THE WEEK’s article promulgated the myth that the finances of our Monetarily Sovereigngovernment are identical to the finances of monetarily non-sovereign entities, like states, counties, cities, businesses, you, and me.
We demonstrated the falsity of the article.
Today, THE WEEK repeated the “crime,” by publishing a short summary, which we will now dissect.
October deficit jumped 34 percent over same month last year
The federal deficit rose to $134 billion in October, a 34 percent increase over last October, according to Treasury Department data released Wednesday.
Translation: This October, the federal government pumped 34 percent growth dollars into the economy than it did last year.
The federal deficit rose to $134 billion in October, a 34 percent increase over last October, according to Treasury Department data released Wednesday.
The Treasury Department estimated that the full 2020 fiscal year deficit would be greater than $1 trillion for the first time since 2002.
President Trump promised during his 2016 campaign that he would eliminate the deficit while in office, but the shortfall has jumped due to the GOP tax cuts and several bipartisan spending deals that have increased defense and domestic spending.
Translation: The federal government pumped $134 growth dollars into the economyin October, a 34 percent increase over last October, according to Treasury Department data released Wednesday.
The Treasury Department estimated that the full 2020 fiscal year economic surplus would be greater than $1 trillion for the first time since 2020.
President Trump promised during his 2016 campaign that he would eliminate the economy’s surplus while in office, but the economy’s growth-dollar increase has jumped due to the GOP tax cuts and several bipartisan spending deals that have increased defense and domestic spending.
A bigger deficit and rising overall federal debt can push up interest rates and limit actions leaders can take to avoid a recession. [The Hill]
Translation: A bigger total of investment in T-securities and a rising overall economic surplus has no unintended effects on interest rates, because the Fed has the unlimited ability to control rates). Further, the increase in T-security investment and rising economic surplus do absolutely nothing to limit actions leaders can take to avoid a recession.
In fact, increasing economic surpluses prevent and cure recessions.
Meanwhile, the so-called “deficit” stimulates economic growth and prevents recessions.
Every day, you will read articles similar to those in THE WEEK and The Hill, broadcasting their utter ignorance of Monetary Sovereignty.
Trying to be as kind, gentle and understanding as possible, I can only say the THIS WEEK and The Hill articles are 100% bullsh*t.
This leaves the question: Do these two respected publications know they are publishing bullsh*t? If so, one only could assume they are being bribed by the very rich, via advertising dollars or ownership by the very rich.
The very rich support this sort of bullsh*t, because they want to widen the income/wealth/power Gap between the rich and the rest. It is the Gap that makes them rich (Without the Gap no one would be rich; we all would be the same), and the wider the Gap, the richer they are.
So by conning the public into believing that federal deficits, which put dollars into the pockets of “the rest,” are unaffordable or a burden on the government or a burden on future taxpayers, the rich reduce the political pressure to widen the Gap. And that makes the rich richer.
The other question would be, if THE WEEK and The Hill don’t know they are publishing bullsh*t, is it because they are ignorant and too lazy to uncover the facts?
Because I respect the integrity of both magazines, I sadly have come to the conclusion that their publishing of bullsh*t is due to ignorance fostered by laziness.
I suspect their attitude is: “Everyone else wrings their hands about the so-called ‘debt’ and ‘deficit,’ so why even listen to opposing facts, much less actively seek them. So we’ll just go along with the herd, and wring our hands, too. No thought needed.”
If you happen to know any of the leaders at THE WEEK or The Hill, perhaps you could persuade then to at least try to understand the basics of Monetary Sovereignty.
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:
Sometimes (often), a print medium writes a set of words that imply one thing but really mean something quite different.
Here, for instance, is the exact wording of a short article that appeared in the November 8, 2019 issue of THE WEEK Magazine, followed by a translation into more accurate wording:
National debt nears $1 trillion — THE WEEK
The U.S. federal budget deficit increased 26 percent over the past fiscal year and is expected to top $1 trillion in 2020 the U.S. Treasury reported last week.
That puts the deficit at its highest since 2010, following four straight years of red ink.
The deficit has jumped nearly 50 percent since President Trump took office, largely because of shrinking tax revenues.
