The Relentless Con Job By The Rich. The Big Lie In Economics

The efforts of the rich to become even richer never end.

The rich incessantly promulgate lies about our economy. More importantly, they bribe the primary influencers — the politicians, the media, and the economists — to spread the Big Lie that federal spending is funded by federal taxes.

File:Scottpelley.jpg - Wikimedia Commons
Bernanke: “It’s not tax money… We simply use the computer to mark up the size of the account.”

In reality, federal spending is funded by ad hoc federal money creation, not taxes.

Unlike state and local government taxes, all federal tax dollars are destroyed upon receipt.

The tax dollars no longer exist in the economy (the private sector), and since the federal government has infinite dollars, the tax dollars no longer exist anywhere.

The Big Lie convinces the populace that the federal government’s ability to provide benefits is financially limited by tax receipts.

(Politicians are bribed via campaign contributions and promises of lucrative jobs. The media are bribed via advertising dollars and actual ownership. Economists are bribed via gifts to universities and lucrative positions on “think tanks.”) 

Whenever you hear about a federal benefit, and someone asks, “Who will pay for it?” you should know you are about to listen to the Big Lie. The answer is: “The federal government will pay for it by creating dollars.”

Quote from former Fed Chairman Ben Bernanke when he was on 60 Minutes:
Scott Pelley: Is that tax money that the Fed is spending?
Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

“Social Security and Medicare are about to become insolvent” is an example of the Big Lie, the purpose of which is to distance the rich from the rest of us.

“Rich” is a comparative, not an absolute. If you have a million dollars, you are rich if most others have less than a million. But you are not wealthy if everyone else has ten million.

That leaves you two ways to become richer: Get more for yourself or make the others have less. The rich in America have chosen both courses.

They try to grab more for themselves; their efforts to force you to have less are not as obvious.

The rich receive most of their income from sources other than salaries. Consider FICA. Congress has deemed FICA should be collected only from salaries, not from other forms of income.

Further, Congress has decided FICA is to be collected on salaries less than $142,800. Anything above that is not taxed.

The FICA limit is just one of the thousands of tax breaks the rich have “encouraged” Congress to give them. The purpose: To widen the Gap between them and you. Widening the Gap makes them richer.

U.S. federal finances are unlike state & local government finances, business finances, and euro nation finances.

The Map and the Territory, by Alan Greenspan | Financial Times
Former Fed Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

The U.S. government is Monetarily Sovereign. It has the unlimited ability to create its own sovereign currency.

It never unintentionally can run short of dollars.

Yet we see organizations funded by the rich claiming that federal spending, which goes to the middle- and lower-income people, is detrimental to the middle- and lower-income people.

They want you to believe you should receive lower benefits and pay more taxes.

If they can cement that belief in your minds, you’ll vote for the very people who take money from your pocket.

Here is the entirety of a page posted by the Committee For A Responsible Budget, one of the organizations that continually tries to foist on you the false idea that you should have less.

Every single sentence, including the headline, is false and/or an outright lie:

Why High and Rising National Debt is a Problem

FALSE. High and rising National (i.e., federal) Debt is not a problem. It is not even Debt. It is the total of deposits into Treasury security accounts at the Federal Reserve.

These accounts resemble safe-deposit boxes. When you buy a T-bill, T-note, or T-bond, you open an account at the Federal Reserve and deposit your dollars into it.

The federal government never touches those dollars. It has no need to.

The government can pay off the so-called “debt” merely by returning to you the dollars in your account.

This is no burden on the government, taxpayers, or the economy. There is no “Problem.”

High and rising national Debt will threaten economic growth and the standard of living for all Americans. High Debt will slow the growth of the economy and wages.

FALSE. Federal “debt,” i.e., the total of deposits in T-securities, is set by law to equal the cumulative total of federal deficits.

Bernanke sees decent chance for Fed to pull off a 'soft-ish landing' | The  Hill
Bernanke: “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.”

Deficits are the difference between the amount of money the government takes out of the economy vs. the amount it puts in (with some going to foreign nations).

Rising national “debt” occurs when the federal government puts more dollars into the economy than it takes out.

There is no mechanism by which adding money to the economy can “slow the growth of the economy and wages.”

On the contrary, when economic growth slows, the government adds more stimulus dollars (increases the “debt”) to prevent or cure a recession.

The “debt” has no direct effect on wages, which are a function of business profits (stimulated by federal deficit spending) and labor supply.

As Debt rises, higher interest payments will crowd out important investments in areas like education, infrastructure, and research that can help grow the economy.

FALSE. Federal Debt does not force higher interest rates. Interest rates are set arbitrarily by the Federal Reserve to control inflation.

The peaks and valleys of changes for Federal deficits (blue) neither correspond to changes in Interest rates (red) nor are they a leading indicator. Note the 12 years 2008 – 2020, when federal deficit spending grew massively while interest rates neared zero.

Federal interest payments do not “crowd out” other federal payments for “education, infrastructure, and research. The federal government has infinite money with which to pay for anything.

During periods of high deficit spending, interest rates have been low.

Getting the Debt under control once the crisis is over will be very beneficial for generations to come, from higher wages to increased investment to lower borrowing costs for families and businesses.

FALSE. This paragraph is just a restatement of the previous section. There is no mechanism by which fewer dollars coming into the economy can cause “higher wages, increased investment, and lower borrowing costs.

The last decade shows the opposite: Higher deficits along with higher wages, increased investment, and low borrowing costs.

The Congressional Budget Office predicts that the economy will grow faster with Debt on a declining path as opposed to a rising one.

FALSE: History shows that declining Debt leads to depressions and recessions.

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 reason is quite simple. Reducing federal Debt requires taking dollars out of the economy. 

Just as adding stimulus dollars to the economy prevents and cures recessions and depressions, taking dollars out of the economy causes recessions and depressions.

The rich do not fear recessions and depressions. They are less harmed than the rest of us. They have more cushion to weather the hard times.

During recessions and depressions, workers become more desperate for jobs, giving the rich the opportunity to cut wages and increase their own relative incomes.

In addition to publishing the completely non-sensical paragraphs just discussed, The rich-run CRFB runs “hearings” on the condition of the government’s finances.”

These hearings contain nothing more than recitations of the Big Lie — false propaganda we have just discussed. The purpose will be to give Congress excuses to:

    • Cut Social Security benefits
    • Cut Medicare benefits
    • Eliminated Obamacare
    • Increase FICA taxes
    • Cut other benefits for the poor and middle-classes
    • Widen the income/wealth/power Gaps between the rich and the rest 

The drumming of lies and misstatements from the rich and toadies for the rich is relentless. So long as it works to indoctrinate the public, it never will end.

The attempts at indoctrination end only when you, the public, demonstrate your understanding of the lies and your willingness to punish the liars.

Fool you once; shame on them. Fool you thousands of times, over and over and over; shame on you.

[No rational person would take dollars from the economy and give them to a federal government that has the infinite ability to create dollars.]

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. 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. 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

5 thoughts on “The Relentless Con Job By The Rich. The Big Lie In Economics

  1. A list of Congresspeople who have been bribed or conned to promulgate the Big Lie. Is your pol among them? If so, contact him/her.

    Fix the Debt Awards 2022 Fiscal Heroes
    June 16, 2022
    Today Fix the Debt, a project of the Committee for a Responsible Federal Budget, is pleased to announce and honor a new class of Fiscal Heroes for 2022. Representing a bipartisan group of 19 Senators and 31 House Members, recipients are Members of Congress who have distinguished themselves by showing leadership on issues of fiscal responsibility. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget and head of Fix the Debt:

    “With inflation at a 40-year high, the national debt reaching near-record levels, and our major trust funds facing looming insolvency over the next decade, our country faces daunting fiscal challenges. Addressing our fiscal challenges requires policymakers in Washington who distinguish themselves by their leadership and political courage, and our Fiscal Heroes are doing just that. We applaud our Fiscal Heroes for their commitment to getting our nation on a more sustainable fiscal path.”

    Fiscal Heroes are awarded each Congress to recognize policymakers working to improve the nation’s fiscal situation and fix the budget process. Fiscal Heroes have distinguished themselves by pushing their party leaders to make debt a priority, leading bipartisan efforts to work through policy options to fix the debt and the budget process, taking responsible votes, participating in fiscally focused events, using their town hall meetings to engage and educate constituents, delivering floor speeches to raise awareness about the issue, advocating to keep tough choices on the table, and introducing legislation to improve the budget process and the nation’s fiscal position.

    The list of honorees is as follows:
    Sen. Mike Braun, R-IN
    Sen. Thomas Carper, D-DE
    Sen. Bill Cassidy, R-LA
    Sen. John Cornyn, R-TX
    Sen. Kevin Cramer, R-ND
    Sen. Joni Ernst, R-IA
    Sen. Maggie Hassan, D-NH
    Sen. Angus King, I-ME
    Sen. James Lankford, R-OK
    Sen. Mike Lee, R-UT
    Sen. Cynthia Marie Lummis, R-WY
    Sen. Joe Manchin, D-WV
    Sen. Rand Paul, R-KY
    Sen. Mitt Romney, R-UT
    Sen. Mike Rounds, R-SD
    Sen. Rick Scott, R-FL
    Sen. Mark Warner, D-VA
    Sen. Sheldon Whitehouse, D-RI
    Sen. Todd Young, R-IN
    Rep. Jodey Arrington, R-TX
    Rep. Jim Banks, R-IN
    Rep. Andy Biggs, R-AZ
    Rep. Carolyn Bourdeaux, D-GA
    Rep. Ted Budd, R-NC
    Rep. Tim Burchett, R-TN
    Rep. Ed Case, D-HI
    Rep. Ben Cline, R-VA
    Rep. Michael Cloud, R-TX
    Rep. Jim Cooper, D-TN
    Rep. Ron Estes, R-KS
    Rep. Randy Feenstra, R-IA
    Rep. Virginia Foxx, R-NC
    Rep. Mike Gallagher, R-WI
    Rep. Jared Golden, D-ME
    Rep. Bob Good, R-VA
    Rep. Kevin Hern, R-OK
    Rep. Bill Huizenga, R-MI
    Rep. Bill Johnson, R-OH
    Rep. Ron Kind, D-WI
    Rep. Tom McClintock, R-CA
    Rep. Blake Moore, R-UT
    Rep. Stephanie Murphy, D-FL
    Rep. Ralph Norman, R-SC
    Rep. Scott Peters, D-CA
    Rep. Dean Phillips, D-MN
    Rep. Kurt Schrader, D-OR
    Rep. Jason Smith, R-MO
    Rep. Lloyd Smucker, R-PA
    Rep. Chris Stewart, R-UT
    Rep. Steve Womack, R-AR

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  2. Excellent analysis, Rodger! The Big Lie has been 100% false ever since 1971 when we got off the gold standard for good. But instead of telling the truth, the powers that be just kept propping it up. The money supply indeed increased exponentially since 1971, but where did all the money go? To Wall Street, that’s where. The financialization of the economy resulted, and Wall Street weaponized their gravy train against the bottom 99% ever since then.

    Take a look at a chart of the financial economy vs the real economy over time, then look at a chart of productivity per hour vs. wages per hour. Both diverged dramatically around 1971 to 1973, with the gap widening ever since and accelerating after 1980. Now imagine if all that money, or even a fraction of it, was rained down upon We the People instead of the oligarchy.

    If that doesn’t make the reader feel RIPPED OFF, check your pulse ’cause you might be dead!

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  3. If CRFB simply replaced “Federal Debt” with “Private Debt”, their analysis would be much more relevant. As Wynne Godley’s sectoral balance research discovered, when Federal Debts go down, private debt must go up along with Wall Street profits (assuming fixed trade deficit). Reducing the federal debt is not just about denying low income people with benefits but also to load them up with debt so that the finance sector can siphon off as much of their wealth as they can, before it all comes crashing down.

    The 2008 GFC was fundamentally caused by excessive (and fraudulently underwritten) mortgage based private debt resulting from declining federal deficits and a housing bubble, and was only reversed through massive increases in federal debt. Yet somehow CRFB learned nothing from that event and still promotes the federal debt is problem canard. It’s amazing the logical contortions people go through to justify their positions when they are driven purely by ideology rather than fact and data.

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