MMT’s “Jobs Guarantee”: The final nail in the coffin of this naive, foolish program

In previous posts (here, here, here, and others) I have given you many reasons why Modern Monetary Theory’s (MMT) “Jobs Guarantee” is naive foolishness.

For instance:

1. Jobs are not hard to find. Millions of jobs are available. It’s the right jobs that are hard to find. (Right skills, right pay, right location, right benefits, right working environment, right opportunities for advancement, right learning potential)

Image result for overburdened bureaucrat — “And **I’m** supposed to find **them** good jobs?

2. The federal government bureaucrats are ill-prepared to:

a. Find or create jobs,
b. interview,
c. hire,
d. supervise,
e. promote and demote,
f. switch jobs, and
g. fire the millions of people who should be fired.
h. while determining pay scales

for every kind of job in every city, suburb, and hamlet all over America.

3. The federal government is ill-prepared to provide healthcare, maternity leave, vacation days, IRAs and myriad other benefits appropriate to different employees all over the nation.

4. If people are hired only because they need jobs, rather than because the jobs need people, nothing prevents those jobs from being make-work.

Image result for workers standing around — *“Good news! We just found you an interesting job. Stand around and look interested.”*

And now comes proof, if more proof is needed, of the federal government’s incompetence in the whole “jobs” area:

The $1.7 Billion Federal Job Training Program Is a Massive Failure
The program’s goals might be admirable, but the reality is a whole different story.
Joe Setyon, Aug. 28, 2018

The Department of Labor’s Job Corps program is supposed to teach disadvantaged young people the skills they need to get good jobs. But the program, which costs taxpayers about $1.7 billion per year, is apparently a failure.

O.K., it doesn’t cost taxpayers one cent.

A Monetarily Sovereign government has the unlimited ability to create its own sovereign currency, which it does by the simple act of paying creditors.

Federal taxes do not fund federal spending. (See link.)

But even that isn’t the most important point.

About 50,000 students enroll in the program each year, about two-thirds of whom are high school dropouts, according to The New York Times. Results aside, the program’s goals are admirable. As The Wall Street Journal reported in April:

Launched in 1964, Job Corps works with 16- to 24-year-olds who grew up homeless or poor, passed through foster care, or suffered other hardships.

The goal is to equip these young adults with skills for careers in advanced manufacturing, the building trades, health care, information technology, business and more.

Unfortunately, that’s not what’s happening. A March audit from the Labor Department’s Office of Inspector General sampled 324 Job Corps participants who were five years removed from graduation.

The median annual income of 231 of those participants (wage records weren’t available for the rest), was just $12,486 as of December 2016.

The audit acknowledged that “Job Corps could not demonstrate beneficial job training outcomes.”

And that is the point. The federal government bureaucrats were supposed to do what high school “Workplace Preparation” courses accomplish — and predictably, they failed.

(Workplace preparation courses prepare students to move directly into the workplace after high school or to be admitted into select apprenticeship programs or other training programs in the community.

Courses focus on employment skills and on practical workplace applications of the subject content.

Many workplace preparation courses involve cooperative education and work experience placements, which allow students to get practical experience in a workplace.)

That’s not all. Job Corps spends about $50 million a year on “transition services” to help graduates find jobs.

But in 94 percent of the cases sampled, “Job Corps contractors could not demonstrate they had assisted participants in finding jobs.”

A 94% failure rate: These are the same federal bureaucrats who are supposed to find jobs for millions of people all over the country — millions of people who don’t have the “benefit” of federal jobs training??

A terrible waste of time for the job-seekers.

One former North Texas teacher, who quit in 2015, says the entire program is failing. “Job Corps doesn’t work,” the teacher, Teresa Sanders, tells the Times. “The adults are making money, the politicians are getting photo ops.

But we are all failing the students.“

No surprise there. It’s what I’ve preached for years.

Labor Secretary Alexander Acosta admits the program “requires fundamental reform.”

“It is not enough to make changes at the margins,” he tells the Times. “We need large-scale changes.”

If a small program fails, the government’s approach is to make the program biggere, so that the failure can be bigger.

Despite its shortcomings, Jobs Corps is popular among both Republicans and Democrats in Congress (to Democrats, it’s a government program aimed at reducing poverty; to Republicans, it incentivizes hard work), so there’s only so much Acosta can do. “

Does that sound familiar, MMT? Reducing poverty and incentivizing work are two of MMT’s goals (i.e. excuses) for its Jobs Guarantee.

But why do we need to incentivize work? Why has sweat become a moral imperative?

You have a program with a rich and complicated history that’s one of the biggest leftovers from the war on poverty, and it is enormously complicated to make any significant changes,” Eric M. Seleznow, a former deputy assistant secretary for the Labor Department’s Employment and Training Administration during the Obama administration, tells the Times.

He notes that “competing interests from Congress, program operators, advocates, as well as complex legal requirements present a lot of challenges.”

If Job Corps is salvageable, then it can do some real good. But if real reforms aren’t going to happen, Congress should shut it down.

So let this be the final nail in the coffin of the “Jobs Guarantee, and instead, let us begin to focus on the Ten Steps to Prosperity (below).

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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 The Ten Steps To Prosperity can 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. Provide a monthly economic bonus to every man, woman and child in America (similar to 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 you.

MONETARY SOVEREIGNTY

Do you believe the single worst lie in the entire spectrum of government/media lies?

Here is a sample of the single worst lie in the entire spectrum of government/media lies:

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Gifts to the U.S. Government

The Fiscal Service accepts gifts, bequests, proceeds and unconditional donations to the United States, both for general government purposes and for the specific purpose of paying down or reducing the public debt. For more information, see:

How to make a gift to reduce the public debt:

General Gifts to the United States Government

How do I make a contribution to the U.S. government?

Citizens who wish to make a general donation to the U.S. government may send contributions to a specific account called “Gifts to the United States.”

This account was established in 1843 to accept gifts, such as bequests, from individuals wishing to express their patriotism to the United States. Money deposited into this account is for general use by the federal government and can be available for budget needs.
These contributions are considered an unconditional gift to the government. Financial gifts can be made by check or money order payable to the United States Treasury and mailed to the address below.

Gifts to the United States
U.S. Department of the Treasury
Funds Management Branch
P.O. Box 1328
Parkersburg, WV 26106-1328Any tax-related questions regarding these contributions should be directed to the Internal Revenue Service at (800) 829-1040.

……………………………………………………………………………………………………………………………………………………..

Yes, there’s nothing like throwing your money into a bonfire, so you can “express your patriotism to the United States,” because that is exactly what the above federal government page tells you to do.

Sending your dollars to a government that produces dollars at will, surely is one of the least intelligent things a person can do, but hey, the government encourages it, so it must be right. Right?

No, it simply is unintelligent. Not only does our Monetarily Sovereign federal government have no need for your dollars, but it actually destroys your dollars upon receipt.

(See: Does the U.S. Treasury really destroy your tax dollars? The Monopoly® answer.)

Every single dollar you send to the U.S. Treasury not only disappears from your pocket, but it also disappears from the total supply of money in America.

Those dollars effectively are destroyed. To visualize why, answer these two questions:

If you owned a limitless dollar-creating machine, how many dollars would you have?
If, while you owned that machine, I sent you $1,000, how many dollars would you now have?

The answer to both questions is the same: You would have an infinite number of dollars. My sending you $1,000 would have zero effect on the number of dollars you have. The $1,000 would disappear into infinity.

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Image result for bernanke and greenspan — ***Can you imagine? People think we need their tax dollars!***

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.”

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills.

The federal government, being Monetarily Sovereign, owns that limitless dollar-creating machine. The government “has” infinite dollars, because it creates the dollars with which it pays all its financial obligations.

The dollars you send to the federal government do not add even one penny to the dollars the government has. Those dollars are destroyed.

And that includes your federal tax dollars.

Even if the federal government received zero tax dollars, zero interest dollars, and zero dollars from any other source, it never would run short of its own sovereign currency, the U.S. dollar.

The FICA dollars taken from your paycheck? Destroyed. The income tax dollars you send to the Treasury? Destroyed. Federal estate taxes? Destroyed. Federal excise taxes? Destroyed. All federal tax dollars are destroyed.

(This does not pertain to state and local government taxes. These governments are monetarily non-sovereign. They do not own unlimited money-creation machines. They do use your tax dollars)

I was reminded of all of this when came across the following article in the August 31, 2018, THE WEEK online paper:

How to pay for Medicare-for-all By Ryan Cooper

Medicare-for-all sounds great, but how do we pay for it?

In a normal country, the answer would be simple — just raise taxes. But in the United States, health care is so outlandishly expensive that the simple solution is anything but.

Where Austria or Finland would be assured that a modest tax hike could (and did) cover everyone, America has to grapple with a bloated health-care sector eating up over 17 percent of GDP — nearly 5 points (or about $1 trillion) greater than Switzerland, the second-most expensive country.

This reality forces Medicare-for-all advocates into one of two basic choices, neither of them easy:

1. Swallow the huge costs, shove through a really big tax hike, and hope that people will understand the taxes-for-premiums swap.

2. Try to cut costs, and keep the tax increase modest, but tempt the wrath of the medical lobby.

Some tax increases are certainly inevitable. But the second choice is by far the best, on grounds of both practical policy and politics.

No, no, no, no, and did I mention, NO? The “really big tax hike” would be beyond stupid, as 100% of those tax dollars would be taken from our pockets and then destroyed.

And as for “cutting costs,” that inevitably becomes “cutting services.”

The best, perhaps only, basic choice is to have the federal government pay for everything, simply by creating dollars.

This would avoid the negative effects of tax hikes and of service cuts.

The article continues:

Why is American health care so expensive? Drug prices and administrative costs.

America paid roughly twice the rich country median for drugs in 2015, at $1,443 per person, with $1,023 of that in the form of retail pharmaceuticals.

France paid $697, while the Netherlands paid just $466. Secondly, fully 8 percent of American health-care spending goes to administration — as compared to Germany at 5 percent, Canada at 3 percent, or Sweden at 2 percent.

Thus the first priority for a Medicare-for-all bill must be to cut administration spending to the bone. Given that this is largely down to providers having to navigate the hellishly complex and fragmented status quo system, this should be quite easy.

Smashing down drug prices would be harder politically, but conceptually simple. You simply survey the drug market and set prices given an overall budget of (let’s say) $725 per person.

We have a knee-jerk, negative response to the word, “expensive.” But, in a single-payer, federally funded, Medicare-for-All program, stimulus dollars would flow from the federal government (which has an infinite supply) to the private sector (which needs dollars for growth).

Pharmaceutical companies, and their employees, and their suppliers all would receive dollars from the federal government. All these people would spend the dollars, benefitting thousands of companies and their employees.

Similarly, administration spending would benefit all those who administer federal programs on both the private sector side and on the government employee side.

Federal spending for Medicare-for-All would benefit many millions of people financially, improve the entire nation’s health, and stimulate the economy.

One last thought: Not many people realize this, but Medicare Part B (medical insurance) is funded differently from Medicare Part A (hospital insurance).

Medicare Part B covers medical services and supplies that are medically necessary to treat your health condition.

This can include outpatient care, preventive services, ambulance services, and durable medical equipment. It also covers part-time or intermittent home health and rehabilitative services, such as physical therapy, if they are ordered by a doctor to treat your condition.

Some of the preventive services Medicare Part B covers include a one-time “Welcome to Medicare” preventive visit, flu and hepatitis B shots, cardiovascular screenings, cancer screenings, diabetes screenings, and more.

While Medicare Part A supposedly is funded through the FICA tax, Part B supposedly is financed through a combination of general revenues and premiums paid by beneficiaries.

In both cases, I say “supposedly,” because all dollars coming to the federal government are destroyed, so all federal spending is funded by new money creation.

The point, however, is:

While a mythical Part A trust fund often is said to be running short of money, Part B never is said to be running short, because even with federal government’s phony financing system, sufficient dollars come from the general fund.

Rather than focusing on tax increases and spending cuts, the government should focus on the one implementation that would save lives: Pay for it all.

A single-payer program would be much simpler and more efficient to implement than the complex, convoluted combination of multiple insurance companies, multiple coverages, multiple deductibles, incomprehensible Part D (drug) coverages, multiple home care, multiple long-term-care rules we now are burdened with.

One source, that covers everything, and sets the price limits for everything, just the way Medicare now does, would take the labor and guesswork out of insurance.

The solution to all federal funding comes with the realization that the federal government:
1. Is Monetarily Sovereign,
2. Has the infinite ability to create its own sovereign currency,
3. Neither needs nor uses tax dollars or any other income, and
4. Never can run short of the dollars needed to pay for anything.

(Now, someone please tell Bernie Sanders and the Democrats)

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Implementation of The Ten Steps To Prosperity can 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. Provide a monthly economic bonus to every man, woman and child in America (similar to 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 you.

MONETARY SOVEREIGNTY

The “law and order” party objects to illegality — by brown-skinned people.

The GOP long has characterized itself as the “law and order” party.

Indeed, one of the main criticisms, leveled by GOPers against illegal immigrants, is the simple fact that they arrived illegally.

Recently, I reminded an ardent Trump follower that his own parents and grandparents were immigrants. His response: “But they came here legally.”

(In the minds of Republicans, the primary difference between their ancestors coming to America and Mexicans coming to America, is a legal difference.

If not for that legal difference, presumably Mexicans would be welcomed with the same open arms that the ancestors of Republicans were.)

It is revealing to see headlines like these:

Post-Indictment Poll Shows Duncan Hunter Still in the Lead
By Ed Kilgore

Anyone following the story of Representative Duncan Hunter’s indictment, along with his wife, for epic levels of illegal personal use of campaign funds, is bound to be curious about how people in his San Diego–area 50th congressional district are reacting.

“He’s doing a great job”: Donald Trump

But now SurveyUSA has published a poll it did for the local newspaper and a TV station that was taken entirely after the indictment was released.

It showed Hunter still up among likely voters by eight points, 47 percent to 39 percent, over Democratic nominee Ammar Campa-Najjar.

It also showed 76 percent of respondents were aware that “Hunter and his wife were the subject of a criminal investigation” (not too surprising since the investigation into his campaign spending has been going on since 2016).

And interestingly enough, Hunter’s lead is the same among those who are and who are not “aware” that he’s in deep trouble with the feds.

GOPers believe “law and order” counts only for immigrants, not for white, Republican citizens.

Michael Cohen’s guilty plea implicates Trump in federal crime. Republicans don’t care.
By Tara Golshan

“A good man”: Donald Trump

Michael Cohen, President Donald Trump’s former personal lawyer, pleaded guilty to eight counts of campaign finance violations and tax and bank fraud, admitting he broke the law at the direction of Trump himself.

Cohen said in his guilty plea that he broke federal law at the direction of the candidate he was working for (Trump).

It’s true that crime would be small potatoes compared to proof that Trump personally colluded with Russian agents to win the presidency. But it’s still a federal crime — and Trump’s allies in Congress don’t seem bothered.

Paul Manafort, Trump’s former campaign manager, was found guilty of eight counts of tax and bank fraud.

“I don’t think he did anything wrong”: Donald Trump

And Republicans in Congress aren’t batting an eye.

The party of “law and order” does not care that Cohen and Manafort are guilty of crimes.

No outrage can be found in Congress or in right-wing media.

And where is the “law and order” party’s outrage about: Michael Flynn, and George Papadopoulos, and Richard Gates, and Ronny Jackson, and Scott Pruitt, and Chris Collins?

And dare we mention noted EB-1, “chain immigrant,” Melania Trump. ( Politico reports that a wealth of evidence suggests that she was, in fact, an undocumented immigrant who worked in this country illegally.)

Image result for george papadopoulos — **“He’s an excellent guy”: Donald Trump**

But if none of the above illegality stirs the souls of the party of “law and order,” we can look at the man himself, Donald Trump, he of the $25 million scam known as “Trump University. ”

Sadly, no Republican outrage there, either.

And none for the Trump Foundation. (“As our investigation reveals, the Trump Foundation was little more than a checkbook for payments from Mr. Trump or his businesses to nonprofits, regardless of their purpose or legality,” Attorney General Barbara Underwood said.)

“I can turn anyone into a successful real estate investor, including you”: Donald Trump

Despite Trump’s long history of scams, we see no outrage — only support — from the party of “law and order.”

The real GOP outrage is reserved for Mexicans.

You know, those brown-skinned, hard-working people who seek shelter here to make better lives for themselves and their children, and unlike crooked Trump and his crooked acolytes, really have helped make America great.

As for crooked Trump’s crooked acolytes, they are pure white. The only things brown about them are their noses.

And as for the GOP, it doesn’t care a fig for “law and order.” Nor does it care about the illegality of immigrants. GOPers feel the same about legal immigrants.

And surely they care nothing about “making America great. They care only about defending the cult leader and appealing to fellow haters.

Image result for dividing immigrant families — **“They’re bringing drugs. They’re bringing crime. They’re rapists”: Donald Trump**

The “law and order” party objects to illegality — but only by brown-skinned people.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Implementation of The Ten Steps To Prosperity can 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. Provide a monthly economic bonus to every man, woman and child in America (similar to 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 you.

MONETARY SOVEREIGNTY

Ten answers that are contrary to popular wisdom

We could have begun each answer with the words, “Contrary to popular wisdom . . .” for much of economics differs from what you, the public, are being told. Image result for popular wisdom

The federal government uniquely is Monetarily Sovereign. It invented and rules all the laws that create and regulate its sovereign currency, the U.S. dollar.

Federal financing is substantially different from your personal financing, your business’s financing, and your state’s, county’s, and your city’s financing.

If ever you have attempted to explain (or understand) Monetary Sovereignty, you probably have encountered these 10 questions:

1. “Is federal debt unsustainable? (I.e., can we continue running deficits forever. If you and I need to live within our means, must the federal government live within its means?)

A Monetarily Sovereign government never can run short of its own sovereign currency, so it has no “means” to live within.

Having the unlimited ability to create new dollars, the federal government can pay any obligation denominated in dollars, no matter how large. The federal government doesn’t even need to levy taxes.

The very act of paying its bills is the method by which the government creates new dollars. To pay a creditor, the federal government sends instructions (in the form of a check or a wire) to the creditor’s bank, instructing the creditor to increase the balance in the creditor’s checking account.

The moment the bank does as instructed, brand new dollars are created and added to the money supply called “M1.” No tax dollars are involved.

There are two ways dollars are created and two ways they are destroyed:

Dollars Are Created By:
A. Federal bill paying
B. All forms of dollar lending

Dollars Are Destroyed By:
A. Federal Taxing
B. Repayment of loans

2. “If the federal government doesn’t need tax dollars, why does the federal government levy taxes?”

There are two primary reasons: Image result for gap between the rich and the poor

A. To control the economy. The government taxes things it wishes to rein in, and cuts taxes on things it wishes to encourage.

B. To fool the public. The very rich, who run the government, want the 99% to believe federal spending must be limited. This discourages the populace from asking for benefits and thereby widens the gap between the rich and the rest.

(The Gap is what makes the rich rich. Without the Gap, no one would be rich; we all would be the same. The wider the Gap, the richer they are.)

3. “If the government doesn’t need to obtain tax dollars in order to pay its bills, why does the government borrow dollars?”

Unlike state and local governments, the federal government doesn’t need to borrow, and indeed, it doesn’t borrow. The misnamed federal “borrowing” and “debt” is the total of deposits into T-security accounts.

When you buy a T-bill (or T-note or T-bond), you instruct your bank to take dollars from your checking account and deposit them into your T-bill account.

Because the federal government has no need for your dollars, it simply leaves your dollars in your account until your T-bill matures. It even adds dollars in the form of interest.

Then it “pays off” your T-bill by sending your dollars back to your checking account. Sending your dollars back to you is no burden on the federal government, and because no tax dollars are used, it is no burden on taxpayers, either.

4. If the federal government doesn’t need to borrow, why does it issue T-bills, T-notes, and T-bonds?

The purpose of T-securities accounts is not to acquire spending money. The purposes are to:

A. Provide a safe place for dollar-users to hold dollars. This safe-haven availability increases the demand for dollars and stabilizes the dollar.

B. To help the Fed control interest rates.

5. “If we just print money won’t we be like Zimbabwe and Argentina?”

Those sick economies not only have dysfunctional governments, but are in the midst of hyper-inflations, which are caused by shortages, most often shortages of food.

In fact, all hyperinflations are caused by shortages. Money “printing” is a wrong-headed government response to hyperinflations, much like pouring gasoline on a car fire.

Government money “printing” is a response to hyper-inflations, not a cause.

Decreases in deficit growth (red line) lead to recessions (vertical, gray bars). Inflation (blue line) does not correlate with deficit spending.

Deficit growth adds dollars to the economy, which increases Gross Domestic Product

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

All three of the above variables add dollars to the economy, which is necessary for economic growth.

Not only do decreases in deficit growth lead to recessions, but federal surpluses lead to depressions:

1804-1812: U. S. Federal Debt reduced 48%. Depression began in 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began in 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began in 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began in 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began in 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began in 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began in 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began in 2001.

It functionally is impossible to grow an economy while reducing the money supply. This would be like trying to cure anemia by applying leeches.

