Do you know what “unsustainable” means? If not, it’s costing you money. Thursday, Aug 3 2017 

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

Image result for big lie

The CRFB makes the Lie simple and big, and tells it often

The word “unsustainable” is a favorite among federal debt fear-mongers. They use it all the time. It is a lie, a Big Lie. It is the biggest lie in all of economics.

Do you know what it supposedly means regarding the federal debt? Specifically, what aspect of the federal debt do they claim can’t be sustained?

While you think about that, read this Email I received from my favorite debt fear-mongers: The Committee for a Responsible Federal Budget (CRFB)

Committee for a Responsible Federal Budget (CRFB)

We Must Increase the Statutory Debt Limit and Take Action to Deal with the Debt
August 2, 2017
For Immediate Release
The United States government is quickly approaching the deadline for raising the debt ceiling. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, released the following statement:

The United States faces two major debt challenges: one urgent and acute, the other gradual and long-term but still pernicious. Without a prompt increase in the debt limit, policymakers would threaten default on America’s obligations and could even spark a global economic crisis.

Correct. The day the United States stops paying its bills is the day the world’s economy collapses, making the “Great Recession” of 2008 look like a picnic.

So why does Congress threaten us with it?  In fact, why is there a debt ceiling at all?

Federal “debt” is not like personal debt. When you “lend” to the federal government, you tell your local bank to transfer your dollars from your checking account and deposit your dollars into your Treasury Security Account at the Federal Reserve Bank (FRB).

That is the way you buy a T-bill, T-note, or T-bond, which together make up the federal “debt.” You simply transfer your dollars from one of your bank accounts to another one of your accounts at another bank, the FRB.

The dollars are still yours. They just have been moved from one of your accounts to another of your accounts.

Thus, the so-called federal “debt” is nothing other than the total of those deposits in Treasury security accounts at the world’s safest bank, the Federal Reserve Bank.

The so-called “debt” is bank deposits, very much like your savings account deposits at your local bank.

At the same time, the national debt is currently higher as a share of the economy than at any time since just after World War II, and it is rising unsustainably.

The debt fear-mongers often mention the fact that the “debt” (T-security deposits) are a high percentage of Gross Domestic Product. But why is this a reason for concern?

Would you be fearful if your savings account deposits were a high percentage of your income?

You might question whether that was the best use of your money, but it would not constitute a danger to you.

The debt fear-mongers seem to be implying that the “debt” (deposits) are paid off by the economy, and that somehow if the debt is a high percentage of the economy, it can’t be paid off.

Related image

Paying off the federal debt just means transferring your dollars from one of your bank accounts to another of your bank accounts.

That is total nonsense.

Since the misnamed “debt” is deposits, it is paid off the way all your bank deposits are paid off: The Federal Reserve Bank merely transfers your existing dollars from your T-security accounts, back to your checking account.

It’s like transferring dollars from your savings account to your checking account.

The federal government could pay off the entire “debt” tomorrow if it wished, simply by transferring dollars from one account to another. No new dollars needed.

We need to increase the statutory debt limit as soon as possible. We should have done so already to avoid creating undue and potentially costly uncertainty, and we most certainly should not wait until the last moment to make this necessary increase. No Member of Congress should even consider holding this must-pass legislation hostage.

We don’t need to increase the statutory limit; we need to eliminate the entire “debt ceiling” rule. It is total nonsense, meant to deceive you into believing the federal government is limited in its ability to fund social programs.

At the same time, it is important to recognize that the near-record national debt is on an unsustainable path and changes need to be made.

And there’s that inevitable word “unsustainable.” What does it mean? You never will be told. It’s a word meant only to frighten you.

The United States has been “sustaining” growth in the federal debt for many years. Here is a graph showing the Gross Federal Debt Held by the Public. (It is “held by the public,” because you, the public, own the dollars in those T-security accounts at the FRB.

In 1940 the total of “debt” held by the public was $41 billion.

By 2015 the “debt” had reached $13 trillion and climbing.  Over the past 75 years, the Federal Reserve Bank has “sustained” a 31,000% increase in T-security deposits. 

So, where’s the crisis?

Back in 1940, Robert M. Hanes, the president of the American Bankers Association, said the federal “debt” (deposits) were a “ticking time-bomb which can eventually destroy the American system.”

Every year since then, the debt fear-mongers have issued hand-wringing claims that the debt is “unsustainable,” or a “ticking time bomb,” or a threat to the world as we know it.

We have endured, or shall we say, “sustained,” more than 75 years of hysterical predictions that never come true, about bank deposits at the FRB — and yet, after more than 75 years, the public still has not caught on to the scam.

Would you believe someone who consistently has been proven wrong for more than 75 years?

Given that the debt ceiling is one of the few reminders of this fiscal reality, it would be prudent for policymakers to attach or simultaneously pass measures to help slow the growth of our national debt. In the past, some debt ceiling increases have been productively paired with deficit-reduction policies or processes.

What is the “fiscal reality,” the CRFB writes of? They don’t say.  But the real “reality” is that contrary to what you have been told, the federal government does not issue T-securities to fund spending.

In fact, the federal government’s method for creating dollars is to pay creditors. Unlike you, and me, and the states, counties, and cities, the federal government needs no income. It creates dollars, ad hoc, every time it pays a bill.

When the federal government pays a creditor, it sends instructions (not dollars) to the creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account. At the instant the creditor’s bank obeys those instructions, new dollars are created and added to the money supply.

The instructions then are cleared through the Federal Reserve Bank, which is owned by the federal government. Thus, the federal government has the power to approve its own payments, which is why no federal check ever has bounced.

This power is known as “Monetary Sovereignty. The federal government is sovereign over its sovereign currency, the dollar. It can do anything it wishes with the dollar. It can create dollars at will, and it can give the dollar any value it chooses. It can create or prevent inflation to whatever level it chooses.

(This is in contrast to state and local governments, which are monetarily non-sovereign regarding the dollar. They use the dollar but it is not their sovereign currency;  they cannot create dollars at will, nor can they control inflation.)

Debt fear-mongerers try to confuse you by falsely implying federal finances are like state and local (and personal) finances.

If T-securities simply are deposits in accounts at the FRB, why do they exist?

  1. They provide a means for interest rate control and inflation control. By setting the interest rates on T-securities, the Fed influences all interest rates, and adjusting interest rates is how the Fed controls inflation.
  2. T-security accounts provide a safe investment for conservative investors, including nations, worldwide. The Chinese, for instance, deposit their dollars into T-security accounts, because the Federal Reserve Bank is the world’s safest bank. It’s the safest place to hold dollars.
  3. To facilitate an antiquated law requiring FRB deposits to equal deficit spending. The law became outmoded in August, 1971, when the U.S. went off the gold standard.

The government has the power eliminate T-securities entirely, and to continue deficit spending, forever.

While first and foremost we encourage policymakers to pass the needed increase immediately, we also support their using this opportunity to take long-overdue action to deal with the debt.

When your credit card bill arrives, you pay it. But if it’s too high, you may also need to adjust your borrowing habits going forward.

The CRFB, like all debt fear-mongers, draws a false parallel between federal financing and personal financing.  You, as a user of dollars, can run short of dollars to pay your bills.

The federal government, as the sole issuer of dollars, never can run short of its own sovereign currency.

So why all the propaganda about “ticking time bombs” and “unsustainable debt”? Very simply:

Very simply:Image result for the rich bribe the government

  1. The world’s governments are run by the very rich.
  2. The Gap between the rich and the rest is what makes the rich, rich.  Without the Gap, no one would be rich (We all would be the same), so the primary goal of the rich is to widen the Gap.
  3. The Gap can be widened either by the rich having more, and/or the rest of us having less.
  4. Most deficit spending is for social programs that help narrow the Gap between the rich and the rest of us.
  5. The rich bribe the three primary sources of economic information: the politicians (via campaign contributions and promises of lucrative employment later), and the media (via advertising money and ownership), and the economists (via university contributions and employment in “think tanks) to convince you the government can’t afford the social programs that narrow the Gap.

For more information contact Patrick Newton, Press Secretary, at
Committee for a Responsible Federal Budget, 1900 M Street, NW
Suite 850, Washington, DC 20036

No, don’t bother to contact these people. They won’t answer you. They are owned and operated by the rich and by toadies to the rich. They do not want you to know the facts. They want you to believe the Big Lie.

So, instead, contact your Senators and your Representative, and tell them you know the federal debt ceiling is a lie, designed to cut your social benefits. Tell them you will vote for the first one who tells the truth.

And please contact your local media; tell your friends. Get the word out.

This charade has cost you way too much for way too long.

Rodger Malcolm Mitchell
Monetary Sovereignty


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.
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

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

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
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.
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.
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.


U.S. recession already here? Wednesday, Mar 16 2016 

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


Excerpts from the Daily Bell:

Key indicators show that US is already in recession
Simon Black – March 16, 2016

Much of the (Federal Reserve) data show that manufacturing is shrinking. Or to be even more clear, that the US is in a manufacturing recession.

Prosperity is quite simple. You have to produce more than you consume.

Strangely, though, the financial establishment cheers when consumption is up. And they totally ignore the data when production is down.

And no surprise, if you look at the long-term data you’ll see that a manufacturing downturn (i.e. less production) almost invariably precedes a recession.

There were large downturns in manufacturing and industrial production in 2008, 2001, 1990, 1980-81, 1974, 1970… and every other recession since the Great Depression.

Welcome to the world.

See the Recession Clock at the bottom of this page and the descriptive article at When Will the Next Recession Arrive?

There is a statistic that precedes recessions by an average of two years: Percentage Change from Previous Year of Federal Debt as a Percentage of GDP.

It may be a bit difficult to wrap your mind around — a percentage of a percentage — but fundamentally it tells you reductions in federal debt lead to recessions.

There is an average of a two-year lag between when the trend line falls below 0 and we have a recession. After the 2008 recession, the line again fell below 0 at the beginning of 2015.

On average, we would expect a recession the beginning of 2017.

Why would anyone be surprised? Federal debt currently results from federal deficits, and deficits add stimulus dollars to the economy.

Money is economic fuel. Reducing the money supply is like turning down the thermostat. The economy cools.

The major error in the article is this line: “Today government debt exceeds $19 trillion, well in excess of 100% of GDP. They don’t have the ability to bail anyone out, including themselves.

Two problems with that:

1. The federal government, being Monetarily Sovereign, never can run short of its own sovereign currency, the dollar.

2. Federal debt is nothing more than the total to T-security accounts at the Federal Reserve Bank. These accounts are paid off the way any bank pays off its accounts: By debiting the accounts and crediting the holder’s checking accounts — a simple money transfer.

No new dollars needed.

Even if federal debt were $100 trillion, the federal government could:

–Pay it all off in one day, simply by transferring existing dollars
–Continue spending, forever.

Congress, the media and the economists, all of whom bribed by the richest 1%, are sure to claim we are headed for a disaster — which is true.

But they also will tell us this disaster can be thwarted only with cuts in social spending (Social Security, Medicare, Medicaid, food benefits, housing benefits, education benefits, etc.) — things that help the poor and middle classes.

And that is the Big Lie, designed to widen the Gap between the rich and the rest.

The disaster will be caused by (relative to GDP) reductions in deficit spending, and later will be cured by increases in deficit spending — as always.

After the increased deficit spending cures the recession, we once again will hear claims that the deficit and debt are too high and “unsustainable.”

We have documented how this charade has continued since at least 1940, and undoubtedly much earlier.

The Fed doesn’t have any room either. On average, the Fed cuts interest rates by 3.5% in a recession. And the smallest interest rate cut in any recession during the last 60 years was 2%.

Today, interest rates are at 0.25%… next to nothing.

That means that even if the next (i.e. current) recession is extremely mild and the Fed cuts by only 2%, interest rates are practically guaranteed to go below zero.

Sadly (for the economy), and contrary to popular belief, low interest rates do not stimulate the economy. The primary stimulant for any economy is money supply, and low rates reduce money supply growth. When rates are low, the federal government pays fewer interest dollars into the economy.

Once again we will cut deficit spending relative to our economy.

And once again we will enter an unnecessary recession, which we do on average, every five years.

And once again we will cure the recession by doing what we should have been doing all along to prevent the recession: Increase deficit spending ala the Ten Steps to Prosperity (below).

And once again, the debt hawks will claim the federal debt and deficit are “unsustainable,” as they have been doing for 75 years.

And once again, the poor and middle income/wealth/power groups (the “99%”) will suffer and drift further behind the rich.

The Big Lie is alive and well and living in Congress, the media, and classrooms all over America. The rich grow richer; the poor grow poorer; and the American dream drifts further from reality.

Rodger Malcolm Mitchell
Monetary Sovereignty


Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually Click here
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

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

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt


Recessions begin an average of 2 years after the blue line first dips below zero. A common phenomenon is for the line briefly to dip below zero, then rise above zero, before falling dramatically below zero. There was a brief dip below zero in 2015, followed by another dip – the familiar pre-recession pattern.
Recessions are cured by a rising red line.

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.


Mitchell’s laws:
•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.

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


–An “investigative” newspaper comments on the new tax agreement Tuesday, Dec 7 2010 

The debt hawks are to economics as the creationists are to biology. Those, who do not understand monetary sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
For reasons I cannot even begin to imagine, the Chicago Tribune, which prides itself on being an investigative newspaper, refuses to investigate facts before or even after, writing about the economy. I have contacted them often, and they never have displayed even a modicum of interest in learning anything about how the economy works. Instead, they rely solely on popular myth.

Here is a verbatum copy of an Email I sent to editors and others at the Tribune:

“Today’s (12/7/10) Chicago Tribune editorial titled, “Tax Dealing” contains a mixture of truth and myths.

1. Truth: “ . . .raising marginal (tax) rates, especially with the tax year ending an a matter of weeks, would hurt an economic recover still on life support. Obama knows he needs all the growth he can get.” Translation: Yes, taxes hurt the economy because they remove money from the economy. A growing economy requires a growing supply of money.

2. Myth: ” . . . nobody is reducing the cost of government to make up the lost revenue.” Fact: Federal spending is not constrained by taxes, nor do taxes pay for federal spending. Tax money is destroyed (i.e. “lost”) upon receipt and is not stored anywhere.

3. Truth: “The (commission on debt reduction) work can be a catalyst for historic change.” Yes, if we follow the commission’s debt reduction advice, we will have a depression of historic proportions. See item #1, above.

4. Truth: “The panel’s plan involves cutting everything from defense to Social Security . . . Everyone from senior citizens to post-office customers have complained about the pain involved if the plan were enacted.” Yes, it’s a plan that hurts everyone and benefits no one. It’s all pain and no gain.

5. Myth: “That’s unavoidable. Everyone is going to feel some pain when the nation makes its government live within its means.” Fact: Causing economic pain neither is unavoidable nor praiseworthy. As for the government “living within its means,” the Tribune demonstrates it does not know the difference between monetarily sovereign finances (U.S. Government) and monetarily non-sovereign finances (everyone else). You and I have “means.” We must have a source of money before we spend. We are limited in how much we can spend. The federal government is not limited. It creates money by spending. It alone has the unlimited ability to pay any bills of any size. It has no “means.”

6. Myth: You repeated Sen. Durbin’s comment, “Borrowing 40 cents out of every dollar we spend for missiles or food stamps is unsustainable.” Fact: The federal government does not need to borrow even one cent. Borrowing the money the federal government originally created, and can continue to create endlessly, makes no economic sense. It is a relic of the gold standard days, when federal borrowing was necessary. The government does not spend borrowed money. As for federal spending being “unsustainable,” this myth has been bandied about since 1980 (See: Unsustainable) It is no more true today than it was 30 years ago.

7. Myth: “It’s irresponsible for our nation to go on accumulating unaffordable debts that will force even more painful cuts down the line.” What makes the debt “unaffordable”? The Tribune has no idea. In fact, “federal debt” merely is a synonym for “federal money created.” Without federal debt there would be no money and no economy. The Tribune makes the nonsensical complaint that money is unaffordable.

8. Myth: “The coming agreement on tax cuts will avoid an unwelcome shock to the U.S. economy. It will buy time. But it has to lead to an agreement on long-term deficit reduction.” The Tribune editors do not realize that the first part of this paragraph contradicts the second part. If increasing deficits will help the economy, why do the Tribune editors want to decrease deficits? Ever?

In summary, the Tribune editors continue to parrot the myths of the day. Not once do they even make an attempt to provide evidence supporting their beliefs. So I’ll leave you with a couple of questions, you may or may not wish to answer:

–Exactly what do you mean by “make up for lost revenue.” Do you mean that without this “lost revenue” the federal government will be unable to pay its bills?
–Why do you feel economic pain is beneficial. Has the economic pain we already have felt proved beneficial?
–Why do you feel cutting defense will benefit the economy and American security?
–Why do you feel cutting Social Security benefits will benefit the economy?
–Why do you feel reducing postal service will benefit the economy?
–What is the definition of “means,” when you say the government must live within its means. What has happened because the government has not lived within its “means.”
–What do you mean by ‘unaffordable debts.” Do you think a government with the unlimited power to create money, cannot afford to pay for the T-securities it creates out of thin air? Similarly, what do you mean by “unsustainable”?
–Does the Tribune feel any concern about spreading false information that could damage your readers and the entire American economy?
–Is the Tribune interested in learning the facts?

If any of you are readers of the Chicago Tribune, you may wish to write to them. Perhaps mutiple voices would help. I write to:
Zoll, Yerak, Dold, Japsen, Page, Greising, Letters, Ponpei, Delama, Kern, , Oliphant, Hirt, Business, Knowles, Kass, Lythcott, McHolt, O’Brien, Epodmolik, Lev, Doneal
Hughlett, Nicholas, Widder, Jones, Hunter, Wong

Rodger Malcolm Mitchell

No nation can tax itself into prosperity. Those who say the stimulus “didn’t work” remind me of the guy whose house is on fire. A neighbor runs with a garden hose and starts spraying, but the fire continues. The neighbor wants to call the fire department, which would bring the big hoses, but the guy says, “Don’t call. As you can see, water doesn’t put out fires.”

–Senator Durbin wanders in Fantasyland Friday, Dec 3 2010 

The debt hawks are to economics as the creationists are to biology. Those, who do not understand monetary sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.

Read about Senator Durbin’s wanderings in Fantasyland. Today, 12/3/10, the Chicago Tribune published an article by Dick Durbin, the senior Senator (D) from Illinois. The title: “Why I’m voting ‘yes.” Here are some quotes from the article, and my comments.

“On Friday, when President Brach Obama’s National Commission on Fiscal Responsibility and Reform gathers to consider a plan to bring our national debt under control, I will be voting yes. . . . America needs to grow our economy and reduce our $13.trillion debt. “

Never mind that almost 30% of that debt is merely one government department owing another government department. (Think of your checking account owing your savings account.) We can forgive that “minor” arithmetic error, because the good Senator makes a much larger one.

It mathematically is impossible to cut the debt and grow the economy at the same time. Money not only is the engine, but also the measure, of economic growth. GDP is a money measure. Cutting the debt requires taking money out of the economy, either by raising taxes or with reduced spending, or both. When you take money out of the economy, there is no mechanism by which you can grow the economy. There are no caveats about efficiency or savings or reducing waste or any other supposedly mitigating concepts. It simply is 100% impossible to grow an economy while reducing the money supply.

It’s like telling someone to take a lower paying job so he can buy a bigger house. The arithmetic doesn’t work.

Apparently Senator Durbin realizes this, because later he says:

“I worked (to) make certain that the (recommended) spending cuts do not start until 2013. We cannot run the risk of hitting the brakes in the midst of this recession, driving more people into unemployment and shredding the safety net to protect our families.”

So let’s see if we understand his thinking. Spending cuts “hit the brakes and drive people into unemployment.” We don’t want to do that now, but we do want to do it in 2013. Huh?

Then he said:

“I also insisted on two things to spark the economy: a payroll tax holiday that can create up to 900,000 jobs and a longer-term investment of $100 billion in infrastructure, education and reserach and development – key investments for long-term economic growth.”

Hmmm. So he wants to cut the deficit, but realizing that deficits stimulate the economy, he wants to increase the deficit with a payroll tax holiday and $100 billion investment.

So tell us again, Senator Durbin why do you want to cut the deficit? Oh sorry, you never told us the first time. Could it be because you have no reason? None at all?

“Borrowing 40 cents out of every dollar we spend for missiles or food stamps is unsustainable.”

Ah yes, the old “unsustainable” line. Back in February 7, 1982, almost 30 years ago, when the Federal Debt Held by Private Investors was $733 billion, President Ronald Reagan referred to the, “rapid, unsustainable expansion of Federal spending and money growth.” (See: Unsustainable) Today, the FDHBPIN is $7.9 trillion, having increased an astounding 1,000% in only 29 years, and politicians continue to refer to it as “unsustainable” – while we keep sustaining it with no difficulty whatsoever. When you say that something we have done, actually since the 1930s, is impossible, at some point you must question yourself. If it’s unsustainable, how have we sustained it?

Senator Durbin is yet another politician who does not understand monetary sovereignty. He does not understand that the U.S. can “sustain” any spending of any amount. Its spending is not constrained by deficits, debt or taxes, but rather by inflation – the inflation the Fed easily controls, the inflation from which we are a long, long way.

And he does not understand the federal government does not need to borrow the dollars it previously created, and does not need to borrow what it can create in unlimited quantities.

How frightening it is that Senator Durbin expresses the false beliefs held by the majority, not only of Congress but of the American people. One only can imagine how Galileo felt.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity. Those who say the stimulus “didn’t work” remind me of the guy whose house is on fire. A neighbor runs with a garden hose and starts spraying, but the fire continues. The neighbor wants to call the fire department, which would bring the big hoses, but the guy says, “Don’t call. As you can see, water doesn’t put out fires.”

%d bloggers like this: