Many economists want poverty never to be cured. Here’s why.

Many economists want poverty never to be cured.

Here’s why: The most crucial question in economics is: “Can the federal government run short of money?”

Most economists will answer something on the order of, “The government always can print more dollars.”

While technically that is not correct — the government prints dollar bills, which are titles to dollars, not dollars in themselves — the concept is correct.

The U.S. federal government cannot unintentionally run short of dollars. With that fundamental truth in mind, logic dictates that:

  1. The U.S. government does not rely on your tax dollars. It simply could “print” all the dollars it spends, and in fact, that is what it does.
  2. Therefore, the U.S. government has no financial need to levy federal taxes.
  3. There is no financial need for the federal government to run a balanced budget.
  4. Federal deficits and debt are not a burden on the federal government or on federal taxpayers
  5. Since the federal government cannot unintentionally run short of dollars, no federal agency can run short of dollars unless the federal government wants that to happen.
  6. Medicare and Social Security are among the hundreds of federal agencies that cannot run short of dollars unless Congress and the President want that result.
  7. The so-called Medicare and Social Security “trust funds” are not real trust funds; they have no financial purpose. The federal government can and does support all federal agencies by creating dollars ad hoc.
  8. Medicare for All, Social Security for All, College Tuition for All, Housing Support for All, Food for All, etc., are well within the federal government’s ability to fund without levying a penny in taxes.

If you can find an error in the above logic, please let me know.

Why, then, does the government collect taxes?

Why does it threaten bankruptcy for Medicare and Social Security?

Why the concern about the federal deficit and debt?

The fundamental financial purpose of federal taxes is to control the economy by taxing what the government wishes to limit and by giving tax breaks to what the government wishes to encourage and reward.

Sadly, the government taxes — i.e., wishes to limit — your income, your healthcare, your retirement, and your other benefits, while it hopes to encourage and reward — i.e., give tax breaks to — the rich and their accumulation of wealth.

That is why the very rich pay a much lower percentage of their income and wealth as taxes than you do.

Donald Trump’s negligible tax payments are but one example.

While the economists generally admit that the federal government cannot become insolvent, they take their lead from the rich, who provide two fallback excuses for not supporting the middle classes and the poor:

Excuse #1: “If we support the middle and the poor by providing health care insurance, retirement insurance, housing aid, food aid, and college aid, the middle and the poor will refuse to work, destroying the economy.”

The tacit claim is that the not-rich are lazy takers who, lacking human aspirations, are not interested in improving their lives via labor but are content to wallow in their own poverty.

Never mind that the poor and middle classes labor much harder than do the rich, who are the real lazy takers.

Excuse #1 is part of the “the poor deserve their poverty, and we rich deserve our wealth” meme.

It is a subset of the white supremacy doctrine — part of the notion that “it was not luck that got us where we are but rather our natural superiority” — part of the “give the poor a few dollars, and they will those dollars to buy drugs and gamble.”

Excuse #2: “Federal spending can cause inflation, which will destroy the economy.”

All inflations are caused by shortages of critical goods and services, which makes sense intuitively and factually.

We can all agree that when something is in short supply, its price rises so that many prices rise when many things are in short supply.

That’s called “inflation.”

Today’s inflation is caused by COVID-related short supplies of oil, food, computer chips, lumber, housing, and labor.

Does federal spending cause these shortages? The reality is that only a very small percentage of federal spending is for the purchase of these things.

The vast majority of federal spending goes to people. Federal dollars for Medicare and other healthcare, Social Security, poverty aids, and even the military comprise nearly all of the federal government’s spending.

Only a tiny percentage goes for the purchase of goods, and even that percentage is largely labor-related.

So, when economists claim that federal spending causes inflation, they really claim that the American people receive too much money.

And further, when people have more money, they spend it on already scarce items, thus causing inflation.

Carried to its logical end, the economists claim that preventing and curing inflation requires impoverishing the middle classes and the poor.

The economists want you to have less money for driving your car, heating your house, buying your food, affording suitable housing, owning a TV, or going to college.

And they want businesses to devote less money to hiring people.

FICA and business-provided healthcare insurance are employment costs discourage hiring while reducing net wages.

Suppose the government did not require employers and employees to pay FICA and did not encourage companies to provide healthcare insurance (via tax deductions and the lack of Medicare for All). In that case, businesses could hire more people at higher net wages.

The entire anti-inflation argument is based on the poor and middle classes receiving poorer health care, food, housing, education, and net wages.

There can be no argument about the federal government’s unlimited ability to create its own sovereign currency. So, you might think the entire Big Lie about federal deficits being “unsustainable” devolves into inflation.

But that Big Lie is just a cover for a more profound lie, based on Gap Psychology, the human desire to widen the income/wealth/power gap below and to narrow the gap above.

The Gap is what makes one rich. Without the Gap, no one would be rich; we all would be equal. And the wider the Gap, the richer the rich.

A man owning a million dollars would be rich if everyone else owned only a thousand dollars, but he would be poor if everyone else owned ten million dollars.

The richer always wish to be more prosperous. They want the Gap below them to grow wider. So, they bribe our sources of information to convince us that the government should not provide Gap-narrowing benefits.

They bribe the media via ownership and advertising dollars. They bribe the politicians via campaign contributions and promises of future employment.