Massive tax cuts in 2017 have not paid for themselves, as Republican backers promised, and federal spending is now rising at twice the rate of revenue.
In a decade, the national debt is projected to represent a bigger share of the economy than at any point in U.S. history, except the period immediately following the massive expenditures of World War II.
Someone reading the above article, with its use of such pejorative wording as “debt,” “deficit,” “red ink,” “shrinking tax revenues,” and “not paid for themselves,” might be led to believe that the economy and the federal government are in trouble.
But exactly the reverse is true. The article actually describes the primary reasons why the economy has continued to grow, even under the feckless leadership of Donald J. Trump.
And now for the translation. What follows are exactly the same facts, but corrected to convey the true meaning:
Investments in Treasury Securities nears $1 trillion
The U.S. federal government’s financial contribution to the economy increased 26 percent over the past fiscal year and is expected to top $1 trillion in 2020 the U.S. Treasury reported last week.
That puts the federal government’s net contribution to the private sector at its highest since 2010, following four straight years of sendingincreased growth dollars to the economy.
The economy’s surplus of economic growth dollars has jumped nearly 50 percent since President Trump took office, largely because of shrinking deductions from the private sector.
Massive tax cuts in 2017 have not been matched by massive tax increases, as Republican backers warned, and federal inputs to the economy are now rising at twice the rate of federal deductions from the economy.
In a decade, the total of investments in Treasury Securities is projected to represent a bigger share of the economy than at any point in U.S. history, except the period immediately following the massive expenditures of World War II — the period when the economy grew faster than at any point in U.S. history.
Rather than stressing over federal “debt” and “deficits,” neither of which is any burden whatsoever on the U.S. economy, the U.S. government, or on the U.S. taxpayers, the rewrite demonstrates that increased federal spending and reduced taxes help grow the private sector (i.e the economy) grow.
Now if only we could convince the media to write that way.
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:
“Parents yearned to give their children more opportunity and purpose in life. Workers hoped to earn decent wages. Churchgoers, under the eyes of informants, longed to worship freely according to their own beliefs and conscience. . . . they risked their lives for freedom.”
“On this day in 1989, courageous men and women from both East and West Germany united to tear down a wall that stood as a symbol of oppression and failed socialism for more than a quarter of a century.
“The eyes of the world watched as a generation of East Germans reclaimed their God-given liberties with each successive swing of their hammers.
“Today, we remember those who perished at the hands of totalitarian regimes, and we recommit to ensuring a freer and more just future.
“For four decades, East German propaganda touted the existence of a thriving workers’ paradise on their side of the wall. Yet the dilapidated apartments and depleted grocery stores told a different story.
“Parents yearned to give their children more opportunity and purpose in life.Workers hoped to earn decent wages. Churchgoers, under the eyes of informants, longed to worship freely according to their own beliefs and conscience.
“Under these difficult circumstances, the citizens of East Germany took to heart the words of the influential German poet, Johann Wolfgang von Goethe: ‘He only earns his freedom and his life Who takes them every day by storm.’
“Together, united in a common and just cause, they risked their lives for freedom, and in doing so they were the catalyst that lifted the Iron Curtain that had, a generation before, fallen across Europe.
“The Cold War has long since passed, but tyrannical regimes around the world continue to employ the oppressive tactics of Soviet-style totalitarianism, which have cast a long, dark shadow over history.
“The United States and our allies and partners remain steadfast in our unwavering allegiance to advancing the principles of individual liberty and freedom that have sustained peace and spawned unparalleled prosperity.
“Let the fate of the Berlin Wall be a lesson to oppressive regimes and rulers everywhere: No Iron Curtain can ever contain the iron will of a people resolved to be free.
“On the 30th anniversary of the fall of the Berlin Wall, I congratulate the German people on the tremendous strides that have been made in reuniting their country and in rebuilding the former East Germany.
“We will continue working with Germany, one of our most treasured allies, to ensure that the flames of freedom burn as a beacon of hope and opportunity for the entire world to see.”
Social Security certainly needs “strengthening and improving.”
The amounts being paid are at starvation levels. The people who need it most often receive the least or none at all.
