Non-transitive dice and where your intuition fails you Sunday, Jun 30 2019 

The universe has an infinite number of facts. We can’t learn and process them all, so we compensate. We learn about the universe by analogy, and by inference, and by reference:

Analogy: A comparison of two otherwise unlike things based on the resemblance of a particular aspect.
Inference: If two or more things agree with one another in some respects they will probably agree in others
Reference: The words of trusted people.

Think of the factual statement: Dogs have four legs and teeth. Spot is my dog. Therefore Spot has four legs and teeth.

Image result for crocodile

Spot

Knowing that Spot is a dog, you infer a picture of him.

You visualize details about Spot without ever having to see or hear him.

Often though, what we think of as analogy and inference can deceive us:

Dogs have four legs and teeth. Spot has four legs and teeth. Therefore Spot is a dog.

Wrong.

Your inference threw you off because it wasn’t a true analogy. It was a misleading “intuition.”

Because the universe is so big, the vast majority of what you “know” is based on your intuition.

Here is another example of where your intuition fails you. As you “know,” when

  • “A” is bigger than “B” and
  • “B” is bigger than “C” and
  • “C” is bigger than “D” then
  • “A” must be bigger than “D”

Right? Do you know any exceptions to this? Actually, there are many exceptions.

Here is one example. It’s called “non-transitive dice.”

Non-Transitive Dice by MathArtFun

These are not ordinary dice. As you can see that they are numbered differently.

The numbers are:

A. Blue Die: 6 6 6 6 5 5

B. Black Die: 4 4 4 4 12 12

C. Red Die: 10 10 3 3 2 2

D. Green Die: 7 7 7 7 1 0

When rolled, die “A” will beat die “B” 2/3 of the time. “B” will beat “C” 2/3 of the time. “C” will beat “D” 2/3 of the time.

And counter-intuitively, “D” will beat “A” 2/3 of the time. No one die is the greatest.

We often see non-transitiveness in sports, where the winningest teams do not always have winning records against the poorest teams. Your favorite team may win the World Series in the same season as they have a losing record against a last-place team.

Politicians repeatedly create false analogies and false inferences. President Barack Obama, in his weekly radio address, July 2, 2011, said, “Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on a sounder footing.”

This is misleading on multiple levels.

The federal government is Monetarily Sovereign. It has a sovereign currency, the U.S. dollar, of which it can create an infinite supply. By contrast, you and your family are monetarily non-sovereign. You do not have a sovereign currency nor can you create an infinite supply of dollars.

The federal government can pay any debt denominated in dollars. You cannot. The federal government never unintentionally can run short of dollars. You can. The federal government needs no income to pay its bills. You need income to pay your bills.

Although you have a “means,” within which you must live, the federal government does not. And, unlike you, the federal government does not need to cut spending so it can afford to spend. Even if the federal government collected zero taxes, it could continue spending, forever.

And finally, it is federal spending, not spending cuts, that grow the U.S. economy and “put it on a sounder footing.”

Obama’s two short sentences were 100% wrong, and the inferences they were meant to draw were 100% misleading.

But to the average person, they sound logical, reasonable and prudent.

Because so much of what you know is based on what seems logical, reasonable, and prudent, you have learned to trust your intuition. You will fight mightily against anything that violates your intuition, despite powerful facts supporting the opposition.

You will believe your intuition especially if it supported by comments from a leader. You might more readily believe that vaccination causes autism, and immigrants cause disproportionate crime, and global warming is a Chinese hoax, if these ideas are supported by the President of the United States.

You have been primed for these beliefs by the knowledge that many medicines cause unpublicized problems, strangers are more responsible for crime than are friends, and China is an economic foe.

Nearly every politician, economist, and media writer tells you that federal financing is just like your personal financing (so debt is a danger and living within one’s means is prudent). The brainwashing comes at you from all sides.

Add such retorts as, “There’s no such thing as a free lunch,” and “Why are you the only one who knows this,” and you have created a powerful belief system that cannot be shaken by facts.

The federal government has increased its debt almost every year for the past 80 years, yet still, you are told that federal debt is a “ticking time bomb.”

Belief is less logical than emotional. You believe what you feel comfortable believing.

If, to help you visualize Monetary Sovereignty, I show you why federal finances are very much like those of the Bank in the game of Monopoly, you may dismiss that as being unrealistic, and “just a game.”

But by rule, the financial parallels between the Monopoly Bank and the federal government nearly are perfect. In the Monopoly rules, you will find this:

“The Bank never goes ‘broke.’ If the Bank runs out of money, the Banker may issue as much more as may be needed by merely writing on any ordinary paper.”

You didn’t question that rule in Monopoly, yet the vast majority of people’s intuition questions exactly the same rule for our Monetarily Sovereign federal government.

Finally, we come to inflation and the brainwashed belief that federal money “printing” causes inflation.

Let’s say you go to the store, and you find that the price of apples has gone up. Do you immediately think, “The government is printing more money,” or more likely do you think, “There must be a shortage of apples”?

In any capitalist economy, supply responds to demand, and prices result from an imbalance between supply and demand.

If supply is less than demand, there will be shortages and price increases, upon which producers will respond by creating more product, alleviating the shortages and lowering prices.

Here is the normal sequence leading to low amounts of inflation, and then inflation moderating:

  1. Shortages develop —>
  2. Prices rise —>
  3. Production increases to meet demand —>
  4. Shortages are eliminated —>
  5. Prices fall.

This process creates the average low inflation that has been the norm for decades.

Here is the process leading to large inflations and hyperinflations:

  1. Shortages develop —>
  2. Prices rise —>
  3. Production is unable to increase sufficiently to meet demand—>
  4. Shortages continue to grow —>
  5. Prices continue to rise into hyperinflation —>

All inflations and hyperinflations are caused by shortages, usually shortages of food or energy, never by federal money “printing.”

In the following graph, note how peaks and valleys of inflation do not match peaks and valleys of federal money “printing.”

In summary, the universe contains more facts than you can absorb. You are forced to develop shortcuts that allow you to bypass the vast majority of facts and to come to conclusions about the reality around you.

These shortcuts include analogy, inference, and reference, the guidance of other people.

Despite common belief, the federal government cannot run short of dollars with which to pay its debts, and federal money creation does not cause excessive inflation (which is caused by shortages.)

And yes, the federal government easily can pay for the Ten Steps to Prosperity (below), without causing inflation.

So why not?

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

 

Medicare for All: The real stumbling block Sunday, Mar 17 2019 

Imagine that everyone in America — you, your family, your friends and neighbors — everyone,  could receive health care from doctors, hospitals, rehab facilities, extended care facilities, and all pharmaceuticals and equipment, and never have to worry about cost.

Related image

A choice?

Imagine you being forced to choose between your financial devastation vs. sickness or death for your loved ones.

Then, imagine the federal government paying all your health-related bills, leaving you free from worry.

The rich in America already live in such a glorious world, but for most of us, current and future health affordability is an ongoing concern.

Yet, many non-rich Americans oppose even the concept of Medicare for All. Why?

1. It’s unsustainable. Debt fear mongers have been promulgating that myth for at least 80 years.In 1940, when the federal debt was $40 Billion, the fear-mongers were calling it a “ticking time bomb.

“Every year afterward, they have pounded the same lies into our brains: “The federal government will go broke. It’s “unsustainable.” Your children’s taxes will have to go up.”

Today, the debt is $20 Trillion, and the government has not gone broke, and indeed cannot go broke, and taxes have not risen.

2. It’s socialism. Actually it isn’t. It’s progressivism. Socialism is government ownership and control, not merely government support.

The federal government supports many things: Social Security, Medicare, Medicaid, poverty aids, education, etc. Shall we eliminate them?

Additionally, we do allow many forms of real socialism: The military, roads, bridges and dams, public libraries, NASA, the VA, etc. Shall we eliminate those, too?

3. It will cause inflation or hyperinflation. Although in the past 80 years, federal debt has risen an astounding 50,000%, inflation has averaged close to the Fed’s 2.5% target.

The reason is that the Fed has tools it needs to prevent and cure inflations, among which is: Control over interest rates.

Raising rates increases demand for the dollar, making it more valuable, so fewer dollars are needed to buy goods and services.

While federal “debt” (blue, i.e. deposits into T-security accounts) increased massively, inflation (red) increased modestly.

4. We don’t have enough resources. What this really means is: “If the poor start using doctors, hospitals, et al, then there won’t be enough doctors and hospitals for me.”

These objectors believe that a viable health-care system relies on the poor not being able to afford health-care — that “limited” resources should be reserved for the wealthier among us. This is America?

A nation’s resources grow with the money available to  pay for them. Funded by a government’s unlimited ability to pay, resources are unlimited.

5. It will take money and jobs from the health insurance industry. Right, just as public transportation takes money and jobs from taxi drivers.

Some jobs will be added in the federal sector. But in any event, the notion that the poor should do without healthcare so that the insurance industry can keep its jobs is ridiculous. It’s an example of misplaced priorities.

The above are fake reasons, used to conceal the real reason, which is described in the following, brief, “THE WEEK Magazine” (2/22/19) article:

Despite all the attention tech gets, the biggest five insurance and health benefits companies have greater revenues than the FAANGS – Facebook, Amazon, Apple, Netflix, and Google.

The top five health insurers and benefit managers expect &787 billion in revenue for 2019, compared with $784 billion for the FAANGS.

Pharmacy benefit manager CVS, the biggest of the health-care group, expects revenues of $246 billion.

In short, the insurance companies, that massively bribe politicians with campaign contributions and promises of lucrative employment later, don’t want the federal government to offer you better, more comprehensive, no deductible insurance at no cost.

OpenSecrets.org reveals:

One-third of Senate Democrats have cosponsored the Medicare for All Act, which Sanders introduced in September.

Democrats who haven’t cosponsored the bill received 146 percent more money on average from health insurance companies between 2011 and 2016 than those who have ($147,186 to $59,789)

If you’ve been told lies #1 thru #5, there is a good chance the source either is ignorant of economic reality or has been bribed by the health insurance industry.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

My split feelings about the GOP tax “cut” plans. Thursday, Nov 30 2017 

Image result for freedom from chains

.

It takes only two things to keep people in chains:

The ignorance of the oppressed
and the treachery of their leaders.

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My feelings are split regarding the GOP tax “cut” plans.

First, on the good side: If it passes it may be the death knell for the politicians who voted for this take-from-the-poor, give-to-the-rich monstrosity. Even those who still back Trump will, at long last, wake up.

Or is that too much to hope?

Second, it will add an estimated $1.5 trillion to the federal deficit. This means, the U.S. federal government, which never can run short of its own sovereign currency, will add $1.5 trillion dollars to the economy.

Though most (nearly all?) of those dollars will go to the rich, and thus widen the Gap between the rich and the rest, adding dollars to the economy is necessary for economic growth.

The formula is:

Gross Domestic Product = Federal Spending + Non-federal Spending + Net Exports.

The two terms — Federal Spending and Non-federal Spending — increase with an increased money supply, which in turn is increased by deficit spending.

There is ample evidence for the positive relationship between deficit growth and economic growth. Even the GOP tacitly admits that this relationship exists by claiming (correctly) that tax cuts will grow the economy.

How do tax cuts grow the economy?

Tax cuts grow the economy by leaving more dollars in the economy.

“The economy” includes you, me and American business. When any of us has more money to spend, we tend to spend more, which increases GDP. That is why taking money out of our pockets, via taxes, reduces GDP, and why cutting taxes increases GDP.

This is straightforward and should be easy to understand, except when the politicians, the media, and even the university economists confuse you with the ridiculous proposition that deficit spending should be cut.

If tax cuts grow the economy then deficit spending grows the economy. Since deficit spending grows the economy, why would anyone wish to cut deficits?

Here are the (wrong) reasons most often given:

  1. Deficits are “unsustainable.” No one knows exactly what that means, but presumably, the idea is that the federal government will run out of dollars to pay its bills. But our Monetarily Sovereign government cannot run short of its own sovereign currency. There is nothing “unsustainable about federal deficits.
  2. The federal government is like you and me. It must live within its means. (This was an Obama favorite). But the government is not like you and me. You and I are monetarily non-sovereign. You and I can run short of dollars to pay our bills; the federal government cannot.
  3. Deficits cause inflation.  (This usually is followed by a mention of Weimar Germany and/or Zimbabwe). Inflation is caused not just by too much money Supply but by too little Demand for money and too little Supply of goods and services compared to Demand..


NO RELATIONSHIP BETWEEN DEFICITS (RED LINE) AND INFLATION (BLUE LINE)

Deficits refer to money supply, but they do not refer to money demand, goods and services supply, or goods and services demand.

Further, “deficits” refer only to net dollar creation by the federal government, but do not include net dollar creation by the private sector, mostly by banks. Every time a bank lends, it increases the money supply.

Hyperinflations like Weimar and Zimbabwe are caused by shortages, not by money “printing.” Weimar had a shortage of gold to pay its bills. Zimbabwe had a shortage of food, when its leader, Robert Magube stole land from farmers. The hyperinflations caused the money “printing,” and not the other way around.

In summary, the GOP tax bills will increase the deficit and the debt. That’s the part I like.

What I don’t like is that the bills reward the rich and widen the Gap between the rich and the rest. From THE WEEK:

GOP senator says tax cuts must be followed by ‘structural changes to Social Security and Medicare‘ 

At a Politico Playbook forum on Wednesday, Sen. Marco Rubio (R-Fla.) said that cutting taxes needs to be followed by cutting spending on popular federal programs.

“I analyze this very differently than most,” Rubio said. “Many argue that you can’t cut taxes because it will drive up the deficit. But we have to do two things. We have to generate economic growth which generates revenue, while reducing spending. That will mean instituting structural changes to Social Security and Medicare for the future.”

He suggested reducing benefits and raising the retirement age for future retirees, so people can prepare for the changes.

“Tax reform is the economic component of this equation,” Rubio said. “When more people are working, there are more taxpayers and more revenue, but that alone won’t be enough. You are still going to have a debt problem in the absence of spending cuts.”

The legislation already includes $25 billion in automatic Medicare cuts for next year alone, along with $111 billion in other cuts to federal programs, and it would either raise taxes or keep them the same for 6.3 million Americans 65 or older in 2019 and 10.8 million by 2027.

Let’s be absolutely clear: THERE IS NO “DEBT PROBLEM.” It is a fiction promulgated by the rich, to make you accept the belief that your benefits should be cut. It is their attempt to widen the Gap between the rich and the rest.

Even AARP has acknowledged there is no need to cut benefits. You may not remember this, but back in 2012, the federal government declared a FICA tax “holiday.” Here are excerpts from a post we published that year:

AARP President Rob Romasco admits FICA does not support Social Security, Wednesday, Aug 15, 2012

In an August 14th online discussion, AARP President Rob Romasco answered questions about Social Security funding, and essentially admitted the BIG LIE, though he didn’t realize it at the time:

The “BIG LIE” is the statement that the federal government relies on federal taxes to pay its bills.

Comment From Guest: “I hear conflicting statements in the media about Social Security running out of money. What is the real story: Is it expected to run out of money?”

Rob: “Social Security receives money from 3 main sources: the payroll tax, interest earned from bonds that are held in the Trust Funds, and the taxation of benefits.”

That is the myth — that Social Security receives money from taxes.

But, federal taxes do not fund Social Security. The so-called “Trust Funds” are an accounting myth, that the federal government can increase, decrease, or do without at will, and still pay all its financial obligations.

Comment From Guest: “Is the FICA tax holiday hurting Social Security?”

Rob: “This is a very good question… The FICA tax holiday is in no way hurting the Social Security program. Even though the payroll tax was decreased by 2 percent, money is transferred from the ‘General Fund’ to make up for the lost payroll tax.”

So there you have it. To pay for the “lost payroll tax,” money is transferred from the mythical General Fund. And in fact, to pay for any “lost” tax, money always can be transferred from the mythical General Fund.

If there were no payroll tax at all – i.e. if FICA were $0 – money to pay Social Security benefits still could be transferred from the mythical General Fund.

What does this all mean? The General Fund, the Social Security Trust Fund, and indeed all federal funds are accounting fictions.

They all are nothing more than numbers on balance sheets, and the numbers are wholly controlled by the U.S. government. That is what we mean when we say the government is Monetarily Sovereign. Contrary to the lies you have been told, your children and grandchildren will not “pay for the debt,” any more than you currently pay for the $14 trillion debt.

The government actually has the power to pay off the entire debt tomorrow, without levying a single penny in taxes, and without inflation.

You might ask your Senator or Representative, “If, in 2012, the government could continue paying Social Security benefits without collecting FICA tax from me, why can’t it continue to pay my Social Security without collecting FICA tax from me?”

The gobbledegook answer you receive should be amusing, though not informative.

Bottom line: Cutting taxes grows the economy, which is a good thing. The GOP plan will, as all GOP plans do, widen the Gap between the rich and the poor/middle classes.

If you have at the very least, $5 million – $10 million in assets (that’s AT LEAST),  you personally will benefit from the GOP plan. If you have $100 million or more, you will come out like a prince.

If you have less than that bare minimum, or if you plan to collect Social Security, Medicare, Medicaid, or any other poverty benefits, you will be worse off.Related image

Hey, it’s a GOP plan. What did you expect?

And, why do you think President Trump hides his tax returns?

Anyway, we have elections coming up next year, so this time, vote.

It’s not enough to gripe after the fact.

And though marching is good, today’s GOP doesn’t pay attention to your marches.

When you stay home, that’s a vote for the rich, who do vote for themselves and who buy votes from others.

Don’t vote for the politicians; vote for yourself.

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

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

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (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 A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) 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 EVERYONE Five 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 FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce 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 business 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

–Saving America by closing the gap: A suggestion for #OWS Friday, Dec 9 2011 

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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It had seemed mysterious to me, that otherwise well-informed, often intelligent people – people who have easy access to the facts – still seem not to understand the very basis of all economics: Monetary Sovereignty. Media writers and politicians are examples of groups who easily could discover the truth, yet they don’t.

For years I’ve ascribed this to laziness of mind or reluctance to admit error. I may have been wrong on both counts.

Let’s begin with a few, absolute, undeniable facts:

1. In 1971, the U.S. federal government became Monetarily Sovereign. It gave itself the unlimited ability to pay any bill of any size, any time.
2. Given this unlimited ability to create dollars, it needs neither taxes nor borrowing to support its spending.
3. U.S. states counties and cities, corporations and individuals are monetarily non-sovereign
4. The sole economic limitation on federal spending is inflation.
5. Since the U.S. became Monetarily Sovereign, and deficits increased greatly, the Fed largely has been able to control inflation at close to its target range of 2%-3%, and there never has been imminent danger of hyperinflation.
6. Federal deficit spending is economically stimulative and supports many economic benefits; reduced deficit spending, i.e. austerity, restricts benefits.
7. Dollars have no physical existence. Much like numbers, they exist only as accounting references. You nether can see nor touch a dollar.
8. The federal government pays its bills, not by sending dollars, which being non-physical, cannot be sent, but rather by sending instructions to banks to mark up accounts.
9. Austerity negatively impacts the poor more than the rich.

One may choose to argue these points, but the evidence suggests such arguments devolve to word play and sophistry. I never have known of an intelligent – emphasis on “intelligent” – debt hawk who seriously will deny any of the above. Yet, these same debt hawks continue to maintain that reductions in federal deficits are prudent and necessary, which strangely does not result in feelings of cognitive dissonance. They seem comfortable holding conflicting beliefs.

As said earlier, I first thought this indicated mental laziness, a cousin to low intelligence. And later I felt it might be closer to pride, hubris and the difficulty in admitting error. In my more recent posts I’ve suggested the real problem is class warfare. The wealthiest 1% are pressing down on the less wealthy 99%, not so much to increase absolute power, but to increase comparative power.

As a businessman, I often saw that absolute compensation was much less important to workers than comparative compensation. A worker making $25K per year was happy, if he were the highest paid among his peers, but a worker making $50K per year was angry if he were the lowest paid. One only need look at professional athletes to see this effect.

Though rationally, absolute income and benefits should be of paramount importance, the “wealth gap” has great psychological meaning. While austerity impacts the poor and the rich, the upper 1% are willing to accept some loss of wealth if the loss to the poor is greater, i.e. if the “gap” grows.

We see this everywhere. Deficit cutters want to reduce Social Security benefits. This negatively would impact the 1%, but not nearly so much as it would hurt the 99%. The same is true for Medicare reductions. Reducing military expenditures might make America less safe for all, but this has the “advantage” of unemploying thousands of soldiers and workers in militarily-related industries, thereby increasing the gap. Cutting postal services will be an inconvenience for the 1%, but a major trauma for those postal workers who lose their jobs.

Everywhere you look, reduced deficit spending hurts America overall, but the 1% are hurt less than the 99%. Reduced deficit spending growth leads to recessions, which grow the gap.

This effect may not always be intentional or even conscious by the 1%. It may simply be a matter of “comfort.” The 1% are uncomfortable when the gap narrows – when members of the 99% move into the neighborhood or into the exclusive building. Some clubs levy high fees to keep the “riff-raff” out. In organizations catering to the 1%, the staff goes beyond courtesy into obsequiousness, further to extend the gap.

Even racial and religious bigotry may be related to a psychological desire to press down some groups in order to extend the gap.

America’s and the world’s opinion leaders – the T.V. personalities, the print media editors, the politicians, the economists – they generally are part of the 1%, and if not the 1% at least the upper 5%. Emotionally, they all treasure the gap and feel uncomfortable when it closes.

Increased deficit spending would stimulate the economy, benefitting everyone, but it would benefit the 99% more, and that bothers the 1%. Even the upper 50% treasure the gap between them and the lower 50%. Everyone loves the gap if they are part of the “haves.”

Citizens, who don’t want immigrants to become citizens, use non-factual excuses like crime and job loss to explain their feelings. “Straights” deny marriage to gays, thereby maintaining the social gap. Everywhere we look, we find groups trying to press down other groups, not for any personal benefits, but to maintain a gap.

And that may be why facts and logic have had so little effect on economic beliefs. The greatly maligned (by me) Chicago Tribune editors, who stoutly refuse even to look at facts, much less acknowledge them, may not reflect mental laziness or reluctance to admit error. They may reflect their possibly subconscious, personal desire to maintain or build the gap.

So if facts and logic cannot overcome the myth that deficits should be reduced and austerity is beneficial, what can? In many nations, military power. In today’s America, political power.

Historically, efforts to reduce the gap have been met with resistance by the upper levels, this resistance being overcome only by political power. All the bloody revolutions fall into that category. Martin Luther King’s marches and especially voter registration, led to the gap-closing, Civil Rights act of 1964, perhaps America’s greatest revolution since the Civil War.

Political power means votes. While #Occupy Wall Street wishes to close the gap, it’s immediate goals are not clearly defined. They seem to want to bring down the upper 1%, a goal that will be met with the fiercest resistance, and which would not benefit the 99%.

#OWS first must learn Monetary Sovereignty, then put forth and support candidates (probably Democrats, not independents) who will show the 99% how MS can close the gap. The 1% will resist, but the 99% have the votes.

Warren Mosler ran for office. He was creamed. He had no backing, no name, no voice, no organization. He was alone with his facts and logic. #OWS should get behind people like Warren (and Warren himself, if he still has the stomach for politics), march for them, gather voters for them and give them big, loud, visible soapboxes, where they can shout the benefits of federal deficit spending – where they can show the 99% how their lives and their children’s lives need not be relegated to agonizing austerity.

That should be the focus of #OWS’s efforts: Learn MS, then elect candidates who understand MS. Given enough votes, the media, the politicians and even the old-school economists will fall in line, and America will emerge from the doldrums into the light.

Don’t damage the 1%. Damage the gap.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

#MONETARY SOVEREIGNTY

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