6. If federal “debt” growth is economically beneficial, why is my state (or county, or city) broke?

Your state (or county, or city) is monetarily non-sovereign. It does not have a sovereign currency. It uses the dollar, which is the sovereign currency of the federal government.

Monetarily non-sovereign entities (like you and me), can run short of dollars and be unable to pay our bills. The federal government cannot run short of dollars, or be unable to pay its bills. Federal finances are different from non-federal finances.

Your state, county, or city are broke because their outgo exceeds their income, and they cannot create dollars at will, the way the federal government can.

7. So why doesn’t the federal government merely give everyone a million dollars and make us all rich?

“The Ten Steps to Prosperity,” recommends that the federal government give more money to Americans (via deficit spending) than it currently does.

There, of course, is a limit.

The limit to federal deficit spending is an inflation that cannot be managed via interest rate control.

Inflation is a reduction in the value of a dollar vs. the value of goods and services. The value of a dollar is: Value = Demand/Supply. So if we increase the Supply, without increasing the Demand enough, the dollar Value goes down, and we have inflation.

The formula for the Demand for dollars is: Demand=Reward/Risk. The government increases the Reward for owning dollars by raising interest rates. That is why raising rates is said to “strengthen” the dollar.

In short, the government should give more dollars and dollar-denominated benefits to the people. This would grow the GDP and narrow the Gap, so long as the Fed can control inflation by increasing the Demand for dollars.

8. Which is better for the U.S. economy: Exports or imports?

Imports of goods and services have more value to the U.S. economy than do exports.

Exports of goods and services actually means “importing dollars in exchange for labor and scarce materials.” But because our Monetarily Sovereign nation has the unlimited ability to create dollars, importing dollars has no value to the nation as a whole.

Imports of goods and services (i.e. “exports” of goods and services) add valuable and scarce assets to the economy while requiring less labor and scarce materials than would products and services created here.

The question can be restated: Which is better: Importing something that we have the unlimited ability to create and at no cost (i.e. dollars), or exporting something that costs effort and valuable raw materials (i.e. goods and services) to create?

9. Are illegal aliens a danger to, and a burden on, America?

This question usually devolves to several concerns, none of which have anything to do with the legal status of immigrants.

Concern 1. Illegal aliens cause crime. This repeatedly has been shown to be false. The crime rate for illegal aliens is lower than the crime rate for citizens. The reasons probably relate to the fear of being apprehended and deported, and to the reasons why desperate people elect dangerous illegal immigration.

Concern 2. Illegal aliens don’t work and don’t pay taxes, but use our benefits. This too has been shown to be questionable. These people made the hazardous trip to the U.S. in order to create better lives for their children and themselves. Though the federal government doesn’t need tax dollars, illegal immigrants tend to be hard-working, tax-paying people, who often are precluded from using most social services.

Concern 3. Illegal aliens bring drugs. The vast majority of drug smuggling is not done by illegal aliens. Drugs come in through legal entrances, via boats, trains, trucks, buses, and cars, rather than via the piddling amounts mothers and children could sneak through.

Concern 4. Illegal aliens steal jobs from American citizens. These people are consumers, who via their spending, actually create jobs. They themselves accept the lowest paid, most physically difficult jobs, that are not popular with U.S. citizens.

On balance, illegal aliens provide a huge benefit to the U.S., by being highly motivated to succeed, and by purchasing products and services from American businesses.

10. Even if the federal government never can run short of dollars, and can afford Medicare for All, won’t we run out of resources, like doctors, hospitals, and medicines?

We address this question in “A concern about ‘Medicare for All.'” Briefly summarizing that article:

A. Every major change, from cars, to phones, to planes, and to high-rise buildings leads to shortages of labor and materials that previously were not used. Medicare itself created a shortage of medical personnel, so today hospitals all over the country have been expanding to provide more services.

B. Personnel shortages lead to higher pay which draws more people into the profession.

In summary, everyone has strong intuitions about economics, though economics realities are not intuitive. The reason is: Our federal government is Monetarily Sovereign, which is very unlike the personal experiences of the populace.

The people have been given the mistaken belief that federal finances are like personal, state, and local finances.

The above questions illustrate the common misunderstandings about our nation’s economy.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Implementation of The Ten Steps To Prosperity can 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. Provide a monthly economic bonus to every man, woman and child in America (similar to 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 you.

MONETARY SOVEREIGNTY

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