America — at least, the America we like to dream exists — has been destroyed, if it ever really existed.
It is not the America of the common person, but rather it is the America of royalty, the same kind of imperial royalty we fought against during the Revolutionary war.
King George was a piker compared to our America’s rich.
Today’s America is more financially stratified, and therefore power-stratified than at any time in our history. We have kings, princes and serfs, just as surely as existed during medieval times. Worse, perhaps.
Nothing will change while Americans believe these five lies:
- The federal “debt” is too high (It isn’t even “debt,” and it isn’t too high.)
- Federal taxes fund federal spending. (Unlike state & local government taxes, federal taxes fund nothing. In fact, federal tax dollars are destroyed upon receipt by the Treasury. That is why no one can say how much money the Treasury has. It has infinite dollars.)
- The federal government can’t afford Medicare for all, Social Security for All, housing for all, college for all, or food for all. (The federal government can afford anything.)
- Federal spending causes inflation. (It doesn’t. Inflation is caused by shortages of key goods and services, i.e. food, energy, computer chips, labor, shipping. In fact, federal spending cures inflation when it facilitates obtaining the scarce items)
- If the government provides the necessities, the poor won’t work. (The “starve ‘em ‘til they slave” system works only for the rich. People always will work to improve their situation, whatever that situation may be.)
Lie I. The Federal Debt Is Too High
The federal “debt” is many things, but it is not “debt” and it is not “too high.
The federal debt is the total of deposits into Treasury Security accounts (i.e. T-bills, T-notes, T-bonds). The purpose of these accounts is not to provide the federal government with spending money but rather:
To provide a safe, interest-paying storage place for unused dollars.
To assist the Fed in setting interest rates.
Treasury Security accounts, which resemble safe-deposit accounts, are owned by depositors. The federal government does not need, use, or touch the dollars in the accounts.
As with safe-deposit accounts, the deposits in the T-security accounts are not a true debt of the federal government, which merely safeguards the money. Think of the federal government as the uniformed guard who stands outside the safe deposit room, and checks signatures. He doesn’t owe the money, either.
When the T-securities mature, the government pays them off simply by returning the dollars in the accounts, which is no burden at all on the federal government. The government merely debits the accounts and credits the checking accounts of the T-security owners.
No tax dollars are involved. Contrary to popular myth, your grandchildren will not owe the federal debt.
Confusion in the minds of the public arises because, by law, the total of these accounts equals the net total of all federal deficit spending through history.
Thus, the public is made to believe wrongly that federal deficits must be “paid back” by taxpayers. But, federal deficits merely are the arithmetic difference between spending and taxing, which gives the wrong appearance that federal taxes actually fund federal spending.
This, in turn, gives the wrong appearance that federal taxpayers owe the federal debt.
Federal deficits never are “paid back.” Federal taxes don’t fund federal spending. And taxpayers do not owe the federal debt.
Lie II. Federal taxes fund federal spending.
Unlike state/local governments, and unlike euro-nation governments, and unlike businesses, and unlike you, and me, the federal government is Monetarily Sovereign.
In the 1780s, the federal government created an arbitrary group of laws from thin air, that created an arbitrary number of dollars — from thin air — and they gave these dollars an arbitrary value.
Over the years, the government arbitrarily has changed the value of the U.S. dollar (aka “inflation” or “deflation.”)
The government still retains the power to create more arbitrary laws and arbitrarily more dollars — again from thin air — and again give them any value it chooses. Thus, it has the unlimited power to cure inflation at the stroke of a pen, although it prefers to use market-oriented methods (interest rate changes0.
The federal government pays all its creditors by sending instructions (not dollars) to the creditors’ banks instructing the banks to increase the balances in the creditors’ checking accounts.
When the bank obeys those instructions, new dollars instantly are created. That is how the federal government “prints” most of its dollars, not with a printing press but with a computer key.
Ben Bernanke, Former Federal Reserve Chairman: “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.”
None of this is related in any way to the tax dollars that are created and destroyed every day. Tax dollars are paid with checking account money from the M1 money supply measure, but when they reach the Treasury, they cease to be part of any money supply measure.
They effectively are destroyed. Even if the federal government collected $0 in taxes, it could continue spending and running deficits, forever.