It contains an unnecessary “gambling” element; you must try to guess how long you will live, to determine when you should begin to receive benefits.
The sole purpose of FICA
Most of Social Security’s shortcomings are based on the myth that it is funded by FICA. It is not. FICA funds nothing — not Social Security, not Medicare, nothing.
They do not enter the economy. Federal spending is unrelated to tax collections, which is why there is a $20 trillion federal “debt.”
According to misleading statements by the federal government:
The Social Security Trust Funds are the Old-Age and Survivors Insurance (OASI) and the Disability Insurance (DI) Trust Funds. These funds are accounts managed by the Department of the Treasury.
They serve two purposes: (1) they provide an accounting mechanism for tracking all income to and disbursements from the trust funds, and (2) they hold the accumulated assets.
These accumulated assets provide automatic spending authority to pay benefits. The Social Security Act limits trust fund expendituresto benefits and administrative costs.
The funds do provide an unnecessary accounting mechanism, but they do not hold anything. They aren’t even trust funds.
According to The Motley Fool there are three elements to a trust fund:
The Grantor: The person who establishes a trust fund and contributes property to it.
The Beneficiary: The person or people who will eventually benefit from the assets in the trust fund.
TheTrustee: The person or organization responsible for administering the trust as it was intended.
In the Social Security “trust funds,” the grantor is the federal government, which supposedly populates the funds, but uses your property.
The trustee is the federal government which supposedly manages the assets, except you make the biggest management decisions of all: When to begin taking benefits.
Though Congress legislated the Trust Fund, it is not the grantor, because a grantor puts his own property into a trust, which Congress did not do.
As for the Board of Trustees, who in a true trust would hold the legal title to its property, (the Board not have) title to anything.
Nor do the purported trust “beneficiaries” have property in the fund to which they have an enforceable property right, as beneficiaries of a true trust do.
Board Chairman Altmeyer revealed that Social Security maintains no accounts containing funds earmarked for individuals, and never had.
Its accounts, then, are just record-keeping entities: file folders, not piggy banks.
Assistant Attorney General Robert Jackson stated that under Social Security, “There is no contract created by which any person becomes entitled as a matter of right to sue the United States or to maintain a claim for any particular sum of money. Not only is there no contract implied but it is expressly negatived, because it is provided in the act, section 1104, that it may be repealed, altered, or amended in any of its provisions at any time.”
And the government’s brief for the Supreme Court case Flemming v. Nestor (1960) argued that a current or prospective Social Security beneficiary does not acquire an interest in the Trust Fund—that is, a property right to its assets—and that the belief that Social Security benefits are “fully accrued property rights” is “wholly erroneous.” The Court concurred.
All this confirms the observations by Suffolk University Law School Professor Charles Rounds, a fellow of the American College of Trust and Estate Counsel:
“Despite the term ‘trust,’ the Social Security system contains nothing that remotely resembles the common law trust.
“There is no segregation of assets, no equitable property rights, no private right of enforcement (all characteristics of the common law trust).
“It is merely a system of taxation and appropriation sprinkled with trust terms to hide its true nature.”
Demonstrating the uselessness of FICA, is the “tax holiday”:
The Middle Class Tax Relief and Job Creation Act of 2012 temporarily reduced the amount of Federal Insurance Contributions Act (“FICA”) taxes owed by employees by two percentage points from 6.2% to 4.2%. This reduction expired on December 31, 2012.
The “holiday” resulted in no change in Social Security benefits.
The purpose of the tax holiday was to stimulate economic growth, particularly favoring the lower- and middle-income Americans. Isn’t that something the government should do all the time?
To summarize, so far:
Federal taxes do not fund federal spending, nor do they fund Social Security benefits. Federal spending does not rely on federal taxing.
The federal government, being Monetarily Sovereign, cannot run short of its own sovereign currency, the U.S. dollar. It creates dollars, ad hoc, by paying creditors.
Just as the federal government cannot run short of dollars, no agency of the federal government can run short of dollars, unless Congress wills it.
There are no Social Security trust funds. They are just bookkeeping devices.
The non-existent “trust funds” cannot run short of dollars unless Congress wills it.
Keep these points in mind as you read excerpts from the following article:
The Social Security 2100 Act proposed by (Democrat) Connecticut Representative John Larson is getting closer to being passed by the House of Representatives. If it were to be approved and become law, it would both improve the program’s benefit structure and its financial picture.
The biggest item on the benefit side is that it guarantees a benefit of at least 125 percent of the poverty level for anyone who has worked for at least 30 years.
The logic here is straightforward; we should be able to ensure that anyone who has put in a full lifetime of work will not be in poverty in their retirement years.
An income of “At least 125 percent of the poverty level” does not guarantee anyone will not be in poverty, unless the government also can guarantee no one will live in a higher-cost area like New York, much of California, or many big American cities.
Further, why is it necessary for someone to have “worked for at least 30 years”? Is there a moral code requiring labor for 30 years.
And what about people whose labor is not as a salaried employee? Does their labor not count?
The second big change on the benefit side is that it changes the cost-of-living formula for adjusting benefits by tying it to an index of consumption items purchased by the elderly rather than the overall Consumer Price Index.
The inflation adjustment for Social Security benefits has long been a major issue, with many politicians wanting to change the formula to reduce benefits.
Well, of course, that is what “many politicians” want. It is what the rich, motivated by Gap Psychology, pay them to “want.”
The third feature on benefits is a change in the formula that will increase average benefits for a bit less than $400 a year. This has provoked some opposition since this increase will go to not just lower-income seniors, but also middle-class and relatively affluent seniors.
The average benefit this year is just over $17,600, certainly not enough to maintain a middle-class lifestyle.
All this effort for a $400 per year benefit increase? And if $17,600 is “not enough to maintain a middle-class lifestyle” (It isn’t), would an increase of $400 to $18,000 be enough?
Hardly.
And now we come to the most economically ignorant part:
Rep. Larson proposes to cover this increase, as well as the projected Social Security shortfall, by having a gradual increase in the payroll tax and applying the tax to very high-income workers.
On the latter point, the income subject to the payroll tax is currently capped at just under $133,000. This means that someone earning millions of dollars each year would pay no more in Social Security taxes than someone earning $132,900.
Larson’s bill would make wages over $400,000 subject to the tax.
Note that the tax is on wages. But rich people receive most of their income from non-wage sources: Stocks, bonds, rents, etc.
And, as we have shown, taxes do not fund Social Security benefits. FICA taxes merely remove dollars from the economy, with a disproportionate coming from the pockets of the middle- and lower-income people.
In addition to being unnecessary and a burden on the economy, FICA is, and would remain, the most regressive tax in America.
No wonder the rich love it. FICA widens the Gap between the rich and the rest.
His other change is an increase in the payroll tax of 0.1 percentage point annually, split between workers and employers. This increase would continue for 24 years, for a total increase of 1.2 percentage points on both the worker and the employer.
While this is a middle tax increase, it is much smaller than increases we saw in the decades of the 1950s, 1960s, 1970s, and 1980s. More importantly, if we can sustain decent wage growth, it is a tax that should be easy to bear.
It is an unnecessary tax that is especially “easy to bear” for the rich, for they pay so little of it.
The article continues:
After adjusting for prices, wages have risen 1.5 percent annually over the last five years. If we can continue this pace of wage growth, the Larson bill would take back much less than 10 percent of the pay increase in taxes.
Of course, wage growth may not continue, but then our focus should be on getting decent wage growth, not blocking revenue needed for Social Security.
One wonders what “take back” means. The wage increases come from the private sector, and the taxes go to the federal government. So the government would not be taking “back” anything. It simply would be taking.
The article ends with this bit of nonsense:
In short, this is a well-considered bill that would accomplish good for current and future retirees. Congress should move on it.
No, it is an ill-considered bill, put forth by a Congress that either is ignorant of economics, or has been paid by the rich to widen the Gap between the rich and the rest — or both.
There is nothing “bold” about the plan, and it does nothing to “strengthen” Social Security, which is infinitely strong, based on the federal government’s infinite ability to fund it.
A “bold” plan would be to institute the “Ten Steps to Prosperity” (below), beginning with Step #1, Eliminate FICA.
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:
