Regular readers of this blog know that Modern Monetary Theory (MMT) and this blog’s Monetary Sovereignty (MS) mostly agree that:
The Federal government cannot run short of dollars. Even if the government collected zero taxes, it could continue spending, forever.
The federal government does not borrow dollars. It creates all its spending dollars, ad hoc, by paying creditors.
MS disagrees with MMT in other areas, specifically inflationand unemployment.
INFLATION
Modern Monetary Theory (MMT) argues that federal deficit spending can lead to inflation. In contrast, Monetary Sovereignty (MS) suggests that inflation is caused by shortages of essential goods and services. Additionally, MS posits that federal deficit spending can actually help alleviate inflationby enabling the production and purchase of these scarce goods and services.
Furthermore, attempts to prevent or cure inflation through federal spending reductions are recessionary; increased spending to address the scarcities can stimulate economic growth.
MMT’s solution to unemployment is the “Jobs Guarantee,” which is just what it sounds like. The federal government would guarantee to find a minimum wage job for anyone who wants one.
In today’s Florida Sun Sentinel, an article demonstrates why the MMT Jobs Guarantee is ineffective — worse than ineffective — harmful, as it diverts attention from the real solutions.
Unemployment is harmful not just because people need jobs, but because they need money. The posts above explore real solutions. The following newspaper article illustrates the futility of a government program aimed at finding minimum wage jobs.
US factories struggling to fill 400,000 open jobsAttracting, retaining workers for blue-collar posts difficultBy Farah Stockman The New York Times
President Donald Trump’s pledge to revive U.S. manufacturing is running into the stubborn obstacle of demographic reality.
The pool of blue-collar workers who are able and willing to perform tasks on a factory floor in the country is shrinking.
As baby boomers retire, few young people are lining up to take their place. About 400,000 manufacturing jobs are currently unfilled, according to the Bureau of Labor Statistics — a shortfall that will surely grow if companies are forced to rely less on manufacturing overseas and build more factories in the United States, experts say.
Difficulty attracting and retaining a quality workforce has been consistently cited as a “top primary challenge” by U.S. manufacturers since 2017, said Victoria Bloom, chief economist at the National Association of Manufacturers, which produces a quarterly survey. Only recently has the issue slipped down on the list of challenges, superseded by trade-related uncertainty and increased raw material costs due to tariffs, Bloom said.
But the scarcity of skilled blue-collar workers remains a long-term problem, according to Ron Hetrick, an economist with Lightcast, a company that provides labor data to universities and industry.
“We spent three generations telling everybody that if they didn’t go to college, they are a loser,” he said. “Now we are paying for it. We still need people to use their hands.”
The hiring challenges faced by U.S. factories are multifaceted.
Trump’s crackdown on immigration, which includes attempts to revoke deportation protections for migrants from troubled countries, may eliminate workers who could have filled those jobs.
Many Americans aren’t interested in factory jobs because they often do not pay enough to lure workers away from service jobs that may have flexible schedules or more comfortable working environments.
Attracting motivated young people to manufacturing careers is also a challenge when high school guidance counselors are still judged by how many students go on to college. But college graduates often do not have the right skills to be successful on a factory floor.
The country is flooded with college graduates who can’t find jobs that match their education, Hetrick said, and there are not enough skilled blue-collar workers to fill the positions that exist, let alone the jobs that will be created if more factories are built in the United States.
The Business Roundtable, a lobbying group whose members are CEOs of companies, has started an initiative in which executives collaborate on strategies to attract and train a new generationof workers in skilled trades. At an event last week in Washington, executives commiserated about how hard it was to find qualified people and swapped tips onstage for overcoming the gap.
“For every 20 job postings that we have, there is one qualified applicant right now,” said David Gitlin, chair and CEO of Carrier Global, which produces air conditioners and furnaces and services heating and cooling equipment.
A Monetarily Sovereign government should have no trouble addressing the problem. Use the farm subsidy approach. Pay factories to hire and train workers at higher wages and better conditions.
If the government funded higher wages and reduced work hours, interest in factory jobs would increase significantly.
In the previous post, “The Fallacy of Free Will,” we discussed the reasons why free will doesn’t actually exist. We explained that it is an illusion created by our brains to help us manage the overwhelming amount of stimuli we encounter every second.
I believe many readers view this argument as sophistry, convinced they possess free will. They experience it directly; they act on their desires and feel that nothing compels their actions.
The reason illusions are powerful is their compelling nature..
The best-known visual illusions are television and movies.
A television screen displays two-dimensional sequences of flashing colored dots, which your brain interprets as convincing, three-dimensional, continuously moving scenes.
A movie consists of a series of rapidly appearing, still, two-dimensional images. Your brain’s shortcut allows you to “see” a three-dimensional, continuously flowing scene.
Another common illusion is the railroad stop sign, which is composed of two alternately flashing lights.
Although the lights don’t move, the alternating flash gives the strong impression that a light is moving back and forth.
In both cases, your visual system sees every photon, but rather than take the time and the monumental effort to translate each one, your brain uses shortcuts. It translates the stream of individual photons into patterns you believe are motion.
It converts the flow of individual photons into patterns that you perceive as motion. You look at the stop sign, and you experience a moving light. No matter how hard you try, you cannot unsee that image.
Only if you cover one light will you see, or rather not see, motion.
That is how we always see. The brain combines trillions of photons entering the visual system every second into a coherent image we perceive as reality. However, that reality consists only of those trillions of photons. Everything you see is an illusion created by your brain.
Our vision is a miracle of evolution. Plants can sense photons, but they don’t see. They don’t put those photons together into a moving, three-dimensional world.
Visual illusions are common, but all sensory systems rely on shortcuts to illusions—experiences where perception diverges from external reality.
I asked AI to give me examples of other, non-visual illusions. Here is what it came up with.
1. Auditory Illusions
Shepard Tone: A series of tones that sound like they’re endlessly rising in pitch, but actually aren’t. Your brain gets tricked by overlapping frequency layers.
McGurk Effect: If you see a face mouthing “ga” while the audio says “ba,” your brain might hear “da.” The illusion comes from conflicting visual and auditory inputs.
Phantom Words: Repeating a short, meaningless audio loop causes people to start “hearing” actual words or phrases—your brain imposes meaning on ambiguous input.
Auditory Continuity Illusion: A sound briefly interrupted by noise is perceived as continuing through the noise. Your brain fills in the gap.
2. Tactile (Touch) IllusionsThermal Grill Illusion: Interlacing warm and cool bars creates a burning sensation, even though neither is dangerously hot.
Pinocchio Illusion: If you close your eyes, hold your nose, and vibrate your biceps tendon, you may feel your nose stretching. Your brain merges proprioceptive and tactile inputs into a bizarre body image.
Cutaneous Rabbit: Taps delivered rapidly at the wrist and then the elbow make people feel taps hopping up the arm. Your brain “fills in” where no contact occurred.
Phantom Vibration Syndrome: Feeling your phone buzz in your pocket when it didn’t. A culturally recent but neurologically real tactile illusion.
Sound-Induced Flash Illusion: Hearing two quick beeps can make you see a single flash as two flashes. Cross-modal illusions show how senses interact and co-create perception.
4. Olfactory (Smell) Illusions
Harder to pin down, but they do occur—often as context effects.
Imagined Smells: People in a “smelly” environment (e.g., told there’s gas or perfume in the air) often report odors even when none are present. Strong suggestion can conjure real olfactory experience.
Flavor Manipulation: Since taste is largely smell, context and expectation can warp it. The same smell labeled as “parmesan” vs. “vomit” will be perceived differently, even if physically identical.
5. Gustatory (Taste) IllusionsThese are typically context- or suggestion-based.
Miracle Fruit: This berry binds to taste receptors, making sour things taste sweet for a while. Not an illusion in the strictest sense, but the interpretation of taste is warped.
Color Influence on Flavor: The color of a drink (say, red) can make people taste “cherry” or “strawberry” even if it’s lemon-flavored. Visual input overrides chemical reality.
6. Proprioceptive IllusionsThese involve body position and motion.
Rotating Room Illusion: In a slowly rotating room, people feel as though they are tilting even when stationary. Your internal sense of gravity gets confused.
Out-of-Body Experiences (in lab settings): Through clever VR or mirrored feedback setups, researchers can induce a feeling of disembodiment, where your sense of self floats away from your body.
In summary, what you see, hear, taste, smell, and feel is not reality. Your brain translates photons into images, vibrations into sound, chemicals into taste and smell, and pressure into touch, whether it is light and shiver-inducing or hard and painful.
None of it is reality. It is translations, often faulty and misleading, though even when as accurate as humanly possible, they still are translations, just as the words “ice cream” or a photo of a sundae are not ice cream.
Here is how that relates to so-called “free will.”
1. Everything we see, hear, smell, taste, and feel is an illusion created by our brain and body. It is as real as a movie, a film, or a TV show.
2. Like all illusions. It may or may not represent some elements of reality, but we cannot know which. Our brain tries to represent enough reality so we will have heirs and they will have heirs.
3. We are not the result of survival of the fittest; rather, we represent the minimum needed for survival, more accurately described as the survival of just barely enough.
4. When it has excess energy, a life form’s population expands to meet the energy supply. That has been true of the human species, which has expanded because, for certain brief times, it has been more than barely enough. We may be nearing that limit.
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PS. Reader “tetrahedron720″ recently wrote to me saying: “I am free to shout in a library, but I can’t do anything about the sequence of reactions of the people around me who will Shhh me or toss me out.”
He is not free to shout in the library.
His brain has translated trillions upon trillions of stimuli into illusions that prevent him from shouting. No matter what he considers doing, the illusions created in his brain will be responsible.
Why are these experiences considered illusions? Tetrahedron720 relies solely on his unique history of receiving photons and other stimuli, which his brain has organized into his unique memories and beliefs. From these stimuli, he has created a distorted reality that influences his actions.
Had those same photons been received by another brain, they would have had a different effect, and produced a different reality.
He believes he is making a decision, but the decision is being made by his brain. There is no supreme “he” that overrides his brain’s actions.
He does not control his brain. His brain controls him.
And now, a question: (I enjoy posting rebuttals or questions about my own opinions, and I welcome them from you, so long as they aren’t simply, “You’re wrong, goodbye.”)
QUESTION: Everything I see, hear, smell, feel, and taste is nothing more than photons, atoms, and other stimuli translated by my brain. Those photons, etc., are the reality.
I’m conscious of the translations, not of the reality.For me, everything is an illusion, like seeing a movie of Hawaii while I sit in Florida.
Yet, while I live my life in an illusion, I still manage to move from point A to point B. I’m not surprised to awaken in point Z.
My life seems to have logical continuity. If this is all an illusion, who or what is the “script girl” that keeps everything in order?
(The old term “script girl” refers to the person on a movie set responsible for ensuring that details, like a cigarette held in the right hand in one scene, do not suddenly change to a handkerchief in the same hand in a subsequent scene.)
ANSWER: Predictive Coding Theory suggests the brain minimizes surprise by anticipating what’s about to happen.
Your brain translates photons to tell you that square “A” is darker than square “B.” but the reality is that they are the same shade. You never see reality. You see the brain’s translations. You run your life by the illusions your brain gives you.
The brain is not a passive receiver of data. It’s a prediction machine. It constantly compares incoming sensory input with past experience. Then it updates its predictions.
The Hollow Face Illusion A concave face looks convex because your brain expects faces to bulge outward. That expectation overrides the actual depth cues.
The dress (white/gold vs. blue/black): The brain guesses the lighting condition (cool shadow vs. warm light), then reconstructs the colors accordingly. It’s not just perception — it’s interpretation.
Memory
I do not perceive reality; I perceive the interpretation of the present plus the memory of the past. Continuity depends heavily on the consistency of memory.
Memory lets me link this moment to the one before it. Without memory, I’d still have perceptions, but they wouldn’t feel like part of a story. The illusion would shatter into isolated frames.
There are people who suffer from anterograde amnesia, where they can no longer form new short-term memories. They often feel like they’ve just “woken up,” even if it’s the tenth time today.
They may not remember eating, speaking, or being in a room. But their emotions often linger. They might not remember a conversation, but still “feel” trust or fear toward a person based on prior encounters they can’t recall.
Perception without memory is not reality as we know it. It’s a sequence of nows. The “script girl” is gone, and the illusion turns into a slideshow with no story.
Their brain has created a reality as real to them as yours is to you, but it is a reality that lacks continuity.
We each live in a different world, one created uniquely for each of us by our unique brains. My world is as real to me as yours is to you, but they are different worlds.
My beliefs and decisions reflect my perspectives just as yours reflect yours. My illusion is that somehow, my world is the “real” one, but it is upon those unique beliefs that all my decisions are based.
I do not rule my brain. There is no “I” that is apart from my brain. My brain rules me via its interpretations.
It is a subject that fascinates me. I hope you feel the same.
Here is what CHAT GPT says:
“Free will is generally understood as the ability to make choices that are not determined entirely by prior causes, external forces, or divine intervention.”
In other words, if you have free will, you—as an agent—can choose among alternatives in a way that you could have done otherwise.”
It goes on to give four explanations:
Libertarian Free Will: Belief that you have genuine freedom to choose. Decisions are not entirely caused by prior events or deterministic laws. Often requires that the self or soul initiate choices.
Determinism: Every event, including human decisions, is the inevitable result of preceding events and natural laws. Under strict determinism, free will is an illusion.
Compatibilism: Argues that free will is compatible with determinism. You are “free” if you can act according to your desires and intentions—even if those are caused by past events.
Hard Incompatibilism: Claims that whether determinism is true or not, you still don’t have the kind of free will that justifies moral responsibility.
In the above definitions and descriptions, a mysterious “you” lurks in the background. That always is the problem — the belief that there is an underlying “you” making out-of-body decisions. It’s the fundamental belief in free will.
And that is why free will does not exist; it would require that underlying “you,” a non-physical entity that doesn’t respond to any outside or internal stimuli, but instead is a self-stimulating concept apart from every atom in one’s body, and every field and force.
Though free will requires a self (a “you”) that is not affected by any external or internal stimuli. No such “you” has been found to exist. Everything we think or do is a physical response to some stimulus, external or internal, conscious.
Any process that could supposedly ininitiate “free will” would either arise from prior causes (and be deterministic), or arise from randomness (which isn’t will, just chaos), or require a non-physical self (which violates everything we know about reality).
Consciousness is not magical or mystical. It is physics. Not only are our choices caused, but our awarenessof choosing is itself just another response, not the seat of some independent self.
I’m going to propose counterarguments (I love arguing against myself.)
I. If we don’t have free will, why is God so angry at us? Or is that just us making assumptions about a human-like God?
Presumably, God is omniscient, omnipotent, and just. Humans have free will and are judged accordingly. God made us as we are. God knew exactly what we’d do. God is punishing us for doing what he made us do.
This creates a contradiction: A just God cannot righteously punish deterministic beings for actions they were guaranteed to perform.
Conclusions:
God is not omniscient, omnipotent, and just, or
God did not create us, or
God does not exist, or
God created us with free will.
What those four alternatives add up to is that the existence of “free will” is a theological, not a scientific, assertion, which cannot be proved scientifically
II. And if I don’t have free will, why should I be blamed and punished for doing evil or credited and rewarded for doing good?
If we don’t have free will, how can we blame Hitler and praise Mother Teresa?
It’s a matter of convenience and perspective. It is convenient to say Hitler was bad, but the reality is that his actions, i.e., his responses to his life’s stimuli, were bad. Hitler is just a bag of chemicals
Mother Teresa was a bag of similar chemicals. Society dubbed her responses to stimuli “good.” But her chemicals had no moral measure. They are just chemicals.
It is the actions that we judge, and those judgments are social, not physical. Murder is bad except when society deems it necessary. Military generals, who have killed thousands, often are revered.
Infants are neither bad nor good. Later in life, their responses to stimuli are judged by society, which then punishes or rewards those actions. The bag of chemicals is changed by stimuli.
Every second of every day, we experience trillions of stimuli, both internal and external. For our small three-pound brain, processing, analyzing, and responding to all these stimuli is an incredibly challenging task — impossible, really.
Even the most powerful electronic computer doesn’t instantly have to deal with the number and range of stimuli and needed responses that the human brain must.
Your brain and body must consider billions of ever-changing situations, from decoding photons for sight to decoding sound waves and decoding chemicals for taste.
All through your body, stimuli are decoded, so y0u can deal with pathogens, and remain the right temperature, sleep and wake, pump blood, and on and on to a factor of millions.
You must keep functioning from when you weighed 8 pounds, and now you weigh 150 pounds, and you still function, though every cell in your body has been replaced many times. (Imagine repairing a car with new parts every day, while the car is running at 50 mph.)
You must create reality out of sensory input. Response alone wouldn’t survive. You need to anticipate, and that anticipation is what you call “reality.”
One urn or two faces. You can flip them, but if you do, why? What stimulus causes you to take that action?
You see things before you actually “see” them.
This anticipation allows you to mentally “flip” illusions, so the urn alternatively can appear to be two faces.
Pure response, billions of times every second, would be impossible, as well as exhausting. It has to be a mix — anticipation and response– or we always would be a step too slow.
So the brain is forced to take shortcuts. Survival works better with anticipation than with blind response.
The illusion of free will — the belief in effect without cause — is the method by which we create anticipation.
We already know that parts of the brain predict before other parts realize it.
In 1983, Benjamin Libet found that brain activity (the “readiness potential”) begins up to 500 milliseconds before participants report deciding to move their finger. Libet concluded that the brain begins preparing for movement before we become aware of choosing to act.
Soon et al. (2008) – fMRI-based prediction of choices
Finding: Using fMRI, researchers could predict with ~60% accuracy which button a subject would press up to 10 seconds before the subject became consciously aware of deciding. “The outcome of a decision can be encoded in brain activity several seconds before it enters awareness.”
Later studies replicated and extended Soon et al.’s work, showing that even abstract decisions, like whether to add or subtract numbers, could be predicted seconds in advance from brain scans.
Consciousness is not a live feed but a carefully delayed and smoothed reconstruction. A classic example: the “flash-lag effect.” See video
And if you enjoy videos, try this one: 30 Best Illusions. We all have seen illusions, and these are good ones. They demonstrate one simple fact.
Our brains invent what we believe is reality. Seeing is not in the eye, or even in the optical system. It is in the prediction.
We cannot act on reality because we don’t know what reality is. It is an illusion created by our brains and other parts of the body. See: Phantom limb pain. See also, “Psychosomatic.”
This undermines the idea of free will— that conscious intent causes behavior. Just as our perception of the world is an illusion, “free will is a functional illusion — a survival mechanism.
It arises from the brain’s need to anticipate complex outcomes and simulate future actions—giving the system a predictive edge. The illusion of free will improves our survival through anticipation.
Camouflage works because of the brain’s shortcuts. Some of these examples exist to fool even simple brains, not just your complex brain.
All living creatures invent their version of reality.
Evolution selects for illusion. So we don’t experience free will because it’s real—we experience it because it’s useful.
Free will is not a physical reality, but an evolved illusion. It’s a product of the brain’s need to predict, simulate, and integrate stimuli rapidly for survival.
While consciousness is the ultimate response to stimuli, the free will illusion evolved to deal with the massive number of stimuli, translations of those stimuli, and responses that life survival uniquely demands.
The illusion of free will emerges from the anticipatory architecture of the human brain, which evolved not to reflect absolute truth, but to stay one step ahead of chaos.
Consider AI, to date. It is the product of some very smart people, and is very smart in a narrow range.But no one yet has been smart enough to create even a tiny fruit fly, because a fruit fly is faced with far more complex tasks than any AI.
The fruit fly must live, procreate (a massively complex function in itself), find food, eliminate, avoid predators, gauge the wind, follow odors, sleep, wake, deal with bacteria and viruses, receive stimuli, translate stimuli, and respond to stimuli.
Nature created that fruitfly with more trials and failures than we are capable of running — at least so far.
While consciousness is the response to stimuli, free will is an illusion that emerges from the predictive needs of the human brain, which evolved not to reflect absolute truth, but to stay ahead of chaos.
Every minute, the human body receives trillions of stimuli—from the photons striking our retinas, waves of sound, airborne chemicals decoded as scent, fluctuations in temperature, blood chemistry, and pressure.
Internally, our cells generate, destroy, and communicate. We are bags of chemicals shaped by evolution, complex hierarchies of input processing.
Imagine a United Nations interpreter translating speeches from trillions of people, all speaking different languages at the same time. Your brain faces an even greater challenge. It must translate, edit, and respond simultaneously.
If your response to this chaos were merely reflexive, we would die quickly. Reaction alone is too slow. To survive, organisms must anticipate. Anticipation buys time. It enables strategic action before events unfold.
This predictive capacity forms the scaffold for what we subjectively experience as “free will.”
The classical notion of free will—uncaused, sovereign choice—is incompatible with a deterministic universe. Any genuine “freedom” would require a self that acts independently of all internal and external causes, which no system (biological or otherwise) has ever demonstrated.
Yet, we experience something that feels like choice.
This experience isn’t evidence of freedom. It is a cognitive simulationthat arises from the way the brain forecasts possible futures based on pattern recognition, memory, and context.
Like a chess computer searching its decision tree, the brain projects outcomes and generates readiness. Consciousness narrates these projections after the neural action has already begun.
Anticipation is not a luxury—it is a necessity. Brains evolved to “see before seeing,” to integrate probabilities and partial data in real time. Consider the experienced baseball batter: he must begin his swings before the pitch has arrived.
He reads the pitcher’s micro-signals, subconsciously aggregates prior experience, and initiates a swing before any conscious explanation exists.
When asked afterward how he knew a curveball was coming, he might say, “I could just tell.” This is not mysticism; it’s high-speed, subconscious prediction. Free will is the feeling generated when such predictions are fed into the brain’s narrative center and explained retroactively.
Consciousness does not serve as the decision-maker; instead, it acts as a narrator. It recounts the story of what the organism is currently doing, what it has done, or what it may do next.
Consciousness creates coherence in the flow of behavior, but it operates on a delay—the decisions it describes have often already been initiated by unconscious brain activity.
This does not make the experience of choice meaningless. It makes it strategic. The illusion of free will enables humans to reflect on past outcomes, simulate future options, and socially justify actions.
These are evolutionarily valuable functions, not signs of uncaused agency.
If the human brain were only a responder, we’d always be one step too slow. Our perceptual systems constantly forecast: we hallucinate continuity in flickering stimuli; we flip ambiguous images (faces or urns) with our minds. These are not errors—they are demonstrations of a system primed to guess forward.
Reality, as we perceive it, is not built from raw sensory data alone. It is constructed from expectation + input. This is why the “reality” we create feels stable—it is our prediction engine smoothing the chaos.
Free will, as a physical phenomenon, does not exist. Instead, a system has evolved to survive through prediction. The experience of choosing is a necessary illusion—a signal that our anticipatory machinery is working.
In that sense, we are not truly free, but we are equipped to feel free, just in time to stay alive.
You must wonder why something so simple and obvious is so widely and regularly misunderstood. I’m talking about the federal debt, which simultaneously is two things:
The total of deposits into Treasury bill, note, and bond accounts.
The net total of all past federal deficits, i.e. the difference between federal spending and federal taxing.
Here is an article from page 17 of The Week’s June 6, 2025 issue.
National debt: Why Congress no longer cares
Rising interest rates, tariffs and Trump’s ‘big, beautiful’ bill could sent the national debt soaring
“Now would be a very good time for Washington to bring back its debt obsession,” said Rogé Karma in The Atlantic. That’s because the perfect storm for turning the federal deficit into a “genuine crisis” has arrived.
The above-referenced “Historic bullshit . . .” article was based on the warning, “ticking time bomb.” Now, we must face not a bomb but a “genuine crisis.” Same idea. Same bullshit.
In recent years, the Federal Reserve has “raised interest rates dramatically in an effort to tame inflation.” Since that means the federal government has to pay higher interest on its bonds, “government payments on debt interest soared to $881 billion in 2024.” That’s more than the U.S. spent last year on national defense.
For reasons unknown, the frightening comparison of the federal debt vs. the amount spent on national defense has become de rigueur for debt freaks these days.
Gone are the days when the debt was compared to the cost of 200 airliners or something equally meaningless.
At the same time, President Trump’s tariff policies have led “almost every credible” forecast this year to anticipate slowed economic growth.
When the tariffs take effect, money will be taken out of the economy and sent to the federal government. Taking money out of the economy is recessionary.
Then there’s Trump’s “big, beautiful,” and bloated budget bill, which would add “more than $3 trillion to the deficit over the next decade.”
Translation: Then there’s Trump’s “big, beautiful,” and bloated budget bill, which would add “more than 3 trillion growth dollars to the economy over the next decade.”
(It’s not clear whether the author meant “debt” or “deficit” because deficits usually are calculated annually, and not over 10-year periods. Either way, the shrieking is meaningless. Both deficits and their resultant debt are necessary for economic growth.)
Trump’s bill is a horrible bill, for many reasons, but one of those reasons is not its contribution to the deficit or debt.
According to the formula for economic growth—Gross Domestic Product = Federal Spending + Nonfederal Spending + Net Imports—it is clear that deficit spending boosts both Federal Spending and Nonfederal Spending.
There is only one way for the federal government to avoid a deficit, and that is by running a surplus.
All U.S. depressions have come on the heels of federal surpluses.
1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.
The warning signals are flashing red, and if Washington continues to ignore them, “very bad things can happen,” from 1970s-style stagflation to a panicked flight from U.S. Treasuries and a global financial meltdown.
“Stagflation” is a combination of stagnation (or, more troubling, a recession) and inflation.
Recessions are caused by reduced (not increased) deficits and are cured by increased (not reduced) deficits.
When debt growth (red line) is reduced, we have recessions (vertical gray bars), which are cured by increased debt growth
As for “panicked flight from U.S. Treasuries,” there are three responses:
The federal government always can pay interest on its obligations simply by creating dollars.
When the U.S. economy is in trouble, there is a “panicked flight” to U.S. Treasuries, because they are the safest investment from a principal standpoint.
Who cares? The federal government does not need to offer Treasuries. Even if the public deposited $0 dollars into T-Security accounts, the government could continue to pay its bills forever.
Back to stagflation, the cause of inflation never has been federal spending but rather the lack of federal spending. Inflations are caused by shortages of crucial goods and services — most often oil and food — and cured by increased federal spending to reduce those shortages.
Lastly, there is concern about a potential “global financial meltdown.” It is unclear what type of “meltdown” the author means. Is he talking about a recession, which would be caused by reduced deficit growth? Or is he talking about a COVID-style recession that would be caused by shortages of virtually everything, and cured by federal deficit spending?
Or is he talking about the federal government being unable to pay its bills, which never has happened and cannot happen to a Monetarily Sovereign government.
So far, bond markets are showing concern but not panic, said Victoria Guida in Politico. The credit rating firm Moody’s slightly downgraded the safety of U.S. bonds, and investor unease pushed interest rates on those bonds above 5%.
That was Moody’s “performance” downgrade. No knowledgeable person believes the Federal government will be unable to pay interest on the securities. As for the principal, it’s locked safely away, never touched by anyone but the depositors.
The government could pay off all the so-called (misnamed) “debt” today, simply by crediting all the depositors’ checking accounts. A few computer keystrokes should do it.
Still, if Congress doesn’t heed these warnings and “shift the trajectory” of the budget bill—which would add trillions of dollars in tax cuts “without also making politically painful spending cuts”—”something more painful” than a mild Moody’s downgrade could occur.
Don’t bet on lawmakers acting responsibly, said Clive Crook in Bloomberg. The 2008 bank bail-outs and Covid-related spending under both Democrats and Republicans ballooned the national debt to previously unimaginable levels—it’s now $36.2 trillion.
Oooh, “unimaginable.” Is that worse than a “ticking time bomb,” “a perfect storm,” or a “genuine crisis”? Or is that closer to, “I have no idea what I’m talking about, so I’ll use scare words to pretend I do.”
Rather than confront debt of that magnitude, all but a few remaining deficit hawks “just stopped thinking about it.” Facing it would mean huge spending cuts and major tax increases, both of which are very unpopular.
Uh, perhaps it’s because “huge spending cuts and major tax increases” would cause a depression, like they always have.
Here, the author proves they don’t understand the fundamental differences between a Monetarily Sovereign entity like the U.S. government, and monetarily non-sovereign entities like state & local governments, businesses, euro governments, and individuals.
The U.S. has absolute control over the supply and value of its sovereign currency, the dollar. That is what “sovereignty” means. The non-sovereigns do not use a sovereign currency. They spend some other sovereign’s currency, so they have little, if any, control.
State and local governments use the dollar, over which the U.S. government is sovereign. You, I, and American businesses also use the dollar. We, too, are not sovereign, so we all can run short of dollars.
By contrast, euro nations use the euro over which the European Union is sovereign. So France, Greece, Italy, Portugal, et al can and do run short of euros.
Canada, Australia, the UK, and Japan are Monetarily Sovereign, so they cannot run short of dollars. It’s a reason why Japan has no difficulty supporting a so-called “debt” that is massively greater than the size of its economy. If the U.S. debt is a ticking time bomb, Japan’s debt would be an atomic bomb — but somehow, it isn’t.
One wonders how the debt nuts explain it.
Instead, Republicans are now trying to hide the bill’s “unfathomable cost” from voters, said Jessica Riedl in MSNBC.com. But it’s the voters who will suffer as a result.
“Unfathomable cost” — is that ever worse than “unimaginable,” “a ticking time bomb,” “a perfect storm,” and a “genuine crisis”?
I’d prefer “a pseudo-crisis invented by those who either are ignorant about Monetary Sovereignty, or want you to be ignorant so you don’t demand services from the government.”
That way, they have a “good” excuse to cut your Social Security, cut your Medicare, cut you Medicaid, and to deny you all the benefits the government easily could provide. The purpose: To widen the income/wealth/power Gap between you and the very rich political contributors.
The rapidly growing debt and massive interest payments create “economic drag,” diverting wealth “away from the investments that would start businesses, create jobs, and raise incomes.”
The massive interest payments go FROM the government TO the economy, where the added dollars allow for “the investments that would start businesses, create jobs, and raise incomes.”
As Washington continues to take an ostrich-like approach to the national debt, something large and unpleasant is bearing down on all of us.
Yes, that time bomb has been ticking for at least 85 years. It’s still ticking and still “bearing down.” If you can’t learn from 85 years of experience . . . Wow.
#Monetary Sovereignty - Mitchell 
