Can something be too simple to be believed?

“It can’t be that easy.”

When I was explaining to a friend, the basics of Monetary Sovereignty, she said, “It can’t be that easy.” She really meant that if it were so simple, logical and rational, why don’t our thought leaders — the economists, politicians, and media — seem to understand it?

I’ll discuss that question, but first here is what I had originally told her.

A. The U.S. federal government invented the U.S. dollar, which it created from thin air. It still has the infinite ability to create dollars. It never can run short of dollars.

So, the federal government never, never, never borrows dollars. It creates all it needs by pressing computer keys. Those things called Treasury bills, notes, and bonds are not borrowing.

They are deposits in accounts owned by depositors. The government pays them off simply by transferring the dollars to the depositors ‘private bank accounts. This is akin to you transferring dollars from your savings account to your checking account.

The purpose of T-accounts is to provide a safer place than private banks, to store unused dollars — not to provide the federal government with spending money. If you were a foreign nation, and had millions or billions of unused dollars for international trading, would you feel safe storing them all in private banks?

Even if the federal government stopped collecting tax dollars, it still could continue spending forever. This is known as “Monetary Sovereignty.”

The federal debt isn’t a burden on the federal government or taxpayers—actually, it’s quite the opposite. It represents the net amount of growth dollars the government has injected into the economy. The more money the federal government puts in, the more the economy grows.

State and local governments don’t have this ability. Like businesses and individuals, they’re monetarily non-sovereign and need income before they can spend.

The federal government’s finances are unique, unlike those of local governments, businesses, or households—it creates its own income by tapping computer keys.

B. The purpose of federal taxes is not to provide spending money to a government that creates all its spending money. It’s to control the economy by taxing what it wants to discourage and by giving tax breaks to what it wants to reward.

A second purpose of federal taxes is to assure demand for the U.S. dollar by requiring that taxes be paid in dollars.

C. When something is scarce and demanded, its price rises. When the price of many things rises, that is called “inflation.”

Scarcity is caused by excessive demand or by insufficient supply. Thus, to cure inflation, one must reduce demand for, and/or increase the supply of, the most critical items.

D. Cutting demand requires pulling money out of the economy, which can be done by raising taxes, reduced spending on things like Medicare, Social Security, or making it harder for businesses to grow by increasing borrowing costs. All of these are recessionary.

E. Increasing supply can be accomplished via federal financial support for businesses and industries that add to the supply of scarce goods and services. Because scarcities of energy and/or food are the primary causes of inflation, increasing the supply of oil and food cures inflation.

This can be accomplished via federal financial support for energy production and food production. This involves pumping dollars into the economy, which grows the overall economy.

F. For the above reasons, every depression and most recessions have resulted from reduced federal deficit spending, and these recessions and depressions have been cured by increased deficit spending.

None of this seems difficult to understand, yet our thought leaders, the economists, politicians. and the media, seem oblivious to those facts.

They keep complaining that the so called “federal debt” is bigger than the economy, which is a meaningless comparison. The economy is supported by the “federal debt.” The bigger the “debt” the more growth dollars are being pumped into the economy.

And inflations are not cured by causing recessions. Has no one heard of “stagflation,” the simultaneous existence of recession and inflation?

At this point, many smart people might wonder, “How could our thought leaders fail to grasp such simple ideas?” There are really only two possibilities:

One, which I find unlikely, is they’re so clueless that even the most basic concepts escape them; the other, which I believe, is that they’re paid not to understand.

The wealthy use their money to shape American politics. They:

fund economists through university endowments and offer them cushy think tank jobs,

influence the media with advertising dollars or outright ownership, and

sway politicians with campaign contributions and the lure of lucrative private-sector roles after their government careers.

Now really, is this hard to understand?

1. The federal government has infinite money. The economy does not.
2.  To grow, the economy requires growth dollars. The government has an unlimited supply to give.
3. When the government pumps more growth dollars into the economy than it takes out, this misleadingly is called “deficits” and the total of deficits is misleadingly called “debt.”
4. Reducing deficits and debt leads to recessions. Increasing deficits and debt leads to economic growth
5. You are being lied to by the thought leaders, the economists, the politicians and the media, who are paid by the rich to tell you that federal benefits like Medicare, Medicaid, Social Security, etc. are “unaffordable” and “unsustainable.”
6. The purpose of the lies is to widen the income/wealth/power Gap between the rich and the rest. Widening the Gap makes them richer.

Now really, is that too difficult to understand? Ask your political representative. Cut and paste this article and send it to your person in Washington. See what their response is.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

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https://www.academia.edu/

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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

MONETARY SOVEREIGNTY