The text of a speech I never will give to my friends at our country club, because they probably won't believe me, and who needs the aggravation? Wednesday, Jan 22 2020 

Our country club invites speakers to give presentations about various, interesting subjects.

I could volunteer to present my friends and neighbors with information they don’t have, and should have, and would find interesting.

Sadly, I’ve found that most people want to hear what they already believe, and they tend to become angry at anyone who tells them otherwise.

What follows is the text of a speech I never will give to my friends at the club because they probably won’t believe me, and at my age, who needs the aggravation?

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TEN THINGS YOU ABSOLUTELY DON’T KNOW ABOUT OUR ECONOMY — BUT YOU SHOULD

I’m going to tell you some things about our economy, and specifically about money — a subject which you already understand quite well because you have lots of it. Image result for money sign

But I’m going to tell you ten things you didn’t know.

The vast majority of you own more than a million U.S. dollars, which used to be a much-respected sum, but no longer is.

Because you own so many dollars, let me ask you this: What does a U.S. dollar look like? For instance, what is the color of the U.S. dollar?

Green, right?

And what is a dollar made of? How big is it?

Paper and about 6 inches?Image result for dollars

And what is the purpose of dollars?

They are a medium of exchange and a measure of value or wealth. OK?

And, if the purpose of dollars is, for example, to act as a medium of exchange, that means you exchange dollars for the goods and services you want, right?

.

Image result for pallet of dollars

So, for instance, let’s say you walk into a car dealership to buy a car.

After proper negotiation, you give the dealer a giant stack, let’s say 75,000, of those green, 6-inch pieces of paper, and he gives you the car keys.

That’s the way it works, right? You schlep big stacks of paper around?

No?? It doesn’t work that way??

Actually, to buy that car, you sign some papers that probably are not green and don’t measure 6 inches.Image result for signing car dealer's documents

And in fact, I venture to guess, that while the vast majority of your life’s purchases do involve dollars, they do not involve green pieces of paper.

You gave that car dealer $75,000. So, let me ask you again, What did those dollars — the dollars you gave the dealer — look like?

The answer is: Those dollars didn’t look like anything. They are bookkeeping entries.

The U.S. dollar is not a physical entity. The dollar is a legal entity. It is a group of laws. You can’t see, smell, taste, feel, or hear a dollar any more than you can see, smell, taste, feel, or hear a law.

Image result for car, house titles

Titles

That green piece of paper is not a dollar; it is a dollar bill. It represents the ownership of a dollar. Just as a car title is not a car, and a house title is not a house, a dollar bill is not a dollar.

A dollar bill is a bearer title to a dollar.

A dollar is a legal entity that exists only in law books. And if there is one thing you know about governments and laws it’s this: A government can make as many laws as it wishes. A government cannot run short of laws.Image result for how many laws are there

Before the year 1780, there were no U.S. dollars. Then, as if by magic, the U.S government created from thin air, a bunch of laws, and among them were laws that created from thin air, millions of dollars.

And not only did the government laws and dollars from thin air, but it created other laws from thin air that gave those dollars a value relative to ounces of silver.

In 1792 the US Congress passed the Coinage Act, which states that the U.S. dollar coin must contain four hundred and sixteen grains of standard silver.Image result for 416 grains of silver

And ever since, the U.S. government has continued to create more and more laws, and more and more dollars from thin air, and has continued to pass laws changing the value of U.S. dollars.

All of this was arbitrary, and arbitrarily changed many times, and it demonstrated the unique sovereign power of the federal government over the U.S. dollar.

The American government proved what so many other governments had proved and continue to prove to this day:Image result for monetary sovereignty

The U.S. federal government has the unlimited ability to pass laws, which means it has the unlimited ability to create its sovereign currency, the U.S. dollar and the unlimited ability to give the dollar any value it wishes. 

The term for that is Monetary Sovereignty.

You now know more than 90% of the people — make that 99% of the people — in America.

You know more than most of the media. You know more than most of the politicians. You even know more than most of the economists.

Why do I say that? Because every day, the media, the politicians and the economists tell you the U.S. federal debt is too high. It’s “unsustainable.”Related image

What does “unsustainable” mean? It means the U.S. government will not have enough dollars to pay off its debt.

It even may mean the U.S. government won’t be able to make payments against its debt or even to cover the interest payments.

And it might mean that the government will have to raise taxes on you and your children to obtain dollars to pay its debt.

And as you now have learned, that is all nonsense.

Think about it, and answer for yourself these two questions:Image result for infinite dollars

  1. How can a government that has the unlimited ability to create dollars from thin air, run short of dollars to pay its debts? (It can’t.)
  2. Does a government having the unlimited dollars to pay its debts, need to ask you or your children for tax dollars? (No.)

What? The federal government doesn’t need your tax dollars?

That’s right folks, those tax dollars you sweat and strain to obtain, and then send to the government — the U.S. government does not need those tax dollars.Related image

In fact, the federal government destroys your tax dollars upon receipt.

Really.

Think of it this way. Have you ever played the board game, Monopoly?

It usually is played with four players, one of whom also serves as the Bank.

Think of the Bank as the federal government and the players as the U.S. economy.

Image result for monopoly dollars

Monopoly money

According to the game rules, or laws, the Bank starts the game by distributing a certain amount of Monopoly money to each player.

One time, my friends and I wished to play Monopoly, but when we opened the box we discover the board, some game tokens, and some instruction cards, but no Monopoly dollars inside.

What would you have done?

No problem. The Bank simply took a sheet of paper and drew four columns, one for each player.

Like the U.S. federal government, the Bank created dollars out of thin air, simply by writing numbers into each player’s column.Image result for four-columned sheet

The Bank has no source of dollars other than the rules or laws of the game.

Obviously, the Bank could have written any starting number at the top of each column.

Like the federal government, the Monopoly Bank has the unlimited power to create Monopoly dollars.

Then, as the game progressed, the Bank kept paying out and receiving dollars.

When the Bank paid out more dollars than it received, this was a deficit for the Bank and a surplus for the players — that is, a surplus for the economy — just like in the real world.

Now here comes the interesting part: At various points in the game, the rules require players to pay money to the Bank, either for properties, for fines, or for taxes.

Let’s say a player must pay a $100 tax to the Bank. In that case, 100 was deducted from that player’s column.

But where did the $100 go? The Bank had no column. The $100 simply disappeared. Those tax dollars were destroyed, just like in the real world.

That is why, if you ask someone, “How much money does the federal government have,” you will not get an answer.  The federal government has infinite money.

If the federal government doesn’t need or use tax dollars, why does it collect them? Two reasons:

  1. To control the economy. It taxes what it wishes to limit and it gives tax breaks to what and whom it wishes to reward.
  2. To control the middle- and lower-income groups. Taxes provide a handy excuse for limiting benefits and preventing the non-rich from asking for benefits.

Why does the federal government wish to limit benefits to the non-rich?

Image result for poor man with a cow

A rich man

The rich run America.

Indeed the rich run the world.

“Rich” is a comparative word. You are rich if you have $100 and everyone else has $1, but you are poor if you have $1 million and everyone else has $10 million.

The rich wish to be richer which requires widening the gap between them and the non-rich.

The gap can be widened not only by giving more to the rich, but also by giving less to the non-rich.Image result for boss, behind big desk, employee

The desire to widen the gap between those below, on any economic measure, and to narrow the gap above, is called Gap Psychology

The rich are motivated by Gap Psychology.

The rich want the gap between you and them to widen.

That is why you are told falsely that Medicare for All, and Social Security for All, and the growing debt all are unsustainable.

And as for that so-called “debt,” it isn’t even a debt — at least not in the way you usually think about debt.Image result for lending officer and poor borrower

Loans are made to those who need money.

But the federal government has no need to borrow money. The U.S. federal government already has infinite money.

Those so-called “loans” to the federal government actually are deposits into T-bill, T-note, and T-bond accounts held at the Federal Reserve Bank.

They are deposits, similar to your bank savings account deposit.

When China “lends” to the U.S government, it actually opens T-bill accounts and directs dollars from its checking account at the Federal Reserve Bank to be deposited into its T-bill accounts, also at the Federal Reserve Bank.

There China’s dollars stay, in its T-bill accounts, accumulating interest until the T-bills mature.

Then, how does the government pay off its Chinese loans? It merely sends the dollars that are sitting in China’s T-bill accounts, back to China’s checking account.

It’s a simple dollar transfer. It does this every day.

No tax dollars involved. No burden on the government or future generations.

If the government doesn’t use the dollars in Treasury accounts, why then does the government issue T-bills, notes, and bonds? Two primary reasons:

  1. To provide a safe parking place for unused dollars, which stabilizes the dollar, and
  2. To assist the Federal Reserve in controlling interest rates

In summary, and contrary to what you have been told, the federal debt is not a burden on anyone, not on you, not on your grandchildren and not on the government.

Why is this important?Related image

Well, for one thing, you repeatedly have been told that the Social Security Trust Fund is running out of money, and to save Social Security, we must either increase FICA taxes or reduce benefits.

In fact, benefits already have been reduced by increasing the qualifying ages.

But the U.S. government has the unlimited ability to create dollars. It cannot go broke, And because the U.S. government cannot go broke, no agency of the government can go broke, unless that is what the politicians want.

The Supreme Court, Congress, and the Presidency all are agencies of the government. Have you ever heard concerns about any of them going broke? No, and you never will.

The idea that Social Security can run short of dollars is false. Even if all FICA collections were zero, the federal government could continue paying benefits, forever.Image result for medicare for all

And then we come to the newly famous “Medicare-for-All.”

In its best case, Medicare for All would lower the entrance age to zero, eliminate deductibles, cover long-term care completely, and pay for all drugs.

Who wouldn’t want all health costs to be free? People want it. Companies — except for insurance companies — want it. The benefits to America would be enormous.Image result for federal government handing out money

And yet, Medicare-for-All  is controversial, primarily because of one question: Who would pay for it?”

And the answer, very simply is, the federal government could pay for the whole thing, without levying even a dollar in taxes. It simply would do what it always has done, to fund every federal expense: Create dollars from thin air.

“Oh,” you say. Sure the government can print money.

But, remember what happened to Weimar Germany. Remember what happened to Zimbabwe. We’re talking about hyperinflation. People carrying wheelbarrows full of money.Related image

I’ll let you in on a well-kept secret: Every hyperinflation and nearly every inflation in history has been caused not by deficit spending, but rather by shortages — usually shortages of food and/or energy.

Think of the Zimbabwe hyperinflation. The government took farmland from farmers and gave it to non-farmers.

Predictably that caused a food shortage, which caused the hyperinflation.

Rather than importing more food, and training people to farm, which would have cured the shortage and the hyperinflation, the Zimbabwe government simply printed currency of higher denominations.

When you hear that the price of potatoes has gone up, do you immediately think it’s because the federal government is spending too much? No, the price of potatoes goes up when there is a shortage of potatoes.

In fact, the best way for a government to end an inflation is to increase deficit spending to cure the shortage.

Potato prices gone up? The solution: More deficit spending to import more potatoes, and/or to pay more farmers to grow more potatoes, and/or

That is the irony of inflations. They can be cured by deficit spending to eliminate the shortages.

The government has other means of ending inflations: It can raise interest rates which strengthen the dollar by creating more demand for dollars.

And it can simply revalue the dollar vs. other currencies, which it has done often in its 240-year history. Being sovereign over the dollar, the government can do anything it wishes with the dollar.

The U.S. government is Monetarily Sovereign.

Your city is not Monetarily Sovereign. Nor is your county. Nor is your state. Nor is your business. Nor are the euro nations. Nor are you, nor am I. But the federal government is. It has unlimited sovereign power over the U.S. dollar, which is nothing more than a creation of federal law.

And that makes all the difference.

In summary:

  1. The federal government created the very first dollar, and subsequent dollars, out of thin air, simply by writing federal laws, also out of thin air.
  2. Dollars are not physical entities; they are legal entities, and so to the federal government, they are in unlimited supply.
  3. Even if all federal tax collections fell to $0, the federal government easily could continue spending, and paying all its bills, forever.
  4. Unlike state and local governments, the federal government is Monetarily Sovereign, so it cannot run short of its own sovereign currency, the U.S. dollar.
  5. No agency of the federal government can run short of dollars unless Congress and the President want it to.
  6. Social Security and Medicare are federal agencies. They cannot run short of dollars unless Congress and the President want them to.
  7. Because the federal government is Monetarily Sovereign, it does not borrow its own sovereign currency. The primary purposes of federal debt are to stabilize the dollar and to help control interest rates.
  8. The federal government, being sovereign over the dollar, has absolute control over the value of the dollar, also known as inflation. The government can give the dollar any value it chooses.
  9. Inflations are caused by shortages, most often shortages of food or energy,  and seldom if ever,  by federal deficit spending, which actually can control inflation.
  10. Being Monetarily Sovereign, the federal government has absolute control over inflation, either by raising interest rates, and/or by using deficit spending to eliminate shortages.

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And that is the speech I’d like to give to my wealthy country-club friends.

But have you ever heard the biblical line, “A prophet is not without honor except in his own country, among his own relatives, and in his own house”?

This prophet doesn’t wish to duck thrown tomatoes, and anyway, who needs the aggravation?

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

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The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

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 Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

Why do you want to starve the poor? The Gap Psychology of the rich. Saturday, Jan 11 2020 

Why do you want to starve the poor?

Oh, you don’t. Well, your government does. Here are excerpts from an article that appeared in a recent issue of the New York Times:

SNAP cuts can be costly elsewhere
Recipients of food stamps are healthier, studies found
By Austin Frakt and Elsa Pearson The New York Times

The Department of Agriculture recently finished work on a new rule that may take food stamps away from nearly 700,000 Americans by tightening work requirements.

Why do you wish to tighten work requirements on the poor? Is it that you harbor Puritanical instincts demanding that people labor to receive benefits from the federal government?

Image result for American poor workers

Too many benefits to the lazy poor.

Many of the rich don’t work, or they labor only minimally. Yet, they receive massive tax benefits from the U.S. government. Why the “special” rules for the poor?

Why don’t you demand that the rich labor in real jobs to receive those tax benefits? Why do you demand that the poor be required to work in order to receive their minimal benefits?

Give me one good excuse.

Fake Excuse 1. No, your tax dollars do not pay for food stamps, so you can’t use that excuse. The federal government creates brand new dollars to pay for food stamps. Federal tax dollars do not pay for anything.
Fake Excuse 2. And no, even if the government gave loafers food stamps, that would not lead to nationwide indolence. Food stamps comprise such a meager amount of money, you know full well that you wouldn’t quit your job in order to receive them.

Any others?

Image result for rich people on yachts

Not enough benefits to the hard-working rich.

Continuing with the excerpts:

Several times in the past year, the government has proposed cutting food stamp eligibility. The new rule is intended to save almost $8 billion over five years.

The problem with that reasoning is:

Fake Excuse 3. While food stamps are an important part of many poor people’s survival income, $1.6 billion represents pocket change to the federal government, barely noticeable to a government that spends trillions.
Fake Excuse 4. The federal government, being Monetarily Sovereign, does not need to save money. It freely creates all the dollars it needs simply by pressing computer keys.

The article continues:

It’s not clear how much money would actually be saved, research suggests, given the costs that might come from a decline in the health and well-being of many of the country’s 14.3 million “food-insecure” households.

The Department of Agriculture defines food insecurity as a lack of consistent access to enough food for an active, healthy life. It affects low-income, single-parent, and black and Latino households the most, but it cuts across many demographic lines and affects 11% of American households overall.

Citing a strong job market, the Trump administration has said helping able-bodied adults was no longer necessary.

Sonny Perdue, the agriculture secretary, said: “We need to encourage people by giving them a helping hand but not allowing it to become an indefinitely giving hand.”

Sonny, doesn’t believe in giving people money, because . . .  well, just because:

Sonny Perdue, 72, Secretary of Agriculture, Net worth: $5 million
The former Georgia governor built a fortune in agribusiness and real estate. Shortly after joining Trump’s cabinet, he transferred control of investments worth at least $8 million—including a stake in a multimillion-dollar grain-merchandising business—to his four adult children.

Correction: Sonny doesn’t believe in giving money to poor people who desperately need it. Giving billions to his rich kids is just fine, however.

Continuing the excerpts:

Food insecurity is linked to worse health outcomes, including poor mental health, high blood pressure and diabetes, with children particularly vulnerable.

Low-income people may be eligible for federal Supplemental Nutrition Assistance Program benefits, better known as food stamps. The details vary by state.
“SNAP recipients often work, but their employment can be unsteady,” said Dr. Seth Berkowitz, an internist and assistant professor at the University of North Carolina School of Medicine.

Seasonal variation in some labor markets — like agriculture or even retail consumer jobs when sales may spike around the winter holidays — can put people temporarily out of work, making it hard for them to keep food on the table. “The way these work requirements are imposed could pull support out from under people even when they are working.”

The real motive of the GOP (“Party of the Rich”) is not to force people to labor for their money, but rather to widen the Gap between the rich and the rest. (See: Gap Psychology)

Because there is no limit to the lust of the rich to be richer and ever richer, there also is no limit to the punishment they dole out to the poor. Whatever rule the Department of Agriculture publishes, it will not ever be enough to satisfy the rich.

Depend on this: Immediately after the rule is published, the Party of the Rich will begin to demand an even harsher rule.

One study found that receiving SNAP benefits was associated with a reduction in annual health care spending of about $1,400 per person among low-income adults.

Another study found that each additional $10 of monthly SNAP benefits was linked with a lower risk of hospitalization for Maryland residents enrolled in both Medicare and Medicaid.

In Massachusetts, an increase in SNAP benefits slowed the increase in Medicaid hospitalization costs.

The authors of the article, Austin Frakt and Elsa Pearson, in typical New York Times fashion, try to make their point based on cost, not on compassion or concern for Americans’ health.

This probably is wise, because compassion totally is missing from the GOP, from Trump and from the “religious” right (who are perhaps the least religious people on earth). That lack of religion is proved every day at the U.S. southern border.

And as for cost, it is a phony concern. The federal government, being Monetarily Sovereign, can afford anything.

The Special Supplemental Nutrition Program for Women, Infants and Children WIC is similar to SNAP, but as its name suggests, it provides nutritional support only for low-income mothers and their young children.

What about low-income fathers? What about low-income teens? What about low-income adults who don’t have children?

The only social concern exhibited by the “religious right” involves the survival of fetuses. There is no concern for the pregnant woman or for the fetuses after they are born. In their world, abortion is bad, but feeding children and adults is worse. 

How do they know? Jesus told them.

For additional help, people often turn to local food pantries, such as those that partner with the Greater Boston Food Bank.

Local food pantries are funded by the private sector and local governments, none of which is Monetarily Sovereign. They can run short of money. The federal government cannot.

Illogic is taking money from those whose money is limited instead of taking it from a government with unlimited funds.

Research suggests food pantries are also effective at providing immediate relief. They have far fewer eligibility requirements than SNAP or WIC — sometimes none — but limit when and how often clients can receive food.

Some pantries are even on college campuses, helping the almost 40% of college students who report struggling to afford food.

Food pantries also serve as a community entry point for a variety of initiatives, including cooking and nutrition classes.

The federal government has the financial power to do all of the above, yet the burden falls on the private sector and local governments.

A review of 12 pilot pantry-based programs found these could improve participants’ nutritional knowledge and diet.

One of the interventions studied a novel approach to food pantry design that allows clients to choose their own food and take part in monthly nutritional goal setting.

Three months in, participants were less likely than those using a traditional food pantry to experience severe food insecurity.

A year later, they were eating more fruits and vegetables.

What a concept. Actually allowing poor people to choose their own food! Who would have believed it would allow the poor to eat more healthfully? Not the federal government, which is dominated by the Gap Psychology of the rich, who run America, and the “religious” right, which runs the GOP.

While interventions can help, they are not long-term solutions nor do they address underlying problems, like food deserts (communities where healthy food is hard to find) and food swamps (those where unhealthy food abounds). We eat what’s available and affordable, even if that’s bad food.

The Trump administration’s solution to food insecurity is to cut funding for food stamps. Presumably, the rationale is: By starving the poor to death, there will be fewer poor to feed. Problem solved.

Feeding America estimates at least 30% of those with food insecurity nationwide aren’t eligible for SNAP. In some states, it’s nearly 50%.

Tightening eligibility for the program, as new work requirements would do, would only increase that number.

And that, dear friends, is how we make America great, again.

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

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

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

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 Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

A movie about Gap Psychology in everyday life Friday, Dec 20 2019 

Gap Psychology is the desire to distance oneself from those considered “below” you in any socioeconomic ranking, and to come closer to those above.

You are subject to Gap Psychology, whether you realize it or not.

Think about where you live, who your friends are, where you go to school, the type of job you’ll accept, how you vote, who you marry, and as in the case of the movie, “Parasite,” your relationship with those you employ and those who employ you.

A discussion of Parasite can be found here; some excerpts from that discussion are below:

The Invisible Line
“Parasite” nails the inherent inequality of hiring household help
By Sarah Todd
The South Korean satire-thriller Parasite is emerging as a major contender this awards season.

