Big data, uncertainty, prediction, and approximations Tuesday, Oct 11 2016 

A few thoughts on uncertainty:

Nothing is certain. We live in a universe of approximations.

There is, in physics “the Heisenberg uncertainty principle,” which describes certain limits of what we can know.

We simultaneously cannot know both the position (in space) of a subatomic particle and its momentum (speed times mass). The more accurately we measure one, the less accurately we can know the other.

This counter-intuitive fact has nothing to do with the act of measurement (aka “the observer effect”) somehow changing the result. It has to do with what we absolutely never can know, despite out best, most careful efforts.

At any moment in time, each particle has both a position and a momentum. But we cannot know both.

Nature has decided some knowledge will be hidden from us, today, tomorrow and forever.

If you find this hard to believe, perhaps a slightly more familiar situation will be instructive: We simultaneously cannot know the diameter and the circumference of a circle.

We can measure the diameter of a circle. We can measure the circumference of a circle. But no matter how hard we try, we cannot measure both for the same circle.

We can measure the diameter as precisely as we wish. Let’s call it exactly “1” (1 inch, 1 foot, 1 mile, 1 light year).

No matter how precisely we create that circle, we never can know the diameter, which is based “1” multiplied by the infinite sequence known as π. Being an infinite sequence, π cannot be measured precisely.

In mathematics, there is a workaround, or rather a convenience, that says an infinite sequence can be expressed as the rounding of the last terms. For instance, 1.9999999 . . . can be treated as being the “same” as 2, because the difference would be infinitely small..

Pi is an infinitely long sequence. You can see a million digits of Pi here.

The first few digits are 3.14159 . . . , which sometimes are rounded to 3.14 or to 3.1416 if greater precision is desired.

True, the word “pi” represents a number, just as the word “one” and the numeral “1” each represent a number, but there is no way to measure both the circumference of a circle and the diameter, by the same number system.

If, for instance, one uses pi to measure a circle’s diameter, no fraction of pi will measure the same circle’s circumference.

Every circle has both a specific circumference and a specific diameter but you never can know both.

The uncertainty principle of physics and the uncertainty of pi in geometry are distant cousins. Physics at its core is mathematics, and mathematics at its core is geometry.

Because of the uncertainty found in geometry, mathematics, and physics, they all function only as approximations. Everything we know devolves to an approximation.

(In mathematics, even simple “1+1 = 2” is equivalent to the approximation:  .99999 . . . + .99999 . . . = 1.99999 . . .)

Economics, at its core, is psychology, and the measures in psychology are even less certain that are those of geometry.

Consider inflation (or as some call it, “price inflation”). It is defined as a general increase in prices. Though we can look back and declare with some confidence that there has been inflation, we cannot say how much.

Like subatomic position and momentum, or pi, inflation is unmeasurable.

Circulating through America’s and the world’s economies are billions, perhaps trillions, of different products and services, each changing through time. Today’s overall mix of products and services is different from yesterday’s. Tomorrow, just one day later will see a different mix.

How then does one compare the pricing of yesterday’s product/service mix “A” with the pricing of today’s product/service mix “A+1”?

If “A+1” has a higher price than does “A” does this represent inflation? Or does it merely represent the fact that two different product/service mixes have two different prices?

Consider a basic example: The price inflation of milk. We can’t even measure that . Too many alternatives. Skim, 2%, or regular; gallon, quart, or pint; Pasteurized, flavored, or raw;glass bottle, paper carton or plastic; grass-fed cow from Wisconsin, grain-fed cow from Illinois or a goat from Missouri.

Only fourteen such questions will yield nearly five million alternatives. What then is the better measure of price inflation in milk?

One sometimes hears that the federal government fudges the inflation statistics to make some point — to exaggerate or to minimize the measure of inflation. And this often may be true.

But since there can be no accurate measure of inflation, the best that can be attained is an approximation. The argument then becomes, “Whose approximation is ‘better'”?

“Better” for what? Is it “better” to know the position of a subatomic particle or its momentum? Or an approximation of both?

Is it “better” to know the diameter of a circle or the circumference or some approximation of each?

Is it better to know the price inflation of milk, or of some static and selected basket of products and services, or of some evolving and selected basket of products and services?

Our approximations tell us there has been some inflation in the past 20 years, though how much, we cannot know, nor do we know how much is “best.”

We can try to impute inflation by determining the changing value of money itself.  The formula is: Value = Demand/Supply.

Sadly, we have no measure for those terms, either.

Gross Domestic Product (GDP), another often-used measure, suffers the same problem. Without knowing inflation, a gross measure like GDP is all-but-meaningless. In fact, all the measures in economics are based on approximations, and when approximations are compounded by other approximations, results can vary wildly.

But it gets worse, for economics is massively complex, with all factors being related. Employment is related to GDP, which is related to education, which is related to income inequality, and on and on — trillions upon trillions of inter-relationships of approximations.

Much of science, including economics, has as its goal, prediction. Unless one can say, “If ‘A’ happens, ‘B’ will result,” of what value is economics?

And that is exactly the problem facing economics: It lacks predictability.

When someone predicts kicking a ball will send the ball into the air, that is not an impressive forecast. And when someone predicts that a triangle will resist deformation better than a square, that is expected.

But, when someone predicts a recession or inflation or a stock price increase, and that recession, inflation or stock price increase happens near the predicted time, the person is acclaimed, so rare is even somewhat accurate, prediction in economics.

Given that geometry is far more predictive than psychology (despite the effects of infinity), one might think economics would attempt to incorporate geometry into its calculations.

And indeed, it has, in the form of graphs and charts. Look in any economics text or read any economics blog, and you will frequent use of graphs and charts.

Unfortunately, the graphs and charts are constructed from the same uncertain data that makes economics prediction so difficult. Extending trend lines usually fails.

Finally, psychology is based on the brain, and the brain is an approximation device. We do not actually see an object. We translate a two-dimensional sensing of the light coming from the object, into a three-dimensional approximation, which is why illusions can be so convincing.

Approximations can make for good science, so long as we understand their limitations. Consider the Ten Steps To Prosperity (below), the plan for narrowing the income/wealth/power Gap between the rich and the rest.

Step #1 is “Eliminate FICA.” That tax is highly regressive, being imposed only on salaries (not on all income and not on wealth). Its primary effect is on the low- and middle-income workers.

We believe:

  1. The Gap is too wide and has been widening, though we don’t know how wide it is or how wide it should be.
  2. One measure of the Gap is via the GINI ratio, but this ratio is based on many variables, the measure and weighting of which can be debated.
  3. Eliminating FICA would narrow the Gap, but there is no way to determine how great the narrowing would be.
  4. Because the federal government is Monetarily Sovereign, and never can run short of its own sovereign currency, it neither needs nor uses FICA tax dollars.
  5. The only negative to eliminating FICA might be inflation, though we don’t know whether that negative is real, nor how much inflation might occur, nor whether, for certain,  inflation could be contained.

We see many beliefs, unknowns, and uncertainties indicated in those points. We cannot quantify them, nor prove them.

So why do we believe them?

The human belief system is based on translating insufficient information into certainty.

Everything is approximate. Looking out the window, I am certain I see a tree. But my brain has made an approximation. It has interpreted certain light quanta, falling on my retina to approximate a tree and a window, though upon closer inspection, the whole approximation might be a shadowbox or a photo or just a play of light.

Physics, geometry, and economics can grow only as we reduce the human element, i. e. the human interpretation and intuition as solutions to uncertainty.

The purpose of human intuition is quickly to interpret a massive amount of information that otherwise cannot be factored. But machines are good with massive amounts of data. A machine could find relationships in the huge data described in the milk illustration.

Think of Google’s web crawler, then think of more advanced computers crawling the web for every mention of every product and service.

At some future point, the computers will “know” the relationships between all past sales, uses and prices of everything, and from these past relationships, be able to estimate the future.

Big data will be the solution to big uncertainty, as we creep ever closer to knowing the position and mass, the diameter and circumference, the future of the Gap and of inflation.

Closer is as good as it ever will be.

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 rich and the rest.

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 afford better health care than 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 AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) 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 EVERYONEFive 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 benefiting 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 CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from 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 corporate 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

How the Rich Use the Big Lie to Cheat You: Chapter V: Taxes Wednesday, Feb 17 2016 

LOOK FOR US ON GOFUNDME.COM: RODGER MALCOLM MITCHELL

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

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“Nothing is certain but death and taxes.” You’ve heard it so many times it has become ingrained in our psyches that there must be taxes.

But why?

“To pay for the government,” comes the ready answer.

None of us likes paying taxes, but few of us even can imagine a government that does not levy taxes.

And it’s all part of the Big Lie. In it’s simplest version, the Big Lie is: “Federal taxes fund federal spending.”

We’ve discussed the Big Lie so many times, we won’t go deeper into it here, other than to say this: Monetarily non-sovereign governments like states, counties, and cities do need taxes to fund spending. The Monetarily Sovereign U.S. government neither needs nor uses taxes to fund spending.

Even if all federal tax collections fell to $0, the U.S. government could continue spending, forever. That is a fundamental econnomics truth, which you can read about at any of the numerous posts detailing the features of Monetary Sovereignty.

Why then, do we have taxes?

Some history: Being Monetarily Sovereign, the U.S. government has the unlimited ability to create its own sovereign currency. But it was not always so.

The one thing every government has is the ability to pass laws. And some of these laws may reduce the nation’s own Monetary Sovereignty. (The euro nations passed laws completely eliminating their Monetary Sovereignty.)

Deciding to be on a gold standard, where each unit of a nation’s sovereign currency must be matched by a unit of gold, cancels the nation’s unlimited ability to create its money.

During much of our history, the U.S. government has been on some sort of metal standard, and at those times, we were not Monetarily Sovereign. Our government needed to ask our citizens or foreigners for dollars.

This all changed on August 15, 1971 (“the Nixon shock”), when we freed ourselves from the restrictive chains of a gold standard.

Why then, do we still have taxes?

There are four reasons — the first two of which are offered by Modern Monetary Theory (MMT) — reasons MS disputes:

1. To provide Demand for, and therefore, Value to, the dollar.

There is some debate about whether Professor Randy Wray (UMKC), a leading proponent of MMT, believes taxes are necessary for this purpose, or merely helpful. He seemingly has supported both positions.

There can be little doubt that requiring Americans to pay their taxes with dollars, does help increase the Demand for dollars.

There is much doubt, however, about whether taxes are necessary to create Demand. The massive size of America’s economy, America’s huge export and import business, the availability of Treasury Securities as safe-harbor investments, the dollar’s position as a world reserve currency, and the worldwide trust in America’s full faith and credit, all combine to create Demand for the dollar — without the need for taxes.

2. Related to point #1.: The use of taxation to prevent inflation, another position supported by MMT.

In the formula Demand/Supply = Value, increasing Demand and/or reducing Supply will defeat inflation. Taxation reduces inflation partly by increasing the Demand for dollars, but mostly by decreasing the Supply of dollars.

Federal tax dollars are sent to the U.S. Treasury, where they are destroyed. Some critics of MS claim tax dollars are not destroyed, but the evidence for destruction is quite clear. If tax dollars were not destroyed, the U.S. Treasury would have billions of dollars. Yet there are no accounting records that show the U.S. Treasury to have any dollars at all.

Try to find the answer to the question, “How many dollars does the U.S. Treasury have”? and you will come up empty. The U.S. Treasury does not own tax dollars, and cannot provide spending money to the other branches of the government.

To pay a bill, the government (i.e. its agencies) sends instructions (not dollars), in the form of checks or bank wires, to the creditor’s bank. The instructions tell the bank to increase the balance in the creditor’s checking account.

At the moment (not before) the creditor’s bank obeys those instructions, dollars are created. Banks are the mechanism for all dollar creation, much of it is on the instructions of the U.S. government. (Banks also create dollars by lending.)

While taxation reduces inflation by reducing the money supply, taxing cannot efficiently be used as an inflation-prevention or cure device.

Preventing and curing inflation requires a mechanism that can be applied quickly, will act immediately, and can be implemented in small, measurable increments.

Taxation, by contrast, is slow, political and does not lend itself to small, measurable increments.

Visualize the U.S. Congress, faced with impending or actual inflation, trying to force all political parties to pass tax laws that can be implemented in small, measurable increments, and immediately will affect inflation.

If you were in Congress, which tax change would you be able to get through all the vested interests, and have immediate, incremental, measurable effects?

By contrast, the Fed instantly can raise interest rates by tiny increments, and these higher rates quickly will increase the Demand for dollar-denominated securities and for dollars themselves.

(MMT disagrees, claiming that higher rates increase business costs, thereby inflating prices. But the proof, as is said, is in the pudding. The Fed effectively has used interest rate to controls inflation, for a hundred years).

3. The third purpose of taxes is to guide behavior. “Sin” taxes on alcohol and cigarettes, reduce the usage of these harmful products by making them more expensive.

4. The fourth, most important reason we still levy unnecessary taxes, is to widen the Gap between the rich and the rest.

Consider the most extreme case of an unnecessary tax designed to widen the Gap: The FICA tax. This tax supposedly funds Social Security and Medicare, though no tax funds federal spending. FICA is a tax that applies only to wages, salaries, tips and self-employment income, and for most of the tax, it applies only to wages below $119K.

FICA does not apply to all sorts of income other than wages, salaries, tips and self-employment income (interest, capital gains and various forms of passive income — i.e. the income the very rich have)

In short, the rich pay a negligible amount of FICA, if at all, compared with their incomes. FICA is the perfect tax for widening the Gap between the rich and the rest.

Now consider sales tax. While there is no general federal sales tax, the federal government does levy taxes on alcohol, tobacco, guns, and ammunition. The cost of purchasing these products constitutes a greater percentage of middle- and low-incomes than of high incomes. In that way, these federal sales taxes widen the Gap (although the primary purpose is to control and limit consumption).

More serious, however, are local sales taxes. Being monetarily non-sovereign, Cities, counties, and states claim they need sales taxes to fund spending. These sales taxes constitute a huge proportion of middle- and low incomes and are greatly regressive.

Are local sales taxes really necessary, as the local governments claim? Yes and no.

Yes, if local tourism, business taxes, property taxes and other forms of income are insufficient to pay for local government spending.

No, if the federal government will simply use its unlimited ability to create dollars, and use those dollars to pay economic bonuses. (See Prosperity Step #3: Provide an Economic Bonus to every man, woman, and child in America, and/or every state a per capita Economic Bonus.)

SUMMARY:
1. Federal taxes do not fund federal spending.
They are destroyed upon receipt. Federal spending is funded ad hoc, with new dollars created at federal agency instructions.
2. Federal taxes cannot function as an inflation control. They are too slow, too political and not precise or incremental enough. The Fed successfully has used interest rates to control inflation.
3. To justify federal taxes, the rich have co-opted Congress, the media, the economists. The purpose: To widen the Gap between the rich and the rest.

Federal taxes can, and should be, dramatically reduced, while spending on social issues is increased. That is, the deficit should be increased. This is the point of the Ten Steps to Prosperity.

Rodger Malcolm Mitchell
Monetary Sovereignty

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PLEASE HELP US GET THE WORD OUT
LOOK FOR US ON GOFUNDME.COM: RODGER MALCOLM MITCHELL

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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.
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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

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK

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.

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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..

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..

MONETARY SOVEREIGNTY

–Republicans agree on the need to end FICA Wednesday, Nov 11 2015 

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

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..

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 poor.
•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..

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This post is a followup to the previous post: The KISS approach to narrowing the Gap and growing the American economy.

Headline: Republicans agree on the need to end FICA

Trump, Carson, Rubio: Don’t raise the minimum wage
By: Liz Goodwin, Senior National Affairs Reporter, November 10, 2015

GOP frontrunners Donald Trump, Ben Carson and Marco Rubio agree on at least one thing: The minimum wage should not be raised.

“Wages are too high,” Trump said, while explaining why he did not support hiking the federal minimum wage from $7.25 to $15 an hour.

“We are a country that is being beaten on every front: economically, militarily. There is nothing that we do now to win. We don’t win anymore,” Trump said.

The real estate mogul added that the country should dramatically lower its taxes but keep wages as they are to be more competitive economically with the rest of the world.

The crowd applauded. Ben Carson quickly agreed when the question was tossed to him.

See, the leading Republicans agree that taxes should be reduced and that wages also need to be reduced to make America more competitive — and eliminating FICA would accomplish all those goals.

Yes, we know that when Republicans say they want to reduce taxes, they mean reduce taxes on the rich.

And yes, we know that when Republicans want to reduce wages, they want to cut take-home wages.

And yes, we know that Republicans want to reduce wages so as to enrich corporations, which they phrase as “making America more competitive.”

But eliminating the wholly unnecessary FICA tax would accomplish everything Republicans claim they want:
1. Cutting FICA would reduce taxes
2. Cutting FICA would reduce paid wages (while increasing take-home pay).
3. Cutting FICA would enrich corporations and make America more competitive.

“Every time we raise the minimum wage, the number of jobless people increases. I would not raise it,” Carson said, to applause.

Sen. Marco Rubio joined his two rivals, saying tax reform would be more effective than raising wages.

“If I thought [raising the] minimum wage would be the best way to help increase their pay I would be all for for it, but it isn’t,” Rubio said of lower income people in the country.

“It’s disaster if you raise the minimum wage. You make people more expensive than machines.

That is why Republicans would love the elimination of FICA.
1. It would not increase joblessness
2. It is tax reform.
3. It is the best way to help increase workers’ pay.

Cutting FICA does everything — everything — Republicans say they want, with only a small exception. It doesn’t widen the gap between the rich and the rest. It doesn’t punish the poor, and it isn’t mean-spirited.

But hey, you can’t have everything.

Rodger Malcolm Mitchell
Monetary Sovereignty

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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 add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

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

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Vertical gray bars mark recessions. Recessions come after the blue line drops below zero and when deficit growth declines.

As the federal deficit growth lines drop, we approach recessions, each of which has been cured only when the growth lines rose.

Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–Lord, save us from our friends. The left’s plans for Social Security Wednesday, Aug 26 2015 

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

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. .
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 poor.
•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..

===================================================================================================================================================================================================================================================================================

The Republicans

The Republicans endlessly wish to privatize Social Security, for one reason and one reason only.

No, it’s not because private investments yield more than Social Security does. That’s the excuse given. The problem with that excuse is it merely restates a simple fact: With greater reward comes greater risk.

If you invest in stocks, you most likely will come out ahead in the long run — the long, long run. Or you could lose. In January 2008, the S&P stock average was above $1,400. By April of 2009, just 16 months later, it had fallen below $800, a drop of 40%.

Is that the kind of risk you think is appropriate for a retirement fund?

Further, if the Republicans were to privatize Social Security, the massive flow of dollars — billions upon billions of dollars — would cause a stock bubble the likes of which we never have experienced, to be followed by a bubble burst of epic proportions.

The Republicans know all this. So why do they keep suggesting privatization? To reward their dear friends, the rich bankers and investment brokers. Imagine the commissions!

The brokers salivate at the thought, and when they finish salivating, they give big campaign contributions.

The Democrats

The Democrats also understand the fallacy of privatization, so they offer other plans, not as ridiculous as the Republicans’ plan, but bad nevertheless.

O’Malley’s plan to expand Social Security draws fire from a Wall Street front

Former Maryland Gov. Martin O’Malley, one of the more overlooked candidates for the Democratic presidential nomination, emerged Friday with an encouraging endorsement of expanding Social Security to make it even more relevant to the lives of working Americans than it is today.

“The economic pressures on millions of families — from stagnant wages and high housing costs, to a lack of affordable childcare and skyrocketing college tuition — have resulted in meager, if any, retirement savings for tomorrow’s retirees.”

He’s right about that, and right that Social Security is the one pillar of retirement security that has remained strong, while employer pensions and retirees’ personal nest eggs wither.

He calls for expanding benefits and requiring wealthier Americans to shoulder their fair share of the program’s cost.

Expanding benefits is good, even necessary if SS is to have much meaning. But no one, neither the rich, nor the poor, nor the benefit recipients, needs to “shoulder any share of SS costs.

People can run short of dollars. The federal government cannot. It is Monetarily Sovereign. It creates its sovereign currency, the dollar, at will.

So why ask people to shoulder the burden, when paying for SS would be no burden at all for the federal government?

O’Malley joins Sen. Bernie Sanders (I-Vt.), and Sen. Elizabeth Warren (D-Mass.), who also are pushing to expand the program.

O’Malley’s move may increase pressure on Hillary Rodham Clinton to endorse Social Security expansion. She’s been silent on the issue.

O’Malley would impose the payroll tax on all earned income over $250,000. Because the higher figure wouldn’t be indexed to inflation, that window would narrow over time.

Sanders would impose the tax on all income, including unearned income such as capital gains, over $250,000.

Aside from guaranteeing massive pushback from those who would have to pay the new tax (i.e. those who are the big contributors to politicians), these plans are based on, and would fortify, the myth that taxes are needed to pay for Social Security.

Rather than simply telling the truth, that the federal government can spend whatever it wishes to spend, on anything it wishes to buy, the Democrats follow the same fact- twisted notion as the Republicans.

Both parties agree that SS payments are too low, and both pretend that the problem is a lack of income. The only difference is that the Republicans want stock market investors to pay for that income, and the Democrats want the people to pay it.

In short, the people pay everything and the government, which can afford anything, pays nothing. That’s every politicians’ plan.

Remember, neither the people at large, nor the people who invest in stocks, actually create any dollars.

Rising stock prices don’t create dollars. In its essence, the stock market is a gigantic Ponzi scheme, in which the same dollars simply move from hand to hand. The same is true of FICA, which also creates no dollars, but rather takes dollars from one hand, while giving dollars to another hand.

The only time dollars are created is via federal deficit spending, in which the government creates more dollars than are destroyed via taxing.

More than half of all married couples in retirement and about three-quarters of singles get 50% of their income or more from Social Security. For a fifth of married seniors and half of the unmarried, the program accounts for 90% of income.

It is sad for our wealthy nation, when half to three-quarters of retired people must credit 50% of their survival to the pittance provided by SS.

O’Malley explicitly states that he wants to give minimum-wage and lower-income workers an especially enhanced benefit and raise the special minimum Social Security benefit to 125% of the federal poverty level.

That benefit, which applies to workers with long histories of very low wages, is currently $804 a month, which is about 82% of the poverty level; O’Malley would raise it to about $1,226 a month.

Ten years ago, we recommended eliminating FICA and exactly six years ago, we published Ten Reasons to Eliminate FICA

The 10 Reasons remain relevant today, but there is an eleventh reason: The existence of FICA lends false credibility to the Big Lie — the lie that federal spending requires funding from federal taxes.

It is the Big Lie that punishes the poor and widens the Gap between the rich and the rest.

At long last, will the Democrats please stop supporting the Big Lie?

Lord, save us from our friends.

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
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 add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

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

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

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.

#MONETARYSOVEREIGNTY

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