Here comes the IMF to demonstrate its incompetence

The sole purpose of government is to improve and protect the people’s lives.

Why else would we, the people, turn over control of our lives to a government?

Why else would we. the people, give our precious money and limited power to a small group that tells them what they are allowed to do and not allowed to do?

But the International Monetary Fund (IMF) has different purposes, according to their site:

1. Furthering international monetary cooperation for consultation and collaboration on international monetary problems.
2. Facilitating the expansion and balanced growth of international trade, and to contributing thereby to the promotion and maintenance of high levels of employment, real income and productive resources.
3. Promoting orderly exchange arrangements among members, and to avoiding competitive exchange depreciation.
4. The elimination of foreign exchange restrictions which hamper the growth of world trade.
5. Making the resources of the Fund temporarily available to members to correct maladjustments in their balance of payments without measures destructive of prosperity.
6. Shortening the duration and lessening the degree of disequilibrium in the international balances of payments of memberss

Nowhere are improving and protecting the people’s lives mentioned. It’s all about the governments and their money.

That is why the IMF never met an austerity it didn’t love.

It almost always recommends some form of austerity as a cure for what it deems “excessive” government debt. 

Here’s what austerity means:

1. Reducing Expenditure: Governments may cut spending on public services, welfare benefits, and salaries for public sector workers. This can include limiting the terms of unemployment benefits, reducing government employees’ wages, or cutting programs for the poor.

2. Increasing Revenue: This can be achieved by raising taxes, targeting tax fraud and evasion, or privatizing government-owned businesses to raise capital.

3. Economic Impact: Austerity measures act like contractionary fiscal policy, which can slow economic growth. This is because they reduce the amount of money circulating in the economy, which can lead to lower consumer spending and investment.

4. Debt Management: The primary goal of austerity is to reduce the risk of default on government debt. High levels of debt can lead to creditors demanding higher interest rates, making it more expensive for a country to borrow money.

Cut benefits, increase taxes, slow growth, and ensure the government pays its obligations to other governments. That is about as pro-government and “non-people” as you can get. 

It can be said sweetly and nobly as President John Kennedy with his “Ask not what your country can do for you — ask what you can do for your country” speech.

Ah, those lofty words that sound so patriotic and easy on the ear, but are a prescription for an impoverished nation living under a dictatorship.

I prefer to ask politicians, “What will you do for us in return for your salary, lifestyle, and the prestige we have given you?”

The IMF functions as an employee of governments and not of the people.

Based on history and its own statements, the IMF may have a different maxim: The sole purpose of people is to improve and protect their government.

That is true in America. Here, the federal government has infinite money but still demands taxes from the people.

Here, politicians decry federal deficits, though the government can pay any invoice merely by pressing computer keys.

Here government pretends to struggle with funding benefits for the poor, though is has no trouble funding tax breaks for the rich.

“Improving and protecting the people’s lives” seems to be the last thing the IFM and U.S. politicians worry about.

Soaring U.S. debt poses risks to global economy, IMF warns
Story by David J. Lynch

U.S. government budget deficits and an escalating debt load pose “a growing risk” to the global economy, marring an otherwise stellar economic performance, the International Monetary Fund said on Thursday.

Translation: The federal government is putting more dollars into people’s pockets than it is taking out, and as a result, the economy is doing great.

The “growing risk” is that somehow the poor will discover the government’s infinite ability to fund benefits, and demand more and better.

The United States over the next several years faces “a pressing need” to reduce its debt burden, which could require broad-based income tax increases and cuts in popular entitlement programs, the fund said at the conclusion of its annual review of the U.S. economy.

Translation: This “pressing need” often has been described as a “ticking time bomb,” which has been “ticking” for eighty-four years without exploding. 

Our Monetarily Sovereign (MS) government has infinite dollars.

Why then does the IMF want, the government unnecessarily to take more money from the people and cut benefits to those who need them.

