Here it is in all its glory: The Big Lie, perfectly illustrated:

BIG LIE big ditch

The Big Lie: The federal debt (aka “national debt”) is a danger.

It shows the federal debt (aka “national debt”) as a gigantic ditch, just waiting to swallow an innocent homeowner. And it’s all a lie — not just a lie but, “The Big Lie.”

The Big Lie in economics is promulgated via various myths. Which of these myths have you heard:

  1. Federal spending is paid for by federal taxes.
  2. Our children will be responsible for paying the federal debt.
  3. The federal debt is a burden on the economy.
  4. China lends dollars to the U.S. federal government.
  5. If China demands repayment, the federal government will be insolvent.
  6. The federal debt is an unsustainable ticking time bomb.
  7. The federal debt (the total of federal deficits) can cause inflation like Zimbabwe or __[fill in the blank]__.
  8. If you must live within your means, so must the federal government.
  9. The federal government can’t afford __[fill in the blank]__.
  10. A balanced federal budget is more prudent than running a deficit.

You probably have read or hear some of these, and sadly you might even believe some. Not one is correct. Not one.

    1. Because it is Monetarily Sovereign (unlike state and local governments) the U .S. federal government has the unlimited ability to create U.S. dollars. It has no need for taxes, which in fact are destroyed upon receipt.
    2. The so-called federal “debt” is paid by returning the dollars that are in T-security accounts. No one has been, is, or ever will be “responsible.”
    3. Reducing the federal debt is what causes depressions and recessions.
    4. China does not lend dollars to the U.S. federal government. Nobody does. The U.S. government does not borrow. It creates dollars by paying bills. The thing erroneously called federal “debt” does not result from borrowing. It results from deposits.Greenspan quote
    5. The federal government cannot become insolvent. “Insolvent” means: “unable to satisfy creditors or discharge liabilities, either because liabilities exceed assets or because of inability to pay debts as they mature.” But the government’s method of creating dollars is to pay bills.
    6. The “ticking time bomb” fear-mongering phrase has been thrust upon the American public for 80 years. No explosion. Being wrong for 80 years says it all.
    7. All inflations and hyperinflation are caused by shortages of food and/or energy, never by an excess of government spending.
    8. The federal government has no means. That is why those few economists who have tried to demonstrate that federal debt has a negative influence on an econoBernanke quotemy, have failed miserably. Deficit spending is necessary for economic growth; the lack of deficit spending causes recessions and depressions.
    9. The federal government has the infinite ability to create dollars. Therefore, it can afford anything. (See The Ten Steps to Prosperity, below.)
    10. A balanced federal budget is the least prudent notion imaginable. Reducing federal deficit spending leads to recessions and depressions.

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

The Big Lie is promulgated by the rich to discourage the rest of us from asking for more federal benefits and as an excuse to reduce our benefits.

As a result of Gap Psychology, the rich grow richer when the Gap between them and the rest of us is widened. The Big Lie accomplishes exactly what the rich want.

Here is a revision to the misleading cartoon at the start of this post. Perhaps it can serve as a mnemonic for reality:

And they call this debt

Rodger Malcolm Mitchell

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

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

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. I

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