay in each geographical area?
    5. Would a JG employee receive the same pay and benefits as a non-JG employee? If not, why not? Does that make him/her a 2nd class worker?
    6. Would a JG employee do the same work as a non-JG employee?
    7. Will the JG employee work for the government or for a private company?
    8. If for a private company, who will evaluate the company for quality and honesty? If for the government, who will supervise?
    9. Would a JG worker replace current workers rather than adding jobs? How do you know?
    10. How exactly does JG “expand and contract”? Does the government hire and train federal JG administrators all over the country, only to fire them when the need changes (which it does, quickly and often)?
    11. What about the fact that there will continue to be fewer and fewer jobs, due to AI?

    Robert, I have owned and run businesses for 60 years (!) and this I know: JG is a program that only could have been imagined by college professors. It’s a program that would be riddled with problems a national governmental agency cannot solve.

    Contrast that with simply giving money to people (Step #3 of the Ten Steps to Prosperity). Simple, easy, and something we actually did in 2008, when the government gave every taxpayer up to $500, and it also is something we do today with Social Security. We already know how to do it.

    Sadly, the professors think that if you give people enough money to live on, they won’t work, because as “everyone” knows, the poor are lazy, unmotivated, and they deserve their poverty. So treat them like cattle. Right?

    It’s a demonstration of the low regard these ivory tower professors have for the poor. Truly disgusting.

    The problem is lack of money. Solve the problem, and don’t insist that the unemployed jump through hoops for your amusement.

    It would stimulate the economy and cost you nothing.


    1. Your position that there are always plenty of jobs is refuted by data.


      I’ve spent a great deal of time studying the Great depression (the economics I learned at U Chicago is worthless), including watching interviews of men who worked in the CCC, and in other programs. They had pride in what they had accomplished, and they appreciated that the government had provided them with meaningful work when there was no work to be had. So maybe it’s you who should get out of your ivory tower.

      Liked by 1 person

      1. Since you didn’t address even one of the 11 questions I had, I assume you don’t know the answers. But don’t feel bad; MMT doesn’t know the answers, either.

        They don’t have a clue as to the realities and mechanics of giving a job to everyone who wants one, all over America.

        As I said, “There is no possible mechanism for JG to offer the right jobs to every resident of Mullen, NE and Harlem, MT, and every other Mullen and Harlem resident in America, who wants a job.”

        It’s oh, so easy to say, “Give everyone a job,” but the actual mechanics are another matter. When I asked Randy Wray, “How many federal agency people will it take to implement JG,” he responded, “No additional people would be needed.”

        That says it all.

        If ever you wish to have a real discussion, you can begin by addressing the 11 questions, since they would be the basis for any JG.

        Or you can continue to duck the questions and just send me another meaningless graph. Your choice.


        1. There was no need to answer your 11 questions because the basis of your claims conflict with verifiable fact. I’ll no longer read your posts.

          Liked by 1 person

  3. Hi Rodger,

    Your piece today about how MS compares with MMT is good. But I must quibble.

    I try to feed at least fifteen types of birds on my windowsill. Even in June, when there is plenty of food available, they like to come for a bit of breakfast, mid-morning elevenzies, or a before-bedtime snack. It is about two o’clock now and a song sparrow is having a few seeds while looking at me through the window.

    The only thing wrong with this arrangement is the chipmunks that vacuum up cheeks-full of seeds which they carry off and hoard some where. Had I allowed them to continue, the four-legged one percenters would have taken many times more seeds than the birds would have enjoyed.

    I solved the seed distribution problem with a trap made with a can that breadsticks came in and relocating ten of the one percenters to a nice, woodsy location about a mile away. There is still at least one more of the cute little critters, and it will probably go up country before long. But the problem has been reduced. I couldn’t keep trying to feed the ninety-nine percent while stocking the one percent’s hoard.

    I think both MS and MMT overlook the importance of the hoarding one percent. If the sectoral balance equations were to divide the domestic private sector and the foreign sector on the basis of the richest few and the rest in each sector, the continuing surpluses of the rich in relation to the deficits of the rest would stand out as the dominant characteristic of the system. Just feeding more dollars, like seeds, into the system would not make it do as the rest need it to do.

    The QE efforts of central banks show that when the more dollars or pounds or euros were created and fed to the banking system, it did result in inflated securities and real estate. Just because they were not measured by the consumer and producer price indices that economists use does not mean that inflation did not occur. It was just missed because of measurement error.

    Rodger, you have written extensively on the Big Lie. I would like to build on that a bit. Today, free nations are suffering from two types of disinformation. At the level of international politics, countries (including the US) create disabling doubts and confusion about governing institutions or other countries in order to weaken them. And at the level of domestic economies, the rich few are using some of their wealth to distract the rest from seeing how they continue to fill their chipmunk-like hoards. This is where you have concentrated.

    But I think that both MS and MMT are falling short in not recognizing the how the richest few use their disabling power and finding ways to reduce that power. I would like to see some wealthy individual(s) or an organization sponsor a call for papers and a conference on how to reduce income and wealth concentration in time to save our democratic institutions. I believe that this can lead to many of the goals that both MS and MMT seek.

    Keep up the good work, Old Buddy. You are on the right track.





    1. Hello Tip,

      If you’ll read the section on the Ten Steps to Prosperity (brown colored), you’ll see it begins with this:

      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:

      Then, each of the Ten Steps would narrow the Gap between the rich and the rest.

      The entire site has been devoted to the Gap between the rich and the rest, and how to narrow it.


  4. are you thinking that there are jobs enough for all? I really do not believe it. Plenty of jobs, sure. But you point out that matching jobs with skills and desires is another matter. I’ve not seen that addressed in MMT or MS. There is a problem with low skilled jobs being superceded by machinery. A lot of low skilled jobs are unattractive, menial and degrading. I can’t see a way around it. It’s too political. Paying everyone a living stipend, basically because no one asked to be born, but governments are entrusted with looking after everyone, is the way to go. I would make job wages independent and not additive on this UBI. No employer can use a UBI to lower a wage, but the basic wage could be set lower as the living part is covered.
    How inflationary would it be?Stephanie Kelton said in 2014 that US lost output from Austerity policies was about 6 trillion dollars. It’d be more today. Sounds like plenty of spending space.
    Could a UBI not be included in the annual accounts? Not everything is and since it would be a background expense it might qualify?


          1. My last sentence in the original answer. The current accounts are supposed to address the annual expenditure and revenues of a government. This is where the concept of a budget surplus and/or deficit are formed.But I believe not all expenses or spending are included. For example the multi trillion dollar GFC bailout don’t get accounted for. So, could the money spent on a JG also not figure??


  5. Red bar = Not in labor force; want a job now
    Blue bar = Total unfilled job vacancies for the U.S.

    Examples: In 2009, during the depth of the worst recession since the Great Depression, there were 2.4 million job vacancies, while 5.9 people were not in the labor force and wanted a job, now.

    Today, 5.9 people are not in the labor force and want a job now, and there are 5.6 job vacancies.

    Question: Why are there so many job vacancies if millions of people want jobs. Answer: They are the “wrong” jobs — wrong skills, wrong salaries, wrong locations, wrong benefits, wrong working conditions or some other factors that are wrong.

    Question: What will JG do to supply the “right” jobs?
    Answer: JG has no method for supplying the right jobs. With JG, millions of people will continue to be unemployed, while a small number will accept the wrong jobs out of desperation.

    Bottom line: JG cannot address the real problem for millions of Americans: Lack of money.


  6. The “good old days” of my grandpa telling me to take any job are over and done. Back in the day you swallowed your pride and dug ditches, cleaned toilets; it was a job, no freeloading and some pride. You carried your weight.

    Today’s young aren’t so inclined to accept the hardship of yesteryear. They see the world from the vantage of myriad hi-tech improvements that previous generations didn’t. They’re not about to stoop and grunt.

    Occum’s Razor states the simplest answer is usually the best one. MS allows for individuals to make up their mind as to when and where to proceed for employment—a natural separation system! Those who are ready and willing can join the work force as opportunities arise. Those who are, for whatever reason, not ready or able are financially encouraged to stay out of the way of those who wish to be productive, which, by the way is most people. So there’s no need to fear a mass-reaction of utter laziness with MS. (think about it. If no one wanted to work the whole world would collapse into Oblivion. People simply won’t allow that. Only selfish, conspiring institutions permit economic collapse.)

    It would probably pay to allow this type of model to be implemented as it would result in better work place conditions and productivity. Meanwhile, those who aren’t ready and able can live well enough without pressure to take any work and still retain their dignity.

    The old days of “get a job, yuh bum” are obsolete, out of touch and lack comprehension.

    Liked by 2 people

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