Gift to Johns Hopkins. Why doesn’t the government do this.

We’ll introduce this short article with a few facts:

1. The U.S. federal government has infinitely more dollars than does Michael Bloomberg and the Bloomberg Philanthropies.

2. Unlike state/local taxes, which fund state/local spending, federal taxes do not fund federal spending.

The federal government creates new dollars, ad hoc, to fund all its spending.

3. When Bloomberg and/or his foundation give to any charity, this does not add as many growth dollars to the economy as federal spending.

(To the degree that charitable gifts reduce Bloomberg’s taxes, those dollars are not taken from the economy.)

4. America has a shortage of trained healthcare workers (See next:)

Staff Shortages Choking U.S. Health Care System, A growing shortage of health care workers is being called the nation’s top patient safety concern., By Steven Ross Johnson, July 28, 2022

The situation is quite serious and has been exacerbated by the COVID-19 pandemic. 

Physician Shortage: The nation is facing a projected shortage of up to 124,000 physicians by 2033.

Nursing Shortage: There is an urgent need to hire at least 200,000 nurses each year to meet rising demands and replace retiring nurses. Among support personnel, a shortage of home health aides is most acute.

Overall Health Workforce: The health care industry employed 16.3 million people in 2022, making it the largest employment sector in the U.S.

Despite this, there is still a shortage, with a projected need for 1.1 million new registered nurses across the U.S. to address retirements and the growing demand.

Impact of COVID-19: An estimated 1.5 million health care jobs were lost in the first two months of the pandemic. Although many of those jobs have since returned, health care employment remains below pre-pandemic levels.

Patient Safety Concerns: Staffing shortages are now the nation’s top patient safety concern, leading to longer wait times and even patients being turned away in life-threatening emergencies.

This shortage is affecting various levels of healthcare provision, from hospitals to private practices, and is a major concern for the future of healthcare services in the country.

So, the title question is, Why Doesn’t the Federal Government Do This? (I’ll tell you the answer.)

Most Johns Hopkins Medical Students to Receive Free Tuition After $1 Billion Gift Story by Alyssa Lukpat

A majority of medical students at Johns Hopkins University are set to receive free tuition after the school received a $1 billion gift from Bloomberg Philanthropies, making Hopkins the latest medical school to go tuition free because of a large donation.

Hopkins said Monday that students from families earning under $300,000 would receive free tuition starting in the fall.

And, of course, free tuition isn’t enough for many families, so:

Students whose families earn as much as $175,000 will have their living expenses covered.

The school estimates nearly two-thirds of its students would qualify for either of the benefits.

A growing number of philanthropists and medical schools are pushing to make education free for aspiring doctors and reduce the financial barriers that can deter them.

Another financial barrier often is overlooked. Many families rely on their young people to quit school and get jobs to help support the family.

The federal government should pay students a salary so parents would not be tempted to dissuade students from attending college.

Buoyed by donations, the Albert Einstein College of Medicine and the medical schools at New York University and Columbia University have given their students free tuition or scholarships if they have financial need.

Also, Kaiser Permanente Bernard J. Tyson School of Medicine Waived all tuition and fees for students entering between the fall of 2020 and 2025.

Cleveland Clinic Lerner College of Medicine at Case Western University offers full scholarships to all admitted students, to name a couple more.

The schools mentioned are all well-known and prestigious institutions within the United States. They have national and often international reputations for excellence in medical education and research.

Donors to such institutions tend to receive significant recognition for their contributions. America needs much more help than wealthy donors seeking applause can provide.

The cost of medical school has kept aspiring doctors out of the field, where they can graduate with hundreds of thousands of dollars in debt.

The student loan program is one of the most shortsighted, economically ignorant inventions the federal government ever has created.

It forces monetarily non-sovereign (meaning, limited dollars) students, to pay dollars to the Monetarily Sovereign (having unlimited dollars) federal government.

It’s a perfect plan if you want to discourage young people from attending college.

By offering financial freedom to more students, schools can give medical students the flexibility to choose jobs in important but lower-paying fields like internal medical and pediatrics.

Billionaire Michael Bloomberg’s philanthropic organization said Monday that the U.S. has a shortage of medical professionals yet the cost of attending school for these jobs is often too high.

“By reducing the financial barriers to these essential fields, we can free more students to pursue careers they’re passionate about,” he said.

Bloomberg has used his philanthropic organization, Bloomberg Philanthropies, to donate billions to several causes including public health, the environment and improving city governments.

Hopkins said Bloomberg’s donation would also be used to expand financial aid for nursing and public-health graduate students, in addition to graduate students in other fields.

