I’m not sure why, psychologically, it’s so satisfying to see someone hoist with their own petard.

The school bully gets bullied. The “A” student braggart is caught cheating. The terrorist gets blown up by the bomb he was making.

Then there’s the Washington Post.

Don’t get me wrong. The Washington Post is a great, investigative newspaper.

Without the Washington Post, the NY Times, et al, we wouldn’t have learned half of what we know about the crooked Trump administration; And heaven forbid, that incompetent liar still might be President.

But sadly, WP (unintentionally, I assume) helps promulgate the Big Lie in economics, that federal financing is like your personal financing.

For example:

The Washington Post
Rep. Omar’s off-kilter comparison of defense and health-care spending
Glenn Kessler

“If we can afford to give the Pentagon $2B every day, we can afford Medicare-for-all.”

Actually, Omar is correct, in a way, because the federal government can afford to give the Pentagon $2B every day, and also can afford Medicare for All. In fact, being Monetarily Sovereign, the federal government could give double those amounts, even while cutting federal taxes.

But now, the WP introduces the Big Lie in economics:

Anyone taking an introductory macroeconomics course is quickly introduced to the “guns versus butter” model.

It is a framework for discussing how much can be spent on a nation’s military budget vs. social programs.

There’s a finite amount of money available, and so the concept illustrates the tension between defense spending and civilian spending.

No, Mr. Kessler, there is not a “finite amount of money available.” There is, in fact, an infinite amount of money available.

The federal government has the exclusive legal power to create U.S. dollars, infinitely. As former Fed Chairman, Ben Bernanke said,

“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.”

 “. . . as many dollars as it wishes . . .” It couldn’t be clearer, could it? There is not just a finite amount of money available. There’s “as many dollars as the federal government wishes” available.

Omar’s tweet is a perfect distillation of this concept, as she questions why money is being spent on defense when it could instead be spent on a single-payer health-care system, popularly known as Medicare-for-all.

Why “instead.” What is the purpose of that word “instead,” when the government can produce as many dollars as it wishes?

We originally thought Omar was proposing to eliminate spending on “guns” to maximize the “butter.” But her spokesman, Jeremy Slevin, says that is not the case.

“The point, which progressives have made repeatedly, is that we prioritize spending on hundreds of military bases, ground wars and weapons contracts instead of basic needs like health care, housing and nutrition,” he said.

There’s that word “instead” again. The Washington Post believes it. Omar believes it. Slevin believes it. They all believe there only is a finite amount of money to spread around, and that is the Big Lie of economics.

Still, this tweet calls for a review of the numbers. It may be news to Omar, but the U.S. government already spends more on health care than on defense.

So what if the government spends more on health care than on defense. What does spending on one have  to do with spending on the other/

Some things, by their nature, cost more than other things. A diamond ring can cost more than a house, but that doesn’t mean a diamond ring is more important than a house.

Defense outlays in 2021 are expected to be about $733 billion, according to the Congressional Budget Office. Omar’s tweet — $2 billion a day on defense — suggests the annual budget is about $730 billion, so that’s on target.

Assuming no money was spent on defense, that would give you $7.3 trillion in extra cash to spend on a single-payer system for the next 10 years.

No, no, and no. Eliminating money for defense does not give you even one extra dollar to spend on a single-payer system.

The federal government could spend the $2 trillion on defense — or $20 trillion — and still spend as much as it wishes for single-payer health care.

That sounds like a lot of money, but it’s chicken feed compared with what the nation already is projected to spend on health care.

Just in 2028, annual health-care spending is projected to be $6.2 trillion.

Right now, individuals and companies pick up a lot of that tab. A national health-care system would require the federal government to pick up more of the cost.

Wrong, again. If the WP is referring to federal taxes, then none of that money is used to “pick up the tab.”

What “tab” do individuals and companies pick up? If you count the cost of private insurance as part of the tab, that’s a cost individuals pick up.

And if you count the fundamental human and business costs of illness, those are tabs individuals and companies pick up.

But, because federal taxes do not fund federal spending, individuals and companies pay taxes, but those tax dollars do not fund Medicare.

According to the CBO, federal subsidies for health care would increase between $1.5 trillion and $3 trillion a year — far more than any annual savings for eliminating the military. The nation’s national health-care expenditures would increase slightly or decline as much as 10 percent.

(Obviously, one way to increase the size of the pie available for health-care spending is to boost taxes. Nothing in life is ever free, and neither is free health care.)

Once again the Big Lie in economics is presented to you. The WP says nothing is free, but Ben Bernanke says the government can create all the money it wishes “at essentially no cost.”

And Ben is correct.

The WP writer is just quoting the old trope about there not being any such thing as a free lunch, and claiming it’s a fact of economics. But tropes aren’t facts, no matter how clever they may seem.

The Pinocchio Test
Omar appears to have been making a rhetorical point, not a mathematically sound one, so we will leave this unrated.

But in the continuing debate over guns vs. butter, it’s important to remember that butter at the moment has the upper hand.

There needn’t be any debate about guns vs. butter. The federal government easily can pay for both at the touch of a computer key.

I award the Washington Post its own new ranking, the bottomless Pinocchio, for this article and all the others like it.

