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

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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

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

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

Interest rates going up: Should you be concerned? Tuesday, Mar 27 2018 

It takes only two things to keep people in chains:
.

The ignorance of the oppressed
and the treachery of their leaders.

——————————————————————————————————————————————————————————————————————————————————————————–

Interest rates going up: Should you be concerned?

The answer: Well . . .  maybe and maybe not. Here are excerpts from an article by the anti-debt Committee for a Responsible Federal Budget (CRFB):

Rising Rates Could Further Balloon Interest Spending
Mar 21, 2018

The Federal Open Market Committee (decided) to raise the federal funds rate by 0.25 percentage points to 1.5-1.75 percent.

The federal government (is projected) to spend $6.8 trillion on interest costs over the next decade. If interest rates end up just 1 percentage point higher than projected, interest costs would increase by a further $2 trillion. If interest rates return to their pre-recession levels, costs could rise by $3.4 trillion.

Let us rephrase as follows:

The federal government (is projected) to pump $6.8 trillion interest dollars into the economy over the next decade.

Should a $6.8 trillion stimulus — which is similar in effect to a $6.8 trillion tax cut — be a cause for concern?

GDP growth parallels money supply growth

A large economy contains more money than does a smaller economy. The U.S. has a larger money supply than does California, which in turn, has a larger money supply than does Los Angeles.

This overly-simple example shows that to grow from smaller to larger, an economy usually needs an increased money supply. The projected $6.8 trillion in federal interest payments will produce an increased money supply and economic growth.

Federal deficit spending, which increases the money supply, is the method by which the federal government cures recessions:

Two views of deficit spending. The blue line is a direct fiscal year measure of deficit spending. The red line is the calendar year issuance of T-securities, the legal requirement for matching deficit spending. The vertical bars are recessions.

The above graph shows that federal deficit spending stimulates the economy to cure recessions. In the late 1990s, the federal government ran a surplus, which caused a recession. 

That being the proven case, one wonders why anyone would be anti-deficit.

Projected interest rates are notably below historic levels.

Most experts believe we will remain below these levels due to slower productivity growth, greater income inequality, higher demand for safe assets, higher foreign capital inflows, and generally observed reductions in global interest rates, but low interest rates are by no means a given.

If “reductions in global interest rates” are paired with “slower productivity growth” and “greater income inequality,” why would anyone favor low interest rates?

Under CBO’s interest rate assumptions, we recently estimated interest costs will quadruple in a decade or so. We projected interest will rise from $263 billion in 2017 to $965 billion in 2028 under current law and to $1.05 trillion in 2028 assuming various expiring policies are extended. In either of these scenarios interest costs (in percent of GDP) would represent a historic record.

To paraphrase, the CBO estimates that by 2028, our Monetarily Sovereign government will pump $965 billion – $1.08 trillion stimulus dollars annually into our economy.

The CBO implies that this must, in some unstated way, be bad for you. The CBO never says why, instead implying that large federal debt is similar to large personal debt.

It isn’t.

(We) project the debt-to-GDP ratio will rise from 77 percent of GDP today 101 percent of GDP by 2028. The historical record level of debt held by the public as a percent of GDP for the United States is 106 percent, set just after World War II.

We assume the warning about the debt-to-GDP ratio is supposed to frighten you, for some reason. But aside from the reason never being stated, there are two problems with the implied warning:

  1. The so-called federal “debt” isn’t a real debt. It is deposits onto into T-security accounts, that really are something like interest-paying safe deposit boxes.  The dollars go in, interest money is added, and at maturity, the dollars go back. Our federal government, being Monetarily Sovereign, uses those dollars.
  2. Even if the so-called “debt” were real debt that the government actually used (as with state and local government debt), the federal government, being Monetarily Sovereign, could pay it all off, simply by creating new dollars.

Here is a graph comparing GDP growth with the Debt/GDP ratio. It shows that changes in the ratio — up or down — do not affect our economic growth.

The rising Federal Debt/GDP ratio (red) you repeatedly are warned about, has no effect on GDP growth (blue). 

This is one of the reasons we say that the Debt/GDP ratio is meaningless. The ratio compares the historical total of deposits into T-security accounts that still exist, with the value of all goods and services produced in one year. It would be difficult to find two more dissimilar, unrelated measures in all of economics.

The ratio has nothing to do with the federal government’s solvency or ability to spend. The ratio has nothing to do with any need for future tax collections. The ratio has nothing to do with our economic growth or lack thereof.

In astrology, the motions of the planets are compared with future personal events.

 Debt/GDP ratio is economic astrology. It measures nothing.

Lawmakers need to reverse course to reduce the interest burden and the exposure to eventual higher interest rates.

“Interest burden”? Paying interest is no burden on our Monetarily Sovereign federal government. Even without collecting a penny in taxes, our federal government is capable of paying infinite amounts of interest.

Taxpayers do not fund the federal government’s interest payments or any other federal spending. The U.S. government created the very first dollars from thin air. It still creates dollars from thin air, merely by pressing computer keys. It cannot run short of its own sovereign currency.

So do not fret. Despite all the “Henny Penny” warnings, a high deficit, high debt, or high Debt/GDP ratio will not doom your children and grandchildren to higher taxes.

There is some debate about how interest rate increases affect the private sector. Most interest neither adds nor subtracts dollars from the total world economy. Interest just circulates, with some individuals and businesses paying more and some receiving more.

With higher interest rates, the public will pay more for loans and for products/services provided by borrowers. Meanwhile, the public will receive more from bonds, CDs, and interest-paying bank accounts.

So depending on your position in the economy, higher interest rates can help you or hurt you.

But remember, there is that one net benefit from higher interest: The federal government adds more stimulus dollars to the economy when it pays more interest.

When interest rates (red) grew from 1955-1980, GDP (blue) trended upward. When interest rates declined from the 1980s to 2018, GDP trended downward.

In Summary:

    1. Rising interest rates benefit the nation as a whole, because they force the federal government to add more stimulus dollars to the economy. Higher rates are associated with economic growth.Short term, the stock market reacts negatively to interest rate increases, because traders anticipate it will, and act accordingly. Within a few days, the market recovers, which proves the point.
    2. That said, borrowers are punished and lenders benefit from rising interest rates. If you plan to take out a new mortgage or to buy a car in the future, you will pay more interest. If you plan to put dollars into a bank savings account, a money market, a Treasury Security or a bank CD, you will benefit from an interest rate increase.
    3. To pay a creditor, the federal government sends instructions to the creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account. When the bank does as instructed, dollars are added to the money supply.From a bookkeeping standpoint, an account at the Federal Reserve Bank called Treasury’s General Account simultaneously is debited. Though this account is not part of the nation’s money supply, an obsolete rule disallows it from having an overdraft.
      So, the federal government, which is sovereign over the dollar, is forced to issue T-securities.These securities do not add to the federal government’s money supply (the government has no money supply) or provide the federal government with spending money, but rather they obey the rule by providing a bookkeeping credit to the Treasury’s General Account.
      If the government merely eliminated the rule, the Treasury could continue paying its bills, but there would be no requirement to issue T-securities, and there would be no worries about the so-called federal “debt.”
    4. The federal debt/GDP ratio does not reflect the federal government’s ability to pay its bills. It does not reflect the health of the economy. It does not reflect future tax increases or decreases. It is a meaningless ratio comprised of a multi-year measure (total T-securities) divided by a 1-year measure (GDP).
    5. The unfounded concerns about the federal deficit and debt are promulgated by the very rich, who based on Gap Psychology, wish to convince the rest of America that federal social benefits (Social Security, Medicare, Medicaid, aids to the poor, aids to education, etc.) are unaffordable.

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

    MONETARY SOVEREIGNTY

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

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

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

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

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

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

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

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

    MONETARY SOVEREIGNTY

Good is bad. Up is down. Other “truths” the authorities are telling you Friday, Feb 9 2018 

It takes only two things to keep people in chains:
.

The ignorance of the oppressed
and the treachery of their leaders.

——————————————————————————————————————————————————————————————————————————————————————————–

Let us begin with some real truths, after which we can move on to the fake “truths” you have been hearing.

Real truths:
1. The U.S. federal government, being Monetarily Sovereign, never can run short of dollars. Even if tax collections fell to $0, the federal government could continue spending, forever. It creates dollars, ad hoc, by paying creditors. Federal taxes do not pay for federal spending; dollar creation pays for federal spending.
2. Federal spending stimulates Gross Domestic Product growth by adding dollars to the economy. (Federal Spending is part of the basic GDP formula: GDP=Federal Spending + Non-federal Spending + Net Exports).
3. The federal government has absolute control over the value of its own sovereign currency, which gives it control over inflation.

Now, let us move to an article from 2/9/18 Chicago Tribune, an article typical of what you will see in your own local paper, and see on TV, and hear on the radio:

Budget deal would pour gas on an economy running hot
By Don Lee Washington Bureau

WASHINGTON — If the GOP’s $1.5 trillion tax-cut package powers the American economy like rocket fuel as President Donald Trump predicts, the new congressional budget deal could, if passed, become the extra boost that causes the engine to overheat.

“Overheat” means inflation. The prediction, very simply, is that deficit spending will cause inflation.

Image result for time bomb

78 years and the fake bomb still is ticking.

 

That has been the concern for the past 78 years. In 1940, when the “Debt Held by the Public” was 40 Billion, it was called a “ticking time bomb.” Every year since, it has been termed some variation of “ticking time bomb.” Yet today, inflation is low and controlled.

Seventy-eight years of being wrong have not taught the economists and pundits humility.

The budget compromise that was struggling late Thursday to win passage provided a bipartisan answer to the latest fiscal crisis. But lawmakers did so by raising spending caps on military and non-defense programs that would add $300 billion to $400 billion to the deficit.

Coming on top of the tax cuts passed late last year, the increased spending caps — plus tens of billions of additional money for hurricane relief — would throw more fuel to an economy that is already perking up.

“Throw more fuel” means to grow the economy. Aside from inflation fears — the same false fears expressed for the past 78 years — why is growing the economy considered a bad thing? I’ll tell you later in this post.

Analysts say that raises the odds of higher inflation and interest rates, precisely the concerns that in recent days have stoked investor fears and stock market volatility.

The budget deal also means that the United States probably would be returning to trillion-dollar annual deficits next year — much sooner than expected and under a government controlled by Republicans who traditionally had identified themselves as the party of fiscal probity.

The fear is threefold:

  1. That increased federal deficit is inflationary, and
  2. In response, the Fed will raise interest rates to combat the inflation, and
  3. Higher rates slow the economy, by making borrowing more difficult.

Let’s discuss each:

I. Is increased federal deficit spending inflationary?

The formula is Value = Demand/Supply. So if the Supply of money increases and/or the Demand for money decreases, the Value of money will be reduced, which means more money will be required to buy the same goods, i.e. inflation.

That is the formula. Here is the reality:

Blue line = inflation; Red line = deficit

For at least the last 45 years, there has been no relationship between our huge deficits and inflation, but why? Is something wrong with the formula?

Well, actually there is a relationship between deficits and inflation, but that relationship is overshadowed by a far more important relationship:

Blue line = inflation; Orange line = oil prices

The price of oil also is determined by the formula, Value = Demand/Supply. When the Demand goes up and/or the Supply goes down, the price of oil falls, and oil is far more influential on inflation than are federal deficits.

The price of oil affects the prices of nearly every product and service in the world.

That is why federal deficit spending has not caused inflation. Oil prices have, on average, gone down.

II. In response to inflation, will the Fed will raise interest rates?

Although we have shown that federal deficit spending has not caused inflation, even the suspicion of a coming inflation will cause the Fed to increase interest rates. Why?

Because of this formula: Demand = Reward/Risk. 

To combat inflation, the Fed wants to make dollars more valuable, and one way to do this is to increase the Demand for dollars. The Reward for owning dollars is interest.

The higher the interest rate, the more people want to own interest paying forms of money — savings accounts, bonds, notes, and bills. The demand for money increases, which increases the value (aka, the “strength”) of the dollar, thus reducing inflation.

III. Do higher rates slow the economy, by making borrowing more difficult?

This is widely believed, and this belief alone is one of the reasons why the stock market falls when the Fed raises rates. Traders sell just because they expect a downturn.

The other reason the stock market falls: Raising rates makes bonds more attractive, so investors sell stocks to purchase bonds.

That’s how the stock market operates, but what about the economy? Do higher rates slow economic growth?

Green line = Gross Domestic Product growth; Purple line = Interest Rate

There seems to be either no relationship between interest rates and GDP growth, or there actually is a reverse effect, with higher rates coinciding with higher GDP growth.

How can that be?

Two reasons: Federal deficit spending causes the issuance of more Treasury securities, which increases the amount of interest the federal government pays into the economy. And this interest payment increase is compounded by higher interest rates.

All that additional federal deficit spending is stimulative. Therefore:

Far from being a danger or a burden, growing deficit spending grows the economy, and reduced deficit growth is deflationary.

For instance:

Recessions (vertical gray bars) are introduced by reduced deficit growth, while recessions are cured by increased deficit growth.

Recessions are introduced by reduced deficit growth, while recessions are cured by increased deficit growth.

Extreme reductions in deficit growth (i.e. federal surpluses) tend to cause extreme recessions (i.e. 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.

When Trump took office about a year ago, the Congressional Budget Office projected that the nation’s deficit would run between $500 billion and $700 billion annually for a few years, not breaching $1 trillion until 2022.

With lower tax revenues expected and now additional spending and an accompanying agreement to lift the debt ceiling, some experts reckon the deficit would blow past $1 trillion in fiscal 2019 and keep rising.

Said another way:

“The Congressional Budget Office projected that the federal government would add between $500 billion and $700 billion in stimulus growth to the economy, annually for a few years, not breaching $1 trillion until 2022.

