How we can prevent recessions and depressions Saturday, May 25 2019 

How we can prevent recessions and depressions.

In order to prevent something, it is helpful to know what causes that thing. If we wish to prevent recessions and depressions, we need to know what causes them. Then, if we can prevent the causes, we can prevent the effect.

The word “recession” is defined as two consecutive quarters of reduced economic growth. It’s an arbitrary definition, that could just as easily be “three or more” – or fewer – quarters of reduced growth.

“Depression” has an even less specific definition. Investopedia says, “A depression is a severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts two or more years.”

Ask any mainstream economist what causes recessions and depressions, and he’ll tell you pretty much what 24/7 Wall Street says in its 2010 article, “The 13 Worst Recessions, Depressions, and Panics In American History”  by Michael B. Sauter, Douglas A. McIntyre, and Charles B. Stockdale.

They list as causes:

” . . . sharp rises in unemployment, disruption of the banking and financial system, steep fall-offs in business and consumer spending, stagflation, rising bankruptcies, and an increase in the number of companies which have to weather periods of financial distress, asset speculation bubbles (rapidly rising values of gold, land, real estate), trade restrictions, bank failures, unchecked lending,” and just about anything else you can imagine.

Thus, to the mainstream economists, preventing recessions and depressions merely requires preventing all of the above — in short, they have no idea what to do.

There is, however, one common denominator for the vast majority of recessions and for virtually all depressions, and if we prevent that one common denominator, we will prevent recessions and depressions.

Here is some data that illustrates the common denominator: Image result for shoveling money

1796-1799: U.S. Federal Debt reduced 6%. Depression began 1797
1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.

Historical Debt Outstanding  From:  https://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm

1796-1799: U.S. Federal Debt reduced 6%. Depression began 1797.
01/01/1799 78,408,669.77
01/01/1798 79,228,529.12
01/01/1797 82,064,479.33
01/01/1796 83,762,172.07

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
01/01/1812 45,209,737.90
01/01/1811 48,005,587.76
01/01/1810 53,173,217.52
01/01/1809 57,023,192.09
01/01/1808 65,196,317.97
01/01/1807 69,218,398.64
01/01/1806 75,723,270.66
01/01/1805 82,312,150.50
01/01/1804 86,427,120.88

1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
01/01/1822 93,546,676.98
01/01/1821 89,987,427.66
01/01/1820 91,015,566.15
01/01/1819 95,529,648.28
01/01/1818 103,466,633.83
01/01/1817 123,491,965.16
01/01/1816 127,334,933.74

1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
01/01/1836 37,513.05
01/01/1835 33,733.05
01/01/1834 4,760,082.08
01/01/1833 7,001,698.83
01/01/1832 24,322,235.18
01/01/1831 39,123,191.68
01/01/1830 48,565,406.50
01/01/1829 58,421,413.67
01/01/1828 67,475,043.87
01/01/1827 73,987,357.20
01/01/1826 81,054,059.99
01/01/1825 83,788,432.71
01/01/1824 90,269,777.77
01/01/1823 90,875,877.28

1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
07/01/1858 44,911,881.03
07/01/1857 28,699,831.85
07/01/1856 31,972,537.90
07/01/1855 35,586,956.56
07/01/1854 42,242,222.42
07/01/1853 59,803,117.701

1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
07/01/1873 2,234,482,993.20
07/01/1872 2,253,251,328.78
07/01/1871 2,353,211,332.32
07/01/1870 2,480,672,427.81
07/01/1869 2,588,452,213.94
07/01/1868 2,611,687,851.19

1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
07/01/1893 1,545,985,686.13
07/01/1892 1,588,464,144.63
07/01/1891 1,545,996,591.61
07/01/1890 1,552,140,204.73
07/01/1889 1,619,052,922.23
07/01/1888 1,692,858,984.58
07/01/1887 1,657,602,592.63
07/01/1886 1,775,063,013.78
07/01/1885 1,863,964,873.14
07/01/1884 1,830,528,923.57
07/01/1883 1,884,171,728.07
07/01/1882 1,918,312,994.03
07/01/1881 2,069,013,569.58
07/01/1880 2,120,415,370.63

1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
06/30/1930 16,185,309,831.43
06/29/1929 16,931,088,484.10
06/30/1928 17,604,293,201.43
06/30/1927 18,511,906,931.85
06/30/1926 19,643,216,315.19
06/30/1925 20,516,193,887.90
06/30/1924 21,250,812,989.49
06/30/1923 22,349,707,365.36
06/30/1922 22,963,381,708.31
06/30/1921 23,977,450,552.54
07/01/1920 25,952,456,406.16

It’s pretty clear isn’t it. The common denominator among all U.S. depressions is reduced federal deficit spending (reduced debt). A growing economy requires a growing supply of money, and federal deficit spending provides that money.

Ask anyone what caused the “Great Depression of 1929, and they will tell you exactly the same thing as Messrs. Sauter, McIntyre, and Stockdale:

“A period of rampant speculation in the 20’s led to a market crash of epic proportions. Over the course of two days, beginning with the infamous ‘Black Tuesday,’ the stock market lost more than a quarter of its value.”

Utter nonsense: The stock market IS rampant speculation. That’s all it is and all it ever has been. That’s its purpose. What do you think those guys behind computers, and those other guys on the floor waving their arms and screaming are doing: Rampantly speculating.

No, the Great Recession was due to lack of money.

And here is another hint:

Federal debt growth

Recessions (vertical gray bars) tend to begin following a period of reduced federal debt growth, and recessions and depressions are cured by increased federal debt growth.

Reduced growth in the money supply does tend to cause the ” . . . sharp rises in unemployment, disruption of the banking and financial system, steep fall-offs in business and consumer spending, stagflation, rising bankruptcies, and an increase in the number of companies which have to weather periods of financial distress, etc., etc. mentioned above, but they all are results, not the fundamental cause.

Economic growth requires money growth, which should be obvious, because the primary measure of the economy is GDP, which is a money measure. 

GDP = Federal Spending + Non-federal Spending + Net Exports.

All three terms — Federal Spending, Non-federal Spending, and Net Exports — are associated with increased supplies of money.

Since the federal government cannot run short of its own sovereign currency, the U.S. dollar, and has the unlimited ability to prevent inflation (which, in any event, is not caused by federal deficit spending, but rather by shortages), what is the reason to reduce federal deficits and debt?

I can think of only one: Ignorance of facts.

The one good thing Donald Trump has done (though he is clueless about what it is) is to run a trillion-dollar deficit. That will grow the economy, further, just as Barack Obama’s deficits did.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to 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 you.

MONETARY SOVEREIGNTY

 

Why do they want to make you angry at the wrong thing? Tuesday, Apr 16 2019 

I’ll tell you who “they” are and what the “wrong thing” is. But allow me to lead off with some excerpts from the anti-government site, Reason.com.

Fundamentally, Reason.com believes all governments are too large, no matter how large or small they may be.

Of course, making a government smaller does not make it more efficient, more benevolent, or wiser. 

Government is an easy target, because as you repeatedly have been told, government is terrible, except for one little thing: In a world without government, we would be starving, non-human, savage, undisciplined animals. 

Recently, Reason.com published an article titled, GOVERNMENT WASTE, Happy Tax Day! Here Are 6 Infuriating Ways the Government Spends Your Money
Surprised? Yeah, neither are we. By, JOE SETYON | 4.15.2019

The article refers to the federal government (important point). Excerpts:

Happy April 15, everyone! The federal government collects about $3.5 trillion in tax revenue each year, according to the White House Office of Budget and Management. Here, in no particular order, are six of the more infuriating ways that money has gone to waste.

1. $300,000 on 391 coffee mugs
2. $400,000 to promote asset forfeiture…in Paraguay.
3. $13.6 million to hire two border agents
4. More than $325,000 for Mike Pence’s national anthem stunt
5. $333,000 to study bars on the U.S.-Mexico border
6. Nearly $3 million to study dance clubs

If you’re curious, you can click the above link to read the details about each expenditure, but the point is that the federal government spent millions, billions and even trillions on lots of stuff that seems really dumb, and the writer wants you to be angry that these “useless” expenditures are taking dollars from your taxpayer pockets.

And it’s all a lie.

Those payments for coffee mugs, Paraguay, border agents, Pence, bars, and dance clubs didn’t cost you one cent. In fact, those payments put dollars into your pockets.

All federal “wasted” spending puts dollars into your pockets.

Now, if the article had been talking about state government or local government waste, it would have been correct. State and local taxpayers do pay for state and local government spending.

That is because state and local governments are monetarily non-sovereign. (So are you and I).Image result for government money

Those state/local governments do not have the unlimited ability to create their own sovereign currency; they have no sovereign currency; they use the U.S. dollar.

They can, and often do, run short of dollars, and they need tax dollars in order to survive.

By contrast, the federal government is Monetarily Sovereign. It has the unlimited ability to create its own sovereign currency, the U.S. dollar.

The federal government never unintentionally can run short of dollars. Even if all tax collections — income taxes, FICA taxes, luxury taxes, etc. — totaled $0, the federal government could continue spending, forever.

Every time the federal government pays a creditor, it creates new dollars, ad hoc.,

So what about all that “wasted” federal spending? Those are dollars that the federal government created from thin air, and added to the economy.

The “dance club” millions, the coffee mug thousand, the millions for two border agents — all those dollars were created from thin air and were added to the U.S. economy (except for a few that may have gone to overseas suppliers).

The vast majority of those dollars went to U.S. businesses, who used those dollars to pay for employees, who in turn used the dollars to purchase things like food, housing, clothing, cars, education, etc.

In short, the federal government’s “wasted” dollars actually are stimulus dollars, that grow the economy, and eventually wind up in your pockets, my pockets, your kids’ pockets, and even Donald Trump’s pockets.

Again, this is not true of state and local government waste. They do not create dollars from thin air. They use existing tax dollars for their spending. So when they waste money, the dollars come from their taxpayers’ pockets.

Image result for bernanke and greenspan

It’s our little secret. Don’t tell the people we don’t use their tax dollars.

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.”

Alan Greenspan: “Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency.”

St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e.,unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.

So, if the government neither needs nor uses tax dollars, why does it collect taxes? I’m glad you asked. There are three reasons: One mostly good, one bad, and one horrible.

The mostly good reason is: To control the economy by levying taxes on things they wish to reduce, and by giving tax breaks to things they wish to encourage. So-called “sin” taxes are examples of the former, and home real estate tax deductions are examples of the latter.

The bad reason is to reward rich political donors by giving them special tax breaks not available to the middle and lower classes.

The horrible reason is to groom you, the public, to believe that federal spending for social benefits (Social Security, Medicare, Medicaid, food stamps, other poverty aids, college tuition aids, etc.) must be limited or taxes must be increased.

Since the people do not want increased taxes, they easily are convinced that social benefits must be reduced. 

Thus, we have the fake claim that the Social Security Trust Fund is running short of dollars. (Like the federal government itself, no federal agency can run short of U.S. dollars, unless Congress and the President want it to run short). The “Trust Fund” is an accounting fiction, designed to give an imprimatur to a false assertion.

And we have the fake claim that “Medicare for All is unaffordable. And we have all the other fake claims about federal spending being unaffordable, and federal deficits costing taxpayers money. All untrue.

The bottom line is, the rich are rich because they have more money and property than you do. The key word is, “more” because “rich” is a comparative word.

That is, if you have a million dollars, and everyone else has a million dollars, you are not rich. You are just the same as everyone else. But, if you have one hundred dollars and everyone else has just one dollar, you are very rich, indeed.

In short, to be richer, you either must obtain more money for yourself, or you must arrange for the other people to have less money.

Either way widens the Gap between you and those below you, and it is the Gap that makes you rich.

That is why the rich bribe:

  • The politicians via campaign contributions and promises of lucrative employment later
  • The media via advertising dollars and ownership
  • The economics professors via university contributions and jobs with think tanks

The primary purpose of these bribes is to induce legislation to widen the Gap and to make you accept the necessity of widening.

In Summary:

The rich control American politics. Their fundamental goal in life is personal enrichment, which requires widening the Gap between the rich and the rest.

This involves not only bribing the politicians to make Gap-widening legal changes, but also bribing the media and economists to convince you, the public, that Gap-widening is necessary and beneficial.

These information sources promulgate the “Big Lie” that federal finances are similar to your finances, and federal taxes are necessary to fund federal spending.

The rich fear that if you knew federal taxes are not necessary to fund spending, you would demand more benefits, thereby narrowing the Gap, and effectively making the rich less rich.

The rich want you to be angry at “unnecessary” federal spending, so you readily will agree to cut your social benefits.

Finally, the rich want you to believe that federal deficit and debt lead to hyperinflations, similar to those in Zimbabwe and Weimar Germany, though inflations actually are caused by shortages, usually shortages of food and/or energy, not by money creation.

(Despite a 50,000% increase in federal money creation over the past 80 years, average inflation has been moderate, within the Fed’s target range.

While federal debt (blue line) has risen dramatically, inflation (red line) has risen moderately and within the Fed’s target rate

Unfortunately, the constant drip, drip, drip of anti-deficit, anti-debt propaganda continues to brainwash the public, and the Gap widens.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to 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 you.

MONETARY SOVEREIGNTY

Translating a letter from a debt nut Monday, Mar 11 2019 

Herewith, for your education and amusement, we translate into correct economics,  the opinions of a certifiable, wrong-headed debt nut:
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

President Trump’s budget aims to reverse an unsustainable fiscal situation and put debt on a downward path relative to the economy.
Unfortunately, as in previous years, he relies on far too many accounting gimmicks and fantasy assumptions and puts forward far too few actual solutions.
Translation: The Republican budget that President Trump has not, and cannot, read aims to continue a sustainable (since 1940) fiscal situation and put deposits into T-security accounts on an upward path.
Unfortunately, as in previous years, he relies on far too many accounting gimmicks and fantasy assumptions and puts forward far too few actual solutions.
Even full of accounting gimmicks meant to paper over deficits, the President’s Budget would still borrow $7.8 trillion over the next decade.
Under reasonable economic assumptions, however, we find it would be closer to $10.5 trillion.
Translation: Even full of accounting gimmicks meant to paper over stimulative additions to the economy, the Republican Budget that Trump hasn’t read, would still accept $7.8 trillion in T-security account deposits over the next decade.
Under reasonable economic assumptions, however, we find it would be closer to a $10.5 trillion addition to the economy.
Image result for signing blind

How Trump signs GOP bills.

President Trump has already signed into law debt-financed tax cuts and spending increases that will add $2.3 trillion to the debt over the next decade, despite budgets that proposed revenue-neutral tax reform and spending reductions.
This budget does nothing to address or pay for these expanded deficits – in fact, it assumes the tax cuts are extended without even recognizing the cost.

Translation: President Trump has blindly signed into law tax cuts and spending increases that will add $2.3 trillion to the economy over the next decade, despite recessionary budgets that proposed disastrous tax increases and spending reductions.

This budget does nothing to take advantage of the government’s unlimited ability to pay for these expanded additions to the economy – in fact, it assumes the tax cuts are extended without even recognizing the benefits.
Perhaps most disappointing is the decision to continue
Image result for money pouring into a hand

Deficits –federal tax cuts and spending — add growth dollars to the economy.

And expand recent defense increases by funding almost $100 billion in new spending through an off-book emergency war account.

This Overseas Contingency Operations (OCO) gimmick is not new, but the proposed abuse of this account rises to a new level never before seen and sets a dangerous precedent.
Translation: Perhaps most encouraging is the decision to continue and expand recent defense increases by funding almost $100 billion in new spending.
This Overseas Contingency Operations (OCO) program is not new, but the proposed use of this account rises to a new level never before seen and sets a favorable precedent for stimulating the economy.
Meanwhile, a fantasy assumption of sustained 3 percent economic growth makes a return appearance in the budget.
Every independent forecaster foresees growth to average closer to 2 percent over the next decade.
Assuming an extra point of growth serves no purpose but to mask the high deficits and debt likely to materialize under the President’s budget.
Meanwhile, a typically Trumpist fantasy assumption of sustained 3 percent economic growth makes a return appearance in the budget.
Every independent forecaster foresees growth to average closer to 2 percent over the next decade.
Assuming an extra point of growth serves no purpose but to mask the economy’s surpluses and the deposits into T-security accounts likely to materialize under the Republican’s budget.
Thoughtful Medicare, disability, and other proposals in the budget deserve serious debate, but these policies are overshadowed by inflated economic growth, unrealistic policy assumptions, and a failure to recognize the deep hole that policymakers have dug in recent years.
Translation: Thoughtful Medicare, disability, and other proposals in the budget deserve serious debate, but these policies are overshadowed by inflated economic growth, unrealistic policy assumptions, and a failure to recognize the economic stimuli that policymakers have invested in recent years.
If the past two years are any indication, this budget will be followed by more debt, not debt reduction.
On our current course, Americans will soon face record levels of debt, leading to slower income growth, increased interest payments, and less opportunity.
If the past two years are any indication, this budget will be followed by more economic growth, not growth reduction.
On our current course, Americans will soon face record levels of economic growth, leading to higher income growth, increased interest payments into the private sector, and more opportunity that results from increases in the money supply. 
In Summary:
If you merely substitute:
  • “deposits into T-security accounts”  for “debt,”
  • “investments in the private sector” for “deficits,”
  • “sustainable since 1940” for “unsustainable,”
  • “favorable precedent” for “unfavorable precedent,” and
  • “Republican” for “Trump” (who never reads anything and will sign anything anti-Obama),
you will be able to glean the truths from the lies of Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to 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 you.

MONETARY SOVEREIGNTY

Translating the code in a news article Saturday, Jun 30 2018 

It takes only two things to keep people in chains:Image result for pickpocketing

The ignorance of the oppressed

And the treachery of their leaders

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

Humans love codes.  Language is a form of code.

The word “red” is not red. The word “happy” is not happy. They are codes.

We even use code for code. The phrase “That’s great,” may mean something is great, or being sarcastic, may mean something is terrible.Image result for code

Go to your thesaurus, and you will see that virtually every word has multiple meanings, depending on context, which is a common attribute of codes.

Codes can be used to inform or deceive. Since our media and our politicians are notable code users —  the better to fool you — I’ll present you with a short example — the better to educate you.

Here are excerpts from an article that means exactly the opposite of what it purports to say. I offer a translation so you can see the true meaning:

Kudlow, others differ on deficit estimates
By Jeff Stein The Washington Post

WASHINGTON — President Donald Trump’s top economic adviser said Friday that the federal deficit is “coming down rapidly,” contradicting estimates by nonpartisan analysts, Congress’s official scorekeeper and a branch of the White House.

Translation: WASHINGTON — President Donald Trump’s top economic adviser said Friday that the federal government will add less money to the economy, contradicting estimates by partisan analysts, Congress’s official scorekeeper and a branch of the White House.

Larry Kudlow, director of the White House’s National Economic Council, said on Fox Business that stronger economic growth was creating enough new tax revenue to bring down the deficit.

Translation: Larry Kudlow, director of the White House’s National Economic Council, said on Fox Business that stronger economic growth was taking enough tax dollars from taxpayers’ pockets and from the economy to bring down the deficit.

“The deficit — which was one of the other criticisms (of the GOP tax law) — is coming down, and it’s coming down rapidly,” Kudlow said. “It’s throwing up enormous amounts of new tax revenue.”

Translation: “The economy’s surplus — which was one of the other criticisms (of the GOP tax law) — is coming down, and it’s coming down rapidly,” Kudlow said. “It’s taking enormous amounts of money from taxpayers and the economy.”

It’s hard to know where Kudlow is getting his numbers from.

Translation: We know exactly where Kudlow is getting his numbers from: The Trump administration.

The deficit from January through April was $161 billion, according to Treasury, up from $135 billion at the same point last year.

Translation: From January through April, the federal government pumped $161 stimulus dollars into the economy, up from $135 billion at the same point last year.

It will deteriorate further, since the Treasury collects a large amount of tax revenue in April when taxes are due for most.

Translation: The economy will be stimulated further, since the Treasury takes a large amount of money from the economy in April when taxes are due for most.

Kudlow may have been referring to a Congressional Budget Office report earlier this week that said the long-term deficit would be smaller than its estimate in 2017, partly because of revised downward estimates of health care spending.

Kudlow may have been referring to a Congressional Budget Office report earlier this week that said the government would add fewer dollars to the economy than its estimate in 2017, partly because of revised downward estimates of health care benefits to the public.

But it made clear that deficits are still set to rise in the near and long term.

“(T)he federal budget deficit, relative to the size of the economy, would grow substantially over the next several years, stabilize for a few years, and then grow again over the rest of the 30-year period,” the CBO said, projecting that deficits as a percentage of the economy would rise from 3.9 percent in 2018 to 9.5 percent in 2048.

Translation: But it made clear that the federal government will add more dollars to the economy and to your pockets in the near and long term.

“(T)he additional dollars, relative to the size of the economy, would grow substantially over the next several years, stabilize for a few years, and then grow again over the rest of the 30-year period,” the CBO said, projecting that federal input of dollars as a percentage of the economy would rise from 3.9 percent in 2018 to 9.5 percent in 2048.

Commenting specifically on the 2017 tax law, the CBO said it would increase deficits by $1.27 trillion over the next decade.

Translation: Commenting specifically on the 2017 tax law, the CBO said it would increase the amount of money going into the economy, and decrease the amount of money taken from you, by $1.27 trillion over the next decade.


Consider the irony:

Kudlow, who toils for Trump, wants you to believe that the government will add fewer dollars to the economy, and steal more dollars out of your pockets — and that supposedly is a good thing.

But the reality is that the current budget projections have the federal government adding more growth dollars to the economy, while taking fewer dollars from you — and Kudlow tries to deny it, when he should be boasting about it.

The simple fact is:

Larger economies have more money in them than do smaller economies, so to grow — to go from smaller to larger — an economy must have more money.

The federal government is an important source of the money that is necessary to grow our economy. When the federal government “deficit” spends, proportionately fewer dollars are taken from you, and more dollars are spent on benefits for you.

That is why reductions in federal deficit spending lead to recessions, which always are cured by increases in deficit spending.

Declines in deficit growth lead to recessions (vertical gray bars).

Worse yet, the total elimination of deficit spending (disingenuously called a “surplus”) leads to depressions:

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.

In the Kudlow article, the misleading code word is “deficit.” Look it up and you will see such hateful synonyms as: loss, shortfall, arrears, default, deficiency, inadequacy, insufficiency, lack, paucity, scantiness, and shortcoming.

No one loves “deficits.” But what Kudlow doesn’t tell you is that a federal deficit is a surplus for you.

The greater the federal deficit, the more money coming into the economy and into your pockets, and that is a very good thing, indeed.

Another common, misleading code word is “debt,” which means one thing when applied to people, and something altogether different when applied to the federal government.

Both “deficit” and “debt” are misused code words designed to scare you into taking dollars from your pocket and receiving fewer federal benefits. It’s what the very rich want.

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

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

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

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

Ten Steps To Prosperity:
1. ELIMINATE FICA

(Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.

2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE
(H.R. 676, Medicare for All )

This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”

3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All)
(The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) Or institute a reverse income tax.

This article is the fifth in a series about direct financial assistance to Americans:

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

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.

4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE
Five reasons why we should eliminate school loans

Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.

5. SALARY FOR ATTENDING SCHOOL
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

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