Well, there goes another excuse for not giving poor people money.

The sole purpose of government is to improve and protect the lives of the people.

Most people would like to have more money. This includes many of the rich, who already have more money than they can spend, but seem motivated to have even more.

How Florida Is Pushing Back Against Government Overreach
The sole purpose of government is to improve and protect the lives of the people.

Gap Psychology describes the human desire to distance oneself from those below, on any social scale, and to approach those above.

Thus, growing “richer” requires widening the Gap. This involves not only gaining more for oneself but also depressing others.

Either approach widens the Gap.

That is why the rich, and the Republican Party of the rich, seem so adamant that giving people money will disincentivize people to work.

Strangely, or perhaps not so strangely, the rich do not feel the “disincentive” applies to them, for they generally claim to work just a hard as always, no matter how much more money they own.

Their story is that the poor and middle-classes are congenitally lazy, who only will labor if whipped by hunger, homelessness, or other deprivations.

The fact that millions of people work at demanding, or even dangerous jobs, for low or moderately low pay, does not seem to occur to those who claim that if people are given money, they will refuse to work.

It is a lie, or if not a lie, then at least an ivory tower misunderstanding by academics.

Ask a police officer or a fire-fighter or a public school teacher why they work. It is in the nature of human beings that most of us like to work, and we feel such emotions as worthlessness and boredom when we are not working.

In fact, lack of “something to do” is a major problem for retirees.

All of the above is the hypothesis. Here is some fact:

When a California city gave people a guaranteed income, they worked more — not less
Stockton’s experiment shows what $500 per month in “free money” can do for employment, mental health, and more.
By Sigal Samuel Mar 6, 2021

The city of Stockton, California, embarked on a bold experiment two years ago: It decided to distribute $500 a month to 125 people for 24 months — with no strings attached and no work requirements.

The people were randomly chosen from neighborhoods at or below the city’s median household income, and they were free to spend the money any way they liked. Meanwhile, researchers studied what impact the cash had on their lives.

The results from the first year of the experiment, which spanned from February 2019 to February 2020, are now in. And they’re extremely encouraging for its participants, and for advocates who see unconditional cash transfers as an effective way to help people escape poverty.

The most eye-popping finding is that the people who received the cash managed to secure full-time jobs at more than twice the rate of people in a control group, who did not receive cash.

Within a year, the proportion of cash recipients who had full-time jobs jumped from 28 percent to 40 percent. The control group saw only a 5 percent jump over the same period.

When confronted with a non-intuitive result, you surely must wonder, “How can that be? How would giving people money increase their desire to work for money?”

The researchers wrote in their report that the money gave recipients the stability they needed to set goals, take risks, and find new jobs.

In other words, when you’re drowning, all you can think about is staying afloat in the moment. That focus on the now, occupies all your energy and resources.

But if you are given a boat, you now can begin to think about getting food, shelter from the elements, finding land, signaling potential rescuers, etc.

One man in his 30s had been eligible for a real estate license for over a year but hadn’t gotten it because he just couldn’t afford to take time off work. Thanks to the freedom offered by the extra $500 per month, he said, his life was “converted 360 degrees … because I have more time and net worth to study … to achieve my goals.”

That’s a short-term example, but it also works in the longer term. Many intelligent youngsters do not stay in school, because their families need money now. So they are forced to find whatever low-paying jobs they can.

Eventually, these low-level jobs are the first to disappear. During any period or hard times, the under-educated are the first to need unemployment compensation.

Given money, they can continue in school, and find even better jobs, and/or create their own companies. They will be less likely to need unemployment compensation, later.

In the research done to date, unconditional cash does not tend to disincentivize work. In several programs — from Alaska and North Carolina in the US, to Finland and Spain in Europe — it has had no effect on employment either way.

In some cases, it seems to embolden people with an entrepreneurial bent; for instance, in Japan, initial survey results have shown that recipients are 3.9 times more interested in launching a new business.

Employment aside, there are clear benefits to unconditional cash programs. The Stockton experiment shows that getting unconditional cash tends to boost happiness, health, school attendance, and trust in social institutions, while reducing crime.

At its basic level, giving people money reduces their poverty, and crime, especially street crime, is an outgrowth of poverty.

(In the Stockton experiment, money) recipients spent most on necessities like food (37 percent), home goods and clothes (22 percent), utilities (11 percent), and car costs (10 percent). They spent less than 1 percent on alcohol or cigarettes.

These numbers offer a counter to harmful stereotypes and faulty assumptions: that people who become poor get that way because they’re bad at rational decision-making and self-control, and that they’ll blow free money on frivolous things or addictive substances. The evidence does not support these beliefs.

As part of its obligation “to improve and protect the lives of the people” government should give people money. This notion has been criticized on moral grounds. It’s as though not helping a drowning person will force a sink-or-swim mentality, which somehow is morally better.

But, allowing someone to drown is the ultimate immorality.

Here are excerpts from an article describing results around the world.

Everywhere basic income has been tried
Which countries have experimented with basic income — and what were the results?
By Sigal Samuel Updated Oct 20, 2020.

The general idea — that the government should give every citizen a regular infusion of free money with no strings attached — has been around since the 16th century. But it’s recently experienced a remarkable resurgence: Advocates ranging from tech billionaire Mark Zuckerberg to libertarian economist Milton Friedman to former Democratic presidential candidate Andrew Yang have endorsed it.

Many people, who otherwise might favor such a plan, are reluctant to “give money to people who don’t need it.” This belief is founded on two concerns:

  1. The false belief that federal taxes fund federal spending, while in fact no one — not you, not me, not our grandchildren — ever pay for federal spending. The concern, “Why should my money go to rich people?” does not apply to Monetarily Sovereign federal spending. The government creates, from thin air, all the dollars it spends.
  2. The legitimate belief that federal spending should help narrow the Gap between the rich and the rest. I suggest that the simplicity of “Give the same amount to everyone” is far more actionable, and just a fair, as an income-based (or wealth-based?). The rich always find a way to game the system, and they would game this system, too.

Alaska: Since 1982, the state has given each citizen an annual check just for being alive, effectively wiping out extreme poverty. The money — which can range from around $2,000 per person when oil prices are high to $1,000 in cheaper gas years — comes from the Alaska Permanent Fund, a state-owned investment fund financed by oil revenues.

Economists investigated whether the payment was leading people to work less and found that “the dividend had no effect on employment” overall.

North Carolina: Since 1997, revenue from a casino on tribal land has been given to every tribal member, no strings attached. Each person gets on average somewhere between $4,000 and $6,000 per year. Economists found that it doesn’t make them work less. It does lead to improved education and mental health, and decreased addiction and crime.

Manitoba, Canada: Choosing one farming town, Dauphin, as a “saturation site” where every family was eligible to participate in a basic income experiment. The basic income seemed to benefit residents’ physical and mental health — there was a decline in doctor visits and an 8.5 percent reduction in the rate of hospitalization — and high school graduation rates improved, too.

Finland: The government chose 2,000 unemployed citizens at random and gave them a check of 560 euros ($635) every month for two years. Participants were assured they’d keep receiving the money if they got a job. The income didn’t help them get jobs, but it did make them feel happier and less stressed. The recipients also reported that they felt more trust toward other people and social institutions — from political parties to the police to the courts — than they did before getting a basic income.

Spain’s “B-MINCOME” experiment started offering a minimum guaranteed income to 1,000 households randomly selected from some of Barcelona’s poorest districts. Under the two-year randomized controlled trial, households could receive up to 1,675 euros ($1,968) per month. There was also a control group of 383 households. Preliminary results showed that the basic income boosted life satisfaction and mental health while making participants neither more likely nor less likely to find employment.

Iran rolled out a nationwide unconditional cash transfer program to compensate for the phase-out of subsidies on bread, water, electricity, heating, and fuel. The government gave out sizable monthly payments to each family: 29 percent of the median household income on average. Economists found that “the program did not affect labor supply in any appreciable way.” The program is still running, and it’s the only such program in the world to run nationwide.

Namibia: All residents below the age of 60 living in the Otjivero-Omitara region of Namibia received a basic income: 100 Namibian dollars ($6.75) per person per month, no strings attached, regardless of their socioeconomic status. As a result, child malnutrition dropped and school enrollment rates went up, while poverty-related crime (like theft) fell.

India: Between 2011 and 2012, a pilot project in the state of Madhya Pradesh gave a basic income to some 6,000 Indians. Every man, woman, and child in eight villages received a monthly payment: 200 rupees ($2.80) for adults and 100 rupees for each child. The results: Receiving a basic income led to improved sanitation, nutrition, and school attendance.

Japanese billionaire Yusaku Maezawa announced that he would give away 1 billion Japanese yen — about $9 million — to 1,000 random Twitter followers. Recipients of the cash benefit are now 3.9 times more interested in launching a new business. Recipients saw a decrease in divorce rates, from 1.5 percent to 0.6 percent. And more than 70 percent of recipients said they experienced a significant increase in happiness.

SUMMARY

Poverty is the lack of money, and the cure for poverty is to supply money to the impoverished.

We use the term “poverty” to describe merely being short of money. It does not need to be the abject, begging-in-the-street form of poverty, to have a negative effect on a family.

Just being unable to afford college or unable to live in a good home, are serious monetary and psychological negatives, not only for one family, but for that family’s economic surroundings.

Poverty does not indicate a moral lack. It is the result of bad fortune, whether at birth or at any time thereafter. Punishment does not cure poverty, because poverty itself is punishment.

Blaming the needy for their situation provides no benefit, moral or monetary, either for the impoverished or for the rest of humanity.

Withholding money from the impoverished is like withholding medicine from the sick.

The U.S. federal government, being Monetarily Sovereign, has the unlimited ability to create dollars. It is infinitely rich. The dollars it would give in the form of a basic income are not tax dollars. No one ever will pay for those dollars. They are created ad hoc, from thin air.

People receiving money are not less likely to work; the reverse is true. And they are more likely to be more productive members of society and less likely to commit crimes.

Giving “no strings” money to people has time and again proved to benefit the people themselves and the rest of the private sector. Everyone benefits.

See Step #3, Social Security for All (below).

There are no downsides.

Rodger Malcolm Mitchell

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

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

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 Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and 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. 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 the rest.

MONETARY SOVEREIGNTY

Irony of ironies: How two Johns saved the Republican Party

Each day, Donald Trump demonstrates his character by disparaging some American, while professing love for a murderous dictator. Recently, the focus of his ire has been Senator John McCain, a man deceased for months, unable to fight back — the perfect victim for a coward.

Though some may debate whether Senator John McCain was, or was not, a “war hero,” there is a certain irony in a “bone-spur,” draft dodger claiming that a fighting soldier is not a hero simply because he was captured and tortured for five years.

Image result for wounded john mccain soldier
John McCain

Clearly, neither Trump nor his followers understand that irony nor the irony of Trump’s other reason for hating the long-deceased McCain:

McCain’s decision to vote down the health care bill sponsored by Trump’s friend Sen. Lindsey Graham, R-S.C. That bill, which would have passed had McCain supported it, would have destroyed the Affordable Care Act (ACA), also known as “Obamacare.”

They do not see the irony of Trump’s claim that McCain “. . . was horrible, what he did with repeal and replace (of Obamacare) . . . what he did to the Republican Party and to the nation and to sick people that could have had great healthcare was not good.”

What Trump and his followers neither understand nor will not admit that with that vote, Republican John McCain saved the Republican Party and Trump’s Presidency.

In similar fashion, right-wing, Chief Justice, John Roberts, did the same:

Roberts had left behind a storm in Washington over his opinion upholding President Barack Obama’s health-care overhaul — the Affordable Care Act — a stunning validation of Obama’s signature domestic achievement that transformed public perceptions of the chief justice.Republicans in Congress had been fighting the law dubbed Obamacare at every turn for two years, and all the GOP presidential candidates in 2012 had vowed to repeal it.And now Roberts, a nominee of President George W. Bush, had saved it.

How did these two men save the Republican Party and Trump’s Presidency by voting against the Republican Party and Trump?

Because in their zeal to repeal all things Obama, the Republicans and Trump neglected to develop a “replace” that reduced or eliminated many of the coverages of the  ACA. For example (from BBC):

  • ObamacareRequires all insurance plans to cover certain health conditions and services, such as emergency room visits, maternity and postnatal care, cancer treatment, annual physical exams, prescription drug costs and mental health counselling.

Republican plan: States may apply for waivers that allow them to end mandatory coverage of certain health conditions, such as vision and dental care for children, hospital care, and outpatient services. States that receive such waivers could allow insurers to set a maximum amount they will pay for an individual’s medical services – a practice that Obamacare had prohibited.

  • ObamacareProhibits insurers from denying coverage or charging more to individuals who have pre-existing medical conditions.

Republican plan: Gives states the ability to opt-out of requirements that insurers charge the same premiums for healthy and sick customers.

  • ObamacareExpanded Medicaid health insurance for the poor to cover more low-income individuals.

Republican plan: “Block grants” that are capped based on a state’s population and whose growth is limited. 34 states would see reduced government support for Medicaid and tax subsidies for individuals purchasing health insurance.

  • Obamacare: Insurers can charge older Americans no more than three times the cost for younger Americans

Republican plan: States can receive waivers to allow them to charge older Americans more.

In short, the Republican plan offered fewer benefits and dumped many of the costs onto the monetarily non-sovereign states, which must increase taxes if they are to afford to improve health care support.

(By contrast, the federal government, being Monetarily Sovereign, has the unlimited ability to create dollars, and can support any health care plan without raising taxes.)

The Republicans actually had years in which to come up with a suitable and superior replacement, and they failed. Trump, of course, did nothing other than to tell the Party that he was waiting “pen in hand.”

Since any replacement would involve more than a single sheet of paper, Trump’s lack of reading, writing, or comprehension skills did not allow him to participate.

So had the Republicans succeeded, they would have failed. That is, by destroying Obamacare, and leaving millions of people without affordable health care, they would have turned the vast majority of the nation against the right-wing.

Today, they are left in the politically enviable political position of being able to stand on the outside and throw rocks, without having done a single positive thing to help the masses receive health care.

And it was the two Johns, McCain and Roberts, who gave them that ironic gift.

Meanwhile, the Democrats failed by succeeding. They receive scant credit for saving Obamacare, and they saved the Republicans from disaster.

Instead, they now must fight the “Medicare for All” battle, and once again the Republicans with throw “socialism” stones without offering a good alternative plan.

Always be careful what you wish for, boys.

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

SOCIALISM! The Green New Deal socialism monster under your bed

Perhaps you were one of those children who feared the night monster hiding under your bed or in your closet. Perhaps you thought you could hear the night monster sneaking around you while you pulled the covers over your head.

Typical anti-socialism cartoon, misrepresenting the facts
Typical anti-socialism cartoon, misrepresenting the facts

Today, as an adult, perhaps you now fear the Green New Deal (GND) socialism monster. The GND socialism monster and the night monster have much in common.

Both scare you. Both are commonly believed in by the unknowing. And both are imaginary.

SOCIALISM: “A theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.”

The words ownership and control are bolded because they are key. When the government owns and controls something, for instance, a Veterans Administration hospital, that is an element of socialism.

But when the government merely provides funds, as when Medicare pays your hospital and doctor bills, that may be progressivism, but it is not socialism.

The abject failures of Russia’s and Venezuela’s socialist and criminal governments often are given as examples of why socialism “doesn’t work.” But do we give the examples of Greece and Brazil to demonstrate why capitalism “doesn’t work.”

It isn’t socialism that has injured Russia and Venezuela; it’s criminal dictatorships — closer to Donald Trump’s administration of criminals than to real socialism.

We Americans wisely accept some elements of socialism, i.e. government ownership and control, in our capitalistic nation. For example:

Image result for socialism cartoons
The GOP wants you to believe that government spending is socialism.

The list goes on and on. In fact, a capitalistic government could not survive without many socialist elements.

So when pundits complain that this benefit or that program is “socialist,” they merely are using a word that has become a pejorative to the ears of Americans — and that’s why they use it: For psychological impact when facts don’t matter.

Socialism, in of itself, is not a bad thing. Unless you wish to get rid of the military, the national highway system, et al, we always will, always must, have some socialism to protect us.

In fact, when Trump derides “Medicare for All” as “socialism,” he conveniently forgets that his demand for $6 billion dollars to extend the border wall, also is socialism.

The GND monster is not socialism. It is not even a law. It is a set of goals and directions toward preventing the collapse of our ecology and our economy, due to global warming.

If, like Trump, you claim global warming is a Chinese hoax (and that Trump University was a real university, and that Trump never would cheat on his wives, his taxes, or his employees), you are fact-averse, and you now have permission to return to the cult.

Otherwise, you understand that human-caused global warming is a real threat to our grandchildren, a threat we are causing, a threat we cannot ignore as it gets worse and worse.

This is Rep. Alexandria Ocasio-Cortez’s, and Sen. Ed Markey’s, framework defining what they call a “Green New Deal”:

  • upgrading all existing buildings in the country for energy efficiency;
  • working with farmers “to eliminate pollution and greenhouse gas emissions … as much as is technologically feasible” (while supporting family farms and promoting “universal access to healthy food”);
  • Overhauling transportation systems to reduce emissions — including expanding electric car manufacturing, building charging stations everywhere, and expanding high-speed rail to a scale where air travel stops becoming necessary;
  • A guaranteed job with a family-sustaining wage, adequate family and medical leave, paid vacations and retirement security for every American;
  • High-quality health care for all Americans.
For those with no imagination, all goals are unrealistic.

Contrary to what Trump’s pundits want you to believe, Ocasio-Cortez and Markey are not stupid. They do not propose killing cows to prevent cow-farts. They do not propose taking away your cars and tractors.

(An otherwise intelligent friend of mine confided in me that he was worried about the Democrats taking away airplane travel.) Such is the power of rumor and conspiracy-mongering.

Trump’s conservatives, predictably, denounced the GND. After all, conservatism wishes to “preserve or restore what is established and traditional and to limit change.”

Conservatives tend especially to embrace strict interpretations of religion because religion does not easily change. Religion does not create any new thing. Religion did not create modern medicine, or electronics, today’s machinery.  Though most religions preach kindness to the poor, a left-wing notion, religion itself is conservative. The “Word” does not change and those who try to change it are derided as “blasphemous.”

Conservatives tend to be anti-science, because science creates change. So when the vast majority of professional climatologists say that the world is warming, humans are contributing to it, and this will be to our detriment, conservatives try to dig up nay-sayers, who say, in essence, “Do nothing and all will be well.

(That also is why the anti-vaccination movement is fundamentally conservative. If those folks had their way, smallpox still would be killing millions.)

And just as anti-science conservatives do not want us to understand the science of climatology, they also misrepresent the science of economics by threatening us with the “Green New Deal” socialism monster.

It’s so easy to claim that the government is incompetent, wasteful, and less able to accomplish good things than the private sector, and in many cases that is true.

But there are some things the federal government is able to do better than the private sector, the most prominent of which is: Create and spend dollars.

This is especially true of big projects or projects that have no profit motive, like free national highways, armies, space exploration, free libraries, free public schools, et al. Left to the private sector, these things would not exist in America.

The federal government has the unlimited ability to pay for anything. It can pay to upgrade existing buildings, though upgrading “all” existing buildings within a short time period would be functionally impossible.

It could pay farmers to “eliminate pollution and greenhouse gas emissions … as much as is technologically feasible”

It could pay for “expanding electric car manufacturing, building ‘charging stations everywhere,'” and expanding high-speed rail, reducing the use of air travel. It also could pay for research to make air travel less carbon intensive.

And those government dollars will stimulate economic growth for more than have Trump’s tax cuts for the rich.

The federal government has the ability to pay for all the things the GND proposes. And while accomplishing these things in the goal of ten years may not be feasible, as Laozi said, “A journey of a thousand miles begins with the first step.

That journey also begins with a goal. The Green New Deal provides us with the goal — a goal of saving the world for our children. If we allow the conservatives to do nothing, our children will suffer, and they will know it was we who did this.

They will look upon us in the same way as we look upon the religious fanatics who tortured and murdered those who claimed the sun circled the earth — as ignorant savages who refused the truth.

Now, we must convince the Democrats to have courage, and not to fear the Green New Deal (GND) socialism monster. It is a friendly monster that can save the world.

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

“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. ………………………………………………………………………………………………………………………………………….. …………………………………………………………………………

Background

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 Reason.com:

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.

Summary

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.

MONETARY SOVEREIGNTY