Warning: Congress and the President might do something intelligent! Nah! Friday, Sep 8 2017 

Image result for breaking chains

It takes only two things to keep people in chains:
The ignorance of the oppressed and the treachery of their leaders.

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Warning: Congress and the President might do something intelligent.

Trump Reportedly Backed Schumer’s Pitch To Eliminate Debt Ceiling Entirely

During his meeting with congressional leaders on Wednesday, President Donald Trump supported a proposal from Senate Minority Leader Chuck Schumer (D-NY) to eliminate the need for Congress to vote to raise the debt ceiling altogether, according to several reports out Thursday.

Schumer suggested such a deal in the meeting, and Trump agreed that it was a good idea, according to the Washington Post, Politico, and Reuters.

The two reached a “gentleman’s agreement,” a White House official told the Washington Post. Schumer said that Democrats would work on a proposal that could potentially come up for a vote in December, according to the reports.

First, let’s discuss what the debt limit doesn’t do. Contrary to popular myth, the debt limit doesn’t limit government spending.

It limits paying for what the government already owes.

Get it? Think carefully as I summarize the debt ceiling:

  1. Congress authorizes a certain amount of spending
  2. Federal agencies spend what Congress authorized
  3. Then Congress refuses to pay creditors for the spending it had authorized.

That is the debt ceiling.

So dishonest Congresspeople who vote for a debt ceiling actually are voting to make America default on its debt payments — payments that Congress already had authorized — so that America can become a deadbeat nation, which would destroy our economy.

Yes, that is the debt ceiling.

If Congresspeople truly wished to reduce federal spending, that is exactly what they would vote for: A reduction in spending. But they are afraid to admit what they are doing.

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Trust me; I’m your Congressperson

 

And now Schumer and Trump supposedly have agreed heroically to pay the government’s bills. Isn’t that wonderful?

And the questions are: Will Congress agree to pay our bills? Will Trump change his mind?

Will there be yet another battle about paying our bills, in which Congress “reluctantly” agrees not to force America into deadbeat status, pays our bills, and sets yet another “debt limit,” so we can go through the same idiocy a few months in the future?

A plan to nix the need to vote on raising the debt ceiling could face opposition from Republicans. Conservatives in Congress regularly refuse to raise the debt ceiling unless it is paired with budget cuts.

Here is how that goes. Congress tells federal agencies, “We won’t let you pay for what we had authorized you to spend unless you somehow force us to authorize less in the future.

Anyone who thinks this makes sense, really should run for Congress. They would qualify in the dishonesty/stupidity criteria.

House Speaker Paul Ryan (R-WI) on Thursday rejected the idea of eliminating Congress’ need to vote on raising the debt ceiling.

“There’s a legitimate rule for the power of the purse in Article 1 powers, and that’s something we defend here in Congress,” he said at a press conference Thursday.

Do you remember Paul Ryan, the genius who after years of thinking, came up with Obamacare replacements that would have deprived 12 million to 20 million people of health care insurance?

Well, he’s at it again. Let me translate his statement for you. It means: “We value ‘power of the purse,’ meaning government agencies can spend only what we authorize, but if they do spend what we authorize, we won’t pay for it.”

Congress merely is pretending that the spending it authorized is “unsustainable” (their favorite word) and by illegally and unconstitutionally refusing to pay its debts, it supposedly is being frugal and prudent.

We have no idea what “unsustainable” means in this context. A Monetarily Sovereign nation cannot run short of its own sovereign currency. It easily can pay any debt denominated in dollars, because it creates dollars, ad hoc, by the very act of paying bills.

So the entire debt ceiling affair is total nonsense, a combination of ignorance and outright lying. And now, maybe, MAYBE, Trump and the Democrats will get rid of it.

Nah! Don’t bet on it.

Rodger Malcolm Mitchell
Monetary Sovereignty

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THOUGHTS

•All we have are partial solutions; the best we can do is try.

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

•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money no matter how much it taxes its citizens.

•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

•No nation can tax itself into prosperity, nor grow without money growth.

•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.

•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)

•Deficit spending grows the supply of money

•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control. The limit to non-federal deficit spending is the ability to borrow.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Progressives think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

•The single most important problem in economics is the Gap between the rich and the rest.

•Austerity is the government’s method for widening the Gap between the rich and the rest.

•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

MONETARY SOVEREIGNTY

The real purpose of the debt ceiling. Again. Wednesday, Mar 15 2017 

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

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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..
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That time of the year has come again.  You very soon will begin to read more articles about the U.S. “debt ceiling.”

In October 2015, we published, “The real reason we have a debt ceiling.” The article reminded us of a few facts:

  • The debt ceiling had been raised 74 times since March 1962
  • Congress has raised the debt ceiling 14 times from 2001-2013
  • Every single time we have bumped up against the debt ceiling, it has been raised.

If you asked the mythical “man-in-the-street” why we have a “debt ceiling,” he would tell you something like this: “To control Congress’s deficit spending.”

I hope that is not what you would say, because the answer is ridiculous. The so-called “debt ceiling” controls nothing. Think about it:

Congress controls deficit spending, and Congress controls the debt ceiling. So how could the debt ceiling, which is under the total control of Congress, control what Congress does? It makes no sense.

Further, and more important, the “debt ceiling” is a limit on payment for spending already done. The federal government already owes the money at the time the federal debt approaches the ceiling. The only thing a debt ceiling can accomplish is to cheat America’s creditors, the people who sold goods and services to the federal government.

You might ask your Congressperson how cheating creditors benefits America.

Why then do we have a debt ceiling? The abovementioned article concluded:

The debt ceiling has nothing to do with financial prudence or with spending or with taxes or abortion or immigration or Medicare or gay rights or with our military power or whether the Cubs ever will win a World Series.

The debt ceiling exists only because of a bunch of ruthless, vindictive people, whose pay will continue even during a depression — people who could not care less about you, me or anyone else on earth — people who demand, “Give me what I want or I’ll destroy your life and the lives of your friends and loved ones and of the whole world.”

So that is the real reason we have a the debt ceiling: Bastard power.

But the article was wrong. The real reason is even more insidious than that.

The real reason why we have a phony debt ceiling is to help promulgate the Big Lie, the lie that includes such “sub-lies” as:

  1. Federal taxes and borrowing are necessary to pay for federal spending.
  2. The federal deficit (wrongly termed “printing money”) will cause a Zimbabwe style hyperinflation
  3. The federal “debt” is an unsustainable financial burden on the government and a danger should nations not want to lend to us anymore.
  4. Once the GDP/Debt ratio reaches 100% (or 150% or any other number then in vogue) something terrible will happen.

The “Big Truth” is:

  1. Neither taxes nor borrowing have anything to do with federal spending. Even if all taxes and all borrowing fell to $0, our Monetarily Sovereign government could continue spending forever. (Sorry to be the bearer of “bad” news, but those tax dollars you send to the federal government cease to be part of the money supply. They are destroyed. Used for nothing.)
  2. Not only has the U.S. never had a hyperinflation, not even during wars, recessions, depressions and a Cub World Series victory, but even Zimbabwe’s hyperinflation was not caused by excessive deficit spending. All hyperinflations have been caused by shortages of products.
  3. The federal “debt” being nothing more than the total of dollars deposited in T-security accounts at the Federal Reserve Bank, is not a burden on anyone. The federal government easily could pay off the entire “debt” (i.e. deposits) tomorrow, simply by transferring existing dollars from those T-security accounts back to the holders’ checking accounts.
  4. The federal “debt” (total of deposits) is not related to GDP. Japan’s Debt/GDP ratio is about 230%.  The U.S.’s is about 105%. Russia’s is about 18%.  What does that tell you about the significance of the ratio?

O.K., if the real reason why we have a phony debt ceiling is to promulgate the Big Lie, what is the motive for the Big Lie?

The answer brings us to the Gap between the rich (the .1%)and the rest (the 99.9%).

The Gap is what makes them rich. Without the Gap, we all would be the same.  The wider the Gap, the richer they are.

If you had a million dollars, and everyone else had two million, you would be poor. But if you had only a hundred dollars, and everyone else had one dollar, you would be rich.

“Rich” is a comparative, not an absolute.

Thus, the prime financial motivation of the rich is not to make more money but to widen the Gap.

One way to widen the Gap is to deprive the 99.9% of federal benefits, that is to cut Social Security, cut Medicare, cut Medicaid, cut ACA, cut aids to education, cut all poverty assistance.

Social benefits comprise a huge proportion of federal spending, so when politicians talk about reducing the deficit and reducing the “debt,” they really are talking about widening the Gap between the rich and the rest — i.e. making the rich richer.

And that, dear friends, is the purpose of the debt ceiling: To make the rich richer and you poorer.

The rich bribe Congress and the President via campaign “contributions” (Don’t you love that word, “contributions”?), as well as with promises of lucrative employment, later.

Though the debt ceiling itself is meaningless, it reinforces the false narrative that federal spending must be cut, because it represents a fiscal danger to America.

The public is led to believe that the federal government “must live within its means” (Unlike you and me, a Monetarily Sovereign government has no “means” to live within).

You are told falsely that deficits and debts are “unsustainable” (though we have sustained them quite nicely for more than 240 years).

And you are told that future generations of taxpayers will have to pay for today’s deficits and debt (though taxpayers do not fund federal deficits or the federal “debt.” Dollars are created ad hoc, every time the federal government pays a bill. No taxes involved.)

The next time you hear a politician pontificating about the need to deal with the federal debt ceiling, know it is all a charade funded by the rich.

It’s a gigantic con job, paid for by the rich to reduce your government benefits and to widen the Gap. And you are the victim. 

Rodger Malcolm Mitchell
Monetary Sovereignty

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Rodger Malcolm Mitchell
Monetary Sovereignty

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THE RULES

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

•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.

•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

•No nation can tax itself into prosperity, nor grow without money growth.

•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.

•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)

•Deficit spending grows the supply of money

•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control. The limit to non-federal deficit spending is the ability to borrow.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Progressives think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

•The single most important problem in economics is the Gap between the rich and the rest.

•Austerity is the government’s method for widening the Gap between the rich and the rest.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

MONETARY SOVEREIGNTY

Here we go again. Your test of ignorance repeats on March 16th. What have you learned? Thursday, Feb 23 2017 

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

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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..

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Here we go again. Your test of ignorance repeats on March 16th. Will you pass or fail?

Imagine this. You belong to a sect. The leader has just told you the world is about to come to an end. He tells you the world is a “ticking time bomb.”

You are required to give him all your clothes and other belongings and to follow him, naked, up to the top of the mountain to await Armageddon.  So you dutifully do as you are told. You give the leader everything, including your clothes, and up the mountain you trudge.

And there you sit. All night.

And nothing happens.

So the next morning, you walk back down, and at the bottom, you try to rebuild your life.

But, the next year, your leader again tells you the world is about to end, and this time he really means it. So again you give him everything you own, and again you climb up that mountain, and again you await the Armageddon.

And for the second year in a row, nothing happens. And again you climb back down and try to restart your life.

Now, for a third year, the sect leader tells you the world really, truly is about to end and you should repeat the process, because this time it is absolutely for certain.

So the question is this:

How many years will you allow yourself to be fooled before you realize the sect leader either is lying or doesn’t know what he is talking about?

Will three years be enough? Or will you continue to believe him for five years, before realization sinks in? Or will it take you ten years of failures to see the truth?

What about 15 trips up that mountain? Will that be enough? Or heaven forbid, twenty years of failure?

How many years will the leader be able to sucker you? Thirty years? Forty years? Will you give him all your stuff fifty times?

What will it take? Sixty times? Are you that dense? Is anyone that dense?

What about seventy years? It’s getting pretty ludicrous, isn’t it — for someone to be cheated seventy years in a row? Surely, no one could be that ignorant.

Well, what about 77 years? Seems impossible, doesn’t it, for someone to hear the same prediction 77 years in a row, to see that prediction fail 77 years in a row, and still continue to believe?

Even Charlie Brown wouldn’t be so stupid as to believe Lucy’s football trick 77 times.

Yet, here you are, still believing. For, way back in 1940, 77 years ago, you were told the federal debt was a “ticking time bomb,” and you believed it, then.

Sept 26, 1940, New York Times: Deficit Financing is Hit by Hanes: ” . . . unless an end is put to deficit financing, to profligate spending and to indifference as to the nature and extent of governmental borrowing, the nation will surely take the road to dictatorship, Robert M. Hanes, president of the American Bankers Association asserted today. He said, “insolvency is the time-bomb which can eventually destroy the American system . . . the Federal debt . . . threatens the solvency of the entire economy.”

And the next 20 years, year after year, you were warned about the debt threat. It was a “ticking time bomb.” And you believed. For 20 years — and beyond:

Feb 11, 1960, New York Times: Mueller Assails Rise in Spending: The enormous cost of various Federal programs is a time bomb, threatening the country’s fiscal future, Secretary of Commerce, Frederick H. Mueller warned here today “. . . the accrued liability is a ticking time bomb. Some day someone will have to pay.”

Then forty years and counting — and still you believed:

Oct 4, 1983 Evening Independent – The United States and the developed world face a “ticking time bomb” because of the huge foreign debt involving loans to Third World nations

Oct 26, 1983, David Ibata: “ . . . home-building officials called for a commission to propose ways to trim the $200 billion federal deficit. The deficit is a ‘ticking time bomb‘ that probably will explode in the third quarter of 1984,’ said Fred Napolitano, former president of the National Association of Home Builders.

The drumbeat continued. Incredibly you continued to fall for the lie, as your leader’s warning after warning proved to be like the boy who cried “Wolf,” and nothing happened.

But, still you didn’t learn. And still you allowed the leader to cheat you.  Crazy, isn’t it?

Feb 21, 1984, James Warren: “‘We now hear from them (the Reagan administration) that deficits don’t cause high interest rates and inflation,’ AFL-CIO President Lane Kirkland said. ‘If that’s the case, we’ve suddenly discovered the horn of plenty and should stop worrying and keep borrowing and spending. But I don’t believe it. It’s a time bomb ticking away.”

January 12, 1985, Lexington Herald-Leader (KY):The federal deficit is “a ticking time bomb, and it’s about to blow up,” U.S. Sen. Mitch McConnell, a Louisville Republican, said yesterday.

Feb 17, 1985, Los Angeles Times: We labeled the deficit a `ticking time bomb‘ that threatens to permanently undermine the strength and vitality of the American economy.”

Jan 5, 1987, Richmond Times – Dispatch – Richmond, VA: 100TH CONGRESS FACING U.S. DEFICIT ‘TIME BOMB

November 28, 1987, The Dallas Morning News: THE TICKING TIME BOMB OF LONG-TERM HEALTH CARE COSTS A fiscal time bomb is slowly ticking that, if not defused, could explode into a financial crisis within the next few years for the federal government and our nation’s elderly. The ticking bomb is the growing cost of long-term care.

October 23, 1989, FORTUNE Magazine: A TIME BOMB FOR U.S. TAXPAYERS The government guarantees millions of mortgages, bonds, deposits, and student loans. These liabilities, now twice the national debt, are growing fast.

By now there had been forty years, then fifty years of dire predictions, and still nothing. Will you ever wake up to the truth? Or are some people destined to be chumps?

May 1, 1992, The Pantagraph – Bloomington, Illinois: I have seen where politicians in Washington have expressed little or no concern about this ticking time bomb they have helped to create, that being the enormous federal budget deficit, approaching $4 trillion and growing now at an annual rate of $400 billion per year.

October 28, 1992: Ross Perot: “Our great nation is sitting right on top of a ticking time bomb. We have a national debt of $4 trillion. Seventy-five percent of this debt is due and payable in the next five years. This is a bomb that’s set to go off and devastate our economy and destroy thousands of jobs.

Dec 3, 1995, Kansas City Star: Deficit is sapping America’s strength. Concerned citizens. . . regard the national debt as a ticking time bomb poised to explode with devastating consequences at some future date.

October 1, 2004, Bradenton Herald: A NATION AT RISK: TWIN DEFICIT A TICKING TIME BOMB: Lawmakers approved Bush’s request without cutting federal spending by a penny, thereby fattening the country’s projected record deficit of $422 billion by another $145 billion next year.

May 31, 2005, Providence Journal, Defusing the Medicare time bomb, Some lawmakers see the Medicare drug benefit for what it is: a ticking time bomb, set to wreak havoc on the budget and shoot future tax rates sky-high.

April 5, 2006, NewsMax.com, “We have to worry about the deficit . . . when we combine it with the trade deficit we have a real ticking time bomb in our economy,” said Mrs. Clinton.

Dec 3, 2007, USA Today: US debt: $30,000 per American. WASHINGTON (AP): Like a ticking time bomb, the national debt is an explosion waiting to happen.

September 24, 2010, Email from the Reason Alert: ” . . . the time bomb that’s ticking under the federal budget like a Guy Fawkes’ powder keg.”

July 7, 2011, Washington Post, Lori Montgomery: ” . . . defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.

By now, it’s seventy years. The same warnings; the same lies; the same failures.  And still you don’t get it.  Good grief, what will it take?

To support the lies, the U.S. imposed upon itself a “debt ceiling,” the effect of which either is laughable or sad, for we have been exceeding that phony “ceiling” almost every year for 1oo years, but still argue about it repeatedly.

And because you continue to believe the lies, you encourage the lies:

2/10/16: Daily Bell: “Obama’s $4.1 Trillion Budget Is Latest Sign of America’s Looming Collapse”

11/ 11/2016 David Stockman: National debt is ticking time bomb: Former Reagan Budget Director David Stockman on the need to rein in America’s mounting debt.

Today, we reach the 77th anniversary of that Sept 26, 1940 New York Times “ticking time bomb” article, and you have learned nothing.

Lucy still pulls the football away, and you still kick at air. Still the fool. Still believing.

Looming Debt Limit Divides Trump’s Treasury and Budget Chiefs
by Saleha Mohsin, January 25, 2017

Treasury Secretary nominee Steven Mnuchin and Trump’s choice to head the Office of Management and Budget, Mick Mulvaney, face their first joint test in the run-up to March 16, when debt-limit suspension period expires. Failure to agree means investors in the world’s deepest debt market may grow uneasy about the potential of a U.S. default.

A U.S. default? Has the ignorance come to this, where federal “debt” is so misunderstood, the world fears a default?

Even, if federal “debt” were real debt, there would be no problem. The U.S. federal government, being Monetarily Sovereign, creates dollars ad hoc, every time it pays a bill.

To pay any invoice of any size, the government merely sends instructions to a creditor’s bank, instructing the bank to increase the total in the creditor’s checking account, by the amount of the invoice. The instant the bank obeys those instructions, new dollars are created.

The federal government never can run short of instructions or dollars.

That is how the government easily handles real debt, but the federal “debt” isn’t even real debt. The federal so-called “debt” actually is the total of deposits in T-security accounts at the Federal Reserve Bank.

Each time you “lend” to the federal government, you make a deposit in your T-security account. To pay you back, the Federal Reserve Bank merely transfers dollars from your T-security account to your checking account. It’s a transfer of existing dollars.

And that is why the Saleha Mohsin article is so ridiculous:

“Honoring the full faith and credit of our outstanding debt is a critical commitment,” Mnuchin said in written replies to senators’ questions for his nomination process. “My responsibility as secretary would be to pursue all means available to the Treasury to meet this commitment, including historic extraordinary measures that have been employed by necessity in the past.”

A crisis isn’t imminent. The Treasury Department can use extraordinary accounting measures to stay below the ceiling, possibly until the second half of this year.

Rather than “extraordinary accounting measures,” we should get rid of the foolish, meaningless debt ceiling. It has no purpose, whatsoever, other than to make you think federal spending should be reduced.

During the campaign, Trump said that if the economy were in a prolonged slump, he might push creditors to accept write downs on their government holdings.

President Trump demonstrates (pretends?) ignorance of the differences between federal (Monetarily Sovereign) financing and private (monetarily non-sovereign) financing.

Since the federal government never can run short of dollars, what is the purpose of forcing write-downs on creditors?

Former Treasury Secretary Jacob J. Lew wrote in the Harvard Journal on Legislation, “The responsible course for the new Congress would be to raise the debt limit without drama” or brinkmanship.

No, the responsible course would be to do away with the silly debt ceiling and stop pretending the federal government is short of its own sovereign currency, the dollar.

And if it wasn’t bad enough for you to have struggled up and down that mountain of ignorance, year after year for more than 77 years, while having learned nothing about federal financing, it gets even worse.

Arguing against federal deficit spending is the same as arguing against the growth of Gross Domestic Product (GDP), the prime measure of our economy. The reason:  GDP = Federal Spending + Non-federal Spending + Net Exports.

So by definition, a cut to deficits is a cut to GDP. And indeed, reductions in deficit growth lead to recessions and depressions, while increases in deficit growth cure recessions and depressions.

 

Gray vertical bars are recessions

Now, for the 77th consecutive year, you are tested on your knowledge of federal financing.

You can see that federal deficit spending grows GDP, while the above graph shows that deficit growth is necessary to prevent and cure recessions. What have you learned?

For the 77th consecutive year, you are told the federal deficit and debt are too high — “ticking time bombs.” And for the 77th consecutive year, those time bombs have failed to explode. What have you learned?

In the next few weeks, you will be told the following lies:

  1. The federal deficit and “debt” are unsustainable “ticking time bombs” (though they have proven to be quite sustainable, and the “time bombs” never seem to explode).
  2. Deficit spending will cause hyper-inflations, like those in the Weimar Republic and Zimbabwe (though the U.S. never has had a hyper-inflation, and has absolute control over the value of the dollar).
  3. Federal agencies like Medicare and Social Security are headed for insolvency (though because the U.S. government is Monetarily Sovereign no federal agency can become insolvent unless Congress wills it).
  4. The debt ceiling requires us to cut social spending and to raise taxes (though the more federal budgets are cut and taxes increased — i.e. austerity — the weaker an economy becomes).

So the question is, “After 77 years of experience, what have you learned?”

Will you continue to believe the false prophets? Will you continue to give away your possessions to recessions and to cuts in social benefits? Will you continue to climb the mountain of lies, awaiting the Armageddon that never comes, then climb back down, poorer, but no wiser?

Or will you, at long last, tell the politicians, “Enough. I know the truth. You no longer can steal from me with your lies. I demand the Ten Steps to Prosperity (below). Now.”

Rodger Malcolm Mitchell
Monetary Sovereignty

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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 (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 (Guaranteed Income)) 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

–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.
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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


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

Remember that the next time you’re tempted to ask a 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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