Biden determined to pull defeat from the jaws of victory

After the hatred and the bigotry, after the pro-rich and the anti-middle and poor, after the anti-science and pro-lies, after QAnon, the boogaloo bois, and the white supremacist, fascist Proud Boys, now comes the fresh air of the Biden administration, except . . .

. . . except President Biden is determined to squander it.Biden Calls Attack on Capitol an 'Insurrection' - WSJ

After the traitors attacked our Congress and an election that could have sent America into a dictatorship, but by the grace of God prevented the vilest criminal President in American history from continuing his march down America-the-Hate-Monger Road, now we are beginning again to remember American morality and compassion, except . . .

. . . except Biden is aching to blow it.

We still teeter on the fence.

Here are excerpts from an article in today’s Chicago Tribune:

Biden ties tax plan, economy goals
By Alan Rappeport The New York Times

The Biden administration unveiled its plan to overhaul the corporate tax code Wednesday, offering an array of proposals that would require large companies to pay higher taxes to help fund the White House’s economic agenda, including a $2.3 trillion infrastructure package.

The “logic” works like this:

The federal government will pump trillions of dollars into the economy. All those added dollars will fund myriad business programs that benefit America and together will add the jobs improving Americans’ lives.

Now, President Biden says he will increase taxes on business. These taxes will remove dollars from the very businesses that Biden expects to do the work and add the jobs that improve Americans’ lives.

Each dollar of Biden’s proposed taxes will undo each stimulus dollar.

If you asked, “What is the best way to negate the positive effects of the trillion-dollar stimuli?”, the answer would be: “Increase taxes on business.”

There is no hidden magic to all this. Adding dollars to the economy grows the economy. Taking dollars out of the economy shrinks the economy.

Why is that so hard for Biden and the Democrats to understand?

This all would be forgivable if the dollars were coming from the rich, and thus closing the Gap between the very rich and the rest.

But taking dollars from businesses doesn’t do that. It takes away jobs and productive power. Taxing businesses punishes workers. It punishes the very organizations that would accomplish all the changes Biden claims he wants accomplished

The plan, if enacted, would usher in major changes for U.S. companies, which have long embraced quirks in the tax code that allowed them to lower or eliminate their tax liability, often by shifting profits overseas.

Translation: “Quirks” in the tax code have allowed U.S. companies to be more profitable, and presumably, profitable business is a bad thing for America. ???

The plan also includes efforts to help combat climate change, proposing to replace fossil fuel subsidies with tax incentives that promote clean energy production.

The sole economic purpose of federal taxes is not to provide spending dollars to the federal government, but rather to discourage what the government doesn’t like and to encourage what the government likes.

The only questions Biden must answer are:

“Which businesses do you wish to discourage and which do you wish to encourage?”

Then levy your taxes only on businesses you wish to discourage.

Biden doesn’t understand this. He falsely believes the purpose of federal taxes is to “pay for” federal spending. He has no comprehension of Monetary Sovereignty.

So he will charge ahead with tax programs that hamstring the drivers of the American economy: American business. He does not understand that:

Just as federal spending is a stimulus, federal taxing is an anti-stimulus.

Why he doesn’t see that, I cannot say but clearly, he believes that removing dollars from the economy is a good idea for economic growth.

In a Wednesday afternoon speech, President Joe Biden noted that he was open to compromise on how to pay for the infrastructure package, but turned fiery in insisting that inaction is unacceptable, saying that the United States is failing to build, invest and research for the future and that failure to do so amounts to giving up on “leading the world.”

He’s right about “failing to build, invest and research for the future,” but that is not accomplished by taking money from America’s prime instruments for building, investing, and research: American business.

Is it possible that the President of the United States does not understand that the U.S. government pays for everything in the same way: It creates new dollars, ad hoc, every time it pays a supplier.

Ron Paul vs. Ben Bernanke: final battle ends on surprising note -  CSMonitor.com
Former Fed Chairman 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 should be obvious that if tax dollars paid for federal spending, the government could not have spent $25 trillion more dollars than it received in taxes.

“Compromise is inevitable,” Biden said. “We’ll be open to good ideas in good faith negotiations. But here’s what we won’t be open to: We will not be open to doing nothing. Inaction, simply, is not an option.”

Message to President Biden: Compromise is possible only if you are willing to listen and learn, in this instance, learn the facts of Monetary Sovereignty, which briefly are:

  1. The U.S. government uniquely is sovereign over the U.S. dollar. It created the very first dollars from thin air, and it continues to exercise that power, today.
  2. The government has the unlimited ability to create U.S. dollars. It never can run short of dollars.
  3. Federal taxes do not fund federal spending. Even if the government collected $0 in taxes, it could continue spending, forever.
  4. Federal taxes take dollars from the economy, and they are destroyed upon receipt by the U.S. Treasury. Federal tax dollars cease to exist as a part of any money measure. That is why no one can answer the question, “Exactly how much money does the federal government have?” It has infinite money.
  5. The federal government does not borrow. Federal “debt” is not real debt. It is the total of deposits into Treasury Security accounts, which are similar to safe-deposit boxes. The federal government does not touch the dollars in those accounts. Upon maturity, the government merely returns the dollars, plus interest, to the account owners. No tax dollars are involved.