Lie III. The federal government can’t afford Medicare for all, Social Security for All, housing for all, college for all, or food for all.
This lie often is told in conjunction with related lies such as, “The Social Security trund will run out of money on [date].” (All federal “trust funds” are fictional. Real trust funds involve a grantor, a beneficiary, and a trustee).
In a real trust fund:
- The grantor establishes the trust fund, donates the thing of value to it, and decides the management terms.
- The beneficiary is the person for whom the trust fund was established. The assets in the trust will be managed per the specific instructions and rules laid out by the grantor when the trust fund was created.
- The trustee makes sure the trust fund maintains its duties as laid out in the trust documents and according to applicable law.
The Social Security “trust fund” is nothing like the above. It merely is a bookkeeping device that may or may not pay a beneficiary an unknown amount of money at the whim of Congress and the President.
If you collect Social Security, you are the ostensible “grantor” who pays a FICA tax that supposedly is the “thing of value,” but you do not “establish the trust fund,” and you do not decide the management terms, and FICA is just another tax that pays for nothing.
You also are the beneficiary, but the rules can change without warning. And the government is the supposed “trustee,” but it has the power to change the “trust documents” at will, a power no real trustee has.
Social Security is a federal agency. No agency of the federal government can run short of money unless that is what Congress wants.
Former Federal Reserve Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
The so-called “trust fund” is completely under the control of Congress, and it only can run short of money if Congress wants it to run short of money. Period.
Another related lie is that federal benefits must be “paid for.” We have heard this lie repeatedly from Sen. Manchin and other politicians regarding the Democrats’ “Build Back Better” proposal. It is supposed to mean that federal taxes must pay for federal spending.
Fact: All federal spending has been “paid for,” not by taxes but by money creation.
Federal taxes pay for nothing. Manchin and the other politicians know this, but their constituents don’t, so the lie is repeated for political purposes.
Lie IV: Federal spending causes inflation. You undoubtedly have seen hyperinflation photos of people forced to tote wheelbarrows filled with nearly worthless currency, or have seen pictures of such bills. These photos may have given you the false impression that it is the printing of such currency that caused the inflation.
But that impression confuses cause and effect.
The real cause of all inflations is shortages of key goods and services.
Today’s inflation is caused not by federal spending but rather by shortages of oil, food, labor, computer chips, and shipping.
In fact, federal spending can actually halt inflation if the spending helps create and distribute the scarce items.
A food shortage can be cured by federal aid to farmers. An oil shortage can be cured by federal aid to drillers and processors.
A labor shortage can be cured by ending FICA deductions from pay, and providing free Medicare for All, so that employers are better able to raise payrolls.
Lie V. If the government provides the necessities, the poor won’t work. This is the most insidious lie of all. It is eagerly believed by the richer about the poorer. Its purpose is to widen the income/wealth/power Gap between the rich and the rest.
Ironically, the poorer on balance, work harder than do the richer. The poorer must work while doing everything for themselves. The richer can afford to hire people to do for them.
The richer sneer at the poorer as “takers,” to separate themselves from those who have less. This is known as “Gap Psychology,” the human desire to widen the Gap below you and to narrow the Gap above you.
Widening the Gap is the method by which the rich make themselves richer. (If there were no Gap, no one would be rich. We all would be the same).
Virtually everyone wants to improve their lives, and this applies even to the very wealthy, who seemingly have everything but still want more.
There is no evidence that people will refuse to work when given basic benefits. People did not refuse to work when given Social Security and Medicare.
Five, widely believe lies, are responsible for the decline and loss of the “American dream,” the dream that if you work hard in this “land of opportunity,” you will get ahead and your children will lead better lives.
Note however, the word “ahead.” Ahead of what? Ahead of those near you. It is the basis for Gap Psychology.
- The federal “debt” is too high
- Federal taxes fund federal spending.
- The federal government can’t afford basic benefits for all.
- Federal spending causes inflation.
- If the government provides the necessities, the poor won’t work.
These lies are promulgated by the rich, who run America, to make themselves even richer, by widening the income/wealth/power Gap below them.
Because of Gap Psychology, even the middle classes parrot the lies, as a way to distance themselves from those below them. It’s the fastest way to “get ahead.”
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
- 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.