The required fiscal adjustment will mean “difficult political decisions over the course of multiple years,” the fund said, warning that an unchecked rise in debt could eventually sap U.S. growth and snowball into global financial distress.

Translation: “Difficult political decisions” are those that screw the people while sounding like the IMF is helping them.

For instance, raising Medicare, Social Security, and unemployment taxes with the false explanation that these taxes are needed to “save” the benefits.

These decisions are difficult, but we politicans, being heroic, are ready to sacrifice your lives to make the rich richer.

The rise in debt stimulated U.S. growth and “snowballed” into the people’s financial success. So, cut the debt.

“Now is a good time,” said Kristalina Georgieva, the fund’s managing director. “The U.S. economy is very strong, and it is in good times where you can do more to prepare yourself for risks in the future.”

Translation: The U.S. economy is very strong because the government has increased spending.

Therefore, now is a good time to weaken it by taking money out of the economy. GDP=Federal and Non-federal Spending + Net Exports.

You can be sure that if the economy was suffering, Ms. Georgieva would offer the same prescription: Austerity. It’s what they always recommend, regardless of the circumstances.

President Biden has ruled out at least one of the fund’s suggested remedies: Higher taxes on people making less than $400,000 a year.

Translation: The IMF wants to take dollars out of the pockets of the poorer people.

Apparently, these people should ask not what the country can do for them but what they can do for the rich people.

But debt aside, the IMF statement praised the U.S. economy for “a remarkable performance” in recent years.

Inflation has largely been brought under control without the sharp increase in unemployment that many economists had expected.

Gross domestic product (GDP) growth remains above expectations and is expected to continue.

Translation: We, the IMF, are completely clueless about how high levels of federal deficit spending can cause these remarkable outcomes, but whatever the reason, we want it stopped.

“The U.S. is the only G-20 economy whose GDP level now exceeds the pre-pandemic level. This is good for the U.S. and it is good for the global economy,” Georgieva told reporters.

Translation: The federal debt (that isn’t federal and isn’t debt — See: National Debt ) is up, and all this good stuff is happening. We of the IMF don’t understand why, and we want it stopped.

Despite the U.S. debt bulge, financial markets remain untroubled. The return that the government must offer to entice investors to purchase 10-year treasury securities hovers around 4.2 percent, below rates that were typical before the Great Recession.

Translation: The IMF is shocked that financial markets are untroubled by sales and profit growth.

The U.S. government doesn’t really don’t care how many treasury securities are purchased.

Those dollars mean nothing to a government that has infinite dollars.

The government sets the interest rate at any level the Fed chooses.

It’s what the Fed does to make people think it is driving the car when, in fact, it is just going along for the ride.

The U.S. economy also is attracting an increasing share of global capital, according to Georgieva.

Before the pandemic, 18 percent of funds invested outside national borders was placed in the United States.

Today, the U.S. share of mobile finance is 33 percent, she said.

Translation: The so-called “federal debt” that bothers the IMF doesn’t seem to bother knowledgeable investors. 

Debts and deficits will be an early challenge for the next president. In early 2025, Congress must lift the statutory debt ceiling or see the United States default on its debt.

Lawmakers also must decide by the end of 2025 to extend Trump’s 2017 tax cuts or allow them to expire, thus increasing taxes on most Americans.

Translation: Debts and deficits will grow the economy, but politicians, economists, the media and IMF will argue that the debt and deficits should be reduced. It’s what the very rich want us to say.

In April, as part of a separate review, IMF officials chided the United States for government deficits that stimulated the economy, saying they effectively made it more difficult for the Federal Reserve to cut interest rates.

Translation: Deficits grew the economy and enriched the private sector, but how is the Fed going to justify its existence if it can’t manipulate interest rates?

The IMF’s slogan should be: The sole purpose of people is to protect and improve their government and the rich people.

On Thursday, citing potential upside risks to inflation, the IMF said the Fed should wait to cut interest rates until “at least late 2024.”

Translation: Otherwise, it will be too easy for those who aren’t rich to buy cars, houses, refrigerators, furniture, and every other product whose price is increased by high interest rates (i.e., all products).

Thursday’s IMF statement is just the latest warning on the U.S. debt picture.

On Tuesday, the Organization for Economic Co-Operation and Development said that adding debt at a time of higher interest rates will limit the ability of the United States to meet other needs, including defense, an aging population, and future economic shocks.

Translation: We have no idea what this means. The U.S. government has proved it has infinite money to meet all needs, including defense, an aging population, and future economic shocks. But, the IMF felt compelled to make a statement, however wrong.

Years of repeated tax cuts have narrowed the government’s revenue base at a time when it faces escalating spending commitments for programs such as Social Security and Medicare, as well as rising interest charges, the OECD said.

Translation: Federal taxes do not fund federal spending. Even if it collected zero taxes, it could continue spending forever.

But then, it couldn’t take dollars from the poor for social benefits or just limit those benefits altogether.

That is not what our real patrons, the rich, want.

As a share of the economy, corporate income tax payments are now less than half what they were in 1967, according to the Congressional Budget Office.

Interest expenses on the national debt over the same period have doubled to 2.4 percent of gross domestic product.

Translation: The government is taking comparatively less money from corporations, and adding more money to the economy in interest. This is working spectacularly, so it must be stopped???

The OECD, a group of more than three dozen advanced economies, called for a “sustained but steady multiyear” budget effort to curb debt.

Only Italy, Greece and Japan have higher gross debt-to-GDP ratios, the OECD said in its annual assessment of the U.S. economy.

Translation: Because the IMF is are clueless about the fundamental differences between a Monetarily Sovereign (MS) government and a monetarily non-sovereign government, it lumps Italy, Greece, and Japan into our comparison.

Italy and Greece, not being MS, must rely on the (EU) European Union to provide them with money. Japan, being MS, doesn’t need any help.

Government debt held by the public, which excludes Treasury securities in the Social Security Trust Fund, is equal to 99 percent of total U.S. output and is expected to hit 122 percent in 2034, according to the CBO.

Translation: The useless Debt/GDP ratio is the phony number of last resort for those who don’t understand MS; therefore, the IMF tries to fool you with it.

And as for that Social Security Trust Fund, it isn’t a trust fund.

Many economists say the government’s growing debt burden must be addressed with a mix of spending cuts and tax increases.

Stabilizing the debt relative to the size of the economy is “a really important goal,” Jared Bernstein, the chairman of the White House Council of Economic Advisers, said at the Brookings Institution this week.

Someone please tell Mr. Bernstein that federal debt is two things, neither of which has any meaning relative to the size of our economy (which is GDP).

The two meanings of federal debt are:

1. The historical net total of federal deficits — the difference between federal spending and federal taxes. Simply add all the spending the government has ever done and subtract all the income the federal government has ever received. That’s the debt.
2. The current total of all outstanding Treasury Securities (T-bills, T-notes, T-bonds, etc.)

With regard to #1, the “debt” would have some meaning if the federal government was monetarily non-sovereign: it doesn’t use a currency it issues. This resembles city, county, and state governments, as well as businesses, you, and me.

It’s relevant because we monetarily non-sovereign types might have difficulty paying all those outstanding bills. The Monetarily Sovereign U.S. government has no such difficulty because it has the infinite ability to create dollars.

Regarding #2, Treasury Securities are accounts wholly owned by the depositors. The government doesn’t owe the contents of those accounts because it never takes ownership of the money. It just holds the dollars for safekeeping.

This resembles bank safe deposit boxes. The contents are not part of bank debt because the bank never owns them.

By contrast, city, county, and state notes and bonds are in accounts owed by the respective cities, counties, and states, which rely on income to pay them off.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell

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

MONETARY SOVEREIGNTY