Gap Psychology dictates that to achieve superiority, one must claim inferiors and then distance oneself from those claimed inferiors. The greater the distance—i.e., the wider the “Gap,” the greater our superiority.
“Rich” and “poor” are comparatives, not absolutes. For one to be rich, someone else must be poor, or at least poorer.
A person with $100,000 is rich if everyone else has only $100, but he/she is “middle” if everyone else has $100,000. And he is poor if everyone else has $1,000,000.
Getting richer is not simply a matter of increasing one’s ownership of money. If a middle-income person has $100,000 and doubles that to $200,000, he still is “middle” if everyone else rises to $200,000.
Getting richer requires widening the Gap below and narrowing the Gap above. It is the Gap that measures wealth, not the wealth itself.
Gap Psychology describes the desire to widen the Gap below and to narrow the Gap above.
Gap Psychology enters into virtually all aspects of human existence, not only money or wealth. A person with an IQ of 130 is smart unless everyone else has an IQ of 170.
A 21-year-old man who can do 50 chin-ups is strong unless everyone else can do 150. A child who can read at age 4 is considered smart unless every other child can read at age 3. If you can run 100 meters in 9.5 seconds, you are blazingly fast unless you are a cheetah, which means you would be laughingly slow.
Self-improvement does not require improving yourself so long as you can widen the Gap below and narrow the Gap above.
You can be strong and do just two chin-ups if you hang a 300 lb. weight from everyone else’s ankles.
If you force everyone else to wear blindfolds, you can learn to read at age 8 and be considered smart. And if you tie everyone else’s legs together, you can be fast, running 100 meters in 20 seconds.
Figuratively, that is how the rich treat the rest of us to widen the Gap. They falsely claim that the federal government “can’t afford” to provide benefits to the middle and lower classes while accepting tax benefits for themselves.
Gap Psychology even enters into the abortion controversy. The rich can easily obtain abortions and other medical procedures. It is the poor who must suffer from a lack of care. That is a Gap the rich wish to widen.
Gap Psychology leads to bigotry, classes, and the caste system. Here is an excellent summary:
The Foundations of Caste: The Origins of our DiscontentsFor more than half of American history, slavery was the dominant social institution in the South.
Wilkerson argues that even after emancipation, legally sanctioned violence, harassment, and displacement of African Americans remained—and still remains—an existential threat.
According to Wilkerson, these behavioral scripts and socially reinforced biases have become deeply encoded in the American psyche at all levels of society, which unconsciously perpetuates the system.
Her research demonstrates that all caste systems have the eight essential characteristics (Pillars) in common.
Pillar Number One: Divine Will and the Laws of Nature
Hindu cosmology holds that the caste system is an aspect of the birth of Brahma, the supreme god, who created and populated the world out of various parts of his body in a way corresponding to the social functions dictated by the traditional order.
The Judeo-Christian tradition has a contrasting story about the creation of the world’s different races descending from the three sons of the Old Testament patriarch Noah.
The two “good” sons who are rewarded for their honor become the fathers of the Eastern and Western races, while the cursed son, Ham, and his own son Canaan are fated to be people of the South, forsaken by God.
For there to be “good,” there must be “bad.”
All caste systems, religions, and cults (similar to religions but smaller and not as mainstream) identify members as “good” and outsiders as “bad” or lesser in some way.
At the time when Spain and Portugal were beginning their global circumnavigations, the native inhabitants of Africa and India were believed by Europeans to be descendants of the biblical outcasts and thus divinely ordained to suffering and subjugation.
Pillar Number Two: HeritabilityIn India, caste is inherited through the father’s line, whereas the United States has historically determined caste through the mother.
In Judaism, to be Jewish, one must have a Jewish mother. The father can be Jewish or gentile.
Presidents Bush, father and son
Because enslaved mothers had no legal right to their own children, Black birth became a production process for slave labor, as Black children were regarded as valuable, durable commodities.
The major distinction between caste and class, Wilkerson writes, is that caste is predetermined, unchanging, and generationally upheld, whereas class implies an attainmentof certain conditions based on merit and effort and is much more inclusive within its respective caste “container.”
Yet we have the expressions “new” and “old” money, with “old money: considered superior by those whose ancestors were wealthy.
In the United States, the exclusion of African Americans regardless of their level of social or professional success—an exclusion based on superficial, inescapable, inherited characteristics—resembles in practice the treatment of India’s “untouchable” populations.
Pillar Number Three: Endogamy and the Control of Marriage and MatingIt is essential for a caste system to separate and manage bloodlines in a way that preserves the impenetrability of the dominant gene pool by subordinate-caste DNA.
This protects the Gap between white and non-white. Most American parents prefer that their children marry within their religion and color.
To achieve this, miscegenation laws are passed that restrict marriage and reproduction along caste lines, a policy known as endogamy—and something Hitler admired about the American model.