“This new scholarship formula will ensure the most talented aspiring doctors representing the broadest and deepest range of socioeconomic and geographic backgrounds have the opportunity to graduate debt-free,” Hopkins said.

No, it doesn’t assure that at all.

It assures the relative handful of aspiring doctors, who can afford not to have any income for the next few years, will be relieved of many college costs.

And as vital as healthcare is, what about all the other specialties that are short of practitioners?

Consider the serious shortage of engineers.

Every year, the US will need about 400,000 new engineers.

Yet the next-generation skill sets that those engineers will require are sorely lacking, presenting the alarming possibility that nearly one in three engineering roles will remain unfilled each year through at least 2030.

This persistent talent gap risks short-circuiting the progress of several essential industries.

It may also seriously inhibit various US government initiatives intended to boost the economy and US competitiveness, such as the 2022 Build Back Better Act (BBBA) and the 2022 Chips and Science Act.

We also are short of trained people in Information Technology  (cybersecurity experts, data scientists, and software developers) and Teaching, particularly in STEM (Science, Technology, Engineering, Mathematics) subjects and special education.

Of course, this doesn’t include our shortages in trades not ordinarily associated with colleges but still requiring training: Electricians, plumbers, welders, HVAC technicians, truck drivers and logistics coordinators, agricultural workers, and skilled manufacturing workers who can operate complex machinery and robotics.

America relies on the private sector to pay for all this schooling and training.

Our state universities and colleges, for instance, are largely funded by the private sector, either through local and state taxes or private contributions and endowments.

All suffer from one common problem: Affordability.

1. Potential workers cannot afford to take the time and pay the costs involved in formalized training, whether in a college, university, or specialized school.

2. The private sector cannot afford to pay students and trainees for their time and costs involved in receiving training.

3. Schools and other training facilities cannot afford to provide their services without remuneration.

The federal government suffers no such limitations. It can:

1. Pay students salaries and personal expense allowances for attending schools and training facilities.

2. Remunerate students for their education and training costs

3. Remunerate educational and training facilities to provide their services without charge.

The private sector (which does not have unlimited funds) already does some of this—just not enough.

Sixty years ago, the company that employed me paid my tuition to Northwestern University for my MBA. They didn’t pay for my books, transportation, or time (night school), and I was locked into that company for the 3 years I attended, but it’s what a monetarily non-sovereign company chose to do.

The presumptive goal of government is to protect and improve people’s lives. Funding training and education is an important step in accomplishing that mission.

Why is funding left to the monetarily non-sovereign private sector?

Why are you forced to pay local taxes for grades K-12—taxes that, in most places, are insufficient to fund excellent schooling—when the Monetarily Sovereign federal government could easily fund higher teacher salaries and better facilities without charging you a penny in taxes?

The Lesson

Yes, it’s commendable that Mr. Bloomberg, in exchange for tax breaks and accolades, will provide a vanishingly tiny support for what the nation needs.

But why do we need to rely on the Bloombergs of the world when the money is there, waiting for the populace and our leaders to acknowledge its need and availability?

The tax breaks already demonstrate the government’s willingness and ability to fund about one-third of the support at Mr. Bloomberg’s whim.

There is no financial reason why the federal government cannot provide the entire nation with everything that Mr. Bloomberg provides to a select few.

What is the real reason it already is not happening? There are two reasons:

  1. The ignorance of the populace who have been brainwashed into believing that federal finances are like personal finances, and can’t afford to fund what America needs.
  2. The rich, who run America, do not want benefits that would narrow the income/wealth/power Gap between the rich and the rest.

Ignorance is the most expensive thing we can buy, yet each day, we pay mightily for another dollop of ignorance and allow the federal government to cry, “Poor.”

 

Rodger Malcolm Mitchell

Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

MONETARY SOVEREIGNTY

Do you support or oppose these Medicare changes?

Do you support or oppose these Medicare changes?

CMS Proposes Funding In-Home Dialysis for Acute Kidney Injury Patients By Tom Ozimek, 7/4/2024

The federal government has announced a federal rulemaking proposal that would extend Medicare coverage to include in-home dialysis for patients with acute kidney injury.Dialysis bus makes holidays possible for patients suffering kidney disease  - ABC News

The Centers for Medicare & Medicaid Services (CMS) said it had issued a proposed rule that would update payment rates and policies of the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for 2025.

Besides increasing overall expenditures in 2025 on the ESRD payment system by 2.2 percent, or around $170 million, the update includes a proposal to increase patient options for dialysis treatment for Medicare beneficiaries with acute kidney injury.

Contrary to popular misinformation and disinformation, Medicare is not funded by the Federal Insurance Contributions Act (aka “FICA” or payroll tax).

No federal taxes fund federal spending. All federal taxes are destroyed upon receipt by the federal government.

Taxes begin in the M2 money supply measure, but when they reach the Treasury, they are absorbed into the Treasury’s infinite money supply. Effectively, they are destroyed:

When “x” is any amount of federal taxes and ∞ is infinity,  ∞ + x = ∞.

“x” disappears.

Medicare “A” and “B” supposedly are funded differently — “A” by FICA and “B” by the government and by recipients. I say “supposedly” because here is how both are funded:

1. Each month, the federal government sends instructions (not dollars) to health providers’ banks, instructing the banks to increase the size of the providers’ checking accounts by a specific amount (i.e., “Pay to the order of . . .” ).

2. The instant the bank does as instructed new dollars are created and added to the M2 money supply measure. No dollars are subtracted from any corresponding money supply measure.

That is the primary way the government creates net dollars — by instructing banks to increase checking accounts.

3. The banks’  books are balanced,and new dollars created, by clearing the government’s instructions through another part of the government, the Federal Reserve.

Compare the above to the way monetarily non-sovereign state and local governments (and businesses, you and I) pay our bills:

Like the federal government, we send instructions (checks or wires) to creditors’ banks. The difference is that in clearing your instructions, the Fed sends instructions to our banks, telling them to subtract dollars from our accounts.

When monetarily non-sovereign entities pay creditors, no net dollars are created. M2 rises when the creditors’ bank increases balances, and M2 falls when our bank decreases our balances.

Thus, the overall money supply grows when the government pays for things, not when the private sector pays for things. The money supply shrinks when the private sector pays the government for things.

A growing money supply leads to a growing GDP, while a shrinking money supply leads to recessions and depressions.

For 2025, CMS is proposing to allow Medicare beneficiaries with acute kidney injury to receive dialysis at home.

The agency also proposes that dialysis facilities be allowed to bill Medicare for training patients with acute kidney injury to perform in-home dialysis.

The agency also plans to update the payment rate for acute kidney injury dialysis to $273.20, which is the same as the base rate for regular dialysis.

For in-center hemodialysis, which is typically done three times a week, the annual cost was reported to be approximately $72,000 to $88,000, which could translate to about $250 to $350 per session.

Peritoneal dialysis, often done at home, might be slightly less expensive, with annual costs around $53,000 to $65,000, equating to roughly $145 to $180 per day.

The proposal represents a significant shift in CMS policy as, under current Medicare rules, only in-center dialysisis covered for beneficiaries with acute kidney injury who are not hospitalized.

CMS said in the announcement that dialysis-dependent patients with acute kidney injury have the potential to recover kidney function and avoid long-term dialysis.

The agency added that providing such beneficiaries with more flexible treatment options like in-home dialysis would encourage more frequent dialysis at lower ultrafiltration rates, supporting recovery of kidney function in patients with acute kidney injury.

If the rule is ultimately adopted, Medicare coverage of home dialysis will be available to both patients with acute kidney injury as well as end-stage renal disease.

Given that federal spending costs you nothing, and stimulates economic growth, there is no reason why Medicare has been slow to cover in-home dialysis.

Specifically, CMS said that its proposal would increase the base rate to $273.20 in 2025 from $271.02 in 2024, incorporating a 1.8 percent market basket percentage increase adjusted for productivity.

The agency estimates that the updates would increase the total payments to all ESRD facilities next year by 2.2 percent compared to 2024. Hospital-based ESRD facilities are projected to see a 3.9 percent increase in total payments while freestanding facilities will see a total payment increase of 2.1 percent.

CMS is also proposing updates to the policy of handling unusually high costs, or outliers, in providing kidney dialysis services.

It wants to include more specialty drugs and biological products in the list of services considered for extra cost adjustments. These are items that were or would have been included in the composite rate prior to the establishment of the current ESRD payment system.

The agency is also proposing technical changes to how it calculates the extra cost amounts, which consist of the outlier services fixed-dollar loss (FDL) amounts and the Medicare allowable payment (MAP) amounts, in order to better match current data and costs.

The oft-quoted objection to federal spending is that it causes inflation. The arguments are shown in green:

1. When the government spends more, it can increase the overall demand for goods and services in the economy. If the production capacity doesn’t keep up with this increased demand, prices may rise.

However, federal spending amounts to only a small fraction of GDP. GDP = Personal Consumption (68%) + Private Investment (18%) + Government Expenditures (18%) – Net Imports (4%)

Further, in a capitalist economy, increased demand is met by increased capacity.

2. Increased government spending can also raise the cost of production by increasing demand for resources, which can lead to higher prices for consumers.

However, increased demand for resources is widely inflationary for only one resource: Oil.

Further, oil prices are less subjet to supply and demand than to prices determined by major oil suppliers OPEC, Russia, and the U.S.

3.  To finance spending, the government might borrow money, which can influence the interest rates. If the Federal Reserve purchases these securities, it increases the money supply, which can devalue the currency and lead to inflation.

However, the U.S. government, being Monetarily Sovereign, does not borrow dollars. While higher interest rates are inflationary, they are not caused by market forces. They are caused by the Fed’s strange belief that higher rates lower prices.

The government has the infinite ability to spend, which increases the money supply — while also increasing the ability to produce.

4. If businesses and consumers expect that government spending will lead to inflation, they may adjust their behavior accordingly, such as by raising prices or wages, which can create a self-fulfilling prophecy.

However, in a capitalist economy, excessive profits quickly are met with price cutting.

SUMMARY

It is far better for the economy and for individuals if the government funds things rather than the monetarily non-sovereign, private sector paying.

This not only applies to Medicare but also to Social Security and to everything currently tax-funded by city, county, and state governments. Consider the implications.

  1. Free, comprehensive medical and health support for all age and income groups.
  2. Generous Social Security benefits for all age and income groups. (Yes, the rich, too. This is to avoid needless paperwork and investigations.)
  3. Free college for everyone who wants it.
  4. Funding for all the sciences.
  5. Funding for infrastructure, including infrastructure now funded by cities, counties, and states.

 

Rodger Malcolm Mitchell

Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell ACADEMIA: https://www.academia.edu/

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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

MONETARY SOVEREIGNTY

“Where one burns books, one will soon burn people,” German poet Heinrich Heine

This article from the July 6, 2024, Florida Sun Sentinel speaks for itself.

Textbook authors told climate change references must be cut to get Florida’s OK

The directive appears similar to requirements the state imposed on math and social studies textbooks said to include “critical race theory” and “social justice” material

Trump praises 'great meeting' with DeSantis in Florida — their first conversation since governor dropped out of GOP primary | CNN Politics
Donald Trump, Ron DeSantis: Burn or delete

By LESLIE POSTAL | lpostal@orlandosentinel.com |July 5, 2024 at 5:36 p.m.

Textbook authors were told last month that some references to “climate change” must be removed from science books before they could be accepted for use in Florida’s public schools, according to two of those authors.

A high school biology book also had to add citations to back up statements that “human activity” caused climate change and cut a “political statement” urging governments to take action to stop climate change, said Ken Miller, the co-author of that textbook and a professor emeritus of biology at Brown University.

Both Miller and a second author who asked not to be identified told the Orlando Sentinel they learned of the state-directed changes from their publishers, who received phone calls in June from state officials.

Miller, also president of the board of the National Center for Science Education, said the phrase “climate change” was not removed from his high school biology text, which he assumed happened because climate change is mentioned in Florida’s academic standards for biology courses.Opinion: Don't think book burning can happen in the U.S.? It has - Los Angeles Times

But according to his publisher, a 90-page section on climate change was removed from its high school chemistry textbook and the phrase was removed from middle school science books, he said.

The other author said he was told Florida wanted publishers to remove “extraneous information” not listed in state standards.

“They asked to take out phrases such as climate change,”he added.

The actions seemed to echo Florida’s previous rejection of math and social studies textbooks that state officials claimed include passages of “indoctrination” and “ideological rhetoric.”

101-YEAR-OLD GRACE LINN: ‘BANNING BOOKS AND BURNING BOOKS ARE THE SAME’

And they fall in line with the views of many GOP leaders, who question both the existence of climate change and the contributions of human activities to the problem, despite a broad scientific consensus that human-caused climate change is transforming the earth’s environment.

In May, Gov. Ron DeSantis signed a bill that stripped the phrase “climate change” from much of Florida law, reversing 16 years of state policy and, critics said, undermining Florida’s support of renewable and clean energy.

The bill did not address public education nor the state’s science standards, which were adopted in 2008 and spell out what students should learn in science instruction from kindergarten through 12th grade.

But SB 1645 altered Florida’s energy policy, removing the goal of recognizing and addressing “the potential of global climate change,” Senate staff wrote in an analysis of the bill.

DeSantis has said the new legislation, passed by Florida’s Republican-dominated Legislature, was “restoring sanity in our approach to energy and rejecting the agenda of the radical green zealots.”

The Florida Department of Education did not respond this week to a request for comment about the science books nor to earlier questions in May and June about when its approved list of science textbooks for elementary, middle and high school science classes would be released.

Florida’s school districts use the list to purchase books for their schools and had been told the state would release the science list in April.

Late Tuesday, the department posted the list on its website. Miller’s and the other author’s books were among those approved. The texts have not yet been printed so the Sentinel was unable to review them.

But there are no textbooks for high school environmental science classes on the approved list, though three companies submitted bids to supply books for that class, according to documents on the department’s website. Course material for that subject typically includes significant discussion of climate change.

“How do you write an environmental science book to appease people who are opposed to climate change?” asked a school district science supervisor, who is involved in science textbook adoption for her district. She asked not to be identified for fear of job repercussions.

She and other educators, the textbook authors and science advocates said the state’s actions will rob students of a deeper understanding of global warming even as it impacts their state and communities through longer and hotter heat waves, more ferocious storms and sea level rise.

Florida had already earned a D —and was among the five lowest-ranked states in the country — in a 2020 study that graded the states on how their public school science standards addressed climate change, said Glenn Branch, deputy director of the center for science education, which was a partner in the study.

Excising the phrase from science textbooks will “make Florida climate education even worse than it is,” Branch said. “These ill-considered actions are going to cheat Florida students.”

Branch said it was especially troubling the decision seemed based on “ideological grounds” and ignored the “rock solid” science that has documented climate change and its impacts.

Brandon Haught teaches environmental science at a Volusia County high school and was active in efforts to include evolution — another controversial science topic — in the standards adopted 16 years ago.

His ninth graders know almost nothing about climate change because it is not taught in the lower grades, he said. He spends at least a week on the topic but is covering only “the basics,” he said.

Florida students need more information on the subject not less, he added. “Florida is one of the most impacted by the impacts of climate change, and oh my goodness Gov DeSantis, why?”

The state’s push to get publishers to remove “climate change” from some science books seems similar to its actions in 2022 and 2023 when it rejected some math and social studies textbooks publishers wanted to sell in Florida.

In those cases, the department announced it had rejected textbooks in press releases that claimed the books contained “critical race theory” and “social justice” topics, which were prohibited by state laws and rules. Some of those textbooks were later approved after the publishers made changes.

In contrast, the list of approved science books was posted to the department’s website without an accompanying press release.

Judging from past practice, science textbooks that were rejected, such as those for environmental science, could later be approved if they were altered to meet Florida’s requirements.

Some school districts, including those in Orange and Seminole counties, were poised to buy new science books as soon as the state list was released.

But districts can continue to use older books for a while, and some districts now may not purchase new science books immediately because the list was released months later than expected.Why did Trump have to tell his followers to stop bringing Nazi flags to his rallies? - Quora

There were 146 textbooks submitted for consideration.

About 75 books from a total of about 10 publishers were approved for middle and high school classes, with four publishers also approved to provide science books for kindergarten-to-fifth-grade classes, according to documents on the department’s website.

Textbooks can be rejected for failing to match Florida’s standards or failing to provide content that is accurate, among many other issues.

Science textbook publishers were told in advance to keep “critical race theory,” “social emotional learning” and other “unsolicited strategies” out of their textbooks.

However, the “rubric” used to evaluate the books made no mention of “climate change.”

The Sentinel could not reach for comment the three publishers — Cengage Learning, McGraw Hill and Savvas Learning Company — that submitted environmental science books that did not make the approved list posted Tuesday.I publish this article for you, without comment.

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The History of Nazi Book Burning Julia Rittenberg

The rise in book censorship across the United States is reminiscent of the fascist tendencies throughout history.

While book banners and censorship supporters paint their concerns as specific to contemporary issues, it’s a common way to consolidate power.News from Arkansas State University

The history of Nazi book burning is one of the most obvious antecedents to the censorship of books in the U.S.

Book burning began shortly after the Nazi Party took control over the government: “Beginning on May 10, 1933, Nazi-dominated student groups carried out public burnings of books they claimed were “un-German.”

The book burnings took place in 34 university towns and cities.

Works of prominent Jewish, liberal, and leftist writers ended up in the bonfires.”

With these ideas came the need to define what was German and what was not. Exclusion is necessary to create an enclosed nation.

Part of the rhetoric of German nationalism was that all true Germans were Christian.

Some German nationalists believed Jews could assimilate only if they converted. German Jewish people disagreed and fought for equal recognition under German law.

Gabriel Riesser, a prominent Jewish activist during the first half of the 19th century, argued that the Jewish people’s participation in the army validated their German identity, not their faith.The Book-Burner and the Post-Truther: Why Fahrenheit 451 is a Book for the Age of Trump - Litro Magazine

The German poet Heinrich Heine wrote with chilling clairvoyance, “where one burns books, one will soon burn people.”

Although Germany was officially unified in 1871, chaos and power-grabs in the form of nationalistic fervor were quick to dominate the country.

Taking the time to separate German and un-German texts (even if a number of them originated in Germany) also allowed the Party to define the enemy.

The un-German forces defined by the Party were texts from Jewish writers, socialist writing, anything democratic, or foreign authors.

On May 6, 1933, the first book-burning action took place. The Institute of Sexology was targeted by German students.

The library of the Institute collected over 20,000 texts about intersexuality, homosexuality, and transgender people.A display of banned or censored books at Books Inc., an independent bookstore in Alameda, California, on October 16, 2021.

Magnus Hirschfeld, the founder of the Institute, also performed the first gender confirmation surgery on Dora Richter, who died in 1933 and was most likely killed in the chaos of the book burning action.

This initial step was part of the Nazi Party’s mission to ban all “deviant” sexuality.

The fact that state governments are choosing schools to start the book bans is also deliberate. The Nazi Party exerted control over universities and children through the Hitler Youth program in order to raise compliantly racist Germans.

American schools filled with students with no knowledge of the Middle Passage, the Jim Crow era, or internment camps will pay no attention to the erosion of protections for marginalized people under federal or state law.Lawsuit Alleges More Government Censorship by Proxy—State Department Funds Blacklisting of US Media? | Cato at Liberty Blog

If they know nothing about discrimination, they can’t fight it.

They’re also fed a false narrative of American exceptionalism, similar to the narratives of German purity that drove the book burnings.

Th(is) could even preface a future in which students learn very little about the lead-up to the Holocaust and fail to recognize the signs of dictatorial cultural power.

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell

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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

MONETARY SOVEREIGNTY

Uninformed debate on “national government debt” and one informed voice.

Former Fed chairman Alan Greenspan on the risk of recession
Alan Greenspan
The UK government, like the US government, is Monetarily Sovereign. It has the infinite ability to create its own sovereign currency.

Former Federal Reserve Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.

“There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.

“The United States can pay any debt it has because we can always print the money to do that.”

Other governments have this ability — the UK, Canada, Japan, Australia, the EU (though not its euro-using nations), China, etc. Not only can they create infinite amounts of their sovereign currency, but they are large enough to assure acceptance of, and demand for, their currencies. The currencies of the above-named nations are backed by the full faith and credit of those nations, so there always is demand.

(By contrast, if you decided to create and distribute “mybucks” as your sovereign currency, you, too, would be Monetarily Sovereign, but few, if any, people would want it because your full faith and credit do not support a widely used currency.)

Sadly, the leaders of those nations have been paid by the rich to pretend they are not Monetarily Sovereign and that their “debt” is not “sustainable.” The purpose of the bribe: To widen the Gap between the rich and the rest. In many posts on this blog, I have discussed the facts that:
  1. U.S. “federal debt” is not federal, nor is it debt. It is deposits wholly owned by the depositors.
  2. The U.S. federal government is infinitely able to pay any obligations denominated in dollars, and the federal “debt” is infinitely sustainable.
  3. Creating dollars does not cause inflation. All inflations are caused by scarcities of critical goods and services, most often oil, food, and labor.
  4. Federal deficits are necessary to grow the economy, necessary to prevent recessions and depressions, and necessary to cure recessions.
Lest you believe the U.S. is the only Monetarily Sovereign government that pretends it isn’t Monetarily Sovereign, I give you the following demonstration of economic ignorance from the UK:

Background UK public sector net debt, often referred to as ‘national debt’, currently stands at just under 100 per cent of GDP.

The UK’s growth outlook remains weak; quantitative easing has significantly increased the sensitivity of the UK’s debt to changes in short-term interest rates; and it is unclear whether the Government’s fiscal rule, as it relates to the national debt, is fit for purpose.

The committee’s inquiry will investigate whether the UK’s national debt is on a sustainable path; if not, what steps are required; and whether the Government’s fiscal rule regarding the national debt is meaningful.

There it is, the “sustainable” lie. Like the Monetarily Sovereign U.S. “debt,” the UK debt is infinitely sustainable.

Call for evidence The committee is seeking answers to the following questions:

1. What is meant by a “sustainable” national debt? Does the metric of debt as a percentage of GDP adequately capture sustainability?

Answer: No. The “debt”/GDP has no meaning with regard to a Monetarily Sovereign government’s ability to “sustain” its so-called “debt.”

2. The Government’s target is for public sector net debt (excluding the Bank of England) to be falling, as a percentage of GDP, by the fifth year of the OBR’s forecast. How meaningful is this target; and how does it inform an evaluation of the sustainability of our national debt?

Answer: The only way to decrease the “debt”/GDP ratio is to reduce deficit spending, a reduction that has repeatedly caused recessions.

3. How robust are the assumptions used by the Office for Budget Responsibility when forecasting our national debt?

Answer: Since the forecasts are meaningless, the “robustness” question also is meaningless.

4. What implications does the structure of the UK’s national debt have for its short and longer-term funding?

Answer: The debt is the net total of deficit spending, which already has been funded by money creation.

5. What are the market risks created by high levels of public debt; and what factors will influence the market’s appetite for this debt?

Answer: National government deficit spending adds growth dollars to the economy. The real market risks — i.e., recession and depression — come from insufficient deficit spending. The government does not need to sell deposits into so-called “debt.” So, there is no government need for “market appetite.” The UK government can spend endlessly without selling even one pound of debt securities.

6. If we are to ensure our national debt is sustainable, what might this mean for fiscal policy?

Answer: There is no need to “ensure’ the national debt is sustainable. It is infinitely sustainable. For that reason, paying higher interest on the “debt” is not a burden on the government Higher rates often can benefit the economy by adding dollars to the private sector, thus increasing GDP.

7. Should the definition of the national debt differentiate between debt incurred for investments (which generate revenue for the Government), and other areas of spending?

Answer: The so-called “national debt” is nothing like private (monetarily non-sovereign) debt. The more “national debt” there is, the healthier the economy. The UK government has no need for revenue. Even if it didn’t collect a pound in income or taxes, it could continue spending forever. And then there is this bit of nonsense:
Matthew Lynn
Matthew Lynn

Britain is teetering on the brink of bankruptcy. No one dares admit it Story by Matthew Lynn

Rishi Sunak came under fire for some Treasury forecasts of tax rises.

The Labour Party droned on about “change” while endlessly repeating some imaginary numbers about “investing” in the NHS and creating “green jobs”. 

Over the course of the election campaign, the main parties have argued furiously about trivialities.

Yet there is an ugly truth lurking behind this election: Britain is far closer to bankruptcy than our political elites are willing to admit. 

This is absolutely false scaremongering. The UK cannot go bankrupt because it cannot run short of money. Period.

Taxes are already at a 70-year high, and yet we are nowhere close to balancing the books.

Every pound of taxes reduces GDP growth. National taxes absolutely should be cut. They do not fund (monetary sovereign) national government spending. (Taxes do fund local — monetarily non-sovereign –government spending.) If the UK stops running deficits, it will have a depression that will make the Great Depression look like a picnic — a depression that only will be cured by massive deficit spending.

Over the course of this year, we will add another £87 billion, or around 3 per cent of GDP, to the national debt, according to the Office for Budget Responsibility (OBR).

And this is happening at a time when the economy is recovering, and the Government has pushed through a series of punishing tax rises.

Did it occur to the authors that GDP = National + local government spending + Net Exports? An economy recovers because of deficit spending, not in spite of it.

We should be paying back debt at this point in the cycle, not racking up even more.

“Paying back requires either more taxes or less spending, both of which will reduce GDP. It’s simple algebra.

Our debt to GDP ratio is close to 100 per cent, and tripled in the 16 years to 2023, according to the Resolution Foundation, the largest ever increase in peacetime.

We are very near to the 112 per cent level that has just led to the humiliating downgrade of France’s credit rating twice over the past six months.

The UK is Monetarily Sovereign. France is monetarily non-sovereign. Sadly, the authors don’t understand the difference, yet they write about economics. Shameful.

It doesn’t stop there. We are still racking up huge off-balance sheet debts. Such as? There is already £200 billion of outstanding student debt, and that is forecast to rise to over £400 billion by the 2040s.

Again, students are monetarily non-sovereign. The authors confuse the burden of private debt with the economic necessity of national debt, demonstrating unforgivable ignorance by national leaders. The government should increase its deficits by helping fund students’ debt.

Few believe that graduates will earn enough to pay back their loans in full, especially as our zero-growth economy is hardly creating any new professional jobs to absorb them all.

Government deficit spending could grow the economy and create jobs.

We are on the hook for some £2.6 trillion in “unfunded” public sector pension entitlements.

There are zero “unfunded” public sector pension entitlements. They all are funded by government money creation. The claim is an attempt to widen the income/wealth/power Gaps between the rich and the rest. The claim is funded by the rich to make themselves richer. The wider the Gaps, the richer are the wealthy.

As the state employs more and more people – we added another 135,000 to the government payroll in the year to September 2023 – that figure will carry on getting larger and larger.

That means 135,000 people receive money that is added to GDP.

We are legally mandated to hit a net zero target which the OBR has calculated could add at least another £300 billion to the government’s costs over three decades.

If a “net zero” target means zero deficits, the UK is headed for a depression. That target is beyond stupid. It is criminal.

In Wales, a staggering 28 per cent of working age people are now on benefits, depending on the state to support them, and the figures are little better in the rest of the country.

If “the state” is the national government, those payments add to GDP and do not cost anyone anything. And at last, we come to one Britisher who understands Monetary Sovereignty. Delight in reading one informed man’s comments:
Jon Camden | Materials Science and Engineering | University of Notre Dame
Jon Camden

JON CAMDEN – WRITTEN EVIDENCE SND0005 – SUSTAINABILITY OF THE UK’S NATIONAL DEBT INQUIRY

The UK’s national debt is always sustainable.

I’m frankly amazed you have to ask this question. Firstly, a brief explanation as to what the National Debt actually is. The debt is nothing more than a record of all government expenditure into the economy less taxes removed from the economy.

The issuance of Gilts to match the difference between spending and tax is not borrowing and does not provision government. The sale/purchase of Gilts is an Open Market Operation with the purpose of managing interest rates, it is a hangover from the gold standard days.

Gilt sales serve no real purpose other than to provide a safe way for pension funds and other financial institutions to make money.

They also help control interest rates, but the point is correct. They do not provide the government with spending funds.

Not a bad thing in itself but let’s not pretend that our government, that is the monopoly issuer of the pound, needs to borrow pounds that it has already issued.

And what is the mechanism behind this simple fact? Reserves accounts of commercial financial institutions held at the Bank of England solely consist of pounds issued/spent by the government or loaned by the government.

The pounds in the reserve accounts of commercial institutions put there by our government are then used by commercial institutions to purchase Gilts issued by our government! In effect the pounds in the reserve account are transferred to a Gilts account which pays interest.

That’s it. There is no way that in any sense of the word could this be considered as the UK government borrowing.

Next, although we’ve just seen that the National Debt is a mirage and better described as savings, we still insist that we have to pay interest (often described as nothing more than corporate welfare) on the pounds we have issued.

And that is a lot of interest. How sustainable are these interest payments? The answer is infinitely sustainable.

As I’ve already stated the irrefutable fact that the UK government is the monopoly issuer of the pound. The UK government can never involuntarily become bankrupt.

It can never run out of pounds. It can therefore always service its ‘debt’ as long as the debt is in pounds (which of course it is).

You only have to look at the example of Japan to realise that debt to GDP ratios are totally meaningless.

Last time I looked, end of 2023, Japan had a debt to GDP of 263% with low inflation, low interest rates, high levels of employment and excellent public services.

Any debt to GDP target is completely arbitrary and designed to hold down the spending of public money for public purpose, in other words it is politically motivated rather than having any economic basis.

Last, just want to reiterate that the idea that the UK government is dependent on the private sector or market to finance its ‘debt’ is total nonsense.

As I’ve already stated the pounds used by private financial institutions to buy Gilts were already issued by the government but we still have to go through the theatre of pretence by selling Gilts on the primary market.

BoE just used to buy them directly until it was forbidden, but that is entirely self-impose constraint. Now, if the market loses its appetite for debt the BoE just steps in and buys on the secondary market.

It’s about time the law-makers of our country understood that the UK government is monetarily sovereign. UK government finances are not like a household’s.

The UK government can never go broke, can never run out of money, and can always sustain its debt.

That, however, is not to say there are no limits to government expenditure. UK government expenditure is constrained by the real resources that are available to buy priced in pounds.

Asking how we are going deploy our government’s infinite financial resources to invest to sustain the real economy, mobilise our workforce and the finite resources of our country and, at the same time, sustain the environment are the real questions we should be asking.

Not worrying about an imaginary problem about how to sustain an imaginary ‘debt’, caused by imaginary ‘borrowing’. 23 January 2024

Thank you, Professor Camden. We can now assure everyone that there is at least one informed, though lonesome, person in England. Is there another? Oh, wait. I think Camden is an American and a chemist. If that is the case, perhaps it shows that chemists rely on proofs and facts, while economists rely on intuition and hearsay. So, thank you again, Professor Jon Camden, for your excellent article. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell

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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

MONETARY SOVEREIGNTY