Biden challenged the idea that low tax rates would do more for growth than investing in care workers, roads, bridges, clean water, broadband, school buildings, the power grid, electric vehicles and veterans hospitals.

Low tax rates allow fewer dollars to be taken from the economy. Investing in care workers, bridges, etc. adds dollars to the economy.

Thus, the result is the same, with the only difference being one of targeting. If for instance, the government wants bridges built, it can reduce taxes on bridge-builders and/or it can pay bridge-builders to build.

Former Fed Chair Alan Greenspan says the US is entering a period of slow  economic growth on lowered productivity | Markets Insider
Former Fed Chair Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.

But for Biden to pay for bridges, and then to tax the bridge-builders, is to work at cross purposes with himself.

Biden wants to pour water into a bucket while knocking a hole in the bottom.

“What the president proposed this week is not an infrastructure bill,” Sen. Roger Wicker, R-Miss., said on NBC’s “Meet the Press.

“It’s a huge tax increase, for one thing. And it’s a tax increase on small businesses, on job creators in the United States.”

Some corporations have expressed a willingness to pay more in taxes, but the overall scope of the proposal is likely to draw backlash from the business community, which has benefited for years from loopholes in the tax code and a relaxed approach to enforcement.

The federal government has no use for tax money. The federal government does not spend tax dollars.

Federal taxes do not grow the economy. Federal taxes shrink the economy.

Businesses do have use for the money. Businesses do grow the economy.

It’s that simple.

Then Biden admits that federal taxes are a burden on American business:

The Biden administration’s plan, announced by the Treasury Department, would raise the corporate tax rate to 28% from 21%.

The administration said the increase would bring the U.S. corporate tax rate more closely in line with other advanced economies and reduce inequality.

It would also remain lower than it was before the 2017 Trump tax cuts, when the rate stood at 35%.

But Biden said he was willing to accept a rate below 28% so long as the economic projects he envisions are financed and taxes are not increased on people making less than $400,000.

Translation: “I want to pump trillions into the economy because that will grow the economy.  Then I want to take trillions back out of the economy because . . . well, because I have no idea how a Monetarily Sovereign government pays for things.”

“I’m willing to listen to that,” Biden said. “But we gotta pay for this. We gotta pay for this. There’s many other ways we can do it.

But I am willing to negotiate. I’ve come forward with the best, most rational way, in my view the fairest way, to pay for it, but there are many other ways as well.”

Yes, there is one other way to pay for it, and that is the way a Monetarily Sovereign government pays for everything. It simply creates the needed money.

No sensible person would pump money into the economy, then pull money out of the economy, and still believe he was helping the economy grow.

Why does the American economy grow? Federal spending exceeds federal taxing.

A growing economy requires a growing money supply. This is demonstrated by the basic formula for economic growth:

GDP=Federal Spending + Non-federal Spending + Net Exports.

The president added that America’s position in the world was incumbent on taking aggressive action on modern infrastructure that serves a computerized age. Otherwise, the county would lose out to China in what he believes is a fundamental test of democracy.

Biden is right that America needs to upgrade its infrastructure.

Republican lawmakers counter that higher taxes would make the country less competitive globally.

The Republicans are right that federal taxes, which take dollars out of the economy, are recessive.

State and local taxes are recycled back into the economy, by monetarily non-sovereign state and local governments.

In a related vein, monetarily non-sovereign state and local spending does not add dollars to the economy, but Monetarily Sovereign federal spending does.

That is one important difference between Monetarily Sovereign federal finance vs. monetarily non-sovereign state/local government finance.

“You think China is waiting around to invest in this digital infrastructure or on research and development? I promise you. They are not waiting.

But they’re counting on American democracy, to be too slow, too limited and too divided to keep pace.”

No, they’re counting on American politicians not to understand Monetary Sovereignty, and thus tax their engines of economic growth. 

Biden’s former boss, Barack Obama, made the same mistake. He too believed that federal taxes funded federal spending. The result was a much slower recovery from the Great Recession what was possible.

The plan also tries to crack down on large, profitable companies that pay little or no income taxes yet signal large profits to companies with their “book value.”

To cut down on that disparity, companies would have to pay a minimum tax of 15% on book income, which businesses report to investors and which are often used to judge shareholder and executive payouts.

Associated Press contributed.

Someone please enlighten me. How would taxing businesses help America grow?

Better yet, please enlighten Biden.

Taking money from business and giving it to the government, does not make America richer.

…………………………………………………………………………

Rodger Malcolm Mitchell Monetary SovereigntyTwitter: @rodgermitchellSearch #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:

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

MONETARY SOVEREIGNTY

Debt hawks: “We’ve been wrong every year for the past 80 years. But this time we have it right. Trust us.”

For 80+ years, the debt hawks have told you the federal debt and deficit are a ticking time bomb, a burden on taxpayers, on the economy, and on the government.

By contrast, for the past 25+ years, I have told you the federal deficit actually is too low, is not a burden on anyone, and that deficit spending is necessary to:

  1. Grow the economy
  2. Avoid recessions and depressions
  3. Cure recessions and depressions.

Having learned nothing from historical cause and effect, the debt hawks continue to display massive, mule-headed ignorance about federal financing.

The debt hawks remind me of children who put their hand on a hot stove, are burned, then do it again, and again, and again. Today, they still are being burned, and they still claim, “Next time will be different.”

The following article appeared in that citadel of learning inability, Reason.com.

Does National Debt Still Matter? America’s Greatest Gamble
Fiscal hawks have been sounding the alarm about rising debt levels for decades, but their nightmare scenario of runaway inflation hasn’t come to pass. How do we know if this time is different?
ZACH WEISSMUELLER AND JUSTIN MONTICELLO | 4.5.2021 

In 2010, when former White House Chief of Staff Erskine Bowles and former Sen. Alan Simpson (R–Wyo.) were appointed to co-chair President Obama’s deficit-reduction commission, the Congressional Budget Office (CBO) offered two projections on the future of American debt. One forecast saw debt ballooning, and the second was much more moderate.

Current projections are somewhere in the middle.

Yes, they were correct. The so-called federal “debt” (i.e. the net total of deposits into Treasury Security accounts) has ballooned. But, it didn’t matter then. It doesn’t matter now.

The federal debt, which because of a legal bookkeeping quirk, is derived from federal deficits. These deficits add stimulus dollars to the economy.

That said, there is no direct relationship between the federal deficit and the federal “debt.” Federal deficits in themselves, do not add to the debt, but:

By its own federal law, the federal government has decided not to allow itself to run a negative balance in its checking account. So it accepts deposits into Treasury Securities, and via bookkeeping magic, claims those deposits offset federal deficits.

It’s all unnecessary bookkeeping legerdemain that could end tomorrow with the passage of a new law that would separate deficit totals from Treasury security accounts. 

Even now, the federal government “cheats” its own law by having an agency of the Federal Reserve make deposits into Treasury Security accounts. 

The debt hawks refuse to admit that:

  1. Federal deficits add dollars to the economy (i.e. the private sector), and
  2. A growing economy requires a growing supply of dollars.
  3. Recessions and depressions follow reductions in deficit spending and
  4. Recessions and depressions are cured by increases in deficit spendings.

There is no mystery to this. The data are there for all to see.

U.S. depressions tend to come on the heels of federal surpluses.

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 federal debt is reduced on the books by the simple strategy of running federal surpluses. Sadly, federal surpluses are deficits for the private sector, aka the economy.

And when the economy runs deficits, by definition, we have recessions and depressions.

There is no historical relationship between federal deficit spending (red line) and inflation (blue line). Not even close.

Continuing with the debt-hawk article:

And in the 11 years since, America has also made no meaningful structural reforms to deal with the problem.

Congress has doled out more than $4 trillion in response to the COVID-19 pandemic. The U.S. national debt held by the public is currently almost $22 trillion, or about $67,000 per citizen, surpassing the country’s annual GDP for the first time since World War II.

The only problem has been that the federal deficit has been too low, which is why we have suffered an unnecessary recession, every five years on average.

Federal deficits add stimulus dollars to the economy. Insufficient stimulus dollars lead to recessions. Adding stimulus dollars cures recessions.

That is why the federal government now is pumping trillions of deficit dollars into the economy — and notice, without causing inflation.

On the current path, the CBO predicted in March that the debt would grow to 102 percent of GDP by the end of 2021, to 107 percent by 2031, and 202 percent by 2051.

The notorious Debt/GDP ratio is a meaningless, “apples/oranges” relationship, having zero predictive power.

The debt hawks have been “shocked, shocked, shocked” by the growing Debt/GDP ratio for decades, though they have no idea why.

“Debt” is deposits; GDP is spending. There is no reason why the rising “apples/oranges” ratio should trouble anyone.

It also predicted that by 2051, the federal government will be spending more than a quarter of its annual budget just to pay interest on the principal.

But those estimates came before President Joe Biden signed the $1.9 trillion COVID-19 relief bill, which made the long-term budget outlook even worse.

The above merely means that the federal government, which being Monetarily Sovereign, is not constrained by any budgets, will pump more stimulus dollars into the economy. That, dear friends, is a good thing, not a bad thing.

What is the risk to the U.S. economy? Fiscal hawks have been sounding the alarm about rising debt levels for decades, but their nightmare scenario of runaway inflation hasn’t come to pass. How do we know if this time is different?

Indeed, this time will not be different. It will be the same and the “fiscal hawks” will continue to promulgate their tired and completely wrong message. Why? Because they do not want you to understand Monetary Sovereignty.

In 2010, midway through the first term of President Barack Obama and on the heels of the Great Recession, the national debt was skyrocketing. But it wasn’t until a Democratic president championed an $831 billion federal stimulus that Republicans said they had finally seen enough.

Of course. The rising debt is not a financial threat. It is a phony political weapon, that actually benefits the economy.

The Tea Party rose to prominence, riding a wave of public concern over debt levels that they said would hinder economic progress and stick future generations with the bill.

Republicans claimed to be renewing their commitment to fiscal responsibility post-Bush.

President Obama established the Simpson-Bowles Commission, which concluded that disaster was inevitable unless the federal government cut spending, raised taxes, and reformed entitlements. 