The objective of this kind of social engineering is to achieve racial purity among the dominant caste, but it also concentrates resources, value, and empathy among the various levels of the dominant caste that are systematically denied to non-white subordinates.
America’s racial boundaries had been set from its earliest days, and coupled with the nation’s historic exclusion of non-European immigrants, endogamy laws effectively created a process of selective breeding that reinforced caste divisions while reserving for white men the ownership of Black reproduction.
Pillar Number Four: Purity Versus Pollution
The United States has its own unique system of gradations on a scale of racial purity that defines itself in opposition to an obsession with contamination by genetic material from a perceived inferior bloodline.
Not only was there the so-called “one-drop rule” that defined Blackness and which the Nazis found so extreme, but there was also an elaborate status-defining class subsystem within the subordinate caste based on skin tone and proportion of African ancestry.
Systems like the examples Wilkerson uses all share a rabid aversion to the idea of public spaces and utilities, particularly water and swimming pools, being similarly contaminated not by blood but by mere exposure to the skin, breath, sweat, or even shadow of the subordinate caste.
Hitler and Trump have spoken of those who “poison the blood” of the nation. Hitler primarily (though not exclusively) was talking about Jews.
Trump was talking about non-white immigrants.
Pillar Number Five: Occupational Hierarchy: The Jatis and the MudsillWilkerson returns to the architectural metaphor she introduced in chapter 2 to describe the house’s most important structural element, where the framing meets the foundation, known as a mudsill.
In the segregationist political tradition, the enslaved caste of African American servants and laborers constituted an analogous base to the American social order.
The lowly work they performed for lack of choice was seen as the limit of their capabilities and their purpose for existence, a permanent servile class upon which the American economy was built.
This is part of the belief that the poor are lazy, stupid, and cannot be trusted. It provides an excuse for widening the employment Gap.
It also alludes to benefits given to the poor, i.e., “Who is going to pick up the garbage if we give them money?”
One major difference between the subordinate Americans and Indian Dalit is that while the Indian system has many subdivisions, known as jatis, within each group that determined one’s work, the African American subordinate class has been limited in professional options with few chances to break out except as performers or athletes.
Until recently, even these luminaries were expected to reinforce popular racist stereotypes if they were to be accepted by the dominant culture.
Pillar Number Six: Dehumanization and StigmaIn order to justify the extreme and often violent measures taken to maintain the oppressive status quo, dominant-caste authority invariably engages in a process of dehumanizing subordinate groups.
By denying subordinates equal regard for their virtue, dignity, and suffering, the dominant caste can so diminish subordinates’ humanity as to make them appear mere beasts of burden, pestilent scourges, or puppets on a string, insensitive to pain and humiliation.
The subordinate group thus becomes marked with pariah status, and their punishment is seen as just and moral, commensurate with the perceived bestiality and inhumanity that relegates them to ghettoization and marginalization.
This dehumanizing mindset is inculcated in generations of dominant-caste children who are raised believing in their superiority and entitlement, which desensitizes them to the victimization of others, even in brutal extremes.
Pillar Number Seven: Terror as Enforcement, Cruelty as a Means for ControlWilkerson describes the means necessary for the sustained oppression of an outcast group, which requires only that the members of the dominant class do nothing and remain silent, maintaining a complicity in which the order will thrive.
The image of the dreaded slaver’s whip encapsulates the violence and intimidation deemed necessary to hold the subordinates in their “container,” and the public complicity that allows the brutal enforcement of the order is the result of the racist attitudes bred into the dominant caste since childhood.
The savage business of terror seems like a part of normal life when it is tolerated by the majority of people.
Trump says he will deport a million undocumented immigrants. Imagine the terror these men, women, and children will feel waiting for their lives to be ripped apart when his brown shirts come banging on the door.
1. Ipsos Poll (2013):
30% think most illegal immigrants (with some exceptions) should be deported.
23% believe all illegal immigrants should be deported.
Only 5% believe all illegal immigrants should stay legally, and 31% want most illegal immigrants to stay.
2. Pew Research Center (2021):
25% of adults say undocumented immigrants should not be allowed to stay legally, advocating for national law enforcement efforts to deport them.
3. Harris Poll (2024):
Half of all Americans favor mass deportation of people who are illegally in the U.S.
Pillar Number Eight: Inherent Superiority Versus Inherent Inferiority
Wilkerson uses old Hollywood as an example of a cultural force that helped perpetuate popular stereotypes about African Americans’ inferiority and contributed to the same majority mindset that tolerated Jim Crow cruelty and injustice.
In the South, law and custom dictated at all levels of interaction between white and Black citizens that white people enjoy unquestioned superiority, while Black people were expected to treat the dominant caste with false deference and submission.
The consequence for African Americans is that these constant reminders from almost every aspect of American culture reinforce the generational effect of believing oneself inferior, resulting in defeatism and despair.
The eight pillars can be found not only in castes but in religions and cults.
Divine Will and the Laws of Nature
Heritability
Endogamy and the Control of Marriage and Mating
Purity Versus Pollution
Occupational Hierarchy: The Jatis and the Mudsill
Dehumanization and Stigma
Terror as Enforcement
Cruelty as a Means for Control, and Inherent Superiority Versus Inherent Inferiority
Look back at #1 through #8 and visualize religions and cults in America. They all implement some forms of the pollars, and all are related to Gap Psychology.
Gap Psychology is expressed secretly and overtly in various ways: Fear, hatred, disgust, avoidance, fanaticism, and the desire to inflict pain.
We each belong to groups that we view as extensions of ourselves. We find ways to view our groups as superior to others, which helps us feel superior.
These groups range from families to sports teams, cities, states, countries, political parties, tribes, social groups, religions, and cults.
Why is this so important to them? Gap Psychology
If our group “wins,” however that is defined, we win. And, if other groups “lose,” we win.
Personal note: In my younger days, I was a Chicago Bears football fan. I was nervous watching their games because winning meant so much. Finally, in 1985, they won a Super Bowl.
Crowds of screaming Bear fans clogged downtown Chicago. Logically, I had gained nothing, but I felt I had won. Gap Psychology is not based on logic.
When Donald Trump claims, against all evidence, that he won, MAGAs believe.
They disbelieve the 64 lawsuits he lost, the women who claim he attacked them, the criminality of Trump U. and the Trump Foundation, the many convicted criminals he surrounds himself with, and a trial’s 30+ criminal convictions.
To them, the evidence against Trump proves that someone else has committed crimes. (His attempts to overturn the election constitute the proofthe election was stolen.)
That is an outcome of Gap Psychology. When Trump is compared to God, a huge branch of Christianity believes, because when your leader is Godlike, the superiority Gap between you and the non-believers widens.
Gap Psychology is not logical, but it is the single, most important factor ruling our lives. Centuries from now, if we encounter another intelligent species, we will wish to dominate them or fear they will dominate us.
Like many Americans, the federal government is shelling out a lot more money to cover interest payments on its debt after a series of Federal Reserve rate hikes over the past year.
Translation: The federal government is nothing “like many Americans.” The federal government is Monetarily Sovereign, while the American people are monetarily non-sovereign. But we want you to believe the government is just like you.
The Treasury Department paid a record $213 billion in interest payments on the national debt in the last quarter of 2022, up $63 billion from the same period a year earlier.
Translation: The Treasury Department pumped a record $213 billion growth dollars worth of interest payments in the last quarter of 2022. That is $64 billion added to Gross Domestic Product (GDP)from the same period a year earlier.
The fourth-quarter tab was also nearly $30 billion more than in the prior quarter, which is the largest quarterly increase on record, said Jerry Dwyer, an economics professor emeritus at Clemson University.
Translation: The fourth-quarter addition to GDP was nearly $30 billion more than in the prior quarter, the largest stimulus to the economy on record.
Borrowing costs are expected to become an increasingly heavy burden in coming years. The Congressional Budget Office is set to provide its latest estimate on Wednesday.
The surge is due mainly to the Federal Reserve raising interest rates by 4.25% between March and December. The central bank increased the rate another quarter point in February.
Translation: The Federal Reserve is raising interest rates by 4.25%, which will increase the price of everything, in its effort to combat increased prices. Think about that.
Until recently, it cost the federal government very little to issue debt to finance its operations.
Translation: Until recently, it cost the federal government very little to create the dollars to finance its operations. Just the press of a few computer keys.
“It was almost free money,” Dwyer said. “You could borrow a trillion dollars, and if you financed it with Treasury bills, you paid almost no interest.”
Translation (courtesy of 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.”
Translation (courtesy of former Fed Chairman Alan Greenspan): “There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.” So, why would the government borrow dollars? It doesn’t.
“But interest rates weren’t going to stay there forever.”
Translation: The Fed raises rates, which increases all prices, i.e., causes inflation, to fight inflation. It’s like a doctor bleeding a patient to cure anemia.
The national debt is once again in the spotlight now that the US has hit its $31.4 trillion debt ceiling, forcing Congress to take action or risk a catastrophic default.
Translation: The US has hit its $31.4 debt ceiling, which actually isn’t a “debt” ceiling. Everything has already been paid for, and nothing is owed. There is no debt. The dollars exist in T-security accounts. To pay off those accounts, the government merely returns the existing dollars.
Congress created the fake “debt” ceiling to make itself look prudent to an ill-informed electorate.
Decreases in federal deficits (red) cause recessions (vertical gray bars), which are cured by increases in federal deficits.
Those who call for a decrease in deficit spending ignore the fact that economic growth relies on the federal government continuing to pump money into the economy.
The Treasury Department is taking extraordinary measures to allow the government to continue paying its bills in full and on time, which it expects to last at least until early June.
Translation (Courtesy of Alan Greenspan): “The United States can pay any debt it has because we can always print the money to do that.” so the “extraordinary measures” are a bunch of hokum. And so is the fake “debt ceiling.”
The spike in interest payments also contributed to the federal government hitting the debt ceiling that much faster.
And it adds to the pressure on Congress to raise taxes, cut spending or allow the government to borrow more to meet all its obligations.
Translation: The spike in interest payments added growth dollars to GDP much faster. This adds unnecessary pressure on Congress to take dollars out of the economy, thereby causing a recession.
Even if the Federal Reserve slows or stops raising rates this year, as many economists expect, the nation’s borrowing costs will continue to increase.
That’s because as the existing debt matures, the government issues new debt with the higher prevailing interest rates.
Translation: As existing Treasury Securities mature, the government will increase the amount of growth dollars it pumps into the economy.
The higher rates could increase the net interest cost on the national debt to about $9 trillion over the next decade, according to estimates by the Peter G. Peterson Foundation, a nonpartisan organization that seeks to raise awareness of America’s long-term fiscal challenges.
Translation: The higher rates could increase the amount of growth dollars pumped into GDP to about $9 trillion, according to the Peter B. Peterson Foundation, a right-wing organization that, on behalf of the rich, seeks to spread disinformation about America’s finances.
That’s up from the record $8.1 trillion that the CBO projected in May 2022 and the $5.4 trillion it projected in July 2021.
Translation: That’s up from a record $8.1 trillion growth dollars the CBO projected in May 2022, and the $5.4 growth dollars it tried to scare you about in July 2021.
By 2032, interest costs will triple to more than $3 billion per day and to at least $9,400 per household, on average, according to the foundation.
Translation: (Courtesy of Ben Bernanke) “It’s not tax money… We simply use the computer to mark up the size of the account.” By 2032, growth dollars will triple to more than $3 billion per day, and not costing any household a single penny.
The federal government creates ad hoc every dollar it spends by pressing computer keys. No tax dollars are used.
They are on track to become the largest federal budget item, surpassing Social Security and Medicare by the middle of the century.
Translation: The government justifies paying too little to Social Security and Medicare by pretending it is short of money when, in fact, it has infinite money.
“Having rapidly growing interest makes it much more difficult for government to fund all the things that are important to our society,” said Michael Peterson, the foundation’s CEO.
Translation: To keep you from asking for benefits, we pretend that “Having rapidly growing interest makes it much more difficult for the government to fund all the things that are important to our society.”
Why do we do that? Because the rich tell us to widen the income/wealth/power Gap between them and you. The wider the Gap, the richer they are.
So, they bribe the main information sources to tell you the government can afford tax loopholes for the rich, but not Social Security and Medicare increases for the rest of you.
Economists are bribed with university grants and promises of lucrative employment later. The media are bribed with advertising dollars and ownership. Politicians are bribed with political contributions and lucrative jobs in “think tanks.”
All are bribed to tell you that increasing your benefits is unaffordable.
SUMMARY
The rich get richer when the income/wealth/Gapwidens. So they promulgate the lie that your taxes pay for benefits, and your federal deficits are unsustainable.
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: 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.
I suggest a motto for the science of economics: “The easy we make impossible, but it takes forever.”
I say that because of my 25 years critiquing economics articles, and most recently because of an article titled, “Do Budget Deficits Cause Inflation?”
The answer to the question is, “No, not for Monetarily Sovereign nations,” and the article comes to that “No” conclusion. Except:
It never differentiates between Monetarily Sovereign governments (which create and control the value and supply of the money they use) and monetarily non-sovereign governments (cities, counties, states, euro nations, nations that use another nation’s currency, and nations that peg their currency to another nation’s currency}.
It never mentions shortages of critical goods and services, most commonly oil, food, and labor, which are the real causes of inflation.
It complexifies a straightforward solution: To cure a problem, eliminate the cause of the problem. In the case of inflation, the cause is shortages. To cure inflations, eliminate the shortages.
Keith Sill, Senior Vice President of Research and Director of the Real-Time Data Research Center. keith.sill@phil.frb.org (215) 574-3815
In 2004, the federal budget deficit stood at $412 billion and reached 4.5 percent of gross domestic product (GDP).
Though not at a record level, the deficit as a fraction of GDP is now the largest since the early 1980s.
Moreover, the recent swing from surplus to deficit is the largest since the end of World War II.
Comment: The deficit as a fraction of GDP is irrelevant to inflation. Federal deficits are beneficial because they add GDP growth dollars to the economy.
Federal surpluses take dollars from the economy, causing depressions and recessions. Mr. Sill could have answered the title question with two simple graphs:
There is no relationship between federal deficit spending (blue line) and inflation.There is a strong relationship between the oil supply (red line) and inflation.
Inflation is caused by shortages of critical goods and services, most often oil, food, and labor.
The flip side of deficit spending is that the amount of government debt outstanding rises: The government must borrow to finance the excess of its spending over its receipts.
Comment: The federal government, being Monetarily Sovereign, never borrows. Why would it? It has the infinite ability to create its sovereign currency, the U.S. dollar, at virtually no cost (aka, “seigniorage”).
Further, unlike state/local government taxes, which fund state/local spending, federal taxes do not fund federal spending.
Federal taxes are destroyed upon receipt, while state and local tax dollars remain in the economy’s private banks. To finance all its spending, the federal government creates new dollars ad hoc.
It does this regardless of taxes collected. Even if federal tax collection totaled $0, the government could continue spending forever.
For the U.S. economy, the amount of federal debt held by the public as a fraction of GDP has been rising since the early 1970s. It now stands at a little over 37 percent of GDP.
The debt/GDP fraction is meaningless. It has no predictive or analytical power and does not tell anything about an economy’s health.
Do government budget deficits lead to higher inflation? When looking at data across countries, the answer is: it depends. Some countries with high inflation also have large government budget deficits. This suggests a link between budget deficits and inflation.
Yet for developed countries, such as the U.S., which tend to have relatively low inflation, there is little evidence of a tie between deficit spending and inflation.
Mr. Sill falsely equates “developed” with Monetary Sovereignty. However, there are “developed” nations – for example, Italy, France, Greece, etc. that are monetarily non-sovereign. They use the euro.
Why are budget deficits are associated with high inflation in some countries but not in others? Government deficit spending is linked to the quantity of money circulating in the economy through the budget restraint, i.e. the relationship between resources and spending.
Money spent has to come from somewhere: In the case of local and national governments, from taxes or borrowing.
But, nationalgovernments can also use monetary policy to help finance the government’s deficits.
I believe that Mr. Sill’s use of “resources” means the amount of money a government can spend, which it gets from taxes or borrowing.
Since he doesn’t differentiate among Monetarily Sovereign, monetarily non-sovereign, and “nationally,” his comments are either partially or totally wrong. First, a reminder about the differences between monetary policy and fiscal policy:
Monetary policy involves changing the interest rateand influencing the money supply.
Fiscal policy involves the government changing tax rates and spending levels to influence aggregate economic demand. (“Aggregate demand” is Gross Domestic Product at a specific time.)
Here are the sources of confusion:
1. Raising interest rates causes prices to rise. The cost of every product includes the cost of interest. Amazingly, this is the Fed’s tool to combat inflation. The Fed’s theory seems to be that raising prices will reduce demand, causing a recession that supposedly will cure inflation.
In short, the Fed causes inflation to cure inflation while claiming to hope a recession doesn’t occur but secretly relies on recession to cure inflation. (Clear?)
Of course, a result can also be stagflation, a combination of recession and inflation, at which point Fed Chairman Jerome Powell, having no solutions, will hide in his closet and pray. (The cure for stagflation is federal deficit spending to obtain and distribute the scarce products while adding growth dollars to the economy.)
2. As the issuer of its money, only a Monetarily Sovereign government can change interest rates by fiat. It sets the lowest rate on its Treasury Securities.
Because a monetarily non-sovereign government is not an issuer of money, it cannot unilaterally change interest rates. It must rely on markets or the issuer of its money.
For example, Italy cannot arbitrarily raise interest rates on euro-based loans. It uses the euro but is not the issuer.
3. Monetarily Sovereign governments don’t borrow their own currency. The above-mentioned Italy, being monetarily non-sovereign, borrows euros.
In short, Sill, an economist at the Fed (!), is confused about what different kinds of governments can do. Next, he confuses households with our Monetarily Sovereign government:
Budget constraints are a fact of life we all face. We’re told we can’t spend more than we have or more than we can borrow.
The U.S. government “has” infinite dollars, so it does not borrow dollars. Those federal T-securities are not a form of borrowing, which is what a monetarily non-sovereign government does when it needs money.
Rather than providing the U.S. government with dollars, T-securities:
Provide a safe parking place for unused dollars — safer than any other storage place (i.e., bank accounts, safe deposit boxes, etc.) The government never touches those dollars. They remain the property of the depositors.
Assist the Fed in controlling interest rates by setting a floor rate.
In that sense, budget constraints always hold: They reflect the fact that when we make decisions, we must recognize we have limited resources.
See the confusion? “We” and the Italian government have limited resources (money), but the U.S. government does not. It has unlimited money. Next, Mr. Sill expressly shows us his confusion between federal finance and personal finance:
Imagine a household that gets income from working and from past investments in financial assets. The household can also borrow, perhaps by using a credit card or getting a home-equity loan.
The household can then spend the funds obtained from these sources to buy goods and services, such as food, clothing, and haircuts.
It can also use the funds to pay back some of its past borrowingand to invest in financial assets such as stocks and bonds.
The household’s budget constraint says that the sum of its income from working, from financial assets, and from what it borrows must equal its spending plus debt repayment plus new investment in financial assets.
Not one word of the above applies to the U.S. government.
The government does not borrow or use dollars obtained from any source. It creates ad hoc all the funds it spends. Any income the federal government receives is destroyed upon receipt. (See: “Does the U.S. government really destroy your tax dollars?“)
The only federal budget constraint is not a budget constraint at all. Federal agencies routinely exceed budgets. The restraint is whatever Congress and the President say it is at any given moment.
Congress and the President have the unlimited ability to create dollars and stimulate the economy, plus a strong, though not unlimited, ability to obtain and distribute the scarcities causing inflation.
Mr. Sill continues with an explanation that is irrelevant to federal financing.
The household’s sources of funds and spending are all accounted for, and the two must be equal. The household may use borrowing to spend more than it earns, but that funding source is accounted for in the budget constraint.
If the household has hit its borrowing limit, fully drawn down its assets, and spent its work wages, it has nowhere else to turn for funds and would, therefore, be unable to finance additional spending.
I have no idea what Mr. Sills hoped to accomplish by giving household finances as his explanation for federal finances. The two are fundamentally opposite.
Here, Mr. Sills makes sure to show you that he doesn’t understand the difference between the federal government’s Monetary Sovereignty and your household’s monetary non-sovereignty:
Just like households, governments, face constraints that relate spending to sources of funds.
Governments can raise revenue by taxing their citizens, and they can borrow by issuing bonds to citizens and foreigners. In addition, governments may receive revenue from their central banks when new currency is issued.
Governments spend their resources on such things as goods and services, transfer payments such as Social Security to its citizens, and repayment of existing debt.
Central banks are a potential source of financing for government spending, since the revenue the government gets from the central bank can be used to finance spending in lieu of imposing taxes or issuing new bonds.
No, the U.S. government is not “just like households. It does not raise revenue by taxing you. It doesn’t borrow from the central bank. It doesn’t have an existing debt to repay.
And it finances its spending not with taxes or bonds but by creating new money ad hoc. Who says so, Mr. Sill? Your former bosses:
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.”
Mr. Sill’s article continues for many more paragraphs, so I will just quote one more thought:
There may be limits on the government’s ability to borrow or raise taxes. Obviously, if there were no such limits, there would be no constraint on how much the government could spend at any point in time.
Congress and the president are the only constraints on federal spending. Unlike your checking account, There are no financial constraints. That is why net spending (spending vs. taxing) has risen to $32 trillion.
Certainly governments are limited in their ability to tax citizens. (That is, the government can’t tax more than 100 percent of income.) But are governments constrained in their ability to borrow?
Monetarily non-sovereign governments are constrained by their full faith and credit, i.e., their credit rating. Monetarily Sovereign governments have no need to borrow, so there is no constraint.
Indeed they are. Informally, the value of government debt outstanding today cannot be more than the value of the government’s resources to pay off the debt.
The U.S. government has the infinite ability to pay for anything. Just ask Fed Chairmen Greenspan and Bernanke.
How do governments pay their current debt obligations? One way is for the government to collect more tax revenue than it spends. In this case, the surplus can be used to pay bondholders.
Wrong. All a federal surplus does is reduce Gross Domestic Product, i.e., cause a recession or depression.
Another way to finance existing debt is to collect seigniorage revenue and use that to pay bondholders.
Half right, half wrong. “Collect seigniorage” is a fancy way to say “print money.”
Seigniorage is the difference between the face value of dollars and the cost of creating them, which comes close to zero. However, holders of U.S. Treasury bonds are paid in two ways: Seigniorage pays the interest, and the principal is paid by returning the bondholder’s deposit.
Finally, the government can borrow more from the public to pay existing debt holders.
Wrong again. The federal government does not borrow, though monetarily non-sovereign governments do borrow.
SUMMARY
It is discouraging to read an article written by the Senior Vice President of Research and Director of the Real-Time Data Research Center for the Federal Reserve that displays so little understanding of Monetarily Sovereign finance.
The article claims that federal finance is similar to personal finance, but it does not demonstrate any knowledge of the vast differences.
Cities, counties, states, businesses, and euro nations can run short of money. The federal government cannot, and a key figure in the Federal Reserve seems to not understand that.
The answer to the title question is, “No, deficits do not cause inflation. Inflation is caused by shortages of key goods and services, most often oil, food, and labor.
Deficit spending can cure inflation by paying for scarce goods and services and ending shortages.
MAGA is a cult.
Like all cults, it is authoritarian and believes in authoritarianism. Cults are the antithesis of democracy. A democratic cult would be an oxymoron.
Cults are led by psychopaths. See the Robert Hare Checklist of Psychopathy Symptoms — the 20 criteria for psychopathy — here.
MAGAs don’t really believe the Biden/Trump election was stolen because they don’t believe in elections. Thus, no amount of evidence could convince them any election Trump loses was fair. Today, they are already preparing to claim that the next election was stolen if Trump loses.
They believe in the authoritarian power of the cult leader, and they believe this authoritarian power is what was taken from Donald Trump. When MAGAs chant “Stop the steal,” they don’t mean the steal of an election. They mean the steal of Trump’s unconditional, god-like power.
Mao: A psychopath who was never wrong. Demanded absolute obedience.
Donald Trump acknowledged MAGA is a cult when he said he could “shoot someone on 5th Avenue and not lose any followers.” Recent events prove him correct; his indictments and criminal convictions yielded more campaign contributions from his followers.
To a MAGA, evidence of Trump’s guilt merely is proof that the “deep state” did something dishonest.
Trump follows the familiar scripts used by Charles Manson, Jim Jones, Saddam Hussein, Joseph Stalin, Adolf Hitler, Mao Zedong, and other dictators.
One sure symptom of a cult is when a leader can commit any crime, no matter how heinous, and not lose followers. The irony of Trump’s followers brandishing American flags is lost on them.
They genuinely think they are being patriotic by supporting the man who sent a mob to overturn an election he lost by over 7 million votes and 74 electoral votes,Mao:
We describe cult realities in The Most Common Personality Traits of a Cult Leader.
A comment on that post came from reader “rawgod” who asked, “How do people protect themselves from falling into the clutches of a cult, especially one as widespread as MAGA?”
Opinions about that can be found in many places on the Internet. Here is my take:
Some people are forced into cults by parents and caretakers. Some join willingly. Cults offer the willing members something they do not receive elsewhere: Protection from their fears.
While cults can be fearsome, they exist partly because members feel that “the fear I know is better than the fear I don’t understand.”
The fears can include one or more of the following. Fear of: Blacks, browns, yellows, reds, gays, men, women, immigrants, foreigners, a religion, peers, parents, siblings, loss of status, strangers, a political group, a secret organization, and or the government.
Hitler: A psychopath who was never wrong. Demanded absolute obedience.
There may be others that are less common but no less fearsome.
Fear is the mother of hatred. One cannot hate someone or something without fearing it. A cult leader plays on the fears of his/her followers.
Donald Trump is an expert fearmonger. He calls Mexicans “rapists.” He says blacks come from “shithole countries.” He tells his followers that immigrants are “poisoning the blood of the nation,” an example of replacement theory.
His message always is some variant of: “These people want to destroy you, but I will protect you.”
Who are the people who fall for his blatant lies? Who are the gullible people who would vote for him, even if he “shot someone on 5th Avenue”?
Begin with the rich, who care about one thing: money, or more accurately, The Income/Wealth/Power Gap between them and those who have less.
They fear and despise the poor. They invent reasons: “I work hard for my money. I pay taxes. Why should they be able to do nothing and get everything free from my tax money?”
Never mind that lower-income people generally work harder than upper-income people (unless one considers numerous vacations, living in mansions, riding in private planes and the chauffer-driven cars of the rich to be “work.”)
Never mind that lower-income people do not benefit from the tax breaks the rich receive and the fact that in a Monetarily Sovereign nation, federal taxes do not fund benefits to the poor. See: Monetary Sovereignty)
Stalin: A psychopath who was never wrong. Demanded absolute obedience.
One thing is clear: Facts don’t matter to cults. They invent their own facts, “alternative facts.”
“Alternative facts” was a phrase Kellyanne Conway used to defend Sean Spicer’s false claim about the attendance numbers at Donald Trump’s presidential inauguration.
When Chuck Todd pressed her to explain why Spicer would “utter a provable falsehood,” Conway stated that Spicer was giving “alternative facts.” Todd responded, “Look, alternative facts are not facts. They’re falsehoods.”
Donald Trump made more than 30,000 false or misleading statementsduring his four years as President of the United States. MAGAs don’t care about Trump’s lies. Loyalty to Trump is the only measure that matters in the cult.
The astounding figure, which roughly equates to 21 false statements per day during his tenure at the White House, comes after he spent weeks falsely alleging that the 2020 election was “stolen.”
He continues to make the false claim, which his followers want to believe despite 60+ lawsuits, investigations, and recounts finding no evidence to support it.
In a cult, the only evidence members need is the leader’s utterance. Nothing else matters.
If facts don’t matter, what is the answer to rawgods’ question?
Being in a cult resembles being addicted to alcohol or other drugs. Physical addiction and psychological addiction have similar symptoms and similar results. To an addict or cult member, facts are evidence of a secret effort to hide the facts.
Cult members often don’t believe they are in a cult. They believe the “truth” is whatever the cult leader tells them.
