How really to stop inflation without doing damage to the economy.

The oft-revised Hippocratic oath for doctors contains variations on the phrase, “Do no harm.” If only the Fed, the President, Congress, most economists and economic writers understood and adhered to that admonision.

Sadly the above-mentioned folks claim one very big and very wrong and very harmful thing. They claim Federal deficit spending causes inflation

Inflation is not caused by federal deficits or any other type of money creation. Inflation always is caused by shortages of key goods and services.

ALWAYS.

Pick any inflation or hyperinflation in history and you will find that the cause was certain scarcities. Despite the photos of money in wheelbarrows, there never has been an inflation caused by money creation.

In fact, the reverse is true: Inflation causes money creation by those who do not understand the problem. )See: Will the “Build Back Better” bill and “too much” federal debt cause inflation? An examination of myths. – #Monetary Sovereignty – Mitchell (mythfighter.com)

Interest rates (blue) and inflation (green) have trended down, while federal debt (red) has increased.
We have had massive federal deficit spending for more than a decade, and interest rates have been near zero. But, inflation remained low.
Now suddenly, we have inflation.
What is different, today? Think: What is different today from the past 10 years of low interest rates and high federal spending?
Today’s sudden inflation is not caused by deficit spending, which has been ongoing, not sudden, for decades, but rather by sudden shortages of oil, food, computer chips, shipping, lumber, labor, etc.
None of those shortages is related to federal deficit spending; most are related more closely to COVID.
We currently have a COVID inflation, not a deficit-spending inflation.
In reality, federal deficit spending can CURE inflation if the spending is directed toward obtaining and distributing the scarce goods.
To cure inflation, we must cure the shortages that caused the inflation.
The government could cure our inflation by spending to increase oil drilling (or better yet, spending to:
1. Increase the availability and use of renewable energy)
2. Aid more efficient and more productive farming,
3. Encourage more local computer chip manufacture
4. Develop a more efficient shipping and transportation systems
5. Facilitate more lumber-growing (and substitute-for-wood products)
6. Eliminating FICA and providing Medicare for All (allowing employers room to increase salaries, thus tempting workers back to work).
The primary power to cure inflation is in the hands of Congress and the President, not the Fed.
The Fed has some power, but it is small. Raising interest rates increases the value of the U.S. dollar, thus requiring fewer dollars to purchase the same amount of goods and services.
So when the Fed raises rates, this will help somewhat to reduce inflation. But if scarcities are not cured, inflation will continue to bedevil us.
Congress and the President, as usual, want to lay the responsibility anywhere but themselves. So, they ask the Fed to grow the economy and to control inflation, while the Congress and the President . . . well, what do they do about inflation? Not much, other than point fingers at the Fed.
Maybe they’ll continue to bicker like children about which party gets the credit for this and the blame for that. So while the Dems want to grow the economy, the GOP will vote against anything that grows the economy, lest the Dems get credit.
We are being led by a group of infantile liars. I would call them “useless,” except that doesn’t describe the damage they do.
Here is how the Fed plans to handle our scarcity-fueled inflation:

Inflation is still red hot, and it’s forcing the Federal Reserve into a new game plan
Updated December 15, 2021 SCOTT HORSLEY

The Federal Reserve is paving the way for possible interest rate hikesnext year, in an effort to contain stubbornly high inflation.

If oil, food, chip manufacture, shipping, and lumber-growing remain scarce, and FICA continues to chase people out of the labor poor, we will continue to have inflation, even if interest rates are raised to 10% or more.

At the conclusion of a two-day policy meeting Wednesday, the central bank announced plans to phase out its large-scale bond-buying program faster than initially planned.

The Fed started purchasing bonds during the pandemic as a way to keep borrowing costs across the economy low and to prevent any market disruptions.

What the Fed bond-buying program actually does is to pump growth dollars into the economy.

Unfortunately, turning off that money-creation pump will bring us closer to recession.

Reductions in federal debt growth lead to inflation
When federal debt growth (blue line) declines, we have recessions (vertical gray bars) which are cured by increases in federal debt growth.

Ending the bond purchases earlier would give the Fed more flexibility to raise interest rates sooner, if necessary, to keep prices from spiraling out of control.

The central bank said previously it wanted to stop its bond purchases before considering raising interest rates.

Utter nonsense. The Fed doesn’t need more “flexibility.” It has the infinite ability to raise interest rates. It merely does so by fiat, and up the rates go.

There is a zero relationship between bond purchases and the Fed’s ability to raise interest rates.

The Fed is taking a harder line against inflation after consumer prices in November jumped 6.8% from a year ago — the largest increase in nearly four decades.

The sudden jump in prices was not caused by the federal deficit spending, which will take place over as much as ten years. It was caused by COVID-related, OPEC-related, and regulation-related scarcities.

In a statement, the Fed acknowledged the rapid runup in prices. Although the central bank still believes inflation is largely driven by factors tied to the pandemic, which should ease when the health outlook improves, policymakers are no longer taking that as a given.

Yes, correct. Today’s inflation is not just largely driven, but totally driven, by pandemic factors.

Notably missing from Wednesday’s statement was the word “transitory,” which the Fed had used in the past to describe inflationary pressures.

“The risk of higher inflation becoming entrenched has increased,” Fed chairman Jerome Powell told reporters. “It’s certainly increased. I don’t think it’s high at this moment but I think it’s increased. And I think that’s part of the reason behind our move today.”

He is clueless about the future for the same reason we all are clueless. He has no idea how much oil will be pumped, how much food will be grown (including weather considerations), or how many computer chips will be manufactured or needed.

He has no way to know how and when the shipping situation will be fixed, and what we will do about the lumber shortage.

Like all of us, he doesn’t know what the effect of the omicron variant of COVID will have, nor if there will be other variants and what their effect will be. He has no idea what effect global warming will have on shortages, and when.

I would just as soon lay tarot cards on an ouija board as rely on economic predictions by the Fed chairman, or anyone else, including me.

His problem is not just his inability to predict the future, but also his inability to judge cause and effect.

The Fed has kept interest rates near zero throughout the pandemic in an effort to prop up the economy.

And during all that time of low interest rates, we had massive federal deficits with low inflation. That alone should provide any thinking person with sufficient evidence to determine that deficits and debt do not cause inflation.

Twelve of the 18 members of the Fed’s rate-setting committee now say they expect interest rates to rise by three-quarters of a percent or more in 2022.

That underscores the evolution in the Fed’s thinking. Three months ago, no one on the committee envisioned rates climbing by that much next year.

It’s not “evolution.” It’s ignorance. From just three months ago their thinking totally has reversed. Why would anyone trust their predictions?

The Fed has repeatedly been surprised this year by both the strength and staying power of inflationary forces. While average wages have been rising at a rapid pace, prices are climbing even faster.

Really? Given all their inside information, were they really surprised by the oil shortage? The computer chip shortage?

Committee members now say they expect inflation to be 2.6% at the end of next year, up from 2.2% that was projected in September. 

Raising interest rates is the Fed’s traditional tool for keeping inflation under control, but it comes with its own price. Higher borrowing costs typically lead to slower economic growth, and the Fed has been reluctant to raise interest rates until it feels the U.S. had achieved “maximum employment.”

Do higher borrowing costs (blue) typically lead to slower growth. (red)? Not according to this map.

The popular wisdom is that low interest rates make borrowing easier, and so are stimulative, and high rates are stagnating or worse. But the above graph seems to show the popular wisdom to be incorrect, even opposite to the truth.

While low rates make borrowing easier, they also mean that the federal government will pump fewer stimulus dollars into the economy (for interest on T-bills, T-notes, and T-bonds).

If anything, there seems to be a correspondence between high interest rates and high GDP growth.

That’s the challenge facing Fed policymakers.

“This was a different kind of recession that we’ve never really been through,” said Greene, who’s also chief economist at the Kroll Institute. “So the jury’s still out on what’s going to happen with the labor force.”

Powell suggested that if inflation goes unchecked, that in itself could jeopardize a complete jobs recovery.

The inflation can be checked, but not by the Fed. Congress can check the inflation by:

  1. Using tax policy and spending policy to encourage the development and use of renewable energy.
  2. Using tax policy and spending policy to encourage the development of more and better food crops and other foods, that are able to feed more people, using less land, labor, and fertilizers, while renewing the soil.
  3. Using tax policy and spending policy to encourage the supply of lumber and other building-related materials.
  4. Using tax policy and spending policy to encourage the development of U.S. based computer chips and other computer-related hardware and software.
  5. Using tax policy and spending policy to improve both international and domestic shipping and mail. The postal service should be funded by the government and not be required to make a profit.
  6. Eliminating FICA so that employers are encouraged to raise salaries.
  7. Providing Medicare for All so that employers do not need to fund healthcare insurance, and again, are encouraged to raise salaries.

“What we need is another long expansion like the ones we’ve been having over the last 40 years,” Powell said. “And to have that happen, we need to make sure that we maintain price stability.” 

“Price stability,” i.e. low inflation, is beneficial, but it does not lead to “another long expansion. The primary factor leading to a long economic expansion is ongoing and increasing federal deficit spending.

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

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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
  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

The end of poverty in America

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.

Poverty in America | The Economist

The poor you will always have with you, and you can help them any time you want. (Mark 14:7)

For there will never cease to be poor in the land; that is why I am commanding you to open wide your hand to your brother and to the poor and needy in your land. (Deuteronomy 15:11)

Is it true that there always will be poor people? Should it be true? Must it be true?

Yes, the poor have been with us in most societies, but it should not be true, and it need not be true.

Mathematically, in any scale of wealth, income, or power, some must be closer to the bottom. If “having less” is your definition of “poor” then yes, the poor always must be with us.

But what if your definition of “poor” referenced “insufficiency” rather than “less” — insufficiency of food, healthcare, education, housing — then perhaps the poor need not all ways be with us.

I suggest that it is not necessary for some people in America to be starving, sick, uneducated, and/or homeless.

Poverty fell overall in 2020 due to massive stimulus checks and unemployment aid, U.S. Census says
By Heather Long and Amy Goldstein
U.S. poverty fell overall in 2020, a surprising decline that is largely a result of the swift and large federal aidthat Congress enacted at the start of the pandemic to try to prevent widespread financial hardship as the nation experienced the worst economic crisis since the Great Depression.

Federal deficit spending for benefits to the poor “surprisingly” helped reduce the percentage of poor people. Who possibly could have expected that?

After accounting for all the federal relief payments, the so-called supplemental poverty measure declined to 9.1 percent in 2020 — the lowest on record and a significant decline from 11.8 percent in 2019.

The decline in the poverty rate means that millions of Americans were lifted out of severe financial hardship last year, the U.S. Census said. Poverty is defined as having an income of less than $26,250 a year for a family of four.

If you happen to believe that poverty is bad for America, and that honestly religious people wish to help the impoverished, then all that deficit spending opposed by debt-scare peddlers was good for this country.

If, however, you believe that the poor are lazy, good-for-nothing, takers, who deserve their poverty, then you will be saddened at learning the poverty rate declined.

And if you have been told that federal taxes fund federal spending, you will be flummoxed by all that spending with federal taxes staying the same.

And if you believe it’s better for the public to run a deficit with the federal government than for the federal government to run a deficit with the public, then you may be surprised to learn that federal deficit spending has allowed fewer people to be thrust into poverty.

Extensive federal relief assistance passed during the coronavirus pandemic is widely credited by economists and policy experts for preventing another Great Depression.

The stimulus payments provided $1,200 cash payments to most low-income and middle-class Americans last year, moving 11.7 million people out of poverty, the Census said.

Another 5.5 million people were prevented from falling into povertyby the enhanced unemployment insurance aid.

“This really highlights the importance of our social safety net,” said Liana Fox, chief of the U.S. Census Bureau’s Poverty Statistics Branch.

Try to remember the fight against deficit spending, put up mostly by the right wing (with just a couple faux Democrats dissenting). If they had had their way, we would have had a depression.

The annual findings also showed that median income declined by 2.9 percent in 2020 to $67,500. Still, after accounting for the government aid, every age group, racial and ethnic group and educational level saw a decline in poverty.

Some of the largest declines in poverty were reported for families headed by single moms, African Americans, Hispanic Americans and adults without a high school degree.

“The federal government responded quickly and significantly. And it’s very clear that those efforts prevented a sharp rise in poverty,” said James Sullivan, an economics professor at the University of Notre Dame.

“The concern is that we will see poverty rise again because we’ve now seen these relief packages expire.”

Remember also that the Monetarily Sovereign U.S. government has the infinite ability to create its own sovereign currency, U.S. dollars. It never can run short of dollars, and neither needs nor uses tax dollars for spending.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Despite current debates about “how will it be paid for,” the fact is that all federal spending is paid for the same way: The federal government, creates from thin air, its spending dollars. It can do so endlessly.

President Biden is urging Congress to enact more programs to help the poor and working class as part of a $3.5 trillion package that would make significant investments in many parts of the economy.

Top White House aides point to the success of the pandemic aid as an example of how additional resources can make a dramatic difference in lowering poverty and hardship.

You can be certain that 100% of the GOP will oppose any aid to the poor, though the same politicians will approve of aid to the rich.

All any insurance does is provide money, which the federal government is far more able to do. There is no advantage to your paying for health insurance, when the federal government is able to pay for health insurance.

The census data shows that the rate of uninsured was especially high in a dozen states that have chosen not to expand Medicaid eligibility under the ACA.

Unlike his predecessor, President Biden has been pressing to expand Medicaid in the dozen holdout states, and Congressional Democrats are considering proposals that would allow people frozen out of the program by their state governments to buy private ACA health plans inexpensively.

Here are the states whose political majority is Republican, and who do not consider poverty and lack of medical care to be a problem.

FROM KAISER FAMILY FOUNDATION

What happens next to family incomes and poverty will depend largely on how many Americans are able to return to work in the coming months and whether the U.S. government extends some aid to low-income Americans.

Contrary to popular wisdom, federal deficit spending does not cause inflation. All inflations have been caused by shortages of key goods and services, most often food and oil. Today’s inflation results from shortages of labor, food, and oil.

Sadly, some voters have so little regard for humanity that they vote against the federal financing to ease poverty — financing that costs them nothing, but that will lift their neighbors from agonizing poverty and free children from starvation, homelessness, illness, and lack of education.

SUMMARY

  1. The U.S. federal government has demonstrated how federal deficit spending can reduce poverty in America.
  2. The federal government, being Monetarily Sovereign, has the unlimited ability to deficit spend, without collecting taxes. It cannot unintentionally run short of dollars
  3. Federal deficit spending never has caused inflation; shortages of key goods and services are the sole cause of inflation.
  4. People who are homeless, uneducated, ill, and hungry are a drag on the economy. They are less able to produce and to consume.
  5. Poverty in America could be cured by the adoption of the Ten Steps to Prosperity (below).

The U.S. federal government has all the tools it needs to end poverty in America. All it needs is the will.

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

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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
  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

The debt “bomb” and Rachel Maddow. Not you too? Say it isn’t so

It takes only two things to keep people in chains:
The ignorance of the oppressed

Image result for in chains
Rachel, not you, too?

and the treachery of their leaders.

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http://bit.ly/2Hj8EHG

Perhaps I have a strange sense of humor, but I cannot help but laugh at the repeated “time bomb” references to our federal misnamed “debt.” (It’s not the kind of debt people think of. It actually is the total of deposits in T-security accounts.)

Years ago, we published the article, Federal Debt: A ‘ticking time bomb“.  It showed that in the 71 years from 1940 through 2011, the federal “debt” (deposits) repeatedly was called a “ticking time bomb” by the media, the politicians, the economists, and members of the public who believed what the experts said.

In 1940, the federal “debt” was $40 Billion dollars.  If you click the above link you will see that because of the “time bomb,” horrible things were just about to happen.

Any minute now. Look out! Duck, the sky is falling. Here it comes!

By 2011, the “debt” (deposits) had grown to $10 Trillion, at which time we were in the midst of huge economic growth, fueled by massive deficit spending, growth that continues today.

During that period, we published “From ‘ticking time bomb’ to ‘looming collapse,” an article that quoted the experts claiming the federal debt (deposits) continued to be a threat to America well into 2017.  By then, the so-called “debt” had grown to $15 trillion.

That’s a 50% growth in just six years, and still no explosion. The sky remained intact and America’s prosperity continued (though the Gap between the rich and poor also grew — that’s another story.)

If the first 71 years of wrong predictions were amusing, the next six were absolutely hilarious.  Sadly, the black comedy has not ended.

Just today, one of my favorite TV commentators, Rachel Maddow, broadcast a piece titled, “Paul Ryan legacy gives lie to Beltway’s deficit hawk mythology.”

“Rachel Maddow shows how the Beltway media spun up an elaborate myth about Paul Ryan as a budget hawk focused on reducing spending and debt.

Ryan announced his retirement two days after the CBO announced a record deficit resulting from the budget Ryan oversaw.”

Rachel criticized Ryan, who devoted his entire career, his entire raison d’etre as the Speaker of the House, for announcing his retirement with the claim that he had succeeded in what he wanted to do.

She rightfully scoffed at the notion of success by failure, but what she failed to mention is that by failing to keep his promises, Ryan helped America grow. 

If you go to the above link, and watch Rachel’s show, you’ll see she doesn’t understand that deficit spending is stimulative.

Money growth is absolutely, positively necessary for economic growth, and federal deficit spending, which is reflected in the so-called federal “debt,” provides money growth.

Yes, it was a case of ignorance succeeding, and Ryan probably still doesn’t understand it, but federal deficit spending has grown the economy, and cuts to federal spending have cut economic growth.

And today, even my beloved Rachel has joined the chorus of ignorance — or humor, depending on your perspective.

I can understand the boobs of Fox and Friends not getting it. When Sean Hannity is one of your top personalities, you know you have problems.

But Rachel? My Rachel Maddow? Oh Rachel, say it isn’t so.

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

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

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

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

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

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

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

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MONETARY SOVEREIGNTY

We all are doomed — again. What will it take for us to understand?

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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If you had read the following, which was published in the New York Times, what would you have thought about the imminent future of America?

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.”

These comments were made by the respected president of the American Bankers Association on Sept 26, 1940, at which time the Federal debt was $40 billion.

Similar “time bomb” comments were being made continually, until 20 years later, on Feb 11, 1960, we read in the New York Times:

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.”

When Secretary of Commerce Mueller made his dire prediction, the federal debt had risen to $236 billion.

The “time bomb” predictions continued, and by Oct 26, 1983, Fred Napolitano, former president of the National Association of Home Builders , jumped into the act:

“ . . . 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,’

By then, the federal debt “time bomb” had exploded to $1.3 trillion, and though Armageddon didn’t come, the predictions continued:

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.

Honest Mitch McConnell, remember him?

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

Image result for exploding time bomb
Fiscal “time bomb” never explodes.

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, which the federal government easily could fund, if it chose to.

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.

Never mind that neither taxpayers nor the federal government are financially burdened by government guarantees. The taxpayer never will pay, and the government easily could pay — no burden on either.

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.

The budget deficit is an economic surplus, good for the economy.

October 28, 1992Ross 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.

Ross Perot, remember him? Not much of a forecaster, is he?

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.

No one knows how the deficit, which adds dollars to the economy, saps America’s strength. An no one ever explains what those “devastating consequences” are.

April 14, 2003: Porter Stansberry, for the Daily Reckoning: The baby boomers are heading into retirement with no savings and no productive companies to support them in old age. Generation debt is a ticking time bomb…with about ten years left on the clock.

The ten years have expired.

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.

Well, I guess that didn’t happen.

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.

And waiting, and waiting, and waiting . . .

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

Nice, poetic phrasing . . . not true, but poetic.

And, as the Republicans are working to cut Medicare and Obamacare, this:

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 2011, the federal debt had reached $10 trillion, a 25,000% increase from its “dire” level of 1940.  Still, that debt time bomb refused to explode, and to Henny Penny’s dismay, the sky refused to fall.

Gross Domestic Product had risen from $43 Billion to $15.5 Trillion, but that massive economic growth did not dissuade the fear mongers. The “Big Lie” continued:

In 2014: CBN News: “The United States of Debt: A Ticking Time Bomb.” The vast majority of Americans feel in their gut that the economy is headed in the wrong direction, in no small part because of this debt time bomb.

Read more at: http://www.nationalreview.com/article/394293/united-states-debt-stephen-moore

On Jun 18, 2015: The ticking economic time bomb that presidential candidates are ignoring: Fortune Magazine, Shawn Tully,

On January 23, 2017: Trump’s ‘Debt Bomb’: Deficit May Grow, Defense Budget May Not, By Sydney J. Freedberg, Jr.

On April 28, 2017: Debt in the U.S. Fuel for Growth or Ticking Time Bomb?, American Institute for Economic Research, by Max Gulker, PhD – Senior Research Fellow, Theodore Cangero

The federal “debt” has grown massively, as has the economy. No sign of the “time bomb.”

By 2017 the federal debt had grown to $14.7 trillion, and the slowest time bomb in history still kept ticking. And ticking.

Now we have arrived in 2018. The debt still is growing; the economy still is growing. So these are good things, right?

Not if you read the news of the day:

Trump’s Tax Cuts Are ‘A Ticking Time Bomb,’ Says Former Treasury Secretary
January 2, 2018. (Bloomberg) Former U.S. Treasury Secretary Jacob J. Lew said the Trump administration’s decision to add a significant amount of debt through last year’s tax legislation is leaving the country broke.

“It’s a ticking time bomb in terms of the debt,” Lew said in a Bloomberg Radio interview with Tom Keene and Jonathan Ferro. “You cannot run a fiscal policy by spending trillions of dollars you don’t have at a time that the economy is doing well.”

Mr. Lew is well aware that the federal government always spends dollars it doesn’t have, simply because, being Monetarily Sovereign, it creates dollars, ad hoc, by spending dollars. Spending, or more specifically, paying bills is the federal government’s money-creation method.

(Anyone who believes the government spends dollars it has, is welcome to tell me how many dollars the U.S. Treasury has. You might be surprised at not being able to find an answer. But why would a government need to have dollars, if it can create dollars, endlessly?)

We’ll end this explosion, not of time bombs that never explode, but ratherthe explosion of lies, with something from just a few days ago:

REASON.COM
What About the Debt? Trump’s State of the Union Ignores a $20 Trillion Time Bomb
If a Republican president can’t address a Republican-controlled Congress without paying lip service to the idea of cutting spending, what good are Republicans?
Eric Boehm|Jan. 31, 2018 9:31 am

The tax bill will also add an estimated $1.5 trillion to the national debt over the next 10 years.

Republicans can pat themselves on the back for cutting taxes, but unless spending is reduced all they’ve really done is postpone the payment of taxes for 10 years or so.

Has Mr. Boehm noticed that taxes have not paid for past federal debts? Does he realize that taxes have nothing whatever to do with federal debt?  (Even if all federal tax collections fell to $0, our Monetarily Sovereign federal government could pay off all its debts, with no difficulty. That is what “Monetary Sovereignty” means.)

For many years, pundits consistently have been wrong about the debt. If that doesn’t convince America federal debt is not a problem, what will?

What will it take for the American public to understand that the federal debt is nothing more than deposits in T-security accounts? These accounts are quite similar to bank savings accounts, that easily are paid off simply by returning the dollars residing in those T-security accounts.

What will it take for Americans (and citizens of other Monetarily Sovereign nations) to understand what “Monetary Sovereignty” means?

What will it take for the public to understand that a federal deficit is income for the economy, and the greater the deficit the more income benefits the economy?

What will it take for the public to understand that the lack of deficit spending leads to recessions and depressions and increased deficit spending cures recessions and depressions?

What will it take for the public to understand that the politicians, the media, and the economists have been paid by the rich to tell “The Big Lie, (that the federal government can run short of its own sovereign currency), so that social benefits like Social Security, Medicare, Medicaid, etc. can be cut?

How much evidence is necessary for the public finally to realize that the federal government has absolute control over the value of the dollar, so can cause or cure inflation at will?

Really, at long last, what will it take?

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

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

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

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

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

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

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

MONETARY SOVEREIGNTY