–Economic ignorance unquestioned by the media, politicians, mainstream economists and the public. Where is the outrage?

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create dollars to pay its bills.
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3/8/11: WASHINGTON (Dow Jones)–Any move by Congress to overhaul the Social Security program without addressing the shortfalls in the other entitlement programs wouldn’t come close to resolving the fiscal crisis the U.S. is facing, the co-chairman of a White House deficit commission said Tuesday.

Erskine Bowles, who was White House chief of staff during the Clinton presidency, told a Senate panel that moving forward with changes to Social Security without also tackling Medicare and Medicaid wouldn’t make any sense.

“If we only do Social Security, we don’t come close to solving the problem,” Bowles said in testimony before the Senate Budget committee.

Alright, so Erskine Bowles has not the slightest understanding of Monetary Sovereignty. America can survive a handful of leaders who know nothing of economics. And alright, Bowles would rather create terrible human problems for you who receive, or will receive, Social Security, Medicare and Medicaid benefits, than to encounter the non-problem of a federal deficit.

But for heavens sake, don’t the media care about your hardships? Don’t the politicians care? And what the heck is wrong with the economists? Why are they so dense? Why don’t they look at the basic facts sitting right in front of their noses?

There is no deficit problem. There is no debt problem. The whole charade is based on “Anthropomorphic Economics Disease,” the false belief that federal financing is just like yours and mine. But, federal “deficits,” “debt” and “borrowing” are entirely different from your deficits, debt and borrowing — not even close. Visualize astronomers basing their hypotheses on the astrological signs, and you’ll get the idea.

So why, at least, don’t the economists get it? The facts of Monetary Sovereignty are beyond dispute; but, the discussions are beyond reason; and the situation is beyond comprehension.

Today, your politicians plan the financial destruction of America, with the complicity of your media and the economists, and I haven’t noticed your outrage. I see and hear lots of outrage about abortion. I see and hear lots of outrage about guns. I see and hear lots of outrage about Islam and Pakistan and Egypt and Israel, and the constitutionality of health care insurance and Obama’s birthplace. I even see outrage about Charlie Sheen. But when it comes to the economic future of your children and your grandchildren, you seem strangely passive. Only the Tea Party seems to be making much noise, and they are, to be charitable, Palinesque.

Where are your letters to the editor, insisting that the media understand Monetary Sovereignty, before writing any more foolish articles? Where are your letters to the politicians, telling them the facts? Do you know of even one syndicated columnist who has the vaguest idea about economics?

The whole situation is surreal. Visualize millions of us, heads down, obediently, silently shuffling toward the abyss. The guards stand with whips, urging us on. No one protests until they tumble over the edge. But then, it’s too late.

We shake our heads at the ignorance of people who, out of religious belief, refuse medical attention for their dying children, while we condemn our own children to a future of misery. We wonder at the ignorance of yesteryear, while we plod backwards in time, toward the next economic disaster.

Do you lack the energy to protest, and prefer to accept the fate to which they condemn you? Where is your outrage?

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity, nor grow without money growth.

MONETARY SOVEREIGNTY

–Why Robert J. Samuelson wants to cut Social Security, Medicare and Medicaid.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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Robert J. Samuelson is a weekly columnist for The Washington Post, writing on political, economic and social issues. His column usually appears on Wednesdays. Add his name to the long list of economics writers who are ignorant of Monetary Sovereignty, the basis of all modern economics.

In a March 7, 2011 column titled, “Why Social Security is Welfare,” he makes the following comments:

Recall that Social Security, Medicare and Medicaid, the main programs for the elderly, exceed 40 percent of federal spending. Exempting them from cuts – as polls indicate many Americans prefer – would ordain massive deficits, huge tax increases or draconian reductions in other programs. That’s a disastrous formula for the future.

Yes, Robert, not cutting Social Security, Medicare and Medicaid would “ordain” (?) deficits. However, because the U.S. now is Monetarily Sovereign, there is zero connection between deficits and taxes. For your benefit, Robert, I’ll say again what you as an economics writer already should know: “Federal taxes do not pay for federal spending.”

And so far as those draconian reductions in other programs, why do you believe a nation with the unlimited ability to create dollars, needs to cut spending, when inflation is nowhere in sight?

Here is how I define a welfare program: First, it taxes one group to support another group. . .

Robert, now repeat after me until you get it: “Federal taxes do not pay for federal spending.” State taxes do pay for state spending, and city taxes do pay for city spending. The states and cities are not Monetarily Sovereign. But, federal taxes do not pay for federal spending. In fact, FICA could be eliminated, and this would not reduce by even one penny, the federal government’s ability to support this program – even were benefits doubled.

Since the 1940s, Social Security has been a pay-as-you-go program. Most benefits are paid by payroll taxes on today’s workers.

Things have changed markedly since the 1940’s, and Robert has not kept up with the changes. In August, 1971, one of the biggest economic changes in our lives occurred. We became Monetarily Sovereign. At that instant, Social Security ceased being a “pay-as-you-go” program, because FICA no longer supported benefits. In a Monetarily Sovereign nation, tax dollars are destroyed upon receipt. They do not, and cannot, support federal spending.

Think about it, Robert. Why would a government with the unlimited ability to create dollars, need to use taxes to pay for anything? It makes absolutely no sense. Sadly, Robert still lives in a gold-standard (aka “flat-earth”) world.

Annual benefits already exceed payroll taxes. The gap will grow.

Yep, the difference between FICA collections and benefits will grow. More net money will be created. This will stimulate economic growth. So what is the problem?

No doubt people would be outraged (by benefit cuts). Having been misled, they’d feel cheated. They paid their taxes, why can’t they get all their promised benefits? But the alternative is much worse: imposing all the burdens on younger taxpayers and cuts in other government programs. Shared sacrifice is meaningless if it excludes older Americans.

No, shared sacrifice is meaningless if it is purposeless. There is absolutely, positively no reason to cause widespread human misery by cutting Social Security, Medicare and/or Medicaid benefits. Causing misery out of sheer ignorance is unforgivable.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity, nor grow without money growth.

–The conversation Barry Ritholtz wouldn’t publish

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
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The self-esteemed commentator, Barry Ritholtz, wrote a post titled, “Who Will Buy Treasuries When the Fed Doesn’t” in which he described U.S. treasuries as a Ponzi scheme. Barry may not understand that a Ponzi scheme is a program in which later investors pay earlier investors, and eventually there aren’t enough later investors, and the scheme runs out.

Barry also doesn’t seem to understand that our Monetarily Sovereign government could pay off all outstanding Treasuries simply by exchanging the Treasuries, which are one form of U.S. money (in a category called “L”) with dollars, another form of U.S. money (in a category called “M1”). That redemption neither would add nor subtract money from the U.S. economy, and could be accomplished instantly at the press of a computer key. In short, U.S. treasuries are nothing at all like a Ponzi scheme. Not even close.

Over the years, I have tried to educate Barry about Monetary Sovereignty, all to no avail. Classic debt hawk.

Anyway, one of Barry’s readers, pseudo-named “Greg0658″ complained about his senator, Mark Kirk, who also happens to be my senator. I replied to Greg:

Greg0658, Sadly, Mark Kirk, like Barry, has no understanding of Monetary Sovereignty nor, despite my frequent communications with him, has he shown any inclination to learn.

To which Barry replied:

BR: Jeebus, you fucking sovereign guys are such dreadful bores.

I responded:

Did that “BR” stand for Barry Ritholtz? He thinks “sovereign guys” are dreadful bores? Naw, Barry couldn’t be that ignorant — could he?

Here are the supercilious words Barry puts at the beginning of each post: “Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge.” Huh? That from you,Barry?

Is this the man who has demonstrated zero knowledge of Monetary Sovereignty, the very basis of
all modern economics?

Is this the man who does not realize that in 1971, the federal government gave itself the unlimited ability to create dollars, which meant federal borrowing and taxing no longer were necessary to fund federal spending? Is this the man, who does not understand the empirical data linking deficits and economic growth? Is this the man, who does not understand the profound differences between monetarily non-sovereign governments (i.e. Greece, Spain, Illinois, Chicago) and Monetarily Sovereign governements (U.S., Japan, Canada, China), nor when those differences occurred nor why?

Is that the BR who talks about “boring?”

I guess when one has staked his reputation on, and earns his living telling the world, the world is flat, he finds proof the world is spherical, boring. Or frightening.
Rodger Malcolm Mitchell

I suspect Barry was been afraid to publish that comment, for instead he sent me this personal Email:

I was being polite — all you single issue guys are bores
Everything posted is an excuse to point back to your own blog on the same (often) off topic issue

The fact that my comment was exactly on target escaped Barry, so I replied:

As long as the politicians, the media, the mainstream economics and you keep telling the public that the federal debt and deficit are too high, I’ll keep telling the public you don’t know what you’re talking about. You may find that boring, since you don’t understand it, but it’s the single most important economic issue in America and in the world.

You continue pepper your writing with stories about your oh-so-exciting travels — they surely have a beneficial effect on your readers and on the world — and I’ll continue to try to save them from misinformation.

And really, thank you for being so very polite.

Rodger Malcolm Mitchell

It’s Barry’s column, and if he prefers to publish foul-mouthed insults, while excluding legitimate criticism of his knowledge shortcomings, who can blame him? I expect that sometime down the road, Monetary Sovereignty will be understood and accepted by the mainstream, and Barry then will tell you he knew it all the time.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity, nor grow without money growth.

Are there good deficits and bad deficits?

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
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While Congress struggles with plans to cut federal deficits (i.e. cut federal money creation), and simultaneously tries to encourage banks to lend (i.e increase private money creation), it might be instructive to see why this is exactly the wrong approach. Please go to a post I wrote last June (since updated), titled, Is federal money better than other money?

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity, nor grow without money growth.