Here is what Mr. Naroff wrote:
Congress and the president are having a grand time spending taxpayers’ money.
Wrong. State and local governments are monetarily NON-sovereign. They do not have the unlimited ability to create dollars. They use taxapayers’ dollars with which to pay their bills.
The federal government is Monetarily Sovereign. It has the unlimited ability to create dollars. It never can run short. It does not use taxpayer dollars to pay its bills.
Rather than providing the government with spending funds, the 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 reward, and
- To help the Federal Reserve control interest rates by providing a “floor rate” above which all other rates are determined.
The FICA tax has no fiscal purpose. It was created only for psychological purposes, to make it harder for Congress to eliminate.
But sadly, today it merely provides the government (which is controlled by the very rich) with an excuse to cut benefits to the middle- and lower-income people.
Whether it’s the One Big Beautiful spending and tax cuts bill, funding for wars in the Middle East, deporting immigrants, or bailing out farmers, there seems to be unlimited resources.
If he is referring to money, that is correct. The federal government has unlimited money.
Remember when tax-and-spending proposals were met with the question: How will that be paid for? Well, not anymore.
When people asked how the government will pay for things, it was a demonstration of ignorance. The federal government has the infinite ability to pay for anything it wishes.
[Alan Greenspan, Former Federal Reserve Chairman: “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.”]
Unfortunately, for some programs, such as Social Security, the well is going to be dry soon, and neither Congress nor the president seem to be interested in dealing with the looming financial crisis.
The only “financial crisis” is the crisis of deception. Congress and the President are well aware of the federal government’s infinite ability to create dollars.
There always are plenty of dollars for war and I.C.E., and a White House ballroom, and the reflecting pool, and Trump’s vanity arch, and to pay Congress, SCOTUS, and etc., etc., etc.
Social Security is facing insolvency
Social Security, which in some form or another provides funds for over 75 million people, has always been a program that pays for itself. That no longer may be the case.
Wrong. Social Security is facing Congress, not insolvency. It is a federal agency. No federal agency faces insolvency unless Congress wants it to.
And Social Security never has “paid for itself.” It is paid the same way every other federal agency is paid:
- Congress votes for funds
- The Treasury creates the funds
- The agency spends the funds
Even if FICA collections were $0.00, Social Security (and Medicare) could continue paying benefits forever. All Congress needs to do is vote.
Since 2010, the Social Security System has been running deficits, paying out more in benefits than it received in revenues. The so-called Trust Fund that built up for the first 75 years is starting to run dry.
Wrong by implication. In the 86 years since 1940, the federal government has run a deficit in all but three years, which is why the so-called “debt” now exceeds $30 trillion. Still, as a monetarily sovereign nation, we’re no closer to insolvency than we were in 1940—meaning not at all.
It is estimated that the previous surpluses will be depleted some time in 2032. And that forecast was created before the financial impacts of high inflation on expenditures are known.
Social Security payments are inflation-adjusted every year. Given the elevated inflation rates created by the Iran war, the adjustment for 2027 could be 4% or higher. In comparison, this year’s increase was 2.8%.
That could mean the day of reckoning gets pushed even closer.
The “day of reckoning” is when the public realizes that all the talk about “insolvency” is a Big Lie, designed to make the rich even richer by widening the gap in income, wealth, and power between them and everyone else. The bigger the gap, the richer they become.
When the public understands the truth, they will vote the rascals out and begin to receive the benefits they deserve.
A government bailout is doubtful
Though it would be nice to think the federal government can fund anything and everything, high and rising government debt and deficits make that unlikely.
A government bailout is unlikely simply because Congress won’t admit the truth: federal deficits are essential for economic growth. Every time we’ve avoided running a deficit, it’s led to a depression—except for one occasion when we were “lucky” and “only” faced a recession.
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.
The latest estimate for the current fiscal year’s deficit is roughly $2 trillion. That is up from the nearly $1.8 trillion level posted in fiscal year 2025.
The government is pumping more growth dollars into the economy.
It would also be the third largest deficit in history, exceeded only by the COVID-driven fiscal years in 2020 and 2021.
And the current deficit estimates will probably be adjusted upward. Costs of the Iran war are uncertain, and refunds for tariff payments are also unclear.
Heavier burden
Meanwhile, the national debt keeps ballooning and now exceeds an astounding $39 trillion.
To put it in perspective, the ratio of debt-to-GDP will likely hit 125% this year. It first broke the 100% mark in 2013. That is a 25% increase in just 14 years.
While the ever-growing national debt is a clear problem in and of itself, the true burden is the interest on the debt.
Wrong. The national debt is not a problem. It merely is the net total of growth dollars the federal government has pumped into the economy. The federal government has the infinite ability to create those dollars.
We will never pay off the national debt, but paying the interest on the debt is mandatory. A U.S. default would be catastrophic.
In the current fiscal year, interest payments will likely break the $1 trillion level for the first time and will continue to rise.
That will be an additional $1 trillion in growth dollars added to the economy. The federal government will create those dollars by pressing computer keys.
Consequently, the share of government revenues earmarked for interest payments, interest as a percent of total expenditures, and interest costs as a percent of GDP are all at or nearing historically high levels.
Wrong. The government creates dollars for all its spending. Even if total revenues were $0.00, the government could continue spending, forever.
The huge interest payment burdens, coupled with massive tax cuts and spending increases, make it clear that the federal government has limited capacity to pay for interest costs and budgeted programs while also funding Social Security shortfalls.
Absolutely, false. You have just read the BIG LIE in economics. The truth is: The federal government has unlimited capacity to pay for anything.
Everyone hurt by a drop in Social Security payments
According to the nonpartisan (and they really are nonpartisan) Committee for a Responsible Federal Budget, a failure to resolve the looming Social Security Trust Fund crisis will require a 24% — or about a $345 billion — reduction in benefits.
Wrong. The CRFB is a Libertarian shill for the very rich and the Republican party. They have been singing the same (“federal deficits are a disaster”) wrong song for many years, while the facts say:
- Federal deficits are necessary for economic growth.
- The lack of federal deficits leads to recessions
- Federal deficits cure recessions
- Federal surpluses lead to depressions.
Though most benefit reductions will be felt by the nearly 60 million retired Social Security recipients, the resulting economic impacts will hit the economies of all states, as well as well as households at all income levels.
Correct. The reduction in federal spending on benefits will be recessionary.
A high-income couple could experience as much as a $24,000 per year reduction in payments, a middle-income household could see their benefits fall by up to $18,000, and some low-income recipients might suffer $8,000 cuts.
Since a significant proportion of Social Security recipients spend most if not all of their benefits, there is likely to be a substantial reduction in the demand for goods and services.
Nationally, the reduction in benefits amounts to 1.1% of GDP. The resulting cutbacks in spending will multiply through the economy and yield an even greater decline in economic activity.
For businesses in lower income areas, where recipients tend to spend most of their checks, the impact on consumption could be significant.
All of the above is true. Yet, knowing this, Mr. Naroff still wishes to reduce benefits (or increase FICA payments, which has the same effect.) Amazing.
Time is running out
The insolvency threat has been known for decades, but Washington has done nothing but help accelerate the process.
As a consequence, Social Security insolvency could be about six years away.
Social Security insolvency will happen exactly when Congress wants it to happen. This is true of all federal agencies.
It will not be easy to find a solution that pushes insolvency back significantly. It will require taxing some people more, maybe even a lot more, altering the revenue base to include nonwage and salary compensation, and modifying and/or reducing benefits.
Wrong. Increasing taxes and/or reducing benefits are a recessionary “solution.” The real solution is additional federal deficit spending to fund more SS benefits.
But there is a way out. The American public has not been heard from on this subject. Budgets are political documents with economic consequences. The spending structure is supposed to mirror the wants and desires of the public.
The way those preferences are made clear is through the ballot box. At this point, Social Security is not on the ballot.
For Social Security to be saved from insolvency, politicians must put it on the ballot. They will have to make it a campaign issue, and the voters will have to show that it is something they truly care about by electing those candidates.
True, so long as the public knows more about Monetary Sovereignty and the federal government’s unlimited ability to create dollars.
[Ben Bernanke, Former Federal Reserve Chairman: “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.”
Beardsley Ruml, former Chairman of the Federal Reserve Bank of New York . “The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government. All federal taxes must meet the test of public policy and practical effect. The public purpose which is served should never be obscured in a tax program under the mask of raising revenue.”
Federal Reserve Chairman, Jerome Powell: “As a central bank, we have the ability to create money digitally.”: There’s an infinite amount of cash in the Federal Reserve. We will do whatever we need to do to make sure there’s enough cash in the banking system.” 60 Minutes in March 2020
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.”
Paul O’Neill, “I come to you as a managing trustee of Social Security. Today we have no assets in the trust fund. We have promises of the good faith and credit of the United States government that benefits will flow.”
Paul Krugman, Nobel Prize–winning economist: “The U.S. government is not like a household. It literally prints money, and it can’t run out. The government can always finance its spending by creating money.”]
Rodger Malcolm Mitchell
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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 