Let’s begin with a few facts:
- Unlike state/local governments, the U.S. government is Monetarily Sovereign. That means it never, NEVER, unintentionally can run short of its own sovereign currency, the U.S. dollar.
- Federal taxes do not support federal spending. Even if all federal tax collections ceased, the federal government could continue spending forever.
The federal government has infinite money. It cannot run short of dollars. - The federal debt and deficit are not a burden on anyone — not on you, not on your grandchildren. On the contrary, when federal debt growth slows, we have recessions and depressions, which are cured by increases in federal debt growth.
- Inflations never are caused by federal deficit spending. Inflations always are caused by shortages, most often by shortages of food and/or energy. In fact, inflations often are cured by deficit spending to obtain and distribute the scarce goods.
- Federal deficit spending itself is not socialism. Socialism is government ownership and control. That said, some forms of socialism are good for the economy. Examples: Virtually all streets and highways, Social Security, public parks and beaches, many museums and zoos, many rivers and lakes, the military and VA hospitals, many libraries, federal lands, federal buildings, federal agencies like NASA, FBI, and CIA.
- Government in itself is neither good nor bad. Government is a tool. The function of the tool is to improve and protect the lives of the people. To the degree it fulfills that mission, it is good. Where it fails that mission, it is bad. Mere size is not an issue any more than the size of the pencil in the voter’s booth is an issue.
Given all of the above, why do we see an article like this? “Congress likely to avert government shutdown, Brady Tax Package heads toward floor vote”
I. Given Congress’s infinite checkbook, why is there even a discussion of a government shutdown?
II. The Democrats had suggested $1,200 checks. Even Trump wanted $2,000 checks. Why was this reduced to $600, and still is being debated, in face of the private sector’s worst financial crisis in many years?
III. Why exclude assistance to states?
IV. Why has Congress struggled for months to produce a plan for preventing/curing the COVID recession, that has hurt so many people?
V. Pfizer Says Millions of COVID-19 Vaccine Doses Are Sitting Unclaimed in Warehouse Coolers. The federal government has not given the company shipping instructions. Why?
You can contact your Senator or Representative– that person to whom you gave your valuable vote — and ask these questions.
Do you think you will get an informative answer? An honest answer? An intelligent answer?
If not, why did you toss away your vote on an uninformative, dishonest, unintelligent fool?
What should Congress really do? Institute the Ten Steps to Prosperity (below) immediately, especially rush Step #3: Social Security for All.
Give me one good reason why not.
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:
- Monetary Sovereignty describes money creation and destruction.
- 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:
- Eliminate FICA
- Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
- Social Security for all or a reverse income tax
- Free education (including post-grad) for everyone
- Salary for attending school
- Eliminate federal taxes on business
- Increase the standard income tax deduction, annually.
- Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
- Federal ownership of all banks
- 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
#Monetary Sovereignty - Mitchell 
GOP Senator Ron Johnson said, “We do not have an unlimited checking account.”
It’s a typical lie. In fact, the federal government does have an unlimited checking account. That is how it already was able to fund $3 trillion in stimulus spending.
Voters should ask Johnson, “What is the limit to our checking account?”
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Good morning Rodger.
Of the 2 or 3 trillion dollars earmarked for rescue package under the CARES Act, how much of it were funded by private bond buyers and how much were bought by FRB?
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Federal spending is not funded by bonds. Federal spending dollars created ad hoc. If the federal government wished, it completely could stop accepting deposits into Treasury Security Accounts and still continue spending.
The primary purposes of federal bonds are:
1. To provide a safe place to store unused dollars, which stabilizes the dollar.
2. To help the Fed control interest rates.
Bonds do not provide spending money to the federal government.
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My limited understanding is that Congress legislates and appropriates the spending program, Treasury provides the funds drawn from its account in the Federal Reserve where, in the event of overdraft, it then issues bonds to cover the deficit. Some of those bonds are bought by private buyers and some are bought by the central bank in the secondary market.
That, I believe, is the mainstream narrative.
If that is entirely wrong, could you please provide the entire mechanism of this funding/spending process as it is currently done?
In the CARES program, for example, how exactly were the funds sourced and disbursed? Was it really as simple as the Treasury giving checks or electronic transfers to Bank of America without bothering with the accounting gimmicks?
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There is a difference in meaning between “covers” and “equals,” and that difference involves Monetary Sovereignty.
“Covers” implies that the source of the money being spent is the bonds. That is not correct for a Monetarily Sovereign entity.
You are correct that some bonds are purchased by private investors and some by the Fed. Contrary to popular wisdom, and contrary to statements by the Fed itself, none of that money is spent.
The money invested in bonds is placed in T-bond accounts and never leaves those accounts until the bonds mature, at which time the money (plus interest) is returned to the bondholders.
“Equals” means the Government issues bonds in the same amount as the deficit caused by spending.
The above describes the fundamental differences between a Monetarily Sovereign entity (the federal government) and monetarily non-sovereign entities (state/local governments, euro governments, businesses, you, me.)
The former spend dollars created ad hoc and at will.
The latter need a source of dollars in order to spend. That source of dollars can be income or borrowing.
Federal (Monetarily Sovereign) bonds do not constitute borrowing. Monetarily non-sovereign bonds do constitute borrowing.
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Thanks Rodger.
IOW, as soon as Congress passed the CARES legislation and the President signed it into law, Steve Mnuchin just went right ahead and disbursed those $1,200 across the board payments without him necessarily verifying if there are enough funds in the Treasury’s account at the central bank. Those checks and electronic transfers are not ever gonna bounce – the clearing house will always and forever approve those payments.
Is that an accurate way of saying it?
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Pretty much. In theory, federal checks could bounce — for instance when there is a debt ceiling — but that is an unnecessary option for Congress and the President.
If you want to explain it to your friends, here is one attempt at simplification: https://mythfighter.com/2020/02/09/a-monopoly-story-and-why-you-cant-see-dollars/
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If it wasn’t for the need to make money with money, the various insurers of life, health, auto, etc. could just step aside and let MS handle all the confusion with a simple single payer system. But OMG!!! what would they do w/o their beautiful offices , sky-hi buildings and easy income? Do they go on the dole and do they make the same buck$?? Can they be useful and transform legally into a bank? Prudential,
Allstate, State Farm, Savings and Loan,
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They could join the people who made chariots, astralabes and Betamax players. As for transforming into banks, read https://mythfighter.com/2017/02/22/ten-steps-to-prosperity-step-9-federal-ownership-of-all-banks/
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