They bribe university economists via university contributions and employment in think tanks, which is why economists never want poverty to be cured.

They like bribes.

Everyone, from layperson to self-described expert, is fed the same Big Lie: “Federal finances are like personal finances.”

That lie includes misleading statements: The federal government should live within its means and run a balanced budget, deficits and debt are unsustainable, federal taxes fund federal spending, and federal expenditures causes inflations.

The facts are:

  1. The federal government, having the infinite ability to create dollars, has no “means” to live within.
  2. Running a balanced federal budget always leads to recessions and depressions
  3. Federal taxes not only don’t fund federal spending but federal tax dollars are destroyed upon receipt by the Treasury.
  4. All inflations are caused by shortages of critical goods and services, usually oil or food.
  5. Federal spending creates economic growth and even can cure inflations by curing shortages.

Here’s the evidence:

This graph demonstrates that recessions (vertical gray bars) occur not just when federal debt (red) shrinks but even when federal debt doesn’t grow enough.

Here is a list of periods in which the federal debt actually has shrunk:

U.S. depressions tend to come on the heels of federal surpluses.

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.

A growing economy requires a growing supply of money.

Federal deficits pump money into the private sector, aka “the economy,” and by formula, increase economic growth (GDP=Federal Spending+Non-federal Spending+Net Exports.)

You and everyone else pay federal taxes with dollars taken from the M1 money supply measure  , which includes currency in people’s pockets or the M1 money supply measure  which includes currency that is in people’s pockets or in checking accounts.

There is no money supply measure for the federal government’s dollars because the government has the infinite ability to create dollars.

It has an infinite supply of money.

Former Fed Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

Former Fed Chairman Ben 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.”

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

Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

Thus, all those M1 money supply tax dollars disappear from any money supply measure. They effectively are destroyed.

The federal government creates ad hoc dollars every time it pays for something. And as for the myth that federal deficit spending causes inflation, look at this graph:

If federal deficit spending caused inflation, the peaks and valleys of the red line (changes in federal debt) would correspond to the peaks and valleys of the blue line (inflation). There is no such correspondence.

If you’re looking for something that does correspond to inflation, look at this graph.

Oil prices (silver) correspond with inflation (blue). Inflations are caused by shortages.

Your major sources of information, the media, politicians, and university economists have been bribed to believe and to disseminate the Big Lie that federal finances resemble personal finances.

In fact, the two could not be more different.

  1. The federal government is Monetarily Sovereign; you, the states, counties, cities, and businesses are monetarily non-sovereign.
  2. The federal government can create unlimited numbers of dollars; you, the states et al, cannot create unlimited dollars
  3. The federal government destroys all the dollars it receives; you do not.
  4. The federal government never unintentionally can be insolvent; you can become insolvent if you do not have sufficient dollars to pay your creditors.
  5. The federal government never borrows dollars; you might have occasion to borrow.

The federal government can cure inflations, not by raising interest rates (which exacerbates shortages), but by spending to alleviate shortages.

For instance: To lower the price of oil, the government could financially support oil exploration and processing, and/or invest in renewable energy.

To lower the price of food, the government could financially support farming and food production R&D.

To ease the price of labor, the government could eliminate the FICA tax while providing Medicare for All (relieving businesses of this financial obligation).

To lower the prices of electronics, the government could invest in computer chips and electronic R&D.

In short, reducing inflation actually requires additional government spending, not less.

Any time you read or hear someone equating federal finances with personal finances, you will know they are lying or ignorant about economics.

Similarly, any time you read or hear someone saying federal debt or deficits are “unsustainable,” they, too are lying or ignorant.

If you have played the board game Monopoly, you know the Bank mimics the federal government in that it cannot run out of money. By rule, the Bank is Monetarily Sovereign.

The players comprise the “economy,” and they do not need to worry about the Bank’s deficits or its debt being “unsustainable.”

The Bank always is able to pay $200 for passing “GO.”

If you find Monetary Sovereignty puzzling, just think of Monopoly. That may help you visualize the reality of the U.S. economy.

The purpose of the Big Lie is to widen the Gaps between richer and poorer, and more specifically, between the very rich and the rest of us.

Economist charlatans never want poverty cured because the cures would reveal their ignorance, deception, and/or their receipt of bribes from the rich.

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.


3 thoughts on “Many economists want poverty never to be cured. Here’s why.

  1. Occum’s Razor states the best system or solution is the simplest one. The political-economic system is very complex as is it’s Siamese twin brother, the legal system. Eliminating one would rid the other. Such is the size of our 21st Century problem whose roots are imbedded in non-science, i.e. lies. The idea of our participating in a system that cannot totally succeed is really strange this late in our evolution.
    Evolution has now mutated to give us two gaps: the original gap between rich and poor, and the newer gap between 19th Century, scarcity (controlled by the ultrarich) and 21st Century, scientific progress moved by the ultra smart. The former make money, the latter make sense. They both need each other to continue. Occum’s Razor seems to lean toward the latter. Whether we succeed will likely depend on big-money getting out of the way in the nick of time to allow for application of real solutions.


  2. Here’s a recent Tweet from Rep. Jim Jordan
    “Don’t spend money if you can’t afford it. Why’s it any different for the federal government?”

    OMG! Jim Jordan doesn’t understand the difference between federal financing and personal financing.


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