The “national emergency.” Sunday, Jan 6 2019 

I just saw this article about our “national emergency.”

Each side accusing other of giving no ground on shutdown
By CATHERINE LUCEY and LISA MASCARO

“Not much headway made today,” Trump tweeted on Saturday after receiving a briefing from the team led by Vice President Mike Pence.

Democrats said the White House did not budge on the president’s key demand, $5.6 billion to build a wall along the U.S.-Mexico border. The White House said money was not discussed in depth, but the administration was clear about the need for a wall and the goal of resolving the shutdown all at once, not piecemeal.

Trump had campaigned on the promise that Mexico would pay for the wall. Mexico has refused. He’s now demanding the money from Congress.

Trump is reportedly more seriously considering his idea to use military funding for the wall by declaring a national emergency. On Twitter Sunday morning, he claimed the “only reason [Democrats] do not want to build a Wall is that Walls Work!”

Trump and his followers are passionate about needing a wall to protect America from the hoards of criminal immigrants invading our fragile nation.

If you are one of those who believes Trump’s Wall is necessary, kindly answer these questions:

1. Where exactly will Trump’s wall be built? Where on the map.
2. How many illegal aliens have crossed into America at those points? That is, how many additional people is Trump’s wall projected to stop.
3. At a projected cost of $5 billion to build, plus millions more to staff, how much per additional illegal alien apprehended will the wall cost?
For instance, if the wall stops 1,000 men, women and children, the initial cost will be $5,000,000 (five million) per person. Is that acceptable?
4. At what point will enough be enough? When will all our border walls be high enough and strong enough, or will there be repeated requests for more, and more, and more?

Yes, many Trump followers are passionate about the vital and urgent need for additions to our existing fortifications. Trump says the situation is so dire he might declare a “national emergency” to get his wall:

“A lot of the people that wanted to come into the country, and really, they were to come in no matter how they wanted to come in — they were going to come in even in a rough way — many of these people are leaving now and they’re going back to their countries: Honduras, Guatemala, El Salvador, and other countries. They’re leaving. If you noticed, it’s getting a lot less crowded in Mexico.”

I know. It’s total gibberish, but Trump’s followers prefer gibberish to actual facts. That way they, like Trump, can switch positions without having to think.

His followers agree that the situation is dire, though they have no idea what the situation actually is. They are so frightened by Trump’s doomsday claims they probably would vote for a $50 billion, or even a $500 billion wall.

Ironically, these cowardly souls use the pejorative, “snowflakes” to describe those who don’t want to hide behind a wall. Cringing behind a wall is a sign of courage??

Anyway, on behalf of Trump’s vague scare-mongering, he has shut down the federal government, and his followers are overjoyed. Hey, who needs government, anyway?

There is a national emergency, but it’s not the few dangerous people who may cross at the “unwalled” locations. The national emergency is Donald Trump.

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

Is this good news or bad news for JPMorgan Chase? Saturday, Jan 5 2019 

Is the following press release good news or bad news for JPMorgan Chase?

JPMorgan Chase Tops Nation in Deposits
Customers add $96 billion in net deposits in last year, bringing the total to $1.3 trillion.

For the first time in 23 years, JPMorgan Chase & Co. led the nation in total deposits as consumers and businesses added $96 billion to their bank accounts in the last year.

The Firm’s U.S. deposits grew 7.9 percent to reach $1.3 trillion on June 30, 2017.

Over the last five years, customers added $447 billion in deposits, a 51 percent increase.

“Customers continue to trust us with their money as we help them bank whenever, wherever, however they want,” said Thasunda Duckett, CEO of Consumer Banking at Chase.

See how proud JPM is.

If the Committee for a Responsible Federal Budget (CRFB), the federal debt worry-warts, had written this article, it would have read like this:

JPMorgan adds $96 billion in debt in last year, bringing the total owed to customers and businesses to $1.3 trillion.

For the first time in 23 years, JPMorgan Chase & Co. led the nation in total debt as it borrowed $96 billion more in the last year.

The Firm’s U.S. debt grew 7.9 percent to reach $1.3 trillion on June 30, 2017. Over the last five years, JPM borrowed an additional $447 billion, a 51 percent increase.