It’s on the Oscars shortlist for best international film, while writer-director Bong Joon-ho received Golden Globe nominations for best director and best screenplay, and the movie’s cast is up for best film ensemble at the Screen Actors Guild awards.

(The movie) focuses on the complex relationships and moral ambiguity that surrounds hiring household help.

For the uninitiated (spoilers ahead!), Parasite tells the story of the Kims, a poor family who connive their way into working (for) the wealthy Parks.

To get on the rich family’s payroll, the Kims must appear more educated and accustomed to rubbing shoulders with the upper class than they actually are.

The son pretends to have a prestigious university degree; the daughter poses as a trained art therapist. The parents invent lengthy employment histories as a highly sought-after driver and housekeeper.

Yet even as the Kims disguise themselves, they must also respect what Mr. Park, the head of the family, refers to repeatedly as “the line”—the boundaries that mark them as employees in a hierarchical relationship, the terms of which are defined exclusively by the Parks.

It’s fine for Mrs. Park to expect the Kims to come to work on their day off to put together a last-minute birthday party for her son. But it’s unacceptable for Mr. Kim to talk too much about himself as he drives his boss home at the end of a long work day.

The Kims may be the wealthy family’s intimates, even confidantes, but they are never to think of themselves as equals.

This dynamic rings true to the real-life experiences of many domestic workers, according to Megan Stack, a journalist and author of the book Women’s Work: A Reckoning With Work and Home.

Power imbalances tend to manifest most frequently like this,” Stack writes. “The house becomes both an intimate family setting and a job site at the same time. But employers are the ones who have the power, and they end up getting to decide (often without being conscious of it) whether they are approaching the employee in a way that corresponds to an intimate relationship or in a way that corresponds to an employment relationship.

So the employee has to navigate both a faux family relationship and a job where basic labor rights can be granted or withdrawn on the whim of an unreliable manager.”

It’s a job arrangement that depends on a wide gap between haves and have-nots.

Women shouldn’t feel guilty about hiring household help, but that they should push for regulations that ensure domestic workers are earning fair wages and working under non-exploitative conditions.

The movie also exposes the toxicity of the Parks’ expectation that they can pay domestic workers to care for them without caring about the workers in return, or even seeing their employees as fully human.

There is a deep unfairness in the notion that employers get to decide where that line between intimacy and work is drawn—and, usually, it keeps shifting around.

Nannies are asked to be “simultaneously present and absent in children’s lives”—and to be sensitive enough to know when to negate themselves in order to preserve their boss’s feelings.

Parasite makes it impossible for audiences to ignore the uncomfortable ways in which household labor has been constructed to prioritize one group’s emotional life over another—and suggests that money is not all that’s owed to the people who power middle- and upper-class homes.

The income/wealth/power Gap, which stimulates Gap Psychology, always has existed in our lives, always will exist, and indeed must exist in any realistic socio-economic setting. The problem, however, occurs when the Gap becomes too wide, as it always tends to do.

The width of the Gap is determined by the more powerful — i.e., those “above.”  Their natural instincts are to widen the Gap, because it is the Gap that makes them superior. (Without Gaps, no one would be superior. We all would be the same.) And the wider the Gaps, the more superior they are.

Thus, over time, a Gap tends to persist or even widen, because that is what the more powerful want.

Then, moral pressure causes a revolution by the lower group and/or an awakening by the upper group.

The Gap temporarily narrows. It becomes “improper” or unlawful. Then, it again begins to widen, as the upper group resumes its resistance.

Typical scenario: A weaker group is bullied by a more powerful group’s leaders. These actions are mimicked by the more powerful group’s followers until the bigotry becomes routine and traditional.

At some tipping point, the bullied group resists and/or the more powerful group’s leaders find virtue, and they declare the bullying to be improper or unlawful.

After a time, some of the more powerful group’s leaders begin to justify and to resume the bullying, and the cycle repeats.

Slavery in America, the Civil War, and its aftermath provide one example. Today, years after blacks received the right to vote, America’s bigots attempt, and often succeed, in making voting more difficult for blacks.

Social Security, launched as a partial cure for poverty, now is under atta ck, as is healthcare and other benefits for the poor.

Another example. I play tennis, and I much prefer to play with those whose skills are at least equal to, and preferably superior to my own. On the surface, this may seem illogical, because I have a much greater chance of winning when I compete with inferior players. Still, I dislike playing with them.

I like to play with the “big boys,” and it doesn’t trouble me at all that the “big boys” may not relish playing with me.

Gap Psychology is everywhere. From your “trophy” (or not-so-trophy) wife, to the size of your house in the “right” neighborhood, to sending your children to the “right” school, to belonging to the “right” club, to your clothing, your jewelry, your car, to having the “right” job, the certificate on your wall, yours and your child’s achievements, to your friends, to being an “A-lister (or not),” even to your accent and the language you use, you live your life guided by Gap Psychology, whether you are willing to admit it or not.

If you are a fan of a team, your emotions watching that team are guided by Gap Psychology. When you see a list of nations, states, or cities,  ranked by any positive measure, you want to see your nation, state, or city near the top.

Would you like to be rich? “Rich” is a comparative, not an absolute. You can be rich only if others are poorer. The wider the Gaps below you, the richer you are.

Gap Psychology certainly is not your sole motivator, but it is the single, most powerful motivator in human society, and perhaps in other social animals’ societies, too.

The Gap in America is too wide, and is widening.

The GINI Index. The higher the number, the wider the Gap.

But the Gap can be narrowed. Because the U.S. government is Monetarily Sovereign, and so has the unlimited ability to create its own sovereign currency, it also has the unlimited ability to narrow the Gap.

Applying the Ten Steps to Prosperity (below) would narrow the Gap.

Because of Gap Psychology, the very rich do not want the Gap narrowed. But they comprise only 1% of the voting population.

Narrowing the Gap is a job for the 99%. They can’t hope the 1% will save them.

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

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

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

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 Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

 

Why do the richer grow richer and the poorer stay poorer? Wednesday, Nov 20 2019 

The November 2019 issue of Scientific American magazine included an article titled, “The Inescapable Casino,” by Bruce M. Boghosian a professor of mathematics at Tufts University, with research interests in applied dynamical systems and applied probability theory.

Professor Bruce M. Boghosian

The article purportedly reveals:

“A novel approach developed by physicists and mathematicians describing the distribution of wealth in modern economics with unprecedented accuracy.”

Economics is based mostly on psychology, which itself is a science only in the loosest application of the term. Thus, unlike most sciences, economics rarely is capable of creating reproducible tests that result in mathematical laws.

But, SA being a science magazine, Professor Boghosian’s article attempts to attach scientific credibility to economics by creating a casino-based mathematical explanation of why the rich get richer and the poor stay poorer.

His own summary of his findings is:

“1. Wealth inequality is escalating in many countries at an alarming rate, with the U.S. arguably having the highest inequality in the developed world.

“2. A remarkably simple model of wealth distribution developed by physicists and mathematicians can reproduce inequality in a range of countries with unprecedented accuracy.

“3. Surprisingly, several mathematical models of free-market economies display features of complex macroscopic physical systems such as ferromagnets, including phase transitions, symmetry breaking and duality.”

Here are a few more snippets from Professor Boghosian’s article:

Suppose you are invited to play a game. You must place some ante—say, $100—on a table, and a fair coin will be flipped. If the coin comes up heads, the casino will pay you 20 percent of what you have on the table, resulting in $120 on the table.

If the coin comes up tails, the house will take 17 percent of what you have on the table, resulting in $83 left on the table. You can keep your money on the table for as many flips of the coin as you would like.

Each time you play, you will win 20 percent of what is on the table if the coin comes up heads, and you will lose 17 percent of it if the coin comes up tails. Should you agree to play this game?

After five wins and five losses in any order, the amount of money remaining on the table will be:

1.2 x 1.2 x 1.2 x 1.2 x 1.2 x 0.83 x 0.83 x 0.83 x 0.83 x 0.83 x $100 = $98.02

so you will have lost about $2 of my original $100 ante.

The rest of the article describes the mathematics of why supposedly even exchanges between richer persons and poorer persons ultimately favor the richer persons. And mathematical examples are given of water boiling, the strength of a ferromagnet and phase transitions.

Aha. But, it’s mathematics, so it must be true — except not only does it have nothing to do with casino play, it has nothing to do with real-world economics.

First, the examples do not describe “wealth.” They seemingly describe net income, a different concept.

But far more important, although the examples are supposed to demonstrate why the richer grow richer and the poorer stay poor (or poorer), they do not.

The problem has long been known in the computer world as “GIGO,” Garbage In, Garbage Out. What is the basis for Boghosian’s 20% and 17% starting figures? There is none.  The professor arbitrarily chose numbers that “worked,” which “amazingly” multiplied to prove his point, whatever that may be.

Had he arbitrarily chosen even slightly different numbers, the results would have been vastly different. Try it yourself with ever-so-slightly different numbers.

Further, the whole concept of paying or receiving a percentage of what’s “on the table” has nothing to do with the way a casino operates, and even less to do with the way your personal finances operate.

You do not make or lose a percentage of what’s on the table. You make or lose a percentage of what you invest.

Finally, Boghosian proves his point by making predictions of the past. It’s a problem all we economists face. Unable to predict the future with any reasonable degree of accuracy, we predict the past.

We take any set of inputs and compare them to all past results, and if we can find some inputs that correspond with results, we claim to have discovered cause and effect.

It’s, for instance, the classic problem of chartists — the people who use graphs of past stock market movements to predict future stock market movements. The graphs provide perfect representations of the past — until they don’t, because the past does not perfectly create the future in psychology.

Not being an economist, Boghosian hasn’t encountered this flaw, so he is excited to have discovered this strange mathematical relationship among boiling water, ferromagnets, phase transitions, and wealth transfers.

(He also has no understanding of Monetary Sovereignty, so he speaks of taxes funding government activities, which is true only of monetarily non-sovereign governments. But that is a mere detail.)

That said, Boghosian is correct about money tending to flow upward from poorer to richer, and he is correct that it involves percentages, but not in the way he claims.

Here, in simple terms, are the three reasons why the richer grow richer and the poorer stay poorer.

  1. Richer people have higher incomes.
  2. Richer people spend a lower percentage of their higher incomes.
  3. Richer people save and invest a higher percentage of their higher incomes.

Put those three bits of mathematics together and you can see the rather obvious solution to the title question.

Consider three classic nuclear families of two parents and two children.

In nuclear family “A” the parents together earn $30,000 a year. To pay for food, housing, clothing, taxes, entertainment, school, etc. the nuclear family just scrapes by, spending $30,000 a year, and saving/investing $0. After 10 years, they have saved $0, and their children will receive nothing when the parents die.

In nuclear family “B” the parents together earn $50,000 a year. To pay for food, housing, clothing, taxes, entertainment, school, etc. the nuclear family spends $45,000 a year, and saves/invests $5,000, about 10% of their income. After 10 years, they have saved about $50,000, more or less, depending on how well they invested, and their children may, or may not, receive a minimal amount when the parents die.

In nuclear family “C” the parents together earn $1,000,000 a year. To pay for food, housing, clothing, taxes, entertainment, school, etc. this nuclear family spends $500,000 a year, and saves/invests $500,000, about 50% of their income. After ten years they have saved about $5 million, depending on how well they invested, and their children will receive millions when the parents die.

And there it is, in simplistic terms, the reason why the richer grow richer and the poorer stay poorer, and the Gap between them widens.

Choose any set of numbers you wish, and you will find that the richer are able to save and invest not just more of their incomes, but a higher percentage of their incomes, and they are able to pass down to their children substantially more.

The pseudo-mathematical formula is:

More x More = Increasingly more.

So mathematically, the Gap between the richer and the poorer not only must grow, but it must grow at an increasing rate.

But there’s even more.

The Gap is what make the rich rich and the poor poor. Without the Gap no one would be rich or poor. We all would be the same. So to feed their desire to become richer, the rich must widen the Gap, which can be accomplished by increasing their own wealth or by decreasing the wealth of the poorer.

This desire to widen the Gap is known as “Gap Psychology.”

The rich run the politics of America. To become richer, they pay politicians to provide favorable tax laws for the rich, and to resist giving benefits to the poor. They also pay the media and university economists to disseminate false statements about Social Security, Medicare, and other social benefits becoming “unsustainable” and  “insolvent.”

In summary, the Gap between the rich and the rest naturally widens, not because of a mathematical formula involving inter-class transactions, but rather because the rich are able to retain, invest, and pass to their children a higher percentage of their higher incomes.

And that is why a nation’s overall prosperity depends on such efforts as are described in the Ten Steps to Prosperity (below).

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

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

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

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 Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

 

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