“If the Simpson-Bowles had been adopted, we would have been chronically short of demand in the years that followed its adoption,” Jason Furman, who chaired the Council of Economic Advisers under President Obama, tells Reason.

“The unemployment rate would have been higher, growth would have been lower, and when we went into the COVID crisis we would have gone in with a lower inflation rate, lower interest rates, and thus, even less scope to maneuver than we actually had,” Furman says.

Furman was 100% correct. But as always, having learned nothing from plain facts staring them in the face, the debt-hawks continue to claim that the Emperor is wearing clothes. And the public, being bombarded by false information, believes.

Furman has co-authored a paper with his Harvard colleague and former Treasury Secretary Lawrence Summers questioning past assumptions about the national debt. He says that the debt hawks of the 2010s were wrong to worry that America’s balance sheet endangered the economy.

As the industrialized world racked up debt through the 2010s, inflation and interest rates stayed low—contrary to the warnings of the doomsayers.

So far, so good. Summers, who generally is wrong, suddenly sees the light. Right?

Well, maybe not:

This situation, Furman and Summers say, implies that the U.S. government has much more leeway to borrow money, spend it on government projects, and grow its way out of the debt than fiscal hawks have led us to believe.

Oh, dear. Furman and Summers still believe that a Monetary Sovereign government, having the unlimited ability to create its own sovereign currency, still needs to borrow.

Logical? No, but logic and factsdo not seem to stand in the way of belief.

And as far as “growing its way out of debt,” how does that work? Growth of GDP doesn’t affect the deposits into T-security accounts.

The only thing that reduces so-called federal “debt” is running surpluses, which as you saw earlier, leads to depressions.

“There was nothing about the U.S. debt level going into the COVID crisis that created any constraint on the resources available to fight the crisis,” he says.

“The United States was able to borrow an enormous amount, [and] not just the United States. Japan, which has a higher debt level, was able to borrow an enormous amount.”

Except, the federal government doesn’t borrow.

According to Furman, there is no relationship between a country’s debt and its ability to manage the COVID crisis.

Furman is correct (above), but doesn’t it seem as though he is taking two sided of the same issue?

John Cochrane, an economist at Stanford University’s Hoover Institution, disagrees. “If you wait until the crisis comes, everything is much much worse,” he says.

As a fiscal hawk, Cochrane acknowledges that his doomsaying has been wrong for the past decade, but he says that doesn’t mean he’s wrong now.

Hey, being wrong for the past 80 years doesn’t mean you’re wrong now. But it sure doesn’t mean you’re right.

And you can be sure that when he’s wrong in 2021, he still will have learned nothing. He still will believe that large federal debt is a serious financial problem.

And now come the ridiculous analogy:

“I live in California. We live on earthquake faults.” Cochrane says. “We haven’t had a major earthquake, a magnitude nine, for about a hundred years.” It would be foolish to consider someone a doomsayer for preparing for an earthquake in California, he says, despite the fact that major earthquakes aren’t a common occurrence.

Except, Mr. Cochrane, your financial predictions are based on your interpretation of cause and effect, i.e federal large debt causes a financial crisis.

What is the analogous cause and effect for earthquakes? Oh, there is none?

“That’s the nature of the danger that faces us. It’s not a slow predictable thing,” says Cochrane. “It is the danger of a crisis breaking out. So I’m happy to be wrong for a while, but that doesn’t mean that the earthquake fault is not under us and growing bigger as we speak.”

Economist and New York Times columnist Paul Krugman wrote in a December piece titled “Learn to Stop Worrying and Love Debt” that, “It’s a completely safe prediction that once Joe Biden is sworn in, we will once again hear lots of righteous Republican ranting about the evils of borrowing.”

Right about Republicans, but Biden already is planning to raise taxes, unnecessarily.

Krugman is right. Republicans have been complicit in ballooning the debt going back to the Nixon administration.

But scoring rhetorical points about GOP hypocrisy doesn’t address the question of whether or not America’s debt, typically measured as a ratio of GDP, is cause for concern.

The U.S. reached these heights only once before—at the end of World War II.

“The U.S. had a hundred percent debt-to-GDP ratio because we borrowed a ton of money to save the world from fascism,” Cochrane says. But he argues that today’s situation is different because the U.S. stopped spending after World War II.

What Cochrane fails to reveal is that when the U.S. “stopped spending,” (actually, reduced spending) we promptly had recessions in 1945, and again in 1950. Is that his proof deficit spending is a problem?

The war was over and the U.S. ran steady primary surpluses, actually.

And those federal “surpluses” caused recessions, which surpluses always do.

Federal deficit reduction led to recessions in 1945 and 1949

Whereas right now, we’re talking about at least three to five percent primary deficits forever. Plus stimulus for crisis. Plus Social Security and Medicare,” Cochrane says.

“Deficits forever” means that the federal government will forever pump growth dollars into the economy. And is this a bad thing?

But Furman and Summers say that if the government spends money borrowed at low-interest rates on critical infrastructure, it will more than pay for itself in the long run.

“If it costs you…zero to borrow and something does more than zero, it’s worth doing,” says Furman. “It then needs to do a decent amount more than zero such that when you tax it…it pays itself back.”

