The fake “debt time-bomb,” still ticking after 78 years Wednesday, Aug 1 2018 

Every so seldom, I feel compelled to remind you of the #1 idiocy in economics, the daily, weekly, monthly, and annual warnings that the U.S. federal “debt” is a ticking time-bomb, ready to explode at any moment.

This repeated forecast has been promulgated for at least the 78 years since 1940, with  no end in sight.

In any other science, a repeated failed prediction would be a strong signal that either the facts are wrong or misinterpreted, and its forecasters are wrongheaded.

But, because mainstream economics is not a real science, but rather is akin to a religion, its asinine, proven-wrong forecasts are treated with solemn respect.

Image result for sign the end is near

Any minute, now

Imagine the cult leader who tells his followers to climb the mountain and await the world’s end.

When the world fails to end, they climb back down, but still believe the cult leader’s next “world-is-ending” prophecy.

That is economics.

By way of reminder, the debt in 1940 was $40 Billion, and today it is $16 Trillion. Surely, a gigantic 40,000% increase should have caused that debt bomb to explode.

But no, the debt bomb ticks, perhaps the slowest time bomb in recorded history. And our cult leaders continue their false warnings.

Waiting, waiting, waiting for that debt bomb to explode. Still waiting.

By way of further reminder, here is a bit of history from previous posts:

Back in 1940, the federal budget was a “ticking time-bomb which can eventually destroy the American system,” said Robert M. Hanes, president of the American Bankers Association.

By 1960: the debt was “threatening the country’s fiscal future,” said Secretary of Commerce, Frederick H. Mueller.

By 1983: “The debt “probably will explode in the third quarter of 1984,” said Fred Napolitano, former president of the National Association of Home Builders.

In 1984: AFL-CIO President Lane Kirkland said. “It’s a time bomb ticking away.”

In 1985: “The federal deficit is ‘a ticking time bomb, and it’s about to blow up,’ U.S. Sen. Mitch McConnell.

Later in 1985: Los Angeles Times: “We labeled the deficit a ‘ticking time bomb’ that threatens to permanently undermine the strength and vitality of the American economy.”

In 1987: Richmond Times–Dispatch – Richmond, VA: “100TH CONGRESS FACING U.S. DEFICIT ‘TIME BOMB’”

Later in 1987: The Dallas Morning News: “A fiscal time bomb is slowly ticking that, if not defused, could explode into a financial crisis within the next few years for the federal government.”

In 1989: FORTUNE Magazine: “A TIME BOMB FOR U.S. TAXPAYERS”

In 1992: The Pantagraph – Bloomington, Illinois: “I have seen where politicians in Washington have expressed little or no concern about this ticking time bomb they have helped to create, that being the enormous federal budget deficit, approaching $4 trillion.

Later in 1992: Ross Perot: “Our great nation is sitting right on top of a ticking time bomb. We have a national debt of $4 trillion.”

In 1995: Kansas City Star: “Concerned citizens. . . regard the national debt as a ticking time bomb poised to explode with devastating consequences at some future date.”

In 2003: Porter Stansberry, for the Daily Reckoning: “Generation debt is a ticking time bomb . . . with about ten years left on the clock.”

In 2004: Bradenton Herald: “A NATION AT RISK: TWIN DEFICIT A TICKING TIME BOMB”

In 2005: Providence Journal: “Some lawmakers see the Medicare drug benefit for what it is: a ticking time bomb.”

In 2006: NewsMax.com, “We have to worry about the deficit . . . when we combine it with the trade deficit we have a real ticking time bomb in our economy,” said Mrs. Clinton.

In 2007: USA Today: “Like a ticking time bomb, the national debt is an explosion waiting to happen.

In 2010: Reason Alert: “. . . the time bomb that’s ticking under the federal budget like a Guy Fawkes’ powder keg.”

In 2011: Washington Post, Lori Montgomery: ” . . . defuse the biggest budgetary time bombs that are set to explode.”

In 2014: CBN News: “The United States of Debt: A Ticking Time Bomb”

*On Jun 18, 2015: The ticking economic time bomb that presidential candidates are ignoring: Fortune Magazine, Shawn Tully,

*February 10, 2016, The Daily Bell: “Obama’s $4.1 Trillion Budget Is Latest Sign of America’s Looming Collapse”

*On January 23, 2017: Trump’s ‘Debt Bomb’: Deficit May Grow, Defense Budget May Not, By Sydney J. Freedberg, Jr.

*On April 28, 2017: Debt in the U.S. Fuel for Growth or Ticking Time Bomb?, American Institute for Economic Research, by Max Gulker, PhD – Senior Research Fellow, Theodore Cangeros

And now, for your amusement, here is a sampling of this year’s Henny Penny, sky-is-falling, ticking-time-bomb, scare articles:

America’s Debt Bomb Conservatives and deficit hawks are hurling criticism at Washington for deepening America’s debt hole.

Paying debt servicing costs associated with what America owes is also tying up federal dollars that could be used elsewhere.

The U.S. must pay interest on its outstanding debt, and, given the trillions and trillions of dollars that the country owes, those payments are becoming particularly expensive.

This latest article drips with ignorance. Here are the facts:

  1. The U.S. government is Monetarily Sovereign. It has the unlimited ability to create its own sovereign currency, the U.S. dollar. The U.S. government cannot run short of dollars.
  2. Because the federal government has infinite dollars, its dollars cannot be “tied up,” and there always are plenty of dollars to be “used elsewhere.”
  3. Federal deficit is necessary for economic growth, so the interest the government pays into the economy stimulates economic growth.

And then, there’s this:

CBO: US Debt Burden Set to Break Record in Early 2030s
Growing deficits to push debt to almost 100 percent of GDP by 2028
Jun 26, 2018

CBO Director Keith Hall said that by 2048, “as interest rates rise from their currently low levels and as debt accumulates, the federal government’s net interest costs are projected to more than double as a percentage of GDP and to reach record levels.”

Hall said interest costs would equal spending for Social Security, currently the largest federal program, by 2048.

CBO has long warned that rising debt poses a risk to the economy, and Hall made the point again Tuesday.

“The prospect of large and growing debt poses substantial risks for the nation and presents policymakers with significant challenges,” he said in the statement.

It’s all a lie. Debt/GDP is one of economics’ more meaningless ratios.

Debt/GDP does not indicate the federal government’s ability to pay its bills, nor does it indicate the likelihood of inflation, recession, depression, economic growth, stagflation or any other economic measure.

Being meaningless, it naturally is a favorite of mainstream economists and the media.

Then there is this:

Podcast: Ticking Debt Bomb, Jul 2, 2018

The Congressional Budget Office recently issued an alarming report on the nation’s debt outlook, which CQ senior budget reporter Paul M. Krawzak says should worry millennials.

“A tidal wave of interest payments on the debt is about to hit us.”

And from the reliably wrong, Committee for a Responsible Federal Budget:

National debt is about to roar back to life as a pressing issue
By Maya MacGuineas, Updated 6:03 PM ET, Tue July 31, 2018

As a result of an unprecedented debt binge by Congress over the past year, the national debt is about to roar back to life as a pressing issue after years of hibernation.

The debt didn’t go away. It has been growing by the second ever since, and the dominoes are about to start falling. 

These sums accelerate a coming fiscal freefall and will push the nation over a psychological barrier as soon as next year: trillion-dollar annual deficits.

You would expect worries about debt to center on affordability. If you experience debt problems, your primary concern is, “Can I afford to pay it off.”

You would expect warnings about federal debt to include words similar to: “The government will run short of money.

But those words never are used because unlike state and local governments, the federal government cannot run short of money.

It can pay off any size financial obligation at any time, and despite the massive debt increase, through wars and depressions, the federal government never has failed to pay a debt.

Instead, we are treated to such meaningless generalities as “ticking time bomb,” “looming collapse,” “tidal wave,” “the dominoes are about to start falling,” “coming fiscal freefall,” “psychological barrier,” and “alarming report.”

After seventy-eight years, that ole’ federal debt bomb still is ticking. Meanwhile, it also has been “unsustainable,” “insane,” and “irresponsible,” a “mounting debt crisis,” and servicing is “problematic.”

All of the above are not based on mere ignorance. Instead, they are part of an intentional plan to deceive you.

The very rich .1%, who run America, do not want you of the 99.9% to know that the federal government has the ability to provide far more benefits for you than it currently does.

They want you to believe falsely, that benefits are a burden on the government and require tax increases. In short, they want to convince you to vote against yourself.

It has to do with Gap Psychology, which you can learn about, here.

In brief, the very rich want to widen the Gap gap between them and you, and making false claims about the federal debt is their insidious method.

It works. You have been suckered.

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

The end of social security? Wednesday, May 30 2018 

Image result for federal reserve bank of st. louis

James Bullard, President & CEO, Federal Reserve Bank of St. Louis

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

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.”

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.”

Thomas Edison: If the Nation can issue a dollar bond it can issue a dollar bill.  The element that makes the bond good makes the bill good also. . . . It is absurd to say our Country can issue bonds and cannot issue currency.

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Do you believe Social Security is running short of dollars and, without a tax increase or benefits decrease, in the future will be unable to continue paying benefits?

If so that is exactly what the very rich, who direct American politics, want you to believe.

The very rich want you to accept the notion that Social Security is going bankrupt, the Social Security “trust fund” is running short of dollars, and your benefits must be reduced to “save” the program.

Why do they want you to believe that? Because of Gap Psychology.

Gap Psychology is the desire to distance oneself from those “below” you on any arbitrary measure, and to approach those above you. You wish to disassociate with the poorer and less powerful than you, and to associate with those wealthier and more powerful.

Image result for rich stay away from poor

Gap Psychology at work

Gap Psychology is an evolutionary attempt to increase one’s relative power and thus, safety.

The “associate/disassociate” concept can relate to income, wealth, power, housing, clothing, neighborhood, college attendance, choice of restaurant, mode of travel — anything that confers relative prestige on the user.

Driving an expensive car is an attempt to associate with the rich and to disassociate from those who cannot afford an expensive car. Like everything associated with the Gap, “expensive” is a relative term.  A car you might consider expensive, would not be expensive for a billionaire.

The word “relative” is key. “Rich,” “powerful,” “influential,” etc. are not absolutes. They are comparatives.

If you had $1 thousand, while everyone else had $10, you would be rich. But if you had that same $1 thousand, while everyone else had $1 million, you would be poor.

The U.S. government is Monetarily Sovereign. It has the unlimited money-creation capabilities described (above) by Alan Greenspan, Ben Bernanke, and the St. Louis Federal Reserve.

Image result for endless money

Thomas Edison: If the Nation can issue a dollar bond it can issue a dollar bill.  The element that makes the bond good makes the bill good also. . . . It is absurd to say our Country can issue bonds and cannot issue currency.

Thus, the U.S. government can be viewed as infinitely rich. It can create infinite dollars. It’s purchasing ability is infinite. It has the infinite ability to fund its agencies, which functionally makes U.S. agencies as rich as Congress and the President wish them to be.

If such federal agencies as Social Security, Medicare, the Army, the Supreme Court, et al were to run short of dollars, the reason would not be that the U.S. government has run short of money (which is impossible).

The reason would be that Congress and the President arbitrarily had chosen to provide insufficient dollars to these agencies.

FICA is the tax incorrectly said to fund Social Security and Medicare. But they are federal agencies, so even if FICA collections were $ zero, the federal government could continue to pay Social Security and Medicare benefits, forever.

FICA is irrelevant to the real financial well-being of Social Security and Medicare. FICA is an excuse for cutting benefits.

Congress and the President, at the behest of rich donors, who are influenced by Gap Psychology, pretend Social Security and Medicare can run short of dollars. It all is a charade for the benefit of the rich.

In that vein, here are excerpts from a recent, online article in Money & Career CheatSheet, titled:

9 Lies You’ve Been Told About Social Security
By Megan Elliott May 28, 2018
(Megan is a Money & Career, Health & Fitness, and Culture Writer at The Cheat Sheet. She has a bachelor’s degree in cultural studies from Macalester College and a master’s degree in media studies from the New School University. Her writing has appeared in the Journal of Financial Planning and other publications.)

Social Security is the linchpin of the American retirement system. Nearly 40 million retired Americans receive an average of $1,335 a month from the program. For 64% of retirees, the check they receive makes up more than half of their total income. Without this retirement benefit, many of the oldest Americans would be destitute.

Yet for all its importance, Social Security remains a program that is shrouded in confusion and mystery. When Massachusetts Mutual Life Insurance Company quizzed people in 2015 on some basic facts about Social Security, only 28% received a passing grade.

Being misinformed about how Social Security works is costing retirees. “Americans who lack the proper knowledge and information about Social Security may be putting their retirement planning in jeopardy,” Phil Michalowski, the vice president at U.S. Insurance Group, MassMutual, said in a statement.

“In fact, many may be leaving Social Security retirement benefits they’re entitled to on the table, or incorrectly assuming what benefits may be available in retirement.”

Michalowski was referring to ignorance about Social Security law costing retirees. But there is a deeper, more important ignorance about Social Security, that costs Americans much more.

Unlike state and local governments, and unlike business and individual people, all of which are monetarily non-sovereign, the U.S. government is Monetarily Sovereign.  It never can run short of dollars.

Sadly, the American public has been brainwashed by the rich into believing the “Big Lie,” that the U.S. federal government can run short of dollars. The rich bribe three main information sources to promulgate the Big Lie:

  1. The media, who are bribed via advertising revenues and media ownership
  2. The politicians, who are bribed via campaign contributions and promises of lucrative employment later
  3. The economists, who are bribed via university contributions and employment in “think tanks.”

Continuing with excerpts from Ms. Elliott’s article:

Confusion about how benefits are earned, how much you can get, and the best time to retire abounds. Politicians and the media add to the confusion when they make dramatic — and sometimes false — statements about the future health of Social Security. In some cases, believing the lies you hear about Social Security could cause you to make planning mistakes that jeopardize your future financial security.

Here are nine of the biggest whoppers you’ll hear about Social Security.

1. You have a personal Social Security “account”

Roughly one-third of Americans think the money they pay into Social goes into a personal account. Instead, the money goes into a general trust fund, and is then used to pay benefits to current and future retirees.

When you retire, the money you receive will come from contributions of those currently working.

“Social Security isn’t like a 401(k) or even a traditional funded pension plan. Your contributions are immediately paid out to current beneficiaries,” Erik Carter of Financial Finesse explained in an article for Forbes.

This is completely false. There is no “general trust fund.” It is an accounting fiction. Think about it: Why would a Monetarily Sovereign entity, that has the unlimited ability to create its sovereign currency, in any amount at any time — why would that entity have any use for a “trust fund.”

The concept makes no sense.

When your FICA tax dollars are received by the federal government, they cease to be part of any money supply measure. In actual effect, your dollars are destroyed upon receipt.

Then, when the federal government pays benefits, it sends instructions to you (via a check) or to your bank (via a wire). Those instructions tell the bank to increase the balance in your checking account.

At the instant the bank obeys those instructions, brand new dollars are created and added to the money supply (called “M1”).

Our Monetarily Sovereign government, having the unlimited ability to create dollars, neither needs nor uses tax dollars for any purpose. (Review the statements by Greenspan, Bernanke, and the St. Louis Fed.)

2. Private accounts are a better alternative to the current Social Security system

Privatizing Social Security is periodically floated as a way to save what some see as a failing system. Former President George W. Bush was a big supporter of such a plan.

Bush’s proposal was controversial and ultimately didn’t go anywhere. But some still argue that letting people invest all or a portion of their Social Security would increase people’s savings and lead to a more secure retirement.

Others argue that such a strategy is just too risky given stock market volatility and how bad many Americans are at managing money.

The proposal is based on the Big Lie that the federal government cannot afford to fund Social Security and that it must take dollars from the public in order to pay for benefits. Absolutely untrue.

3. Younger workers won’t get a dime

Doomsayers sometimes claim Social Security is on the verge of going broke. Younger workers may never get their benefits, they warn, and future retirees could see their checks cut off. But the future of Social Security, while not exactly rosy-looking, isn’t quite so dire.

“The idea that the program is going to ‘run out of money’ or is ‘going broke’ is a zombie lie, one that deserves to have its head lopped off with a quick slice of Michonne’s katana,” Paul Waldman of The American Prospect wrote in The Washington Post.

So far, #3 is spot on. But then, the wrongheadedness returns:

It’s true current workers are paying less into the Social Security trust fund than is being paid out to retirees. By 2035, the reserves in the trust fund are projected to run dry.

At that point, Social Security could pay about 77% of projected benefits to retirees from the income it receives from people currently working. Obviously, that’s not a great situation, but future retirees will still get some money — just as not as much as they were promised.

So-called “trust fund” reserves are completely irrelevant. The federal government needs no “trust fund” to pay the President’s expenses, Congress’s expenses, or the Supreme Court’s expenses. Why would it need a trust fund to pay for Social Security?

President Roosevelt, the founder of Social Security knew this. But he insisted on collecting FICA taxes so as to give recipients a “moral right” to benefits, that Congress could not take away.

It hasn’t worked, however, as benefits have been decreased, for no reason at all. Social Security does not pay benefits from income. Period.

4. You have to be a citizen to get benefits

Provided you’ve worked for at least 10 years, are lawfully in the U.S., and meet all the other requirements, you can claim Social Security benefits when you retire, whether you’re a citizen or not. Even non-working spouses of non-citizens may be able to get benefits.

Correct. Since non-workers don’t pay FICA, there goes the Big Lie that FICA funds Social Security.

5. The retirement age is 65

For people born in 1937 or earlier, full retirement age is 65. If you were born between 1938 and 1959, full retirement age varies between 65 and 2 months and 66 and 10 months. For everyone born after 1960, full retirement is at 67.

No matter when you were born, you can start claiming early benefits at age 62. But if you claim early, your monthly benefit is reduced by 20% to 30%. If you wait until age 70 to claim Social Security, you could increase your monthly benefit by more than 30%.

This entire rigamarole is based on the myth that FICA funds SS. Without that myth, there would be no reason ever to reduce benefits.

6. You can’t get benefits if you’ve never worked

Even if you’ve never worked a day in your life, you may still be able to get benefits from Social Security. Non-working spouses may receive up to 50% of their husband or wife’s benefit amount.

In 2010, the Social Security Administration (SSA) estimated only 4% of people between 62 and 84 would never receive benefits.

Point #6, once again, demonstrates that people don’t pay for Social Security. The federal government merely makes up rules to suit its Big Lie.

Imagine if a life insurance company told its insureds,  “We’re going to cut your benefits because we want to pay people who never bought insurance.”

7. You should claim Social Security as soon as you can

If you can afford to delay taking benefits until 65 or even 70, you’ll get a bigger check every month. Given that people are generally living longer, holding off on requesting benefits is often a wise move.

It would be a “wise move” only if the federal government needed to ration dollars. Otherwise, forcing people to guess how long they will live is a terrible idea.

8. You can work and collect full Social Security benefits

You may not get your full benefit if you’re drawing a paycheck. “If you are younger than full retirement age and make more than the yearly earnings limit, we will reduce your benefit,” the SSA explained.

Reducing benefits is absolutely unnecessary.

9. Social Security is a Ponzi scheme

You’ll sometimes hear people dismiss Social Security as a Ponzi scheme. They’re comparing the program to the famous investment fraud perpetrated by Charles Ponzi in 1920.

In a ponzi scheme, investors are lured in with promises of big returns with little risk. In reality, no investment exists.

Instead, the first group of investors are paid with money gathered from a second group of investors, and so on down the line.

Once the pool of investors dries up, the scheme collapses.

On the surface, Social Security does share some resemblance with a Ponzi scheme, since the earnings of today’s workers are used to pay benefits to those who are already retired.

But there are important differences between the two. For one, no one is in the dark about the nature of Social Security. The program is transparent about the way it is funded and the state of its finances.

A Ponzi scheme depends on the ignorance of investors to survive.

Plus, as long as the government can require people to pay taxes, there will still be a source of new income, though it may not be enough to meet the promised payouts. With a Ponzi scheme, people will eventually wise up and stop investing, which causes everything to fall apart.

“What makes a Ponzi scheme a Ponzi scheme is that it’s a giant fraud. People think they’re investing in postal stamps. Their money is actually being invested in nothing. In Social Security, conversely, it’s perfectly clear what is going on,” Ezra Klein wrote in an article for the Washington Post.

If we were to believe the Big Lie about the government’s supposed inability to pay benefits, Social Security would, in fact, be a Ponzi scheme.

Here are some classic symptoms of the Social Security “Ponzi scheme”:

  1. Payouts arbitrarily can and have been reduced.
  2. The operator provides fabricated reports claiming there are dollars in a “trust fund.”
  3. The operator says the benefits it pays to older members from new members.
  4. The money is invested in nothing.
  5. The scheme depends on the ignorance of the investors regarding exactly how benefits are calculated.

If Bernard Madoff had legally been allowed to cut benefits whenever he wished, he still would be in business.

However, Social Security is not a true Ponzi scheme: Unlike the usual Ponzi scheme, the operator — the U.S. government — never can run short of dollars to pay benefits.

In Summary:

The FICA tax, being an unnecessary and regressive imposition on the middle and lower income groups, should be eliminated (See Step #1 of the Ten Steps to Prosperity).

The federal government can and should provide Social Security payments to every man, woman, and child in America. (See Step #3 of the Ten Steps to Prosperity)

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
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

How does Gap Psychology affect you? Friday, Apr 6 2018 


It takes only two things to keep people in chains:
The ignorance of the oppressed and the treachery of their leaders.

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

In Economics, everything devolves to Monetary Sovereignty and Gap Psychology.

  1. Economics studies the relationships among wealth, money, and human psychology.
  2. Monetary Sovereignty studies a money issuer’s power over the money it issues.
  3. Gap Psychology describes the human desire to widen the Gap below you on any economic or social measure, and to narrow the Gap above you.

The purpose of this post is to discuss Gap Psychology.

As a social animal, you are protected by your group, or rather, “groups,” for you live in many.  There are evolutionary advantages to being protected by a comparatively strong group, so you tend to cherish whichever groups you find yourself in. A group honor is seen as a personal honor.

Just a tiny sampling of our groups includes: Our nation, village, religion, age, sex, school, interest, income, company, and team.

You cheer for your country in the Olympics. You back your village or school in any kind of competition or measure. You take pride in the accomplishments of those whose religion you share.Related image

For similar emotional reasons, you wish to distance yourself from those below you — the “losers,” the poor, the socially unpopular —  while you wish to be closer to those above you.

Not only do you wish to be part of a “higher” group, but we wish to be seen as part of a higher group. You take pride in having attended a “good” school, though the quality of a school you may have attended does not, in any way, change who you really are, today.

If you yourself cannot be famously respected, you enjoy having a famously respected friend, or being seen with someone who is famously respected. You might even treasure a “selfie” with someone famous.

So deep are your social ties, the merely being thought of in a certain way — even by total strangers — can be a sufficient proxy for actually being that way.

If members of your group endure embarrassment, you feel that embarrassment. Innocent Chicagoans feel embarrassed by Chicago’s murder rate. Innocent Catholics feel burdened by the clergy’s sexual crimes. Innocent immigrants are weighted by pejorative claims against all immigrants. Your memberships in groups define you.

So, you may buy a too expensive car, or live in an unaffordable house, or wear a costly jewel, so that friends and strangers alike, will view you as being at a certain social level.

Merely being seen, even falsely, as part of a certain group, is sufficient to provide you with actual social strength or weakness.

Words that never left my memory:

“If they think you got the goods, they give you room, even if you know you don’t really got the goods.” (Neighborhood boy from my youth.)

In your social world, perception is truth.

Given all of the above, why do you give to charity? On its surface, charity would seem to be a violation of Gap Psychology.

Giving money or goods to the poor not only narrows the financial Gap (however slightly) between you and the poor, but it widens the financial Gap (also however slightly) between you and those who are richer.

Why would anyone want to do that? There are many reasons why you give to charity, and none of them are totally selfless, and all are Gap-based.

Every college contains buildings named in honor of a generous philanthropist, who stipulated the name. The price of having one’s name adorn a building might be in the millions, but to the giver, the reward was greater than the cost.  It was a gift to himself in terms of self-seen prestige.

At some point, the donor made this mental calculation: “Is the cost worth the benefit?”

Was there a time when you volunteered your time to a charity? Your benefit came from the support of your fellow volunteers, and from outsiders who know what a good thing you do. The benefit came from your enhanced view of yourself (“I am a good person.”)

The admiration for “doing a good thing,” or for merely being allowed entrance to a “good” group, can be reward enough. Even in this instance, the ever-present question is asked, “Is the cost (in time) worth the benefit (the membership in the group).

Even if you donated anonymously, you made a cost/benefit decision.  The benefit came from your view in your mirror: “I am a good person.”

In essence, everything you do, involves the tacit question, “Is the cost worth the benefit?”

Think about your day, from the time you wake up, until your bedtime, and you will be astounded at how much you do that is based on Gap Psychology — widening the Gap below you and narrowing the Gap above you.

Image result for wearing a rolex

A Rolex keeps no better time than a Timex.

You brush your teeth for a brighter smile, you dress for the approval (or at least to avoid the disapproval) of friends and strangers. You comb your hair; you may apply makeup; you drive a certain car; you live in a certain kind of dwelling in a certain kind of neighborhood, and work at a certain kind of job — and even in the most menial of jobs, if you have co-workers, you act in a certain way, so they will believe certain good things about you.

Solitary animals do not have these concerns.

Your entire life, the lives you bestow upon your children, and the pride you feel in their accomplishments, and the shame you feel in their transgressions — all are a testament to Gap Psychology.

And that also can have negative consequences because you can widen the Gap below you, not only by lifting yourself up, but by pushing others down.

If you are a Chicago Cubs fan, you not only want the Cubs to win, but you want the other teams to lose.

Go to a right-wing site like breitbart.com, and look at the readers’ comments. You will see the most hateful and vile statements about immigrants — how they should be jailed, deported, separated from their children and punished in every way.

Why? Not for factual reasons, but rather because this hatred is born of the terror that the Gap below might be narrowing.

The most extreme bigots are those who feel most insecure or resentful about their position in society.

Bigotry against certain ethnic backgrounds is Gap Psychology at its worst. We see it in the unreasoned excuses to deny jobs to those of a certain sexual orientation or of a certain religion or nationality.

Despite thin rationales to the contrary, those merely are efforts to widen the Gap below.

Similarly, the delight we take in seeing the mighty fall — a rich woman sent to jail, a powerful man humiliated  — these events narrow the Gap above us (“They are no better than me.”)

Without the Gaps no person or group would be rich, smart, talented, beautiful, or strong. We all would be the same. It is the Gaps that make you and your groups special, protected, and safe in a harsh world.

Everything in economics devolves to Monetary Sovereignty and to Gap Psychology.

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

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

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

Gap Psychology is everywhere in your life Tuesday, Mar 20 2018 

It takes only two things to keep people in chains:

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

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

In brief:

Monetary Sovereignty describes money creation and destruction.

Gap Psychology describes the common desire to distance yourself from those “below” you in any socio-economic ranking, and to near those “above” you. The socio-economic distance is referred to as “The Gap.”

Gap Psychology manifests in infinite ways. It is everywhere in your life:

Bigotry
Image result for high fashion vs ragsBigotry is the dislike and/or demeaning of any group that is in some way different from your own or admired group.

Bigotry can be based on race, religion, age, weight, height, wealth, geography, political beliefs, or on any other attributes. We all tend to distance ourselves from groups we consider to be lower and to try to associate ourselves with groups we consider to be higher.

In compassionate or charitable people, this desire is repressed. In bigots, this desire is overwhelming.Image result for rich and poor

Class differences are related to generalization — i.e. inferring “high” or “low” from a small number of facts — a process that has evolutionary advantages. (You need not determine whether this particular tiger is dangerous. Assuming all tigers are dangerous can be life-saving.)

Members of upper-income groups often feel disdain, even fear, about those in a lower income group, and wish to widen the socio-economic Gap between themselves and the lower group. Widening the Gap is not limited to increasing one’s own income, power or wealth. It also can include reducing the income, power or wealth of those below.

It is the Gap width that matters, not the absolute income, power or wealth.

If you own $100 and everyone else owns $1, you are rich. But if you own $1 million, and everyone else owns $100 million, you are poor.

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

Bullying
Few acts more clearly exemplify Gap Psychology than harassing the weak, or seemingly weak. The object of the bully is to lift himself by stepping on others.

Bullies live in fear of being found wanting or of being associated with those below. Typical of bullies is bluster, the attempt to lift oneself by making self-association with some superiority, i/e claiming “I’m the greatest [individual]” to appear close to those above.

Celebrity Endorsement
If basketball star Michael Jordan endorses a certain brand of basketball sneaker, buyers might assume he has special knowledge about what makes for the “best” basketball shoe. But what if Jordan endorses a brand of Tee-shirt? Why would that be convincing?

That sort of advertising is effective when buyers have a psychological belief that in some vague way, buying the shirt will make them more “like Mike.”

Fashion
The fundamental purpose of clothing is to protect your body. This can be accomplished in many simple, inexpensive ways. So why do you pay more to wear designer clothing?

A woman’s purse can accomplish its “bag” mission for just a few dollars. Yet some designer purses cost thousands of dollars. Women pay these outlandish prices to close the distance between them and those financially above them.

The fundamental purpose of a car is transportation. A functional car, especially a used model, can be had for a few thousand dollars. Why then do you own (i.e. want to be seen in) a BMW, Lexus, Mercedes, Ferrari, or Rolls?

And then there are mansions, diamonds indistinguishable from paste), charitable contributions made public, personally named buildings, etc., all part of Gap Psychology.

Group and Team Support
As social animals, humans rely on groups, or at the very least, partners. Evolutionary survival has meant being part of a strong group or having a strong partner to watch your back.

With no thought necessary, people will support all sorts of groups — religious, sports, business, neighborhood, political. To be a “fan,” i.e. a fanatic, comes naturally. It scarcely is possible to watch a sporting event between two unknown teams, without mentally aligning yourself with one of the teams.

All of the above merely demonstrate that Gap Psychology is in our genes, and there are innumerable Gaps. But there is one Gap that is most important of all:

The Power Gap
The power Gap, or more specifically, the income/wealth/power Gap, is the Gap that truly rules our lives. Like all Gaps, the power Gaps are bifurcated into the Gaps below you and the Gaps above you.

Lord Acton’s famous phrase, “Power tends to corrupt, and absolute power corrupts absolutely, applies here.

The certainty of the relationship between power and moral corruption is why the U.S. Constitution was created, especially its Amendments, the first ten of which commonly are known as the “Bill of Rights.”

The greater the power Gap between you and others who are “above” you, the greater will be their tendency to treat you badly and to demand your servility, especially if they are insecure about their own power.

American slavery, for instance, was evil, not only because the slaves were . . .  well, slaves . . .  but just as importantly, because of the evil, corrupting effect it had on the slave owners.

Slavery cost America its moral compass, the loss from which many of us still have not recovered. Sadly, some in America’s South still consider slavery to be a proud part of their heritage, and in the entire nation, the remnants of slavery exist as bigotry.

