The fake fight over your Social Security benefits Monday, Feb 1 2021 

Kiplinger’s is supposed to know what they are writing about.

Hah!

Here is an article that appeared in today’s Chicago Tribune. You decide whether Kiplinger’s Managing Editor knows what she is writing about.

Biden’s plan to strengthen Social Security
By Catherine Siskos, managing editor at Kiplinger’s Retirement Report

In 2021, Social Security is expected to begin drawing down its trust fund to cover benefits instead of tapping only the interest.

Right away, we are greeted with the Big Lie that federal taxes fund federal spending.

While, state and local government taxes fund state and local government spending, federal taxes do not fund federal spending. That is a major difference most people do not understand.

Because the U.S. federal government uniquely is Monetarily Sovereign, it has the unlimited ability to create its own sovereign currency. The U.S. government never can run short of U.S. dollars.

Even if payroll tax collections fell to $0, the federal government could continue to fund Social Security, forever.

550 Blank Cheque Photos - Free & Royalty-Free Stock Photos from Dreamstime

An example of instructions: “Pay to the order of . . . “

Why can the U.S. government never run short of dollars? Because it pays creditors with instructions, not with dollars.

It never can run short of instructions, which it creates from thin air, simply by voting.

To pay for its spending, the federal government creates new dollars, ad hoc, by creating and sending instructions to each creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account.

The instructions are in the form of a paper check or more commonly a wire, both of which begin with the instructions, “Pay to the order of __________.”

When the creditor’s bank does as instructed (by pressing a computer key), new dollars instantly are created and are added to the M1 money supply. It is the bank that does the actual money creation.

The creditor’s bank then balances its books by getting approval from (i.e. “clearing” the government’s instructions through) the Federal Reserve Bank, and the money-creation cycle is complete.

What then becomes of the tax dollars sent to the U.S. Treasury? They are destroyed. They cease to exist in any money supply measure.The Destruction of Money: Who Does It, Why, When, and How? - The Atlantic

That is why no one on earth can answer the question, “How much money does the U.S. federal government have?”

Depending on your perspective, the answer either is “$0” or “infinite.”

Personally, I prefer “infinite,” because the Treasury does carry a comparatively small account with the Federal Reserve Bank.

And by the way, remember that bolded phrase above, “instead of tapping only the interest?” Guess where the interest comes from.

It comes from the fake “trust fund’s” investment in Treasury Securities.

The U.S. Treasury creates dollars from thin air to pay interest to a non-existent U.S. federal “trust fund.” The U.S. Treasury instead simply could create dollars to fund Social Security, and do away with the bookkeeping mumbo-jumbo.

Unless Congress acts, benefits will be cut at least 20% when the trust fund runs out of money in 2033 — two years sooner than previously projected, according to the Center for Retirement Research at Boston College.

At that point, the program will rely entirely on payroll taxes, which currently aren’t enough to fully fund Social Security.

Unless Congress acts, your benefits will be cut, but not because the fake “trust fund” runs out of money. Benefits will be cut because Congress created the fake “trust fund” as a device to limit your benefits.

Medicare Part A has a similar fake “trust fund,” which also is running short of money, while Medicare Part B has no trust fund that can run short of money.

Why? Because by law, the federal government will add dollars to this mythical “trust fund” as needed. Thus, in reality, the federal government pays for Medicare Part B, without the flim-flam tax pretense of Part A.

Hmmm . . . Does that give you any ideas? How about using the Medicare Part B system for Medicare Part A and for Social Security?

That way, we never would have to hear false warnings about running short of money, and we could dispense with deceptive articles like this one from Kiplingers.

President Joe Biden wants to expand Social Security in two ways. He would raise benefits for the people most in need: low-wage workers, surviving spouses of dual-earner couples, caregivers, government workers and those who have been collecting Social Security the longest. (The rationale for that last group? Seniors have higher medical and long-term care expenses later in life.)

Everyone else’s benefits would remain the same, but their Social Security cost-of-living adjustments would increase because Biden supports switching to the Consumer Price Index for the Elderly.

The CPI-E is considered a better measure of inflation for older adults because it weights senior citizens’ biggest expenses, such as health care and housing, more heavily.

The Social Security Administration estimates that switching to the CPI-E from the current wage earners index will raise annual COLAs 0.2 percentage points, on average.

To pay for these changes, Biden wants to increase Social Security payroll taxes on people earning more than $400,000 a year, a short-term fix that would also shore up the program for only another five years, Melissa M. Favreault predicts in an analysis for the Urban-Brookings Tax Policy Center.

She is a senior fellow in the Income and Benefits Policy Center at the Urban Institute.

Does the “senior fellow in the Tax Policy Center at the Urban-Brookings Institute really believe that Social Security taxes fund Social Security benefits?

Or is she merely parroting the Big Lie for political reasons?

Proposed legislation from Rep. John Larson, a Democrat, would secure the program’s funding for 75 years.

Along with the increase on those earning more than $400,000 that Biden has proposed, the bill calls for raising the payroll tax for everyone, with employees and employers each contributing an additional 1.2%, or roughly 50 cents more per week, estimates Social Security in an independent analysis of the bill. The increase would be phased in between now and 2043.

In a divided Congress, Democrats and Republicans could find common ground with smaller bills, such as one to reinflate Social Security benefits for people born in 1960 or 1961, says Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare.

Their benefits will be cut unintentionally by a formula glitch and the 2020 recession.

Isn’t it pitiful that even the president and CEO of the National Committee to Preserve Social Security and Medicare is, or pretends to be, so clueless about how federal finances really are handled?

Do you wonder why there has to be a “National Committee to Preserve Social Security and Medicare” when there is no such committee to “preserve” the military, or to “preserve” the Congress, or to “preserve” the Supreme Court?

They all are federal agencies, but somehow, they don’t need fake “trust funds” or financial “preservation.”

The federal government just pays the bills, as it does for every other agency of the federal government.

Do you know why Social Security and Medicare (Part A only) have fake trust funds?

The reason is “Gap Psychology.” You can Google it or click the link for a description, but the short meaning is the human desire to widen the income/wealth/power Gaps below you on any economic or social measure, and to narrow the Gaps above you.

If there were no Gaps, no one would be rich or powerful. We all would be the same. And the wider the Gaps, the richer and more powerful some people would be.

Widening the Gaps makes the rich richer and the powerful more powerful. A good way to widen the Gaps is to cut benefits for the non-rich.

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 or a reverse income tax
  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 BIG LIE OF ECONOMICS EXPRESSED IN ONE CARTOON Monday, Dec 28 2020 

The science of economics is burdened with many lies and myths, most of which are designed to convince you, the public, you should not ask the federal government for benefits.

The Big Lie of Economics is: Federal taxes fund federal spending. It simply is not true. The truth: Federal taxes fund nothing.
Even if the federal government collected $0 taxes, it could continue spending, forever.

The very rich, who control the political establishment, want to widen the Gap between them and you. So they do everything possible to make you agree to have less than you really should. (It’s called “Gap Psychology,” the desire to distance oneself from those below, in any social/economic measure.)

Because “rich” is a comparative measure, the less the poorer have, the richer the rich are. That is why you are told federal deficits and federal debt are too high, and “unsustainable” — to provide you with a seemingly logical rationale for denying you the things they already have: The availability of:

–Significant income
–Safe and comfortable housing
–Comprehensive health care
–A happy, safe, well-fed, well-clothed lifestyle
–University education for your children
–Pleasant, remunerative working conditions
–A comfortable retirement

They tell you, falsely, that you must pay for federal spending, either via taxing or inflation, and that your federal benefits are the dreaded “socialism,

Not one word of that is true.

Federal taxing is not necessary for federal spending. Federal spending never causes inflation. And federal spending is not “socialism.”

And that is why the rich publish misleading cartoons like this:

Dana Summers

The federal government does not spend your money. Your federal taxes do not fund federal spending.

The truth:

1. The federal government does not spend your money. In fact, your federal taxes are destroyed upon receipt
2. You could have free, comprehensive Medicare covering you and everyone in your family, and not need to pay even one penny in FICA (which, by the way, is the most regressive tax in America.)
3. Your children could be educated, grades 13  and above, without any cost to you
4. You could be provided with sufficient income to afford good food, safe housing, good clothing, and the other benefits of being an American (car, TV, vacations, good working conditions, etc.)

Yes, the rich tell you the economy will falter without your hard labor and deprivation (though they themselves are excluded), and that only the rich are entitled to a good life, and that labor is moral (again, the rich are excepted).

And it is all a lie to keep you down.

Consider, for instance, the battle revolving around the $600 stimulus check vs. a $2,000 stimulus check.

Congress finally settled on $600, though there is not a single, economic reason for that limitation. Not one.

I challenge anyone to provide one good excuse for the lower number other than that the rich, and the party of the rich, don’t want you to have it.

The rich expect you not to understand the differences between our Monetarily Sovereign federal government and our monetarily non-sovereign state and local governments.

So, the politicians falsely claim that state and local governments struggle financially because they are inefficient, incompetent, and crooked.

Indeed, some are, but the real reason for the state/local government financial struggles is that they are monetarily non-sovereign.

They simply cannot afford to provide you with good streets, good water, good sewage systems, good elementary and high schools, good police and fire protection, and all the other benefits the federal government could pay for at the touch of a computer key.

The rich have managed to brainwash you into believing you deserve financial hardship and denial of benefits because you don’t labor hard enough or are not smart enough, and that the rich are the ones who deserve the lifestyles you admire.

This can change. The rich are not superior, more deserving Americans. Fate has just been kind to them.

You deserve to have all the benefits the rich have. But first, you must be willing to accept the truth. You must be willing to accept the fact that you have been lied to.

Yes, it is hard to admit you have been suckered all these years. But swallow your pride, understand the truth, and demand that the federal government, which has unlimited money, should even the score, and pay to give you the kind of life rich Americans enjoy.

You deserve it as much as the rich do.

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 or a reverse income tax
  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

STRIFE, FEAR, GREATNESS, AND THE MYSTERY OF TRUMP Monday, Nov 23 2020 

STRIFE, FEAR, GREATNESS, AND THE MYSTERY OF TRUMP

STRIFE:

The universe is not favorable for life. Unimaginable cold, unfathomable heat, deadly radiation, crushing gravity, poisonous elements — they all abound.

Even mother earth tries to kill her children. She sends us ice ages, volcanos, earthquakes, windstorms, floods, droughts, and meteors, while her “red of tooth and claw” children try to kill each other.New study estimates the odds of life and intelligence emerging beyond our planet

Every living creature, from viruses (living?), through plants, through animals, all have enemies, living and inert, that threaten the delicate, interconnected web we call “life.”

Survival has required a constant struggle, life vs. anti-life. To survive, fragile life must defeat vigorous anti-life in a battle that continually is lost, or rather, continually almost is lost, every second of every day. We stand on the point of a needle.

Yet, here we are, we humans who have struggled best, survive.

We survive partly because we have the best brains, joined to marvelous hands, and voice boxes for the best communication, and among animals, we are large. We survive partly because good fortune has spared us the worst the universe has to offer.

But mostly we survive because nature has given us the tools to become the greatest killers this planet ever has known.

We are social animals, but we use our sociability to facilitate our killing. We kill them all, from viruses to bacteria, to whales, to fellow sapiens. Even our pleasures, our games, involve a ritualized form of killing called “winning.”

Evolution is based on strife, the survival of the fittest. We are programmed for strife. Throughout history, humans never have been without war.

The vast majority of our games are selfish, competitive, killing games. We win and the other side loses. In essence, we survive and they die. Only the genes that compete best are allowed to fight another day.

Our species is so enamored with strife, we not only wage war, we enjoy watching it. From Roman gladiators to today’s boxers, to all spectator sports, we become emotionally involved in the battles and the victories and defeats.

Watch the passionate fans at an American football game, and you will see bloodlust in action. Even flag football or touch football are not enough. It has to have crushing tackles and broken bodies to titillate the hoi polloi.

Some of us do exhibit compassion and charity, but scientists will tell you the ultimate purpose of charity is to effect species victory. Helping even the weak, the aged, or the ill assures their knowledge will not be lost — beneficial for a society’s survival.

And this is the important point. Though as individuals, we are efficient killers, and killing eliminates competitors for resources, as a society, we do not spend our lives killing. We need our family, friends, and neighbors to find and create resources, and for defense.

Those who show no compassion, and solely are ego-driven, seemingly would have a personal survival advantage, but because they do not contribute to species survival, they often are punished by the species, directly via physical attacks or indirectly via various forms of shunning.

TRUMP

Millions voted for Donald Trump. Why does he appeal to so many people?

Before he became president, he had failed in businesses where failure is nearly impossible: Gambling casinos and real estate. A casino is a guaranteed money-printing device, and real estate generally had increased in value for more than 60 years.

Repeatedly, Trump had been bailed out of his foolish predicaments by his father, only to fall into bankruptcy, yet again.

He was a Democrat who decided to switch parties to one that would accept is morals, a thrice-married womanizer, who never stopped cheating, a notorious liar and con man, whose reputation was so bad he still today is unable to obtain loans from any American bank.

His money kept him from Trump University and Trump Foundation prison.

He has cheated everyone, not only lenders and investors, but also swindled his workers out of their salaries.

Yet he was elected by the self-proclaimed “party of law and order.” During his four-year term, his prime accomplishments included giving tax breaks to the rich, attempting to destroy health-care insurance that protected millions of people, eliminating consumer protection laws, and hiring incompetent agency heads whose main efforts were to sabotage the primary missions of their agencies.

History will find him wanting.

He was impeached by the House of Representatives, and narrowly saved by the Senate, and was voted out of office. But, still he received more than 70 million votes.

Why?

Trump is a pure warrior. Lacking all compassion and human kindness, he is a psychopath, totally devoted to personal victory. He lives for strife.

He deems anyone, who exhibits even an ounce of kindness and mercy, a “loser,” the single worst epithet he can imagine. For a soldier who dies or is captured or wounded fighting for his country, Trump has only one question, “What was in it for him?”

He cannot imagine doing any unrequited kindness; everything must accrue to him, personally.

Seeing acclaim go to someone else is anathema. Trump has fired people whom he thought received more credit than him. His favorites are those sycophants who give him glory for everything good. (See: Mike Pence)

Trump preaches strength and patriotism, while he himself is a weak anti-patriot, who fearfully avoided the risks of battle by claiming heel spurs.

He admires dictators, the more brutal and unforgiving the better. Vladimir Putin, Kim Jong-un, Rodrigo Duterte, Salman bin Abdulaziz Al Saud — murderers all — are Trump favorites.

In rising to power, he has followed Hitler’s playbook.

FEAR

The most powerful human emotions are fear and hatred. They are so closely related that the former breeds the latter.  It is almost impossible to hate someone of whom you have no fear.

Tyrants understand this, thus we see the use of scapegoats, which generates fear and loathing among the populace.

Trump’s scapegoats are Mexican “rapists,” Muslim “terrorists,” the “fake” media, black “thugs,” “extreme” leftists, socialists, whistleblowers, Barack Obama — all the people Trump fears and thus hates — and these are the people he has taught his followers to fear and hate.

When people suffer fear, they seek protection. They are more likely to buy guns. They are more likely to join cults like the white supremacists, that are based on fearing people of color.

When people are in fear, they look to a strong leader who will protect them. Trump feigns strength. He promises to protect his followers from the people he himself fears and hates.Mahatma Gandhi quote: It is weakness which breeds fear, and fear breeds distrust.

