Do you love learning?
Even though I passed right through 88, and am roaring toward 89, I still do, which means I love being shown where I’m wrong. How else can anyone learn but to be given new beliefs that replace former beliefs?
So here is a challenge to you, my readers, plus the MMT gang (Stephanie, Warren, Randy et al.), CRFB, Fox viewers, mainstream economists, journalists, politicians of all stripes, and all others who may believe some or all of what I believe is wrong.
You may agree with me on many things but disagree on certain details (Hello MMTers). I’d love to hear from you.
Some of you may disagree with everything I write.
I’d love to hear from you (except from those whose main argument consists of comparing me to excrement. No learning there; I’ve heard it all).
Some of you merely may have questions, not necessarily disagreements, about what I believe. Send me your questions and I will try to answer those I feel may be educational.
Some of you agree with everything I write. Gotta love you.
Here’s the challenge: I will list certain things I believe. You tell me where I’m wrong, and this is the important part: Show me your data.
I’ll print worthwhile comments along with whether I feel you’ve made a valid point(s). Where appropriate, I’ll provide data or other evidence to substantiate my point. Or, I’ll simply agree with you.
This way, we all can learn, and it will be fun.
I. Our Monetarily Sovereign government never can run short of its sovereign currency, the U.S. dollar. It can pay for anything costing dollars, instantly, simply by pressing computer keys. This compares to city, county, and state governments, which are monetarily non-sovereign, and do not have a sovereign currency, so can and often do run short of dollars.
In the same vein, euro nations like Germany, France, Italy, Greece et al, do not have sovereign currencies, so they can and do run short of euros. The European Union is Monetarily Sovereign so it cannot run short of euros.
II. Federal taxes do not fund federal spending. The primary 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.
Even if the federal government collected $0 taxes, it could continue spending, forever. In fact, the Treasury destroys all the tax ollars it receives, and orders new dollars to pay for goods and services.
A secondary (though not necessary) purpose of federal taxes is support demand for the U.S. dollar by requiring dollars to be used for tax payments.
III. The Federal government does not borrow dollars, nor does it use the dollars that are deposited into T-security accounts. After being deposited, those dollars remain the property of the T-security account holders and are not touched (including the interest dollars deposited by the government.)
The federal government easily could operate without accepting any T-security dollars. The purposes of T-securities are to provide a safe storage place for unused dollars (which stabilizes the dollar), and to aid the Federal Reserve in controlling interest rates.
IV. The federal deficits and debt are not, nor will they ever be, “unsustainable.” That word, “unsustainable,” is used by Libertarians and other debt hawks, yet never have I seen what it supposedly means. Does “unsustainable” mean the government will be unable to pay its bills? If not, what exactly does it mean?
The “debt ceiling” is an artifact of economic ignorance and should be eliminated. It’s sole purpose is to provide an excuse for outrage by the political party not in power. As such, it is a danger to America if used by traitors in Congress.
V. Federal deficit spending never causes inflation. Every inflation in history has been caused by shortages of key goods and services — most often oil and food — not federal deficits.
Today’s inflation was caused by OPEC and Russia related shortages of oil, and by COVID-related of a litany of products and services.
The old saw, “Inflation is too much money chasing too few goods” is half wrong and half right. It should read, “Inflation is too few goods and services.” Period.
VI. Federal spending does not cause the above-mentioned shortages. Inflations tend to come suddenly. Federal spending does not cause a sudden increase in oil shortages (producers like OPEC, Russia and even America can and do suddenly contract production.)
Similarly, federal spending does not cause people suddenly to eat more food, thereby causeing a food shortage.
Thus, federal deficit spending does not cause inflation.
VII. All hyperinflations — pre-WW2 Germany, Zimbabwe, Argentina, et al. have been caused by shortages, not by government spending. The illusion of “excessive” spending (the infamous currency in a wheelbarrow) is created by an unknowledgable government’s poor response to inflation — printing higher denominations of currency rather than acquiring and distributing the scarce products and services.
VIII. Recessions are caused by reduced federal deficit spending and are cured by increased deficit spending to acquire and distribute the scarce products and services.
IX. Depressions are caused by federal surpluses and “balanced budgets,” and are cured by deficit spending.
X. The federal government can and should fund no-deductible, comprehensive Medicare coverage to every man, woman and child in America.
IX. The federal government can and should fund Social Security benefits for every man, woman, and child in America.
X. The federal government should fund all education from pre-K through post-college-grad, while paying people to attend school. The pre-K through 12 financial burden should be taken from the monetarily non-sovereign cities, counties, and states and paid by the infinitely solvent federal government.
XI. Benefits from the federal government do not dissuade people from working. The vast majority of Americans wish to increase their incomes and/or move up the income/wealth/power scale, so they will work to augment whatever they receive from the federal government.
XII. All benefits should go equally, to everyone, rich or poor. This eliminates the onerous task of monitoring. incomes.
XIII. Gap Psychology (The desire of those near the top of any social scale to distance themselves from those below, and the desire of those below to approach those above) is the prime driver of bigotry, poverty and street crime in America. Curing those social problems will require dealing with Gap Psychology.
XIV. Gold, silver, or any other physical substance never were money, nor have they ever “backed” money nor provided safety for money. They merely are products the federal government periodically decides to purchase or sell at prices stipulated by the whim of the federal government.
If I were writing a book, every paragraph, I – XIV, would warrent a separate chapter and supporting data. Instead, I’ll address your comments and questions, and most importantly, I’ll provide supporting data, as I hope you will.
Hoping to receive many objections, so we all can learn.
Rodger Malcolm Mitchell
Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
The Sole Purpose of Government Is to Improve and Protect the Lives of the People.
7 thoughts on “A Challege: Show me where I’m wrong.”
Everything you said in a previous article about banks and the corrupting affects of the profit motive on the banks AND their federal regulating agencies also applies to all large corporations, yet you consistently defend corporate capitalism. Not that I believe corporations should be nationalized—I agree with about banks—the negative affects of corporate corruption, thievery and capture of our government must also be dealt with. Here,I favor worker ownership of businesses large and small. How do you defend your selective critique of the profit motive when it comes to banks vs. non- banking corporations?
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Max, as a reminder, I said, “The solution to private bank insolvency is for private banking to end. The federal government should own and manage all the banks. There is no public purpose served by allowing the private sector to run banking. The federal government should run the banking industry itself. No other ‘solution’ will work. ”
I do not believe there is no public purpose served by all corporations, nor do I subscribe to socialism. Do you have evidence that all corporations should be government owned (i.e. that socialism is superior to capitalism)? I don’t.
I have no problem with nationalizing the banks, but generally I do not believe in state capitalism or state socialism. My challenge to you is around the striking contradiction apparent in your recognizing the evils of the profit motive when it comes to banks but not in relation to corporations generally. Corporations are enormously damaging to people and society. Nader enumerates the ways clearly. Yours is a logically inconsistent position to maintain. I am curious about how you reconcile that contradiction.
Money is a unique product and banking is unlike any other industry.
For most industries, the profit motive leads to creativity and productivity.
But money itself has not changed nor have the purposes of banking — storage, and lending — changed.
So the profit motive, and the resultant creativity and productivity, only can be put to nefarious uses, not to real improvements.
Uniquely, money is the one product that everyone has, everyone needs, of which everyone desires an ever-increasing amount, and everyone can carry an infinite amount. There is no product so fungible as money.
It is the uniqueness of money that requires that the banking industry be treated uniquely.
Rodger, I thought we were the same age. But you are approximately one year older. Hang in there, old-timer.
Regarding your excellent post today, I have one comment:
“The old saw, “Inflation is too much money chasing too few goods” is half wrong and half right. It should read, “Inflation is too few goods and services.” Period.”
I suggest there is a better statement:
“Inflation is too few goods and services unless it occurs when the economy is operating at full potential.”
John B. Lounsbury Ph.D., CFP(Retired)
Cofounder and Editor, EconCurrents.comhttps://econcurrents.com/
Managing Editor Emeritus, Econintersect.comhttp://www.econintersect.com/index.htm
Highly ranked author, Seeking Alphahttp://seekingalpha.com/author/john-lounsbury
Former Senior Contributor, TheStreet.comhttp://www.thestreet.com/author/1145074/john-lounsbury/all.html
I’m still waiting for somebody to explain the debt ceiling in a way this non-economist can understand and explain to others.
Hint: Something changed in 1974. https://www.newyorker.com/magazine/2011/08/01/smash-the-ceiling
The legislation raising it each time is some of the shortest around: https://www.govinfo.gov/content/pkg/PLAW-117publ73/pdf/PLAW-117publ73.pdf