For those who wish to see a classic example of the Big Lie (that federal deficits cause inflation and are a burden on taxpayers) read this article from the Washington Post.
U.S. government spent $660 billion more in March than it collected in revenue, the third-largest monthly deficit on record
Translation: “. . . the third-largest monthly economic gain on record.” (When the government pumps more money into the economy than it takes out in taxes, that is an economic gain for the economy.)
Stimulus plan and $1,400 checks drove spending much higher as the White House and Republicans clash over where to spend money next.
By Jeff Stein, April 12, 2021 at 2:00 p.m. EDT
The federal government spent $660 billion more than it collected in tax revenue this March, the Department of Treasury said Monday, as the Biden administration’s stimulus package pushed the U.S. monthly deficit near record highs.
Translation: ” . . . pushed the U.S. monthly economic gain near record highs.” (That’s the purpose of a stimulus — adding money grows the economy.)
The U.S. spent $927 billion in March alone — more than double the level from March 2020 — a jump due primarily to the disbursal of tens of millions of $1,400 stimulus payments under the American Rescue Plan. Meanwhile, tax revenues stayed largely flat, with the government only collecting slightly more than last March.
The resulting deficit is the third largest ever in American history, Treasury officials said, eclipsed only by April and June of last year — when the U.S. authorized larger levels of emergency spending to head off the economic crisis caused by the pandemic.
The monthly deficit had contracted relative to the summer months as federal spending expired and the U.S. economy began to heal.
Translation: “The resulting economic gain is the third highest in American history . . . to head off the economic crisis caused by the pandemic.” (Neither you, nor your children, nor your children’s children will ever pay for the so-called “deficit.” Our Monetarily Sovereign federal government funds its payments by creating new dollars, ad hoc.)
The U.S. budget deficit breached $3.1 trillion in 2020 as the pandemic slammed economy
Over the first six months of the current fiscal year, the government’s budget deficit has reached $1.7 trillion, a massive sum.
America’s annual deficit hit $3.1 trillion in 2020, an all-time high that far surpassed the previous record of $1.4 trillion, which came in 2009 during the depths of the Great Recession.
Translation: “The U.S. economic gain breached $3.1 trillion as the pandemic slammed the economy.”
“. . . the economic gain has reached $1.7 trillion, a massive sum.”
“America’s annual economic gain hit $3.1 trillion in 2020, an all-time high . . . ” (And despite all the handwringing by pundits, there is no inflation.)
Democrats and Republicans authorized much of the emergency spending last year as a way to try and stop an economic collapse. They are at odds, though, over spending levels in 2021.
The government has to borrow money to cover deficits, and it does this by issuing debt.
Interest rates are relatively low, which has made it cheaper to borrow, but the federal debt has grown markedly in the past year.
Translation: “The federal government, being Monetarily Sovereign, does not need to borrow money to fund an economic gain, nor does it issue debt.
In an unrelated process, the government accepts deposits into T-security accounts, which are like interest-paying safe-deposit boxes. Unlike “borrowing,” the federal government never touches the dollars in T-security accounts.”
” . . . relatively low, and interest rates have no effect on the federal government’s ability to increase the economic gain.“
Most of the new stimulus payments have already been sent out and are reflected in the March data. Still, budget experts say higher-than-usual deficit totals are likely to continue for the rest of the year.
On a call with reporters, Treasury officials noted that all the funding from last year’s Cares Act and the rescue plan had not yet been allocated.
Translation: “Fortunately, budget experts say higher-than-usual economic gain totals are likely to continue for the rest of the year.”
“This is going to be a big deficit year because we were already running substantial deficits and passed a $1.9 trillion bill,” said Marc Goldwein, a budget expert at the Committee for a Responsible Federal Budget, which advocates for lowering the deficit.
“This is not higher than expected. It’s what you’d expect with a $1.9 trillion stimulus on top of a structural deficit.”
Translation: “This is going to be a big economic gain year, because the economy already was running substantial gains . . . “
“It’s what you would expect with a $1.9 trillion stimulus on top of a structural gain.”
Jeff Stein is the White House economics reporter for The Washington Post.
Translation: Jeff Stein is a White House economics reporter who is paid to promulgate the Big Lie that economic gains are a burden on the federal government and on taxpayers.
Because the federal government is Monetarily Sovereign, it pays for its spending by creating new dollars, ad hoc.
The federal government has the infinite ability to create dollars, so no tax dollars are used for federal spending.
(The sole economic purpose of federal taxes is to allow the government to control the economy. It taxes things it wishes to discourage, and it give tax breaks to what it wishes to encourage.)
Thus, the whole reason for calling it a federal “deficit” is to mislead. The purpose of the misrepresentation is to dissuade you, the public, from demanding more benefits from the government.
Because those benefits tend to narrow the income/wealth/power Gap between the rich and the rest, the rich pay the politicians, the media, and many economists to promulgate the Big Lie.
Shame on Mr. Stein, and shame on the Washington Post, and shame on all the other media, the politicians, and the economists who disseminate the Big Lie. Shame, for doing the dirty work of the very rich.
