And just when I began to feel so good about Congress and the President, at long last, . . . Monday, Feb 8 2021 

And just when I began to feel so good about Congress and the President at long last beginning to understand and tell the truth about economics, then I am splashed by ice water coming from the Committee for a Responsible Federal Budget.Image result for splashed with ice water

You know the CRFB.

They are the ones who run interference for those in Congress who want you to believe the common myth that federal finances are just like your finances.

Here’s what they say:

Important to Pay For Child Tax Credit Expansion

Democratic lawmakers are planning to unveil legislation to substantially boost the child tax credit from $2,000 to $3,000, providing monthly payments to households and higher payments for younger children.

While this thoughtful proposal to expand support for children deserves consideration, it cannot legitimately be classified as COVID relief and should be fully paid for under the House PAYGO rules and normal principles of budgeting.

Briefly, “PAYGO” is an ill-considered concept that requires federal spending to be matched by taxes or T-security deposits.

It’s part of the myth that federal finances are like personal finances (and state/local government finances), where outgo must be funded by income. That’s why CRFB speaks of “normal principles of budgeting.”

Those “normal principles” are normal for you, normal for your state, county, and city, and normal for businesses. But they are not normal for the federal government, and this is what CRFB does not want you to understand.

When you pay for your spending, you must have a money source.

You must have a paying job, or you must borrow, or you must have savings. That’s because you are monetarily non-sovereign.

State and local governments, and businesses operate the same way. They too are monetarily non-sovereign.

The federal government is different. It is Monetarily Sovereign. It uses neither income nor borrowing. It creates, ad hoc, every dollar it spends,, each time it pays a creditor.

The federal government does not borrow and the taxes it collects are destroyed upon receipt.

The federal government does not have money; it creates money. Last year, it was able to spend trillions of dollars it did not have, and yet never ran short, and never bounced a check.

You can’t do that, nor can any other monetarily non-sovereign entity.

Soon, the Biden administration will spend another $2 trillion the government doesn’t have, and still no checks will bounce. That is Monetary Sovereignty.

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

We are still in the midst of a pandemic and economic crisis, and more borrowing will be needed to provide necessary relief and support the economic recovery.

However, emergency borrowing authority must be reserved for pandemic-related needs, not for enacting long-sought-after policy priorities.

It’s amazing how many misstatements the CRFB can pack into three short sentences:

  1. What they call “borrowing” (T-bills, T-notes, T-bonds) merely consists of accepting deposits into T-security accounts. The government does not use those deposits. They remain in the accounts, accumulating interest, until maturity, at which time they are returned. You do not lend to the federal government. You make deposits into your own T-security account.
  2. There is no need to “reserve emergency borrowing authority.” The government can accept as many dollars into T-securities accounts as it wishes, any time it wishes (though again, it doesn’t use the dollars in those accounts. That’s why it isn’t “borrowing.)
  3. I’m not sure why the CRFB tries to differentiate between “pandemic-related needs” and “long-sought-after policy priorities.” Spending is spending. All federal spending is funded exactly the same way: Via money creation.

House PAYGO rules make clear that new spending increases and tax cuts not related to the COVID response or climate change must be paid for.

Expanding the child tax credit clearly doesn’t qualify under either of these exemptions, as it is clearly meant as a permanent policy and is in many ways duplicative with the proposed $2,000 per child recovery rebates.

All federal spending is “paid for.” Apparently, the CRFB falsely means, “paid for via borrowing or taxing.” This demonstrably false statement has been disproven every year. In 2020 alone, trillions of dollars of federal spending easily were “paid for” without the need for tax increases or borrowing.

Replacing the current $2,000 child tax credit with a more broadly available $3,000 to $3,600 credit would help address the disadvantages that kids face in the federal budget.

But we shouldn’t borrow from our kids in order to pay for their care when there are plenty of offsets available.

This mixed-up sentence speaks of “borrowing from our kids,” which probably means future (totally unnecessary) tax increases. But then it talks about “offsets.” And what are those so-called “offsets” that don’t “borrow from our kids?

Overall, this policy will cost over $100 billion per year and more than $1 trillion over a decade if made permanent. Reducing child poverty is a worthy policy priority and one worth paying for.

Senator Mitt Romney’s recent proposal to consolidate existing support for children and workers and repeal regressive tax breaks represents one possible package of offsets.

The $5.8 trillion of tax increases and budget savings proposed by President Biden during the campaign also offers many alternatives.

Offsets could also be phased in to avoid imposing tax increases during a pandemic or disrupting a fragile recovery.

So, to help reduce child poverty, we should “consolidate existing support for children and workers”?? Ah, that lovely little word “consolidate” which in CRFB language means an even smaller word: “Cut.”

And, of course, “repealing tax breaks” is a synonym for “increasing taxes.” (Historically, the breaks the CRFB has seemed to favor eliminating are those that benefit the poor and middle classes.)

It is the “children and workers” who would have to pay the increased taxes and suffer the reduced support.

Offsets could also be phased in to avoid imposing tax increases during a pandemic or disrupting a fragile recovery.

This is a worthy policy aimed at achieving a worthy goal. That’s no reason to throw budget discipline out the window. Borrowing for the pandemic isn’t an excuse for unrelated tax cuts, nor is it a reason to enact permanent policies that aren’t properly financed.

So let’s see. The recovery is “fragile,” but we should have “budget discipline,” which means increasing taxes during this fragile recovery. How wise.

So the government should do something temporary — cut taxes and increase spending — and when we recover the government can increase taxes and cut spending.

“But we shouldn’t borrow from our kids.” Except that “borrowing from our kids” is exactly what future tax increases and spending cuts would do.

If empty-headed claims were dollars, the CRFB would be the wealthiest organization in the world.

Rodger Malcolm Mitchell

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

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

The most important problems in economics involve:

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

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

Ten Steps To Prosperity:

  1. Eliminate FICA
  2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
  3. Social Security for all or a reverse income tax
  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 the rest.

MONETARY SOVEREIGNTY

How To Prevent Economic Growth, by Maya MacGuineas of CRFB Thursday, Oct 8 2020 

No one can do a better job of describing how to thoroughly destroy the American economy than Maya MacGuineas, head of the Committee for a Responsible Federal Budget (CRFB).  She not only writes articles for the CRFB web site, but she often is invited to spew her wisdom before Congress. She is a true celebrity in Washington.

To give you a taste of her acumen, here are excerpts from an Email I just received from her:

Wed, Oct 7 at 8:29 AM, The Cost of the Trump and Biden Campaign Plans

Whoever is inaugurated on January 20, 2021, will face many fiscal challenges over his term.

Under current law, trillion-dollar annual budget deficits will become the new normal, even after the current public health emergency subsides.

Meanwhile, the national debt is projected to exceed the post-World War II record high over the next four-year term and reach twice the size of the economy within 30 years.

For reasons never explained, MacGuineas repeatedly compares the national “debt” (i.e. the federal “debt”), with Gross Domestic Product.

The former is nothing more than the total of deposits into Treasury Security accounts; the latter is total spending in America. The two are not directly related, co-dependent or in any way comparable.

The federal government could stop accepting deposits into T-security accounts tomorrow, at which time the so-called “debt” would begin to shrink to $0 — and this would have no effect on GDP. Or the government could accept twice as much in deposits, and this too would have no effect on GDP.

So her complaint that these deposits will “reach twice the size of the economy” is meaningless, meant more to shock you than to educate you.

Four major trust funds are also headed for insolvency, including the Highway and Medicare Hospital Insurance trust funds, within the next presidential term.

What MacGuineas (and many others) misleadingly term “trust funds” are not trust funds. They are nothing more than bookkeeping accounts that are 100% controlled by the federal government. These accounts cannot become insolvent unless Congress wants them to become insolvent.

The federal government, which has the unlimited power to create U.S. dollars, along with the unlimited power to change its bookkeeping, can put any numbers it wishes into those accounts, any time it wishes.

The federal government arbitrarily could decide to double or triple the balances in these so-called “trust fund” accounts, and as if by magic, the numbers would double, and MacGuineas could stop fretting.

Whenever you see or hear the words, “federal trust funds,” know you are not being told the truth. Though even federal sites refer to “trust funds,” these are like the Bank in the game of Monopoly™: Changeable according to the players’ desires.

Fiscal irresponsibility prior to the pandemic worsened structural deficits that were already growing due to rising health and retirement costs and insufficient revenue.

It is not fiscally irresponsible for the federal government to spend more. On the contrary, not spending more would be fiscally irresponsible. Federal deficit spending grows the economy, and insufficient federal deficit spending shrinks the economy.

The country’s large and growing national debt threatens to slow economic growth, constrain the choices available to future policymakers, and is ultimately unsustainable.

The above sentence is diametrically wrong. False complaints about the national “debt” being a ticking time bomb,” have been voiced since 1940, while the economy has grown massively.

MacGuineas herself has been making the same wrong predictions continually. and for many, many years, but has learned nothing from her predictive failures.

Yet neither presidential candidate has a plan to address the growth in debt. In fact, we find both candidates’ plans are likely to increase the debt.

Under current law, the so-called “debt” results from federal deficit spending, which pumps stimulus dollars into the economy. MacGuineas opts to remove dollars from the economy by running federal surpluses. She ignores the fact that removing dollars from the economy causes recessions and depressions.

A growing economy requires a growing supply of money. Federal deficit spending increases the supply of money, which grows the economy.

The formula for GDP is: GDP = Federal Spending + Non-federal Spending + Net Exports. All these terms are related to the money supply in the United States.

Under our central estimate, we find President Donald Trump’s campaign plan would increase the debt by $4.95 trillion over ten years and former Vice President Biden’s plan would increase the debt by $5.60 trillion.

Debt would rise from 98 percent of Gross Domestic Product (GDP) today to 125 percent by 2030 under President Trump and 128 percent under Vice President Biden, compared to 109 percent under current law.

Despite MacGuenias’s hand-wringing, both plans are insufficient to grow GDP over time. An average of 1/2 trillion dollars in deficit spending in a $20 trillion economy, amounts to only 5% per year, a level that on average, has led to recessions.

 

Vertical gray lines are recessions. Year to year reductions in federal “debt” growth lead to recessions, while increases in federal “debt” cure recessions.

President Donald Trump has issued a 54 bullet point agenda that calls for lowering taxes, strengthening the military, increasing infrastructure spending, expanding spending on veterans and space travel, lowering drug prices, expanding school and health care choice, ending wars abroad, and reducing spending on immigrants. He also has proposed a “Platinum Plan” for black Americans, which increases spending on education and small businesses.

Meanwhile, Vice President Joe Biden has proposed a detailed agenda to increase spending on child care and education, health care, retirement, disability benefits, infrastructure, research, and climate change, while lowering the costs of prescription drugs, ending wars abroad, and increasing taxes on high-income households and corporations.

Which of the above proposals does MacGuineas suggest should be eliminated?

She never says. She decries deficit spending while not saying where the deficit spending should be reduced. Why is she so reticent? Because she probably understands the economic need for federal deficit spending, but she is paid to deny it.

That is why she has been mouthing the same tripe for so many years.

Debt has already grown from 39 percent of the economy in 2008 to 76 percent in 2016, and is estimated to reach 98 percent by the end of FY2020.
Under current law, the Congressional Budget Office (CBO) projects debt will continue to rise to 109 percent of GDP by 2030.

Our central estimate of the Trump plan finds debt would rise to 125 percent of the economy by 2030, excluding the effects of further COVID relief. Under our central estimate of the Biden plan, debt would rise to 128 percent of the economy by 2030, again excluding COVID proposals.

Then next few paragraphs of MacGuineas’s letter comprise an endless recitation of “debt” as a percentage of “the economy” (GDP), all with the tacit — and completely wrong — assumptions that a low ratio is a good ratio, and a high ratio is a bad ratio.

Here is a list showing the Debt/GDP ratio for many nations:

Based solely on the percentages, which nations would you expect to have the healthiest and/or strongest economies”?

Japan 237.54%, Venezuela 214.45%, Sudan 177.87%, Greece 174.15%,
Lebanon 157.81%, Italy 133.43%, Eritrea 127.34%, Cape Verde 125.29%,
Mozambique 124.46%, Portugal 119.46%, Barbados 117.27%, Singapore 109.37%,
United States 106.70%, Bhutan 103.85%, Cyprus 101.04%, Bahrain 100.19%,
Belgium 99.57%, France 99.20%, Spain 95.96%, Jordan 94.83%, Jamaica 94.13%,
Belize 92.64%, Angola 90.46%, Brazil 90.36%, Republic Of The Congo 90.19%,
Antigua And Barbuda 88.35%, Canada 88.01%, Egypt 86.93%, United Kingdom 85.67%,
Aruba 83.57%, Sri Lanka 82.99%, Tunisia 81.55%, Mauritania 80.61%, Zambia 80.50%,
Dominica 79.84%, Gambia 78.67%, San Marino 77.12%, Pakistan 77.00%, Argentina 75.90%,
Sao Tome And Principe 74.10%, Sierra Leone 72.37%, Suriname 72.05%,
Saint Lucia 71.62%, Saint Vincent And The Grenadines 71.38%, Uruguay 71.34%,
Austria 71.17%, Croatia 70.73%, Montenegro 70.58%, Togo 70.39%, India 69.04%,
El Salvador 68.10%, Mauritius 67.50%, Hungary 66.62%, Slovenia 65.44%, Albania 65.13%,
Morocco 65.11%, Laos 64.13%, Burundi 63.54%, Djibouti 62.99%, Ireland 62.42%,
Ukraine 62.03%, Senegal 62.00%, Ghana 61.99%, Maldives 61.43%, Oman 61.29%,
Bahamas 60.49%, Nauru 60.39%, Finland 59.88%, Saint Kitts And Nevis 59.49%,
Malawi 59.01%, Israel 58.96%, Gabon 58.48%, South Africa 57.81%, Puerto Rico 57.70%,
Ethiopia 57.43%, Vietnam 57.36%, Guyana 57.22%, Bolivia 57.11%, Germany 56.93%,
Malaysia 56.32%, Costa Rica 56.15%, Grenada 56.12%, Kyrgyzstan 56.09%, Niger 55.60%,
Kenya 55.50%, China 55.36%, Guinea Bissau 54.92%, Yemen 54.51%, Seychelles 54.49%,
Mexico 54.11%, Benin 54.00%, Qatar 52.74%, Vanuatu 52.18%, Netherlands 52.04%,
Namibia 51.60%, Belarus 51.08%, Serbia 50.95%, Ivory Coast 50.92%, Iraq 50.25%,
Fiji 50.22%, Rwanda 50.00%, Trinidad And Tobago 49.75%, Tajikistan 49.46%,
Samoa 49.44%, Ecuador 49.20%, Colombia 49.16%, Armenia 47.95%, Poland 47.48%,
Algeria 46.92%, Slovakia 46.90%, Liberia 46.66%, Guinea 45.98%, Georgia 45.05%,
Uganda 44.81%, Chad 42.91%, Burkina Faso 42.47%, Malta 42.46%,
Central African Republic 42.25%, Dominican Republic 41.92%, Thailand 41.47%,
Eswatini 41.11%, Australia 41.10%, Madagascar 41.02%, Nicaragua 40.88%,
Honduras 40.80%, South Korea 40.54%, North Macedonia 40.48%, Switzerland 39.49%,
Myanmar 39.19%, Philippines 39.10%, Cameroon 38.11%, Romania 37.99%, Lesotho 37.95%,
South Sudan 37.81%, Panama 37.81%, Papua New Guinea 37.72%, Equatorial Guinea 37.49%,
Sweden 37.23%, Mali 36.93%, Norway 36.75%, Latvia 36.66%, Tanzania 36.57%,
Bosnia And Herzegovina 36.34%, Haiti 36.23%, Comoros 35.08%, Bangladesh 34.81%,
Taiwan 33.91%, Lithuania 33.79%, Denmark 33.61%, Iceland 33.13%, Nepal 33.07%,
Czech Republic 31.57%, Turkmenistan 30.25%, Nigeria 30.05%, Iran 30.04%, Turkey 29.93%,
Cambodia 29.57%, Indonesia 29.29%, Moldova 28.82%, New Zealand 28.07%, Peru 27.18%,
Chile 27.17%, Guatemala 24.76%, Saudi Arabia 23.71%, Kiribati 23.48%,
Marshall Islands 23.37%, Uzbekistan 23.23%, Paraguay 22.37%, Tuvalu 21.81%,
Luxembourg 21.61%, Zimbabwe 20.99%, Kazakhstan 20.90%, Bulgaria 19.33%,
United Arab Emirates 19.20%, Micronesia 18.41%, Kuwait 17.78%, Azerbaijan 17.59%,
Solomon Islands 14.56%, Dr Congo 14.01%, Russia 13.79%, Botswana 12.78%, Estonia 7.61%,
Afghanistan 6.88%, Brunei 2.63%

If you say there seems to be no relationship between “debt” and GDP you would be correct, for several reasons:

  1. Some nations are Monetarily Sovereign, which means they have the unlimited ability to create their own sovereign currency. Any liability denominated in their own currency is serviced simply by creating new currency. They cannot become insolvent if they owe their own currency.
  2. Some nations are monetarily non-sovereign, which like you, me, the euro nations, and all local governments, cannot arbitrarily create money, and so can become insolvent.
  3. The word “debt” means something entirely different, depending on what is owed, and why. If the “debt” consists of optional deposits, as does America’s, Japan’s, Canada’s, Australia’s, and the UK’s, paying it off merely requires returning the money on deposit.
  4. But if the debt is necessary for the purchase of goods and services, like state and local government debt, then taxpayers must fund it, or the government will become insolvent.
  5. If the “debt” adds net money to the economy, as with Monetarily Sovereign governments, it will grow the economy.
  6. But, if the debt must be paid by taxpayers, which subtracts net money, as is the case with monetarily non-sovereign governments. it will shrink the economy.

Conclusion: Even before the onset of the COVID-19 pandemic and subsequent global economic crisis, the federal government was on an unsustainable fiscal path.

Under our central estimate, neither major candidate for President of the United States in 2020 has put forward a plan that would address our unsustainable fiscal path.

The favorite word used by debt critics is “unsustainable.” They never explain what they mean by that word.

Does it mean the U.S. government will run short of dollars? No, that is impossible. The government has the unlimited ability to create dollars at the touch of a computer key.

Does “unsustainable” mean other nations will not lend to the U.S.? No, the U.S. never borrows from other nations. What erroneously is termed “borrowing.” actually is the acceptance of deposits, which has two purposes:

  1. To provide a safe, parking place for unused dollars, which helps stabilize the dollar.
  2. To assist the Fed in controlling interest rates.

Neither purpose has anything to do with the federal government acquiring dollars. The U.S. government does not need to “acquire” dollars. It creates all the dollars it needs. Those dollars on deposit never are touched. They merely are returned when the T-certificates mature.

Does unsustainable mean people will refuse to use the U.S. dollar? No, Despite an 80-year supply increase of more than 50,000%, the U.S. dollar remains a trusted currency. No knowledgeable person fears U.S. insolvency.

So what does the oft-used term unsustainable mean? It is a term that has no specific meaning, but is used to hint at some dark, unspecified, future event, to make you believe the federal debt is too high, without your knowing why.

This high and rising debt could have significant economic, generational, fiscal and distributional consequences.

What are the consequences of a high and rising debt? Answer: Economic growth and prosperity.

Addendum: As I write this, I am watching the so-called debate between Kamala Harris and Mike Pence. It isn’t a debate so much as a performance, but one thing struck me: The both repeat the Big Lie that federal government financing is like state/local government financing.

They both claim that federal taxes fund federal spending, and the “How will you pay for it?” question needs be answered via a complex, convoluted, Byzantine explanation involving increased taxes and money transfers.

The real answer: The federal government will do what it always has done: It will create new dollars, ad hoc, every time it pays a bill. It’s called “Monetary Sovereignty.”

It is the way, the only way, the U.S. economy has grown and will continue to grow.

Rodger Malcolm Mitchell

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

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

The most important problems in economics involve:

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

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

Ten Steps To Prosperity:

  1. Eliminate FICA
  2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
  3. Social Security for all or a reverse income tax
  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 the rest.

MONETARY SOVEREIGNTY

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

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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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