“With lower tax revenues expected and now additional spending and an accompanying agreement to lift the debt ceiling, some experts reckon the federal government will add a $1 trillion worth of economic growth in fiscal 2019 and keep adding growth dollars, thereafter.”

The complaint seems to be that growth is a bad thing, though as we have seen (above), economic growth does not cause inflation.

Treasury Secretary Steven Mnuchin has said that the president is concerned about the increasing debt. And on Thursday, deputy press secretary Raj Shah said the budget the White House plans to release Monday will show a “path” toward declining deficits.

A “path” toward declining deficits is a path toward more frequent recessions and depressions.

“Economic growth is essential to cutting deficits,” he said. “We are committed to fiscal discipline.”

The above is like saying, “Financial growth is essential to lower income,” completely senseless. “Fiscal discipline” means to reduce the income of the economy, also senseless.

The U.S. debt held by the public, including foreign investors, is currently about $15 trillion.

“We’ve already entered a period where we have these structural deficits, and to answer that with a new round of tax cuts that are unpaid for, and a new round of spending that’s unpaid for, is just adding insult to injury,” said Michael Peterson, president and chief executive of the Peter G. Peterson Foundation, a non-partisan organization focused on the country’s fiscal challenges.

First, to say that the Peter G. Peterson Foundation is “non-partisan” is like saying the GOP is non-partisan. It’s a right-wing foundation.

Second, the federal government does not use taxes to pay for spending; it uses money creation. Every time the federal government pays a creditor, it does so with newly created dollars, not with tax dollars.

Therefore, neither spending nor tax cuts can be “paid for.”

Some Republican lawmakers balked at the budget deal, calling it fiscally irresponsible.

No, “irresponsible” is to cut deficit spending and sink the nation into yet another unnecessary recession or depression.

The Great Recession severely shrank government revenues, and spending surged in 2009 as President Barack Obama and Congress responded with a huge economic stimulus package.

The federal deficit spiked to $1.5 trillion in 2009 and remained above $1 trillion for the next three years, then went back down to an average of around $575 billion a year in Obama’s second term through 2016, representing a little over the 3 percent share of gross domestic product that economists consider a maximum sustainable rate.

The politicians agree that deficit spending stimulates economic growth, but ignore that fact when we are between recessions.

The Republican tax cuts and new budget package amount to a similarly massive fiscal stimulus, but it is coming at a time when the economy is not faltering.

We have a recession every five years on average because the politicians drive the “economic car” by switching from gas to brake to gas to brake, forcing the economy to lurch forward in growth, then fall back in recession, again and again, and again.
Economists warn that the rising national debt will choke growth as more public money ends up going to support deficits instead of economically productive uses.

“You already have deficits growing too fast, you cut the (tax) revenue out from under us, you increase the spending, and on top of that you rule out making changes to entitlement programs,” said Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget (CRFB). “It ultimately spells fiscal disaster.”

The CRFB is the ultimate “Debt Henny Penny” organization, continually warning about debt-disaster, that never has come, and never will come. Instead, the disasters come when we cut deficit spending.

For 78 years we have been warned about that “ticking time bomb.” That fake bomb still is “ticking,” and the Henny Pennys still are warning. Wrong for all these years and still crying “Wolf!”

Why? Notice that phrase “entitlement programs” in the CRFB comment?

The real goal is to widen the Gap between the rich and the rest by cutting Social Security, Medicare, Medicaid, and all poverty aids.

The Gap is what makes the rich, rich. Without the Gap, no one would be rich. (We all would be the same.) And the wider the Gap, the richer they are.

So the rich bribe the politicians (via campaign contributions and promises of lucrative employment later), the media (via ownership and advertising dollars),  and the economists (via contributions to universities and lucrative “think tank” employment) to spread “The Big Lie” that federal financing is like personal financing.

But federal financing is unique. Debt is not a burden on the federal government or on federal taxpayers, and it does not force inflation on us.

Our opinion leaders are paid to make you believe that good is bad, and up is down, so they can keep you down and lift the rich up.

And that is what all the “ticking time bomb” lies are about.

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

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

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

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

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

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

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

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

MONETARY SOVEREIGNTY

–There is too much money in the economy. The big problem is not recession; it’s too much federal spending. Thursday, Aug 4 2011 

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Today’s headline:

Dow Jones closes down 513 points;

worst drop since October ’08


Well obviously, we need to cut federal spending. Quickly, write your Congressperson and thank him/her for cutting the federal deficit. Tell him there still is too much damn money in the economy, so we need to cut spending even more. And thank you Mr. President for giving us austerity. That should eliminate the unemployment problem.

By the way, last month I predicted a depression for 2012. What can prevent it? Federal deficit spending. (But don’t tell the Tea Party).

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


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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. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings

MONETARY SOVEREIGNTY

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