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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..
Here is the complete text of an Email I received from the “Campaign to Fix the Debt” (CFD). Do you believe what it says?
The national debt continues on a dangerous and unprecedented path according to updated projections today from the nonpartisan Congressional Budget Office (CBO).
Why is it “dangerous”? They never say.
CBO’s latest Budget and Economic Outlook projects debt held by the public to grow from $14.3 trillion (77 percent of of the economy) today to $25.5 trillion (91 percent of the economy) by 2027. CBO also projects trillion-dollar deficits to return by 2022.
That means the federal government will pump $11.2 trillion stimulus dollars into the economy by 2027. Why is this a bad thing? Again, the CFD never says.
They merely quote big numbers hoping to shock you, but not explaining why you should be concerned.
The following is a statement by Campaign to Fix the Debt Co-Chairs Governor Ed Rendell and Senator Judd Gregg:
“We are entering uncharted waters. Debt has only been this high as a share of the economy one other time in our history—just after World War II.
But unlike then, it is not projected to head back down. Instead, CBO confirms it is rising rapidly without end toward record levels.
The federal debt is nothing more than the total of deposits in T-security accounts at the Federal Reserve Bank. In short, the so-called “debt” is bank accounts, similar to savings accounts.
The total of deposits into these bank accounts is scheduled to reach record levels. Why is an increase in deposits at the Federal Reserve Bank a bad thing?
With deficits rising at alarming speeds, Congress needs to start applying the brakes, not stepping on the gas.
The U.S. federal government is Monetarily Sovereign. It created its sovereign currency, the dollar, from thin air, back in the late 1770’s. Before then, there were no U.S. dollars.
Not only did it create an arbitrary number of dollars from nothing, but it gave those dollars an arbitrary value in grams of silver.
In the years that passed, the Monetarily Sovereign federal government repeatedly increased the number of dollars in circulation, and repeatedly changed the value of those dollars, relative to silver and to gold.
Today, the federal government continues to create an arbitrary number of dollars from nothing, and it continues to set the arbitrary value of those dollars, thus controlling inflation.
Our debt cannot remain on its current path, and the longer we wait for a comprehensive plan, the graver the choices become. Rising debt will slow wage growth, increase interest spending, limit flexibility to respond to new challenges, and diminish policymakers’ ability to invest in the economy and maintain the social safety net.
Let’s examine these ridiculous comments:
“Rising debt will slow wage growth.” How will adding stimulus dollars to the economy slow wage growth? In fact, it will do the opposite. Taking dollars from the economy slows wage growth.
“Rising debt will increase interest spending.” That is true. Increasing deposits in T-security accounts will increase interest payments. But why is that bad? The federal government and the Federal Reserve Bank (FRB) never can run short of dollars. Even if all federal tax collections were $0, the government and the FRB could continue creating new dollars, forever. Those new dollars are what stimulate economic growth.
“Rising debt will limit flexibility to respond to new challenges.” Why will increased deposits in T-security accounts at the FRB limit flexibility to new challenges? No reason is given because the statement is utter nonsense. The FRB accepts as much or as little in deposits as it wishes.
“Rising debt will diminish policymakers’ ability to invest in the economy.” Again, utter nonsense. Why would deposits in the FRB limit policymakers in any way?
“Rising debt will diminish policymakers’ ability maintain the social safety net.” This comment is the most outlandish lie of all, because the CFD’s historical suggestion is to cut such programs as Social Security, Medicare, Medicaid, and other elements of the social safety net.
So let us not endure any more crocodile tears about the social safety net from the very people who wish to destroy the social safety net.
We urge Congress to immediately put together a plan to address our unsustainable debt and not pursue policies like huge unpaid for tax cuts that will only make the problem worse.
As always, they don’t explain why bank deposits are unsustainable. But let us address the lie about tax cuts.
Unlike state and local taxes, federal tax collections disappear from the money supply the instant they are received. There is no measure of the nation’s money supply that includes dollars received by the U.S. Treasury.
The reason is quite simple: Because the Treasury retains the unlimited ability to create dollars, there is no logical reason to measure how many dollars the Treasury has. In essence, the Treasury “has” infinite dollars.
Because tax dollars disappear from the money supply, they are destroyed upon receipt. They no longer exist.
Thus tax increases reduce the money supply, and tax cuts increase the money supply. And increases in the money supply stimulate economic growth.
The CFD uses the nonsense phrase, “unpaid for tax cuts.” Because federal taxes are destroyed upon receipt, they actually pay for nothing. Unlike state and local governments, the U.S. federal government neither needs nor uses tax dollars.
People pay for taxes. No one ever “pays for” tax cuts.
There is no free lunch. The choices are hard and will take real leadership, but the good news is it can be done.