Allow me to assure you, that the above two news releases are identical, except for the substitution of the word “debt” for “deposits.”  In this context, the two words mean the same thing.

Image result for political bull poop

A fresh sample of CRFB “debt” commentary.

The CRFB endlessly tells you that the federal “debt” totals so many trillions, and this is a bad thing. But they really are talking about the total of deposits into T-security (T-bills, T-notes, T-bonds) accounts.

T-security accounts are essentially identical to bank savings accounts and CDs.

When you buy a T-security, that is very much like buying a bank CD, or making a deposit into a bank account. It creates a bank “debt,” but you don’t call it “debt.” do you? You call it “deposits.”

There is are two big differences between deposits with the federal government and deposits with your bank:

  1. The federal government is Monetarily Sovereign. It never can run short of its own sovereign currency, the U.S. dollar. It never can go bankrupt. Your money is 100% safe. Your bank, by contrast, is monetarily non-sovereign. It can run short of dollars. It can go bankrupt.
  2. Because the federal government is Monetarily Sovereign, it has no need for your dollars. So it simply leaves your dollars in your account until maturity, at which time it returns them to you, plus interest. Your bank, by contrast, needs and uses your dollars. So when the time comes to return them, your bank may not have enough.

In short,  JPMorgan Chase & Co. and their CEO of Consumer Banking, bust their buttons boasting about the amount of deposits they hold, while the CRFB wrings its shaky hands about the amount of deposits the much safer federal government holds.

Ironically, the federal government is so much safer than banks that when a bank goes under, it is the federal government’s Federal Deposit Insurance Company that bails out the depositors.

No bank ever is called upon to bail out the government, but you wouldn’t know that by reading the CRFB nonsense

It’s absolute craziness, but the CRFB relies on your not understanding that your purchases of T-securities are deposits in your T-security accounts. The CRFB uses semantic confusion to make its false case, and sadly, your politicians go along with the ruse.

And as long as you keep quiet about it, or believe the “government is in debt” lie, your politicians will continue to tell you the government can’t afford benefits to you, and that you taxpayers are on the hook for federal “debt.”

Bull excrement is hard to wash off when you’ve been covered for years.

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

 

Now it’s the Dem’s turn to act stupidly. Thursday, Jan 3 2019 

Donald Trump does not have a monopoly on stupidity.  The Dems plan to contribute.

I submit as evidence, excerpts from an article that appeared in today’s Chicago Tribune:

Liberal revolt may greet House Dems
Some high-profile members oppose fiscal rule measure
By Mike DeBonis The Washington Post

WASHINGTON — House Democratic leaders faced the prospect of a liberal rebellion on their first day in charge after prominent Democrats said they would oppose a package of rules changes endorsed by incoming speaker Rep. Nancy Pelosi.

Reps. Ro Khanna, D-Calif., and Rep.-elect Alexandria Ocasio-Cortez, D-N.Y., said they would vote against the rules changes Thursday — in the second vote Democrats will take in the majority, after electing Pelosi, D-Calif., because of the inclusion of a fiscal measure known as “pay as you go,” or PAYGO.

That rule, echoing a provision in federal law and in the Senate rules, would require the House to offset any spending so as not to increase the budget deficit.

That any politician, especially a left-wing politician, should endorse PAYGO, demonstrates the depths to which our political leaders have fallen.

PAYGO, the insistence on a balanced budget, is a good idea for cities. It is a good idea for counties. It is a good idea for states.

PAYGO is a good idea for businesses. It is a good idea for you and for me.

But it is an incredibly boneheaded, damaging, harmful idea for the Monetarily Sovereign federal government.

PAYGO guarantees endless recessions and depressions, and zero economic growth.

Gross Domestic Product (GDP), the most common measure of a nation’s economic growth, is based on spending.

GPD = Federal Spending + Non-federal Spending + Net Exports

And spending is based on the supply of money. But PAYGO limits the supply of dollars in the economy. With PAYGO, both federal and non-federal spending are limited. The only source of money would be from Net Exports, which the U.S. seldom has.

Economic growth requires federal deficit spending, which adds growth dollars to the economy.

Cities, counties, states, businesses, you, and I are monetarily non-sovereign. Unlike the federal government, we do not have the unlimited ability to create dollars. To survive long-term, we must have income from the outside.

Cities, counties, and states require income from other government bodies (i.e from the federal government.) Businesses require income from customers. You and I require salaries or other forms of income.

Only the federal government requires zero income. In fact, when the federal government receives income dollars, for instance, tax dollars, it destroys those dollars and creates new dollars, ad hoc, by paying creditors.

It remains to be seen whether the liberals will have the votes to torpedo the rules package, which sets the parameters for the new House.

Defeat of the rules package would be an embarrassing setback for Pelosi that could herald further divides in the Democratic caucus.

Liberals such as Khanna and Ocasio-Cortez — and a number of activists on the political left — argue that PAYGO amounts to a legislative straitjacketthat could impede their efforts to pass new social programs.

And they are especially dubious of its necessity after congressional Republicans waived the law in 2017 to pass a tax bill that added more than $1.5 trillion to the federal deficit over its first decade.

“This is in no way a vote against the leadership; this is a vote against austerity economics that has caused great harm to middle class and working families,” Khanna said Wednesday.

It’s worse than a legislative straitjacket. It’s a financial disaster, that absolutely, positively will cause merely recessions if we are lucky, but more likely, depressions.

Recessions (vertical bars) begin following declines in federal deficit spending; They are cured by increases in federal deficit spending.

Depressions are caused by reductions in federal debt:

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

Ocasio-Cortez announced her opposition in a tweet: “PAYGO isn’t only bad economics … it’s also a dark political maneuver designed to hamstring progress” on health care and other legislation.

Is Ocasio-Cortez the only intelligent/honest Democrat? Seems so, because she not only sees the idiocy of PAYGO,  but the reasons the Republicans especially love it.

PAYGO is designed to be a seemingly prudent way to cut Social Security, Medicare, Medicaid, and other social benefits. But it is all a lie.

PAYGO is a fraud, designed to widen the Gap between the rich and the rest.

And now we transition from mere ignorance to cowardice:

Beyond Khanna and Ocasio-Cortez, however, opposition to the proposal appeared muted Wednesday. Several high-profile freshmen Democrats — Reps.-elect Rashida Tlaib of Michigan, Ilhan Omar of Minnesota and Ayanna Pressley of Massachussets — have not taken public positions.

Reps. Tim Ryan, D-Ohio, said PAYGO “is a no go for me” and said that the rule could obstruct “critical investments in education, infrastructure, and health care,” but he stopped short of saying he would vote against the rules changes.

The co-chairpersons of the Congressional Progressive Caucus, Reps. Mark Pocan, D-Wis., and Pramila Jayapal, D-Wash., said they would support the overall rules package despite their opposition to PAYGO, citing a commitment from House leaders that the provision “will not be an impediment to advancing key progressive priorities” in the new Congress.

What? PAYGO “will not be an impediment to advancing key progressive priorities”? That is beyond ignorant. It is downright deceitful. How could a law limiting federal spending not be an impediment. Makes no sense, whatsoever.

“We all agree that the real problem with PAYGO exists in the statute that requires it,” they said in a statement. “That is why we will be introducing legislation in the 116th Congress to end PAYGO.”

Huh? The real problem with PAYGO is PAYGO. Period. No amount of double-talk will change that.

Image result for bernanke and greenspan

What the people don’t know won’t hurt us.

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.

And now for the ultimate stupidity:

“We all believe we need to ultimately bring our budget into balance, but these investments are too important right now to pass up and will yield significant returns for the U.S. Treasury,” he said, though it was unclear how he would vote.

You all believe it???  Why must the federal budget be brought into balance? No one knows. It just has a nice sound to it, but of course, it is totally illogical.

It’s like saying, “We all believe we need to draw blood from anemic patients.” Completely bass-ackwards.

Perhaps that is why politicians keep repeating it.

The PAYGO rules date back nearly 30 years, to Congress’ initial attempts to rein in the budget deficits of the 1980s. But the rules fell by the wayside amid the budget surpluses of the 1990s.

The (Clinton) budget surpluses of the late 1990s predictably “cured” eighteen years of economic growth and caused the recession of 2001.

When Democrats took control of Congress in 2007, they included PAYGO provisions in their rules, and in 2010, they wrote it into federal law. But Republicans never included the measure in House rules, and the law has been repeatedly waived over the years — making the practical impact of the law questionable.

Drew Hammill, a spokesman for Pelosi, responded to Khanna on Twitter by pointing out that the federal law remains in place regardless of what rules House Democrats adopt — and including the measure in the rules would allow Democrats to “designate appropriate offsets” rather than allow the Trump administration to make the across-the-board cuts mandated in law.

“A vote AGAINST the Democratic Rules package is a vote to let Mick Mulvaney make across the board cuts, unilaterally reversing Democratic initiatives and funding increases,” he said, referring to the budget director and acting White House chief of staff.

Oh, what a terrible mess our politicians have caused, and all because the populace doesn’t understand the differences between Monetary Sovereignty and monetary non-sovereignty.

Ignorance has its penalties, and the most ignorant pay the most penalties.

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

More scare nonsense from the CRFB. Monday, Dec 31 2018 

The nation’s leading supplier of federal debt lies, the Committee for a Responsible Federal Budget, has released its latest salvo of utter nonsense:

Here are a few of their baseless claims:

1. The Deficit Could Hit $1 Trillion This Year and $2 Trillion Within a Decade
Although deficits decreased from Fiscal Year (FY) 2011 to FY 2015, they’ve been rising ever since.

We now expect deficits to return to nearly $1 trillion this fiscal year (2019) and stay above that level indefinitely.

In fact, if lawmakers extend the costly tax cuts and spending increases indefinitely, deficits will be more than $2 trillion by 2028.

Although the above claims themselves are not baseless, the implication that somehow increases in the federal deficit are bad — that is baseless.

An increasing deficit merely means that the federal government pumps more dollars into the economy that it removes. That is a good thing. It is what grows the economy.

In fact, the opposite of deficits — i.e. surpluses — have been the cause of every depression in U.S. history.

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

A growing economy requires a growing supply of money. Austerity (i.e. reduced deficit spending) invariably leads to recessions and depressions.

2. The Long-Term Debt Outlook is Terrifying
This fall, CRFB released its own 75-year budget outlook, which projected an unsustainable fiscal outlook.

Under current law, debt will rise from 78 percent of Gross Domestic Product (GDP) in 2018 to 160 percent by 2050 and nearly 360 percent by 2093. Under the Alternative Fiscal Scenario, debt will exceed 600 percent of GDP by 2093.

Why is the high debt/GDP ratio “unsustainable”? It isn’t. 

There is no relationship between federal debt and GDP. The debt is not serviced by GDP, nor is it serviced with taxes, exports, or any other form of income.

The federal government is Monetarily Sovereign. It has the unlimited ability to service any amount of debt. It never can run short of dollars.

Japan, for example, carries a debt/GDP ratio exceeding 250%, and no one claims this debt is “unsustainable.” See graph, below.

Japan General Government Gross Debt to GDP

3. “Debt-Financed Laws” Offered a Temporary Stimulus
While the economy has grown by about 3 percent over the past year, our analysis Can America Sustain the Recent Economic Boost? showed that the growth rate would likely return to 2 percent per year.

As we illustrated, near-term growth was largely driven by one-time stimulus and other effects from the Tax Cuts and Jobs Act (TCJA), the 2018 Bipartisan Budget Act, and other deficit-financed legislation.

Unfortunately, the economic boost from these laws will be temporary – but the debt will be permanent.

The CRFB admits that economic growth is driven by deficit stimuli. 

They also admit that continuing economic growth requires continuing deficit stimuli, which our Monetarily Sovereign government has the infinite ability to provide.

The U.S. government never unintentionally can run short of U.S. dollars. Never. Even if the federal government collected zero taxes, it could continue spending, forever.

So, exactly what is the problem? The CRFB never says.

4. Rapid Economic Growth is Unlikely to Last
In the analysis of America’s recent economic boost, we showed that nearly all forecasters agree that current rapid rates of economic growth are unlikely to last.

For example, the Congressional Budget Office (CBO) projects that the economy will grow by 3 percent in 2018 and 2.8 percent in 2019, but then grow by between 1.6 and 1.9 percent per year for the remainder of the decade.

A primary factor in predicting economic growth is federal debt growth. Debt growth creates the dollars that stimulate economic growth.

Economic growth (red) parallels federal debt growth (green).

5. Deficits Shouldn’t Rise When the Economy is This Strong
Typically, a strong economy is paired with low deficits (or even surpluses) – both because strong economic performance produces more revenue and because it creates the economic space for deficit reduction.

Yet despite the economy performing at or even above its potential, deficits are widening.

In a recent analysis of deficits and the economy, we showed that the deficit has never been this high when the economy was this strong. 2018 and 2019 are extremely abnormal in that we are running high and rising deficits despite low unemployment, no significant output gap, no recession, and strong economic growth.

The above is a lie of Trumpian proportions. Rising deficits make the economy strong by adding dollars to the economy.

Reduced deficit growth leads to recessions, which are cured by increased deficit growth:

Reduced federal deficit growth leads to recessions (vertical bars) which are cured by increased deficit growth.

And as you have seen, federal surpluses do not create strong economies. Quite the opposite. Federal surpluses create depressions.

It is true that economic growth brings in higher taxes, but that does not create “economic space for deficit reduction.”

The term “economic space for deficit reduction” is gobbledegook. As long as there are deficits, they always can be reduced, so long as one wishes to experience recessions and depressions.

6. Policymakers are Responsible for More than Half of This Year’s Deficit
This year, the deficit will approach $1 trillion – and policymakers have no one to blame but themselves.

We estimate that 55 percent of this year’s projected deficit is the result of deficit-financed legislation enacted since 2015.

Recent spending hikes and tax cuts will cost $540 billion this year. Had these laws been offset or not enacted, the deficit would be $440 billion rather than $981 billion, as CBO projects.

Said more accurately, “Policymakers are Responsible for More than Half of This Year’s Economic Growth, simply because deficits create the dollars necessary for economic growth.”

7. Recent Tax and Spending Bills Both Cost Trillions, If Extended
The Tax Cuts and Jobs Act of 2017 and the Bipartisan Budget Act of 2018 both added tremendously to the national debt.

And while the tax cuts will cost significantly more ($1.9 trillion versus $435 billion) over ten years, that is largely an artifact of the most of the tax cuts enacted for eight years, while the spending boost was a two-year deal.

We found that if lawmakers extend both laws indefinitely, the tax cuts will cost about $2.7 trillion over a decade while the spending bill will cost $2.4 trillion. That’s $5 trillion of additional debt that this country simply cannot afford.

The CRFT prays that you not understand Monetary Sovereignty, otherwise you would know that:

8. Revenue Has Dropped, Not Risen
While some have claimed that revenue grew over the past year  . . . we estimated that actual revenue fell by 3.6 percent between tax year 2017 and tax year 2018. Revenue fell by 5.4 percent after inflation, and by 8.1 percent relative to GDP.

Said more accurately,  . . . “we estimated that 3.6 fewer dollars were taken from the economy between tax year 2017 and tax year 2018.”

Taking fewer dollars out of the economy helps the economy grow, and the government has no need for those dollars.

And now we come to the real reason why the CRFB exists, why it devotes all its resources to promulgating the “Big Lie”: The Committee for a Responsible Federal Budget is paid by the rich to convince you that your federal benefits should be reduced.

The single, biggest economic problem facing the U.S. and the world is widening Gaps between the richer and the poorer.

9. Entitlements and Interest Explain Long-Term Debt Growth
While near-term deficits are largely self-imposed, medium- and long-term debt growth are driven primarily by growing costs of Social Security, federal health spending, and interest on the debt. Indeed, these three categories of spending are responsible for over four-fifths of all nominal spending growth over the next decade alone.

Yes, nothing irritates the rich more than you receiving money. This irritation is “Gap Psychology,”   the human desire to widen the Gap below you on any economic or social measure, and to narrow the Gap above you.

Gap Psychology drives the appeal of expensive jewelry, cars, homes, and designer clothing. Gap Psychology drives the resentment some have for anti-poverty aids like food stamps and college preferences, as well as immigration.

10. Social Security is Hurdling Toward Insolvency
Social Security costs continue to grow faster than dedicated revenue, and its trust fund is running out.

CBO projected that just 13 years from now – when today’s 54-year-olds reach the normal retirement age and today’s youngest retirees turn 75 – the Social Security trust fund will be depleted.

The Trustees project insolvency in 16 years, when today’s 51-year-olds reach the normal retirement age and today’s youngest retirees turn 78. At that point, the law calls for a deep automatic across-the-board cut in benefits.

It is a perfect example of the “Big Lie.”

The federal government cannot run short of dollars, and because the federal government cannot run short of dollars, no agency of the federal government can run short of dollars unless that is what the federal government wants.

The rich run the federal government. The rich want you to believe Medicare and Social Security and Medicaid and every other government program that benefits the not-rich must cut spending. 

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.

There is no “Social Security trust fund.” It is a bookkeeping fiction. The federal government could, if the rich wished, supply unlimited funds to support Social Security and Medicare for every man, woman, and child, of all ages, forever.

11. Rising Health Costs Are Driving Up the Debt
Health care spending is rising even faster than Social Security spending – both as a result of population aging and rising per-person health care costs.

In our analysis of health spending and the federal budget, we found that If health spending were held constant at today’s level, debt would stabilize around 90 percent of GDP; if it had been held constant in 2010, debt would peak in about a decade and return to today’s level by 2040.

Said more accurately, “If only you people would spend more out of your own pockets on health care, and take less from the government, the federal debt would be lower, the economy would decline and the Gap between you and the rich would widen.”

12. Tax Expenditures Remain Costly
While Social Security, Medicare, and Medicaid are the fastest growing federal programs, tax breaks remain costly.

According to the Joint Committee on Taxation, income tax expenditures will cost about $1.5 trillion per year in lost revenue.

While one goal of tax reform was to dramatically shrink the size and number of these tax breaks, the Tax Cuts and Jobs Act actually only eliminated one significant tax expenditure, and it did little to reduce the overall cost of tax preferences.

In the misleading world of the Committee for a Responsible Federal Budget, the words “Tax Expenditures” are not expenditures at all. They are economic savings.

Those are the dollars not taken from your pockets. Those are the growth dollars that remain in the economy.

Then after telling us that Social Security, Medicare, Medicaid and other benefits to you should be cut, the CRFB suddenly expresses false concern for your future generations:

13. Policymakers are Prioritizing the Past Over the Future
Instead of leaving future generations better off, we’re leaving them with a stack of large bills.

Interest payments on the debt are expected to exceed federal spending on children by 2020 and all federal support for children (including tax expenditures and spending) by 2021.

That means we’ll soon be spending more financing the consumption of past generations than investing in our future.

All lies. Future generations will not pay for future federal deficit and debt, any more than current generations pay for current deficits and debt.

Who pays? The government pays for its deficits by creating dollars from thin air, just as it has done ever since it created the very first dollar, way back in the 1780s.

Federal taxes do not fund federal spending. All tax dollars are destroyed upon receipt, and brand-new dollars are created, ad hoc, each time the government pays a creditor.

If interest payments exceed federal support for children, the government could solve that “problem” simply by spending more on children.

Meanwhile, federal interest payments add growth dollars to the economy.

And finally, we come to the biggest whopper of them all:

14. Reducing Debt Would Increase the Size of the Economy
One consequence of a rising national debt is that it crowds out productive investment, which in turn slows income growth.

The corollary is that lower debt can actually boost income growth.

CBO estimates that if debt were reduced to its historic average of about 41 percent of GDP by 2048, per-capita GNP (a rough parallel for average income) would be about $6,000 (6.5 percent) higher than under current law.

Simply holding debt at current levels would boost income per person by $4,000 per year in 2048.

This is so laughably wrong, that one wonders how anyone with an IQ above 50 could possibly believe it.

Federal debt, by law and not by necessity, results from federal deficits. Federal deficits are economic surpluses. When the government runs a deficit, the economy runs a surplus — more money enters the economy than leaves it.

It takes a peculiar sort of illogic to claim that adding dollars to the economy “crowds out productive investment, which slows income growth.”

In short, the CRFB and its rich patrons want you to believe that cutting your federal benefits and/or increasing your federal taxes actually increases your income. 

If the people who wrote this nonsense actually believe it, they are woefully ignorant of basic economics, and if they don’t believe it, they are shameless liars.

Take your pick.

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

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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

 

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