The U.S. federal government is Monetarily Sovereign. It has several powers we monetarily non-sovereign folks don’t have.
Unlike you and me, and unlike state and local governments, and unlike businesses, the federal government:
- Can create unlimited U.S. dollars, at will.
- Never, unwillingly, can run short of dollars.
- Can pay any financial debt, of any size, instantly.
- Never needs to borrow dollars.
- Neither needs nor uses tax dollars, or any other income, to pay its obligations.
- Can control the value of the dollar, vs. other currencies, by fiat.
- Determines the interest it will pay on deposits into T-security accounts.
There are other features to Monetary Sovereignty, but the above make a fundamental point: Being sovereign over its currency, the federal government can do anything it pleases, with regard to dollars.
Unfortunately, the federal government is ruled by people who don’t want you to understand it.
They want you to believe federal finances are like personal finances, where money is scarce, and debts are a burden, and you sometimes need to borrow, and you need income to survive.
Why don’t so many in the government want you to understand truth? Because of Gap Psychology, the human desire to approach those who are “better” on any given scale, and to distance oneself from those who are “inferior”
The federal government is run at the behest of the rich, and the rich do not want you to demand and receive the benefits the government could fund, if only it chose to.
If you were to receive those benefits, you “inferior” souls would come closer to the rich, and the rich do not want that. They want the Gap to widen. They want to distance themselves from you.
So you are told that Social Security and Medicare soon will be bankrupt, and Medicare for All is unaffordable, and the federal “debt” is unsustainable, and federal Monetarily Sovereign finances are like your monetarily non–sovereign finances.
And this brings us to the U.S. Postal Service.
There are few things more important to the efficient operation of a nation than its postal service. So one might think that the federal government would want to build the best postal service, possible.
Sadly, that is not the case in the U.S. The government withholds funds from the Postal Service to help make you believe money is scarce to the government:
Postal officials said they expected next year’s finances to be helped by a strong holiday season of package deliveries and a just-approved increase to the price of its first-class stamp, from 50 cents to 55 cents.
But they pleaded anew for help from Congress to relieve the Postal Service of onerous health and pension prepayments and for help from regulators to grant the agency more flexibility to increase prices so it can return to profitability.
“Absent legislative and regulatory change, we cannot generate enough revenue or cut enough costs to pay off our bills,” said Postmaster General and CEO Megan J. Brennan.
“The flawed business model imposed by law continues to be the root cause of our financial instability.”
You financially “inferior” people might be upset about having to pay more than a half buck, every time you send a letter. The rich are not bothered at all. Postage means nothing to them, and anyway, their companies pay for their tax-deductible postage.
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
And why should a federal agency return to “profitability“? That would mean taking money from the private sector, which needs dollars to grow, while giving dollars to the federal government that has no need for income — exactly the opposite of what the economy needs.
The “flawed business model” begins with you paying an increased tax (aka “postage”) to a government that destroys all the dollars it receives. (Yes, it’s true. To see why, click the link.)
The Postal Service reported a loss of $3.9 billion for the budget year that ended Sept. 30, compared with a $2.7 billion loss the year before.
Trump in recent months has asserted without evidence that the Postal Service is “losing a fortune” and reporting annual losses because it is not charging higher shipping rates for online retailers such as Amazon, whose founder, Jeff Bezos, owns The Washington Post.
The backstory is that Trump hates the Washington Post, and therefore hates Bezos and Amazon, so he wishes to use his political power to destroy private businesses that may oppose him.
In April, Trump issued an executive order demanding a review of the Postal Service’s finances.
Package delivery has been a bright spot although its growth is slowing, and regulators have found its contract with Amazon to be profitable.
The Postal Service, an independent agency, is trying to stay financially afloat as it seeks to invest billions in new delivery trucks to get packages more nimbly to American homes.
Regulators this week approved the Postal Service’s request to increase the price of its first-class stamp by 5 cents. The 10 percent increase to the cost of mailing a 1-ounce letter is the biggest since 1991. The price of each additional ounce will drop from 21 cents to 15 cents. The rate increase takes effect on Jan. 27.
The bottom line is:
- The federal government, and its agencies, can run short of dollars only if Congress wills it.g
- The federal government neither needs nor uses tax dollars; it creates new dollars, ad hoc, by paying creditors.
- An effective postal service is as vital to America as are roads, bridges, dams, the military.
- The federal government has the unlimited financial power to pay for an effective postal service, rather than squeezing it and forcing it to cut services while raising prices.
- Because of Gap Psychology, the rich do not want you to understand this.
Rodger Malcolm Mitchell
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: 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
3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.