Heritage Foundation: Ignorant, stupid, or traitors? You choose.

Are the writers for the right-wing Heritage Foundation ignorant, stupid, or merely traitors to America?

Read the following excerpts and you decide:

Commentary: Dealing with America’s Olympic-sized debt problem

Image result for Rachel Greszler and David Ditch. Size: 316 x 160. Source: www.buckscountycouriertimes.com
Rachel Greszler is a research fellow in economics at The Heritage Foundation. David Ditch is a researcher specializing in transportation issues for Heritage’s Hermann Center for the Federal Budget.

Rachel Greszler and David Ditch, The Heritage Foundation on Aug 5, 2021

Most Americans realize the federal government spent a lot of money, including three rounds of so-called “stimulus payments” that most households received.

But those $3,200 worth of individual checks pale in comparison to total spending.

If ordinary Americans had spent like the federal government did in 2020, the median household that earns $68,703 would have spent $131,620 and put $62,917 on the credit card, despite already being $541,287 in debt.

In our previous post, “Debt is not debt; deficits are not deficits; the government never borrows; gold never backed the dollar; inflation is not caused by federal spending,” we describe how charlatans use homonyms to deceive you.

Via ignorance, stupidity, or malice, the writers for the Heritage Foundation prove our point by attempting to confuse federal finances with personal finances.

The two are as completely different as flypaper is from the daily paper.

As of 2021, the U.S. debt comes out to roughly $220,000 per household. That’s enough to buy about eight years’ worth of groceries, gas, clothing, and housing for the typical household.

The above is a completely meaningless and misleading comparison, that is supposed to shock you, but not to inform you. You are not, and never will be liable for the so-called, misnamed federal “debt.” It isn’t a debt, and no one is liable for it.

And even that figure doesn’t include the unfunded liabilities of Social Security and Medicare.

Without a significant reduction in the size of those programs, each household’s total debt is actually over $660,000. That’s equal to the cost of a median family home, a new car, plus over five years’ worth of a typical household’s income.

Utter nonsense. All federal liabilities are “unfunded” until the government funds them by creating dollars, ad hoc.

The real purpose of the article is to groom you for acquiescence to right-wing calls for Social Security and Medicare cuts. But even if the FICA tax were eliminated, the federal government could support Social Security for All and a comprehensive Medicare for All, forever.

Then follow more meaningless comparisons, all designed only to be shocking. Your household will not ever pay a single penny to pay off the so-called federal “debt.”

However, even this massive a debt doesn’t seem all that bad.

Interest rates are low, and the federal government has had little problem seemingly borrowing into oblivion without consequence. (The same could be said of Greece before a financial crisis ensued.)

The fact that interest rates are low is yet more meaningless tripe. The U.S. government sets interest rates at any level it chooses, and it pays interest by creating new dollars, ad hoc, which it has the infinite ability to do.

And by the way, Greszler and Ditch, is it ignorance, stupidity, or traitorousness that causes you to compare the Monetarily Sovereign United States (which has the unlimited ability to create its own sovereign currency, the dollar) with the monetarily non-sovereign Greece (which has no sovereign currency)?

But our currently low interest rate payments—equal to over $2,500 per household in 2021, or the cost of about 6 months’ worth of groceries—are on track to rise to about $6,400 per household in 2031. That’s four months of mortgage payments.

Again, more designed-to-deceive, meaningless, false equivalences between federal finances and personal finances

And that’s the equivalent of an interest-only mortgage. Those costs don’t even begin to reduce the principal amount of debt.

The so-called federal “debt” is not a debt in the usual sense. It is the total of deposits into Treasury Security accounts (similar to safe deposit boxes) which are no burden whatsoever on the government or on future taxpayers.

While ordinary Americans aren’t allowed to take out mortgages or open up new credit cards in their children’s names, the federal government does this every day.

Yet even more ignorant, stupid, or intentionally deceptive false comparisons between federal finances and personal finances. The Heritage fraud goes on and on.

The share of debt for a child born this year was $66,874. And that debt is on track to rise every year, reaching $111,552 by the time they’re 18 and either start working or head off to college. It will then hit $191,768 by the time they’re 30 and potentially raising young children.

The above implies that future children will have to pay for the so-called “debt.” It is a lie of the first order.

No one will pay for the “debt” because it is not debt. It is deposits that will be paid off as they always have been: By simply returning the dollars in those T-security accounts.

Fortunately, it’s not too late to prevent the nation from going broke.

It is impossible for the United States to “go broke.” Being Monetarily Sovereign (unlike Greece), the U.S. has the unlimited ability to create dollars. If needed, it could press one computer key and create a trillion dollars tomorrow.

Congress should cut out wasteful spending such as corporate welfare and excessive compensation for federal bureaucrats.

The Heritage Foundation, being right-wing, now complains about “corporate welfare.” Do they mean the Republicans’ tax cuts for businesses?

And really, how many federal bureaucrats receive “excessive compensation”?

Of course, the whole thing is meaningless, because all federal deficit spending, even so-called “wasteful” spending, benefits everyone by adding stimulus dollars to the economy.

Congress should stop shirking their responsibilities by placing an increasing amount of federal spending on autopilot, and instead seek to reform programs like Social Security and Medicare that are on a path to bankruptcy.

I have no idea what “autopilot” means in this context. I suspect the authors don’t know, either. But none of it matters.

The real purpose is to make you believe Social Security and Medicare should be cut. That is the goal of The Party of the Rich, the Republicans.

The rich, who support Heritage Foundation, always want to widen the Gap between the rich and the rest. The wider the Gap, the richer are the rich. It’s known as Gap Psychology — the desire to widen the income/wealth/power Gap below, and to narrow the Gap above.

So they repeatedly warn that Social Security and Medicare soon will run short of money, despite their being a federal agency that has available to them, infinite dollars.

Neither the federal government, nor any agency of the federal government, can go bankrupt unless Congress and the President want them to.

Congress should focus on core federal responsibilities and clear away countless programs that benefit narrow interest groups at the expense of the public good.

The elderly and the poor — are they what Heritage considers to be “narrow interest groups”?? Or aren’t the rich — Heritage’s buddies — who really comprise the narrow interest groups?

Congress should recognize our looming debt disaster and step away from shortsighted spending plans.

Still “looming.” Debt-nuts like Heritage have been making the same “disaster” claim for more than 80 years, yet here we are, with the strongest economy in U.S. history.

Big problems like the unsustainable national debt won’t be solved quickly or easily. However, Congress must begin to take fiscal responsibility seriously as soon as possible.

The “unsustainable” national debt has been growing massively, and sustaining, since 1940, while organizations like Heritage have been crying “Wolf” again, and again, and again.

Otherwise, a Greece-like fate may await us.

And the article ends appropriately, with one, final, false comparison of monetarily non-sovereign Greece vs. Monetarily Sovereign America. The Big Lie is alive and well at Heritage.

Even, an organization as devoted to advancing the interests of the rich vs. the rest, should be embarrassed by the above article.

It is so wrongheaded and misleading as to be written by fools and approved by traitors. They do more to hurt America than do the most devoted Russian, Iranian, and Chinese spies.

Perhaps The Heritage Foundation should be renamed The Benedict Arnold Foundation.

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

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

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. 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

How you will be cheated out of your health care insurance

We begin with these, indisputable facts:

Fantasy Writing Diploma Course - Centre of Excellence
The federal government has the infinite power to create laws, and these laws have the infinite ability to create dollars. The government cannot run short of laws or dollars.

A. Federal laws are created from thin air by the federal government. The government creates any, and as many, laws it wants, so long as those laws are in keeping with the Constitution, which also was created from thin air by the government.

The federal government never unintentionally can run short of laws. It has the infinite ability to create laws.

B. Among the many laws the government created from thin air are the laws that created the U.S. sovereign currency: The U.S. dollar.

Initially, the government’s laws created as many dollars as the government wanted, and gave them the value the government wanted.

This infinite ability to create any number of dollars and to specify their value is known as “Monetary Sovereignty.”

The U.S. government is sovereign over the dollar.

This infinite ability to create dollars does not rely on tax collections. Even if the government collected zero taxes, it could continue creating dollars forever.

The federal government never unintentionally can run short of dollars or laws.

Similarly, the federal government has no need to borrow dollars, and indeed the government does not borrow dollars. It pays all its bills by creating new dollars, ad hoc.

The purpose of federal taxes is not to supply the government with dollars, but rather to control the economy by taxing what the government wishes to discourage, and giving tax breaks to what the government wishes to encourage.

C. Having absolute control over all aspects of the U.S. dollar, the federal government has absolute control over the value of the U.S. dollar, i.e. inflation. The government has the power to change the value of the dollar at will, a power it has exercised many times over the years.

Thus, the federal government has the absolute power to control inflation.


Keeping the above facts in mind, we can review the following article that describes how and why the federal government will cheat you out of your health care insurance.

Committee for a Responsible Federal Budget (CRFB)
Two Ways to Reduce Prescription Drug Costs
July 26, 2021

High and rising prescription drug costs are contributing to the budgetary pressure faced by the federal government. Also, a significant number of patients face very high out-of-pocket costs.

Interesting choice of words: “budgetary pressure.” The government not only creates infinite dollars from thin air; it also creates infinite budgets from thin air. And it changes those budgets at will.

So, yes, the cost of drugs easily could exceed the budget, but since the government never unintentionally can run short of dollars, there is no financial pressure.

Any budgetary pressure the government may feel is self-inflicted and essentially meaningless. (Visualize Jeff Bezos budgeting $5,000 to buy a TV set, and discovering the TV set costs $5,001. He may feel budgetary pressure, but will not feel financial pressure.)

Our two new briefs focus on options to reduce prescription drug prices. They include:

Medicare Part B could inject price competition into drug classes that have clinically comparable options but wide price variation – blunting the advantage that higher-priced drugs have under the current formula.

Injecting Price Competition into Medicare Part B Drugs

Currently, Medicare Part B, which covers outpatient physician services, pays for physician-administered drugs by reimbursing physicians the average cost for each specific drug plus a 6 percent add-on percentage of that cost. This arrangement creates misaligned incentives that blunt price competition and advantage higher-priced drugs – especially within drug classes that have clinically comparable options but a wide variation in prices.

This policy option looks at implementing “clinically comparable drug pricing,” where Medicare payments for physician-administered drugs would be set at a single price for groups of drugs within the same therapeutic class. That price would be set at the weighted average of prices manufacturers charge for each of the clinically comparable drugs.

This reform should encourage physicians to administer lower cost drugs and manufacturers to lower prices to maintain market share. The policy would reduce Medicare costs and would likely result in savings for Medicare Advantage plans and commercial payers.

The federal government pays its bills by creating dollars ad hoc. Thus, the government legitimately can be said to have infinite dollars. Federal taxes do not fund federal spending. Tax dollars are destroyed upon receipt by the Treasury.

So, there is no economic value to price competition. In fact, each penny the federal government sends into the economy is economically stimulative, at no cost to anyone.

However, the CRFB seems to claim that physicians make more money when physician-administered drugs are priced higher, and this can influence the choice of drugs. I am not sure how prevalent this situation is, but in any event, there is no fair way to prevent it.

The “weighted average” approach can penalize patients by making some of the more effective, costlier-to-produce drugs unavailable.

As a rule, price competition shifts costs from the government to the private sector, which penalizes the economy as a whole, while also penalizing drug research and development.

Over the next decade (2021-2030), implementing “clinically comparable drug pricing” could:

Reduce total (gross) Medicare spending by at least $122 billion in just three drug classes.
That includes $56 billion of savings to fee-for-service Medicare, $37 billion in lower beneficiary premiums and cost sharing, and $29 billion in savings for the Medicare Advantage program.

In more accurate words, implementing “clinically comparable drug pricing” could reduce the federal stimulus to economic growth by $122 billion in just three drug classes, while having no financial benefits for the private sector..

The policy would also generate private sector spillover savings. For example, in the rheumatoid arthritis class of drugs, the policy could reduce commercial drug costs by at least $21 billion.

Actually, there could be zero private sector spillover savings, if the government simply would pay, but the pharmaceutical industry would receive $21 billion less from the government.

Limiting Evergreening for Name-Brand Prescription Drugs
To encourage medical innovation, the FDA grants temporary market exclusivities to new name-brand drugs. These exclusivities prohibit generic drug competitors’ access to the market for a limited period.

However, drug manufacturers are often able to take advantage of the current rules, using “evergreening” strategies to extend their exclusivity periods and either delay generic drug market entry or limit the number of patients who switch to a new generic.

One evergreening tactic manufacturers employ involves introducing a new “line” or version of their drug shortly before a generic competitor is released.

This new line can be granted its own exclusivity period. For example, a manufacturer may introduce an extended-release formulation just before a generic of the original immediate-release formulation enters the market. This can allow a brand manufacturer to maintain market share in the face of generic competition – increasing its profits and increasing payer and patient costs.

New FDA exclusivity rules could lead to meaningful savings for consumers, commercial insurers, and government payers. The policy change could also speed up the market entry of brand extended-release and other reformulations, providing clinical benefits to patients.

Under a comprehensive, no-deductible, Medicare-for-All plan, there would be no cost for consumers, and government payers (who have infinite dollars) need no dollar savings. More stimulus dollars would be pumped into the economy by federal spending.

As for commercial insurers, they probably would go the way of the manufacturers of street corner phone booths, horse-drawn wagons, Betamax, and audio cassettes.  Medicare for All could offer better service at no cost (and no need to ask for permission to have surgery).

Over the next decade (2021-2030), this policy could:

Reduce federal deficits by at least $10 billion.

I.e. reduce federal economic growth and job stimulus by $10 billion

Save Medicare Part D $7 billion in drug costs and Medicare beneficiaries $4 billion in lower premiums and cost sharing.

I.e., reduce federal economic growth stimulus by $7 billion. If Medicare for All were free, as it should be, premiums would be cut hundreds of billions of dollars, and there would be no need for cost-sharing.

Reduce federal and state Medicaid drug spending.

Medicare for all would eliminate the need for federal and state Medicaid drug spending.

Reduce private sector drug costs by $9 billion.

There is no economic need for the private sector to spend anything for drugs.

In Summary:
Incredibly, the CRFB seems to prefer saving money for the infinitely endowed federal government at the expense of the money-deprived.

The CRFB suggestions are based on these myths:

  1. Federal finances are like private finances
  2. The federal government is funded by federal taxes
  3. The federal government can run short of dollars.

In truth, the federal government has infinite dollars available, has no need for tax dollars, and never can run short of its own sovereign currency. It needs to run deficits in order to grow the economy and prevent recessions, and it has absolute control over every aspect of the U.S. dollar including inflation.

Spending by the rich encourages the media, the politicians, and the economists to promulgate these myths. The purpose is to widen the income/wealth/power Gaps between the richer and the poorer, aka Gap Psychology.

Here are the CRFB notables, whose mission in life seems to be to help the rich become richer by widening the Gap between the rich and the rest. They have been quite successful.

 

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

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

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. 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

Economics is simple while being complex.

Economics is simple, though you wouldn’t know that if you ever were confronted with an economics text. Business complexity

Filled with jargon and maths, an economics textbook can be a daunting read, intentionally so, because nothing tells the world “I am real science” better than arcane language and impenetrable maths.

Part of the problem with labeling economics a science is that it is the study of the psychology of money, and psychology is a “science” only in the broadest, most charitable definition:

Wikipedia: Science (from Latin scientia ‘knowledge’) is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe.

Sadly, neither psychology nor its little sister, economics, are systematic, provide testable explanations or worthwhile predictions. Rather than being sciences, they are faith/belief systems (religions without mythical gods), filled with self-congratulatory experts, who endlessly expound with certainty, while providing scan proof, few tests, and laughably wrong predictions.

I apologize to tell you, I am an economist.

In this post, I provide you with none of the aforesaid maths and as little jargon as I can manage, hoping only to provide a bit of counterbalance to the flood of woolly-headed, faux expertise that confronts you every day.

Economics is simple because you can understand virtually everything of importance by understanding just two simple things — Monetary Sovereignty and Gap Psychology — and having understood them, you will know more than any politicians, any media pundits, and any economics professors, who don’t wish you to understand these simple things.

Monetary Sovereignty
“Monetary” means relating to money. “Sovereignty” means having ultimate power or authority. Thus the term “Monetary Sovereignty” means having ultimate power or authority over money.

The U.S. government created the first dollar from thin air by creating laws from thin air. These laws are entirely arbitrary in inception and they repeatedly have been changed, arbitrarily.

Because the laws that created U.S. dollars were created by the U.S. government and remain under the complete control of the U.S. government, and no other entity, dollars themselves are under the complete control of the U.S. government.

Laws have no physical existence. You cannot see, smell, taste, feel, or hear a law. It is an idea, a concept, a description. A lawbook might contain descriptions of thousands of laws, but the book itself contains no laws. The paper and ink that comprise the book are not laws. They merely represent laws.

This does not mean that laws are not real. Laws are very real. They just are not physical.

Consider, for instance, a law against murder. What does that law look like? How does it feel to the touch? How does it taste or smell? Despite being non-physical, the law is real, and because it is non-physical the law can be anything its creators deem it to be.

The U.S. government is legally sovereign over U.S. laws. These laws can be anything the government and the American voters wish them to be. The degree to which voters influence laws is known as “democracy.”

Not only are the U.S. government and the American voter sovereign over our laws, but we never can run short of laws. The federal government does not need to collect laws from you in order to create more laws. The U.S. government creates endless laws, ad hoc, arbitrarily.

Even if American voters did not supply a single law to the federal government, the government could continue creating new laws, forever. This difference between the number of laws supplied to the government, and the number of laws created each year might be known as a federal “deficit of laws,” and the totality of all laws in existence might be known as the federal “law debt.”

Among the laws created by the federal government and the people, are the laws creating dollars. Just as laws have no physical existence, dollars also have no physical existence. 

The reason gold coins, for instance, are not money, is that laws cannot create gold coins. Laws cannot create gold, and laws cannot create coins. Only people can do that. And just as law books are not laws — they represent laws — gold coins only represent money.

Similarly, paper dollars are not dollars. They represent dollars, which are non-physical bookkeeping entries.

To create dollars, the federal government neither needs nor uses any input of dollars. Even if all federal taxes were eliminated, the Monetarily Sovereign federal government could continue creating new dollars, forever.

The mathematical difference, each year, between dollars sent to the federal government vs the dollars created by the federal government is known as the federal “deficit,” and the total of all deficits is known a the federal “debt.”

Money, like the laws that create it, is ideas, concepts, abstractions. And because laws and ideas are not physical, they are whatever their creator deems them to be at any given moment.

Very soon, we will endure the annual “debt limit” fight, a fake conflict having absolutely nothing to do with the federal government’s ability to service its debt. The federal “debt” is not a debt and even if it were, the federal government has the unlimited ability to fund anything.

Why the fight? It’s all theater, the purpose of which is to convince you that the actors are financially prudent. So the party that is out of power will protest, and the party in power will assure, and everyone one will huff and puff, and eventually, having made their points, the fakers, feigning anger, reluctantly will agree to set a new, higher debt limit for the future.

There can be no greater proof of government duplicity than the federal “debt” limit.

INFLATION: Can there be too many laws? Can the annual “deficit of laws” and the “law debt” be too high? In essence, can there be law “inflation,” in which the addition of new laws depreciates the value of existing laws?

For instance, can the creation of say, a new law against speeding, make all other laws less valuable, i.e. cause law inflation?

Or by parallel, can the creation of new dollars make all other dollars less valuable, i.e. cause inflation?

The federal government has access to infinite laws and to infinite dollars, both of which it sends into the economy, at will.

Neither the creation and promulgation of new laws nor the creation and promulgation of new dollars depreciates the laws and dollars already in existence. New ideas, concepts, and abstractions do not depreciate existing ideas, concepts, and abstractions.

Infinity plus one equals infinity.

The  U.S. government is uniquely Monetarily Sovereign over the U.S. dollar. No other entity has this God-like power over the dollar.

Having this power and authority means the government can control the supply of dollars at whatever levels it arbitrarily chooses. It never can run short of dollars. The federal government can afford anything and does not need to have income. It simply creates, by fiat, any number of dollars whenever the mood strikes.

(That is why the term “fiat money” is a redundancy. All money is fiat, i.e. created by fiat.)

The government also can control the value of the dollar in relation to any other product or currency. It can decide, by fiat, that a dollar is worth an ounce of silver, a pound of beef, or a partridge in a pear tree.

This means inflation is not caused by government spending but rather is caused by scarcities of key goods and services.

Inflation can be prevented and cured by preventing and curing scarcities. The federal government can accomplish this by federal deficit spending to obtain, or facilitate the creation of, the scarce goods and services.

Example: The notorious Zimbabwe hyperinflation was caused by food scarcity. The government took farmland from experienced farmers and gave it to inexperienced non-farmers. The resultant inflation could have been cured by government financing to support farming via education and material support.

Instead, the Zimbabwean government merely created money, while the scarcities grew unabated.

The other “simple thing” upon which economics stands is:

Gap Psychology
The “Gap” represents the distances between those who have more income, wealth, privilege, and power vs. those who have less.

The Gap (or rather, “Gaps”) are what makes the richer richer and the poorer poorer. Without the Gaps, no one would be rich; we all would be the same. And the wider the Gaps, the richer are the richer.

The richer always wish to grow richer yet.

The rich can grow richer, that is widen the Gaps, by gaining more for themselves or by making sure those below them lose, or at least gain less. Either method will do.

The rich generally oppose and demean aids to those who have less. They claim Social Security and Medicare are running short of dollars, though no federal agency runs short of dollars unless that is what Congress and the President want.

The rich, who control Congress, have made sure the FICA tax falls most heavily on the poor and middle classes. It is why capital gains are taxed more lightly than salaries. These are evidence of the rich growing richer by widening the Gaps.

The rich despise the poor. Hatred is a symptom of fear. There can be no hatred without fear, and the rich fear the poor masses. The rich fear not only lanterns and pitchfork uprisings, but more realistically, the latent voting power of the masses.

If the masses ever were to realize how false are the claims by the bribed media, the bribed politicians, and the bribed economists, those masses would rise up and demand that the Gaps be narrowed.

Yes, bribed. The media are bribed by rich ownership and advertising dollars. The politicians are bribed with campaign contributions and promises of lucrative employment. The economists are bribed with university endowments and promises of well-paying jobs at think tanks.

Wide Gaps are economically corrosive. They 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.

IN SUMMARY
Economics studies money and its movement, which is controlled by human psychology.

The foundation of today’s economics is Monetary Sovereignty, the ability of an entity, usually but not always a nation, to create and control unlimited amounts of money and to determine the value of that money.

The engine that drives economics is Gap Psychology, the common human desire to widen the income/wealth/power Gaps below, and to narrow the Gaps, above.

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

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

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. 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

The inflation con. How can it be any clearer than this?

The Chicago Tribune, a mighty newspaper having substantial resources for information-gathering, repeatedly promulgates the “Big Lie” in economics — the lie that because U.S. federal finances are just like state/local government finances, business finances, and personal finances, the federal deficit must be cut and/or taxes increased to “pay for” it all.

In truth, federal finances have almost nothing in common with the finances of other entities, not even the finances of Germany, France, Italy, et al.

Here are some excerpts from a Tribune editorial dated 7/19/2021:

Spend-borrow-repeat will be the ‘debt’ of us
Mark Lennihan/AP

National governments worldwide — ours in the forefront — have fought the pandemic and its side effects with borrowed money. Much of this new debt will fall not only on today’s children and grandchildren, but also on our descendants not yet born.

Wrong: “Today’s children and descendants not yet born” will not pay for any part of the so-called “debt,” just as you have not paid anything for the $25 trillion already accumulated.

It’s not debt. The misnamed “debt” is nothing more than the total of deposits into Treasury Security accounts, which resemble bank safe deposit accounts.

The government never touches those accounts, except to deposit interest, and the “debt” easily is paid off simply by sending the money back to the depositors. No tax dollars ever are involved.

So we were concerned if not surprised by a Wall Street Journal news story headlined “Governments world-wide gorge on record debt, testing new limits.” The Journal reports: “The U.S. government is on course for a budget deficit of $3 trillion for the second year in a row.”

The deficit (the difference between taxes and spending) is not a real deficit. Federal taxes have no relationship to federal spending; all federal taxes are destroyed immediately upon receipt.

When you pay your federal taxes, you take dollars from your checking account (which is part of the M1 money supply), and you send them to the federal government, where they are destroyed. That is, they cease to be part of any money measure. They cease to exist.

The federal government does not use your tax dollars to pay its bills. It creates new dollars, ad hoc.

Even if the federal government collected zero taxes, it still could continue spending forever. The main purpose of federal taxes is to control the economy.  The government taxes what it wishes to discourage, and it gives tax breaks to what it wishes to encourage.

We mention this as our government’s Internal Revenue Service delivers the first of several child tax credit payments to single parents earning up to $95,000, and to couples earning up to $170,000. Meanwhile, Senate Democrats say they intend to pass a sweeping social, educational and environmental package they price at $3.5 trillion. 

A trillion of anything befuddles many Americans, journalists included. The temptation is to toss one’s fidgety hands in the air and mutter that these debts belong not to us individual Americans but to a faceless federal government.

That last paragraph is true. The misnamed “debt” is just a notation on the federal government’s books. It is completely unrelated to individual Americans or to taxes.

No one is liable for paying off the federal “debt,” which is paid off by returning dollars already in the T-security accounts.

Ah, problem already. That government is essentially a big checking account with a standing army; it collects and spends tax dollars.

Wrong. Although the government does collect tax dollars, it does not spend tax dollars.

It has the unlimited ability to create new dollars and that is what they use when paying their bills.

No one has said it better than former Fed Chairman Alan Greenspan:

Absolutely correct.

The U.S. government uniquely is Monetarily Sovereign — it is sovereign over the U.S. dollar. It can create as many as it pleases at any time it pleases, for any purpose it pleases, and give them any value it pleases.

As our national debt rises daily toward $29 trillion, the government’s perpetual printing of new dollars threatens to cheapen the currency. In short, we — or our progeny — have to repay every dollar now being lent to Washington by China and other buyers of U.S. bonds.

Mark Lennihan, the author of the editorial, publishes two errors in one paragraph. “Cheapen the currency” refers to inflation. Lennihan is claiming that the rising national “debt” (deposits into T-security accounts) causes inflation.

He is wrong. The “debt” has risen, in the past 80 years from about $40 billion to about $25 trillion (depending on who’s counting), a gigantic increase. But in those 80 years, inflation has been modest.

The red line is federal debt growth. The green and blue lines are different measures of inflation.

Further, being Monetarily Sovereign, the federal government retains absolute control over the value of the dollar. It can change the value at will, as it has done many times in the past, the most recent being in 1971.

Maybe the accumulation of debt continues indefinitely without consequence. Or maybe critics cited by the Journal are right to warn that our spending is excessive, “risking an overheated economy and a lasting rise in inflation and interest rates.”

If federal debt caused inflation the two lines should essentially be parallel. As you can see they are nowhere near being parallel. There is no relationship between federal debt and inflation.

The accumulation of debt has continued without consequence for 80 years, despite repeated (and wrong) warnings from debt fear-mongers. Inflation has been modest — close to the Fed’s 2% annual target.

Which raises a question we hope Illinoisans will direct to their members of Congress: When does necessary spending on pandemic relief mutate into optional spending on the desirable but unaffordable?

We argue that unchecked cycles of spend-borrow-repeat eventually enfeeble any nation. That may not happen while interest rates are as low as today’s. But those rates — the relentless cost to taxpayers of carrying so much debt — now are likelier to rise than to fall.

Nothing is “unaffordable” for the federal government. It has infinite money. The author is confusing federal finances with personal finances or state/local government finances.u

Federal taxpayers have not and will not “carry” any of the federal debt. Tax dollars are destroyed upon receipt. They do not fund the debt.

Thus far in the pandemic, global securities markets happily support all of our borrowing; because of its prosperity, America is a safe haven for investors.

The federal government, having the infinite ability to create dollars, never borrows. More confusion by the author of the editorial.

But as Robert Rubin, the treasury secretary under President Bill Clinton, warned in a 2018 op-ed published in the Tribune: “The European financial crisis that began in early 2010 shows how markets can ignore unsound conditions for a long time — until they don’t. For many years,

Greeksovereign bonds traded at virtually the same yields as their German counterparts, which made no sense. Then, when the bond markets suddenly focused on the fiscal problems plaguing Greece and the other weaker countries, interest rates spiraled into crisis.”

Astoundingly, the treasury secretary did not understand the differences between a Monetarily Sovereign government (the U.S.) and monetarily non-sovereign governments (euro nations, Greece, Germany, Italy et al)

Greece, Germany and all the other euro nations do not have the ability to create their sovereign currency at will. Like you, and me, and our cities and states, they do not have a sovereign currency. They use the euro, which is the sovereign currency of the European Union, not of any individual nation. (It’s similar to the way American states are not sovereign over the dollar.)

All of us can run short of money. The U.S. government cannot. Anyone who does not understand the difference, does not understand economics.

Many Tribune readers are smarter than their government: Chastened by the Great Recession in which the inability to pay mortgage debt cost people their homes, Americans have attacked private-sector debt even as their politicians raised public-sector debt.

Again, Mr. Lennihan demonstrates a shocking ignorance of economics. He confuses personal (monetarily non-sovereign) finances with federal (Monetarily Sovereign) finances. It is amazing that he receives such a nationwide platform to spew such nonsense.

A classic example of citizens taking to heart the admonition, “Don’t try this at home.”

To reiterate arguments you’ve read here before: We write often about debt in part to counteract the popular (and in Illinois, political) tendency to see borrowed money as free manna that somebody else will worry about, someday. The truth is that, whether it’s enforced or nominally forgiven, someone always pays.

The admonition, “Don’t try this at home” is correct, because “home” is not Monetarily Sovereign.

Since it’s not real debt, but rather it’s deposits, no one pays. However, the federal government always pays its creditors — with newly created dollars.

When America’s debt inevitably grows too onerous for taxpayers to bear or global investors to tolerate, expect a furious blame game: Why did our politicians let this happen?

America’s debt is not borne by taxpayers. If it were, the debt could not have reached $25 trillion. It already would have been “borne.”

The “blame game” only will occur if we have a recession, which would be caused by too little deficit spending.

We voters didn’t demand that spending not exceed revenue, that debt not be allowed to pile up like snow atop a mountain. A long line of presidents and Congresses have talked about preventing the avalanche. But we voters have let them get by on that lip service alone.

When spending doesn’t exceed revenue, we have recessions if we are lucky, and depressions if we are not lucky.

U.S. depressions tend to come on the heels of federal surpluses.

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

A growing economy requires a growing supply of money. If the money supply shrinks, or even grows too slowly, we have recessions or depressions.

Their greatest sin thus far is abject failure to reform the debt-manufacturing entitlement programs such as Medicare (whose hospital coverage trust fund is projected by its trustees to run dry in 2026) and the Social Security retirement fund (projected as empty in 2034).

Finally, toward the end of his editorial, Mr. Lennihan reveals the true purpose of his Big Lie: He wants to cut the benefits that would go to the masses.

Why? Because that is what the very rich, who really run America, want.

It’s called Gap Psychology, the desire to distance oneself from those below. The rich are rich only because of the Gap. If there were no Gap, no one would be rich; everyone would be the same. And the wider the Gap the richer are the rich.

To widen the Gap, the rich bribe the media (via ownership and advertising dollars). They bribe the politicians (via campaign contributions and promises of lucrative employment, later.) They bribe the economists (via university endowments and promises of employment with “think tanks.)

So as members of Congress and President Joe Biden ponder a massive expansion of social, educational and environmental spending, we have a request:
Whatever the final shape of your package, pay for it rather than borrow for it. Because given how you’ve behaved — especially since the pandemic struck — your binge of spend-borrow-repeat will be the debt of us.

Fear, not Mr. Lennihan, it all will be paid for in exactly the same manner as always. No, the federal government will not borrow its own sovereign currency. It will create new dollars, ad hoc.

Now we have a request: Stop disseminating the Big Lie, either by ignorance or intent.

If you don’t understand Monetary Sovereignty, read up on it before writing anything more.

If you do understand it, and still are spreading the Big Lies, retire immediately in ignominy. You don’t deserve to have any of your work published.

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

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

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. 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