–Congress, the media, the economists: The same Big Lie since 1940. What the hell is the problem? Friday, Sep 25 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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Sen. Rand Paul, Kentucky Republican and 2016 presidential contender, said he could not support any bill that “continues to add to our nation’s mountain of debt. (By Tom Howell Jr. – The Washington Times – Thursday, September 24, 2015)

Congress, the media and the economists have been telling you the same Big Lie since — well, forever. What the hell is the problem?

The Big Lie, simply stated is this: “The federal debt should be reduced. Whether its federal debt or personal debt, being in debt is bad.”

But why is federal debt bad?

Will the federal government default? Will the federal debt cause inflation? Will our children have to pay the federal debt?

No, no and no.

So, what exactly is the problem with the federal debt?

Government debt threatens to send U.S. economy into death spiral, CBO warns

Rising federal debt threatens to choke economic growth within a decade, beginning a death spiral that will sap revenue from government programs even as demands grow, forcing the government to borrow even more, Congress‘ budget watchdog said in a frightening report Tuesday.

Budget cuts or tax increases now would help avert that scary scenario, leaving the economy far stronger than it otherwise would be, the Congressional Budget Office said.

The next few years will show solid improvement in the budget as the effects of the stimulus wear off.

So let’s get this straight: Tax increases make the economy stronger by . . . by what? By removing dollars from the economy?

Are we supposed to believe that reducing the money supply increases GDP??

And that federal spending, which adds dollars to the economy, should be decreased?

What branch of economics claims that adding dollars to an economy, particularly at a time of extremely low inflation, depresses the economy?

And finally, do we need the effects of the stimulus, which by definition stimulated the economy — do we need those stimulative effects to wear off?

Earth to CBO, Earth to CBO. Come in please.

And then we come to the infamous “debt ceiling,” the law that says, “Beyond an arbitrary limit, the U.S. government should not pay for what it already has bought.”

Right. Congress and the President first decide how much to spend and tax, and then the debt ceiling determines which debts they will pay, after all the spending and taxing.

Intelligent?

If that makes sense to you, feel free to join the CBO, drifting somewhere on a distant planet.

Returning to earth, here are the simple facts:

monetary sovereignty

In 1939, the federal debt was $48 billion.
In 1972, the year the U.S. government became Monetarily Sovereign, the federal debt was $436 billion — a 9-fold increase in 33 years.
Last year, the federal debt was $18 trillion — a 41-fold increase in 43 years.

Yet here we are: Despite the CBO’s ludicrous claim about a “death spiral,” the federal government still has no difficulty paying its debts (phony “debt ceiling” notwithstanding).

And despite debt-nuts’ incessant warnings about hyper-inflation, our inflation rate is as low as it ever has been — so low as to concern the Fed.

And with today’s federal tax rates at relatively low levels, nobody’s children are paying for past federal debts.

So again, what the hell is the problem? Why do we see headlines like these?

–The Treasury Department estimated (when) the government would hit its $18.1 trillion borrowing limit

–Highway trust fund runs out next summer

–Social Security disability payments will run out of money in 2016

–Medicare: Running out of time and money; The crisis is coming—with no easy fix in sight

–The United States Postal Service is in deep financial trouble

And why does the Big Lie continue to be told and believed, year after year:

FEDERAL DEBT, A TICKING TIME BOMB Sept 26, 1940, New York Times: Deficit Financing is Hit by Hanes: ” . . . unless an end is put to deficit financing,to profligate spending and to indifference as to the nature and extent of governmental borrowing, the nation will surely take the road to dictatorship

Our politicians, media and economists long have known that the public is economically ignorant, and will believe the same lies, even when the lies become laughably obvious.

The same warnings, since 1940 and earlier, about federal debt — yet the debt grows, and none of the warnings come true, the “time bomb” keeps ticking, and still the public believes.

Just like in the Peanuts comic strip, where Lucy repeatedly pulls the football away before Charlie Brown can kick it — and Charlie never catches on — the American public never catches on to the fact that the Monetarily Sovereign federal government cannot run short of its own sovereign dollars.

What is the purpose of the Big Lie? Very simple: Federal deficit spending benefits the poor and middle classes far more than the rich.

The rich run the government (via campaign contributions and promises of lucrative employment later), the media (via ownership) and the university economists (via university contributions).

The rich want the Gap between the rich and the rest to be widened, for without the Gap, no one would be rich, and the wider the Gap, the richer they are.

So now, as we enter the silly season of the federal debt ceiling debates, remember this: The federal debt ceiling is a Big Lie, and what the politicians, the media and the university economists tell you will be bullsh*t.

But our Charlie Brown public keeps getting fooled.

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.
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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
Monetary Sovereignty

Recessions come after the blue line drops below zero.

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

–A letter you may wish to write to your political representatives and local media: Friday, Apr 8 2011 

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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You may wish to send this letter to your political representatives and your local media. Let me know if you receive a response.

Dear _______________;

Can you explain why the federal deficit and debt should be reduced?

1. Is it because the federal government may have difficulty servicing its debt? No, as a Monetarily Sovereign nation (since 1971) the federal government now has the unlimited ability to pay debts of any size. Even were the federal debt to be $100 trillion, the federal government could pay off the debt in one day, by pressing a computer key, and without causing inflation. (Paying off federal debt merely is the exchange of one form of money [dollars] for another form of money [T-securities]. It does not increase the money supply.)

2. Is it because large deficits will require high taxes, later? No, there is zero relationship between federal spending and federal taxes. Were all federal taxes to fall to zero, this would not affect the federal government’s ability to spend by even one dollar.

3. Is it because our children and grandchildren will be in debt? No, our children and grandchildren are not the debtors and do not pay for previous federal spending. We are the children and grandchildren of the WWII generation, and we never have, nor ever will, pay for WWII debts. Today’s children and grandchildren are not paying for the Reagan-era debts.

4. Is it because paying the federal deficits and debt will cause inflation? No, contrary to popular wisdom, there is no historic relationship between federal deficits/debt and inflation, which actually has been caused by oil prices.

5. Is it because large federal deficits and debt will force interest rates up? No, interest rates are not set by the marketplace, but rather are set arbitrarily by the Fed, when it sets the Fed Funds rate.

6. Is it because federal deficits and debt hurt GDP growth? No, historically there is a positive relationship between federal deficits/debt and GDP growth.

7. Is it because federal deficits and debt reduce personal savings? No, historically, there is a positive relationship between federal deficits/debt and personal savings. This is because federal deficits supply the money to be saved.

8. Is it because federal deficits/debt replaces private debt? No, because federal deficits add money to the economy, they facilitate private borrowing.

9. Is it because federal spending gives government too much power? No. Federal deficits could and should support states, counties and cities, where the local governments direct the programs and the federal government merely supplies the money. This is similar to the way Medicaid is handled.

10. Is it because the U. S. government is like the euro nations, whose large deficits and debts are driving them toward insolvency? No, those nations are monetarily non-sovereign, so cannot create their currency. The U.S. is Monetarily Sovereign and can create its currency. The rules that apply to monetarily non-sovereign nations do not apply to Monetarily Sovereign nations.

11. Is it because federal deficits/debt increase the wealth gap between the rich and the poor? On the contrary, reductions in federal spending impact the poor more than the rich. Social programs and the military not only are skewed toward the poor, but occupy the largest part of federal spending. The majority of suggested budget cuts would affect the poor more than the rich.

So why is there concern about the federal deficit/debt? Because people confuse personal debt with federal debt, and think the same rules apply.

Still, what is wrong with reducing the federal budget? Here’s what: The federal government supports thousands of valuable projects that improve our lives — from Medicare to Social Security, roads, bridges, dams, food inspection, aid to the poor, housing, the military, financial oversight, product safety, medical research, scientific research, homeland security, education, energy, communication, FDIC, and on and on and on. Losing these benefits would severely impact our lives. The budget cutters claim to protect our children and grandchildren, but in reality, they punish those they claim to protect.

Further, a growing economy requires a growing money supply. Federal deficit spending is the federal government’s method for adding the money to grow the economy. All depressions and most recessions have come as a result of reduced growth in federal deficit spending.

In short, there is zero value or purpose to cutting the federal budget and thousands of reasons not to.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up the economy.”

MONETARY SOVEREIGNTY

–Who will be at fault for the return to recession? Wednesday, Mar 30 2011 

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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The horror the politicians will visit on us, all in the name of winning:

Former Democratic National Committee chairman Howard Dean said he would be “quietly rooting for” a government shutdown. “I know who’s going to get blamed – we’ve been down this road before.”

Yes, who cares whether the nation burns down so long as we point at the Republicans as arsonists.

South Carolina Sen. Jim DeMint (R),“I just hope that we are not so afraid of a government shutdown that we are not willing to make the right decisions. That is what the tea party is for.”

Ah, so that’s what the Tea Party is for: Closing down the government.

The politicians are playing games with our lives, but don’t blame them. They’re politicians, i.e immoral, amoral, ignorant, selfish, uncaring and untruthful. You know it, so why do you listen to such people? The fault lies with you who allow yourself to believe the absolute lie that the federal deficit is unsustainable and should be reduced. The fault lies with you who refuse to heed the facts showing federal deficits are absolutely necessary for economic growth, and the federal debt easily could be eliminated tomorrow, at the click of a computer key.

The fault lies with you who stand meekly aside while the sneering, insulting, foul-mouthed debt hawks dominate the discussion to deride the people bringing you the truth. The fault lies with you who ask for no evidence to support what the liars tell you, but rather allow yourselves to be led like lambs to the slaughter, and even grow angry when you are not led more quickly.

And when the Tea Party has its way, and valuable government services are emasculated or eliminated, and the economy enters another recession, perhaps worse than the previous one, the fault will lie with you who surely will whine and complain you didn’t realize this is what less government really means. “It’s not my fault. I didn’t know. Why didn’t they warn me I would lose my hopes and my dreams and my family and my life?”

You were warned. You just refused to listen. Who gave the Tea Party its power? “They sow the wind, and reap the whirlwind.” Though the Tea Party is sowing the wind, it is you, and the rest of us, who will reap the whirlwind.

Ignorance provides its own reward.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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

MONETARY SOVEREIGNTY

–The debt ceiling, the ultimate expression of Congressional ignorance Wednesday, Mar 2 2011 

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
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We all are ignorant of many things, but Congress has managed to demonstrate an inhuman, almost surreal level of ignorance in its wrestling with the debt ceiling. Each day, we read statements from otherwise intelligent people, that somehow manage to exceed in ignorance, the statements from the previous day.

The debt ceiling is Congress’s wooly-brained attempt to limit the spending which it itself authorizes. It’s like a person who goes shopping, and intentionally takes less money than they want to spend, because they know that once in the store, they won’t be able to control themselves. What an admission! Congress tells the world, “The majority of us is so foolish, so imprudent, so clueless, we need an artificial control to prevent our running amok — and we are the foolish, imprudent, clueless people guiding America.” As the kids say, OMG!

Those understanding Monetary Sovereignty know, since 1971 the federal government has had the unlimited ability to create dollars. It cannot “go broke” as House Speaker John A. Boehner often claims. Its debt is not “unsustainable,” as the media like to declare. The government could end all taxes and end all borrowing, while tripling its deficit spending, all with no difficulty. It could redeem every T-security (i.e. pay all debt) tomorrow, without breaking a sweat. So what does “going broke” and “unsustainable” mean?

The sole constraint on federal deficit spending is inflation.

So, the sole “purpose” for the purposeless debt ceiling must be to prevent inflation — and we are nowhere near that. Today, millions do not have health care insurance, and millions more have inadequate health care insurance. Millions of children go to poor schools, live in poor housing or on the street. Roads and bridges are falling apart. States are not paying their bills. Small businesses are failing for lack of payment by government agencies. Research and development has been reduced. And we labor with unemployment and the human suffering it causes, which suffering is exacerbated by a debt ceiling, and could be alleviated with federal support.

Here is a question you may wish to put to your Congressperson: “How, on balance, does having a debt ceiling benefit America more than it harms America?” I’ll be glad to publish their answers, here.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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

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