We live in fearful times. Many people are impoverished or fear poverty. Many people are jobless or fear joblessness.

Many people fear the “Godless” left, who “kill babies.”

Bigotry is a representation of fear. Trump’s appeal is to bigotry, hatred, and fear.

Trump’s most ardent followers are America’s most fearful people.

Compassion and generosity require the courage to give of oneself — the courage to overcome the Gap psychology that urges us to distance ourselves from those “below” us on any social or economic scale.

And so, despite all his flaws, Trump has retained much of his base. And he will retain them until a principled leader arrives to assuage the fears we all suffer to some degree and teaches us we can be both compassionate and safe.

GREATNESS

Trump promised to make America great, again, then proceeded to make America small.

He promised we could cower safely behind his Wall, though a great people does not cower or need a wall. His promised wall only told the world and us that we are weak.

America was great when we followed Franklin Roosevelt and gave our lives and fortunes against the Axis oppressors.

America was great when, under Harry Truman, we instituted the European Recovery Program (Marshall plan), that gave billions of our dollars to war-devastated European nations.

America was great when under Harry Truman we didn’t wreak vengeance on Japan, a nation that had attacked us. Instead, we made Japan an ally and helped its people recover.

America was great when we followed John Kennedy and courageously flew the dangerous path to the moon.

America was great when we instituted Lyndon Johnson’s “Great Society.” to unselfishly help the poor and the weak.

Those were unselfish times. Those were compassionate times. Those were great times.

Those were NOT “America first” times.

Had Trump encouraged the wearing of masks, he could have saved well more than 100,000 Americans. Despite all his other failings, he could have been great, for that alone.

Instead, his personal insecurities caused him to fear looking weak. So he discouraged mask-wearing to prove his strength, and our families, friends, and neighbors died.

Trump poisoned the GOP and drained its strength. Today, it is an assemblage of toadies, fearing to say anything that will crack the ego of the bully.

The bully is not strong. Continual strife is not strength. The weak are those who most fear looking weak.

Trump is a weak man, supposedly diminished by his tyrant father. When Americans begin to understand Trump’s weakness, we will not fear to welcome a wise and compassionate leader, and the age of Trump and fear will end.

Only then will America become great, again.

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 or a reverse income tax
  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

Explaining: “Which of these myths do you believe? A test of your knowledge.” Friday, Oct 30 2020 

Way back on May 12, 2011, we published, “Which of these myths do you believe? A test of your knowledge.”

It is a list of common myths and bits of popular false wisdom. All have been foisted on you by the ignorance or the intent of the media, the economists, and the politicians.

Mostly, these misleading statements have been made at the behest of the very rich who don’t want you to understand the realities of finance.

Example: Groups like the Committee for a Responsible Federal Budget  (CRFB) are paid by the very rich to dissuade you from demanding social benefits like Medicare and Social Security. The pretext is that the federal deficit and debt are large and “unsustainable.” It is all a lie.

14 people revealed their most brutal rejection stories - Insider

Gap Psychology: The common desire to distance oneself from those below and to approach those above.

The ultimate purpose of the lie: To widen the financial/wealth/power Gap between the rich and you.

The effort to widen the Gap is described in Gap Psychology, which is the common desire to distance oneself from those below in any socio-economic measure, and to approach those above.

Subsequent to the May, 2011 post, in literally thousands of posts, we have discussed the myths it listed, and we explained why they are myths.

Today, more than nine years later, the public still believes the myths. Those nine years of posts educated some, but overall, were to little avail.

Failure can be discouraging or encouraging, depending on one’s attitude. For me, it is both. Only semi-daunted, I now will try once again to explain the truths of economics in a way that even the “experts” can understand.

You don’t need to read a complex economics text. You can understand certain basics in order to realize what your government really is doing to you. In any science, it is the basics that light the way to clarity.

Fundamentally, economics is about money. Yes, it also has to do with things like production, consumption, demand and supply, imports and exports, and wealth and value, and psychology. Ultimately, they all are described in terms of money.

Few people understand money. Unless you (objective “you,” not you personally) understand what money actually is, you will find understanding economics impossible.

WHAT IS MONEY?
All money is a form of debt. All debt has collateral. The issuer of money is the debtor who owes the user of money “full faith and credit,” which is the collateral for the debt.

“Full faith and credit” may sound nebulous to some, but it actually involves certain, specific, and valuable guarantees, among which are:
A. –The government will accept only U.S. currency in payment of debts to the government
B. –It unfailingly will pay all it’s dollar debts with U.S. dollars and will not default
C. –It will force all your domestic creditors to accept U.S. dollars, if you offer them, to satisfy your debt.
D. –It will not require domestic creditors to accept any other money
E. –It will take action to protect the value of the dollar.
F. –It will maintain a market for U.S. currency
G. –It will continue to use U.S. currency and will not change to another currency.
H. –All forms of U.S. currency will be reciprocal, that is five $1 bills always will equal one $5 bill and vice versa.

Debt has no physical existence. You cannot see, hear, taste, smell, or feel debt. Thus money has no physical existence.

A physical dollar bill is not a dollar. A dollar bill is an evidence that the bearer owns a dollar. Just as a car title is not a car — it is evidence — and a house title is not a house, a dollar bill is not a dollar; it represents a dollar.

A U.S. dollar is nothing more than a legal number on a balance sheet. As a number, it has no physical existence. You cannot see, hear, taste, smell, or feel a number or a dollar. They both are mere concepts.

In one of its earliest steps, the U.S. government created laws from thin air, which also have no physical existence. These laws created dollars from thin air. As there is no limit to the number or form of the laws the U.S. government creates, there is no limit to the number or form of the dollars these laws can create.

Just as the U.S. never can run short of laws, the U.S. never can run short of dollars. The U.S. never needs to borrow laws; similarly, it never needs to borrow dollars. It can create infinite laws and infinite dollars, forever.

The U.S., as the issuer of the dollar, is Monetarily Sovereign. It is sovereign over its laws and its dollar. It can create dollars at will and give those dollars any value it wishes.

Ben Bernanke, Former Chair of the U.S. Federal Reserve: “The U.S. government . . . can produce as many U.S. dollars as it wishes at essentially no cost.”

Alan Greenspan, Former Chair of the U.S. Federal Reserve:  “There is nothing to prevent the Federal Government from creating as much money as it wants and paying it to somebody.”

Neither this coin nor the gold in it are money.

That is why gold, for instance, is not money and never has been money. It is a mineral, a fairly useless mineral, that some people like to own because it is pretty.

Here is pictured a $50 gold coin. It, in itself, is not money. It represents $50 in money, and if you turn it in to the United States Treasury, you will receive a $50 credit to your checking account. (BTW, your checking account also has no physical existence.)

The coin is made with 1/4 ounce of gold, so if you sold it to a private party, you would receive something in excess of $500, because that is the selling price of gold as a mineral.

The federal government can create a coin from whatever mineral it wishes and give that coin any face value.

A $50 coin made from tin would be worth $50 in money, as is a $50 coin made from gold.

A $50 coin made from platinum also would be worth $50 in money, but more than gold and far more than tin on the open market.

Thus gold, platinum, tin, and paper are not money. Money had no physical existence.

The federal government creates dollars by spending. To pay a creditor, the government sends instructions (not money) to the creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account.

The instant the bank obeys those instructions, new dollars are created and added to a money measure called “M1.” Though the creditor’s bank technically creates the dollars, it is the instructions from the government that make it possible.

We have stressed money’s lack of physical existence to demonstrate the federal government’s infinite ability to create money. Money is just a number on a balance sheet, controlled by the federal government.

THE FEDERAL DEBT
The so-called federal debt, so often claimed to be “unsustainable,” is not even debt in the classic sense, and definitely is not unsustainable.

Because the federal government has the infinite ability to create dollars, it never borrows dollars. What erroneously is termed “borrowing” merely is the acceptance of deposits into Treasury Security accounts, the total of which is called “debt.”

To pay off this “debt” the government merely returns the dollars in those accounts to the account holders. The government never uses those dollars. It creates new dollars, ad hoc, every time it pays a creditor.

The deposits in T-security accounts remain there, accumulating interest, until the deposit matures, at which time the dollars are returned to the owner of the account.

Those who think the “debt” is a burden on the government or on future taxpayers, do not understand federal finance. Those deposits are a burden on no one.

The federal debt sometimes and erroneously is called “a ticking time bomb,” but having ticked for more than 80 years, that “bomb” is a dud.

The federal government already has the legal power to produce platinum coins in any amount and of any value. It could, if it chose, create a $100 trillion coin, and deposit it with the Federal Reserve, thus eliminating all federal “debt.”

The annually debated debt ceiling does not put a ceiling on debt. It puts a ceiling on paying what already is legitimately owed. There is no reason for a debt ceiling, and the proof is that it is raised, by the passage of laws, every time that “ceiling” is reached.

Those who opt for a debt ceiling demonstrate ignorance of money.

Another common bit of misinformation is the claim that federal “borrowing” reduces the availability of bank lending funds. This is wrong for several reasons:

  1. The federal government does not borrow. It has no need to. It has infinite money.
  2. The claim probably refers to accepting deposits into T-security accounts, which erroneously is termed, “borrowing.”
  3. Federal deficit spending, rather than reducing borrowing funds, adds dollars to the economy, making more dollars available for private lending.
  4. Banks create lending funds merely by writing contracts. The only legal limit to bank lending is bank capital.

Often, you will hear or read some variation of, “Rather than being a net borrower, the federal government should be a net lender.” As discussed, the federal government does not borrow, but it does lend, and that is a problem.

For example, the government lends to students, in a misguided effort to encourage college attendance. Lending involves payback, but there is no reason why the federal government should require payback. The government doesn’t need or use the money paid back (It is destroyed), and those paid-back dollars are subtracted from the private sector, which has a recessive effect.

The primary effect of the student loan program is needlessly to impoverish millions of students at just the time of their lives when they should invest in businesses rather than pay back loans.

The federal government should give, not lend, whenever it wishes to encourage any activity.

Speaking of lending, there is a myth about something erroneously termed, “fractional reserve lending.” The myth is that banks keep a fraction of deposits (i.e. reserves) and lend the rest. So, as the myth goes, if a bank has a million dollars on deposit, it could lent say $900 thousand, and keep $100 thousand on reserve. You can read the myth here.

The reality is that bank lending is not constrained by reserves, because banks can obtain all the reserves they need from the federal government. Bank lending is constrained by bank capital. The correct terminology should be “fractional capital lending.”

FEDERAL TAXES
Contrary to popular wisdom, federal taxes do not fund federal spending. You, as a federal taxpayer, do not pay for anything. You just pay whatever taxes the federal government arbitrarily decides to collect from you.

Those FICA dollars deducted from your paycheck, do not fund Medicare of Social Security. The federal government could fund Medicare and Social Security out of the General Fund, without collecting a penny in taxes. (That is mostly how Medicare Part B already is funded.)

All those hard-earned tax dollars you send to the federal government are destroyed upon receipt. As soon as they are received by the federal government they cease to exist in any measure of any money-supply definition. They simply disappear.

That is why no one can answer the question, “How much money does the federal government have?” The sole answer: “Infinite.” That answer does not change, whether or not you send the government your tax dollars. (Infinite + your taxes = Infinite.)

Both before and after you send your tax dollars to the government, the government has exactly the same infinite dollars. You could send the federal government $1 in taxes, or you could send the government $1 billion in taxes, and either way, the government would have exactly the same amount of money: Infinite.

The misnamed federal “trust funds” (of which there are several) are not real “trust funds.”

They deceptively are called “trust funds” to make you believe they hold your taxes in trust. The “trust funds” are just numbers, totally controlled by the federal government, which can and has changed those numbers at will.

  • Real trust funds include a grantor, beneficiary, and trustee.
  • The grantor of a real trust fund can set terms for the way assets are to be held, gathered, or distributed.
  • A trustee manages a real trust fund’s assets and executes its directives, while the beneficiary receives the assets or other benefits from the fund.

(Your 1040 income tax form includes a little box asking whether you would like to contribute $3 to the Presidential Election Campaign fund. Don’t do it. If you check that box, you will be $3 poorer and the federal government will be precisely $0 richer. Your $3 will be destroyed.)

If the Medicare trust fund were a real trust fund, the grantor would be the FICA payer (you and your employer). But neither you nor your employer sets terms. The government sets terms.

Further, the Medicare trust fund doesn’t manage or distribute anything. Congress does that. The “trust fund simply is a balance sheet, showing “IN” and “OUT” like the old time desk boxes.

The federal government could take dollars from it any time it wishes (It already has done that), change the terms, or add dollars at will — all by the press of a computer key.

Our children and grandchildren will not pay for today’s federal deficit spending. Contrary to popular wisdom, you and your family are not liable for servicing federal debt. The federal debt has no relationship to tax rates.

The purpose of federal taxation is not to provide spending funds to the federal government. The federal government could end all taxation and still continue spending, forever.

If the federal government has no need for taxes, why does it levy taxes?

  1. To control the economy by taxing things it wishes to discourage, and to give tax breaks to things it wishes to encourage.
  2. To add to the demand for U.S. dollars.
  3. To convince you, the public, that benefits are unaffordable or “unsustainable,” so you will refrain from demanding benefits. (An example of how the rich, who control the government, are motivated by Gap Psychology.)

Contrary to popular wisdom, your Medicare and Social Security will not go bankrupt if their “trust funds” run short of dollars. Do not believe the scare stories. The federal government can change the balance in its trust funds, simply by pressing a computer key.

Medicare and Social Security will go bankrupt only if Congress and the President want them to go bankrupt. All the fake handwringing about the need to cut benefits or to increase taxes is meant to fool you.

The federal government could fund Medicare and Social Security for every man, woman, and child in America, forever. No taxes needed.

Bernie Sanders repeatedly was asked, “How will you pay for Medicare for All,” his honest answer should have been: “The government can pay for anything.”  Sadly he was deterred by the myths of debt “unsustainability” and cries of “socialism.”

The federal government could fund the Ten Steps to Prosperity (below), without collecting a dime in taxes.

The pernicious misinformation about America’s impending financial doom is designed to widen the Gap between you and the very rich, who run America.

Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

Populists, particularly progressives, often suggest taxing the rich in order to “pay for” certain beneficial projects.

The “soak the rich” notion is a mixed bag.

The federal government doesn’t need the tax dollars.

Taxing anyone, rich or poor, is recessionary because it removes dollars from the private sector.

But taxing the rich can narrow the Gap between the rich and the rest, which benefits society.

So this is a question without an absolute answer.

Step #8 of the Ten Steps to Prosperity, advocates taxing the rich more, not to raise funds for any specific function, but to narrow the Gap.

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MONETARY SOVEREIGNTY AND NON-SOVEREIGNTY
We have discussed the fact that the federal government is Monetarily Sovereign over the U.S. dollar. Other nations — i.e. Japan, Canada, Australia, Mexico, China — are sovereign over their currencies. They too are Monetarily Sovereign.

Many governments, however, are monetarily non-sovereign. Examples are state, county, city, and village governments. To the degree they use the U.S. dollar, they are non-sovereign.

Contrary to popular myth, they are not legally precluded from creating their own sovereign currency. Detroit,, MI has created “Cheers.” Ithaca, NY has issued “Ithaca Hours.” “Berkshares” were issued by a part of Massachusetts. In each case, the issuer is sovereign over its currency, and can do whatever it wishes regarding that currency — issue more, revalue it, or give it any usage terms.

The University of Missouri, Kansas City (UMKC), the home of Modern Monetary Theory (MMT), is in partnership to issue a currency called “RooBucks,” a perfectly legal currency.

Notably, the euro-using nations are monetarily non-sovereign. France, Greece, Germany, Italy, et al, use the euro, but they are not the issuers. Unlike Monetarily Sovereign nations, they can run short of the currency they use.

The euro nations surrendered their Monetary Sovereignty in exchange for ease of trade. It was a bad move because it left them with no control over their money supply, and no way to fight recessions. Greece, France, Italy, et al, financially troubled euro nations, are forced to exercise spending restraint (aka “austerity“), which is recessive, and the resultant recessions are a feedback mechanism that leads to more recessions.

The euro nations constantly struggle against recession, and when recession hits, have very little power to reverse it.

The issuer of the euro is the European Union (EU), via the European Central Bank. It is the European Union that is sovereign over the euro. The EU (like the U.S. federal government with respect to the U.S. states) that has the power to reverse recessions.

In that regard, state governments often are criticized for being profligate and not living within their means. But many states pay more money to the federal government than they receive from the government, so they constantly are being drained of money that only can come from taxpayers. This constant drain impoverishes the residents of the state, as it requires ever-higher taxes, with no end in sight.

Incidentally, if you wish, you can create your own currency, and be Monetarily Sovereign over it. Your biggest problem would be to gain acceptance of your currency, which would depend largely on your full faith and credit.

Being monetarily non-sovereign like you are, U.S. states, counties, and cities can and often do, run short of dollars. Unlike the federal government, they often are forced to borrow dollars in order to pay their creditors.  The federal government never borrows.

In summary, your finances, and state and local government finances, are nothing like federal finances.

Years ago, President Obama gave one of the most money-ignorant speeches, ever:

President Obama: Washington Has to Live within its Means
September 19, 2011 by Colleen Curtis

President Obama today unveiled a plan for economic growth and deficit reduction that details how to pay for the American Jobs Act while also paying down our debt over time. The President’s plan lays out a blueprint that will enable Washington to live within its means.

“It comes down to this: We have to prioritize. Both parties agree that we need to reduce the deficit by the same amount — by $4 trillion. So what choices are we going to make to reach that goal? Either we ask the wealthiest Americans to pay their fair share in taxes, or we’re going to have to ask seniors to pay more for Medicare. We can’t afford to do both.  

“Either we gut education and medical research, or we’ve got to reform the tax code so that the most profitable corporations have to give up tax loopholes that other companies don’t get. We can’t afford to do both.  

“This is not class warfare. It’s math. The money is going to have to come from someplace. And if we’re not willing to ask those who’ve done extraordinarily well to help America close the deficit and we are trying to reach that same target of $4 trillion, then the logic, the math says everybody else has to do a whole lot more: We’ve got to put the entire burden on the middle class and the poor. We’ve got to scale back on the investments that have always helped our economy grow. We’ve got to settle for second-rate roads and second-rate bridges and second-rate airports, and schools that are crumbling. 

“That’s unacceptable to me. That’s unacceptable to the American people. And it will not happen on my watch. I will not support — I will not support — any plan that puts all the burden for closing our deficit on ordinary Americans. And I will veto any bill that changes benefits for those who rely on Medicare but does not raise serious revenues by asking the wealthiest Americans or biggest corporations to pay their fair share. We are not going to have a one-sided deal that hurts the folks who are most vulnerable.”

Whew! That entire speech was a lie. It was the Big Lie.

The federal government never should reduce the deficit; seniors should not have to pay for Medicare; we never need to gut education and medical research; the money doesn’t need to “come from somewhere.” It can come from the federal government.

It is foolish to tax corporations. Such a tax merely takes dollars from the private sector and gives it to the government, where it is destroyed. Taking dollars from the private sector causes recessions and depressions, that are cured by adding money to the private sector (which the government now is doing to cure the COVID-caused recession.

Every paragraph in the above speech demonstrates abject ignorance about money and federal finances.

Politicians often shovel praise onto the concept of a balanced federal budget. They claim it is prudent. But, in fact, a balanced budget always leads to a recession or a depression. A “balanced budget” means the federal government takes as much money from the private sector as it adds in.

But a growing economy requires a growing supply of money.

It is mathematically impossible for the economy to grow when the money supply remains static or declines. The common measure of the economy is Gross Domestic Product (GDP). The formula for GDP is:

GDP = (Federal Spending) + (Non-federal Spending) + (Net Exports).

Each of those three terms is related to the supply of money in our economy. Federal deficit spending increases the supply of money in the economy. That is why federal deficit spending is used to stimulate the economy during recessions and depressions.

Similarly, federal surpluses take dollars from the private sector (i.e. the economy), which is why federal surpluses cause recessions and depressions.

Some media writers, and even some economists, scream when the federal debt/GDP ratio rises. Recently you may have read that the federal debt exceeded GDP, and this was a terrible thing.

Actually, the federal debt, which is a bookkeeping number that evolves from federal deficit spending, always stimulates economic growth. The aforenamed ratio is, if anything, a positive, certainly not a negative.

Contrary to popular myth, the federal debt/GDP ratio does not measure the federal government’s ability to service its financial obligations. That ability is infinite. The government never can run short of the dollars with which to pay its obligations.

Nor does the federal debt/GDP ratio measure the health of the economy. Depending on how one measures “health,” the best measure might be GDP percentage growth.

The oft-heard screaming about the debt/GDP ratio often is paired to the misguided screaming about federal waste. You surely have experienced one or more of your federal representatives criticizing federal earmarks, pork-barrel spending, and wasteful projects.

That all is done for show. There are no federal wasteful projects. All federal spending, no matter the ostensible purpose, benefits the economy by adding dollars to the private sector.

Clearly, some spending is more beneficial than other spending, but because the government creates dollars at the touch of a computer key, no spending is wasteful.

Even spending on foreign projects is beneficial, because it enriches the world, a world of which we are part.

So, you can save your outrage for state and local government spending, which because it is monetarily non-sovereign spending, can be and often is, wasteful.

Not understanding the differences between state/local government finances vs. federal finances leads to the mistaken belief that America would benefit if it exported more and imported less, to achieve a positive balance of payments.

Why would the government want to receive dollars in exchange for goods and services? The U.S. government can create unlimited dollars at no cost. Dollars are free to us. But goods and services are expensive. We create those by sacrificing some of our physical assets along with expending valuable labor.

If we can create all the dollars we want, at no cost to us, why would we prefer to sacrifice valuable goods and services in exchange for dollars?

INFLATION
Popular wisdom claims that federal deficit spending or too much money causes inflation. This is not true, has never happened, in history,  and in fact, federal deficit spending might be the best cure for inflation.

The illusion that deficits cause inflation comes from the experience of hyperinflation leading to extreme paper currency printing.  Consider, for example, the Zimbabwe hyperinflation,  in which massive amounts of currency were printed.

That inflation began when the Zimbabwean government stole farmland from white farmers and gave the land to blacks who didn’t know how to farm. The inevitable result was food shortages, and shortages always cause prices to rise. In response to those rising prices, the government printed more currency, which did nothing to eliminate the fundamental problem: Shortages.

All inflations are due to shortages, usually shortages of food and/or energy, never to deficit spending.

Inflations can be cured by increased deficit spending if the spending alleviates the shortages. Because Zimbabwe’s inflation was caused by food shortages, the government should have deficit spent to bring more food to the people, via imports and/or educating the black farmers and/or giving these farmers modern equipment, fertilizer, weed-killer, and/or improving roads and warehouses, etc.

The least intelligent way to cure inflation is to reduce the amount of money in the economy, either by raising taxes or by reducing deficit spending. Both of those efforts will lead to recessions or depressions, and inflation is not the opposite of recession or depression. It is quite possible to have inflation along with recession. (See: “Stagflation.”)

The Federal Reserve modulates inflation slightly by making dollars more valuable. It accomplishes this by increasing the demand for dollars, which in turn is accomplished by raising interest rates.

Another common myth: Reducing interest rates is economically stimulative. The hypothesis is based on the belief that more people will borrow when rates are low, and this borrowing adds stimulus dollars to the economy.

Historically however, the volume of borrowing is not determined by interest rates. It is based on expectations of profit, of which interest is a minuscule factor. More importantly, low interest rates reduce the number of interest dollars the federal government pumps into the economy for T-securities. Reducing federal dollar input is recessionary, not stimulative.

SOCIALISM
We have seen that the government has infinite money and can spend infinite money, without collecting taxes.

Debt-fear mongers, as a last resort, like to call federal spending, “Socialism.” It is a proven scare word among Americans who have on idea what socialism is, but think it is bad, somehow.

Social Security is socialism, but Medicare is not. The Veterans Administration hospitals are socialism, but your local hospital is not. Most highways and streets are socialism. The nations sewage systems are socialism, as are most drinking water systems. Most dams are socialism. NASA is socialism, as is the FBI, CIA and the military.

Socialism is not government spending. Socialism is governmental ownership and administration of the means of production and distribution of goods and services. That is why, for instance, a program like Medicare for All is not socialism. The means of production (hospitals, doctors, equipment, etc.) are not owned and administered by the government.

It is doubtful whether the “socialism” scare mongers really would like to eliminate Social Security, the VA hospitals, highways, streets, sewage systems, drinking water, dams, police, NASA, FBI, CIA, and the military.

The phony cries of “socialism” are designed to restrict you from receiving federal benefits. Period.

IN SUMMARY
Money is scarce to you, to me, to state/local governments, euro governments, and to businesses. We all are monetarily non-sovereign.

But money is free to the U.S. government, which is Monetarily Sovereign. In fact, when the U.S. government receives money, it destroys that money, and instead creates new money for spending purposes.

Whenever you hear of a plan that involves sending money to the U.S. government, or saving money for the U.S. government, be very skeptical. The U.S. government neither needs nor uses financial income.

Even if all tax collections totaled $0, the federal government could spend forever.

While deficit spending is stimulative, and it cures recessions, it never causes inflation. That general increases in prices always is caused by shortages, usually shortages of food or energy.

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:

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 or a reverse income tax
  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.

(Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.)

MONETARY SOVEREIGNTY

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