Medicare, private healthcare insurance, or something better?

We’ll begin by reminding you that the U.S. federal government’s finances are unlike those of state and local governments, businesses, and individuals. The federal government is uniquely Monetarily Sovereign (See Monetary Sovereignty, the Key to Understanding Economics.) It has the infinite ability to create dollars and cannot run short of them. Even if the federal government collected zero taxes, it could continue spending at double or triple the current levels forever.

THE FEDERAL GOVERNMENT HAS AN INFINITE SUPPLY OF SPENDING MONEY

Huge mountain made of dollars — **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.”
**Ben Bernanke:** “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. It’s not tax money… We simply use the computer to mark up the size of the account.
**Jerome Powell:** “As a central bank, we have the ability to **create money digitally**.
**The St. Louis Fed:** “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is **not dependent on credit markets** to remain operational.”
**Mario Draghi**, President of the Monetarily Sovereign ECB: “**We cannot run out of money**.”

Because the U.S. government cannot run short of dollars, all concerns about the large size of the U.S. “debt” and deficit are based on ignorance and/or deceit. The federal “debt” is not a burden on the government or on taxpayers. The oft-quoted debt/GDP ratio has no meaning for a Monetarily Sovereign government. (See: Enough already with the Debt/GDP ratio) It does not indicate the government’s ability to pay its bills (infinite) nor the likelihood of insolvency (zero). Concerning healthcare for Americans, the concern should not be about cost but about coverage. Even without collecting a penny in taxes, the U.S. government has the financial ability to provide Americans with the best healthcare available. No compromises are necessary. Today, Americans must select among Medicare, Medicaid, Medicare Advantage, employer-funded insurance, and individually purchased policies. They each have disadvantages:

They require premiums
Some restrict which doctors and hospitals you can use
They do not cover all medical situations.

Medicare’s Advantage Over Medicare Advantage Plans

Wider Provider Network: Original Medicare allows you to see any doctor or hospital in the U.S. that accepts Medicare.
No Network Restrictions: You don’t need referrals to see specialists.
Simplicity: Original Medicare is straightforward with fewer plan options to choose from.
Flexibility: You can add Medigap (Medicare Supplement Insurance) to cover additional costs like copays and deductibles.
No Prior Health Denials: Original Medicare generally does not deny coverage based on pre-existing conditions or prior health issues.

Medicare Advantage Plans’ Advantage Over Medicare

Additional Benefits: Many Medicare Advantage plans offer extra benefits like vision, dental, and hearing coverage, which Original Medicare does not cover.
Lower Out-of-Pocket Costs: Some plans have lower copays and deductibles compared to Original Medicare.
Prescription Drug Coverage: Most Medicare Advantage plans include Part D prescription drug coverage.
Potential Cost Savings: Some plans have $0 premiums and may offer lower overall costs for certain services.
Managed Care and Wellness Programs: Many plans include coordinated care and wellness programs, which can be beneficial for managing chronic conditions.
Potential Coverage Denials: Medicare Advantage plans can have more restrictive networks and may deny coverage for services not deemed medically necessary by the plan. They also may require prior authorizations for certain treatments and medications.
No need to purchase Medigap policies for more complete coverage

Employer-funded Plans

These use commercial healthcare insurance providers, all charging premiums paid or partially paid by employers. In reality, all premiums are paid by employees because employers consider healthcare costs when calculating employee compensation.
Private healthcare insurance is ruled by the profit motive, which notoriously causes massive claim denials.

The federal government has the financial ability to fund every benefit provided by all of the above plans without charging premiums, denying legitimate claims, or collecting tax dollars. So why doesn’t the government do it? Why do you pay outrageous premiums and/or taxes for insurance that doesn’t cover all your needs or, on many occasions, may even reject your claims? Ignorance + Politics Very few Americans understand Monetary Sovereignty. The general population wrongly believes: 1. Wrong belief: Federal taxes and federal borrowing fund federal spending.

Unlike state and local taxes, which fund state and local government (monetarily non-sovereign) spending, federal tax dollars are destroyed upon receipt. (See: Does the U.S. Treasury really destroy your tax dollars?) Federal taxpayers do not pay for any federal spending.
Federal taxes have only two purposes, and neither is to provide spending funds to the government. The purposes are:
To control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to reward
And to assure demand for the U.S. dollar by requiring taxes to be paid in dollars.
Tax dollars begin as part of the M2 money supply measure, but when they reach the Treasury, they cease to be part of any money supply measure. They are effectively destroyed as they disappear and cannot be measured. (See: If federal deficits are bad, why do we run deficits to cure recessions?)
The federal government’s infinite ability to create dollars makes it impossible to measure the number of dollars the government has.
The federal government pays all its creditors with newly created dollars. It sends instructions (not dollars) to the creditors’ banks to increase the balances in the creditors’ checking accounts. When the banks do as instructed, new dollars are created and added to the M2 money supply measure. That (not “printing”) is how the federal government creates dollars.
The federal government never borrows dollars. Those Treasury bills, notes, and bonds do not represent borrowing. They represent deposits into T-security accounts. The government never takes dollars from the accounts, nor does the government owe the dollars. The dollars remain the property of the depositors. To pay off the misnamed “debt,” the government merely sends the dollars back to the owners, i.e., the depositors. This is not a burden on the government or on taxpayers.

2. Wrong belief: Federal deficit spending causes inflation.

All data indicate that inflation is caused by shortages of critical goods and services, most often oil and food. (See: The cause of inflation down to the last decimal point WAG.)
No data indicate that federal deficit spending causes inflation.
On the contrary, all data show that federal deficit spending cures inflation by addressing the shortages that caused it.

**When federal debt growth (red line) is reduced, we have recessions (vertical gray bars), which are cured by increased federal debt growth.**

This (above) is a typical recession. It begins after a period of reduced federal debt growth and is cured by increased federal debt growth, demonstrating that a growing economy requires a growing supply of federal money.

Here (above) is the 2020 COVID-caused recession. The data show that federal debt was growing at a high 5%—7% rate when COVID suddenly caused massive shortages and the resultant recession. To cure the recession, government deficit spending grew by almost 20%.

**The high 5%-7% growth rate of federal deficit spending (blue line, above) didn’t cause inflation, which came only with COVID-related shortages.**

The above graph shows no relationship between federal deficit spending (red) and inflation (blue), which demonstrates this important fact: The federal government has the financial ability to fund comprehensive, free medical insurance for every man, woman, and child, without levying taxes and without causing inflation. Why then, do we see articles like this:

Here’s how Trump and the GOP may try to weaken Obamacare November 21, 2024, From KFF Health News, By Stephanie Armour, Sam Whitehead, and Julie Rovner President-elect Donald Trump’s return to the White House could embolden Republicans who want to weaken or repeal the Affordable Care Act. Trump, long an ACA opponent, expressed interest during the campaign in retooling the health law. In addition, some high-ranking Republican lawmakers — who now have control over both the House and the Senate — have said revamping the landmark 2010 legislation known as Obamacare would be a priority. They say the law is too expensive and represents government overreach. The governing trifecta sets the stage for potentially seismic changes that could curtail the law’s Medicaid expansion, raise the uninsured rate, weaken patient protections, and increase premium costs for millions of people.

The GOP supports wealthy businesses over poorer people. Insurance companies are massive contributors to candidates of both parties, though they favor Republicans. “Richer” and “poorer” are comparatives determined by the income/wealth/power Gap. (See: “Here we go again. The rich can hardly wait to widen the Gap.”) The wider the Gap, the richer are the rich and the poorer are the poor. Therefore, the rich continually try to widen the Gap, and one way to do that is to deny free health care to the masses. Obamacare (ACA) is a favorite target of the rich because it primarily aids the poor. You seldom will hear a wealthy person complain about the the “unaffordability” of tax loopholes enjoyed by the rich, though those loopholes are expensive and represent government overreach. You never will hear a Republican say, “We’ll cut back on ACA, and to show we’re balanced, we also will eliminate:

Private foundations that offer immediate income tax deductions of up to 30% of adjusted gross income (AGI) for contributions. (These foundations only need to distribute about 5% of their assets annually for charitable purposes, allowing the rest to grow tax-free.)

Annual gift tax exclusions and lifetime gift tax exemptions to transfer wealth to heirs without incurring significant taxes.

Instead of selling assets and incurring capital gains taxes, the wealthy can borrow against their assets, which is not taxable while the interest is.

The carried interest loophole allows hedge fund and private equity managers to classify their earnings as capital gains rather than ordinary income, resulting in lower tax rates

Real estate investors can defer capital gains taxes indefinitely by reinvesting the proceeds from the sale of property into similar properties, aka “1031 exchanges.” (When was the last time you ever heard Donald Trump complain that 1031 exchanges were “too expensive” for the government?

Wealthy individuals can use offshore trusts and accounts to shield assets from taxes and protect wealth from legal claims

These, and many other loopholes, allow the rich to save money while they complain about benefits to middle- and lower-income people. You never will hear that 1031 exchanges are “unsustainable” and “unaffordable” or that they cause inflation. Musk and Ramaswamy will not identify private foundations as inefficient or suggest revamping the carried interest exclusion, but they are shocked — shocked I tell you — about provisions like the Community Eligibility Provision (CEP), which allows schools in low-income areas to offer free meals to all students. They claim raising qualification ages is necessary to “save Medicare and Social Security.” However, they do not mention “saving” tax loopholes by cutting them. In 2011, Republicans passed a bill titled “Repealing the Job-Killing Health Care Law Act” (H.R. 2). This marked the beginning of numerous efforts to repeal or defund the ACA, with over 40 attempts made in the following years. The efforts continued through various legislative sessions, including a notable attempt in 2017 with the introduction of the American Health Care Act (AHCA), which aimed to repeal and replace the ACA. Note that ACA hasn’t killed any jobs, nor have the Republicans come up with a “better” program to replace ACA. In summary, it’s all a giant lie. Cutting the federal deficit is neither prudent nor practical. It is the opposite. It is a thinly veiled attempt to widen the income/wealth/power Gap between the rich and the rest. The federal government could and absolutely should provide free, comprehensive healthcare insurance to every man, woman, and child in America without raising taxes. But it will happen only if the public becomes more educated about Monetary Sovereignty, votes accordingly, and complains loudly. Do you care enough to complain to your Congressional representatives? 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

Would you trust a baker who doesn’t know the differences between salt and sugar?

It often isn’t easy to determine whether information falls into the “miss-” (unintentional) category or the “dis-” (intentional) category. For instance, Fox News has promulgated faulty information of the “dis-” sort, while your addled neighbor usually mouths “mis-“.

Uncle Sam is picking someone's pocket — **I have the infinite ability to create U.S. dollars just by pressing computer keys, but I want you to give me more dollars and keep fewer for yourself. Crazy, huh?**

The following article comes from the Associated Press, so I would put it in the misinformation category.

National debt: Trump’s big challenge Paying down $36T could limit his tax cuts, other policies By Josh Boak and Fatima Hussein Associated Press WASHINGTON — President-elect Donald Trump has big plans for the economy — and a big debt problem that will be a hurdle to delivering on them. Trump has bold ideas on tax cuts, tariffs and other programs, but high interest rates and the price of repaying the federal government’s debt could limit what he’s able to do.

High interest rates and debt do not prevent anything. The government has infinite money available to fund anything. And heaven forbid we ever begin to “repay” the federal debt (which isn’t federal and isn’t debt). The federal debt is the total of deposits in Treasury Security accounts, all wholly owned by the depositors, not the federal government. These accounts can be “repaid” simply by returning the dollars currently in the accounts to the depositors. This would not burden the government, taxpayers, or anyone else. The article’s authors believe that federal so-called “debt” should be reduced, which requires increased taxes and/or reduced deficits. This is what reducing federal debt causes:

Every U.S. depression has come on the heels of a federal “debt” reduction.

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.

The reason is simple. Federal debt reduction removes dollars from the economy, which causes the economy to shrink. By definition, a shrinking economy is a depression. There is no magic here. To grow, an economy must have a growing supply of spending money. The formula is:

GDP = Federal and Non-federal Spending + Net Exports

There is no way to avoid a recession or depression when the money supply shrinks. Basic mathematics.

Not only is the federal debt at roughly $36 trillion, but the spike in inflation after the coronavirus pandemic and Russia’s invasion of Ukraine have pushed up the government’s borrowing costs such that debt service next year will easily exceed spending on national debt.

Again, the AP writers demonstrate monumental ignorance about federal financing, which is quite different from the business financing Donald Trump and Elon Musk know. First, the federal government is Monetarily Sovereign and has the infinite ability to create U.S. dollars. So it has no need to borrow dollars and, indeed, doesn’t.

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

“Not dependent on credit markets” is Fed-speak for “doesn’t borrow.” Those T-bills, T-notes, and T-bonds mistakenly are called “borrowing,” though they are deposits into accounts similar to safe deposit boxes. The government never owns those dollars, so it does not owe them. Instead, it merely holds them in a secure place and returns them to their owners to repay the so-called borrowing. Second, “debt service” means interest payments, which the federal government can do endlessly without collecting a penny in taxes.

The higher cost of servicing the debt gives Trump less room to maneuver with the federal budget as he seeks income tax cuts.

Unlike state and local governments, the federal government has infinite “room to maneuver.” Even if the misnamed “debt” were double or triple its current size, the federal government could cut taxes to $0 and still pay all its bills simply by pressing computer keys.

It’s also a political challenge because higher interest rates have made it costlier for many Americans to buy a home or new automobile. And the issue of high costs helped Trump reclaim the presidency in November’s election.

The Fed raises interest rates to fight inflation. However, contrary to popular wisdom, those higher rates actually cause inflation. Almost every business must add interest to its cost of goods and services. Raising rates increases the cost of goods and services, which exacerbates inflation.

“It’s clear the current amount of debt is putting upward pressure on interest rates, including mortgage rates for instance,” said Shai Akabas, executive director of the economic policy program at the Bipartisan Policy Center. “The cost of housing and groceries is going to be increasingly felt by households in a way that are going to adversely affect our economic prospects.”

“Federal debt” (which isn’t federal and isn’t debt) does not put pressure on anything. Interest rates are set arbitrarily by the Fed and are not forced by anything.

The so-called “debt” isn’t federal, because the dollars always remain the depositor’s property. It isn’t debt because the government never owned or owed the dollars; it merely held them for depositors in safe storage.

The government doesn’t need to accept T-security deposits. T-securities’ purpose is not to provide the government with spending money but rather to provide a safe place for dollar holders to store unused dollars. China, for instance, would much prefer to store its unused dollars in Treasury Security accounts than in any bank. This safety stabilizes the dollar, making it attractive as the world’s primary money choice.

Akabas stressed that the debt service is already starting to crowd out government spending on basic needs, such as infrastructure and education. About 1 in 5 dollars spent by the government are repaying investors for borrowed money, instead of enabling investments in future economic growth.

Because the federal government has infinite dollars, it does not borrow. So-called “debt service” is interest on T-security deposits. These payments do not “crowd out” spending. On the contrary, federal payments add growth dollars to the economy.

Bessent: I never knew that federal finances are different from business finances. Maybe that’s why President Trump chose me to be Treasury Secretary.
It’s an issue on Trump’s radar. In his statement on choosing billionaire investor Scott Bessent to be his Treasury secretary, the Republican president-elect said Bessent would “help curb the unsustainable path of Federal Debt.”

Federal “debt” growth is infinitely sustainable. Even if the “debt” were triple its current size, it still would be sustainable. See: Historical BULLSHIT Claims the Federal Debt Is a “Ticking Time Bomb”: From Sept. 26, 1940 to October 10, 2024

The debt service costs along with the higher total debt complicate Trump’s efforts to renew his 2017 tax cuts, much of which are set to expire after next year. The higher debt from those tax cuts could push interest rates higher, making debt service even costlier and minimizing any benefits the tax cuts could produce for growth.

Why is Elon Musk becoming Donald Trump's efficiency adviser? — **DT: Don’t tell anyone, but someone said federal finance is Monetarily Sovereign, while business finance is monetarily non-sovereign. I don’t know the difference, do you? EM: Never heard of it.**

Utter nonsense. Tax collections could be cut to $0, and the government could continue to spend, forever. Nothing “pushes” interest rates higher. They are set arbitrarily by the Fed.

“Clearly, it’s irresponsible to run back the same tax cuts after the deficit has tripled,” said Brian Riedl, a senior fellow at the Manhattan Institute and a former Republican congressional aide. “Even congressional Republicans behind the scenes are looking for ways to scale down the president’s ambitions.”

This is another classic example of ignorance about federal finance. They don’t understand the difference between Monetarily Sovereign (federal government) and monetary non-sovereignty (state and local governments).

Democrats and many economists say Trump’s income tax cuts disproportionately benefit the wealthy, which deprives the government of revenues needed for programs for the middle class and poor.

The tax cuts disproportionately benefit the wealthy but do not deprive the government of revenues. It has infinite revenues. The ignorance is appalling.

“The president-elect’s tax policy ideas will increase the deficit because they will decrease taxes for those with the highest ability to pay, such as the corporations whose tax rate he’s proposed reducing even further to 15%,” said Jessica Fulton, vice president of policy at the Joint Center for Political and Economic Studies, a Washington-based think tank that deals with issues facing communities of color.

Increasing the deficit adds growth dollars to the economy. Cutting corporate taxes helps the economy grow. The federal deficit is not a burden on the government or on taxpayers. Seemingly, the Joint Center for Political and Economic Studies doesn’t understand basic economics.

Trump’s team insists he can make the math work. “The American people reelected President Trump … to implement the promises he made on the campaign trail, including lowering prices. He will deliver,” said Karoline Leavitt, the Trump transition spokeswoman.

He won’t deliver if he increases import duties as he promises. American consumers pay those duties.

When Trump was last in the White House, the federal government was spending $345 billion annually to service the national debt. It was possible to run up the national debt with tax cuts and pandemic aid because the average interest rate was low, making repayment costs manageable even as debt levels climbed.

The federal government doesn’t pay for debt; it merely returns depositors’ money. In any event, the federal government has the infinite ability to pay for anything without collecting taxes. The sole purposes of taxes are to:

Control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to reward and
To assure demand for the U.S. dollar by requiring taxes be paid in dollars.

Federal taxes do not provide the federal government with spending money.

Congressional Budget Office projections indicate that debt service costs next year could exceed $1 trillion. What fueled the increased cost of servicing the debt? Higher interest rates.

Translation: The federal government will pump more than 1 trillion growth dollars into the economy at no cost to anyone.

A political leader not knowing the differences between Monetary Sovereignty and monetary non-sovereignty is like a baker not knowing the differences between salt and sugar.
In April 2020, when the government was borrowing trillions of dollars to address the pandemic, the yield on 10-year Treasury notes fell as low as 0.6%. They’re now 4.4%, having increased since September as investors expect Trump to add several trillions of dollars onto projected deficits with his income tax cuts.

The federal government never borrows dollars. It has the infinite ability to create dollars. Treasury securities do not represent borrowing. They are deposits, easily returned simply by sending them back to their owners. The Fed arbitrarily determines interest rates, which could be 0% if it chooses to.

Democratic President Joe Biden can point to strong economic growth and successfully avoiding a recessionas the Federal Reserve sought to bring down inflation. Still, deficits ran at unusually high levels during his term. That’s due in part to his initiatives to boost manufacturing and address climate change, and to the legacy of Trump’s previous tax cuts.

Federal deficits are income for the economy. Without federal deficits, the economy would not grow, and the greater the deficits, the greater the growth.

People in Trump’s orbit, as well as Republican lawmakers, are already scouting out ways to reduce spending to minimize the debt and bring down interest rates.

The Fed could bring down interest rates simply by lowering the base rate. Reducing federal debt causes depression.

Elon Musk and Vivek Ramaswamy, the wealthy businessmen leading Trump’s efforts to cut government costs, have proposed simply refusing to spend some of the money approved by Congress. It’s an idea that Trump has also backed, but it would likely provoke challenges in court as undermining congressional authority.

Musk and Ramaswamy are showing pure ignorance. They seemingly don’t understand that our Monetarily Sovereign government has the infinite ability to create dollars. The so-called “debt” does not burden the government or taxpayers. Refusing to spend money is refusing to insert growth dollars into the economy.

Russell Vought, the White House budget director during Trump’s first term and Trump’s choice to lead it again, put out an alternative proposed budget for 2023 with more than $11 trillion in spending cuts over 10 years to potentially generate a surplus.

Translation: Russell Vought proposed costing the economy $11 trillion.

Trump has also talked up tariffs on imports to generate revenues and reduce deficits, while some GOP lawmakers have discussed adding work requirements to trim Medicaid expenses.

Tariffs on imports are identical to taxes. Thus, Trump wants to increase taxes and reduce economic income. SUMMARY Our leaders’ ignorance of the difference between federal and business finance is like a baker’s ignorance of the difference between salt and sugar. Decisions based on ignorance cause massive damage. Try baking a cake using salt instead of sugar. The facts are:

The U.S. federal government is uniquely Monetarily Sovereign. It creates dollars simply by pressing computer keys. It never can run short of dollars.
The U.S. economy is monetarily non-sovereign. During recessions and depressions, it can and often does run short of dollars.
Being Monetarily Sovereign, the federal government never borrows dollars. Treasury bonds are fundamentally different from corporate bonds. Treasury bonds are a safe storage device, while corporate bonds are used to obtain spending dollars. The same word, “bonds,” describes two completely different functions.
While state government taxes provide states with spending money, federal taxes have a different purpose — to control the economy and assure demand for the U.S. dollar.

In short, confusion arises when words like “bond,” “note,” “debt,” “owe,” and even “tax” have different purposes and functions when applied to federal finances vs. personal finances. It’s one thing for the public not to understand the differences. It’s far worse when our political leaders don’t. 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

Trump, Musk, et al promise to start a depression

Every depression in U.S. history began with a reduction in federal debt.

This is the penalty for ignorance:

No one ever made money betting against the government’s ability to pay its bills.

It’s a head-scratcher, despite all evidence to the contrary, “the Fed’s financial-market contacts” believe the federal debt is a “risk to financial stability.”

US Debt Load Tops Fed’s Survey of Financial Stability Risks Persistent inflation no longer top concern By Craig Torres November 22, 2024 The US government’s debt load is now seen as the biggest risk to financial stability, outweighing persistent inflation in a Federal Reserve survey.

This is an alternative “Ticking Time Bomb” story we have written about for many years: Historical BULLSHIT Claims the Federal Debt Is a “Ticking Time Bomb”: From Sept. 26, 1940 to October 10, 2024 The first example of “ticking time bomb” claims was from 1940, when the federal debt was $40 Billion. The most recent example was from October 2024, when the federal debt was $33 trillion. The federal debt increased by 824,000% from 1940 to October 2024. That’s eighty years of being wrong about the “time bomb” and still the experts persist in idiocy.

One boxer is enormous. One boxer is tiny. — **Hey, big guy, you may have KO’d me 80 times in a row, but the experts are worried about you this time.**

The federal government, being Monetarily Sovereign, never can run short of dollars.

Former Fed 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.”

Former Fed Chairman Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. It’s not tax money… We simply use the computer to mark up the size of the account.

Fed Chairman Jerome Powell stated, “As a central bank, we have the ability to create money digitally.

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

Press Conference: Mario Draghi, President of the (Monetarily Sovereign) ECB, 9 January 2014. Question: I am wondering: can the ECB ever run out of money? Draghi: Technically, no. We cannot run out of money.

And still, the “experts” claim the so-called “debt” is “unsustainable” and a “ticking time bomb.” Now we are blessed with Trump’s amateur tag team, Musk and Ramaswamy, who promise to “use a chainsaw” on federal spending. They believe that all federal spending is bad, so it doesn’t matter what you cut so long as you cut. This is what happens when you give a machine gun to children and tell them to take it out and play.

“Concerns surrounding US fiscal debt sustainability were atop the list this survey, followed by escalating tensions in the Middle East and policy uncertainty,” the Fed said in its semi-annual financial stability report.

Get that? Concerns about the Middle East were less than concerns about the government’s ability to pay its bills. Ignorance is beyond imagination.

The report includes a survey of the Fed’s financial-market contacts conducted from late August to late October by New York Fed staff members. It also includes the central bank’s assessment of developing risks in four main areas, including asset valuations, borrowing by businesses and households, leverage in the financial sector and funding risks. More than half the respondents — 54% — cited fiscal debt sustainability as a salient risk, up from 40% just a half year ago.

Aha. In its wisdom, did the report lump personal and business debt with federal debt? It’s not clear. Shame on Bloomberg for publishing such tripe.

More debt issuance by the Treasury could start to crowd out private investment or limit policy responsesif there’s an economic slump, the survey found.

And there, again, is the old “crowd out” trope. (See: “The Myths of Crowding Out”) The crowding-out effect claims that when the government borrows more money (increasing federal debt), it can lead to higher interest rates. Higher interest rates make borrowing more expensive for private businesses and individuals, which can reduce private investment and spending. It all sounds very logical until you remember that the Fed controls interest rates. No matter how many T-bills it issues, it sets the rates, and if it doesn’t attract enough investors, it buys them on the open market or even engages in Quantitative Easing. The “limit policy responses” trope assumes the government has a limited ability to spend. Wrong. Its ability to spend is not limited. Even if it didn’t collect a penny in taxes, it could continue spending—double, triple, or more—forever. Remember that 824,000% increase? The government could double or triple that and still pay all its bills on time.

The banking sector remained “sound and resilient overall,” with capital ratios hovering around record levels and high liquidity, the Fed said. But in financial markets, the Fed found valuations remain elevated, liquidity “generally low” and leverage across hedge funds at or near the highest level observed since data became available in 2013. The central bank also singled out life insurers for a steady decline in the liquidity of their assets amid greater use of alternative investments. Taking a look at households, the Fed said credit card and auto loan delinquencies were above average, especially among those with lower credit scores. Overall, they judged vulnerabilities related to household and business debt as “moderate.” “These borrowers hold a relatively small share of aggregate debt, and their high delinquency rates reportedly reflect, in part, more borrowing by some households during and after the pandemic, rather than an abrupt broad-based weakening in households’ ability to repay,” the report said.

In short, “We aren’t worried about the private sector’s finances. We’re worried about the federal government’s finances. Incredible. 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

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