Recently, I read an article titled, “Is this ‘one of the worst scientific scandals of all time’?”

It referred to Hans Eysenck, “one of the greatest psychologists in history, his fame built on his work concerning intelligence and personality testing, known as psychometrics.”

The article continues with the following excerpts:

He long maintained the hereditability of IQ and personality traits and was a supporter of the work of people like Charles Murray and Richard Herrnstein, the somewhat infamous authors of The Bell Curve, a book that amongst other things makes correlations between race and IQ in the US.

Eysenck also published work validating aspects of astrology to do with the correlation between personality and astrological signs and was seemingly rather partial to parapsychology and the world of psychics.

Eysenck published a large number of papers that explored the idea that personality was a serious risk factor in various forms of heart disease and cancer. Famously, some of the research concluded that personality factors were six times more likely to increase the risk of lung cancer than smoking was.

Making the situation worse are the links, including financial, between Eysenck,  his junior collaborator Ronald Grossath-Maticek, and the tobacco industry.

“To his eternal shame, Hans Eysenck attempted to discredit the well-established causal links between tobacco smoking and cancer while in receipt of large sums from the tobacco industry.”

“These widely-cited studies have had direct and indirect influences on some people’s smoking and lifestyle choices. For an unknown number of individual men and women, this programme of research has been a contributory factor in premature illness and death.

A scientific scandal that contributes to premature illness and death — sounds pretty bad, doesn’t it?

I’ll give you one even worse. This worse scientific scandal has led to poverty, suffering by hundreds of millions of people, and yes, even including “premature illness and death.”

The scandal is the pseudo-scientific lie being promulgated by many politicians, the media, and so-called economists, who falsely claim that our Monetarily Sovereign government “can’t afford” to pay for such benefits as Medicare for all, Social Security for all, education for all, and various programs that would cure impoverishment.

(Because, economics is deeply entangled with psychology, perhaps it should be no surprise that it is scandalous, often preferring prestige to facts.)

As recently as August 14, 1971, the U.S. dollar was pegged to gold, meaning that in effect, the federal government’s ability to create dollars was limited by its inventory of gold. (This was a self-imposed limit. Because the U.S. government invented the U.S. dollar, it always has had the power to create more dollars whenever it wished.)

In August 1971, President Nixon arbitrarily removed the convertibility of dollars-to-gold, and at that instant, and ever since, the U.S. government has not hamstrung itself with gold-supply limits on its ability to create dollars.

We really mean unlimited. The federal government is not limited by gold supplies. It is not limited by tax collections. It is not limited by debts or by borrowing, or by any other economic factor (other than the ridiculous “debt ceiling” which is an unconstitutional limit on paying for what already has been purchased. 14th Amendment: The validity of the public debt of the United States, authorized by law . . .  shall not be questioned.)

MONETARY SOVEREIGNTY
If our Monetarily Sovereign, federal government wished, it could create a trillion dollars tomorrow, and another trillion the next day — all at the press of a computer key.

Image result for bernanke and greenspan

It’s our little secret. Don’t tell the people we don’t use their tax dollars.

Ben Bernanke: “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.”

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

St. Louis Federal Reserve: “As the manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never be unable to pay its bills. The government is not dependent on credit markets (borrowing) to remain operational.

If the federal government wished, it could make sure that you and your parents and your children never would have to worry about health care costs, never have to worry about the costs of a college education, never have to worry about housing costs, food costs, clothing costs. That is, “if the federal government wished.”

So why doesn’t the federal government wish?

INFLATION
Before we explain that, let’s address the factor that always seems to surface among lay people — the huge, though phony, bogeyman that is hoisted in front of you: Inflation.

The U.S. government is Monetarily Sovereign. That means it is sovereign over the U.S. dollar, and like any sovereign, it has the power to do anything it wishes with its own sovereign currency.

It invented the first dollars, and arbitrarily gave these early dollars values vs. silver and gold. It just as easily could have given them values vs. potatoes and pigs, or any other goods you can think of.

Since inflation is the declining value of money vs. goods and services, having the unlimited ability to set money values vs, goods and services gives the government the unlimited ability to fight inflation.

