Should we eliminate the U.S. Treasury to narrow the Gap between the rich and the rest??

According to its website:

“The Department of the Treasury oversees the Bureau of Engraving and Printing and the U.S. Mint.

“These two agencies are responsible for printing all paper currency and minting coins, while the treasury executes currency circulation in the domestic fiscal system.

“The USDT collects all federal taxes; manages U.S. government debt instruments; licenses and supervises banks and thrift institutions; and advises the legislative and executive branches on fiscal policy matters.

In these days of computerized records, credit cards, smartphones, and payment apps, do we need paper currency and coins? 

I purchased online from Amazon yesterday, using only my laptop to pay. I bought milk and bread from the local Publix and paid with my credit card. And I went to the movie theater, having reserved and paid for my seat with my smartphone.

At dinner, I paid my restaurant bill with a credit card and paid for parking with my phone.

I seldom touch dollar bills and haven’t had a coin in my pocket for years.

I understand that not everyone operates that way. The poor, especially, are often limited, and I don’t suggest we eliminate paper and metal immediately, but it’s coming.

More importantly, the federal government seldom uses paper or metal to pay its bills. It pays virtually everything by sending instructions (in the form of wires or checks) to creditors’ banks, telling the banks to increase the balance in the creditors’ checking accounts.

Where does the government get the money it uses to pay for things?

One of the most essential functions of the Treasury Department is to “collect taxes.” If you believe — like most people — that is how the government gets the money to pay for things, you would be wrong. 

State and local governments get their funding from taxes, but the federal government does not. In fact, the federal government destroys all the tax dollars sent to it. It pays for everything by creating new dollars, ad hoc, i.e. by sending instructions.

If you are having trouble wrapping your head around the notion that your federal tax dollars are destroyed upon receipt, let me give you an example from the game of MONOPOLY. Perhaps that will help you visualize the process.

In the game, the “Bank” is a corollary to the U.S. Treasury because it distributes money by paying for things and by collecting taxes. Both the “Bank” and the U.S. government are Monetarily Sovereign.

That means the MONOPOLY Bank and the U.S. government have the infinite ability to create their sovereign currency.

According to the rules of MONOPOLY,

“The Bank never ‘goes broke.’ If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper.” 

Similarly, the U.S. Treasury never goes broke. As Federal Reserve Chairmen have stated:

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it has because we can always print the money to do that.”

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. It’s not tax money… We simply use the computer to mark up the size of the account.“

Imagine you and three friends — Tom, Mary, and Jim — decide to play MONOPOLY, but when you open the game’s box, you find no paper money. What do you do?

You could make a table like this:

Since the Bank has no paper dollars to distribute, you simply create dollars by marking up the size of each account, like this.

Notice that because the bank has no money, it has no column. It doesn’t need one because it creates dollars by marking up the size of player’s accounts.

In MONOPOLY, if a player lands on an income tax or luxury tax space, they must pay the corresponding amount — let’s say, $100 — to the bank.  But the bank has no column. 

If you are required to pay MONOPOLY taxes, here is what your scoresheet would look like:

You now have only $4900. But what happened to the $100 you paid for taxes? They simply disappeared.

When you pay MONOPOLY taxes or federal taxes, your MONOPOLY dollars and your federal tax dollars are destroyed. They no longer exist.

(Your tax dollars are paid from the M2 money supply measure. When they reach the Treasury, they no longer are part of any money supply measure. State and local tax dollars remain in the private sector, because they are stored in banks. They are not destroyed.)

When the MONOPOLY Bank wishes to pay for something, it creates new dollars, which is precisely what the U.S. Treasury does.

The MONOPOLY Bank collects tax dollars not because it needs or uses them but because widening the money Gap between the rich and the poor is the point of the game. Ultimately, only the richest survive.

The U.S. Treasury collects tax dollars not because it needs or uses them but:

1. To control the economy by taxing what the government wishes to discourage and giving tax breaks to what the government wishes to reward,

2. To assure demand for the U.S. dollar by requiring taxes to be paid in dollars.

And there is one more purpose, seldom acknowledged but similar to the MONOPOLY purpose:

3. To widen the income/wealth/power Gap between the rich and the rest of us.

The rich who run America continually wish to be richer. 

Being richer requires widening the income/wealth/power Gap below and narrowing the Gap above. To accomplish this, the rich need the willing compliance of the populace. 

The people must be made to believe that federal taxes are necessary to operate the federal government. Without that false belief, the people would refuse to pay taxes.

Suppose you and all Americans understood that your federal taxes do not pay for anything and are destroyed upon receipt. How willing would you be to keep unnecessarily sending the government those dollars you work so hard for? 

The three primary sources of your financial information — politicians, media, and economists — must go along with the scam.

The rich control politicians by bribing them with campaign contributions and promises of lucrative employment later.

The rich control and bribe the media with advertising dollars and outright ownership.

And the rich control university economists with donations to universities and promises of lucrative employment at think tanks.

So, the politicians create favorable tax laws for the rich while the media and the university economists promulgate the myth that federal taxes fund federal spending. It’s the Big Lie in economics, which is:

“If you want benefits from the federal government, you have to pay for them. Otherwise, Medicare will go bankrupt, and Social Security will go bankrupt, and all poverty aids will end.”

It’s all a lie, a Big Lie. The federal government simply destroys the tax dollars you send, just as the MONOPOLY Bank destroys all the tax dollars it receives.

The federal government can create endless dollars by sending instructions to banks. Nothing is “unaffordable” or “unsustainable.”

On average, the rich pay a lower percentage of their income in taxes than you do.

Though supposedly, the rich are in higher tax brackets than you, that is a subterfuge. If you are the typical salaried worker, all your income is taxed. Additionally, your first $168,600 is subject to the FICA tax. There also is a 0.9% surtax on top of the standard 1.45% Medicare tax for those who earn over $200,000 (single filers) or $250,000 (joint filers).

While your salaries are taxed at a high rate, the rich get most of their income from tax-free or reduced tax sources. Long-term capital gains, tax-free municipal bonds, company-paid expenses, and numerous tax loopholes allow the rich to keep a much higher percentage of their much higher incomes than you can.

That is how Donald Trump paid less federal tax in the past 10 years than you did.

The rich make more and save a much higher percentage, and they pass along far more to their heirs than you do. So, over the generations, as the tax laws continually chip away at what you earn, those same tax laws help the rich grow in wealth, power, and influence.

The Gap widens.

SUMMARY

The U.S. Treasury prints paper dollars and mints coins; it collects taxes and manages debt instruments. Over time, paper dollars and coins will disappear.

When the populace begins to understand the “Big Lie” (the lie that federal tax dollars pay for federal spending) Federal taxes will have only restricted use (i.e., “sin” taxes), as will debt instruments (the purpose of which is to provide a safe place to store unused dollars.) 

The whole operation will be handled out of a closet, and all Americans will receive comprehensive Medicare and Social Security, the poor will be supported, and no American child will go hungry or be homeless.

Most importantly, you won’t allow our tax laws to favor the rich, so the Income/wealth/power Gap between the rich and the rest will narrow. Because of your knowledge about the Big Lie, you will have more money and power.

You never again will hear the pitiful and misleading bleating of the rich that programs aiding people are “unsustainable” and “unaffordable,” or the other lie the rich tell you, that helping people is “socialism.”

 

Rodger Malcolm Mitchell
Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

MONETARY SOVEREIGNTY