The CRFB myth machine keeps on rolling Saturday, Apr 14 2018 

It takes only two things to keep people in chains:Image result for fortune teller
The ignorance of the oppressed
And the treachery of their leaders

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Quotes: 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.”

St. Louis Federal Reserve: “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. Moreover, there will always be a market for U.S. government debt at home because the U.S. government has the only means of creating risk-free dollar-denominated assets.”

Alan Greenspan (Re. Social Security solvency): “There’s nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.”

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The CRFB (Committee for a Responsible Federal Budget) was formed in 1983. For the past 38 years, they have been telling the same old story, namely that the federal deficit and debt are too high —  really, really, really too high.

But while that myth . . . uh, story, remains the same-old, same-old, year after year, there is another story they conveniently have omitted: What does it mean for the deficit and debt to be high — really, really high? Why should we care?

  1. Does it mean the federal government is running short of dollars?
  2. Does it mean the federal government will be unable to pay its debts?
  3. Does it mean your taxes need to rise?
  4. Does it mean the economy will suffer because of the federal debt?
  5. Does it mean the federal debt will cause hyperinflation?
  6. Does it mean no one will want to buy Treasury securities?

You might think that after 38 years, the CRFB would be ready, willing, and able to provide data to answer such questions. But amazingly, during those 38 painfully wrong years, the CRFB never even attempts to answer.

They just keep repeating the myth that the deficit and debt are too high. The CRFB seems to believe that if they repeat a lie often enough, they can get people to believe it.

Here are excerpts from the sorry and ongoing saga of CRFB, the paid mouthpiece for the rich:

Welcome to the woeful world of free-lunch economics
By Maya MacGuineas. Opinion Contributor — 04/13/18

Congress and the president have been on quite the borrowing binge over the past few months — from multiple rounds of tax cuts to smashing through the budget caps. Meanwhile, talk of paying for these budget-busting policies has just about disappeared.

Immediately, MacGuineas jumps into the phony “paying for” theme. Why is it phony? Because the federal government, unlike state and local governments, uniquely is Monetarily Sovereign.

Being Monetarily Sovereign, the federal government created the very first dollars out of thin air, by creating laws out of thin air. And ever since that time, 240 years ago, the federal government has continued to create dollars out of thin air.

U.S. dollars are not physical things. They are balance sheet notations, and the federal government owns the balance sheets.

Monetarily non-sovereign, state and local government can’t do this. Nor can businesses. Nor can the euro nations. Nor can you and I. The public’s confusion between Monetary Sovereignty and monetary non-sovereignty, is what helps the CRFB promulgate its myth.

But, in fact, as both former Fed Chairmen Alan Greenspan and Ben Bernanke admit, the federal government, uniquely cannot run short of its own sovereign currency, the dollar (which answers questions #1, and #2, above).

Given that the federal government has the unlimited ability to create its own sovereign currency, it neither needs nor uses tax dollars to pay its bills.

In fact, even if all federal tax collections fell to $0, the federal government could continue to spend dollars, forever, simply by creating more dollars (which answers question #3, above).

So, why does the federal government levy taxes? Federal taxation mostly is a relic of our gold and silver standards — those years when the federal government voluntarily surrendered its unlimited ability to create dollars.

Taxation also is an economic control device to reduce certain activities — for instance sin taxes on cigarettes, gasoline, and liquor. Unlike state & local taxation, federal taxation does not fund its spending. 

Finally, the rich, who own the federal politicians, do not want you to know that federal spending is not limited by debt or dollar supply.

Continuing the CRFB article: Instead of the sensible conversation that starts with: “If something is worth doing it is worth paying for,” we have been hearing from our leaders: “Don’t worry, this will pay for itself,” and, “This is too important to have to pay for.”
Welcome to the world of free-lunch economics.

By “pay for itself,” many of our leaders try to make you believe something like: “Increased deficits will cause increased income, which will cause increased tax collections, which in turn, will reduce deficits, leading to lower tax collections.”

The CRFB is right. The whole notion that increased deficits can cause reduced deficits is nutty. The idea leads to a ridiculous endless circle, in which high deficits would beget low deficits, which presumably would again beget high deficits.

Thus, it logically and mathematically is impossible for deficit spending ever to “pay for itself” — impossible and wholly unnecessary for a Monetarily Sovereign government.

More to the point, however, the CRFB never acknowledges that increased deficits actually result in economic growth.

Deficit spending grows the economy by putting dollars into consumers’ pockets, which is why when deficit growth decreases we have recessions, and when we have recessions, deficit growth cures them.

The CRFB never mentions this fact, though that answers question #4, above. The economy does not suffer because of federal debt; it thrives.

Recessions (vertical bars) tend to begin after deficit growth has been low, and are cured by increased deficit growth.

Continuing the CRFB article: Just this week, we learned that budget deficits are now projected to be $12.4 trillion over the next 10 years — an increase of $2.3 trillion since 10 months ago.

The milestones of trillion-dollar deficits about to return and become permanent, the debt reaching the size of the economy in just over a decade, and annual interest payments increasing by $600 billion over the decade are signs this new school of economics is not putting us on a smart path.

Why are “trillion-dollar deficits” a problem? The CRFB never tells you, principally because they aren’t a problem — not for the federal government and not for taxpayers. No, your grandchildren never will pay the U.S. federal debt, just as you have not paid the debt accumulated for the past seventy years.

(Deficits are a problem for monetarily non-sovereign state and local governments, and for you and me, but the CRFB doesn’t want you to understand the difference.)

And as for question #5 above, do not believe the scaremongers, who tell you deficit spending will cause a Zimbabwe, Weimar Germany hyperinflation (which the U.S. never has had in all its 240-year history).

This graph shows the huge increase in federal debt compared to our modest increase in inflation.

Federal debt (red line); inflation (blue line)

(Aside: Hyperinflations historically have not been caused by deficit spending. They are caused by shortages. Zimbabwe’s was a shortage of food. Germany’s was a shortage of gold. Deficit spending often has been a government’s bad response to hyperinflation, not a cause.)

Continuing the CRFB article: In just a little over a decade, our debt could be the highest it has even been compared to the overall economy. The current record was set just after World War II. The difference here, though is there is no world war. No recession. No depression. Unemployment is low. Growth is strong.

There is no need for stimulus and no rationale to rack up such a huge tab during stable times and already historic levels of debt.

Apparently, Ms. MacGuineas doesn’t realize that she has just admitted the truth:

The highest debt it has even been” and “historic levels of debt” have brought us “no recession, no depression, low unemployment and strong growth.”

So Ms. MacGuineas, please remind us again why you wish to reduce the debt.

Continuing the CRFB article: Instead, at this point in the business cycle, we should be running surpluses (remember that quaint concept?) to be prepared for the next emergency. But there is zero talk of changing course.

Not only are federal surpluses a “quaint concept,” but they are an economically suicidal concept. U.S. depressions tend to come on the heels of federal surpluses.

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.

Why have federal surpluses repeatedly led to economic failures?  Because federal surpluses require either higher taxes and/or lower federal spending. In short,  federal surpluses take dollars out of consumers’ pockets, which depresses the economy. 

It’s really a simple and straightforward concept, which the CRFB wishes to obfuscate. Don’t fall for it.

Continuing the CRFB article: Sure, there is the empty idea of voting on a balanced budget amendment. If people were serious, this would be a reasonable idea for discussion.

Many details would need to be worked out, like escape hatches for recessions and emergencies, and balancing restraints on spending and revenue.

If a balanced budget was a “reasonable idea,” why would it need “escape hatches for recessions and emergencies?”

Hers is a tacit admission that a balanced budget cannot grow the economy, and whenever a balanced budget causes economic stagnation (which it always has), we need to “escape” from the balanced budget.

Escape how? By running federal deficits — by pumping dollars into the economy — and the bigger the deficits, the faster the recovery.

Continuing the CRFB article: Our fiscal hole is now so large that balance is a long, long way off, and it is better to focus on more credible goals. But come on, in this context, the balanced budget amendment is a total joke.

Here, we agree with MacGuineas. The balanced budget amendment is a total joke, because it would cause the greatest depression in American history, with no way out, no “escape hatch.”

Continuing the CRFB article: Voting to require balancing the budget without putting out a budget that does indeed balance is still looking for that free lunch.

MacGuineas never explains “free lunch,” but we’ll try to help her. A “free lunch” is what the rich receive whenever deficit reduction plans are put forth. The rich always make sure to escape the pain, while the poor and middle-income groups suffer.

Continuing the CRFB article: Our debt is projected to increase by almost 20 percentage points over the next 10 years. Spending on health, retirement and interest alone will double in dollars, and entitlement reform is long overdue.

During the next 13 years, our nation’s major trust funds for highways, Medicare hospital insurance and Social Security will run out of full funding. If Congress had addressed this problem 10 years ago, revenue and benefit changes would have been much smaller.

And here, the CRFB reveals its true motive: On behalf of the rich, the CRFB wants to cut Medicare, Social Security, and all other social programs (aka “entitlement reform”). 

Using the lie of unaffordability, the rich want to widen the income/wealth/power Gap between the rich and the rest.

(The Gap is what makes the rich, rich. Without the Gap, no one would be rich; we all would be the same. The wider the Gap, the richer they are.)

Continuing the CRFB article: Even today, changes can be phased in. But if we wait a few more years, the choices are much more difficult. Instead, this fiscal situation has been made dramatically worse by the large, irresponsible, unpaid-for tax cuts.

Taxes are “paid for” by taxpayers. But, who pays for tax cuts? Answer: The federal government which, being Monetarily Sovereign, neither needs nor uses tax dollars.

Continuing the CRFB article: Free-lunch economics appears poised to do major damage to our economy, slowing growth, increasing the chances of some type of crisis and starving the nation of the resources and flexibility to meet new challenges — from the threat of recession to grappling with artificial intelligence and the future of work.

Let’s examine the above nonsense paragraph. MacGuineas claims deficit spending “slows economic growth.” But how does pumping more dollars into the economy — the thing the government does to cure recessions — slow economic growth? It doesn’t.

And how does adding dollars to the economy “starve the nation of resources and flexibility to meet new challenges”? It’s all ridiculous.

Finally, if one wishes to “grapple with artificial intelligence (AI),” we must provide a source of income for people who have lost income to AI. Federal deficit spending, not tax increases, are needed.

Continuing the CRFB article: Policymakers have dug themselves into quite the hole. Our historic and unsustainable debt cannot be fixed with more tweaks and gimmicks.

What is “unsustainable” about the debt? It consists of deposits plus interest. The deposits are paid off with dollars already in the accounts, and the interest is paid by a government that has the unlimited ability to create dollars.

So, “unsustainable,” a word the CRFB often uses to describe the deficit and debt, is a lie, a Big Lie.

And then finally MacGuineas repeats the real purpose of the CRFB:

Continuing the CRFB article: It will take a big deal including new discretionary spending caps, a real plan to fix our entitlement programs and changes to bring in more revenues. Fairy dust, wishful thinking and free-lunch economics won’t get us there.

The real purpose of the CRFB is to facilitate cutting “entitlement” programs — Medicare, Social Security, Medicaid, aids to the poor, aids to education.

The CRFB wants to cut the programs that help narrow the Gap between the rich and the rest. That is the fundamental purpose of the CRFB.

Let’s end with a mention of question #6: Does it (a large debt) mean no one will want to buy Treasury securities?

As we already have discussed, the federal government does not need to sell T-securities — at least not to fund spending.  And even if the federal government did need to sell T-securities, and in the remote possibility that no one wanted to buy them, the Federal Reserve has the power to buy them — in fact, it already has, many times.

An excerpt from a December 22, 2010, Wall Street Journal article by Jon Hilsenrath, gives you one example:

“Back in March 2009, Mr. Ben Bernanke told CBS News’s Scott Pelley that the Fed was printing money to fund an earlier bond-buying program.

“It’s not tax money. The banks have accounts with the Fed, much the same way that you have an account in a commercial bank.

“So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed.

“It’s much more akin to printing money than it is to borrowing.”

The Federal Reserve, an agency of the federal government, the bank where other federal agencies maintain accounts, has the unlimited ability to “use the computer to mark up the size of the account that they have with the Fed.”

That is how the federal government creates dollars. It uses the computer to mark up accounts. It can do this endlessly if it chooses.

So think about it. If you could use your computer to create unlimited dollars simply by marking up your bank account, at any time, and in any amount you chose, would you worry about debt? Would you need to borrow? Would you need to ask anyone for dollars?

Of course not. And that is why the CRFB is a fountain of lies — lies that hurt America, just to widen the Gap between the rich and the rest.

To summarize:

  1. The federal government is not running short of dollars.
  2. The federal government always will be able to pay its debts.
  3. Your taxes do not need to rise.
  4. The economy will not suffer. because of the debt.
  5. The debt will not cause hyperinflation.
  6. It does not mean no one will want to buy Treasury securities.

Continuing the CRFB article: Maya MacGuineas is the president of the Committee for a Responsible Federal Budget and head of the Campaign to Fix the Debt.

MacGuineas should be ashamed of damaging America by telling such monstrous lies, but apparently, a nice salary can be convincing.

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

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The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-lesses.

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 The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

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MONETARY SOVEREIGNTY

Even Maya MacGuineas admits (sort of) debt ceiling is a hoax Monday, Sep 11 2017 

Maya MacGuineas is President of the Committee for a Responsible Federal Budget (CRFB). This is the right-wing organization that pretends federal taxes grow the economy because the economy has too much money.

Yes, that is what they really believe. They want taxes increased and/or federal spending decreased, both of which remove dollars from the economy.

It’s nuts, I know, but the CRFB has a big following among the politicians and other mentally and morally challenged.

MacGuineas is forever being invited to speak to such people, and her articles are widely published, apparently because people love Stephen King, Edgar Allen Poe, and other writers of horror fiction.

Unlike them, she is not a particularly good writer. For instance, consider the opening paragraph of her September 10, 2017, Washington Post article, titled “Don’t Get Rid of the Debt Ceiling. Reform It.”

As has happened more than 100 times before, Congress just raised the debt ceiling, the legal amount our government can borrow.

In the past, this act has occurred smoothly, and on many occasions, it has been used productively to spur fiscal efforts from budget deals to process reforms to the creation of a fiscal commission.

The first paragraph tacitly admits that the debt ceiling is useless.

It is based on “total debt,” of which about 25% is money the federal government owes to itself, i.e. one federal agency owes another federal agency.

More importantly, it does not do what it purports to do, i.e. limit federal spending. Congress and the President not only determine federal spending, but they set the debt ceiling.

It’s a process identical with you buying a $20,000 car and then, after the papers have been signed and you have driven off, you decide how much you will pay.  That is the nonsensical debt ceiling.

And then there is the second paragraph, replete with five prepositional clauses and two infinities, all of which mean . . . what? What is Maya trying to say with that garbled mess?

Does she mean the purpose of the debt ceiling is to create a “fiscal commission,” whatever that may be? Or is the purpose to create “budget deals,” which Congress does without debt ceilings, every day it is in session?

If she means that in the past the debt ceiling was good and now it’s bad, she is wrong. It never was good.

But in recent years, the debt-ceiling-as-leverage strategy has been taken too far with absurd and damaging threats to actually allow a default.

Yes, these threats are “absurd and damaging,” but they are the inevitable result of a ridiculous rule that tells Congress to limit what can be paid for what Congress already has purchased.

Debt remains a huge problem and is itself a threat to the economy, slowing growth and creating new risks.

Image result for pants on fireThat is a perfect, succinct statement of “The Big Lie,” the lie that somehow the U.S. government can be unable to pay its bills.

The “huge problem” never has happened, never will not happen, and never can happen, but that fact does not deter MacGuineas from setting her pants on fire.

Federal deficit spending, by federal law, creates the so-called “debt.” And federal deficit spending adds dollars to the economy.  So Maya effectively claims that adding dollars to the economy is a “threat to the economy and slows growth.”

But if adding dollars to the economy “slows growth,” how would MacGuineas explain the fundamental formula for Gross Domestic Product?

GDP = Federal Spending + Nonfederal Spending + Net Exports

If she understands simple algebra, she can see that Federal Spending, Nonfederal Spending, and Net Exports each adds dollars to the economy.  This demonstrates why adding dollars to the economy increases GDP.

Similarly, taxes, which take dollars out of the economy reduce GDP. So the entire notion that debt and/or deficits harm the economy is rank nonsense.

But amazingly, her article gets even worse:

Given that the debt ceiling is the only real check on borrowing, tossing it out without any plan for restraint would continue the fiscal free fall we are already in.

So instead of repealing the debt ceiling, we should reform it.

First, the debt ceiling is not “the only real check on borrowing.”

  1. It doesn’t prevent borrowing. It prevents paying for what already is owed.
  2. Because deficit spending adds dollars to the economy, the resultant “borrowing” grows the economy.
  3. So-called “borrowing” actually is the sale of T-securities, which are very much like deposits in bank savings accounts. They are no burden on the federal government or on taxpayers.  They are paid off by transferring existing dollars from the T-security accounts back to the holders’ checking accounts.
  4. The only “real check on borrowing” (in the unlikely event we will need a check on federal deficit spending) is the Congressional budgeting process. The less deficit spending Congress creates, the less “borrowing.”

And what is the “fiscal free fall” MacGuineas claims we are in? The economy and the “debt” have grown every year since the 2008 recession. “Fiscal free fall”?

No, Maya, the sky is not falling.

Then, temporarily, Maya seems to come to her senses:

One main problem with the debt ceiling is that it gets raised long after the tax and spending decisions that add to the debt are made, allowing policymakers to support adding to the debt while opposing the debt increase itself.

You don’t rein in your family budget by going on a spending spree and then refusing to pay the bill. The restraint has to come earlier in the process.

Well, yes. That isn’t “one main” problem; that is the problem.

And now for her solution, an obfuscating, convoluted plan to save a useless — no, harmful — program:

To address this, Congress could tie the debt ceiling to budget resolutions or any major legislation that adds to the debt.

Thus, Congress would have to vote in favor of lifting the debt ceiling when supporting the policy that necessitates it, which might give legislators more pause before adding to the debt.

Get it? Instead of Congress simply voting on a budget, MacGuineas would have Congress vote on a budget and a corresponding debt ceiling. Two votes.

So, for instance, if Congress voted for a billion dollar budget, it simultaneously would vote for a billion dollar debt ceiling, and thereafter, every time it raised the budget, it would raise the debt ceiling — again, two votes instead of one, and both votes for the same amount.

If that makes financial sense to you, kindly post your bank account numbers and your Social Security number on line for all to see. That would make equal sense.

A second problem is that the height of the debt ceiling is quite arbitrary.

Some level of debt is perfectly fine and, in fact, desirable for a country to have. And the amount of debt we can support depends on the size of the economy.

“Quite arbitrary” means Congress arbitrarily decides on it, which is exactly what the Constitution says Congress does for everything, including budgets.  Perhaps Maya wishes to tell Congress what to do, rather than having them do it “arbitrarily.”

And “‘some‘ level (what level?) is . . . desirable” (why?) But she thinks the “amount of debt we can support depends on the size of the economy.” Complete nonsense.

You and I “support” our debts, but the United States government does not “support” the thing that is misnamed, “debt.” It merely accepts deposits in T-security accounts. It can accept any amount it wishes, and pay back any amount it wishes.

And this has nothing whatsoever to do with the size of the economy. GDP is not the collateral for the federal debt, nor does GDP pay the federal debt. Whether the federal debt was 10% of GDP, or GDP was 10% of the federal debt, would make no difference in the U.S. ability to “support” the debt.

Accordingly, it would make sense to shift measuring the debt ceiling from a specific dollar figure, as we currently measure it, to a share of the economy.

More utter nonsense.

Consider this scenario: We enter a depression, and GDP falls. Curing the depression requires an increase in federal deficit spending, but because the government is limited to a share of a declining GDP, it must cut, rather than increase, deficits.

This leads to further declines in GDP in a never-ending downward economic helix. That is what MacGuineas suggests.

Policymakers could set a glide path to reduce the debt-to-gross-domestic-product ratio from today’s postwar-era high; the debt ceiling would only apply when our debt load breaches a set percentage of the economy.

Such a reform would give Congress an incentive to enact fiscally responsible policies to avoid a politically difficult vote to increase the debt ceiling.

To give you a feeling about the idiocy of her comments, here are a few of 2016 Debt/GDP ratios from around the world (Source: tradingeconomics.com).

  1. Japan: 250%
  2. Greece: 179%
  3. U.S.: 106%
  4. France: 96%
  5. United Kingdom: 89%
  6. Germany: 68%
  7. Israel: 61%
  8. Mexico: 48%
  9. Australia: 41%
  10. Russia: 17%

Based on the above ratios, which nations are most, and least, “fiscally responsible“?

Right. There is no relationship between Debt/GDP and “fiscal responsibility.”

Yet another problem with the debt ceiling is that the hammer, in this case, is just too dangerous. Given our past flirtations with the nuclear option of default, it needs to come with an escape valve.

That could take the form of allowing the president to lift the debt ceiling while automatic tax and spending adjustments went into effect until Congress put together its own plan. Or it could take the form of a softer trigger in which the president and Congress submit plans to make improvements to the debt.

The “hammer is too dangerous,” because telling the U.S. not to pay its bills when they are due, is the height of recklessness.

And a final recommendation for Congress and the president: Stop adding more to the debt.

Increases in the debt ceiling are always accompanied by rhetoric decrying the growing level of debt, even though politicians keep voting for more deficit-increasing policies.

The rhetoric comes from but two sources: Those who are ignorant about federal financing or those who are lying about federal financing.

If we ever stop adding to the debt, we will have a depression that makes the Great Depression of 1929 look like a garden party. Want some evidence?

U.S. depressions tend to come on the heels of federal surpluses:
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.

U.S. recessions tend to come on the heels of debt growth reductions, and are cured by debt growth increases:

Debt held by the public, % change from previous year

With our national debt so high, we need a multitrillion-dollar debt-reduction plan that phases in savings from revenue and entitlement reforms.

Wrong. Debt growth (actually, deficit growth) is required for economic growth.

However, in today’s hyperpartisan environment, where politicians assume our fiscal policies come with free lunches, a serious debt deal seems pretty far off.

In fact, federal finances are a perfect example of a “free lunch.” (See:  I just thought you should know, lunch really can be free.)  Clearly, MacGuineas is ignorant or lying about how dollars are created.

Clearly, MacGuineas is one of those who is ignorant or lying about how dollars are created.

In the meantime, we can and should at the very least agree not to adopt new policies that add to the debt. It will require the old-fashioned notion of paying for things.

The federal government has been “paying for things” since its beginnings and never has defaulted. We have grown to 330 million people and $14 Trillion in debt, and we still are “paying for things.”

Maya wants you to believe federal financing is like personal financing, but the two could not be more different. You and I can run short of dollars. The federal government cannot.

Tax reform should be deficit-neutral. Spending plans should be fully paid for. And yes, even emergency spending, which should be passed swiftly, should be paired with plans to cover the costs.

And there, sneaked into the end of her article, MacGuineas reveals what this is all about. “Paired with plans to cover the costs” really means “Cut social spending.” 

Macguineas’s salary is paid by rich people, the .1%, who want nothing more than to widen the Gap between the rich and the rest, by cutting benefits to the 99%.

When claiming federal spending should be reduced, the bribed-by-the-rich pols try to do one of the things: Cut social benefits for the 99%,  or ask for tax increases on the 99%.

Politicians need to stop claiming that their policies are too important to pay for or that they will magically pay for themselves; instead, our lawmakers should start identifying real solutions to offset new costs.

News flash for Maya and her co-conspirators: The federal government always has paid for its policies — never has bounced a check. For 240 years it has been creating dollars, ad hoc, to pay for its spending. 

It’s not broken. Don’t “fix” it.

We shouldn’t depend on a debt ceiling in any form to replace politicians doing their jobs. They need to determine what spending is worthwhile — and then figure out how to pay for it.

Right. Get rid of the debt ceiling. Congress already knows how to pay for its spending.

Rodger Malcolm Mitchell
Monetary Sovereignty

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………, …………………….
P.S.: As we said earlier, the only people who agree with MacGuineas fall into two groups: The people who are ignorant about federal financing or the people who are lying on behalf of the rich.

Here is a list of CRFB Board Members. You will recognize some of these names as people who absolutely are not ignorant about federal financing, which will put them in the “other” category:
Mitch Daniels, Leon Panetta, Timothy Penny, Barry Anderson, Erskine Bowles, Charles Bowsher, Kent Conrad, Dan Crippen, Vic Fazio, Bill Gradison, Jr., William Hoagland, James Jones, Lou Kerr, Jim Kolbe, Dave McCurdy, James T. McIntyre, Jr., David Minge, June O’Neill, Paul O’Neill, Marne Obernauer, Jr., Robert Packwood, Rudolph Penner, Peter G. Peterson, Robert Reischauer, Alice Rivlin, Charles Robb, Alan K. Simpson, John Spratt, Charlie Stenholm, Eugene Steuerle, David Stockman, John Tanner, Tom Tauke, Paul Volcker, Carol Cox Wait, Joseph R. Wright, Jr., Maya MacGuineas

Thirty-seven directors, four of whom are women, all of whom are white and all of whom hobnob with the rich and powerful.

…………………………………………………………………………………………………………………………………………………

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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 The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY

 

The Committee for Screwing the Middle Classes and the Poor Friday, Jul 29 2016 

We’ve written before about an organization that calls itself, “The Committee for a Responsible Federal Budget.” (CRFB)

We suggest they change the name to “The Committee for Screwing the Middle Classes and the Poor.” To say that what they publish is rank nonsense, would do a disservice to the words “rank” and “nonsense.”

CRFB is a prime promulgator of the Big Lie, the lie that the federal government somehow can run short of its own sovereign currency, the dollar, with which to pay its bills.

The Big Lie devolves to the Big Screwing, the never-ending effort by the rich, to cut Social Security, cut Medicare, cut Medicaid and cut virtually every other program that benefits the middle classes and the poor.

Here are a couple of CRFB’s luminaries (quoting from their website), nearly all of whom are rich and all of whom are white:

Maya MacGuineas, the President of the CRFB as well as the head of the Campaign to Fix the Debt. (She once was) dubbed “an anti-deficit warrior” by The Wall Street Journal.

Since deficit spending is the method by which the federal government grows the economy, MacGuineas should more properly be dubbed “an anti-economic growth warrior.”

Erskine Bowles was appointed by President Barack Obama to serve as co-chair of the National Commission on Fiscal Responsibility and Reform with fellow CRFB board member Senator Alan Simpson.

Erskine and Bowles authored a report that recommended cuts in the federal spending that was pulling us out of the Great Recession. Remember “sequestration” and the “fiscal cliff”?

Peter Peterson is the founder and chairman of the Peter G. Peterson Foundation is the founding president of The Concord Coalition. Prior to this, he served as chairman and CEO of Lehman Brothers.

Peterson is a very rich man who does everything possible to make sure your Social Security and Medicare are cut. The Concord Coalition is, like the CRFB, an organization devoted to widening the Gap between the rich and the rest.

In true CRFB tradition, our intelligence and our pocketbooks once again are assaulted with an article like this:

Long-Term Budget Outlook Underlines Trouble Ahead for Social Security
JUL 29, 2016

The Congressional Budget Office’s (CBO) 2016 Long-Term Budget Outlook release came with updated projections of the 75-year solvency of Social Security.

CBO now projects that Social Security faces a 75-year shortfall of 4.7 percent of taxable payroll – 0.3 percentage points worse than its projections from December – but maintains an exhaustion date of 2029.

Social Security is an agency of the federal government. Neither the federal government nor any of its agencies can become insolvent unless Congress wants it.

Unlike state and local governments, which can be insolvent, the federal government is Monetarily Sovereign, meaning it has unlimited control over both the supply and the value of the U.S. dollar.

The U.S. government invented the dollar, created it from thin air by the simple device of passing laws, which also were created from thin air. Because the government never can run short of laws, it also never can run short of dollars.

The U.S. government never, never, never can be unable to service any invoice denominated in dollars. Never has, never will.  All talk about federal agency insolvency is 100% BS.

The rest of CRFB’s article attempts to put a scientific spin on its woefully false claims by touting such measures as: “actuarial shortfall” and “projections involving life expectancy, fertility, and growth in the consumer price index.”

But all the phony math in the world will not cover up the Big Lie, the basic premise, that the federal government can run short of its own sovereign dollars.

And then comes the real pitch to the suckers:

Now is the time to start making reasonable changes to Social Security rather than waiting until the last minute when the necessary changes become much more drastic.

Instead of discussing ways to expand a program whose funds are already strained, policymakers should be considering both spending and revenue changes to ensure the long-term health of this important program for millions of beneficiaries across the country.

To hide the truth from you, these con artists use the innocent-sounding phrase, “reasonable changes,” when they really mean: Cut Social Security benefits and increase the FICA taken from your paycheck.

And then they have the chutzpah to end with, “ensure the long-term health of this important program for millions of beneficiaries across the country.”

Please gimme a break. If these characters cared one whit about the “millions of beneficiaries,” they would demand benefit increases and tax cuts.

The fact of Monetary Sovereignty is this: You, and the rest of salaried Americans, could pay $0 FICA, while Social Security benefits were doubled, and still the federal government would not run short of dollars.

Why do you pay FICA? Why have Social Security benefits begun later and later? Why do organizations like CRFB lie to you again and again about mythical insolvency threats? Why even, was a complex, convoluted program like “Obamacare” necessary?

Because our political leaders are paid to lie by the rich, whose primary objective is to widen the income/wealth/power Gap between the rich and the rest.

The Gap is what makes the rich richer, and the wider that Gap, the richer they are.

So the rich bribe Congress (via campaign contributions); they bribe the media via ownership; they bribe the economists via contributions to universities and think tanks; and the rich pay the salaries of MacGuineas, Simpson, Bowles et al, and finally, the rich even bribe the Supreme Court justices with free vacations and other perks.

Bernie Sanders made a stab at narrowing the Gap, but he wasn’t believed by the very people who would have been helped most: The middle classes and the poor.

So now we are stuck with Hillary Clinton, who if she is like Barack Obama, will do very little to close the Gap, or worse yet, stuck with Donald Trump who with his ignorance and hubris, not only will do nothing to close the Gap, but who will destroy America’s economy.

It doesn’t need to be this way.  The federal government easily could provide Social Security and Medicare for every man, woman, and child in America.

The first step is for you and enough other people to understand and believe Monetary Sovereignty, and to demand the same of Congress

You need only to get up off your butt and make it happen.

Rodger Malcolm Mitchell
Monetary Sovereignty

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Ten Steps to Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich afford better health care than the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-tranferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be an good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY

–Why a dollar bill is not a dollar, and other economic craziness Monday, Jun 20 2011 

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==================================================================================================================================================================================

You may have seen your bank; you may have seen your safe deposit box. But have you ever seen your checking account?

No, you haven’t. Your checking account is not a physical reality. It is an accounting notation. You could travel to your bank, and walk into the lobby, and you would not be one inch closer to your checking account than if you had stayed home.

When you receive a printed checking account statement, you receive evidence you own the dollars in your checking account. But, you never will see those dollars. They too, are not physical realities, but rather, accounting notations. In fact, you never will see a dollar, anywhere. No one on earth ever has seen a dollar.

A dollar bill is not a dollar.

A dollar bill is a piece of paper telling the world the bearer owns a dollar. It can be compared to a title. When you own a car or a house, you have a document telling the world you own that car or house. The document is called a “title.” The title is not the car or house. You can’t drive a title; you can’t live in a title. It’s just evidence of ownership. Your dollar bill is evidence you own that invisible dollar.

A dollar has no physical existence. You can’t hold a dollar. A dollar has no more substance than does a number. You can’t hold the number “one.” You can’t carry the number “ten.” When you write a check, from your invisible checking account, that check is a set of instructions telling your bank to debit your checking account and to credit the payee’s checking account.

One account is debited and another account is credited. No dollars move. They can’t. They aren’t physical. The peso, the euro, the mark, the pound, the yuan, – none of the world’s currencies are physical. They all are accounting notations.

The U.S. federal government has been Monetarily Sovereign since we went off the gold standard in 1971. Money creation no longer is limited by the availability of gold. Our Monetarily Sovereign government can pay any bill of any size at any time, merely by sending instructions to banks to credit bank accounts.

The world’s financial structure is based on instructions to banks. When the federal government owes you $1,000, it sends you a check for $1,000, and you send the check to your bank. The check is not money. It is a written instruction to your bank to credit your account. The bank does as instructed, and your account balance is increased by $1,000. The federal government can send such checks – such instructions – endlessly. It doesn’t need to borrow or collect taxes. It merely sends instructions.

The federal government never “prints” dollars. Printing implies a physical creation. But dollars are not physical. Warren Mosler, uses the analogy of a football scoreboard. The government creates dollars by crediting bank accounts; the scoreboard creates points by posting them. The government never can run short of dollars just as the scoreboard never can run short of points.

Is paying a debt a burden to the federal government? Is posting a score a burden to the scoreboard? Does the federal government need to tax or borrow dollars? Does the scoreboard need to tax or borrow points?

Can the government run short of dollars? Can the scoreboard run short of points?

Would the posting of points be “unsustainable” as some claim the federal debt is?

The federal government pays all its bills by typing numbers into a computer – just like a scoreboard.

The dollar bill is an IOU. On its face is printed, “Federal Reserve Note.” The words “bill” and “note” describe debt instruments (as in “T-bill”and “T-note”). These instruments are held by creditors to demonstrate debt.

When you hold a dollar, who owes you what? The federal government owes you full faith and credit, which may not sound like much, but actually is powerful. It means:

1. The government will accept U.S. currency in payment of debts to the government
2. It unfailingly will pay all it’s dollar debts with U.S. dollars and will not default
3. It will force all your domestic creditors to accept U.S. dollars, if you offer it, to satisfy your debt.
4. It will not require domestic creditors to accept any other money
5. It will take action to protect the value of the dollar.
6. It will maintain a market for U.S. currency
7. It will continue to use U.S. currency and will not change to another currency.
8. All forms of U.S. currency will be reciprocal, that is five $1 bills always will equal one $5 bill and vice versa.

Every form of U.S. money is a form of debt. For many people, the word “debt” is threatening. That may be true for you and me and the states, counties and cities, and Greece and Ireland, all of which are monetarily non-sovereign, but not for our Monetarily Sovereign government, which can credit bank accounts endlessly.

Try to think of any U.S. money that is not owed by something to someone. You can’t.

Federal debt is not functionally the total of federal deficits. By law, the Treasury must issue T-securities (aka “debt”) in an amount equal to federal deficits. But that law is obsolete and could be eliminated immediately. Were it eliminated, there still could be deficits, but all federal debt would disappear.

Similarly, the Treasury could issue T-securities (debt), while the government did not run a deficit, or even ran a surplus.

Brief summary: A dollar has no physical reality. Neither does a checking account or any other bank account, debt, deficit, inflation, recession, depression, stagflation or money. All these terms are descriptive of accounting notations. The federal government can change any of these simply by typing into a computer.

Dollars do not physically move, because they don’t physically exist. When the government pays a debt, you may imagine dollars moving out of some government storage place into a creditor’s bank. But, there is no storage place; there is no movement. The government sends instructions to the creditor’s bank. That’s it. A Monetarily Sovereign government never can run out of instructions.

Given all of the above, how is there a debt crisis? How can the federal debt be a “burden” or “unsustainable” or a “ticking time bomb.” as the media love to claim?

One final thought: Debt-hawks typically confuse two questions:
1. How many dollars can the federal government create?
2. How many dollars should the federal government create?

When a debt-hawk is presented with the unassailable proof that the federal government cannot run short of dollars, and easily can pay any bill of any size, the rejoinder often is, “But that would cause inflation,” or “Why don’t we just give everyone a trillion dollars?” These responses indicate a quick switch in subjects, from question #1 to question #2.

This post describes only question #1. Question #2, which involves economic stimulus and inflation, is described in other posts. The answer to #1 is “infinite,” and that is why the federal debt is an obsolete, useless, meaningless, indeed harmful, concept.

Isn’t economics crazy?

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


==========================================================================================================================================
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 teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it ruined my future.”

MONETARY SOVEREIGNTY

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