Cancel Student Loan Debt. For heaven’s sake, just do it. Sunday, Feb 21 2021 

Image result for college graduate

The future success of America always has been in their hands. Help them to help ourselves.

America’s early settlers understood the value of education. They established taxpayer-funded, free schools, equivalent to today’s grades K-12.

Wikipedia: The first free taxpayer-supported public school in North America, the Mather School, was opened in Dorchester, Massachusetts, in 1639.

All the New England colonies required towns to set up schools, and many did so. In 1642 the Massachusetts Bay Colony made “proper” education compulsory; other New England colonies followed this example.

Similar statutes were adopted in other colonies in the 1640s and 1650s.

The larger towns in New England opened grammar schools, the forerunner of the modern high school. The most famous was the Boston Latin School, which is still in operation as a public high school.  Boston Latin School was founded on April 23, 1635. The school was modeled after the Free Grammar School of Boston in England. It was intended to educate young men of all social classes in the classics.

Now today, nearly 400 years later, Americans incredibly still have not learned the value of education.

Our cities and states, being monetarily non-sovereign, spend scarce taxpayer dollars to fund grades K-12. But most college education is costly, a financial burden on most families.

They often need to go into debt to give their children the education that America needs to be internationally competitive in today’s more advanced world. 

In America, most grade school is free. Most high school is free. Most college is costly. Why? What is the logic for that divide?

Because the monetarily NON-sovereign cities and states have limited funds, you see underpaid teachers, underfunded elementary and high schools in poor repair, teacher strikes, and in general, poor education, especially for the less affluent children.

Which brings us to this article:

State attorneys general call on Biden to cancel up to $50,000 in student debt to provide ‘immediate relief to millions’
Jillian Berman 9 hrs ago

A multistate coalition of Democratic attorneys general is calling on President Joe Biden to cancel up to $50,000 in student debt per borrower.

The letter from 17 state law enforcement officials, led by Massachusetts attorney general Maura Healey and New York attorney general Letitia James, comes just days after Biden appeared to reject the idea of canceling that level of student debtin a CNN Townhall.

Why is Biden diddling about this? It’s a no-brainer. College education is as important to America as is the military, interstate highways, federally funded dams, federal courts, and Congress itself — all things paid for by the federal government.

Yet after all these years, we Americans still have not advanced past the “college-is-for-the-elite” mindset.

Over the past several years, attorneys general, including Healey and Vice President Kamala Harris have been at the forefront of investigating the conduct of for-profit colleges, some of which have been accused of preying on students, particularly students of color.

The state law enforcement officials said they also regularly hear from borrowers struggling to navigate existing student loan repayment and forgiveness programs, suggesting to them that the current system “provides insufficient opportunity for struggling borrowers to manage their debts or recover from the current economic crisis.”

“Broad cancellation of Federal student loan debt will provide immediate relief to millions who are struggling during this pandemic and recession, and give a much-needed boost to families and our economy,” the group wrote.

Is it that we American’s don’t understand the benefits to America of advanced education?

Can it be that we don’t realize the importance of doctors, scientists, accountants, writers, et al?

Do we still believe, in today’s scientifically advanced world, that college is an unnecessary, elitist concept?

Are we that ignorant?

The idea of student debt cancellation has been around for years, but gained new urgency after Biden was elected in November. Amid the coronavirus-induced downturn, student debt cancellation is a particularly attractive form of relief for progressives and mainstream Democrats because Biden and the executive branch can arguably do it themselves.

Democratic Senators Elizabeth Warren and Chuck Schumer have repeatedly called on Biden to cancel up to $50,000 in student debt. During his campaign for president Biden proposed to “immediately cancel a minimum of $10,000 of student debt per person.”

And there is the typical, timid Democrat response: “If it’s worth doing, do it as small and quietly as possible. Don’t make any waves. Only do it if you can get a consensus.”

That was the Obama approach and apparently, it now is the Biden approach.

Given that the federal government has infinite money, and can create trillions of dollars at the touch of a computer key, why only $10,000? Why indeed, only $50,000?

Just as our ancestors were wise enough to offer free grades K-12 to all, why are we not wise enough to offer free college for all, funded by the federal government — especially when it won’t cost anyone a cent?

The federal government does not spend taxpayer dollars. It creates new dollar ad hoc and at will, every time it pays a bill. Federal spending is free to you and free to me. So why are we being miserly?

Even among those who support debt cancellation there is debate about whether it should be done by executive action or through Congress.

In addition, there’s a range of opinions among supporters about how much debt per borrower should be cancelled and whether there should be a cap on the income of borrowers receiving the relief.

The answer: Do it by any means possible. Do it through Congress if Congress will do it. If Congress won’t do it, use executive action. But stop diddling and just do it!

The next answer: What is the need for an income cap? There is no income cap for free elementary school. There is no income cap for free high school. Why does there need to be an income cap for free college?

Critics worry it would be a boon to borrowers who have six-figure debts from graduate school, but also relatively high incomes. 

Why is income a criterion? Should there be an income cap for using federal highways? An income cap for using federal courts? No matter what breaking level is agreed upon, it will be “a boon” to those below it and unfair to those above it.

So the family making $399,999 gets free college, and the family making $400,000 has to pay? How does that help America?

We Americans always pride ourselves on being the “leaders” of the world, yet our attitudes toward our education system has not progressed beyond the 17th century.

Click the following link to see the rest of the argument.

Ten Steps to Prosperity: Step 4: Free education for everyone

As a citizens of a wealthy nation, whose government has unlimited access to money, without levying taxes, Americans should be ashamed of today’s debates.

I have one question for our politicians: How does it benefit America for college to be a financial burden on anyone, particularly when our federal government has the unlimited ability to create dollars?

College is not for the elite. College is for America.

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 or a reverse income tax
  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

100% Proof That Getting a BS From Wharton BS can teach you BS. Saturday, Feb 20 2021 

Getting a degree from the Wharton Business School is like bringing a beautiful, but stale cake to a party. It will get you in the door, and lots of “oohs and aahs,” but later, people will have a bad taste in their mouths.

The Whsrton school has a great reputation, but if the following article is any indication of what they teach there .  .  .  well, I don’t know.

Image result for WHARTON

Great reputation.

Here are a few excerpts to make my point:

CORONAVIRUS
Beware the COVID-19 Debt Hangover
Biden’s proposed stimulus spending might give a modest boost, but in the long run it’ll slow the economy.
J.D. TUCCILLE | 2.19.2021 7:00 AM

After the rush, brace yourself for the hangover.

That’s the warning from experts with the University of Pennsylvania’s Wharton Business School, who caution that plans for massive “stimulus” spending by the Biden administration will administer only a brief boost to the country followed by a nasty and prolonged comedown.

Will someone please tell the “experts,” there is no history of federal deficit spending creating a “nasty and prolonged comedown.”

On the contrary, it is a lack of federal spending that causes nasty recessions, and those recessions are cured by increased federal deficit growth.

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.

And:

Graph shows annual % growth of Federal Debt held by the public. Every recession (vertical gray bars) is preceded by a decline in debt growth, and is cured by an increase in debt growth.

The White House objects to the forecast, but it squares with earlier predictions from the Congressional Budget Office that accumulated debt, worsened by heavy pandemic-related spending, will hobble the economy for years to come

There is no historical evidence that increased federal debt (red) causes decreased GDP (blue). On the contrary, they rise together, because federal debt adds growth dollars to the economy.

.
Again, that “hobble the economy for years to come” is a hypothesis that runs counter to actual results.

I get the feeling that someone at Wharton is sitting alone, in a windowless room, with no access to the real world, dreaming up scenarios.

President Joe Biden’s proposed $1.9 trillion relief package would increase economic growth by 0.6 percent in 2021, according to analyses by the Penn Wharton Budget Model (PWBM).

After that, though, it would start to slow the economy, decreasing GDP by 0.2 percent in 2022 and by 0.3 percent as late as 2040, showing lingering negative effects after the initial spending.

“Decreasing GDP,” which never has happened following federal stimulus spending. Where do they get this stuff?

The big problem for the longer-term outlook is “the large amount of additional money that we’re adding to our already very large debt,” according to Efraim Berkovich, PWBM’s director of computational analysis.

“The existence of the debt saps the rest of the economy. When the government is running budget deficits, the money that could have gone to productive investment is redirected.”

There is no mechanism by which adding money to the economy “saps the rest of the economy.”

And what is “the rest” of the economy? Federal deficit spending circulates throughout the economy. Which part of the economy is “the rest,.” that will be sapped?

And consider the statement, “the money that could have gone to productive investment is redirected.” Which money are they talking about?

If the government doesn’t deficit spend, then where does the money come from that could have gone to “productive investment.”

Further, the federal stimulus money is going to workers, consumers, businesses, and schools. What are the more “productive investments” than those?

U.S. government debt is already sky-high, having increased by $7 trillion dollars in the last four years alone to reach 100 percent of GDP at the end of 2020.

That burden threatens to act as a dead weight on economic growth.

Adding money to the economy is “a dead weight on economic growth”??? Huh? Is that what they teach at Wharton?

The formula for economic growth is Gross Domestic Product = Federal Spending + Non-federal Spending + Net Exports.

Do the algebra. How do increases in Federal Spending reduce Gross Domestic Product growth? Is the formula wrong or is Wharton BS simply spreading BS?

This all is a restatement of the “ticking time bomb” fallacy, that by some magical process, adding dollars to the private sector impoverishes the private sector. It’s laughable nonsense.

Finally, the fact that the federal debt (actually the total of deposits into T-security accounts at the Federal Reserve) is 100% of GDP also is 100% meaningless. That ratio is classic apples/oranges comparison.

Federal debt is the total deposits in T-security accounts. GDP is total spending. By what magical thinking does the fact that they are at an equal level, act as a “dead weight”?

Press Secretary Jen Psaki insists the prediction is “way out of step with the majority of studies on this plan.”

In particular, she complains “the analysis concludes that our economy is near capacity, which would be news to the millions of Americans who are out of work or facing reduced hours and reduced paychecks.”

Ms. Psaki is attempting to speak truth to ignorance, something this blog has been laboring to do for more than 20 years. Good luck, Jen.

In response, the Wharton analysts point to ongoing recovery in many sectors. They also point out that continuing lockdowns prevent some production and employment that would otherwise occur.

What does this have to do with the false notion that the federal government is spending too much?

“[R]ecovery in the affected sectors is limited by pandemic-related shutdowns and individual behavior,” they wrote. “There is no mechanism by which additional household spending will stimulate those sectors until pandemic-related restrictions ease.”

They alluded to the mechanism, which is: “Ongoing recovery in many sectors.” When people have money to spend, the businesses that receive that spending do well. Consider all the online and delivery services, for instance. Consider the businesses that have had to lay off employees because their customers aren’t spending.

The vast majority of America’s businesses are open and running, with their biggest problem being that their customers are unemployed and don’t have money to spend.

Look at these statistics supplied by Wharton BS.

Unemployment claims unexpectedly increased last week to 861,000. The official unemployment rate of 6.3 percent remains above its pre-pandemic/pre-lockdown rate of 3.5 percent (just one year ago!). But that’s a steep drop from the April peak of 14.8 percent.

Industrial production, too, at 75.6 percent of capacity in January, remains about 4 percent lower than it was a year ago. But it’s higher than it was just a few years ago and steadily rising.

“At 107.2 percent of its 2012 average, total industrial production in January was 1.8 percent lower than its year-earlier level,” according to a February 17 Federal Reserve update.

So, while the economy isn’t entirely back, it’s moving in the right direction—a process that could be interrupted by massive government spending.

There is no known process by which “massive government spending” (remember the formula for GDP) can “interrupt” economic growth.

So, wait a second! Unemployment is up. Production is 4% lower than last year. How does that square with the claim that “our economy is near capacity” and simultaneously growing?

And now comes the real ignorance:

“[E]ffectively, what we’re doing is taking money from [some] people and giving it to other people for consumption purposes,” notes Berkovich of stimulus schemes.

“That has value for social safety nets and redistributive benefits, but longer-term, you’re taking away from the capital that we need to grow our economy in the future.”

Clearly, Wharton BS school does not understand the differences between Monetary Sovereignty and monetary non-sovereignty. They actually believe that federal taxes fund federal spending. OMG!

[Note to Wharton professors: Federal taxes, unlike state/local taxes, are destroyed upon receipt. The federal government has no use for tax dollars. It creates new dollars each time it pays a creditor. That is a fundamental of Monetary Sovereignty. It is the reason why no one can answer the question, “How much money does the federal government have?”]

While state and local (monetarily non-sovereign) taxes do fund state and local spending, federal spending is funded by ad hoc money creation. While state and local governments can and do run short of dollars, the federal government never does.

The federal government has spent trillions of additional stimulus dollars in just the past year, yet taxes have not been raised. How is that possible? Answer: The federal government does not spend tax dollars.

Stimulus spending also has the potential to delay the inevitable shakeout as businesses and workers scramble to adapt to a changing environment.

Both the McKinsey Global Institute and the Bureau of Labor Statistics recently published studies predicting that remote work is here to stay for many people.

What is the “shakeout” that Wharton BS does not want delayed? Bankruptcies? Impoverishment? Recession and depression? And if remote work is here to stay, why is this a bad thing, especially if people receive money from the federal government?

“In the moderate impact scenario, increased telework is the primary force of economic change and has both direct and spillover effects,” notes the BLS report. “With more employees teleworking, the need for office space will decline, and so will nonresidential construction.”

That’s going to necessitate a lot of adjustment in sectors including restaurants, travel, and commercial real estate; government checks just delay the day of reckoning.

That is like saying we all are going to die, and modern medicine will “just delay the day of reckoning.”

Increased telework is not the result of federal spending. It is the result of technology. It will have bad effects (for instance, the aforementioned “decline in nonresidential construction”) and it will have good effects (for instance less auto use of fossil fuels and pollution).

That is already a problem in Europe, where economists and business owners worry that subsidies prop up “zombie” companies that would otherwise disappear and clear the way for healthier enterprises.

Get the double-talk? “Already a problem — because economists and business owners “worry” about a possible future.

If money is given to consumers, how does this “prop up zombie businesses that prevent “healthier” enterprises from existing? What are these “zombie” companies that are benefiting from federal deficit spending, and what are these “healthier” companies that are being prevented from doing business?

“These zombie companies…run their business for a couple of months below costs,” Alexander Alban, managing partner at German mechanical parts manufacturer Walter Schimmel GmbH told the Wall Street Journal.

“They ruin the market. Afterwards, it’s very hard to get this business back. Usually it’s good if the market is cleaned.”

Apparently, Alban is talking about every new company that originally runs at a loss, until it succeeds or fails — like Amazon, ESPN, Tesla, Square, FedEx, Turner Broadcasting, et al. In short, Alban is complaining about how startups normally are built.

The result is a poorer and less-productive economy than would have existed in the absence of government spending sprees. That’s in addition to the depressing effects of deficits and debt.

In analyses predating the latest stimulus proposals, the Congressional Budget Office (CBO) voiced concerns similar to those of the Wharton Business School about debt-fueled spending.

Get it? When the government pumps money into the economy, as it has been doing for 80 years, that magically has made the economy poorer and less productive. Except that is exactly the opposite of what has happened in the real world.

You see, despite everything you know, GDP has gone down, because uh, well, uh, GDP = Federal and Non-federal spending + Net Exports. So pay no attention to 6th-grade algebra.

And of course, the dependably wrong CBO agrees.

“CBO estimates that the legislation will boost the level of real (inflation-adjusted) gross domestic product (GDP) by 4.7 percent in 2020 and 3.1 percent in 2021,” according to a September 2020 report forecasting the impact of pandemic-related federal spending.

“From fiscal year 2020 through 2023, for every dollar that it adds to the deficit, the legislation is projected to increase GDP by about 58 cents.

That’s the straight line for the joke. Now here comes the punch line:

In the longer term, the legislation will reduce the level of real GDP, CBO estimates.”

That is, the CBO predicted two years of benefit, followed by each dollar spent producing far less than its value in return. The ultimate result is a smaller economy than would have existed without the addition of trillions to the national debt.

And what is the mechanism for this “smaller economy” that has more real money than a bigger economy? By what strange alchemy does adding dollars to the economy reduce real economic growth.

And what is the evidence that this alchemy exists anywhere but in the fevered dreams of the Penn Wharton Budget Model?

“The legislation will increase federal debt as a percentage of GDP, and in the longer term, CBO expects that increase to raise borrowing costs, lower economic output, and reduce the income of U.S. households and businesses,” adds the CBO.

Nice theory, but for two small details:

  1. The meaningless Debt/GDP ratio has been going up for 80 years and what is the result? Borrowing costs are at historic lows, economic output is at historic highs, as is the income of households and businesses.
  2. The Fed has absolute control over interest rates, and by this control has intentionally decided to keep rates low.

But hey, Wharton BS, you have a great reputation, so you don’t really need to let historical fact get in the way of your hypotheses. Just keep spouting nonsense and your followers will nod dumbly and spread the gospel.

You folks remind me of the preacher who tells his flock the world is about to end. So they give away all their belongings and climb to the top of a mountain to away doomsday.

The next morning, when the sun rises as usual, the acolytes, having learned nothing, come down from the mountain, and continue to believe every word of the preacher’s next sermon.

With the House of Representatives poised to consider the stimulus package as early as next week, we may soon have an opportunity to find out just how bad the hangover will be.

If only that would help you “find out” anything. Sadly, history says you will learn nothing. And the great Wharton BS will continue to spout BS.

Hey wait, didn’t Donald Trump attend Wharton? Ah, that explains it.

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 or a reverse income tax
  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

Do you favor raising the minimum wage? I don’t. Friday, Feb 19 2021 

Congress is doing its usual disingenuous dance about the minimum wage.

Image result for feeding plants

Who should feed the economy?

It may surprise readers to learn that on balance, I am opposed to raising the minimum wage. In fact, I oppose the entire concept of a “minimum wage.”

Before I get into the pros and cons, here are some excerpts from an article in the Chicago Tribune.

The downsides of a higher minimum wage
Steve Chapman

For most Americans, being asked if they favor a higher minimum wage is like asking if they like sunshine and ice cream. What’s not to like about increasing the rewards for low-paid workers — especially for anyone who has ever been a low-paid worker?

This is one of those ideas that you might think would generate disagreement along partisan lines. President Joe Biden wants to increase the national minimum wage to $15 an hour, up from $7.25. It’s no surprise that 87% of Democrats support the idea. The surprise is that 62% of Republicans agree.

Empathy for essential workers during the pandemic has only made the idea more appealing.

But just because an idea is popular doesn’t mean it’s wise. What economics teaches is that no government intervention in the economy comes without costs, some of which greatly outweigh benefits. This one has major flaws.

The most obvious drawback is that raising the price of anything causes people to pay for less of it. Double the price of a gallon of gas or a pound of ground beef and consumers will cut back on their consumption. When businesses have to pay their employees more, they will search for ways to reduce staffing.

“It’s not the Amazons of the world that will be hurt,” Nada Eissa, an economist at Georgetown University points out. “It’s mostly small businesses.” Those are many of the same employers that have suffered disproportionately from the pandemic.

A recent report from the Congressional Budget Office (CBO) concluded that a $15 minimum wage would lift 900,000 people out of poverty — while destroying 1.4 million jobs. Is that a sensible trade-off?

Let’s pause for a moment to digest what Chapman says. All of us, with the exception of Trump Republicans, many of whom are among the lower-paid workers, have empathy for lowest-paid workers.

(The seeming disconnect of lower-paid workers having no empathy for lowest-paid workers is a common consequence of Gap Psychology combined with a dash of envy.)

Lower-paid workers, especially those making minimum wage not only wish to distance themselves from those making below minimum wage (Gap Psychology), but also suffer from the “If-I-didn’t, Why-should-he” envy disease.

It’s the same disease that infects those who paid for college, and now do not want the government to forgive student loan debt.

That said, the majority of Americans would like to see poverty eliminated, or near-eliminated, in America.

As for the CBO, their main function is to act as a seemingly bipartisan — but not really bipartisan — front for the right-wing. We discussed them in “Overshoot” or “undershoot”? Making decisions by using wrong assumptions based on mythical numbers”.

The day the CBO makes even an attempt to understand the realities of Monetary Sovereignty, will be a great day for economics. I suspect that blessed day is a long way off, however.

Different places have different circumstances. A $15 minimum would be a minor matter in places like California, which already has a state floor of $14, Massachusetts ($13.50) and New York ($12.50). Illinois ($11) is already on track to go to $15 in 2025. The increase would be a huge change, though, in the many states that don’t set a minimum above the federal level.

The current $7.25 looks far skimpier in Hawaii or California, which have the highest living costs in the country, than in Mississippi or Oklahoma, which have the lowest. The average monthly rent is $689 in Mississippi but $1,657 in California.

That’s a logical argument if one believes there is an “overshoot or undershoot” conundrum. It’s less logical if we merely agree to overshoot, by providing sufficient income to everyone so that no one earns at a poverty level, no matter where in America they live.

That’s an argument for federalism: letting states set their own levels to reflect their economic conditions, living costs, educational levels and prevailing ideology.

A state with a lower minimum wage may attract businesses, creating jobs that otherwise would have gone elsewhere. A state with a higher one may lure workers looking to boost their income. There is no answer that suits every state.

Except that workers and businesses aren’t as mobile as the economists want you to believe, else every worker would have moved to California and Massachusetts, and every business would have relocated to Mississippi or Oklahoma.

Further, the “red” states seem to have retained their appreciation for the business advantages of slavery, and are less inclined to understand the benefits of a well-paid citizenry and workforce.

The right-wing’s efforts to repeal and (not) replace Obamacare provide ample evidence of this bias.

If we want to raise the incomes of low-wage workers, there’s a superior option: expanding the federal Earned Income Tax Credit (EITC), a sort of wage bonus.

It provides up to $3,584 per year for workers in households with one child and a maximum of  $6,660 for those with three or more kids. But childless workers can get no more than $538, and only those from the age of 25 to 64 qualify.

More generous credits, particularly for workers without kids, would raise incomes at the bottom of the wage scale. Like a minimum wage increase, the change would encourage work by boosting earnings. But unlike a minimum wage increase, it doesn’t raise the cost of labor to employers. Result: more people working and earning more for their work.

If it were, in fact, a “bonus” it would be worth considering. But it is not a bonus; it is a tax credit, which requires that one pay income taxes.

Under today’s tax laws, the lowest paid, neediest among us, are not overly burdened with federal taxes. They are burdened far more by state and local taxes, FICA, and sales taxes.

And notice those two little words, “encourage work.” This is part of the upper- and middle-class belief that the poor are poor because they are lazy, and if given any financial support, they will opt not to work.

This is multiplied by the belief that labor is a moral issue, so everyone but the rich and the aged morally is obligated to work. Giving these impoverished “freeloaders” money becomes morally objectionable.

And then, the “lazy” belief and the “moral” belief are further multiplied by the “what-if-everyone” belief, which assumes there is a possibility everyone would stop working if given money, and the economy would come to a halt.

So, we are faced with three false beliefs, which then are compounded by a fourth:

A virtue of the EITC is it spreads the cost of helping low-wage workers to all taxpayers, not just those who have the misfortune of owning small businesses.

Democratic politicians are entranced by the visible benefits of boosting the minimum wage. The harm it promises to do, luckily for them, will go mostly unseen.

Steve Chapman, a member of the Tribune Editorial Board, blogs at http://www.chicagotribune.com/chapman .
schapman@chicagotribune.com
Twitter @SteveChapman13

The above puts forth the false belief that federal taxes fund federal spending. It is a belief that demonstrates an ignorance of the differences between Monetary Sovereignty and monetary non-sovereignty.

(Just as a reminder, the federal government has the unlimited ability to pay its bills, not with tax dollars, but by creating new dollars, ad hoc. It never can run short of dollars. Even if all federal tax collections were $0, the federal government could continue spending forever.

Moving on now to another article in the same edition of the Chicago Tribune;

===========================================

$1.9 trillion for a relief package should be the minimum — not the max
By Marie Newman, a Democrat, is the U.S. representative for Illinois’ 3rd Congressional District.

This week marks the 12-year anniversary of President Barack Obama’s American Recovery and Reinvestment Act, the historic stimulus package passed in 2009 to lift the nation out of the Great Recession and put millions of Americans back to work.

In appeasing Republican concerns of spending too much money on a single relief package, Obama’s final $800 billion package was only two-thirds of the $1.2 trillion stimulus proposal originally recommended by the administration economists. Even after cuts were made, Republicans decried it as too much. In reality, it was not enough.

Absolutely true.

The Republicans never spend enough, ostensibly because they believe in “small government,’ but in reality because they want to appear to be helping, while actually keeping the underclasses down.

While the bold legislation certainly cushioned the financial downturn and fueled longer-term economic competitiveness, the price of aiming too small on relief resulted in a sluggish jobless recession that cost millions of low-income families — mostly people of color — their homes, livelihoods and savings.

In fact, the unemployment rate during the month of the 2010 midterm election was 9.8%, nearly the same it had been a full year before.

As President Joe Biden’s $1.9 trillion stimulus package inches closer to passing Congress, Democrats cannot afford to make the same mistakes we made over a decade ago. And we are in a much worse situation than in 2009.

The gravest danger currently facing America is that Biden is a less charismatic, older version of Obama. He seems to lack a strong ideology, being more interested in compromising to get something done than if fighting for the beliefs he lacks.

Last Wednesday, Federal Reserve Chairman Jerome Powell said the real unemployment rate today is close to 10%. “The pandemic has led to the largest 12-month decline in labor force participation since at least 1948,” stated the Republican-appointed chairman.

And yet, like they did a decade ago, Republicans in Congress today are preaching from their faux gospel of fiscal conservatism.

Earlier this month, a group of 10 Republican lawmakers presented a $618 billion counterproposal. Sen. Susan Collins of Maine called it “premature” for Congress to consider a relief package in the trillions.

The Republicans do not want a Democrat to solve the nation’s problems, as that would make the 2022 election year more difficult for them. They prefer being able to point with horror at failure.

It’s difficult to imagine any other motive for someone claiming adequate relief is “premature” at this stage of the pandemic. If not now, when?

Just last week, the Chicago Tribune’s Editorial Board called on Congress to hold “money until it has a clearer picture of the actual impact of the pandemic” and proclaimed that it was “not clear that Americans need another round of stimulus payments in the amount of $1,400 per person.”

“A clearer picture”? Ten percent unemployment and small businesses drowning is not “clear” enough. The Tribune’s editorial board consists of journalists — not an economist among them — and if you go to their page they universally boast about their humble beginnings.

And this is supposed to justify their ability to write about economics??

Two million women have left the labor force entirely, 29 million Americans face food insecurity, and an estimated 14 million are behind on payments.

Additionally, states and cities across America — run by elected officials from both political parties — face historic budget shortfalls.

The last COVID-19 relief package excluded state and local aid, and the Republicans’ counterproposal would continue to ignore this looming crisis that will have catastrophic consequences.

Economists predict 5.3 million workers likely will lose their jobs by the end of 2021. Simply put, the fate of our state and cities is a kitchen table economics issue.

The Republicans will tell you that state and local governments simply suffer from bad management, so why give them money? This is absolutely false.

The federal government’s ability to spend is not due to its good management. Far from it. Monetary Sovereignty is the reason.

Seven states actually send more money to the federal government (which destroys it) than they receive in return.

Visualize sending your last dollars to Bill Gates, who then complains about your poor money management.

By the Rockefeller institute of government

Even our leading national economic experts agree that helping more working families far outweighs fears of spending too much. In fact, their estimated costs of relief to revitalize our economy is no less than $3 trillion , dwarfing President Biden’s $1.9 trillion relief package.

Back on April 17, we wrote, “The economy needs at least $7 Trillion net added from the federal government.” That was before Trump let the economy deteriorate to its current condition.

Forbes Magazine says that so far, the federal government has added about $3.5 trillion extra as a stimulus, (Stimulus Spending: $2.6 trillion, Stimulus Tax Relief: $900 billion) plus next Stimulus Proposal: $1.8 to $2.2 trillion, would bring the total to $5.3 – $5.7, so considering the current state of the economy, an additional $3 trillion should be about right.

If a $1.9 trillion tax cut for the ultrawealthy was justifiable four years ago, surely a $1.9 trillion rescue plan during a pandemic is appropriate today.

Fiscal responsibility must mean meeting the economic needs of today, not hypocritical concerns about the national debt.

Americans need and want a robust relief package that meets the scale of the public health and economic crises. The cost of President Biden’s American Rescue Plan must be the floor, not the ceiling.
Marie Newman

IN SUMMARY:
Clearly, the wealthiest nation on earth should do whatever it can to lift the less financially fortunate.

Being Monetarily Sovereign, the U.S. government has the unlimited ability to support the lower- and middle-income groups.