The “Bottomless Pinocchio, the Washington Post’s new ranking for a false claim repeated over and over, again.

…………………………………………………………………………

Rodger Malcolm Mitchell

[ Monetary Sovereignty, Twitter: @rodgermitchell, Search: #monetarysovereignty Facebook: Rodger Malcolm Mitchell ]

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE. The most important problems in economics involve:

• Monetary Sovereignty describes money creation and destruction.
• Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps: Ten Steps To Prosperity:

1. Eliminate FICA
2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
3. Social Security for all
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually.
8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

Watch at our nation is attacked.

McCarthy rejects proposed commission to investigate Jan 6. Capitol assault

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE. The most important problems in economics involve:

• Monetary Sovereignty describes money creation and destruction.
• Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps: Ten Steps To Prosperity:

1. Eliminate FICA
2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
3. Social Security for all
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually.
8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

 

Rodger Malcolm Mitchell [ Monetary Sovereignty, Twitter: @rodgermitchell, Search: #monetarysovereignty Facebook: Rodger Malcolm Mitchell ]

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE. The most important problems in economics involve:

• Monetary Sovereignty describes money creation and destruction.
• Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps: Ten Steps To Prosperity:

1. Eliminate FICA
2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
3. Social Security for all
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually.
8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

 

Monetary Sovereignty is the foundation of modern economics — but babies?

Here is a short article that appeared in the May 21, 2021 issue of THE WEEK Magazine:

America’s declining birth rate
The Week (US)21 May 2021
Noah Smith

A “baby bust” points to “a grim economic future” for America, said Noah Smith. U.S. births fell 4 percent in 2020 to their lowest rate since World War II, the federal government reported last week.

“This puts an increasing financial and physical burden on the young,” who must pay the soaring costs of Social Security, Medicare, and caring for their own aging family members.

Contrary to what the media, the politicians, and heaven help us, even the economists have been bribed to claim, there will be no financial burden (i.e. tax burden) on future taxpayers.

The reason: Unlike state and local taxpayers, the federal taxpayers do not fund anything.

The U.S. government is Monetarily Sovereign, meaning it has the unlimited ability to create its own sovereign currency, the U.S. dollar, at the touch of a computer key.

The federal government can pay for anything simply by creating dollars, and never can run short of dollars. Even if all federal tax collections fell to $0, the federal government could continue spending forever.

Think of all those trillions the federal government now is spending for COVID relief. No new taxes were levied. In fact, the most recent tax law changed involved tax cuts.

So, if federal taxes don’t pay for anything, why are they collected? Two reasons:

1. To tax what Congress and the President wish to discourage, and give tax breaks to what they wish to encourage, and
2. To fool you into believing that federal money is scarce so you won’t ask for federal benefits.

“In 2010, the number of working-age adults per older adult was 4.8; by 2060, it’s projected to be only half that”—meaning that the tax burden on workers will need to double.

The only “tax burden on workers” is the legal requirement to pay taxes, and those tax dollars are destroyed upon receipt by the Treasury.

To pay for Social Security and Medicare, the federal government uses the same system it uses to pay for Congress and the Supreme Court, the same system it uses to pay for the White House and the FBI, the same system it uses to pay for the military — it presses computer keys and creates dollars ad hoc.

Being Monetarily Sovereign, the federal government never can run short of dollars, never needs to ask anyone for dollars, and never borrows dollars.

The graying of the population will also lead to lower productivity and economic stagnation.

We assume they mean that old people are less productive than young people. While that is a questionable proposition, it is irrelevant.

It advent of smart machines makes each worker of any age far more productive than the previous working populations. There will be no stagnation so long as the federal government continues to pump dollars into the economy.

And it will put the U.S. at a marked disadvantage in our competition with China, which has four times our population. Increased immigration would help, but it’s not enough to keep our population growing.

All the above means is that China has four times as many people to support, a vast number of whom are impoverished by U.S. standards.

“Americans need to have more children,” and surveys show they want to—but are held back by the high costs of housing, education, and child care.

This would not even be an issue for debate, if the federal government would begin to institute the Ten Steps to Prosperity (below).

America has a choice to make: to be a graying nation in decline or a great nation, “confident enough in ourselves to believe that there should be more of us.”

It’s not clear what Noah Smith is suggesting. More sex? Fewer condoms?

The “solution” to the nonproblem of a declining population is simply to stop pretending that federal finances are like state/local government finances.

Yes, future taxpayers will have serious problems. Global warming is one. The proliferation of guns and other killing machines is another. Environmental poisoning and pollution are yet another.

But lack of workers is not one of those problems. In fact, smart automation making human labor obsolete is a far more likely scenario than the low birthrate in America.

…………………………………………………………………………

Rodger Malcolm Mitchell [ Monetary Sovereignty, Twitter: @rodgermitchell, Search: #monetarysovereignty Facebook: Rodger Malcolm Mitchell ]

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE. The most important problems in economics involve:

• Monetary Sovereignty describes money creation and destruction.
• Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps: Ten Steps To Prosperity:

1. Eliminate FICA
2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
3. Social Security for all
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually.
8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY