Author: Rodger Malcolm Mitchell

MBA Northwestern, business turnaround expert, economist

I smell the meat a’cookin’. The new privatization scam.

wTwitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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We’ve posted before about infamous Illinois politician, Paul Powell who when salivating over another crooked political deal said, “I smell the meat a’cookin’”. 

Ah, Illinois, the land of the incarcerated pol, where the tried-and-true political route is: First, get elected; then, steal money; then, go to jail.

The smart ones, like the recent Mayor Daley, don’t go to jail, but rather are rewarded by an insider law firm with a do-nothing, “thank you” job.

Otherwise, from the top — governors — to the bottom — Chicago aldermen — it is a well-travelled path of Illinois political chicanery.

We frequently have posted about another well-travelled path of political chicanery: Privatization.

Examples are:

1. TSA and the great privatization scam: Part II;

2. Why Privatization? Here’s why;

3. PRIVATIZATION: The Road to Perdition in the United States of Koch;

4. Presenting!! The Great Privatization Scam!

And, there are others.

“Privatization” actually can have two, significantly different meanings. One can refer to government contracting out for goods and services. When the federal government builds planes, tanks, bullets, roads, and dams, typically it pays private contractors to do the work.

The federal government acts as a customer, not as a partner.

That is not true “privatization,” which is when the government sells or gives to private industry its toll-roads, its jails, its mail delivery, its policing — functions typically handled by government employees.  That is the kind of privatization where stealing is most rife.

The key question is this: Who owns and runs the business?

The key question is this: Who owns and runs the business? In one sense, it is not possible for there to be a real partnership between the federal government and a private party, because they have different motives and goals.

Ostensibly, the federal government wants some task accomplished in the most efficient, most expeditious manner. That is its primary goal.

The federal government has no need for, nor should it take, profits. If the federal government were to accept profits, those dollars would be taken from the economy and have the same recessive effect as a tax.

By contrast, the primary goal of a private investor is profits. Unless the program is set up for charitable purposes, the accomplishment of a task only is the medium by which profits may be obtained.

The difference between profit-maximization and output maximization is decisive in how the business is run.

If the federal government owns and runs the business, what would motivate an investor to put his money into it? And what would motivate a Monetarily Sovereign federal government to solicit the investor’s money?

If the investor owns and runs the business, the result is not a partnership. Rather, the federal government plays the role of a customer, which it already does for millions of products and services.

So exactly which format is Trump proposing? As with so much Trump, his proposals are vague wishes, with specifics “to follow later.”

The classic example is his border wall. Trump’s “plan” is: “I will build a wall and Mexico will pay for it. You figure out how.” 

There are two facts — excuses really —  repeatedly given for government privatization:

1. The government needs private money. This may be true for state and local government privatization but never, ever is true for our Monetarily Sovereign federal government.

2. The private sector is smarter than the government, so will do a better job.  This is true or not depending on specifics. There are smart and non-smart individuals in the private sector and in government.

Neither sector has a monopoly on brains. Remember, it was federal employees who created atomic energy and the man on the moon, two of the most complex initiatives in human history,

There is a 3rd fact about privatization:

3. Private sector leaders are motivated by personal profits, while government leaders are motivated by votes and bribes.

When the sole motivation is profits, you reliably will see excessive pricing and under-servicing in privatized businesses, which often are given monopoly status by the government.

Privatized jails, privatized toll roads, privatized parking meters, privatized electric service, privatized TSA — all offer examples of excessive pricing and under-servicing by privatized, monopoly businesses.

As is the custom for privatization, governments sell or give public property or exclusives at a discount to rich insiders, while claiming #1 and #2 above, and hiding #3.

Trump’s Plan for Infrastructure, by Michael Likosky

To remain a land of opportunity, all citizens—and many businesses—must have access to state-of-the-art affordable infrastructure.

It includes transportation,  water, communications, schools, public hospitals, community colleges, and public universities. Today, most of us simply do not have this access. Moreover, we cannot attract and retain global businesses with the resources we have.

We are in this situation in part due to dysfunctional politics. The Beltway cannot agree on the basics: how to pay for the needed infrastructure, how to prioritize our needs, and the most efficient way to design and build projects.

In reality, the issue is “how to pay,” and for the federal government, it is no issue at all.  It is a pretend issue. Our Monetarily Sovereign government can pay for anything.

As for “prioritize,” this is something the federal government has to do, whether or not it privatizes.

The same is true for “efficient way to design and build.”  The government sets the standards. It will employ architects and engineers to provide the plans and contractors to organize the work. No “privatization” needed.

