Cancel student loan debt?

Our federal government and the European Central Bank are Monetarily Sovereign. The implications are:

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

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.”

Ben Bernanke when, as Fed chief, he was on 60 Minutes: Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

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 ECB, 9 January 2014 Question: I am wondering: can the ECB ever run out of money? Mario Draghi: Technically, no. We cannot run out of money.

[Why would any sane person take dollars from the economy and give them to a federal government that has the infinite ability to create dollars?]

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Step #4 of the Ten Steps to Prosperity (below) is: Free education for everyone That post begins with the following facts:

Educating our young people is important to the future of America.
For that reason, free elementary education has been provided by every state and every town in America.
Since WWII, America’s need for college-educated young people has grown, in a more sophisticated, more competitive world. College-educated students no longer are a luxury for America; they are a necessity.
Many of America’s bright students are unable to afford a college education, especially not in better colleges.
The U.S. federal government is Monetarily Sovereign, meaning it creates dollars at will. It never can run short of dollars. The federal government has the unlimited ability to pay for anything priced in dollars.
The federal government’s responsibility is to advance the interests of the United States and its people.
Putting America’s young people into debt, a debt so suffocating it cannot even be discharged in bankruptcy, does not advance the interests of the United States and its people.

A literate nation is a better nation in every aspect of human life, emotionally, socially, and economically. Our founders knew it, which is why free education was offered to settler’s children, and today is offered everywhere in America. The famous “one-room schoolhouse” was ubiquous in the new America. It would be utter folly for our government, or any government, not to expend every effort to educate its young people, especially true in our more advanced world, where a high school education no longer is the gold standard. Yet, here we are:

Calls Mount to Cancel Student Debt as Biden Weighs Longer Payment Pause By Jessica Corbett. Originally published at Common Dreams

After a White House official confirmed this week that President Joe Biden is considering further extending a pandemic-related pause on student loan payments, lawmakers and activists renewed calls for debt cancellation.

“We have reached a student debt crisis of epic proportions.”

While payments are due to resume on May 1, White House Chief of Staff Ronald Klain suggested on a popular podcast that the president may extend the pause and is still sorting out whether he will take further action on the student debt crisis.

“This is a GOOD idea!” the group Bold Progressives tweeted with a video of Klain on “Pod Save America.”

Senate Majority Leader Chuck Schumer (D-N.Y.), a key advocate of student debt cancellation in Congress, agreed, also tweeting Klain’s comments.

In response to HuffPost‘s reporting on Klain’s remarks, Congresswoman Marie Newman (D-Ill.) said Saturday that “pausing student loan payments during Covid has allowed Americans to get by.”

“We need immediate student debt relief, and deferring payments again is a great step, but we need to do more,” she added.

Noting that “education is a pathway to greater opportunity and economic security, yet many Americans simply can’t afford it or become crushed by student loans,” Rep. Ilhan Omar (D-Minn.) told Biden on Saturday that “we must cancel student debt.”

Rep. Jesús “Chuy” García (D-Ill.) and Rep. Ayanna Pressley (D-Mass.) also pressured the president to take action on the issue Saturday:

Pressley and Sen. Elizabeth Warren (D-Mass.), who have been leading the fight in Congress with Schumer, participated in a Friday roundtable about how student loan debt impacts Black communities, particularly business owners, entrepreneurs, and other professionals.

Advocates of debt cancellation often argue that it is necessary to help address the racial wealth gap in the United States.

Eliminating student debt would help narrow every income/wealth/power Gap in America. There is not a single benefit to our nation that emanates from charging American students to attend college. Given all you know, you might think student debt cancellation is an obvious solution to many problems facing all of America, not just those students who already are in debt. But America has two parties. The more aggressive and united GOP party is “The Party of the Rich.” It wants to widen, not narrow, the Gaps between the “haves” and the “have-nots.” It believes in harsh punishments for misdeeds by those below, and rewards only for those above. The wider the Gap, the richer are the rich, and that is what the GOP wants. The more timid and disunited Democratic party advocates narrowing the Gaps, with rewards for those below and punishments for those above, but it is riven with strife among partisans, whose blinders restrict each view to specific needs at the exclusion of all others. Not being able to present a united front, the Dems’ messages become muddled, so the general public rightfully views it and its programs as weak and ineffectual.

Also on Friday, the Debt Collective announced a nationally coordinated refusal to make payments if Biden refuses to step in before they resume in May.

“If President Biden resumes illegitimate student debt payments in May, we will facilitate as many student debtors as possible to safely pay $0 a month to the Department of Education,” declared Debt Collective co-founder Astra Taylor.

“Whether it’s filing a borrower defense or enrolling in an income-driven repayment plan, we are politicizing our refusal to pay as part of our escalation on President Biden,” Taylor said. “He has the authority to cancel all federal student debt with the flick of a pen. He can end this manufactured crisis today.”

Debt Collective spokesperson Braxton Brewington emphasized that “we want to be clear—a student debt strike is not intentionally defaulting on your loans but politicizing and collectivizing your refusal to pay by using the tools the Department of Education already provides to student borrowers.”

America does not need an “income-driven repayment plan.” America needs a no-repayment plan. More than that, America needs a no payment (i.e. no payment for college) plan. The U.S. government neither needs nor uses any dollars sent to it. In fact, every dollar sent to the U.S. federal government is destroyed upon receipt by the Treasury (When you pay taxes, for instance, those dollars in your checking account are part of the M1 money supply measure. When they hit the Treasury, they instantly disappear from any money supply measure. They effectively are destroyed. The federal government creates new dollars ad hoc each time it pays creditors.) And for those students who received dollars from private sources, the federal government has the unlimited ability to pay off those loans, and no cost to taxpayers.

“The federal government doesn’t need our student debt payments to function, and the last two years have proved that,” Brewington added, “but they do need our cooperation—and they certainly won’t have that.”

The federal government not only doesn’t need student debt payments, it doesn’t need any payments of any kind.

Congresswoman Rashida Tlaib (D-Mich.) expressed support for the planned strike, noting that “the road to student debt cancellation is long and hard, and a key aspect is building solidarity amongst students and graduates with debt.”

It’s only “long and hard,” because the “haves” don’t want it (Widening Gap makes the rich richer), and the “have-nots” don’t understand it (They erroneously believe, because they repeatedly have been told, federal deficits should be reduced.)

“The Debt Collective’s Student Debt Strike is an important campaign to help build the mass movement we need to resist and abolish student debt, and there are so many ways to support it without putting yourself in financial jeopardy,” she said. “I stand with Student Debt Strikers and encourage everyone—whether you have debt or not—to join us.”

As Common Dreams reported last month, polling shows student debt cancellation is popular with the American public, even among people who don’t have higher education loans to repay.

Student debt cancellation may be popular with the public as a whole, but there may be some who find it less appetizing. The rich, of course, want to keep the rest of us down, because that makes them richer. Those who already have paid for college by scrimping, saving, and borrowing, may feel it’s “unfair” for others to have the benefits without the suffering. Those who don’t want college educations may feel it’s unfair or even unnecessary, for others to receive free college. Even those who recognize the massive benefits to America of universal, free college may object to student debt reduction or elimination. And there is another problem: Let us say that the Dems suddenly and miraculously acquire courage and cohesion, and they manage to pass a bill eliminating all student debt, what happens tomorrow? Who pays for tomorrow’s college? Do we begin the same process anew, with future students building future debt, and future arguments about paying it? How will colleges and teachers be supported? We already have a model for that. It is called “Medicare” and it answers the question, “How can hospitals and doctors be supported?” Just as America needs a Medicare available to everyone, (aka “Medicare for All,”) not just for the elderly, America needs a “Collecare” plan that funds grades 13+, not just grades K-12. The first 13 years of education in America are funded by local, monetarily non-sovereign governments, using taxpayer dollars. Why, in heaven’s name, are college years not funded by our Monetarily Sovereign government, that does not use taxpayer dollars, but instead can create infinite dollars from thin air? Just as Medicare does not treat patients — it merely funds private sector treatment — Collecare would not educate students — it merely would fund private sector education. And just as Medicare doesn’t pay the “better” hospitals more, Collecare would not pay the “better” universities more. Harvard would receive no more than would Podunk U. Today, Virtually all colleges and universities provide scholarships to students based on wealth, income, athleticism, skin color, religion, country of origin, and a long, often secret list of student attributes. With Collecare, that expense no longer would be necessary for any college. Your tuition payments no longer would be used to pay for other students’ educations. And, there yet is another problem: Those whose income is so low that even free college is unaffordable: They need their young people to work full time just to support themselves and their families. (For this latter group, we recommend (Ten Steps to Prosperity: Step 5: Salary for attending school, and Salary for attending school, III and Salary for attending school: 2nd paper.) Just as healthcare insurance should cover rehab costs, Collecare would be incomplete without a supplement that pays students’ living expenses. And then, there is one final problem. In general, the education in America’s K-12 schools is not worthy of this wealthy nation. We have good teachers in bad schools; we have bad teachers in good schools; and commonly, we have bad teachers in bad schools. Much of what is “bad” can be attributed to income. Low income begets crime, illness, and hopelessness, which beget bad K-12 schools, which in turn beget more crime, illness, and hopelessness. We cannot solve America’s income, education, and health problems separately without solving them together. America needs Medicare for All. America needs College for All. America needs Social Security for All. The U.S. government should do everything it can to support America’s people. That is the fundamental purpose of government — not to run people’s lives but to support people’s lives. The sainted President John Kennedy famously said, “Ask not what your country can do for you; ask what you can do for your country.” If by “your country” he had meant the federal government, it would have been among the most stupid, misleading statements of all time. I suspect however, that it was a general call to do right for everyone, not just yourself — a sort of golden rule appeal. It means, in part, when voting, vote for what is best for America, not just what is best for you. The rich hate federal funding for the have-nots. They will try to talk you out of it, with phony claims that inflation is caused by federal spending on your benefits. Quoting the voice of the rich, the Committee for a Responsible Federal Budget:

Full debt cancellation would cost the federal government roughly $1.6 trillion, while improving household balance sheets by a similar amount.

Consistent with our prior analysis, we estimate this would translate to an $80 billion reduction in repayments in the first year, which would in turn increase household consumption by $70 to $95 billion once the effect of higher wealth is considered.

For the rich, “cost federal government” is bad only if the money goes to you, not to the rich. The rich hate “improving household balance sheets,” and “higher wealth” for you and me. Don’t listen to them. The government, being Monetarily Sovereign, can bring to bear unlimited funding, without taxpayer support. It should devote that funding to making our lives healthier, safer, and better. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps: Ten Steps To Prosperity:

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

Wall Street Journal gets it wrong, again. Do they have a learning disability?

20 Easy Things That Will Make You the Next Millionaire | Inc.com — **Being Monetarily Sovereign, the U.S. government owns infinite dollars.**

You reasonably might expect that, of all the newspapers in the world, the Wall Street Journal surely would print articles by only writers who understand federal finances. Ah, would that it were so. Unfortunately, some writers published by WSJ either are as ignorant as the general populace or as intentionally ignorant as the bribed-by-the-rich politicians and university economists. Here is an example saw in a recent WSJ edition (OK, the article printed in several papers, but I read in WSJ, which should know better):

U.S. National Debt Tops $30 Trillion as Borrowing Surged Amid Pandemic The record red ink, fueled by spending to combat the coronavirus, comes as interest rates are expected to rise, which could add to America’s costs. After a protracted standoff last year, Congress agreed in December to raise the nation’s borrowing cap to $31.4 trillion. By Alan Rappeport, Feb. 1, 2022

We can’t even get past the headline and subheads without being subjected to WSJ ignorance.

Safe Deposit Box: What You Should (And Shouldn't) Store | Bankrate — **Federal “debt” is deposits into accounts similar to safe deposit boxes. The federal government never touches those deposits except to return them to the owners.**

The so-called “national debt” neither is “red ink,” nor is it debt. It is the total of deposits into Treasury Security accounts. When you invest in a T-bill, T-note, or T-bond, you do not lend the federal government money. You merely deposit your dollars into your T-security account. It’s an account similar to an interest-paying, safe-deposit box. As with a safe deposit box, the federal government does not touch your dollars. It merely stores them for you, and allows you to accumulate interest. Upon the maturity of your account, the government “pays it off” simply by returning to you, the dollars in your account. Since the dollars already exist in your account, and remain yours, this payoff is no burden on you, on the government, or on taxpayers. It’s merely a transfer of your dollars. If the national “debt” were a real governemnt debt, it would go something like this:

The government needs dollars to pay its bills. Federal taxes are insufficient to pay all the creditors, so the government must borrow dollars, and in return it gives the lenders its IOUs in the form of T-securities (T-bills, T-notes, T-bonds).

Later, to obtain the dollars to pay off the T-securities, the government levies more taxes. This means we taxpayers ultimately are liable for the government’s debts.

You have just read what the Wall Street Journal and the vast majority of Americans believe about the federal debt. And it is 100% wrong. Back in the late 1770s, the federal government created the U.S. dollar from thin air. The government simply passed laws (from thin air) that created as many dollars as it wished, and gave those dollars whatever value it wished.

The first U.S. silver dollars were coined on Oct 15,1794. On that day, 1,758 of them were produced, but no more the rest of the year.

In 1794, a new coin called the Draped Bust Dollar, featuring a matronly Liberty of considerable endowment wearing a draped blouse. Over 40,000 Draped Bust dollars were minted in 1795.

Why 1,158 and 40,000? Because the government arbitrarily based its coin on silver. Each coin contained 0.7737 oz of silver. Why 0.7737? Because the government arbitrarily made its dollar similar in weight to the Spanish dollar. Note the word “arbitrarily.” The government could have produced any number of dollars, and could have made them equivalent to anything it wished. The base could have been gold, lead, tin, or nothing at all. Because we were a new country, we tried to create demand for the dollar by making it equivalent to an existing coin. But it was all arbitrary. The federal government arbitrarily has changed the metal content of all U.S. coins many, many times over the years. Today, the vast majority of dollars are nothing more than numbers on spreadsheets, and have no physical existence. The federal government retains the infinite ability to create laws from thin air, and those laws have the infinite ability to create dollars from thin air.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

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.”

Quote from Ben Bernanke when, as Fed chief, he was on 60 Minutes: Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

Read the above quotes carefully, then ask, what is Alan Rappeport talking about when he refers to the federal “debt” (i.e. deposits) as “red ink?” How can accepting deposits into T-security accounts be considered “borrowing,” when, as Greenspan, Bernanke, and the St. Louis Fed say the federal government has the infinite ability to create dollars? Why would the government ever need to borrow? It wouldn’t and it doesn’t.

WASHINGTON — America’s gross national debt topped $30 trillion for the first time on Tuesday, an ominous fiscal milestone that underscores the fragile nature of the country’s long-term economic health as it grapples with soaring prices and the prospect of higher interest rates.

It’s not “ominous.” On the contrary, it’s a sign of a growing economy. It would be “ominous” if the misnamed national “debt” were declining. That would demonstrate we are in a recession or depression. In fact, the so-called”debt” isn’t even debt or borrowing. It’s the total of investments in T-securities (T-bills, T-notes, T-bonds). The government never touches the dollars invested in these securities, and the government pays them off every day, simply by returning the balances in the accounts. No tax dollars are involved. This is not a burden on the government or on taxpayers. The sole purpose of T-securities is not to provide the federal government with its own dollars, but rather to provide a safe “parking place” for unused dollars. This stabilizes the dollar. It is not borrowing in any sense of the term.

The breach of that threshold, which was revealed in new Treasury Department figures, arrived years earlier than previously projected as a result of trillions in federal spending that the United States has deployed to combat the pandemic. That $5 trillion, which funded expanded jobless benefits, financial support for small businesses and stimulus payments, was financed with borrowed money.

No, no, no. It was NOT financed with borrowed money. Every penny the government pays for anything is created, ad hoc, with the press of a computer key. The federal government never borrows the currency it has the infinite ability to create from thin air. Here is how:

To pay a creditor, the federal government creates instructions. These instructions tell the creditor’s bank to increase the balance in the creditor’s checking account.

At the instant the instructions are obeyed, new dollars are created and added to the money supply measure called “M1.”

That is how the federal government creates money: By using its infinite ability to create instructions telling banks to increase checking account balances. Why would the federal government borrow, when as Chairman Ben Bernanke said, it can “produce as many U.S. dollars as it wishes at essentially no cost.”

The borrowing binge, which many economists viewed as necessary to help the United States recover from the pandemic, has left the nation with a debt burden so large that the government would need to spend an amount larger than America’s entire annual economy in order to pay it off.

Utter nonsense. The so-called “debt” (that isn’t a debt) is not a debt “burden.” The government pays off all T-securities simply by returning the dollars in T-security accounts. It does this every day. And the phrase, “entire annual economy” is a non-sequitur based on ignorance. The size of the U.S. economy (i.e. the Gross Domestic Product) does not pay for any part of the “debt.” That comparison of the so-called “debt” vs. the US. economy — known as the “debt/GDP ratio — often is quoted as a way to shock the reader, though it is a meaningless comparison.

Here are a few similar comparisons.

Country	Debt To GDP Ratio	2022 Population
Japan	237.00%	125,584,838
Greece	177.00%	10,316,637
Lebanon	151.00%	6,684,849
Italy	135.00%	60,262,770
Singapore	126.00%	5,943,546
Cape Verde	125.00%	567,678
Portugal	117.00%	10,140,570
Angola	111.00%	35,027,343
Mozambique	109.00%	33,089,461
United States	107.00%	334,805,269
Djibouti	104.00%	1,016,097
Jamaica	103.00%	2,985,094

. . .

Guinea	18.00%	13,865,691
Nigeria	17.50%	216,746,934
Libya	16.50%	7,040,745
Palestine	16.40%	5,345,541
Republic of the Congo	15.70%	5,797,805
Burundi	15.20%	12,624,840
Kuwait	14.80%	4,380,326
Russia	12.20%	145,805,947
Bhutan	11.00%	787,941
Eswatini	10.75%	1,184,817
Egypt	9.00%	106,156,692
Estonia	8.40%	1,321,910
Afghanistan	7.10%	40,754,388
Cayman Islands	5.70%	67,277

. . . . . . . . . . Do you see any relationship between the Debt/GDP ratio and the economic strength of the nation? Of course not, because there is no such relationship. The Debt/GDP relationship is meaningless. So why does Rappeport refer to it? Either he doesn’t understand federal finance or he is trying to scare you. (The Wall Street Journal is designed for the rich, and the rich want to convince the populace that the government cannot afford to give benefits to the not-rich.)

Some economists contend that the nation’s large debt load is not unhealthy given that the economy is growing, interest rates are low and investors are still willing to buy U.S. Treasury securities, which gives them safe assets to help manage their financial risk. Those securities allow the government to borrow money relatively cheaply and use it to invest in the economy.

More nonsense. The so-called “debt load” is not unhealthy, and low interest rates are not a factor. The federal government, having the unlimited ability to create dollars, has no difficulty paying any amount of interest. Totally painless. And the federal government doesn’t need investors to buy Treasury securities. These are offered as a benefit to investors, not to the government. And in any event, any unsold T-securities are purchased by the Federal Reserve.

For years, presidents have promised to limit federal borrowing and bring down the nation’s budget deficit, which is the gap between what the nation spends and what it takes in. Under President Bill Clinton, the United States actually ran a budget surplus between 1998 and 2001.

Yes, Presidents have made this promise, and every time they actually kept the promise, we had depression or a recession. Mr. Rappeport fails to mention that Clinton’s surplus led to the recession of 2001.

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.

But taming deficits had fallen out of fashion in recent years, including during the Trump administration, when lawmakers blew through budget caps and borrowed money to fund tax cuts and other federal spending.

Deficits don’t need to be “tamed.” Remember what Greenspan, Bernanke, and the St. Louis Fed said about the government’s infinite ability to pay its bills. Further, the federal government does not borrow its own sovereign dollars, the dollars it has the unlimited ability to create from thin air. And all federal spending is funded, not by taxes, but by ad hoc creation of new dollars. Why does the federal government levy taxes? To control the economy. It taxes what it wishes to discourage, and it gives tax breaks to what it wishes to encourage. Further, taxes give the impression that federal benefits must be limited. The rich, who control Congress and the President, want the Gap between the rich and not-rich to widen. The wider the Gap, the richer are the rich. It’s called “Gap Psychology“, the human desire to widen the Gap below and to narrow the Gap above.

“Hitting the $30 trillion mark is clearly an important milestone in our dangerous fiscal trajectory,” said Michael A. Peterson, the chief executive officer of the Peter G. Peterson Foundation, which promotes deficit reduction. “For many years before Covid, America had an unsustainable structural fiscal path because the programs we’ve designed are not sufficiently funded by the revenue we take in.”

The Peter G. Peterson Foundation is notorious for crying “wolf” about the deficit and predicting calamity that never happens — until we actually do reduce the deficit, at which time we have the aforementioned depressions or recessions. Until then, it’s all warnings and hand wringing about the “ticking time bomb of debt.” It’s a “time bomb” that has been ticking since 1940 and still no explosion.

The gross national debt represents debt held by the public, such as individuals, businesses and pension funds, as well as liabilities that one part of the federal government owes to another part.

Right, the so-called debt (T-bills et al) are assets of the private sector. When you own a T-bill, that is one of your assets. Alan Rappeport doesn’t want you to have that asset. He wants the government, which has infinite assets, to take that asset from you. Smart?

While Republican lawmakers helped run up the nation’s debt load, they have since blamed Mr. Biden for putting the nation on a rocky fiscal path by funding his agenda. After a protracted standoff in which Republicans refused to raise America’s borrowing cap, threatening a first-ever federal default, Congress finally agreed in December to raise the nation’s debt limit to about $31.4 trillion.

It was all political theater — cynical politicians trying to convince the innocent public that they are fiscally prudent. But if they really were prudent, they would spend more on global warming, poverty, healthcare, education, transportation, infrastructure, science, ecology, etc. — not debating about how to spend less.

In January 2020, before the pandemic spread across the United States, the Congressional Budget Office projected that the gross national debt would reach $30 trillion by around the end of 2025. The total debt held by the public outpaced the size of the American economy last year, a decade faster than forecasters projected.

Yes, as usual, the economic forecasters were wrong about the meaningless Debt/GDP ratio. So?

The nonpartisan office warned last year that rising interest costs and growing health spending as the population aged would increase the risk of a “fiscal crisis” and higher inflation, a situation that could undermine confidence in the U.S. dollar.

By “fiscal crisis,” we assume Rappeport means the federal government would be unable to pay its debts — which as we know is impossible for our Monetarily Sovereign government. (It can happen to state/local government, which are monetarily non-sovereign.) And inflation always is caused by shortages, never by federal deficit spending. In fact, federal deficit spending is one of the best methods for curing inflation, if the spending is for curing the shortages. Todays inflation is caused by shortages of oil, food, computer chips, labor, and other needs. The federal government could stop inflation by spending more to support oil drilling, efficient farming, and chip manufacture, and by eliminating FICA (FICA lowers the net income of workers and makes them less willing to accept jobs).

Trillions in federal spending has left the United States approaching levels of red ink not seen since World War II.

Actually, the so-called “debt” is much higher than it was during WWII. And when spending for WWII ended, we had recessions.

The Biden administration has said the $1.9 trillion pandemic relief package the Democrats passed last year was a necessary measure to protect the economy from further damage. Treasury Secretary Janet L. Yellen has argued that such large federal investments are affordable because interest costs as a share of gross domestic product are at historically low levels thanks to persistently low interest rates.

Yes, the $1.9 Trillion in deficit spending did protect the economy, just as cuts to federal spending will injure the economy. So why cut? Interest costs as a share of GDP are irrelevant, as are low interest rates. In fact, higher interest rates have one advantage: They force the federal government to pump more stimulus dollars into the economy.

What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys. What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.

Inflation always is caused by shortages and always is cured by curing the shortages, which the federal government can do by federal deficit spending.

Esther L. George, the president of the Federal Reserve Bank of Kansas City, suggested during a speech this week that the Fed’s big bond holdings might be lowering longer-term interest rates by as much as 1.5 percentage points — nearly cutting the interest rate on 10-year government debt in half. As rates rise, so does the amount that the United States owes to investors who buy its debt. The Congressional Budget Office estimates that if interest rates rise in line with their own forecasts, net interest costs will reach 8.6 percent of gross domestic product in 2051. That would amount to about $60 trillion in total interest payments over three decades.

That’s 60 trillion stimulus dollars pumped into the economy — dollars the federal government easily can create with the touch of a computer key, and dollars the economy uses for growth.

“A larger amount of debt makes the United States’ fiscal position more vulnerable to an increase in interest rates,” the C.B.O. said in its long-term budget outlook.

What does he mean by “vulnerable”? Is he saying that our Monetarily Sovereign government, which has the infinite ability to create dollars, will not be able to pay interest? Nonsensical.

Biden administration officials insist that they view fiscal responsibility as a priority. They have pledged that their economic agenda will be fully paid for through tax increases on wealthy Americans and corporations and by more rigorous enforcement of the tax code.

Biden wants you to believe that federal taxes fund federal spending. It is a lie. Federal taxes are destroyed upon receipt by the Treasury. Taxes come out of checking accounts that are part of the M1 money-supply measure. When they reach the Treasury, they cease to be part of any money-supply measure. They effectively disappear. There is no money supply measure that includes the federal government, because the government has infinite money. No one can answer the question, “How much money does the federal government have?” The only answer is, “Infinite.”

In recent months, the budget deficit has started to shrink as a stronger economy has boosted tax receipts and as government payments of pandemic relief money have slowed.

And this means economic growth will slow. If federal deficits fall enough, we will have a recession or depression.

And some economists argue that a more recent economic phenomenon — inflation — may have a silver lining in that it could chip away at the nation’s debt burden.

The federal “debt” is not a burden on the federal government or on taxpayers or on anyone else. It’s not debt, and even if it were, the federal government has the unlimited ability to pay.

Kenneth Rogoff, a Harvard University economist, said “You would rather have no debt, of course, but compared to other issues at the moment that’s not the principal problem.”

He’s a Harvard economist and he thinks that having no debt (which would require removing $30 trillion from the economy) is something we “would rather have”?? Is this the nonsense they teach at Harvard? In summary:

A federal deficit is necessary for economic growth. The federal Debt/GDP ratio is meaningless as a measure of economic health.

The federal government creates dollars, ad hoc, by paying creditors, which it can do endlessly.

Unlike state/local governments, the federal government is Monetarily Sovereign. It has the unlimited ability to create its sovereign currency, the U.S. dollar, and instantly can pay any obligation based on dollars.

The government never unintentionally can run short of dollars.

Federal taxes are destroyed upon receipt and do not fund federal spending.

The federal debt is nothing more than the total of deposits in T-security accounts, which are “paid off” by returning the dollars in them. This is not a burden on the federal government or taxpayers.

Federal deficit spending does not cause inflation; shortages cause inflation. A prime way to combat inflation is with federal deficit spending to cure shortages.

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

Understanding economic reality via a board game

I continually am puzzled by the misunderstanding (“disunderstanding”?) of Monetary Sovereignty. It is both simple and obvious, yet many (most?) people have trouble comprehending it. MS is based on just four simple facts:

The case against the American Constitution | The Week

In the 1780s, the U.S. federal government created the laws that created the U.S. dollar from thin air — as many dollars as it wished – and gave them the value it wished.
The government’s own laws give it the power to continue creating dollars, infinitely
The government’s own laws give it the power to continue changing the value of the dollar — a power it has used many times.
The government can change its laws at will.

Really, what could be simpler, more obvious, and less controversial? Derived from these simple, obvious facts comes the following:

The U.S. federal government never unintentionally can run short of U.S. dollars.
No agency of the government can run short of dollars unless the government wishes it.
Federal taxes are not used or needed to fund federal spending.
By changing the value of the dollar, the government has absolute control over inflation

And that’s it. Monetary Sovereignty. Intuition is powerful. Many of us prefer to believe our intuition than believe facts. Interestingly, where fiction parallels facts, you might not believe the facts about the fiction, while still believing fiction about the facts. That is, you might read a historical novel of fiction, and not believe the background facts presented. Yet, you might be fooled by a conspiracy theory website presenting fiction as fact. So here is the explanation that may appeal to intuition as well as to facts. You probably have played the hugely popular board game, Monopoly^tm. As a game, it’s fiction, but you believe and understand the facts (i.e. “rules.’)

Amazon.com: Hasbro Monopoly Money : Toys & Games

Here are some of the facts.

The game is played with multiple players plus a Bank. The Bank pays Monopoly dollars to the players for various benefits. The Bank collects taxes, fines, loans and interest from the players. The Bank “never goes broke.” If the Bank needs money, it may issue as many dollars as needed by printing on scraps of paper or simply by creating a bookkeeping tally.

A sample tally is demonstrated by the illustration at the right. It reveals three things: I. Monopoly money is not physical. Those printed $500, $100, $50, $20 $10 $5, and $1 bills aren’t dollars in of themselves. They merely represent dollars, just as the numbers on a tally represent dollars. II. The Bank can create an infinite supply of Monopoly dollars. If needed, the Bank instantly could pay Tom, Dick, Harry, or Bob $1, or $100, or $1,000,000,000 in Monopoly dollars. In the tally, there is no need to create a column for the Monopoly Bank.

This lack of a column demonstrates the Bank’s ownership of infinite dollars.

It also demonstrates that all dollars sent to the Monopoly Bank are destroyed upon receipt.

If Tom, for instance, sent $100 to the Bank, his $4,400 would be reduced to $4,300. So, what happened to the $100 Tom paid? They simply disappeared. They no longer exist. Although the Bank can create infinite dollars this creation process does not create Monopoly Bank “debt.” The Monopoly Bank does not borrow dollars nor does it owe any dollars. Thus, taxes are not levied to “pay off” any Monopoly Bank debt. By rule, the Monopoly Bank simply creates all the dollars it needs. Although the Bank is not precluded from keeping track of the dollars it receives from players, that record would not indicate how many dollars the Monopoly Bank “owes” or has. There is no ongoing debt owed by the Monopoly Bank. All of the above is easily understood by you and by virtually anyone else who has played the game. Now, in the above paragraphs, substitute the words, “U.S. federal government” for the word “Bank.” And substitute “members of the public” for “players.” The facts remain essentially the same.

There are multiple members of the public plus the federal government.

The federal government pays dollars to the public for various benefits.

The federal government collects taxes, fines, loans, and interest from the public.

The federal government “never goes broke.” If the federal government needs money, the government may issue as much as needed by printing on paper or simply by creating a bookkeeping tally.

[Former Fed Chairman, Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”]

Continue reading and substituting until you come to the part that some people have difficulty understanding:

The federal government does not borrow dollars nor does it owe any dollars. Taxes are not levied to “pay off” any federal government debt.

[Quote from Ben Bernanke when, as Fed chief, he was on 60 Minutes: Scott Pelley: Is that tax money that the Fed is spending? Former Fed Chair, Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.]

The Monopoly Bank and the U.S. federal government both are Monetarily Sovereign. They both are issuers of their dollars. Neither of them can run short of dollars. Both the Monopoly Bank and the U.S federal government have infinite dollars.

[Former Fed Chair, 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.”]

Neither the Monopoly Bank nor the federal government borrows or taxes in order to pay their financial obligations. Spending by the Monopoly Bank or the U.S. federal government does not create future taxpayer obligations. For that reason, Social Security, an agency of the federal government, cannot run short of dollars, unless that is what the government wants. Even if there were no FICA tax (which contrary to popular myth, does not fund Social Security), that agency need not run short of dollars.

State and Local Governments With the Most Debt Per Capita — **The “debt clock.” You have no share.**

Medicare for All, college for all, upgraded infrastructure, good housing for all — every imaginable federal benefit — all are easily affordable. The so-called federal debt is not a burden on future taxpayers or on the government. The famous “debt clock” implies the lie that somehow the federal “debt” is a danger to you, your children, and the federal government. It is not a debt, and it is not a danger, to you or anyone. It is just simple deposits by the public into accounts. The parallels between the Monopoly game and federal financing are stunning. Yet, though people tend to understand the rules of Monopoly, too many become hopelessly confused by the same set of facts when applied to real life. Yes, one is fiction and the other is fact, but that difference is not the source of the confusion. The confusion is caused by the longtime, ongoing, relentless dissemination of false information about the federal government’s finances and by the misnaming of T-securities as “borrowing” and “debt.” They are neither. The misinformation is promulgated by agents for the rich, who want to prevent you from asking for the benefits the rich already receive: Retirement benefits, medical care, good housing, safe neighborhoods, college education, spending money for a good life. Neither the government nor you owes the deposits that sit in T-security accounts. These accounts resemble bank safe deposit boxes, which the bank “pays off” simply by returning the contents. No “debt” or tax liability there. The Monopoly board game is a good analog for the federal finance system. If you understand one, you should understand the other. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

Another reminder why reducing the federal deficit is national suicide. Your health, your children’s health and your grandchildren’s health are being sacrificed.

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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Another reminder about why reducing the federal deficit is national suicide: Your health, your children’s health and your grandchildren’s health is being threatened — no more than threatened, compromised. And it’s all because of the myth the federal deficit and federal debt are “unsustainable.”

While the myth is easily disproved, the politicians, media and mainstream economists refuse to learn.

By Associated Press, Updated: Tuesday, May 17, 2011
WASHINGTON — A disease standoff may be brewing: How can Alzheimer’s research receive more scarce dollars without cutting from areas like heart disease or cancer?

In one of the stark realities of the budget crisis, scientists’ chances of winning research dollars from the National Institutes of Health for any condition have dipped to a new low.

“We are clearly not able to support a lot of great science that we would like to support,” NIH Director Dr. Francis Collins told senators last week. This year, for every six grant applications that NIH receives, “five of them are going to go begging.”

That’s down from nearly 1 in 3 grants funded a decade ago, and 1 in 5 last year. And it comes before the looming fight over how much more to cut in overall government spending for next year, and where to make those cuts.

Already, a new report says one of the biggest losers is aging research, despite a rapidly graying population that promises a worsening epidemic of dementia, among other illnesses.

“Nobody wants to say Alzheimer’s is worse than diabetes or heart disease or cancer,” says Dr. Sam Gandy, a prominent neuroscientist at New York’s Mount Sinai School of Medicine.

But “part of the problem now with all the pressure to cut the budget … is that for Alzheimer’s to get more, something else has to lose,” adds Gandy. His own lab is scrambling for funds to study a potential dementia drug after losing out on an NIH aging grant.

The NIH pays for much of the nation’s leading biomedical research. Republicans and Democrats alike have long been staunch supporters. But the agency’s nearly $31 billion budget offers an example of the hard choices facing lawmakers, especially if they’re to meet House calls for a drastic scale-back of overall government spending.

So which do you fear more: Disease or the federal deficit, knowing the federal government has proved it can support any size deficit? Have you been so brainwashed by the Tea (formerly Republican) Party nuts, you are willing to lay your health, and the health of your family on the line?

Consider aging issues.

The NIH spends about $469 million on Alzheimer’s research, says a new report from the Alzheimer’s Foundation of America that criticizes overall aging research as “a minuscule and declining investment.”

About 5.4 million Americans now have Alzheimer’s disease, and studies suggest health and nursing home expenditures for it cost more than $170 billion a year, much of it paid by Medicare and Medicaid.

NIH’s Collins told a Senate appropriations subcommittee that there’s a “very frightening cost curve.” In 2050, when more than 13 million Americans are projected to have Alzheimer’s, the bill is expected to reach a staggering $1 trillion. But he said that cost could be halved merely by finding a way to delay people getting Alzheimer’s by five years.

The debt-hawks are fond of showing you graphs illustrating (falsely) how the increase in older people will cause Social Security and Medicare to run out of money. But have they ever shown you a graph illustrating how many more people will get Alzheimers, for lack of medical research?

Monday, Republican presidential contender Newt Gingrich jumped into the debate, saying that over the next four decades Alzheimer’s could cost the government a total of $20 trillion. He suggested selling U.S. bonds to raise money for research rather than have the disease compete each year for a share of the federal budget.

“We are grotesquely underfunded,” Gingrich said of health research dollars.

Yes, we are. Nice of him to notice. But creating T-securities out of thin air, then exchanging them for dollars we previously created out of thin air is foolish.

How foolish? Newt favors reducing the debt, but his bond-selling plan increases the debt. This demonstrates the idiocy of the Tea (formerly Republican) Party debt-reduction position. We wouldn’t need to struggle with complex, convoluted, nonsensical plans if we simply would end the debt-hawk control over our thinking. Stop selling bonds; fund with deficit spending.

Competition for today’s dollars is fierce, with applications up 60 percent at the aging division alone since 2003. Aging chief Dr. Richard Hodes says last year, his institute couldn’t pay for about half of what were ranked as the most outstanding applications for research projects. Still, he hopes to fund more scientists this year by limiting the number who get especially large grants.

What’s the squeeze? Congress doubled the NIH’s budget in the early 2000s, an investment that helped speed the genetic revolution and thus a host of new projects that scientists are clamoring to try. But in more recent years, economists say NIH’s budget hasn’t kept pace with medical inflation, and this year Congress cut overall NIH funding by 1 percent

The Obama administration has sought nearly $32 billion for next year, and prospects for avoiding a cut instead are far from clear. Sen. Tom Harkin, D-Iowa, who chairs the subcommittee that oversees the issue, warns that under some early-circulating House plans to curb health spending, “severe reductions to NIH research would be unavoidable.”

Still the Tea (formerly Republican) Party doesn’t get it. They don’t understand the simple premise that medical progress requires medical research.

Sen. Jerry Moran, R-Kan., pushed Collins to make the case that investments in medical research really can pay off.

Collins’ response: Four decades of NIH-led research revealed how arteries get clogged and spurred development of cholesterol-fighting statin drugs, helping lead to a 60 percent drop in heart-disease deaths. Averaged out, that research cost about $3.70 per person per year, “the cost of a latte, and not even a grande latte,” Collins told lawmakers.

Get it now, debt hawks? Probably not. But are you willing to fight for your family’s health? Contact your Washington representatives and tell them our lives are being threatened by their misguided budget-reduction nonsense.

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

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No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up my future.”

MONETARY SOVEREIGNTY

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