Well, the Democrats finally have proved they understand Monetary Sovereignty.
How do I know? Read the following excerpts. Amazingly, no one is asking, “Who will pay for it?”
Is it possible that at least one political party gets it?
House Democrats to include $250-300 monthly child payments in stimulus
House Democrats will release legislation Monday to provide millions of U.S. families $3,600 a year for each child under 6 and $3,000 for every child age 6 to 17.
The legislation, spearheaded by House Ways and Means Committee Chairman Richard Neal (D-Mass.), will likely be added to President Biden’s $1.9 trillion COVID-19 stimulus package.
Biden wants his American Rescue Plan to use an expanded child tax credit to cut the child poverty rate in half. Under the plan, the IRS would send $250-300 monthly payments to households for a year, starting in July.
The White House and Senate Democrats have reviewed Neal’s proposal and support it, The Washington Post reports.
After trillions of dollars in stimulus, the Democrats already are on board with an additional $1.9 trillion — and no one is asking, “Who will pay for it?”
Why? Because apparently they must realize that our Monetarily Sovereign federal government pays for everything simply by creating new dollars, ad hoc. Always has, always will.
And then there’s this:
Yellen says those earning up to $60,000 should get full stimulus checks
Treasury Secretary Janet Yellen said Sunday that individuals earning up to $60,000 should receive the $1,400 checks proposed in President Biden’s $1.9 trillion coronavirus relief package.
“The exact details of how it should be targeted are to be determined, but struggling middle class families need help,” Yellen said on CNN’s State of the Union.
The White House has said that Biden won’t budge on sending families another round of stimulus checks, but he is willing to negotiate on where the income cutoff should be to determine who’s eligible.
“He wouldn’t want to see a household making over $300,000 receive these payments,” Yellen said. She added that if Congress approves Biden’s plan the U.S. will return to full employment in 2022.
How much more than $1.9 trillion will those checks cost? No one seems to be asking, because it doesn’t matter. A Monetarily Sovereign government can afford anything.
And no, taxpayers will not pay for it. While state and local taxpayers do pay for state and local government spending, federal taxpayers do not pay for federal government spending.
State and local governments are monetarily non-sovereign, while the federal government is Monetarily Sovereign. There is a vast difference between the two. Those who do not understand that difference, do not understand economics.
“But,” cry the deficit hand-wringers, “this will cause inflation.”
Inflation never is caused by government spending. Inflation is caused by shortages, usually shortages of food and/or energy. In fact, inflations can be cured by additional government spending to obtain and distribute the scarce goods.
“But,” cry the Republicans and Libertarians, “this will cause excessive demand, which will cause inflation.”
Inflation is a general increase in prices, but putting money in the pockets of the middle- and lower-income groups never has caused a general increase in prices.
The cost of certain, specific products could rise temporarily, but there will not be price increases for products and services overall.
The primary effect will be for people to be able to afford life’s basics — food, housing, clothing, education — and additionally pay off debts will being able to save for a “rainy day.”
“But,” cry the rich, who because of Gap Psychology, (the desire to distance oneself from those below and to come closer to those above, on any social scale) do not want the middle- and lower-income groups to narrow the Gap between them and the rich, claim: “The people will simply use the money to pay off loans and add to savings, which will do nothing to stimulate the economy.”
Paying off loans and adding to savings not only will encourage spending on things the impoverishment has forced people to do without, but it will help prevent future recessions. The populace will have the resources to continue spending during otherwise lean times.
“But,” cry the most selfish among us, “if we give people money that will discourage them from working, and where would America be without workers?”
Among certain classes there is the false belief that the poor are inherently lazy, and would rather collect meager welfare checks than exert the effort to improve their lives.
Receiving money begets the desire for more money, which is obtained via labor. The vast majority at any income level would gladly work for more money, if they knew how, where, and what. The primary cause of poverty is circumstance, not laziness.
Actually, on average, the poor labor harder than do the rich, the main difference being the better cards the rich have been dealt.
“But,” cry the uninformed, “all that federal spending is socialism.”
Socialism is not government spending. All governments spend. Socialism is government ownership and control. Sending check to people does not constitute ownership or control. It does not, in any way, constitute socialism.
The primary complaints about the stimulus programs being “excessive” will come from the Republicans, who want the economy to fail under President Biden. These are the people who put politics before patriotism.
They want America to suffer, so they will have election talking points. It’s a traitorous lust for power that has become all too common among the right.
Sadly, we fear the left could fall into the trap. Only recently, left-wing supporters of “Medicare for All,” tried to explain it would be paid for via circuitous, convoluted, complex bookkeeping rather than simply telling the truth: The federal government will pay for it, the way it pays for everything: Via ad hoc money creation.