There is, in fact, a “free lunch.” The federal government creates dollars freely, arbitrarily, and with no need to ask anyone for assistance. (See: Lunch Really Can Be Free)
With pro-growth tax reform and policies to shore-up our unsustainable entitlement programs, we can put the debt back on a downward path and unlock our economy for future generations instead of saddling them with mountains of debt.
” . . . unlock our economy for future generations instead of saddling them with mountains of debt.” This is a bold faced lie. Future generations are not liable for the deposits in the Federal Reserve Bank. Federal tax collections do not pay for those bank deposits.
But notice how the CFD reveals its true motives when it talks about “unsustainable entitlement programs.” They want to cut Social Security, Medicare, Medicaid and other programs for the poor and middle classes. Remember, these are the guys who were shedding those crocodile tears about the social safety net.
Finally, why does the FCD repeatedly lie about the so-called “federal debt” (deposits in T-security accounts)? Look up their steering committee and you’ll see some familiar names:
Erskine Bowles, Co-Chair, National Commission on Fiscal Responsibility and Reform
Sen. Alan Simpson, Co-Chair, National Commission on Fiscal Responsibility and Reform
Remember them? Their National Commission created the notorious “fiscal cliff” that almost ruined the American economy. They continue to preach the same old austerity, that has destroyed the economy of every nation that has practiced it.
And there’s: Michael Peterson, President & COO, Peter G. Peterson Foundation, which is one of the nation’s primary “take-from-the-poor; give-to-the-rich” groups.
And no “cut-benefits-to-the-poor organization would be complete without Maya MacGuineas, President, Committee for a Responsible Federal Budget (CRFB), a mirror group for reverse Robin Hood CFD.
Bottom line, CFD, CRFB, Peterson Foundation, and other of their ilk work for the rich in their ongoing efforts to widen the Gap between the Rich and you.
If you believe the lies these people tell you, they will own you.
Rodger Malcolm Mitchell
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.
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 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.
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 FEDERAL TAXES ON BUSINESS
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.
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.
7 thoughts on “If you believe the latest lies from the “Campaign to Fix the Debt,” they own you.”
I heard pizza was also given an arbitrary number and value when first created. I just realized that everything is arbitrary, including you Rodger. Hope you are going down well in your home hell of ILLinois.
Everything is NOT arbitrary. Ever heard of Planck’s Constant, Newton’s Laws, Ohm’s Law, sun and moon.
But debt IS arbitrary. People made it up long ago and now it’s gotten out of hand and out of control. The only way out is to arbitrarily create a system of CREDIT, preferably paid forward rather than what we have now; a system of debt paid “back” wards without any end in sight.
As time goes on and everything gets worse, as it certainly will, there’ll be a denouement. Humanity will have to get real. Debt will have to be forgiven and a system of credit introduced whether or not the .01% like it.
The choice is oblivion for all or success for all.
Read Rodgers post.
He says we can create dollars and arbitrarily assign a value to it.
It’s like saying I can eat all the candy and junk food I want and still control my weight.
It’s pure bullshit.
No, it’s more like this: For the entire many-billion history of the universe, prior to 1780, there was no such thing as a U.S. dollar.
Then, in 1792, suddenly the U.S. Congress arbitrarily created laws from thin air, that created the U.S. dollar, also from thin air.
Congress arbitrarily created as many of those dollars as it wished and gave those dollars the arbitrary value it wished: 1.60 grams of gold.
Since then, Congress, the President, and the Federal Reserve Board, arbitrarily have changed the value of the dollar many times, and today the FRB changes the dollar’s value by arbitrarily changing interest rates.
That is how Monetary Sovereignty works. The U.S. government, unlike state and local governments, is SOVEREIGN over the U.S. dollar. It can create as many dollars as it wishes and can make the dollar equal to anything it wishes.
By fiat, the government can make the dollar equal to an ounce of gold, a pound of silver or a partridge in a pear tree. It is SOVEREIGN.
Read Rodgers post.
OK I see..
“…Not only did it create an arbitrary number of dollars from nothing, but it gave those dollars an arbitrary value in grams of silver.”
Candy is real, money isn’t. It’s arbitrary and legal, meaning you make up the rules as you go along and change them according to convenience.
You can eat all the candy and junk food you want and NOT gain weight if you’re willing to work hard enough to burn it up. You can understand MS IF you’re willing to work hard enough to burn the midnight oil. Money is not the paper ink and metal; it’s the legal meaning of arbitrary value that is attached to the physical material.
Money is created by laws. Laws are created, arbitrarily, by Congress and the President.
So long as Congress doesn’t run short of laws, America will not run short of dollars.
So long as Congress controls our laws, America will control its dollars.
“Why is it “dangerous?”
This is just another example of the oldest trick in the book…Be afraid, rule by fear.
All you have to do is ask “HOW?” and then listen to their dumb reasoning or perhaps they’ll quietly walk away because they can’t answer “how.” They only know talking points and change the subject.