However, more significantly, we find ourselves in such sorry shape because for decades we have suffered from a mindset that refuses to recognize that a rising tide, in this case investment in Infrastructure, raises all boats.

At times the wealthy do not want to pay for the infrastructure of the poor, metropolitan areas the rural, the coasts for the Rust Belt, and so on.

Some wealthy may be ignorant of Monetary Sovereignty, so they truly believe they must pay (via taxes).  The majority of wealthy understand their taxes not pay, but they want the poor to believe reasons for not improving infrastructure.  They want to widen the Gap between the rich and the rest.

But, infrastructure projects benefit the 99.9% more than the .1%. The benefits come from added jobs and from improved services. Thus, these projects could narrow the Gap — which the rich don’t want — unless the rich receive inordinate compensation.

President-elect Donald Trump is coming to office with a mandate to fix all this.

These days, losing by more than 2 million votes is considered a “mandate.” Imagine what they would call it if he actually won the popular vote.

The elements of the plan are clear. However, how it all fits together is not self-evident.

It’s neither “clear” nor “self-evident,” because there is no plan.  It’s just a vague wish list.

Before getting into even the elements though, let’s get the sticker shock out of the way. The plan aims to bring $1 trillion of public and private dollars to the table into infrastructure over the next decade.

As for “sticker shock,” all the dollars contributed by the federal government constitute a stimulus to the economy. Why would anyone be “shocked” by that?

His (Trump’s) elements read like a who’s-who of the most innovative ideas in Washington.

They include public-private partnerships, a special bond program, the repatriation of corporate profits sitting overseas, the streamlining of environmental and regulatory review processes, among others.

“A who’s who of the most innovative ideas in Washington”?  How strange, considering the “innovative ideas” either are fuzzy, non-existent, or are conservative-usual: More money in the pockets of the rich.

“Public-private partnerships” generally mean a few, rich insiders receive the exclusive right to overcharge for shoddy services.

“Special bond program” is unnecessary in a Monetarily Sovereign nation, and probably will turn out to be a feeding trough for rich, criminal banksters.

“Repatriation of profits” has no value to America. Corporations do what is best for business, and unless repatriation stimulates American business it is meaningless. Corporations will spend here only if such spending is good for business.

And here is the best one: “Streamlining of environmental and regulatory review processes.”  That, very simply means, don’t regulate business.

It means: “Let the criminal bankers, the overcharging pharmaceutical companies, the dishonest food processors, the cheating car manufacturers, et al do whatever they please without the intrusion of inconvenient rules against deceiving their customers and exploiting their employees.”

The idea is: “Let ’em pollute, overcharge, and steal.  It’s big business first, big business last, and big business always, and the public be damned.”

That is why billionaire, proven cheater Trump has filled his cabinet with fellow billionaires. And amazingly, the public believes these billionaires represent beneficial change or concern about the “little people.”

Remember, we’re talking about the same Donald Trump who has a history of cheating his employees out of their wages. (Does the phrase, “from the frying pan into the fire” come to mind?)

News flash! Trump and his cabal didn’t get to be billionaires by caring about your family’s finances.

The bond proposal is based upon the Build America Bonds which were, according to Alan Kruger, the former Chief Economist of President Barack Obama’s U.S. Treasury Department, the “unsung hero of the recovery”.

In fact, Steven Mnuchin, the president-elect’s choice for U.S. Treasury Secretary, even mentioned recently that the incoming administration was looking at a National Infrastructure Bank, the holy grail of bipartisan politics.

“Bonds are the unsung hero of the recovery”? The only thing that took us out of the recession was federal deficit spending. Period.

Bonds added a few dollars of interest, and benefitted the kind of people who invest in bonds. But that’s about it.

There have been dozens of different proposals for a “National Infrastructure Bank,” so many that today, no one knows what it is.  Supposedly the bank would borrow from the federal government and lend to private developers to build infrastructure — or something.

Aside from not being a plan with specifics, and aside from the fact that the Monetarily Sovereign federal government never needs to lend  (It only should give), and aside from the Bank having no function that Congress already doesn’t have, it’s wonderfully “bipartisan” (i.e. both parties “smell the meat a’cookin’.”)

So that bipartisanship makes it an “innovative idea” (an idea that has been tossed around for the past ten years.)  It’s the “holy grail of bipartisan politics” because the .1% loves it.

Public-private partnerships are the cornerstone of his plan. Rather than use public outlay of money to pay the entire cost of infrastructure build-out, these partnerships use public money as honey to attract global investor money from pensions, insurers, sovereigns, endowments, and other sources.

Except that the federal government doesn’t need “global investor money,” especially when these global investors are the same billionaires who will be making decisions in Trump’s cabinet.

“Conflict of interest?? Who me?”

Additional partnerships are formed with global design, engineering, and construction firms with astounding capabilities to build the projects themselves.

“Astounding capabilities“?? The author has no idea who these firms are, but he is sure they have “astounding capabilities”?  Who really wrote this article?  Does it sound like anyone you know?

My view is that Mr. Trump’s plan, boiled down, is about three things: moving money to market very quickly; raising money from investors who do not expect to be repaid in the near term; and designing and building projects with engineering prowess.

Oh, puh-leeze! “Not expect to be repaid near term”? Who says? And “engineering prowess“?  Gimme a break.

The government can move money to market even more quickly by eliminating FICA than with a convoluted, mysterious “National Infrastructure Bank.”

The plan is a good one, including the spirit of prudent innovation behind it. The question will be whether Mr. Trump can inspire us to pull together as a single community one project at a time.

The “plan” (which doesn’t exist) includes “prudent innovation” (whatever the heck that means), but we should “pull together” (i.e. let Trump and his billionaires steal the house without us objecting.)

The author of the article, Michael Likowsky works for “32 Advisors.” This is what they say about themselves:

“We assist governments and companies in developing, structuring, and financing public-private partnerships and traditional infrastructure opportunities.”

That may explain the hard-sell for Trump’s non-existent programs. If what pays your salary is public-private partnerships, then you will shill for public-private partnerships.  Self-interest is the most powerful motivator.

You will hear much more about phony “public-private partnerships,” those. devices for widening the Gap between the billionaires and the rest of us. The concept is too delicious for the greedy rich and the crooked politicians to forget.

Just, let your politicians know you know what they are doing and you aren’t fooled by this scam.

Sunlight is the enemy of political criminality.

Rodger Malcolm Mitchell
Monetary Sovereignty

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

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 (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY

Goodbye, Brazil

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

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Reader “Elizabeth” called our attention to the tragedy in Brazil.

Background: June of the year 2005, was the first time I spoke of the euro. I said:

Because of the Euro, no euro nation can control its own money supply. The Euro is the worst economic idea since the recession-era, Smoot-Hawley Tariff. The economies of European nations are doomed by the euro.

The euro nations voluntarily surrendered the single, most valuable asset any nation can have: Their Monetary Sovereignty.  Having surrendered the ability to create and control their own sovereign currencies, the euro nations were reduced to using an “alien” currency, a currency over which they have no control: The euro.

The euro is a product of the European Union (EU), an Oligarchy, “a government in which all power is vested in a few persons or in a dominant class or clique; government by the few.”

The euro nations, now having chosen monetary non-sovereignty, are forced by the few unelected officials of the EU to adopt austerity, as the EU itself drains away the member nation’s resources.

All monetarily non-sovereign entities must adopt some form of austerity unless they have significant income coming from outside their borders.  This is true of cities, counties, states, businesses, you and me, as all are monetarily non-sovereign.

When a nation adopts monetary non-sovereignty, the rich prosper, while the populace is punished. Unless exports exceed imports by a significant amount (to bring money into the economy), wages decline, living standards decline, savings decline; the prosperity and grandeur, even of formerly great nations like Germany, Greece, Italy, France et al, becomes a distant memory.

As the Gap between the rich and the rest widens, the rich gain greater and greater power, which of course, is the whole idea.

All of the above brings us to the Brazilian tragedy, for the Brazilian government, which is Monetarily Sovereign, has chosen monetary non-sovereignty. It blithely has surrendered its single greatest asset:

Trading Economics: The rapid deterioration of (Brazil’s) finances has significantly raised the country’s debt burden leading to a gross debt of 66.2 percent of GDP, sharply higher than 57.2 percent in 2014.

The Gross Domestic Product (GDP) in Brazil was worth 1774.72 billion US dollars in 2015. GDP in Brazil reached an all time high of 2614.57 USD Billion in 2011.

Brazil Summary: Debt/GDP = 66.2%.  GDP has been going down since 2011.

By comparison with the U.S.:

The United States recorded a Government Debt to GDP of 104.17 percent of the country’s Gross Domestic Product in 2015.

The Gross Domestic Product (GDP) in the United States  was worth 17947 billion US dollars in 2015 reaching an all time high in 2015.

U.S. Summary: Debt/GDP=104%. GDP has been going up.

What are we to make of the Debt/GDP comparison between Brazil and the U.S.?  Brazil=66%; U.S.=104%

The U.S. economy being healthier and growing, while Brazil’s is shrinking, shall we conclude that contrary to the opinions of the pundits, higher Debt/GDP is better?

In fact, the Debt/GDP is a meaningless measure for a Monetarily Sovereign government. As its sovereign currency, Brazil uses the “Real,” a widely accepted money, which Brazil can create endlessly.

So long as the Real is accepted for payment of Brazil’s financial obligations, and/or in exchange for the U.S. dollar and other major world currencies, Monetarily Sovereign Brazil does not need to borrow, does not need to tax, and does not need to cut spending.

The so-called “Debt” is the misleading name for the total of investments in Brazilian government securities — securities the Brazilian government has the unlimited ability to create and service.

Thus, the Debt/GDP ratio measures the ratio of all outstanding investments in Brazilian government securities vs. this year’s Gross Domestic Product — a measure that indicates absolutely nothing about the Brazilian economy.

What is worrisome is Brazil’s decline in GDP. Since money is the lifeblood of any economy, and GDP itself is a money measure, one might think Brazil would want to increase dramatically its money supply — specifically its deficit spending  — to help stimulate GDP growth.

After all, if you put more Reals into the hands of the people, and the people spend those reals, that is a major part of GDP growth. This is exactly what the U.S. did to recover from the Great Depression of 2008.

And if, as is the case with Brazil, inflation is too high, the solution is not to reduce the Supply of Reals, but rather to increase the Demand for Reals.

Demand = Reward/Risk, and a large part of the “Reward” for owning money is interest.

Raising interest rates to increase the Demand for money is the program the U.S. Fed successfully has used over the years, and is using right now, as even the slightest whiff of inflation has led to a small rate increase.

Yet:

The Central Bank of Brazil lowered its benchmark Selic rate to 13.75 percent on November 30th, its lowest in over a year. Policymakers aim to bring inflation back to target amid a deep economic recession.

“Bring inflation back to target” by lowering interest rates?? The U.S. Fed raises rates to control inflation.  Why the difference?

Protests erupt in Brazil over controversial 20-year austerity plan
By Emiko Jozuka, Shasta Darlington, and Deborah Bloom, CNN, Updated 6:50 AM ET, Wed December 14, 2016

Brazil is Latin America’s largest economy and has a well-developed agricultural, manufacturing, and service sector. But the country has suffered its deepest recession in decades.

Since the beginning of 2015, the unemployment rate has doubled to more than 11% and as many as 12 million Brazilians are currently unemployed.

Known as PEC 55, the constitutional amendment imposes a cap on public spending that will limit federal investment in social programs for the next 20 years.

Plans to slash public spending are incompatible with Brazil’s human rights obligations and place the country in a “socially retrogressive category of its own,” according to Philip Alston, the United Nations Special Rapporteur on extreme poverty and human rights.

“It is completely inappropriate to freeze only social expenditure and to tie the hands of all future governments for another two decades,” said Alston, in a statement.

“It will hit the poorest and most vulnerable Brazilians the hardest, will increase inequality levels in an already very unequal society, and definitively signals that social rights are a very low priority for Brazil for the next 20 years,” Alston added.

Alston positions the government’s actions as a moral problem, which it is.  But more than that, it is an economics problem.

Brazil cuts interest rates to “Bring inflation back to target” and freezes public spending on social programs to fight recession?? These are the exact opposite of the steps that should be taken.  So what is going on, here?

Clearly, GDP growth and the welfare of the populace are not the goals of the rich who lead Brazil. Their true plan: To solidify a permanent underclass of desperate Brazilians willing to work in poor conditions for a pittance — the perfect slave labor force for the rich industrialists.

Widening the distance — the Gap — between the rich and the rest always has been a primary goal of the rich in all countries, not just in Brazil.

The ridiculous emphasis on sovereign “debt” in Monetarily Sovereign nations that never can run short of their own sovereign currencies demonstrates the goals of the rich. Even naming these investments “debt,” rather than the more correct “deposits,” is indicative.

It’s an ancient scheme:

  1. Create hardship
  2. Convince the populace to accept a counter-productive “cure” for the hardship, that worsens the situation. and widens the Gap between the rich and the rest.
  3. Repeat.

Brazil now has voted for 20 years of abject misery — except for the rich, who will prosper on the sweat of the people. Misery is the penalty for ignorance.

Goodbye, Brazil

Rodger Malcolm Mitchell
Monetary Sovereignty

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THE LAWS

•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.

•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

•No nation can tax itself into prosperity, nor grow without money growth.

•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.

•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)

•Deficit spending grows the supply of money

•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control. The limit to non-federal deficit spending is the ability to borrow.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Progressives think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

•The single most important problem in economics is the Gap between the rich and the rest.

•Austerity is the government’s method for widening the Gap between the rich and the rest.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

MONETARY SOVEREIGNTY

It all boils down to just two questions

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

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Economics is complex, so complex that we often do not know how to identify either cause or effect with much confidence.

The central reason is because economics is intermingled with such complex subjects as psychology, meteorology, Artificial Intelligence, game theory, and mathematics.

Even the language of economics is uncertain. Just by way of example, what exactly are “federal debt,” “federal deficit,” “austerity,” “wealth,” and “progressive”? You will hear many definitions, often contradictory.

But economics is simple, so simple that its entire structure rests on the answers to just two questions:

  1. Can the U.S. federal government unintentionally run short of U.S. dollars?
  2. Can the U.S. federal government control the value of the U.S. dollar?

I. Can The U.S. Federal Government Unintentionally Run Short of U.S. Dollars

The first question leads us to a discussion of Monetary Sovereignty (and monetary non-sovereignty).

“Monetarily sovereign” means absolutely sovereign over the currency the nation primarily uses.

The U.S. government and the governments of such other nations as the UK (pound), Canada (Canadian dollar), Australia (Australian dollar), Japan (yen), and China (Yuan Renminbi) are Monetarily Sovereign.

Each of these nations uses a currency it created and over which it is sovereign.

By contrast, the governments of Germany, France, Italy, and other members of the eurozone use the euro, a currency none of them created, and over which they have no control. 

Similarly, Illinois, Los Angeles, and Idaho use a currency, the dollar, they did not create and over which they have no control.

So, the euro nations can run short of euros, and American states and cities can run short of dollars. They are monetarily non-sovereign.

The U.S. government created the first U.S. dollar more than two centuries ago, by creating laws. The laws, written by men, not by God, specified:

a) the number of dollars to be created and

b) the value of those dollars relative to precious metals.

Note that the U.S. dollar never actually was backed by precious metals. “Backed” implies collateral, but when the debtor has the unconditional power to change the collateral, one cannot say the dollar was backed by metals.

Those who pine for a gold-“backed” dollar must understand that even were we on a gold standard, the federal government has the uncontested power to change the dollar-price of gold at any time.

In short, a gold-“backed” dollar is impossible for our Monetarily Sovereign government. The only thing that backs the dollar — the only thing that ever has backed the dollar, even during gold standards — is the full faith and credit of the federal government.

It would be far more accurate to say the U.S. is on a “full faith” standard than ever on a gold standard.

Both a) and b) above were wholly optional. The men could have used any numbers they chose.

As federal laws are under the control of the federal government, the number of U.S. dollars, the way dollars are created, and the value of dollars can be changed at will, by the federal government.

Because all laws are created from thin air,  dollars too are created from thin air. And because laws have no physical existence — they are ideas only — dollars too, have no physical existence. They are nothing more than numbers in balance sheets.

Just as pages in law books in of themselves are not laws — they merely represent laws — so too are dollar bills not dollars. They merely represent dollars. And just as you never have seen, heard, tasted, smelled, or touched

And just as you never have seen, heard, tasted, smelled, or touched a law, you never have seen, heard, tasted, or touched a dollar. Dollars are notations on balance sheets, ultimately controlled by the federal government.

So in answer to question #1, “Can the U.S. federal government unintentionally run short of U.S. dollars?, we respond, “can the U.S. federal government unintentionally run short of laws to create dollars?

Imagine an unlikely scenario, in which the U.S. government finds that current law somehow restricts its ability to create dollars, but needs to create more dollars to pay its bills. What would the government do?

Obviously. It simply would pass new laws that permit creating more dollars. The U.S. federal government never can be prevented from creating more of its own sovereign currency.

Dishonest websites and pundits that warn you the federal “debt” is unsustainable, or simply too high, must explain how our Monetarily sovereign government ever could find any dollar debt to be “unsustainable.” It never has; it never will.

II. Can the U.S. federal government control the value of the U.S. dollar?

Usually, when we describe the impossibility of the U.S. government running short of its own sovereign currency, or finding any debt denominated in U.S. dollars to be “unsustainable,” we are asked, “What about inflation.”

Then we are given examples of nations that have had hyperinflation: Weimar Republic, Zimbabwe, Argentina, et al.

The first answer is that despite massive deficit spending, wars, depressions, recessions and various natural disasters, the U.S. never has experienced hyper-inflation. So it seems odd that anyone would make the possibility of an event that never has happened the focus of financial concern.

Second, there has been no correlation between federal deficit spending and inflation. See: “Deficit Spending Doesn’t Cause Inflation; Oil Does”

Third, deficit spending in Weimar Republic, Zimbabwe, etc. did not cause hyper-inflations. In fact, the inflations caused the deficit spending. 

Weimar’s hyperinflations were caused by the onerous financial punishments the allies put on the Germans after WWI.

The Zimbabwe hyperinflation was caused by Robert Mugabe, who stole farm land from farmers and gave it to non-farmers, which resulted in a food shortage. Argentina’s hyperinflation was caused by government criminality, leading to shortages of goods and services.

In each case, a desperate (and foolish) attempt to keep up with inflation by the government created additional money, which exacerbated the inflation.

Fourth, the belief that federal deficits cause inflation is based on a simple misunderstanding of algebra.

Inflation is the loss of value of money compared with the value of goods and services. The basic formula for value is: Value = Demand/Supply. 

If Demand goes down, and/or Supply goes up, Value goes down. But those who fear deficits because of inflation, unknowingly use this formula: Value = 1/Supply.

In short, they view Demand remaining static, when dollars are pumped into the economy. But this is seldom the case. Think of what happens to those Social Security, Medicare, Medicaid, military, infrastructure and education dollars the government spends.

They are received, then spent by the public on food, housing, schooling, clothing, travel, etc.  And the providers of those goods and services, upon receiving more dollars, spend them for payroll, equipment, real estate, etc.

So the very increase in dollars helps increase the demand for goods and services, which increases the demand for dollars.

But let’s say that the increase in Demand is not sufficient to balance against Supply, and inflation begins. What else can the government do to increase the demand for dollars?

The dollar is an investment medium, and as an investment, its Demand is based on this formula: Demand = Reward/Risk.

Further, Reward = Interest; Risk = Inflation.

To increase the Demand for dollars (and thus reduce inflation), the government must increase interest rates, and that is exactly what the Fed does, any time it gets even a sniff of impending inflation.

So for question #2, “Can the U.S. federal government control the value of the U.S. dollar?” the answer is “Yes, as a Monetarily Sovereign government, the U.S. can control the Risk, Reward, Supply, and the Demand for the dollar, and even specify the exchange value of the dollar against other currencies.

Therefore, whether or not you agree with all Ten Steps to Prosperity you should understand this: There is no financial reason not to implement them.

You might argue about whether “Medicare for all,” “free school for all” or “Social Security for all” are good economic ideas, but there is no rational reason to claim they are “unaffordable” or “unsustainable.”

Economics is complex. The science is filled with abstruse concepts, formulae, and opinions. But it all boils down to two facts:

  1. The U.S. federal government cannot unintentionally run short of U.S. dollars. Without collecting even one dollar in taxes, the U.S. government still could pay its bills, forever.
  2. The U.S. federal government has complete control over the value of the U.S. dollar? It not only can prevent excessive inflation, but it can set inflation at any level it chooses.

Keep these two facts in mind whenever you read an article or hear anyone say that some federal agency could be insolvent, or some expense is “unsustainable,” or the federal government cannot “afford” some spending.

Those comments all are part of “the Big Lie.”

The often-asked question about any proposed federal government initiative, “Who will pay for it,” should be answered by just three words: “The federal government.”

Rodger Malcolm Mitchell
Monetary Sovereignty

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

The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

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 (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

 

Save us from our “friends,” again

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

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Two other posts on this blog were titled “Save us from our friends.”

In each, we saw examples of articles by people who, on the surface, seemed to be sympathetic to the plight of the working men and women — those good Americans who will live out their latter days in poverty or as financial burdens on their families, because of America’s insufficient healthcare and Social Security.

I say, “on the surface,” because the articles subscribe to the “Big Lie” that federal taxes fund federal spending. So the suggestions always are of the nature: “If we cut here or add there, we can keep Social Security and Medicare solvent.”

As readers of this blog know, Social Security, Medicare, the White House, Congress, the Supreme Court and the military branches et al are agencies of our Monetarily Sovereign federal government.

Unlike state and local governments, which are monetarily non-sovereign, the federal government cannot run short of its own sovereign currency, the dollar, which it invented.

It cannot become insolvent so none of its agencies can become insolvent unless Congress and the President will it.

I can’t tell for certain, whether the following are examples of innocent ignorance or clever deceit. You decide:

Don’t Eliminate the Link between Social Security Contributions and Benefits

Because of the way the Social Security program is funded — through a payroll tax on workers along with an employer contribution — many people believe there is an account for them at some government agency holding those contributions, or at least giving them credit for them, and that they will be able to collect their contributions when they retire.

It’s their money, collected from them monthly, and no matter their income level they have a right to get that money back when they retire.

First, Social Security is not funded through payroll taxes (FICA) any more than the other federal agencies are funded through a tax. They aren’t.

Even if there were no FICA, the federal government could, and should, provide Social Security benefits — higher benefits than today’s — for every man, woman, and child in America.

Contrary to popular myth, and public ignorance of federal financing, the federal government does not use tax dollars for spending. It destroys them.

Try telling them that they don’t. Even those people who understand that if their income is high enough they may not receive payments equal to all they put in get something back — it’s there for them no matter what — and this increases support for the program.

But if we change the funding so that payments for Social Security come out of the general fund — the money the government collects through taxes for all purposes — and impose means testing (i.e. phase out the payments once income is high enough), the link between contributions and benefits would be broken and I fear support for the program would be broken as well.

” . . . it’s there for them no matter what . . .” Wrong. It (meaning FICA deposits) are not there or anywhere. Once dollars are received by the federal government they cease to be a part of the money supply. They are destroyed upon receipt, and new dollars are created every time the federal government spends.

” . . . so that payments for Social Security come out of the general fund . . . “ I sometimes lazily have used this phrase myself, but strictly speaking, it is wrong. There are no dollars in any federal  “fund.”

Unlike you, me, and local governments, which do pay bills out of income and funds, the federal government creates fresh dollars each time it pays a bill.

” . . . the link between contributions and benefits would be broken and I fear support for the program would be broken as well.”

This is the “what-Franklin-Roosevelt-intended” belief.

President Roosevelt, realizing that FICA was not necessary, supposedly said, “We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program”

The contributions do not exist for financial reasons. They exist only for psychological reasons. That fact often is forgotten.

But nice try, Mr. President. The benefits have been cut many times, and today, the right-wing is determined to cut them even more. The whole thing even could be privatized (i.e. given to the rich) if the Republicans have their way.

When programs are supported through the general fund there is competition for funding, there is never enough money to go around, and it wouldn’t be long before the people in power, or with lots of influence over those in power (who don’t really need Social Security in most cases) would argue that the money is best used elsewhere.

” . . . there is never enough money to go around . . . “ This is known as the Big Lie, the lie that the federal government is supported by taxes and can run short of dollars.

There always, always, always is enough money. The U.S. dollar is created from thin air by federal laws that are created from thin air. So long as the federal government doesn’t run short of laws, it never will run short of dollars.

Here are some words from another of our “friends.”

GOP Plans to Gut Social Security
Posted on December 14, 2016,Yves Smith
By Dale Coberly. Originally published at Angry Bear

The  Republicans have opened a new assault on Social Security.  At present all I know about it is what I read  in a Talking Points Memo by Tierney Sneed.

Sneed quotes Paul Van de Water,  who is someone who actually knows that Social Security can be fixed entirely and forever by simply raising the payrolll tax one tenth of one percent per year until the balance between wage growth and growth in the cost of retirement is restored.

But somehow she doesn’t bother to mention this,  or maybe Van De Water forgot to mention it because he favors a “tax the rich” solution…  without understanding that that will turn Social Security into welfare as we knew it, and lead to its ultimate destruction by those rich who would then be paying for it.

Nobody pays for Social Security, not the rich, not the poor, not you and not me.

If Coberly, Sneed and Van de Water “know” their fix for Social Security,  they also must know the moon is made of cheese. Both statements are equally correct.

The CRFB  (Committee for a Responsible Federal Budget). an organization dedicated to the destruction of Social Security by misrepresenting the facts, is playing cute games like “use our calculator to find out how old you will be when SS runs out of funds.”

But SS will never run out of funds as long as the workers are allowed to pay… in advance…for their own benefits. With no change at all in SS, SS will pay 80% of “scheduled benefits,”  but this is 80% of scheduled benefits which meanwhile have grown 25% in real value.

He’s right about the CRFB, whose entire existence is based on the lie that the federal government can run short of dollars and that deficits and debt are “unsustainable.”

” . . .SS will never run out of funds as long as the workers are allowed to pay… in advance…for their own benefits.”  He should have said, “SS never will run out of funds as long as Congress and the President don’t sabotage it.” Workers do NOT pay for their benefits.

Meanwhile, something that calls itself “the Bipartisan Policy Center, says “Ultimately, we are going to need something that’s a little more balanced between benefits saving and revenue changes in order to get a proposal that could pass Congress and get approved by the president,” said Shai Akabas, director fiscal policy at the Bipartisan Policy Center.”

It’s hard to see how much cuts (“benefit savings”) make sense to balance a dollar a week increase in the payroll tax (revenue changes),  but that’s the kind of thinking that “Bipartisan” gets you.  “Hey folks,  we can save you a dollar a week just by gutting Social Security so it becomes meaningless as insurance so workers can retire at a reasonable age.”

I am getting too discouraged.  As long as no one is working to tell the people how this will work for them,  we are just going to stand around like sheep and watch them cut our throats.

I’m even more discouraged than you are, Mr. Coberly, when even our “friends,” who try to defend us, have no idea what they are talking about. Does anyone know how to reach Dale Coberly so we can educate him?

The list of pretend “friends” goes on and on. Simply Google “save Social Security” and you’ll find such nonsense as:

6 ways to save Social Security and keep it from going broke
By Jill Cornfield • Bankrate.com

“Every group should feel like they’re sacrificing something,” says Polina Vlasenko, a senior research fellow at the American Institute for Economic Research in Baltimore. “No one group should feel that someone else is getting off free.”

Vlasenko, of the American Institute for Economic Research, offers these suggestions:

  • Raising the age for early retirement (and partial benefits) to 65, instead of the current 62.
  • Pushing the age for full retirement (and full benefits) to 70. It’s currently in the midst of a gradual rise from 65 to 67, depending on your birth year.

These are known as the “work ’til you drop” solutions, also the. “Only the rich deserve to retire while they are able to enjoy it” solutions.

And then this bit of ignorance: from Bloomberg

How the Next President Could Save Social Security, By Dave Merrill and Chloe Whiteaker October 26, 2016

The problem
Since 2010, the number of workers supporting a growing number of retiring baby boomers is not sufficient to pay all the benefits they are due.

‘Trust fund’ draw down
Since there are not enough payroll taxes being collected day-to-day, money is drawn from Social Security’s “trust fund” reserve to meet the shortfall.

A better way
Congress could restore solvency to the system by combining several smaller, less painful fixes. Actuaries at the Social Security Administration have analyzed more than 100 individual policy provisions and provided estimates of the financial effect of each on the long-range solvency problem.

While simply adding the financial effect of one provision to another does not give an exact measure of a combined proposal, it can give a back-of-the-envelope estimate of the size and scope of the provisions needed to keep Social Security afloat for at least 75 years.

Pick two
For example, adding together any two of these potent provisions eliminates the shortfall, with some left over to replenish the trust fund.

The above is known as the “death by a thousand cuts” solution. Snip a little here and snip a little there, and maybe the public won’t notice that they are less and less able to retire with dignity.

My suggestion: Contact Dave Merrill and Chloe Whiteaker and ask them to defend their completely unnecessary ways to make you poor in your old age.

And finally, the ever-reliable AARP, the insurance agency that pretends to be a lobbyist for the elderly:

Updating Social Security: 12 Proposals You Should Know About
Pros and cons of options on the table in Washington and on the campaign trail:

1. Raise the Full Retirement Age.
2. Begin Longevity Indexing
3. Recalculate the COLA
4. Increase the Payroll Tax Cap
5. Eliminate the Payroll Tax Cap
6. Reduce Benefits for Higher Earners
7. Increase the Payroll Tax Rate
8. Apply Payroll Tax to All Salary Reduction Plans
9. Cover All Newly Hired State and Local Government Workers
10. Benefit Improvements
11. Increase Number of Years Used to Calculate Initial Benefits
12. Begin Means-Testing Social Security Benefits

To see an outline of the proposals, click the article’s link.

This really should have been titled “Screwing the middle- and lower-income groups: 12 Proposals we don’t want you to understand”

But since you do understand, you will recognize that every proposal is based on one Big Lie: The lie that Social Security benefits are funded by FICA.

As long as your “friends” (even Bernie Sanders) tell you the Social Security and Medicare benefits are “paid for” by taxes, you will continue to see complex, convoluted, Rube Goldbergian “solutions” to a non-problem: The supposed impending insolvency of two of a thousand federal agencies.

Yes, you’re being raped, but so long as you don’t object, your politicians will assume you enjoy it.

Rodger Malcolm Mitchell
Monetary Sovereignty

……………………………………………………………………………………………………………………………………………

The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

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 (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY