Non-transitive dice and where your intuition fails you

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

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.


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


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.



“We can’t pay for it.” Did you fall for it?

Image result for bernanke and greenspan
It’s our little secret. Don’t tell the people we don’t use their tax dollars.

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Alan Greenspan: “Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency.”

St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e.,unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational. ………………………………………………………………………………………………………………………………………….. …………………………………………………………………………

Federal financing is different. It is different from your financing and mine. It is different from your state’s and local government’s financing.

The federal government uniquely is Monetarily Sovereign.

That means it created the original dollars from thin air, and gave those dollars the value it wished, simply by passing laws. Today the federal government retains the right to keep passing laws and creating dollars, forever.

It can give the U.S. dollar any value it wishes, relative to other currencies or to precious metals. It can change the dollar’s value at the stroke of a pen, which it has done many times over the years. 

Unlike you, and me, and unlike your state, your county, and your city, and unlike any corporation, the federal government never unintentionally can run short of U.S. dollars. It can service any debt, of any size at any time.

So long as the federal government does not run short of laws, it will not run short of dollars.

Having the unlimited ability to create its dollars, the federal government has no need to ask anyone else for dollars, that is, it has no need for income. It simply creates all the dollars it needs. So, when you send your federal tax dollars to the U.S. Treasury, they are destroyed upon receipt.

(Why federal tax? The real purpose of federal taxation is to control the economy — to tax what the government wishes to discourage and to cut taxes on things it wishes to encourage.)

That’s right, your precious tax dollars are destroyed, and the federal government creates brand new dollars, every time it pays a bill. That is why the government is able to run a deficit almost every year, and still have no difficulty paying its bills.

Contrary to popular wisdom, the federal government does not borrow the dollars it can create at will. The issuance of T-bills, T-notes, and T-bonds is not borrowing, in the sense that the government neither needs nor uses those dollars.

Instead, the dollars are deposited for safekeeping into T-security accounts, and upon maturity, the dollars are returned to their owners. Not only does the government not use those dollars, but the government adds interest to the accounts.

(This is unlike the monetarily non-sovereign state and local governments, which do need and use the money paid for their bonds.)

Our Monetarily Sovereign government neither needs nor uses any form of income.

You wouldn’t know it, by the “Big Lie” comments of our leaders:

Dianne Feinstein Lectures Children Who Want Green New Deal, Portraying It as Untenable New York Times, Feb 22, 2019

Senator Dianne Feinstein found herself in a standoff Friday with a group of schoolchildren who confronted her about her refusal to support the Green New Deal.

In a video posted by the Sunrise Movement, which encourages young people to combat climate change, an exchange quickly became tense once Ms. Feinstein started to explain her opposition to the Green New Deal, an ambitious Democratic-led proposal that calls for a radical transformation of the United States’ energy sector.

“There’s no way to pay for it,” Ms. Feinstein told the group of about 15 children at her San Francisco office.

“We have tons of money going to the military,” a young girl responded, only to receive a lecture about the realpolitik of passing bills in a Republican-led Senate.

I don’t yet know enough about the details of “The Green New Deal” to support or denounce it (so far, no one does), but in any event, Feinstein is wrong. No matter what the dollar cost, whether a billion, a trillion, or many trillions, the federal government easily could pay for it.  And yes, the government could prevent excessive inflation, too.

And lest you believe Dianne Feinstein is uniquely ignorant or deceitful, another, even more “reliable” source of false scare headlines is the Committee for a Responsible Federal Budget (CRFB). We have written about them many times.

Excerpts from their latest scare headline: 

As Debt Rises, Interest Costs Could Top $1 Trillion, Feb 13, 2019

Under current law, net interest payments will nearly triple over the next decade, rising from $325 billion last year to $928 billion by 2029. Under the Alternative Fiscal Scenario, which assumes lawmakers extend the tax cuts and spending increases passed over the last two years, interest on the debt will exceed $1 trillion in a decade.

As a share of the economy, interest payments will nearly double – from 1.6 percent of Gross Domestic Product (GDP) last year to 3 percent by 2029. Under the AFS, interest would be 3.4 percent of GDP by 2029, surpassing the post-WWII record set in 1991 when interest payments were 3.2 percent of GDP.

The article is buttressed by a “scare” graph showing the rise of federal debt.

What the article fails to mention is that this rise is accompanied by one of the greater periods of economic growth in U.S. history.

And this growth is no coincidence. Federal deficits, which lead to federal debt, are the additional growth money the federal government pumps into the economy.

In fact, when federal debt fails to grow sufficiently, the U.S. experiences recessions and depressions.

The most common measure of economic growth is Gross Domestic Product (GDP). The formula for GDP is: GDP = Federal Spending + Non-federal Spending + Net Exports.

All three terms reflect increased dollars, and federal deficits pump dollars into the economy. The graph you never will see from the debt fear-mongers is this one:

Reductions in federal debt growth (red line) lead to recessions (vertical bars) which are cured by increases in federal debt growth.

And though the CRFB may be among the better funded of the Big Lie purveyors, consider this from

Forget Paying for Medicare for All—We Can’t Pay for the Medicare We Have, Peter Suderman|, Feb. 22, 2019

How would Medicare for All, which even under rosy assumptions would require more than doubling individual and corporate income taxes, be financed?

Today, Medicare and Medicaid are widely acknowledged as the biggest drivers of the federal government’s long-term debt. Broadly speaking, America’s biggest fiscal problems are health care spending problems.

And America’s health care spending problems are largely problems stemming from increasing spending on Medicare.

The article lies. Federal taxes do not fund federal spending. (If they did, there would be no federal deficit, the federal debt would not have grown into the many trillions, and the federal government would have had difficulty paying its bills.) 

The federal government does not have a fiscal problem other than the ignorance being spread by our opinion leaders.

What the article does not mention is, all those deficit dollars and interest dollars the federal government has pumped into the economy, are in fact growth dollars that have wended their way through every town, county, state and business in America, enriching our entire nation. While the federal government doesn’t need any infusions of U.S. dollars, the private economy does in order to grow.

But, here comes USA Today, quoting from debt-fear mongers. Let’s take it line-by-line:

The national debt and the federal deficit are skyrocketing. How it affects you

More debt and higher deficits not only harm the economy. They dip into the pocketbooks of average Americans.

Why the debt-fear mongers are wrong: The deficit adds dollars to the economy, thus adding dollars to the pocketbooks of average Americans.

For starters, they drive up interest rates, which leads to slower economic growth. Slower growth leads to lower wages, which results in a lower standard of living for Americans.

Why the debt-fear mongers are wrong: Interest rates are set by the Federal Reserve, which raises rates by fiat, to combat inflation, not to attract buyers of T-securities. If buyers are needed, the Fed itself can buy. Higher interest rates cause the government to pay more interest dollars into the economy, which is stimulative.

To pay for years of deficits, the federal government must borrow money. Roughly half of the U.S. debt is held by foreign countries, such as China, Japan and Saudi Arabia. China alone holds more than $1 trillion in U.S. debt. 

Why the debt-fear mongers are wrong: The federal government, having the unlimited ability to create dollars, has no need to borrow dollars, so does not borrow dollars. It accepts deposits into T-security accounts. The purposes of offering T-securities are not to obtain dollars, but rather to:

  1. Provide a safe “parking place” for unused dollars, which helps stabilize the dollar, and
  2. Assist the Fed in setting interest rates, with T-bill rates at the bottom.

Borrowing at that level is financially irresponsible, because the more we borrow, the more we pay in interest to those countries.

Interest on U.S. debt is projected to total $7 trillion over the next decade and, by 2026, will become the third largest category of the federal budget. That’s $7 trillion going out on the door.

Why the debt-fear mongers are wrong: Paying interest helps grow America’s economy by adding dollars to the economy. The U.S. government has the unlimited ability to pay interest. Those dollars are not “going out the door.” They are being added to the U.S. and world economies, enriching domestic America and future importers of American goods and services.

In other words, that’s $7 trillion that could be spent on things like roads, bridges, schools and other programs that benefit Americans every day.

Why the debt-fear mongers are wrong: The U.S. government has infinite dollars. It never can run short of dollars. It can pay unlimited interest and still fund “roads, bridges, schools, and other programs that benefit Americans.”

Higher interest rates reduce the amount of private capital available for investments, which hurts economic growth and wages and leaves the U.S. with less flexibility to respond to a financial crisis like the Great Recession of 2008.

Why the debt-fear mongers are wrong:Most interest is paid within the economy. Private lenders lend to private borrowers. The money flows within the private economy. However, when the federal government pays more interest, those dollars go into the private economy, increasing the amount of private capital available for investments.

Online you can find hundreds, perhaps thousands of such wrongheaded articles. We’ll close with excerpts from this Heritage Foundation doozy:

In Boom Times, Unsustainable Debt Levels Threaten Prosperity, Justin Bogie, Senior Policy Analyst in Fiscal Affairs, Oct 3rd, 2018

Washington’s soaring deficit and debt could wipe out the progress being made, hitting working Americans the hardest.

Unless lawmakers make significant reforms to entitlement programs — the driving force behind the deficits — it’s a question of when, not if, the breakdown will occur.

Every disseminator of the Big Lie suggests “significant reforms (i.e. cuts) in entitlement programs.” Your are supposed to think reason is because these programs are big. The real reason is that these programs help the poor and middle classes more than the rich.

The federal government’s fiscal year 2018 is over. In some ways, it was a banner year: Economic growth quickened, average paychecks fattened, and there were more jobs available than there were people looking for work.

But there are clouds on the horizon. Washington’s soaring deficit and debt could wipe out the progress being made, hitting working Americans the hardest.

Why the debt-fear mongers are wrong: Economic growth has been substantial since 2008, because deficit spending added growth dollars to the economy.

The Congressional Budget Office (CBO) projects that the FY 2018 deficit will hit $804 billion, pushing national debt to over $21 trillion. It’s a crushing tide of red ink.

Why the debt-fear mongers are wrong: There is nothing “crushing” about it. Federal finances are different from your and my finances. While large debt could “crush” you and me, the federal debt has no crushing effects.

The federal government could pay off the entire debt today, without creating one new dollar. It merely would return the dollars that already exist in T-security accounts, back to the owners of those accounts.

To put those numbers into context, consider the typical U.S. household, which last year earned $60,336. If that typical family spent like the feds, they would have entered the fiscal year more than $300,000 in debt and piled on an additional $12,000 on top of that.

Why the debt-fear mongers are wrong: The Heritage Foundation disseminates the Big Lie by equating Federal Monetarily Sovereign finances with personal monetarily non-sovereign finances. Whether this is ignorance or intent, it is wrong.

For years, budget experts have warned Congress that high deficit and debt levels are not sustainable and will eventually lead to an reconomic breakdown. Unless lawmakers make significant reforms to entitlement programs — the driving force behind the deficits — it’s a question of when, not if, the breakdown will occur. 

Why the debt-fear mongers are wrong: Actually, so-called experts have warned that the federal debt is a “ticking time bomb,” ready to explode. They have promulgated this lie every year since 1940.

In 1940, the federal debt was $40 Billion. Today, it is above $20 Trillion, a 50,000% increase (!), yet here we are, after 80 years of lies, with a strong economy and none of the predicted disasters.

There is also the real risk of sharply higher interest rates and inflation. 

Why the debt-fear mongers are wrong: So where are the ” sharply higher interest rates and inflation”? Both have been low for the past decade. The Fed, not deficits, sets the interest rates..

Some analysts argue that last year’s tax cuts are what’s driving up the deficit, but that’s not true. It’s out-of-control spending, not insufficient revenues, that’s driving the country toward fiscal disaster.

Why the debt-fear mongers are wrong: No disaster, but The Heritage Foundation reveals its bias favoring the rich. These folks love tax cuts for the rich, but hate benefits for the poor and middle classes. So they say, tax cuts are O.K. but benefits should be cut.

Anytime I’ve had discussions with people who do not understand Monetary Sovereignty, they first claim that federal spending is unaffordable. Then, after more discussion, they acknowledge that the federal government never can run short of dollars to pay its bills, but then they turn to inflation.

They claim that despite the 50,000% debt increase in the past 80 years, “eventually” federal deficit spending will cause inflation. 

In recent years, they have claimed that if the federal Debt/GDP ratio rose above a certain percentage, we would have inflation, but as the percentage kept climbing without inflation, they kept adjusting their figures. 

Today’s ratio is above 100% (depending on how “debt” is calculated), and still inflation is low. (Japan’s Debt/GDP ratio is above 250%, and they have struggled to achieve inflation.)

When all other claims have been disproved by history, the debt fear-mongers final, desperate claim is “What about Zimbabwe?” (or Germany, or some other nation that has experienced hyperinflation?)

But inflations are not caused by deficit spending. Inflations are caused by shortages, usually shortages of food, but sometimes shortages of oil or other goods.

As for Zimbabwe, the government stole farm land from farmers and gave it to non-farmers. The predictable shortage of food caused inflation in food costs, which led the government to respond with money “printing.”

In Germany, the onerous conditions placed on Germany by the Allies, caused severe shortages of most goods and services. The German government responded by “printing” money.

In short, inflations are caused by shortages. Money “printing” and deficit spending is a government’s response to inflation, not the cause of inflations.

Image result for koch brothers
Koch foundations have attaching strings to their massive University contributions, — control over curriculum and professor hiring and evaluation.


The rich are motivated by Gap Psychology, the human desire to distance themselves (“widen the Gap”) from those below them on a social scale, and to come closer (“narrow the Gap”) to those above. 

To widen the Gap below, and to narrow the Gap above, the rich opt for cuts to social programs like Social Security and Medicare. These cuts are called “reforms.”

The excuse for the cuts is the supposed “unsustainability” of federal Social Security and Medicare spending.

It is a lie — a Big Lie.

To promulgate the Big Lie, the rich bribe politicians (via campaign contributions and promises of lucrative employment later), economists (via university contributions and jobs with “think tanks”), and the media (via advertising expenditures and outright ownership).

Thus, the rich pay the main sources of information available to the public to spread the Big Lie, that federal deficits and federal debt are a threat to the U.S. 

Until you tell your Senators and Representatives that you know they have been lying, and that the federal government easily can pay for our benefits, they will keep lying and cutting your benefits.

You are the only thing that can eliminate the lies. 

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

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

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.


–Financial frauds who give exactly the same advice to every client, no matter what the situation.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.

We all are aware of the euro nations’ financial problems, especially the problems of the PIIGS – Portugal, Italy, Ireland, Greece and Spain. We have discussed the fact that because these nations, in surrendering their Monetary Sovereignty, surrendered their control over their money supply. They are unable to create the money necessary to support their economies.

I predicted in a 1995 speech at the UMKC,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.” However, not all European nations surrendered their Monetary Sovereignty. Among the nations choosing to remain Monetarily Sovereign are Poland, Romania, Sweden, Norway and the United Kingdom.

Here are some sample news items:

Bloomberg; 5/25/11: “Poland’s economic-growth forecast was raised to 3.9 percent from 3 percent at the Organization for Economic Cooperation and Development

5/27/11: According to Capital Economics, a British research group, Romania’s economy will grow by 3% this year compared to a previous forecast of 1%, followed in 2012 by a 2.5% advance. The recovery will be fueled by private consumption, but also by the resumption of investments. Also the research group states that Romania has the second best potential for economic development in the region, along with Bulgaria, Poland and Russia.

OCDE:1/2/11 – Sweden is expected to continue to recover strongly from the recession as high saving, low interest rates and an improving jobs market encourage consumers to step up spending, according to the OECD’s latest Economic Survey of the country.

Bloomberg: 5/26/11: The mainland (Norway) economy will expand 3.3 percent this year and 4 percent in 2012, after growing 2.2 percent in 2010, the Organization for Economic Cooperation and Development said yesterday.

The Monetarily Sovereign nations are doing better than the monetarily non-sovereign nations. No surprise there for those of you who have been reading this blog. The key, of course, is for a Monetarily Sovereign nation to realize it’s Monetarily Sovereign. Not all do.

Why the British economy is in very deep trouble, Financial Times, Posted by Neil Hume on May 26, 2011

Here’s something for the Chancellor and the Office for Budget Responsibility (OBR) to chew on: a warning from Dr Tim Morgan, the global head of research at Tullett Prebon, that the deficit reduction plan won’t work and the UK is headed for a debt disaster.

Morgan says sectors that account for nearly 60 per cent of UK economic output are critically dependent on debt (public or private) and set to contract rather than expand. This will render economic growth implausible and means the burden of public and private debt will prove too heavy for the nation to carry:

Over the past decade, the British economy has been critically dependent on private borrowing and public spending. Now that these drivers have disappeared – private borrowing has evaporated, and the era of massive public spending expansion is over – the outlook for growth is exceptionally bleak.

Sectors which depend upon either private borrowing or public spending now account for at least 58% of economic output. These sectors are now set to contract rather than expand, which renders aggregate economic growth implausible. And, without growth, there may be no way of avoiding a debt disaster.

The UK, wisely avoided surrendering its Monetary Sovereignty, then forgot why it did so. It thinks, “the era of massive public spending is over.” Why? It has no idea. It believes it’s monetarily non-sovereign.

This puts the UK in the same position as the U.S., whose politicians, media and old-time economists do not understand the implications of Monetary Sovereignty. Read any article or listen to any politician, and you will not be able to tell whether the subject is a Monetarily Sovereign nation or a monetarily non-sovereign nation. They say exactly the same things about both.

What would you think about an investment advisor who gives exactly the same advice to a wealthy, married old man with no children, as he gives to an impoverished single, young woman supporting five children? If someone says exactly the same things, makes exactly the same predictions, and offers exactly the same advice regarding two diametrically opposite monetary situations, that person is a fraud.

I have just described the debt-hawk media, politicians and old-time economists.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up my future.”


–Federal Debt: A “ticking time bomb”

An alternative to popular faith

Popular faith holds that the federal debt is a ticking “time bomb,” ready to explode into inflation and high interest rates, and destroy our economy. Here are a few references, beginning 70 years ago. Note that the language remains the same, down through the years — repeated predictions of a disaster that never seems to come.

Even with the end of the gold standard in 1971, arguably the most significant economic event since the Great Depression, the debt-hawk language never changes — as though 1971 were a non-event.

Sept 26, 1940, New York Times: Deficit Financing is Hit by Hanes: ” . . . unless an end is put to deficit financing, to profligate spending and to indifference as to the nature and extent of governmental borrowing, the nation will surely take the road to dictatorship, Robert M. Hanes, president of the American Bankers Association asserted today. He said, “insolvency is the time-bomb which can eventually destroy the American system . . . the Federal debt . . . threatens the solvency of the entire economy.”

Feb 11, 1960, New York Times: Mueller Assails Rise in Spending: The enormous cost of various Federal programs is a time bomb, threatening the country’s fiscal future, Secretary of Commerce, Frederick H. Mueller warned here today “. . . the accrued liability is a ticking time bomb. Some day someone will have to pay.”

Oct 4, 1983 Evening Independent – The United States and the developed world face a “ticking time bomb” because of the huge foreign debt involving loans to Third World nations

Oct 26, 1983, David Ibata: “ . . . home-building officials called for a commission to propose ways to trim the $200 billion federal deficit. The deficit is a ‘ticking time bomb‘ that probably will explode in the third quarter of 1984,’ said Fred Napolitano, former president of the National Association of Home Builders.

Feb 21, 1984, James Warren: “‘We now hear from them (the Reagan administration) that deficits don’t cause high interest rates and inflation,’ AFL-CIO President Lane Kirkland said. ‘If that’s the case, we’ve suddenly discovered the horn of plenty and should stop worrying and keep borrowing and spending. But I don’t believe it. It’s a time bomb ticking away.”

January 12, 1985, Lexington Herald-Leader (KY):The federal deficit is “a ticking time bomb, and it’s about to blow up,” U.S. Sen. Mitch McConnell, a Louisville Republican, said yesterday.

Feb 17, 1985, Los Angeles Times: We labeled the deficit a `ticking time bomb‘ that threatens to permanently undermine the strength and vitality of the American economy.”

Jan 5, 1987, Richmond Times – Dispatch – Richmond, VA: 100TH CONGRESS FACING U.S. DEFICIT ‘TIME BOMB

November 28, 1987, The Dallas Morning News: THE TICKING TIME BOMB OF LONG-TERM HEALTH CARE COSTS A fiscal time bomb is slowly ticking that, if not defused, could explode into a financial crisis within the next few years for the federal government and our nation’s elderly. The ticking bomb is the growing cost of long-term care.

October 23, 1989, FORTUNE Magazine: A TIME BOMB FOR U.S. TAXPAYERS The government guarantees millions of mortgages, bonds, deposits, and student loans. These liabilities, now twice the national debt, are growing fast.

May 1, 1992, The Pantagraph – Bloomington, Illinois: I have seen where politicians in Washington have expressed little or no concern about this ticking time bomb they have helped to create, that being the enormous federal budget deficit, approaching $4 trillion and growing now at an annual rate of $400 billion per year.

October 28, 1992: Ross Perot: “Our great nation is sitting right on top of a ticking time bomb. We have a national debt of $4 trillion. Seventy-five percent of this debt is due and payable in the next five years. This is a bomb that’s set to go off and devastate our economy and destroy thousands of jobs.

Dec 3, 1995, Kansas City Star: Deficit is sapping America’s strength. Concerned citizens. . . regard the national debt as a ticking time bomb poised to explode with devastating consequences at some future date.

April 14, 2003: Porter Stansberry, for the Daily Reckoning: The baby boomers are heading into retirement with no savings and no productive companies to support them in old age. Generation debt is a ticking time bomb…with about ten years left on the clock.

October 1, 2004, Bradenton Herald: A NATION AT RISK: TWIN DEFICIT A TICKING TIME BOMB: Lawmakers approved Bush’s request without cutting federal spending by a penny, thereby fattening the country’s projected record deficit of $422 billion by another $145 billion next year.

May 31, 2005, Providence Journal, Defusing the Medicare time bomb, Some lawmakers see the Medicare drug benefit for what it is: a ticking time bomb, set to wreak havoc on the budget and shoot future tax rates sky-high.

April 5, 2006,, “We have to worry about the deficit . . . when we combine it with the trade deficit we have a real ticking time bomb in our economy,” said Mrs. Clinton.

Dec 3, 2007, USA Today: US debt: $30,000 per American. WASHINGTON (AP): Like a ticking time bomb, the national debt is an explosion waiting to happen.

*September 24, 2010, Email from the Reason Alert: ” . . . the time bomb that’s ticking under the federal budget like a Guy Fawkes’ powder keg.”

*July 7, 2011, Washington Post, Lori Montgomery: ” . . . defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.

[*Added subsequently]

And on and on and on. You get the idea. That time bomb has been on the verge of explosion at least since 1940. Even today, the media, the politicians and sensationalist economists refer to the debt as a ticking time bomb. Please look at the following graph and see if you can find any relationship between deficit spending vs inflation and/or interest rates.

This graph shows there is no predictable relationship between federal deficits vs. inflation and or interest rates.

If the debt is a time bomb, it surely has the slowest fuse in history. The pundits have been wrong, wrong, wrong, all these years. We should understand federal deficits, even large federal deficits, have not caused inflation or any other negative economic effect, and the debt is not a ticking time bomb? It’s an economic necessity. Let us turn away from faith and start to rely on facts.

The faith healers* are killing our economy by restricting money growth. See: The damage done by deficit cuts.

Rodger Malcolm Mitchell

*Faith is belief without evidence. Science is belief from evidence.