The following cartoon appeared in an August 30, 2019 Email from Reason Foundation.

It is a perfect representation of The Big Lie, the lie that the U.S. government can run short of U.S. dollars.

The Big Lie illustrated

The cartoon, by Toles, not only shows the U.S. Treasury empty, but just in case you didn’t get the point, it also shows America asking the “deaf, dumb and blind” Republicans why they emptied it.

It is a lie, a lie that is told thousands of times a day — a lie that has been told for at least 80 years that we can document. (See: It is 2019, and the phony federal debt “time bomb” still is ticking.)

Take it from me: It is absolutely, positively 100% impossible for the U.S. Treasury to run short of U.S. dollars.

If you won’t take it from me, take it from past Chairman of the Federal Reserve Board, Alan Greenspan who said, “A government cannot become insolvent with respect to obligations in its own currency.”

(All federal obligations can be satisfied with U.S. dollars.)

Oh, you don’t believe Greenspan or me? Then how about past Chairman of the Federal Reserve Board, Ben Bernanke, who said, “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.” 

Not good enough? Then how about these comments (courtesy of Professor John T. Harvey) that appeared in the Sep 25, 2013 issue of Forbes Magazine:

“In the case of United States, default is absolutely impossible. All U.S. government debt is denominated in U.S. dollar assets.” Peter Zeihan, Vice President of Analysis for STRATFOR

“In the case of governments boasting monetary sovereignty and debt denominated in its own currency, like the United States (but also Japan and the UK), it is technically impossible to fall into debt default.” Erwan Mahe, European asset allocation and options strategies adviser

“There is never a risk of default for a sovereign nation that issues its own free-floating currency and where its debts are denominated in that currency.” Mike Norman, Chief Economist for John Thomas Financial

“As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.” Federal Reserve Bank of St. Louis

“There is no inherent limit on federal expenses and therefore on federal spending…When the U.S. government decides to spend fiat money, it adds to its banking reserve system and when it taxes or borrows (issues Treasury securities) it drains reserves from its banking system. These reserve operations are done solely to maintain the target Federal Funds rate.” Monty Agarwal , managing partner and chief investment officer of MA Managed Futures Fund

And then there’s:

We’ve got the right to print our own money that’s the key.

Greece lost their power to print their money. If they could print drachmas they would not have this problem.

They’d have other problems, but they would not have a debt problem. Seventeen countries in Europe gave up their right to print their own money, that’s enormously important.

We’ve got the right to print our own money so our credit is good (Warren Buffet, 2011)

Get it? Despite cartoonists like Toles, who after all is just a guy who can draw stuff, not an economist, the federal government cannot run short of dollars.

And despite cartoons like the Committee for a Responsible Federal Debt (CRFB), that has been highly paid to claim falsely, year after year after year, since 1975, that the federal debt is “unsustainable,” the federal government can “sustain” any size debt.

That’s 45 years of bogus, “sky-is-falling,” Big Lies from the CRFB. They are economists, yet still they lie and presumably feel no shame.

Cartoons are supposed to be funny, and indeed to knowledgeable people, Toles’s cartoon and the CRFB’s articles are hilarious in how wrong they are.

Except for one thing: Most Americans have been led to believe The Big Lie, by the constant, unrelenting drumbeat of disinformation. And this is sad, because the endless disinformation has cost middle-income and poor Americans billions.

Try to pay no attention to the lies. Just remember one main idea:

You can run short of dollars. Your city, county, and state can run short of dollars.  Your company can run short of dollars. All are monetarily non-sovereign.

But the U.S. government is different. It is Monetarily Sovereign. It cannot run short of dollars.

Period.

And as for that so-called federal “deficit,” it is necessary to grow the economy.

A federal deficit occurs when the government pumps more dollars into the economy, via spending, than it takes out, via taxing.

A federal deficit is a surplus for the economy. That is how the economy grows.

And as for that so-called federal “debt,” it nothing like your debt. Federal “debt” is the total of deposits into Treasury Security accounts. It’s paid back, not with tax dollars, but simply by returning the dollars in those accounts to the account owners.

The federal “debt” (deposits) is no burden on the government, on taxpayers or on the economy, nor does the federal “debt” (deposits) cause inflation, recession, difficulty in borrowing, or any other myths and fables being foisted on the innocent American public.

In fact, since the federal debt evolves from the federal “deficit” (economic surplus), increases in the federal debt are necessary for long-term economic growth.

But the very rich (who run America) don’t want you to know this, because they fear your demanding increases in Social Security, Medicare, and other social spending. So, they tell you its unaffordable, and the mythical Social Security and Medicare “trust funds” are running out of money.

Neither the federal government, nor any agency of the federal government, can run short of dollars unless Congress and the President want that to happen.

The rich are rich because they have much more than you do, and because of  Gap Psychology, they want to keep it that way by cutting your income.

It has been ever thus.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY