It’s a real question. If you had to choose between #1. Inflation or #2. Sickness, A Recession, A Depression, Poverty, Illiteracy, Starvation, Homelessness, Crime and some other bad stuff I could mention, would you chose #1 or #2?
It may sound like a no-brainer, and perhaps it is in the literal sense of “no brain,” because the vast majority of Americans claim they would rather experience #2 rather than #1.
Do you agree that you would prefer to experience sickness, a recession, a depression, poverty, illiteracy, Starvation, Homelessness, Crime, etc. than to experience inflation?
Let’s begin with the generally uncontested fact that the federal government created the laws that created the U.S. dollar. Because the federal government can create any laws it wishes, it can create as many dollars as it wishes, and cannot unintentionally run short of dollars.
The experts agree:
Former Fed Chairman, Alan Greenspan:“The United States can pay any debt it has because we can always print the money to do that.”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.”
We could add to the discussion the fact that federal deficit spending does not cause inflation, which we have proved here and here and dozens of other places on this blog.
We could insist that shortages cause inflations, and those shortages can be cured by federal deficit spending. Thus, we can show that rather than causing inflations, federal deficit spending can cure inflations.
But, wait. Why struggle against a tide of misinformation?
Let’s assume, for the sake of argument, that federal deficit spending does indeed, cause inflation. It’s what most Americans believe.
Because the federal government can’t run short of its own sovereign currency, it could risk inflation by using that currency to pay for:
Comprehensive, generous Medicare insurance for every man, woman, and child in America
Generous Social Security benefits for every man, woman, and child in America, regardless of age, income, or wealth
All costs of education from K-12 and beyond, including advanced degrees from top universities
Rent and other housing subsidies, for all.
A healthful diet for all Americans
Subsidies for all states, counties, cities, and villages, so that none of them would have to levy taxes.
Ending the FICA deduction from salaries
Expanded research in all the sciences: Mathematics, Biology, Botany, Social Sciences, Philosophy, Geology, Physics, Chemistry, Astronomy, and all the other sciences not mentioned.
The purpose of such spending would be to improve and extend the lives of humans and the other living creatures with whom we share the earth.
The government has the ability to fund all of #1 through #8. But many people wrongly object, “But that would cause inflation.”
If those people were correct, and that spending would cause inflation, it only would mean they have chosen a lesser life rather than experience inflation.
They have chosen sickness rather than health, poverty instead of affluence, taxation rather than being tax-free, homelessness rather than sheltered, stagnancy rather than advancement, and ignorance rather than knowledge, all for the fear of inflation.
Would you rather suffer from incurable, painful disease than suffer from inflation?
Would you rather risk being impoverished and homeless than to risk inflation?
Would you prefer that your children be unable to attend the best colleges having the best resources money can buy, just so you don’t see prices rise?
Would you rather the type of research that amazed you with the Internet, cell phones, artificial intelligence, moon landings, etc. be discontinued for lack of funds, just so inflation can be avoided?
Would you prefer that America default on its debts by enforcing a debt ceiling?
Would you rather that the federal government cease to improve our military?
Would you rather see the government do nothing to prevent or cure recessions and depressions, just because the cure – federal deficit spending – might cause inflation?
In summary, even if we admit the belief, just for the sake of argument, that federal spending causes inflation, we are left with very unsavory alternatives.
Think about it. Do you really believe that the possibility, or even the false probability, that federal deficit spending could cause inflation is more important than all of the things federal money could buy?
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
The Sole Purpose of Government Is to Improve and Protect the Lives of the People.
4 thoughts on “#1. Inflation or #2. Sickness, Recession, Poverty. Choose #1 or #2. Yes, seriously.”
Does RMM ever peruse the transactions data from the Bank of International Settlements in Basel, Switzerland? https://simonthorpesideas.blogspot.com/2023/02/global-financial-transactions-159.html This Thorpe guy is a science administrator at what would be a French equivalent to Los Alamos or the Argonne Lab in Lemont, IL https://fr.linkedin.com/in/simon-thorpe-3aa74615
Global Financial Transactions : $15.9 quadrillion in 2021
Apparently the US is like Macron’s France. No control over the dollar. https://www.cleveland.com/opinion/2014/08/submit_a_letter_to_the_plain_d.html
Yes, you almost never read about the fundamental differences between France’s finances and America’s finances. It’s sad. It’s as ignorant as wondering why the Chicago Bulls basketball team scores more than the Chicago Cubs baseball team.
“The annual inflation rate in Japan fell to 3.3% in February 2023 from January’s 41-year high of 4.3%.” Could have potentially been the case for France too if they hadn’t given up their Franc.
“The Bank of Japan (BoJ) kept its key short-term interest rate unchanged at -0.1% and that for 10-year bond yields around 0% during its March meeting by a unanimous vote. ” https://tradingeconomics.com/japan/interest-rate
Here on page 15 [of 19]: https://eprints.soton.ac.uk/384540/1/IRFA%25202015%2520Werner%2520Lost%2520Century%2520in%2520Economics%2520-%2520Banking.pdf Werner does not say monetary sovereignty, but it basically what he is talking about for developing countries to avoid loans in currencies they do not control at all costs.
3. The Quantity Theory of Credit
When increases in money supply as a consequence of new credit money creation by banks exceeds the growth of GDP (growth in gross domestic product) transactions in the economy, there are likely to be inflationary consequences. However, the consequences of credit money creation depend on the sector to which credit money is allocated.
The Quantity Theory of Credit presented by Richard Werner (Werner R. A., 1997; Werner R. A., 2013; Ryan-Collins, Greenham, Werner, & Jackson, 2011, pp. 109 – 110; Werner R. A., 2005, p. 226) proposes that the impact of bank lending for GDP transactions will depend on the purpose of lending. If lending is directed towards consumer credit that increases consumption, there is likely to be an increase in consumer price inflation as a consequence of increasing aggregate demand relative to the aggregate supply of products. Whilst bank lending for business investment to private non-financial corporations and unincorporated businesses encourages growth in economic activity. Investment that increases output of goods and services included in GDP transactions suppresses inflationary pressures in the economy, as a consequence of increased production of goods and services, and also raises the incomes of factors of production. From: https://www.economicsnetwork.ac.uk/archive/starkey_banking2