One suggested method for doing this is to raise the minimum wage. The problems with that approach are:

  1. It only helps salaried workers. It does nothing for those who receive income in ways other than salary, or who don’t have any income at all.
  2. While it helps narrow the Gap between the richer and the poorer, it does nothing for the overall economy. It merely shifts dollars from businesses to individuals.
  3. By adding a cost to businesses, it decreases the profits that businesses use to grow and innovate.
  4. It puts American businesses at a competitive disadvantage relative to foreign businesses.
  5. It discourages hiring.

Rather than forcing monetarily non-sovereign businesses to supply the populace with more money, the Monetarily Sovereign U.S. government can do the same thing by simply giving people money.

  1. It would help all less affluent people, not just salaried workers
  2. It not only would narrow the Gap, but it would stimulate the economy by adding dollars to the economy.
  3. It increases business profits by adding dollars to consumers pockets while costing businesses nothing.
  4. It helps American businesses remain competetive.
  5. It does not discourage hiring.

The federal government should not rely on the private sector to feed itself. The federal government has been given the unlimited power to grow the private sector. It should use that power. Feeding the economy is the job of the federal government.

I recommend the federal government supplement current pay scales by instituting Step #3 from the Ten Steps to Prosperity (below): Social Security for all or a reverse income tax

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 or a reverse income tax
  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

Profiles In Courage — and cowardice Monday, Feb 15 2021 

Recent events have made me think about Courage and cowardice.

American history is filled with examples of both.

Courage
I think of our brave military men and women who have given their limbs and their lives so that we may enjoy the American dream.

I think of our police and firefighters who run toward danger so that we can run from it.

I think of our medical guardians who risk disease so that we may recover.

I think of those undermanned, ill-prepared, and poorly-led protectors of Congress who threw their vulnerable bodies in the way of the howling mob that had been unleashed by a madman.

I heard their screams of pain on television. I still hear them, even now.

Some did not survive. Their families mourn.

Some did survive, but with injuries that may never fully heal.

They are fathers and mothers and children; they all faced fear for us. For Congress. For America.

They are the real American Heroes.

cowardice
And last, much, much last, I think of the cowards.

I think of the traitors who attacked Congress while assuming false bravery by being sheltered in the mass, the mindless horde.

Not one of them worth the spit from a patriot’s mouth.

Safe in the mob, they called out the Vice President’s name, threatening to lynch him.

Like all lynch mobs through history, they came as a group for bravery.

One, called out “Nancy, Nancy.”

Had she appeared in front of him, she would have slapped his craven face, and if he were alone, he would have run crying like an infant.

Little did they realize that the man who urged them on, soon would disavow them, and claim they were Antifa.

How does it feel, you right-wing, cowardly bigots, for your President to be so ashamed of you, he claimed you are Antifa?

I think of the Republican party, who with but a few exceptions, continues to display treasonous cowardice, so afraid of the words of an ousted buffoon, they invent excuses for their gutlessness.

One wonders what these, our “leaders,” would do in the face of an enemy.

Heaven help us if we had to rely on the Republican Party cowards to protect us from a Putin or a Kim or a Xi, when they don’t even own courage or principles.

I pity their spouses knowing they are married to ninnies who would abandon them when the going gets tough (as Cruz did after Trump’s insult of his wife).

And last, we come to America’s leading coward, President Bonespurs, the coward so afraid of America’s enemies, he had to pay doctors to invent a disease to keep him from serving.

President Bonespurs. President Draft Dodger.

This is the coward who claimed that those courageous soldiers, who gave their lives to protect us, were “suckers.”

He asked, “What was in it for them,” not understanding the meaning of honor and patriotism.

Those terms are alien to him.

Like all frightened bullies, he talks loudly, calls names, and then, without his daddy to protect him, he whines when he loses.

With false bravado, this coward urged his followers to “fight.”

He told them to march up Pennsylvania Avenue.

He promised them he would lead the march with them.

Then, when the march began, he suddenly disappeared. Slinking quietly into the back of his black limousine, he had his driver flee the other way, so he could watch the riot from a safe television couch.

It was the same slinking he did when cheating on his wives, and when attacking women, and when slyly cheating innocent believers with his phony “University.”

Our national song claims we are the “home of the brave.

That song most definitely does not refer to the Republican Party or to Donald J. Trump, traitors and cowards all.

They hope you will forget.

They want your vote.

They deserve only your contempt.

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 or a reverse income tax
  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

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