…………………………………………………………………………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
- 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%
6 thoughts on “Correcting the Big Lie”
Roger, I’m wondering if the increasing frequency of Death by Cop is somehow related to the Gap you speak of. Or is this just a coincidence? If the Gap is reduced, do minorities get a pass or will everything get worse? The army officer driving a nice new car still got treated like a dog and maced.
I don’t know the answers to any part of your question.
1. I don’t know whether the frequency of cops killing blacks has increased or whether it just is being reported more or protested more.
2. I don’t know the relationship between cop murder and Gap Psychology, but I assume that especially lower-paid cops see poor people as a particular threat.
3. My sense is that higher-income blacks receive better treatment, possibly because they may act better, dress better, speak better — in short, act “whiter” — and thus may seem less menacing to whites and cops in general.
I suspect (without evidence) that Gap Psychology has more to do with income and wealth, than with skin color.
Very well-said as usual, Rodger! One of my friends showed me this in an attempt to discredit Monetary Sovereignty in a debate we are having.
What would your best rebuttal to this be? So many fallacies in it, where do I start?
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Yes, way too many fallacies to deal with. I posted a comment on his site. It will be interesting whether it actually is posted, and what his comments are.
Here is my comment:
1. Debt hawks have been claiming the U.S. debt is a “ticking time bomb since 1940. (See: https://mythfighter.com/2020/09/06/your-periodic-reminder-after-80-years-the-federal-debt-still-is-a-ticking-time-bomb/) In 1940, the federal debt was $40 billion. Today, it has grown to about $25 TRILLION! That’s a 62,500% increase. The “time bomb” still ticks. 80 years of doomsday predictions, and still wrong. Will they never learn?
2. The federal “debt” is not debt in the usual sense. It is nothing more than the total of DEPOSITS into T-security accounts, which are similar to interest-paying safe-deposit boxes. Because the government has the unlimited ability to create dollars, it never touches the dollars in T-security accounts. To “pay off” the so-called “debt,” the federal government merely returns the dollars to the account owners. The government could pay off the entire debt tomorrow, simply by returning the dollars in the T-security accounts. Then we would have $0 “debt.”
3. The sole purpose of T-security accounts (“debt”) is NOT to provide spending dollars for the government, but rather to provide a safe parking place for unused dollars. This helps stabilize the dollar and also helps the Fed control interest rates.
Thus, the U.S. government does not borrow. It has no need to borrow. It creates dollars, ad hoc, by paying creditors.
4. Inflation is not caused by “excessive” federal spending. There is no relationship between federal spending and inflation. (See: https://mythfighter.com/2021/03/20/federal-deficit-spending-causes-inflation-except-when/).
All inflations are caused by SHORTAGES, usually shortages of food or energy. The illusion that spending causes inflation comes when governments REACT to inflations by printing currency, exactly the wrong thing to do.
A government actually can cure an inflation by spending to obtain the scarce items and distributing them to the populace. For example, Zimbabwe’s inflation could have been cured had the government purchased food from abroad and/or helped the farmers grow more food.
Thus, increased spending often can cure inflation. That is how Germany cured its prewar inflation and paid for the mightiest war machine the world had ever known.
5. The federal government neither needs nor uses taxes. In fact, all tax dollars sent to the Treasury are destroyed upon receipt. They cease to exist as part of any money measure (M1, M2, M3, L). That is why no one can answer the question, “How much money does the U.S. government have?” The only answer is, “Infinite.”
The sole purpose of taxes is NOT to provide spending money to the federal government but rather to control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to encourage.
Currently, the federal government is “printing” (misleading word, money is not printed) trillions of stimulus dollars. The debt hawks are setting their hair on fire and predicting crises. There will be no crises, But the debt hawks will do what they have been doing for the past 80 years. They will ignore reality, and continue to claim the so-called “debt” is a “ticking time bomb.”
Well-said, Rodger. And the biggest howler of all in his pitifully obtuse article is the idea that public “debt” somehow needs to be denominated in a foreign currency (!) rather than in a country’s own currency. That is a truly dumb idea that is literally only done by countries whose currency is from the get-go already not trusted very well by the rest of the world because they are already in a bad way and/or the currency is brand new and hasn’t earned anyone’s trust yet.
The article even claims that Monetarily Sovereign governments do not have real power over their own currencies!
It is basically a Gish Gallop of lies, half-truths, equivocation, logical fallacies, and very glaring omissions.
And the most glaring omission of all is that of interest rates, the raising of which is literally the quickest and easiest cure for inflation and devaluations at least in the short run. Though to be fair, MMT also ignores that one as well, preferring to rely solely on taxes to do that, and just walks right into articles like these.
MMT’s claim that taxes help prevent/cure inflation and give value to the dollar, is its single biggest blindness to reality.
Ironically, though the federal government levies taxes, it doesn’t use them enough for their real purpose: To control the economy by taxing the “bad” and giving tax breaks to the “good.”