A perfect illustration of The Big Lie. It’s what the rich want you to believe. Saturday, Aug 31 2019 

The following cartoon appeared in an August 30, 2019 Email from Reason Foundation.

It is a perfect representation of The Big Lie, the lie that the U.S. government can run short of U.S. dollars.

The Big Lie illustrated

The cartoon, by Toles, not only shows the U.S. Treasury empty, but just in case you didn’t get the point, it also shows America asking the “deaf, dumb and blind” Republicans why they emptied it.

It is a lie, a lie that is told thousands of times a day — a lie that has been told for at least 80 years that we can document. (See: It is 2019, and the phony federal debt “time bomb” still is ticking.)

Take it from me: It is absolutely, positively 100% impossible for the U.S. Treasury to run short of U.S. dollars.

If you won’t take it from me, take it from past Chairman of the Federal Reserve Board, Alan Greenspan who said, “A government cannot become insolvent with respect to obligations in its own currency.”

(All federal obligations can be satisfied with U.S. dollars.)

Oh, you don’t believe Greenspan or me? Then how about past Chairman of the Federal Reserve Board, Ben Bernanke, who said, “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.” 

Not good enough? Then how about these comments (courtesy of Professor John T. Harvey) that appeared in the Sep 25, 2013 issue of Forbes Magazine:

“In the case of United States, default is absolutely impossible. All U.S. government debt is denominated in U.S. dollar assets.” Peter Zeihan, Vice President of Analysis for STRATFOR

“In the case of governments boasting monetary sovereignty and debt denominated in its own currency, like the United States (but also Japan and the UK), it is technically impossible to fall into debt default.” Erwan Mahe, European asset allocation and options strategies adviser

“There is never a risk of default for a sovereign nation that issues its own free-floating currency and where its debts are denominated in that currency.” Mike Norman, Chief Economist for John Thomas Financial

“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.” Federal Reserve Bank of St. Louis

“There is no inherent limit on federal expenses and therefore on federal spending…When the U.S. government decides to spend fiat money, it adds to its banking reserve system and when it taxes or borrows (issues Treasury securities) it drains reserves from its banking system. These reserve operations are done solely to maintain the target Federal Funds rate.” Monty Agarwal , managing partner and chief investment officer of MA Managed Futures Fund

And then there’s:

We’ve got the right to print our own money that’s the key.

Greece lost their power to print their money. If they could print drachmas they would not have this problem.

They’d have other problems, but they would not have a debt problem. Seventeen countries in Europe gave up their right to print their own money, that’s enormously important.

We’ve got the right to print our own money so our credit is good (Warren Buffet, 2011)

Get it? Despite cartoonists like Toles, who after all is just a guy who can draw stuff, not an economist, the federal government cannot run short of dollars.

And despite cartoons like the Committee for a Responsible Federal Debt (CRFB), that has been highly paid to claim falsely, year after year after year, since 1975, that the federal debt is “unsustainable,” the federal government can “sustain” any size debt.

That’s 45 years of bogus, “sky-is-falling,” Big Lies from the CRFB. They are economists, yet still they lie and presumably feel no shame.

Cartoons are supposed to be funny, and indeed to knowledgeable people, Toles’s cartoon and the CRFB’s articles are hilarious in how wrong they are.

Except for one thing: Most Americans have been led to believe The Big Lie, by the constant, unrelenting drumbeat of disinformation. And this is sad, because the endless disinformation has cost middle-income and poor Americans billions.

Try to pay no attention to the lies. Just remember one main idea:

You can run short of dollars. Your city, county, and state can run short of dollars.  Your company can run short of dollars. All are monetarily non-sovereign.

But the U.S. government is different. It is Monetarily Sovereign. It cannot run short of dollars.

Period.

And as for that so-called federal “deficit,” it is necessary to grow the economy.

A federal deficit occurs when the government pumps more dollars into the economy, via spending, than it takes out, via taxing.

A federal deficit is a surplus for the economy. That is how the economy grows.

And as for that so-called federal “debt,” it nothing like your debt. Federal “debt” is the total of deposits into Treasury Security accounts. It’s paid back, not with tax dollars, but simply by returning the dollars in those accounts to the account owners.

The federal “debt” (deposits) is no burden on the government, on taxpayers or on the economy, nor does the federal “debt” (deposits) cause inflation, recession, difficulty in borrowing, or any other myths and fables being foisted on the innocent American public.

In fact, since the federal debt evolves from the federal “deficit” (economic surplus), increases in the federal debt are necessary for long-term economic growth.

But the very rich (who run America) don’t want you to know this, because they fear your demanding increases in Social Security, Medicare, and other social spending. So, they tell you its unaffordable, and the mythical Social Security and Medicare “trust funds” are running out of money.

Neither the federal government, nor any agency of the federal government, can run short of dollars unless Congress and the President want that to happen.

The rich are rich because they have much more than you do, and because of  Gap Psychology, they want to keep it that way by cutting your income.

It has been ever thus.

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

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

 

Does the CRFB believe if you tell a lie often enough, it becomes the truth? Monday, Jan 28 2019 

Those of you who read, “It is 2019, and the phony federal debt “time bomb” still is ticking“, are aware that at least since 1940, and surely before, scaremongers have been calling the federal debt a “ticking time bomb.” Eighty years of being wrong. Still no explosion.

Those of you who read, “More scare nonsense from the CRFB,” know that this organization, funded by rich folks, wants you to believe what simply is not true: That the federal government can run short of its own sovereign currency, the U.S. dollar.

It can’t. It created the very first dollar, and continues to create dollars, ad hoc, every time it pays a creditor.

Even if all tax collections totaled $0, the federal government could continue paying its bills, forever.

Now that the latest CRFB (Committee for a Responsible Federal Budget) nonsense has been published, I feel obligated to demonstrate that it is . . . well, nonsense. If they keep publishing the lies I’ll keep publishing the truth.

Committee for a Responsible Federal Budget
CBO: Debt Still on Unsustainable Path, January 28, 2019

The Congressional Budget Office (CBO) released its Budget and Economic Outlook for the next decade this morning, which warned that our debt is headed to uncharted waters (1).

Under current law, CBO projects debt will rise from 78 percent of the economy today to almost 93 percent by 2029 and over 152 percent within 30 years.

Under CBO’s Alternative Fiscal Scenario, which assumes the continuation of current policies, debt would reach 105 percent of the economy by 2029 and exceed record levels set after World War II by 2030 (2).

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

“You need to go no further than this report to see the real state of the union – our national debt is rising rapidly, and trillion-dollar deficits are just on the horizon.

Numbers don’t lie, and anyone with a calculator on their phone can see that debt is a problem that can’t be ignored. (3)

“The debt doesn’t just burden future generations, (4) it also stands in the way of economic and political progress today. (5)

With the government now reopened, it is time for the new Congress and the President to work to put the country on more solid fiscal ground. (6)

“CBO’s annual report is a reminder that the situation is getting worse, not better. (7)

Lawmakers should come up with a plan now while the economy is strong to put our debt on a downward path and phase it in to avoid the much more disruptive choices that procrastination will bring. (8)

Look at the CRFB’s comments, point by point.

(1) Actually, these waters have been “charted” — by Japan, whose Debt to Gross Domestic Product ratio is above 250% — and there’s no sign it is “a problem that can’t be ignored.”

The waters also have been “charted” by the U.S. after WWII, and the chart shows the U.S. economy has grown quite well since WWII:

Federal debt has been “sustainable” since WWII, and has not been a “problem” (3), has not burdened any generations (4), and has not stood in the way of economic and political progress. (5).

Federal debt has been “sustainable” since WWII, and has not been a “problem.” Numbers don’t lie, but liars lie about numbers (3). Federal debt and GDP have grown together, which would not be the case if the debt were “a problem.”

Federal debt cannot “burden future generations” (4), because taxes do not fund the debt. The federal government pays off the debt every day, simply by returning the dollars that reside in those T-security accounts.

It is the lack of federal deficits that burdens generations:

Recessions come from deficit growth decline, and deficits are cured by deficit growth increases. The reason: Economic growth requires money growth, and deficits pump money into the economy.

Growing debt and has not stood in the way of economic and political progress. (5).  We aren’t sure what “political progress” the CRFB means, but the relationship between debt growth and economic growth is clear.

The country is on “solid fiscal ground” (6) when deficits are growing, because deficits pump more dollars into the economy.

The country is on shaky fiscal ground when deficits are reduced, because a growing economy requires a growing supply of money.

All depressions have been introduced by reductions in federal debt, and most recessions have been introduced by reductions in deficit growth.

Depressions and recessions have been cured by debt growth.

(7) “The situation” is getting better because deficits are increasing, which means the federal government is pumping more dollars into the economy.

Putting federal debt on a downward path repeatedly has proven to cause depressions, by taking dollars out of the economy.

There is no reason to do this, however. The federal government is not like state and local governments, and not like you and me. It uniquely is Monetarily Sovereign.

Unlike state and local governments, and unlike you and me, the federal government cannot run short of its own sovereign currency.

Unlike us, the federal government does not have to “save up” to pay its bills. It does not need to wait for the economy to be strong. The U.S. federal government has the unlimited power to pay all its bills, whether the economy is growing, shrinking, or standing still.

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.”

Image result for bernanke and greenspan

Greenspan: “The CRFB tells people we’re running short of dollars.”  Bernanke: “And people fall for it!”

Alan Greenspan: “Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency.”

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. 

As always, the CRFB functions mostly as a shill for the very rich, to convince you your federal benefits — Social Security, Medicare, Medicaid, aids to poverty, aids to education, etc.  — are unaffordable and must be reduced.

All the similar talk about the Social Security Trust Fund running short of dollars, and Medicare-for-All being unaffordable are outright lies, meant to keep you down.

If you’re tired of the lies, don’t stand for them. Tell your national representatives that you know the facts.

  • You know: the government cannot run short of dollars
  • You know that growing deficits are necessary to grow the economy
  • You know that the federal debt is not real debt, but rather is the total of deposits into T-security accounts, similar to savings accounts or bank CDs.
  • You know the federal government easily can afford comprehensive Medicare-for-All
  • You know the federal government could provide free education for everyone
  • In short, you know the federal government can afford the Ten Steps to Prosperity (below).

Tell them to cut the crap rather than cutting budgets, because you know the truth and you’re not going to stand for their lies any longer.

Or, just keep accepting their lies. Your choice.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

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

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

Is this good news or bad news for JPMorgan Chase? Saturday, Jan 5 2019 

Is the following press release good news or bad news for JPMorgan Chase?

JPMorgan Chase Tops Nation in Deposits
Customers add $96 billion in net deposits in last year, bringing the total to $1.3 trillion.

For the first time in 23 years, JPMorgan Chase & Co. led the nation in total deposits as consumers and businesses added $96 billion to their bank accounts in the last year.

The Firm’s U.S. deposits grew 7.9 percent to reach $1.3 trillion on June 30, 2017.

Over the last five years, customers added $447 billion in deposits, a 51 percent increase.

“Customers continue to trust us with their money as we help them bank whenever, wherever, however they want,” said Thasunda Duckett, CEO of Consumer Banking at Chase.

See how proud JPM is.

If the Committee for a Responsible Federal Budget (CRFB), the federal debt worry-warts, had written this article, it would have read like this:

JPMorgan adds $96 billion in debt in last year, bringing the total owed to customers and businesses to $1.3 trillion.

For the first time in 23 years, JPMorgan Chase & Co. led the nation in total debt as it borrowed $96 billion more in the last year.

The Firm’s U.S. debt grew 7.9 percent to reach $1.3 trillion on June 30, 2017. Over the last five years, JPM borrowed an additional $447 billion, a 51 percent increase.

Allow me to assure you, that the above two news releases are identical, except for the substitution of the word “debt” for “deposits.”  In this context, the two words mean the same thing.

Image result for political bull poop

A fresh sample of CRFB “debt” commentary.

The CRFB endlessly tells you that the federal “debt” totals so many trillions, and this is a bad thing. But they really are talking about the total of deposits into T-security (T-bills, T-notes, T-bonds) accounts.

T-security accounts are essentially identical to bank savings accounts and CDs.

When you buy a T-security, that is very much like buying a bank CD, or making a deposit into a bank account. It creates a bank “debt,” but you don’t call it “debt.” do you? You call it “deposits.”

There is are two big differences between deposits with the federal government and deposits with your bank:

  1. The federal government is Monetarily Sovereign. It never can run short of its own sovereign currency, the U.S. dollar. It never can go bankrupt. Your money is 100% safe. Your bank, by contrast, is monetarily non-sovereign. It can run short of dollars. It can go bankrupt.
  2. Because the federal government is Monetarily Sovereign, it has no need for your dollars. So it simply leaves your dollars in your account until maturity, at which time it returns them to you, plus interest. Your bank, by contrast, needs and uses your dollars. So when the time comes to return them, your bank may not have enough.

In short,  JPMorgan Chase & Co. and their CEO of Consumer Banking, bust their buttons boasting about the amount of deposits they hold, while the CRFB wrings its shaky hands about the amount of deposits the much safer federal government holds.

Ironically, the federal government is so much safer than banks that when a bank goes under, it is the federal government’s Federal Deposit Insurance Company that bails out the depositors.

No bank ever is called upon to bail out the government, but you wouldn’t know that by reading the CRFB nonsense

It’s absolute craziness, but the CRFB relies on your not understanding that your purchases of T-securities are deposits in your T-security accounts. The CRFB uses semantic confusion to make its false case, and sadly, your politicians go along with the ruse.

And as long as you keep quiet about it, or believe the “government is in debt” lie, your politicians will continue to tell you the government can’t afford benefits to you, and that you taxpayers are on the hook for federal “debt.”

Bull excrement is hard to wash off when you’ve been covered for years.

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

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

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

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

 

More scare nonsense from the CRFB. Monday, Dec 31 2018 

The nation’s leading supplier of federal debt lies, the Committee for a Responsible Federal Budget, has released its latest salvo of utter nonsense:

Here are a few of their baseless claims:

1. The Deficit Could Hit $1 Trillion This Year and $2 Trillion Within a Decade
Although deficits decreased from Fiscal Year (FY) 2011 to FY 2015, they’ve been rising ever since.

We now expect deficits to return to nearly $1 trillion this fiscal year (2019) and stay above that level indefinitely.

In fact, if lawmakers extend the costly tax cuts and spending increases indefinitely, deficits will be more than $2 trillion by 2028.

Although the above claims themselves are not baseless, the implication that somehow increases in the federal deficit are bad — that is baseless.

An increasing deficit merely means that the federal government pumps more dollars into the economy that it removes. That is a good thing. It is what grows the economy.

In fact, the opposite of deficits — i.e. surpluses — have been the cause of every depression in U.S. history.

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.

A growing economy requires a growing supply of money. Austerity (i.e. reduced deficit spending) invariably leads to recessions and depressions.

2. The Long-Term Debt Outlook is Terrifying
This fall, CRFB released its own 75-year budget outlook, which projected an unsustainable fiscal outlook.

Under current law, debt will rise from 78 percent of Gross Domestic Product (GDP) in 2018 to 160 percent by 2050 and nearly 360 percent by 2093. Under the Alternative Fiscal Scenario, debt will exceed 600 percent of GDP by 2093.

Why is the high debt/GDP ratio “unsustainable”? It isn’t. 

There is no relationship between federal debt and GDP. The debt is not serviced by GDP, nor is it serviced with taxes, exports, or any other form of income.

The federal government is Monetarily Sovereign. It has the unlimited ability to service any amount of debt. It never can run short of dollars.

Japan, for example, carries a debt/GDP ratio exceeding 250%, and no one claims this debt is “unsustainable.” See graph, below.

Japan General Government Gross Debt to GDP

3. “Debt-Financed Laws” Offered a Temporary Stimulus
While the economy has grown by about 3 percent over the past year, our analysis Can America Sustain the Recent Economic Boost? showed that the growth rate would likely return to 2 percent per year.

As we illustrated, near-term growth was largely driven by one-time stimulus and other effects from the Tax Cuts and Jobs Act (TCJA), the 2018 Bipartisan Budget Act, and other deficit-financed legislation.

Unfortunately, the economic boost from these laws will be temporary – but the debt will be permanent.

The CRFB admits that economic growth is driven by deficit stimuli. 

They also admit that continuing economic growth requires continuing deficit stimuli, which our Monetarily Sovereign government has the infinite ability to provide.

The U.S. government never unintentionally can run short of U.S. dollars. Never. Even if the federal government collected zero taxes, it could continue spending, forever.

So, exactly what is the problem? The CRFB never says.

4. Rapid Economic Growth is Unlikely to Last
In the analysis of America’s recent economic boost, we showed that nearly all forecasters agree that current rapid rates of economic growth are unlikely to last.

For example, the Congressional Budget Office (CBO) projects that the economy will grow by 3 percent in 2018 and 2.8 percent in 2019, but then grow by between 1.6 and 1.9 percent per year for the remainder of the decade.

A primary factor in predicting economic growth is federal debt growth. Debt growth creates the dollars that stimulate economic growth.

Economic growth (red) parallels federal debt growth (green).

5. Deficits Shouldn’t Rise When the Economy is This Strong
Typically, a strong economy is paired with low deficits (or even surpluses) – both because strong economic performance produces more revenue and because it creates the economic space for deficit reduction.

Yet despite the economy performing at or even above its potential, deficits are widening.

In a recent analysis of deficits and the economy, we showed that the deficit has never been this high when the economy was this strong. 2018 and 2019 are extremely abnormal in that we are running high and rising deficits despite low unemployment, no significant output gap, no recession, and strong economic growth.

The above is a lie of Trumpian proportions. Rising deficits make the economy strong by adding dollars to the economy.

Reduced deficit growth leads to recessions, which are cured by increased deficit growth:

Reduced federal deficit growth leads to recessions (vertical bars) which are cured by increased deficit growth.

And as you have seen, federal surpluses do not create strong economies. Quite the opposite. Federal surpluses create depressions.

It is true that economic growth brings in higher taxes, but that does not create “economic space for deficit reduction.”

The term “economic space for deficit reduction” is gobbledegook. As long as there are deficits, they always can be reduced, so long as one wishes to experience recessions and depressions.

6. Policymakers are Responsible for More than Half of This Year’s Deficit
This year, the deficit will approach $1 trillion – and policymakers have no one to blame but themselves.

We estimate that 55 percent of this year’s projected deficit is the result of deficit-financed legislation enacted since 2015.

Recent spending hikes and tax cuts will cost $540 billion this year. Had these laws been offset or not enacted, the deficit would be $440 billion rather than $981 billion, as CBO projects.

Said more accurately, “Policymakers are Responsible for More than Half of This Year’s Economic Growth, simply because deficits create the dollars necessary for economic growth.”

7. Recent Tax and Spending Bills Both Cost Trillions, If Extended
The Tax Cuts and Jobs Act of 2017 and the Bipartisan Budget Act of 2018 both added tremendously to the national debt.

And while the tax cuts will cost significantly more ($1.9 trillion versus $435 billion) over ten years, that is largely an artifact of the most of the tax cuts enacted for eight years, while the spending boost was a two-year deal.

We found that if lawmakers extend both laws indefinitely, the tax cuts will cost about $2.7 trillion over a decade while the spending bill will cost $2.4 trillion. That’s $5 trillion of additional debt that this country simply cannot afford.

The CRFT prays that you not understand Monetary Sovereignty, otherwise you would know that:

8. Revenue Has Dropped, Not Risen
While some have claimed that revenue grew over the past year  . . . we estimated that actual revenue fell by 3.6 percent between tax year 2017 and tax year 2018. Revenue fell by 5.4 percent after inflation, and by 8.1 percent relative to GDP.

Said more accurately,  . . . “we estimated that 3.6 fewer dollars were taken from the economy between tax year 2017 and tax year 2018.”

Taking fewer dollars out of the economy helps the economy grow, and the government has no need for those dollars.

And now we come to the real reason why the CRFB exists, why it devotes all its resources to promulgating the “Big Lie”: The Committee for a Responsible Federal Budget is paid by the rich to convince you that your federal benefits should be reduced.

The single, biggest economic problem facing the U.S. and the world is widening Gaps between the richer and the poorer.

9. Entitlements and Interest Explain Long-Term Debt Growth
While near-term deficits are largely self-imposed, medium- and long-term debt growth are driven primarily by growing costs of Social Security, federal health spending, and interest on the debt. Indeed, these three categories of spending are responsible for over four-fifths of all nominal spending growth over the next decade alone.

Yes, nothing irritates the rich more than you receiving money. This irritation is “Gap Psychology,”   the human desire to widen the Gap below you on any economic or social measure, and to narrow the Gap above you.

Gap Psychology drives the appeal of expensive jewelry, cars, homes, and designer clothing. Gap Psychology drives the resentment some have for anti-poverty aids like food stamps and college preferences, as well as immigration.

10. Social Security is Hurdling Toward Insolvency
Social Security costs continue to grow faster than dedicated revenue, and its trust fund is running out.

CBO projected that just 13 years from now – when today’s 54-year-olds reach the normal retirement age and today’s youngest retirees turn 75 – the Social Security trust fund will be depleted.

The Trustees project insolvency in 16 years, when today’s 51-year-olds reach the normal retirement age and today’s youngest retirees turn 78. At that point, the law calls for a deep automatic across-the-board cut in benefits.

It is a perfect example of the “Big Lie.”

The federal government cannot run short of dollars, and because the federal government cannot run short of dollars, no agency of the federal government can run short of dollars unless that is what the federal government wants.

The rich run the federal government. The rich want you to believe Medicare and Social Security and Medicaid and every other government program that benefits the not-rich must cut spending. 

Image result for bernanke and greenspan

It’s our little secret. Don’t tell the people we don’t use their tax dollars.

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.”

Alan Greenspan: “Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency.”

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.

There is no “Social Security trust fund.” It is a bookkeeping fiction. The federal government could, if the rich wished, supply unlimited funds to support Social Security and Medicare for every man, woman, and child, of all ages, forever.

11. Rising Health Costs Are Driving Up the Debt
Health care spending is rising even faster than Social Security spending – both as a result of population aging and rising per-person health care costs.

In our analysis of health spending and the federal budget, we found that If health spending were held constant at today’s level, debt would stabilize around 90 percent of GDP; if it had been held constant in 2010, debt would peak in about a decade and return to today’s level by 2040.

Said more accurately, “If only you people would spend more out of your own pockets on health care, and take less from the government, the federal debt would be lower, the economy would decline and the Gap between you and the rich would widen.”

12. Tax Expenditures Remain Costly
While Social Security, Medicare, and Medicaid are the fastest growing federal programs, tax breaks remain costly.

According to the Joint Committee on Taxation, income tax expenditures will cost about $1.5 trillion per year in lost revenue.

While one goal of tax reform was to dramatically shrink the size and number of these tax breaks, the Tax Cuts and Jobs Act actually only eliminated one significant tax expenditure, and it did little to reduce the overall cost of tax preferences.

In the misleading world of the Committee for a Responsible Federal Budget, the words “Tax Expenditures” are not expenditures at all. They are economic savings.

Those are the dollars not taken from your pockets. Those are the growth dollars that remain in the economy.

Then after telling us that Social Security, Medicare, Medicaid and other benefits to you should be cut, the CRFB suddenly expresses false concern for your future generations:

13. Policymakers are Prioritizing the Past Over the Future
Instead of leaving future generations better off, we’re leaving them with a stack of large bills.

Interest payments on the debt are expected to exceed federal spending on children by 2020 and all federal support for children (including tax expenditures and spending) by 2021.

That means we’ll soon be spending more financing the consumption of past generations than investing in our future.

All lies. Future generations will not pay for future federal deficit and debt, any more than current generations pay for current deficits and debt.

Who pays? The government pays for its deficits by creating dollars from thin air, just as it has done ever since it created the very first dollar, way back in the 1780s.

Federal taxes do not fund federal spending. All tax dollars are destroyed upon receipt, and brand-new dollars are created, ad hoc, each time the government pays a creditor.

If interest payments exceed federal support for children, the government could solve that “problem” simply by spending more on children.

Meanwhile, federal interest payments add growth dollars to the economy.

And finally, we come to the biggest whopper of them all:

14. Reducing Debt Would Increase the Size of the Economy
One consequence of a rising national debt is that it crowds out productive investment, which in turn slows income growth.

The corollary is that lower debt can actually boost income growth.

CBO estimates that if debt were reduced to its historic average of about 41 percent of GDP by 2048, per-capita GNP (a rough parallel for average income) would be about $6,000 (6.5 percent) higher than under current law.

Simply holding debt at current levels would boost income per person by $4,000 per year in 2048.

This is so laughably wrong, that one wonders how anyone with an IQ above 50 could possibly believe it.

Federal debt, by law and not by necessity, results from federal deficits. Federal deficits are economic surpluses. When the government runs a deficit, the economy runs a surplus — more money enters the economy than leaves it.

It takes a peculiar sort of illogic to claim that adding dollars to the economy “crowds out productive investment, which slows income growth.”

In short, the CRFB and its rich patrons want you to believe that cutting your federal benefits and/or increasing your federal taxes actually increases your income. 

If the people who wrote this nonsense actually believe it, they are woefully ignorant of basic economics, and if they don’t believe it, they are shameless liars.

Take your pick.

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

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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

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

 

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