Our Tax Codes
Our tax codes are a collection of laws, and our laws are ruled by the rich and powerful. That is why the most important financial laws in America are regressive:

  1. Sales taxes are regressive in that they most affect the lower income groups, who use a greater proportion of their income on taxable purchases. (The upper-income groups use a greater proportion of their income on investments.)
  2. FICA taxes are regressive because they are levied only on salaries, not on investment income, and are limited to the $100M range.
  3. Income taxes, though ostensibly progressive, actually are regressive in that special rules allow the rich to avoid paying the stated percentage (aka “loopholes”).
  4. Student loans (which amazingly are the single largest asset class owned by the federal government) are regressive in that the rich don’t need them, while the poor can can be held back with them for many years.

Kick Them When They’re Down
That old phrase, “Kick them when they’re down” succinctly describes Gap Psychology. When we join in the “kicking,” we separate and lift ourselves from those being kicked.

A nation is a collection of rules and traditions, which often are manifested in laws. The laws have power over the people of the nation, and the nation’s leaders have power over the laws.

An immutable, or nearly so, Constitution was necessary to prevent each succeeding leader from redesigning the laws to favor his own passions.

Sadly, the corrupting power the Constitution was designed to prevent, still remains as the corrupting power that interprets the Constitution.

American history is replete with examples of a corrupted President, Congress, and Supreme Court twisting the words of the Constitution.

For example, the overly admired Franklin Roosevelt interned American people of Japanese descent, aided and abetted by our Constitutionally protected institutions. The people, being a small minority, had little voting power, and whatever power of national empathy and compassion they had, dissipated with Pearl Harbor.

Being powerless, the people were set upon by those in power, using the traditional excuse of dictators: “National security.”

The fundamental meaning of the 4th Amendment (unreasonable searches and seizures) routinely is violated by police, with the full acceptance of the Supreme Court. People, who only are suspected of a crime, have seen all their entire assets stolen by the police, and not returned even after being found innocent.

Public outcry about this clearly unconstitutional action has been muted. The British have a phrase for that sort of Gap Psychology: “I’m all right Jack, pull up the ladder”. By “pulling up the ladder,” one separates from the unfortunates who remain below.

Law and Punishment
All law answers two fundamental questions:

  1. What is unlawful?
  2.  What is the punishment for violating the law?

The mores of any civilization form the basis for answering both questions. But in any society, the rich and powerful are treated more favorably by lawmakers and judges, who themselves are rich and powerful.

Consider bail and bail bonds (bail handled by a bondsman), one of the more regressive aspects of American law.

The sole purpose of bail is to guarantee the defendant will show up for trial. Bail is not supposed to be a punishment. Usually, bail is set before a trial, meaning before the accused is known to be guilty, so punishment would be inappropriate.  Yet in its use, bail functions as a pre-judgment punishment.

Judges decide the amount of bail on the basis of:

  • the risk of the defendant fleeing,
  • the type of crime alleged,
  • the “dangerousness” of defendants, and
  • the safety of the community.

An impoverished defendant might remain imprisoned by a $100 bail, while a wealthy defendant might go free and flee the country, even after putting up a million bail dollars.

The risk of a defendant fleeing has nothing whatsoever to do with the defendant’s wealth. 

If a judge is concerned that a defendant will flee, what then is the purpose of bail?

  1. A rich guilty person very well could decide that fleeing and losing the bail money, is preferable to spending years in jail.
  2. Lost bail money does not compensate the victims of the crime.
  3. An innocent poor person is punished by the bail system.

The entire bail system is designed to allow the accused rich to separate themselves from the accused poor. It is a product of Gap Psychology.

In Summary:
Gap Psychology is everywhere, affecting our beliefs, our customs, and our laws. It is the proverbial “800 lb. gorilla” in every room of our lives.

Gap Psychology separates not only the rich from the poor, but it separates the poor from the very poor and the not-so-poor, the rich from the almost-rich and the upward-middle, hoping-to-be-rich.

Gap Psychology affects the clothes you wear, the house in which you live, the schools you attend, the car you drive, the stores and restaurants you frequent, the church you attend, your job, your hobbies, your vacations, your voting, the person you marry, even the name you give your child.

Visualize that you have built a wall around yourself to separate you from “other.” The height and thickness of that wall, and the existence of any entrances all are based on Gap Psychology.

Gap Psychology guides our society. It should not be overlooked when we search for answers to any social question beginning with, “Why?”

This brief post leaves us with three truths:

  1. Monetary Sovereignty is fundamental to questions about government finances.
  2. Gap Psychology is fundamental to questions about social interactions
  3. Monetary Sovereignty and Gap Psychology are fundamental to Economics. All questions in Economics ultimately lead to Monetary Sovereignty and Gap Psychology.

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

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

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

 

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