We only can pray that the past year’s multi-trillion dollar federal deficit, combined with federal tax decreases and a growing economy, will educate the populace about Monetary Sovereignty.
Perhaps then, we can use the federal government’s unlimited resources to eliminate poverty and to fund the many heretofore underfunded strategies that will improve our lives.
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.
11 thoughts on “Well, the Democrats finally prove they understand Monetary Sovereignty”
“…all that federal spending is socialism…”
Ha. Without federal spending you have no capitalism, no private sector, no Gap, no economy.
Sadly, I don’t think the Democrats have suddenly begun to understand Monetary Sovereignty. They just realize there’s no sense in asking “who pays” since it’s kinda obvious that no one asks that about the military budget, etc.
Nevertheless, it’s a definite improvement that they aren’t asking.
I don’t have time to check, but I think the child payment proposal was originally Mitt Romney’s, one of the few Republican politicians I respect.
While reading this post, and considering your other recent posts, it seems like you are providing more nuance and detail in your explanations than you used to do. That’s important. Just beating the drum for more federal government spending into the economy without addressing the complexity of the effects leaves too many unanswered questions.
Hey, another Romney proposal. It was he who first instituted what ultimately evolved to become “Obamacare.”
Excellent article as usual, Rodger. The truth of Monetary Sovereignty is becoming more and more obvious by the day. Which is why some conservatives are now pivoting to their old-chestnut paternalistic arguments against giving people money with no strings attached. To wit:
My best rebuttal to this argument is twofold: 1) they are hastily generalizing (a logical fallacy) from a self-selected group (i.e. selection bias), and 2) money is effectively a form of freedom, and as the old saying goes, “It will be found an unjust and unwise jealousy to deprive a man of his natural liberty upon the supposition he may abuse it.” (Allegedly but spuriously attributed to George Washington). Or as Robert Reich famously said, “The economy exists to make our lives better. We do not exist to make the economy better.”
And simply pointing out the paternalism inherent in the conservatives’ arguments against UBI also undermines those arguments. I mean, per their own philosophy of individual responsibility, conservatives are not supposed to be treating adults like children, amirite?
But people still fall for their tired, old arguments against it, while our arguments fall on far too many deaf ears. What would your best rebuttal be, Rodger?
My response to “deaf ears” is:
“Why do you care?
“So, some people prefer to live on the dole. Why does that bother you?
“Is that the life you want for yourself? No one is forcing you. Why does the other guy’s laziness bother you?
“And what about the retired people. They choose not to work for a living. Why is that OK? Is it just that they have more money than the people accepting welfare? Are you bigoted against the poor?
“And what about the financiers, who do very little work and receive big money? Do you object to that too?”
So long as the federal government is paying, I have no objection to people not laboring for money.
Very well-said, Rodger. That last bit, of course, depends on the person understanding Monetary Sovereignty–something so simple, a child could understand, yet so many (willfully) ignorant adults can’t seem to grasp.
And when they predictably cry “inflation!” and “no such thing as a free lunch!” we can simply point out the very robust NON-correlation between “deficit” spending (i.e. money creation) and inflation throughout American history, except during truly major and extremely costly wars like the Civil War, WWI, WWII (and even in WWII the correlation was very weak).
And when the modern-day Pharisees inevitably trot out another old paternalistic chestnut about giving people free money somehow “causing our weaker brothers and sisters to stumble”, and “he who will not work, neither shall he eat” to quote St. Paul out of context, we can easily point out that Jesus himself gave out free stuff to the multitudes with no strings attached, and that supersedes Paul’s out of context (and likely spurious) quotes.
Game. Set. Match. Any questions?
Ajax, ALL inflations are caused by shortages, usually shortages of food or energy — and that includes wartime shortages.
I lived through WWII, and I remember shortages of everything. Remember the song, “Yes, we have no bananas”? That was true of sugar, meat, clothing, many fruits, cars, gasoline, newsprint, even chewing gum.
Very true indeed.
I found this piece as well. Watch them tie themselves in knots with their silly patronizing and paternalistic mental gymnastics:
Also, a good intellectual checkmate is to get them to inadvertently to admit their greatest fear, namely that the poor (and middle class) would become just as corrupt, lazy, decadent, or whatever as the rich. To which I would respond, “then why do you idolize the rich so much then?” Then suggest that instead of “making poverty history”, perhaps we should instead make WEALTH history? Starting with the critics’ very own wealth perhaps? Watch them change the subject or clam up real fast! Checkmate.
I’m 72 and have never encountered more succinct and intelligent discourse. It’s not surprising, I suppose, given the old statement that the most expensive thing a person can own is a closed mind. Anyway, thank you for putting words to my thoughts so much better than I’ve been able to.