Short of Medicare-style price controls, which often come with their own downsides, the government has several other inflation-fighting tools in its kit.

For instance, it arbitrarily can set the foreign exchange rate, i.e. the number of dollars it will trade for other nations’ money. This is known as “revaluing” (up) or “devaluing” (down), depending on whether the government is fighting deflation or inflation. The U.S. government has done both.

The government simply could adjust interest rates, a step it has taken repeatedly. Raising interest rates makes more people wish to own dollar-denominated securities, and thus makes dollars more valuable — an inflation-fighting step.

In summary, our Monetarily Sovereign government not only has absolute control over its dollar creation, but also controls its dollar’s valuation.

Unlike state and local governments, the U.S. government never unintentionally can run short of dollars or be helpless to inflation. It does not need to tax — in fact, federal taxes are destroyed upon receipt — and it does not need to borrow.

(It actually doesn’t borrow. It accepts deposits into Treasury Security accounts at the Federal Reserve Bank. It pays off these deposits by returning the dollars deposited.)

The federal government creates all the dollars it needs simply by paying creditors.

But wait. Why then does the federal government collect taxes?

WHY DOES THE FEDERAL GOVERNMENT COLLECT TAXES?
There are three reasons, and the third should anger you.

  1. To help control the economy by taxing the things it wishes to restrict (i.e., cigarettes, liquor, imports), and by giving tax breaks to things it wishes to encourage (i.e. certain kinds of income). If there were no taxes, there could be no tax breaks.
  2. To assure the demand for dollars by insisting that all taxes be paid in dollars.
  3. To fool you into believing that federal benefits to you must be rationed because they are “unaffordable.”

For instance, the government collects FICA taxes supposedly to “pay for” Social Security and Medicare. In reality, the purpose of collecting FICA is to limit unnecessarily the amount of Social Security and Medicare you receive.

If the federal government can afford anything, why does it wish to limit the benefits you receive?

GAP PSYCHOLOGY
If you owned a million dollars, would you be rich? Yes, if everyone else owned only a hundred dollars. But no, if everyone else owned ten million dollars. The word “rich” is a comparative, not an absolute.

“Rich” describes the gap between those who have more income, wealth, or power than others, and the wider that gap, the richer they are.

If you are rich, there are two ways you can become richer — i.e., two ways you can widen that gap: Get more for yourself or make other people have less. 

When average people receive less for Social Security and Medicare, that widens the gap between them and the above-average (“richer”) people, which makes the rich even richer.

That is the reason for Gap Psychology, the human desire to distance oneself from (widen the gap) those “below ” and to approach (narrow the gap) those above.

Gap Psychology has a profound effect on much of your life: The type of car you drive, your house and neighborhood, your associations, the schools you attend, your clothing, your method of travel and travel destinations.

Gap Psychology is so important that the very rich are willing to spend huge sums just to distance themselves from you.

And one way they spend these huge sums is to bribe politicians, the media, and the university economists, to spread the false narrative that federal taxes are necessary to fund federal spending.

The politicians are bribed with campaign cash and promises of lucrative employment later. The media are bribed with advertising revenue and ownership. The university economists are bribed with university contributions and promises of think-tank work.

As a result of all this bribery and misinformation, you are deprived of the many benefits the federal government easily could provide. Your Social Security begins at later and later ages, when it could begin a birth.

Your Medicare pays at most 80%, and discounts what doctors are paid, so many doctors won’t accept it.  Many plans don’t cover prescriptions, and even then, discount payments.

Rather than providing free college, the government requires students to go deeply into debt, making college unaffordable for millions.

All of this is made possible by the same Gap Psychology, in which even middle-income people who would benefit, are made to resent low-income people receiving government help.

This is one of the worst, most damaging scientific scandals of all time, second only to the historical science denial of religions.

One day, the world will look back on this economics scandal in the same way as we view the scandals involving the Church vs. Copernicus and Galileo — terribly harmful, though supported in ignorance by most of the populace.

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

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The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

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 Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and 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 the rest.

MONETARY SOVEREIGNTY