All creation involves destruction.
This fundamental truth requires no great insight. Visualize anything that has been created — a painting, a building, a song, a poem, an idea, a theory — and you will see that what preceded it was wholly, or partly, destroyed in its making.
The blank canvas, the random pile of bricks, the notes and the spaces between those notes, the meanings of words, the false beliefs, the earlier truths — all are destroyed by creation.
War is destruction and is one of the most creative of all human endeavors. No fields of the creative arts and sciences are unrelated to war.
This is not to claim that destruction, in of itself, is creative or beneficial. Rather, that beneficial creativity requires some measure of destruction.
With this as background, I suggest that the world can be changed, massively and irretrievably, by the two-word destruction: End FICA.
FICA, otherwise known as the Federal Insurance Contributions Act, supposedly funds Social Security and Medicare. Even its title, which includes the words “insurance contributions” is a lie.
FICA is a federal tax. Like all federal taxes, it funds nothing. (See: Does the U.S. Treasury really destroy your tax dollars?) FICA has nothing to do with insurance or with contributions to insurance.
You wrongly have been told that Medicare, for instance, is funded through trust funds. But these so-called “trust funds” are not anything like private trust funds.
These “trust funds” are fictional accounts that are debited and credited arbitrarily by the federal government. The Supplementary Medical Insurance (SMI) Trust Fund, which “pays for” Medicare Parts B and D, receives whatever funds Congress authorizes.
There are no limits on what Congress can authorize. This “trust fund” can run short of dollars only if Congress wants it to run short. This financing has nothing to do with tax collections. It all is strictly arbitrary.
You never had been told that fact.
The elimination of FICA would immediately accomplish one great thing. It would reduce the needless, harmful destruction of private sector dollars, that currently are sent to the U.S. Treasury, where they are destroyed.
Yes, every one of your federal tax dollars that you send to the U.S. Treasury is destroyed upon receipt. It is not saved somewhere for future use. It is destroyed.
By definition, large economies have more money than do small economies. Thus, a growing economy requires a growing supply of dollars. Taking dollars from the U.S. economy restricts economic growth, and even can lead to recessions an depressions.
U.S. depressions tend to come on the heels of federal surpluses, which remove dollars from the economy .
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.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001
Unlike you and me, and unlike businesses, and state and local governments, the U.S. federal government uniquely is Monetarily Sovereign. (See: Monetary Sovereignty, the key to understanding economics.)
As such, the federal government does not save tax dollars in order to pay bills. Instead, the federal government creates brand new dollars, ad hoc, every time it pays a creditor. (See: Have you ever played Monopoly?)
In this regard, no one can answer the question, “How much money does the federal government own?” Retaining the unlimited ability to create dollars at will, the federal government can be said to “own” infinite dollars — or no dollars at all.
Those FICA tax dollars, that are destroyed by the U.S. Treasury, were taken from the salaried class, the very people upon whom economic growth most urgently relies.
More importantly, FICA is resoundingly regressive. It is a tax that widens the income/wealth/power Gap between the rich and the rest. (See: Gap Psychology.)
All of the above-referenced benefits of FICA elimination pale in comparison to the real benefit. The destruction of FICA would open the way toward the understanding of one great economic truth: Monetary Sovereignty — the unlimited power that a money creator has over its own sovereign currency.
The very existence of FICA lends credence to “The Big Lie,” the false belief that federal taxes fund federal spending.
The Big Lie itself encompasses several sub-lies, such as:
- Federal debt is an unsustainable burden on the federal government and on federal taxpayers.
- Federal finances are similar to state and local government finances and similar to personal finances.
- Social Security, Medicare, and many other federal agencies are in danger of becoming insolvent.
- Federal wasteful spending is a burden on federal taxpayers.
- Federal deficit spending leads to inflations and hyperinflations.
- Federal social spending (incorrectly termed “socialism”) is unaffordable and unsustainable.
- Cuts to federal deficit spending (aka “austerity) are financially prudent.
In science, one fact begets another. Many decades after Relativity and Quantum Mechanics first were proposed, discoveries still are being made based on these two great theories. They have shown light on many dark corners of physics.
So too, does Monetary Sovereignty shine a light on the dark corners of economics.
The elimination of FICA would require the open discussion of Monetary Sovereignty, because the immediate question would emerge, “Who will pay for it?”
Answering that question requires understanding the realities of federal economics, i.e. the realities of Monetary Sovereignty.
Every knowledgable and honest economist understands two truths:
- The U.S. federal government created an arbitrary number of the original U.S. dollars from thin air and gave them an arbitrary value.
- The U.S. federal government continues to create U.S. dollars from thin air and retains the power to give them an arbitrary value.
Thus, it functionally is impossible for the federal government to run short of its own sovereign currency, a power it has demonstrated for the entire 240 years of its existence.
And because the federal government cannot run short of dollars, no agency of the federal government can run short of U.S. dollars unless that is what Congress and the President want.
Social Security, Medicare, Medicaid, poverty aids, roads, bridges, education, et al — all federal agencies — cannot become insolvent unless that is what Congress and the President decide, FICA or other tax collections notwithstanding.
The question, “Who will pay for it?” answers itself. Eliminating FICA will force the federal government to admit that the federal government will pay for goods and services the same way it always has — by creating dollars, ad hoc.
Eliminating FICA will force a rational conversation about Monetary Sovereignty, from which the public finally learns that federal taxes pay for nothing.
(This is unlike state and local governments, which are monetarily non-sovereign, and in which taxes do pay for state and local government spending.)
Further, the U.S. federal government has the unlimited power to give its sovereign currency, the U.S. dollar, any value it chooses.
It is a power the federal government has demonstrated many times with respect to silver and gold, and other currencies, most recently in 1971, when the government arbitrarily decided the value of the dollar would float freely on world currency markets.
The federal government retains the power to change that decision, and so, can control and prevent inflation, at will.
Question: What is a U.S. dollar worth? Answer: Whatever the U.S. government says it is worth. The government is sovereign over the dollar.
No doubt, you have been told that federal deficit spending will lead to a Zimbabwe-like hyper-inflation. Yet, no hyper-inflations have been caused by money “printing.”
Inflations are general increases in prices. They always are caused by shortages of goods and services (usually food), with government currency printing being an ignorant government reaction.
Even cursory logic demonstrates the facts. If the price of milk rises, what is the cause? Government money printing? No, the cause is a shortage of milk. That is true of all price increases, including general price increases.
Prices increase when there is insufficient product or services to meet demand. Inflation = shortages.
The cure for inflations, including hyperinflations, always is the same: Increase the availability of whatever products are in short supply, most often, food.
The elimination of FICA will force illuminating discussions of these basic facts.
Finally, you might ask,
“If Monetary Sovereignty is so straightforward, logical and factual, why would the politicians, the media and the economics professors not want you, the public, to know the truth?”
The fundamental reason has to do with Gap Psychology, the human desire to widen the income/wealth/power Gap below, and to narrow it above.
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.
The very rich, who run America and the world, want to become richer. That is the heart of Gap Psychology.
“Rich” is not an absolute; it is a comparative. So there are two ways for the rich to become richer: Either acquire more for themselves or allow you to have less.
The best way to allow you to have less is to prevent the government from giving you more. The rich do not want you to understand that you can have free medical care, free education, free housing and food, free clothing, and all the other things the rich can afford but you can’t.
The rich want to widen the Gaps between themselves and you. So they bribe the sources of information to tell you these things cannot be given to you.
They bribe the politicians via campaign contributions and promises of lucrative employment, later.
They bribe the media via ownership and advertising dollars.
They bribe the university economics professors via university contributions and jobs at think tanks.
Thus all the misinformation you receive regarding Social Security “insolvency,” and federal debt “unsustainability” and the need for FICA and other federal taxes, etc. originates with the bribes from the rich.
They spend billions to convince you that federal deficits are a danger to you and your children, and the good things in life are unaffordable to the government, and there is no such thing as a free lunch, etc., etc. etc.
It’s called “brainwashing.”
And it works. You undoubtedly have been brainwashed.
Do you know a college professor, or a politician, or a media writer? Ask him or her, “Why exactly is FICA necessary?” If the answer is, “To pay for Social Security,” you will know for certain that he or she has been brainwashed or has been bribed.
Then ask, “Is federal financing the same as state and local government financing?” and listen for the double-talk.
The federal government, being Monetarily Sovereign, has the unlimited ability to create U.S. dollars, so does not use tax dollars to pay for anything.
This is different from state and local governments, which are monetarily non-sovereign, and which do use tax dollars to pay creditors.
The rich have it all. There is no reason why you too cannot have it all. The rich don’t want that, but you can have it if you don’t fall for the brainwashing.
Think. It’s in your power to change the world.
Begin by demanding the end of FICA. Destroy this harmful tax and along with it, the Big Lies about limits to federal financing.
Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
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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:
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
#Monetary Sovereignty - Mitchell 