Except, the federal government does not borrow, though it costs the federal government zero to spend, because it creates the dollars from thin air, at no cost, whatsoever.

Furman claims that the expenditures that do this are limited, but says that the evidence points to the value of investing in children in areas like preschool and child health care.

Cochrane agrees that government spending on certain projects theoretically can boost growth, but he is skeptical of the government’s ability to spend the money wisely.

Somehow, I feel that I’ve seen this movie:

“Stanley, you’ve been wrong for 80 years in a row. Why should I believe you now?

Laurel and Hardy Movies: 10 Greatest Films Ranked Worst to Best - GoldDerby
 “Well Ollie, have you ever heard of anyone being wrong for 81 years in a row?”

“None of the current stimulus payments are going towards things that raise the economy’s long-run growth path,” says Cochrane.

He claims that most of the money spent on COVID-19 relief won’t help the economy’s long-range prospects—and he’s not sure Biden’s $2.25 trillion for proposed infrastructure spending will, either.

“Our government is not very good right now at investing wisely in things that are good projects,” Cochrane says. “Let me point to the California high-speed train for example. It’s going to connect Fresno to Bakersfield at about 60 miles an hour at a cost of $80 billion and has not one mile of track has been built yet. That’s the kind of infrastructure our government tends to [build].

While it’s true that “investing in children in areas like preschool and child health care” has more value than wasteful spending on things like Cochrane’s and Furman’s salaries, even wasteful federal spending (which costs taxpayers nothing) circulates growth dollars through the economy

The Obama administration promised that 90 percent of the jobs supported by the act would be in the private sector. A year after the law’s implementation, four out of five positions created were government jobs.

Each job the stimulus package created cost taxpayers between $100,000 and $400,000, according to a study by two Dartmouth economists.

No taxpayer sacrificed even one cent for the stimulus package. No tax dollars were used. The federal government created all the dollars, ad hoc, from thin air.

From an economic standpoint, government workers are no less important than private-sector workers. They all are people, earning money and spending it into the economy.

Some economists, including Paul Krugman, said that the 2009 stimulus didn’t work because it was too small.

Krugman is correct that the 2009 stimulus was too small, but he is not correct when he said it didn’t work. It prevented a depression.

More than that, the stimulus cured the “Great Recession” of 2008, and grew the economy significantly after that. The economy would have grown faster yet, had the GOP not objected to Obama’s deficit spending.

Federal deficit spending cured the Great Recession and grew the economy afterward.

Today’s $4.1 trillion in pandemic-related spending is a test of this theory. It is an unprecedented sum.

In current dollars, it is equivalent to what the federal government spent both to land a man on the moon and to build the entire interstate highway system—multiplied by 5. And that doesn’t include the Biden administration’s proposed $2.25 trillion in infrastructure spending.

It is a test of the theory, except we have had repeated tests for 80 years. When this new test again shows how deficit spending creates economic growth, the Cochranes and Furmans of America again will ignore the results or create some excuse for why the economy “really didn’t grow” — or something.

Watch for it.

Summers recently expressed concern that inflation actually could be a problem after the U.S. spends trillions on fiscal stimulus.

“There’s a real possibility that, within the year, we’re going to be dealing with the most serious incipient inflation problem that we have faced in the last 40 years,” Summers said in an interview with Bloomberg in February.

Except, when that “most serious inflation problem in the past 40 years” doesn’t happen, will Summers et al apologize? Nah.

Furman believes that more stimulus money was allocated in 2021 than was warranted. 

Warranted by what?

“I think the number could have been even larger if it had been spread out over time,” says Furman. “So I don’t think it was optimally designed from an economic perspective.

I think it creates some risks but I don’t think that those risks are huge. I think [that] on balance it’s more likely that the higher inflation is good than that the higher inflation is bad.

Again, Furman walks both sides of the fence. Be careful not to slip. Ow!

Furman and Summers’ paper also expresses concerns about debt projections beyond 2030 absent Social Security and Medicare reform as baby boomers retire en masse. Simpson and Bowles recognized that the bill on eldercare would eventually be the item to bust the budget.

“Social Security and Medicare reform” is just another way that the right-wing says, “Gut Social Security and Medicare” so that the populace can fall further and further behind the very rich. It’s called “Gap Psychology,” the desire of the rich to distance themselves from the rest of us.

“All else equal, addressing entitlements sooner is better than addressing entitlements later,” Furman says. “If you want to address it more on benefit reduction, then you probably do want an earlier start, I’m comfortable doing it on the tax side.

Right-wingers love nothing more than cutting benefits for the poor or raising taxes on the poor — anything that widens the Gap between the rich and the rest.

Furman says that unlike advocates of Modern Monetary Theory, which posits that near-unlimited government money creation and spending are possible without dire consequences, he recognizes that there are limits.

Of course, he has no idea what these “limits” might be, especially since he has been wrong every time he claims we are nearing a limit.

“The question is where do you want to stabilize the debt,” says Furman.

“People used to think it should be 30 percent of GDP. Is that what we need to do in order to be safe? I think if you’re asking that question without looking at interest rates, then you’re in danger of a very incomplete answer.”

“Stabilize the debt” means not running any deficits. That has proved to be the road to recessions and depressions. There is not one example in American history where running federal surpluses has led to economic growth.

Cochrane says he’s worried that debt will be a drag on economic growth, but he’s especially concerned that the U.S. could face a scenario similar to the sovereign debt crisis that hit Greece in 2010, which caused its economy to shrink by a quarter, and unemployment to climb to 25 percent.

Cochrane says that if a debt crisis like that of Greece hits the U.S., it would be an unimaginable catastrophe. Greece at least had Germany to bail them out, while there is no one to bail out the U.S.

Here Cochrane demonstrates his ignorance of U.S. federal finance. He uses the monetarily non-sovereign Greek government as an example of what can happen to the Monterarily Sovereign U.S. government.

It’s like claiming that bowling balls should be kept in a refrigerator, so they don’t spoil like peaches.

Greece has no control over its money supply or the value of its money, simply because it has no money. It is just a user of the euro, not the issuer.

Cochrane is clueless about the difference.

“Governments that are undergoing a debt crisis grab money everywhere they can. So watch your wallet,” Cochrane says. “All those things that you count on coming from the government disappear. All of a sudden taxes go up very sharply…Basically, say goodbye to your wealth.”

Yet Cochrane believes it is not too late to avert a potential crisis and that the U.S. can look to other countries as examples to follow. He says that in the 1990s, Sweden “recognized that socialism wasn’t working” and reformed its social welfare system. As a result, its economy grew.

Oops. Suddenly Cochrane begins to talk about Socialism. Apparently, he thinks government spending is Socialism. It isn’t. Socialism is government ownership and control of businesses. Socialism is not stimulus spending.

The ignorance is stunning.

Cochrane says that in the meantime, if there’s no political will to cut spending and slow down borrowing, Treasury Secretary Janet Yellen should “borrow long” by taking a slightly higher interest rate for a longer-term loan.

“Then in the event of trouble, we don’t have to pay more interest on the outstanding debt. And that really diffuses the crisis mechanics,” says Cochrane. “Are you going to be so greedy that you’re not going to pay one and a half percent interest rates in order to get rid of the possibility of a debt crisis for a generation? It seems like cheap insurance to me.”

There is no reason to “cut spending,” and the U.S. does not borrow. You borrow; I borrow; the cities, counties, and states borrow. Cochrane borrows. All are monetarily non-sovereign

The U.S., having the unlimited ability to create its own sovereign dollars, does not borrow.

And as for interest payments: The federal government has the unlimited ability to make interest payments; the more interest it pays, the more stimulus dollars enter the economy.

Is there a point where taking on too much debt is an unacceptable risk?

“The United States isn’t going to default on its debt. We borrow in our own currency. So there’s zero default risk,” says Furman.

He’s correct, except for the part about borrowing. We create our own currency. Where does he think the trillions came from that we supposedly now “borrow”?

And then, Laurel and Hardy finish off with a final flourish of economic ignorance.

“There is definitely inflation risk if you borrow too much and can’t pay it off, but it’s not like you go from one and a half percent inflation to hyperinflation in the blink of an eye.

Wait a second. “Can’t pay it off?” Didn’t he just acknowledge that “The United States isn’t going to default on its debt? Huh?

And how does inflation result from the government not being able to pay off its debt??

Inflation is a general increase in prices that always results from shortages — most often a shortage of food or energy, never the U.S. government being unable to pay its debt.

It’s almost as though Cochrane and Furman think something bad results from debt, but not knowing exactly what that bad thing is, they throw in anything they can think of, relevant or not.

There’s a lot of steps between here and there. I think there is certainly some risk and in the event that that risk materializes we will have to, very quickly, sit down and figure out how to raise taxes or cut spending.

Both of which take dollars from the private sector, an act that always leads to recessions and depressions. Nice going, guys.

“Things always go boom all of a sudden, and so the key to fiscal management is to keep some dry powder around to have some ability to be able to borrow more,” Cochrane says.

What does Cochrane’s  “dry powder” comment mean? Is he saying the U.S. government is unable to accept more deposits into T-security accounts? Or is he saying the U.S. government has arrived at its deficit-spending limit?

Does he even know what he’s saying?

“Imagine if world war breaks out, and we’ve already borrowed the 100 percent debt-to-GDP ratio that we ended World War II with.

Well, once we’re at a 100, 150, 200, our ability to meet that next crisis with borrowing is gone and then that next crisis is a catastrophe.”

Wait! He falsely believes the federal government borrows, and its borrowing causes federal debt. So how the hell would more “borrowing” ever meet a crisis of too much debt?

It’s not only nuts but a perfect demonstration of how weak-minded the entire “science” of economics has become.

These guys, and others of their ilk, have been wrong for 80 years, and still they pontificate about nonsense. And people believe them!

Truly pitiful.
…………………………………………………………………………

Rodger Malcolm Mitchell Monetary SovereigntyTwitter: @rodgermitchellSearch #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

Would you puleeeze tell Jonah Goldberg he doesn’t know WTF he is writing about?

Image result for Jonah Goldberg
Jonah Goldberg

Boston Herald
Goldberg: Culture wars a convenient distraction from spending
Jonah Goldberg

You know what you get for spending trillions of dollars you don’t have? More fights over Dr. Seuss, cancel culture and identity politics.

Puleeeze, someone tell Jonah Goldberg the federal government always spends dollars it doesn’t have, for one simple reason.  To pay for goods and services, the federal government creates brand new dollars, ad hoc.

No one knows how many dollars our Monetarily Sovereign federal government “has” because it is a nonsense concept. It’s like asking how many laws Congress can create, or how many lies Donald Trump “has.”

The answer to all such questions is “infinite.”

By any measure, the federal government has been on a spending spree for decades. Without getting bogged down in the green eyeshade stuff, suffice it to say Uncle Sam has been spending more than he takes in from tax revenues since the 1990s.

Puleeeze tell Jonah Goldberg that Uncle Sam has been spending more than he takes in for much longer than the 1990s.

        Year-by-year federal debt 

This image has an empty alt attribute; its file name is all-debt.png
Source: The Balance.com

In fact, the first dollars the federal government spent in the 1780s were dollars that didn’t exist until the government spent them.

Back in 1929, the federal debt was “only” $17 billion.

Since then, it has risen almost every year, with positive effects, until today it exceeds $28 TRILLION, an astounding 16,470-fold increase. 

In those years, the U.S. federal government has spent more than it “has” — about $26 trillion more. 

So, where is the crisis that Jonah Goldberg seems to anticipate?

The federal debt is nothing more than the total of deposits into T-Security accounts, which rightly can be considered interest-paying safe-deposit boxes.

While federal debt (red) has risen massively, inflation (blue) has risen modestly.

Just as your bank doesn’t access the money you may have stored in your safe-deposit box, the federal government doesn’t access the dollars in your T-security account.

We have documented that since 1940, pundits wrongly have referred to the federal debt as a “ticking time bomb.” Jonah seems to fall into that misbegotten group.

We’ve made up those shortfalls by borrowing money. The national debt ($28 trillion) is now considerably larger than the GDP (about $21 trillion).

Unlike state and local governments, the U.S. federal government does not borrow. Having the unlimited ability to create dollars, why would it?

What Jonah Goldberg erroneously terms “borrowing.” actually is the acceptance of deposits into the above-mentioned T-securities. Like the contents of your safe-deposit box, these deposits are not a burden on anyone, not on the government, not on today’s taxpayers, not on future taxpayers.

To service these accounts the federal government simply returns the dollars deposited in them.

The fact that the total of dollars deposited into T-security accounts is greater than the GDP is meaningless. It’s like saying that the amount deposited in a bank’s safe-deposit boxes is greater than the bank spends. It’s a silly comparison.

Reasonable people can differ on how much value we got for all that credit card debt. But that’s not relevant here.

The government has nothing like “credit card debt.” To pay what it owes, it just creates the dollars from thin air, as it always has. That is how it created, from nothing, the very first laws which created the very first dollars.

And the so-called federal “debt” is not really the federal government’s debt.

The real “debt” is the comparatively small amount the government owes suppliers between the time it orders and receives goods and services vs. the time it pays for them. That “debt” lasts a few weeks.

What’s relevant is that when both parties reach a de facto bipartisan consensus that deficit spending is fine — at least when their party is doing the spending — it makes it difficult to argue about overspending or overborrowing in a credible way.

The federal government, unlike state and local governments, cannot overspend, though it continually underspends which is why we have recessions every five years on average. (Yes, federal underspending leads to recessions, and increased spending is what cures them.)

And, unlike state and local governments, the government does not borrow.

Puleeeze tell Jonah Goldberg.
goldbergcolumn@gmail.com.

…………………………………………………………………………
<!– …………………………………………………………………………

Rodger Malcolm Mitchell Monetary SovereigntyTwitter: @rodgermitchellSearch #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:

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

MONETARY SOVEREIGNTY

 

Hey, wait. Is $2 trillion supposed to be bad??

You always know what you’re going to get from Breitbart: Extreme right-wing red meat for those hypnotized by Donald Trump.Trump's American Carnage - Transcript | FRONTLINE

According to Wikipedia:
Breitbart News Network is an American far-right syndicated news, opinion, and commentary website founded in mid-2007 by American conservative commentator Andrew Breitbart, who conceived it as “the Huffington Post of the right”.

Its journalists are widely considered to be ideologically driven, and some of its content has been called misogynistic, xenophobic, and racist by liberals and many traditional conservatives alike.

The site has published a number of conspiracy theories and intentionally misleading stories.

Breitbart News aligned with the alt-right under the management of former executive chairman Steve Bannon, who declared the website “the platform for the alt-right” in 2016.

In 2016, Breitbart News became a virtual rallying spot for supporters of Donald Trump’s 2016 presidential campaign.

The company’s management, together with former staff member Milo Yiannopoulos, solicited ideas for stories from, and worked to advance and market ideas of, neo-Nazi and white supremacist groups and individuals.

After the election, more than 2,000 organizations removed Breitbart News from ad buys following Internet activism campaigns denouncing the site’s controversial positions.

If you’re misogynistic, xenophobic, and racist, you’ll love Breitbart. If you fall for conspiracy theories and intentionally misleading stories you’ll be an avid reader of Breitbart.

That said, the following Breitbart article makes some interesting points:

Today’s Top Stories From the Breitbart News Desk – Alex Marlow & John Carney
Breitbart News Network

President Biden on Wednesday released the outline of his enormous $2 trillion tax and spending bill. It comes wrapped in the packaging of an infrastructure bill, but only a fraction of the bill is for rebuilding infrastructure as it is commonly understood.

Virtually all large bills passed by Congress contain a variety of laws, some of which do not match the ostensible “main purpose” or title of the bill. This is the norm that Breitbart is trying to spin into a crisis.

It gives politicians nightmares because it forces them to vote for things they don’t like in order to vote for things they do like.

A benign bill to aid widows and orphans may also contain a paragraph supporting wife-beating. The politician can vote against widows and orphans or for wife-beating. Either way will subject him to criticism from across the aisle.

This Hobson’s choice is, however, a fact of politics. It gives the opposition something to carp about.

By some estimates, the corporate tax hikes are three times the size of the 2017 corporate tax cuts. They would return the U.S. to the highest statutory rate in the developed world. The OECD average is 23.59 percent.

Yet corporate America—which has become increasingly vocal on leftwing issues—has barely objected.

The CEO of Delta feels free to attack Georgia’s voter integrity laws but has not spoken up against this enormous tax hike.

Breitbart attempts to create hypocrisy when there is none. The Georgia voter laws have nothing whatsoever to do with federal tax hikes.

The real hypocrisy is that Breitbart even compares them, and in the same sentence.

There are at least three reasons for this silence.

One, our biggest corporations do not pay the statutory rate. That’s for the suckers with small businesses and without armies of lawyers and lobbyists.

Second, corporate executives are rewarded for outperforming other executives. So long as everyone’s tax rate moves in the same direction, there’s not much to object to. In fact, high taxes with lots of loopholes are best for corporate leaders.

Importantly, there is so much spending in this bill that it easily dwarfs whatever paintax hikes might inflict. There is $174 billion to subsidize electric vehicles and the related charging infrastructure, more than enough to buy off the compliance of automakers.

The deeper purpose of this bill is to remake the economy, with the government playing a much larger role in almost every aspect of business and employment.

Giving corporations tax cuts (which is what the GOP did during the Trump administration) is overall financially the same as the federal government buying more goods and services from the private sector.

In either scenario, the entire economy as a whole receives more net income, courtesy of the federal government. The difference lies in which part of the economy receives the money, i.e. the rich or the poor.

Breitbart does not want you to realize that it approves of giving money to the rich while deriding payments that help the poor. 

As the Wall Street Journal explained, the spending program “would reverse Reagan-era tacit understanding that public sector is less efficient than the private in allocating resources.”

Big government, in short, is not just back—it’s going to be everywhere if this bill passes.

The notion that big business is more efficient than big government, is a widespread belief that never has been substantiated. 

From an organizational standpoint, businesses have a profit motive, and governments have an election motive. Businesses function to increase profits and executive compensations, while government agencies function to accomplish the agencies’ goals and politicians’ re-elections.

The profit motive and election motive both compel actions in direct conflict with “efficiency”  and with honesty.

Big businesses and big government are composed of people, each of whom has their own desires, fears, and motives, that may not directly align with the presumed motives of the business or government agency.

There is nothing implicitly wrong with a big nation having a big government. “Big” is not a disadvantage, whether referring to businesses or governments.

In fact, even the term “big” has different definitions, depending on the context.

“Big” can mean number of employees. “Big” can mean amount of income. “Big’ can mean amount of spending.

For instance, in 2020:

Facebook had about 58,000 employees, revenue of $86,billion and net income of $29 billion.

General Motors had about 155,000 employees, revenue of $122 billion, and net income of $6 billion.

Which company is bigger?

When talking about “big government,” are Breitbart and others who lean Libertarian, concerned about the number of employees or the amount of spending?

In truth, they should be concerned about neither.

Presumably, the fear related to “big government” should be about an overpowering, ruthless, lying, dictatorial government, that is concerned only with the welfare of the rich, and cares nothing for the middle-classes and despises the poor (Think Trump). 

But that has nothing to do with the number of government employees or with the amount of government spending. It has to do with the quality of leadership and with the laws they pass.  

“Big government” is a phony bogeyman used by Libertarians and the right-wing attempt to scare voters into accepting less service from the federal government.

In that vein, we bring you this headline from the Libertarian site, REASON:

“Infrastructure projects that are paid for by users, not by federal taxes, can be a big boost to the economy.” by By Adrian Moore, April 1, 2021

Someone should mention to Mr. Moore, that “paid for by users” adds no stimulus money to the economy, and federal taxes, which deplete the private sector’s money supply, pay for nothing.

But infrastructure projects that are paid for by federal spending add stimulus dollars to the economy, and therefore are indeed an economic boost.

This is no reason why $2 trillion may be too much to add to the economy, and it very well may prove to be too little.

Rodger Malcolm Mitchell Monetary SovereigntyTwitter: @rodgermitchellSearch #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