Cult “truths” can range from “The world is coming to an end” to “You always must obey (the leader)” to “The election was stolen.”
You can see some cult “truths” and realizations at 20 Cult Members Talk about The Moment They Knew.
Alcoholics Anonymous suggests a 12-step program for escaping alcoholism, which resembles a cult, with the leader being alcohol. Sadly, the program suggests that alcohol could be replaced by “a higher power.” Cult leaders generally claim to be that higher power.
Trump: A psychopath who is never wrong. Demands absolute obedience.
As one cult member said, “Fundie (fundamentalist) cults are the worst.”
This is not to suggest that religion, per se, is bad. On the contrary, religion benefits many people. Rather, for all groups, religious or otherwise, the group has transitioned into a cult when the belief becomes so powerful that the leader can do no wrong.
Some of the most populated cults are sects (a subgroup of a religious, political, or philosophical belief system, usually an offshoot of a larger group).
The power of religious sects comes from the leader’s claim that he/she speaks for God.
When you are part of a group that sets strict rules against what your common sense says, you may be in a cult.
If you are punished for disagreeing with the leader, you may be in a cult.
When your leader can make thousands of easily disprovable claims, and you don’t care, you may be in a cult.
When you are proud that your leader is a convicted criminal, you may be in a cult.
When your status in an organization relies on the depth of your love for and obedience to the leader, you may be in a cult.
When the group leader orders you to commit acts that are not in your best interest but are in the leader’s best interests, you may be in a cult.
If your leader says he could shoot someone on 5th Avenue and not lose any followers, you are in a cult.
When you are in a cult, you have given your beliefs, ideas, creativity, compassion, sympathy, love, and indeed your humanity to another person. You are less than human.
In that sense, you resemble a pet, an obedient dog. You accept unquestioningly your master’s words. He may kick you, but you forgive him and lick his hand.
Children can be forced into a cult. Some people willingly accept that subservient role. Devoted MAGAs do not question Trump. They not only believe his lies, but they don’t even question them.
When he was proven in courts of law to be a traitor and a convicted criminal, they sent him money. When he offered them worthless online pictures, which one easily could access by turning on a smartphone, they sent him money.
When Trump said, “I was never indicted,” and then boasted that he’s been indicted more times than Al Capone, MAGAs accepted both opposing statements and sent him money.
When he sold gold sneakers at four hundred dollars a pair, MAGAs bought them, even though the website explicitly said, “Trump Sneakers are not designed, manufactured, distributed or sold by Donald J. Trump, The Trump Organization or any of their respective affiliates or principals.”
When he sold T-shirts showing his arrest mugshot, MAGAs bought them. MAGAs ignored Trump’s cheating of students with his fake Trump University and fraudulent Trump Foundation.
Trump claimed he would “drain the swamp.” MAGAs believed him.
What do you think “Drain the swamp” means? Do any of these names sound familiar? What do you know about these people? What do they have in common?
Steve Bannon, Tom Barrack, Elliot Broidy, Kenneth Chesebro, Michael Cohen, Chris Collins, Jenna Ellis, Michael Flynn, Igor Fruman, Rick Gates, Rudy Giuliani, Scott Hall, Duncan Hunter, Brian Kolfage, Ken Kurson, Corey Lewandowski, Paul Manafort, George Nader, Peter Navarro, George Papadopoulos, Lev Parnas, Brad Parscale, Sam Patten, Sidney Powell, Roger Stone, Allen Weisselberg, Imaad Zuberi
Trump still talks about “draining the swamp.” MAGAs still believe him.
So, in answer to reader “rawgod’s” question, I suspect people cannot protect themselves from falling into the clutches of a cult. Just as with a dog, this propensity relies on a combination of DNA and upbringing, the teachings one receives through life.
Some people have grown up to meekly accept authority. Some believe that rebellion from authority requires the acceptance of a harsher authority. Some are emotionally or even physically trapped by authority.
If facts don’t matter to cult members, what does? Their fears.
The path out of a cult is built with protection from a member’s unique fears. It requires identifying those fears and reassuring the member that protection will come from outside the cult.
And therein lies the rub. It’s an enormously complex problem that is beyond my pay grade. But that is the direction one must take.
To escape from an addiction, the addict first must recognize that he is addicted and that life without the addiction would be better.
To escape from a cult, members first must recognize that they are in a cult and that what they fear is less onerous than submitting their life and common sense to a psychopath.
A MAGAs sudden realization that Donald Trump is a fraud and a psychopath is the first step to reality.
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: 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.
opposition to an obsession with contamination by genetic material from a perceived inferior bloodline.
Wilkerson describes the means necessary for the sustained oppression of an outcast group, which requires only that the members of the dominant class do nothing and remain silent, maintaining a complicity in which the order will thrive.
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#Monetary Sovereignty - Mitchell 