AARP spreads the usual Social Security myths Sunday, Nov 25 2018 

Federal finances are different from your personal finances. They also are different from city, county, and state finances. And they are different from business finances.

How different?

  1. The U.S. federal government cannot unintentionally run short of its own sovereign currency, the U.S. dollar.
  2. The federal government does not use or need tax income, in order to pay its bills.
  3. The federal government cannot become insolvent, no matter how high its financial responsibilities.

Who says so?

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Alan Greenspan: “Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency.”

St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e.,unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.

In short, even if all federal tax collections were $0, the federal government could continue paying its bills, forever.

Yet the AARP, repeatedly spreads the false idea that federal finances are like personal finances and so, Social Security can run short of dollars.

Here are excerpts from their latest “informational article” with regard to Social Security:

12 Top Things to Know About Social Security
Understanding the program that helps secure your future
by Kenneth Terrell, AARP Bulletin, November 2018

1. Social Security is not going bankrupt

At the moment, you could say the opposite; the Social Security trust funds are near an all-time high. “The program really is in good shape right now,” says David Certner, AARP’s legislative policy director. “But we know it has a long-term financial challenge.”

Here’s why: For decades, Social Security collected more money than it paid out in benefits. The surplus money collected from payroll taxes each year got invested in Treasury securities; today, the trust fund reserves are worth about $2.89 trillion.

But as the birth rate has fallen and more boomers retire, the ratio of workers to Social Security recipients is changing. This year is a tipping point: The program will need to dip into its reserves to pay full benefits from this point forward, absent any change to the program.

It’s now forecast that the trust fund reserves could be exhausted in 2034. “The longer we wait to fix Social Security funding, the more the cost will be paid by the younger generations, either on the tax side or the benefits side,” says Kathleen Romig, a Social Security analyst at the nonpartisan Center on Budget and Policy Priorities.

The above is the classic “Social Security finances are like your finances” myth. But, the federal government does not pay its bills out of “trust funds” as the term ordinarily is used:

From the Bureau of the Fiscal Service, U.S. Department of the Treasury: The Federal Government uses the term “trust fund” differently than the way in which it is commonly used.

In common usage, the term is used to refer to a private fund that has a beneficiary who owns the trust’s income and may also own the trust’s assets.

A custodian or trustee manages the assets on behalf of the beneficiary according to the terms of the trust agreement, as established by a trustor.

Neither the trustee nor the beneficiary can change the terms of the trust agreement; only the trustor can change the terms of the agreement.

In contrast, the Federal Government owns and manages the assets and the earnings of most Federal trust funds and can unilaterally change the law to raise or lower future trust fund collections and payments or change the purpose for which the collections are used.

Although AARP speaks about the Social Security “trust fund” having a “financial challenge” and reserves “could be exhausted,” the truth is that the federal government has 100% control over the “fund.”

It has the unlimited power to add dollars, deduct dollars, or do anything else it wishes. It could eliminate the “trust fund” and the FICA tax completely, and still continue to pay Social Security benefits.

2. Congress probably will not take up Social Security reform anytime soon

Several members of Congress have proposed legislation to address the program’s long-term funding issues.

But given the deep political divides on Capitol Hill, it’s unlikely that Congress will make any effort to reform Social Security until there’s the possibility of bipartisan support.

There are concerns that the tax-cut legislation passed in late 2017 could lead some lawmakers to look for places where they might cut spending. “The stage has been set by the tax bill to take another run at Social Security, Medicare and Medicaid,” says Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare.

Here, the myth is that taxes, especially FICA, pay for Social Security benefits. Though state and local taxes do fund state and local spending, federal taxes pay for nothing.

In fact, federal taxes are destroyed upon receipt at the U.S. Treasury. and all payments are made with new dollars created ad hoc.

3. Some ideas to reform funding are starting to take shape

One proposal is to either raise or eliminate the wage cap on how much income is subject to the Social Security payroll tax. In 2019, that cap will be $132,900, which means that any amount a worker earns beyond that is not taxed.

Remove that cap, and higher-income earners would contribute far more to the system.

Other options lawmakers might consider include either raising the percentage rate of the payroll tax or raising the age for full retirement benefits.

All of the above options are completely unnecessary. None of them would add even one cent to the federal government’s ability to fund Social Security benefits.

4. Lawmakers do not raid the trust fund

Another common myth about Social Security is that Congress and the president use trust fund assets to pay for other federal expenses, such as education, defense or economic programs.

That’s not accurate. The money remaining after the Social Security Administration (SSA) has paid benefits and other expenses is invested directly into U.S. Treasury securities.

The government can use the money from those securities, but it has to pay the money back with interest.

Via fictional bookkeeping, the government arbitrarily increases and decreases balances in “trust fund” accounts and Treasury Security accounts.

None of this affects, even to the slightest, the federal government’s ability to fund Social Security benefits.

Then, we are treated to the following graph, which would apply to a personal trust fund, but is entirely fictional when describing federal finances.

Illustration of how Social Security works

The dollars “flowing in” are tax dollars destroyed upon receipt. The dollars flowing out are brand, new dollars, created ad hoc by the government. There is no connection between what “flows in” and what “flows out.”

The remainder of the “Twelve things to know” deal with specific rules, not the health of the “trust fund.”

In Summary, Social Security is a federal agency. Because the U.S. government is Monetarily Sovereign, and so cannot run short of its own sovereign currency, the U.S. dollar, no agency of the federal government can run short of dollars unless Congress and the President will it to.

The federal government does not need to “raise or eliminate the FICA wage cap.”  Nor does it need to “raise the percentage rate of the payroll tax .” Nor does it need to “raise the age for full retirement benefits.”

None of these acts will improve Social Security’s solvency, which is infinite .

The federal government doesn’t want you to understand the above, lest you demand more benefits.  Why doesn’t the government want you to have more benefits?

Because of Gap Psychology. You can read more about that, here.

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

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

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

How the MMT “Jobs Guarantee” ignores humanity. Thursday, Oct 4 2018 

Modern Monetary Theory (MMT) and Monetary Sovereignty (MS) are united by the understanding that a Monetarily Sovereign government cannot unintentionally run short of its own sovereign currency.

Thus, the U.S. federal government, unlike state and local governments, which are monetarily non-sovereign, neither needs nor uses tax dollars to fund its spending.

Federal taxes may find purpose in helping to direct the economy by making some products and services more or less attractive, but federal taxes do not provide spending funds.

Even if federal tax collections were $0, the federal government could continue spending forever.

Further, being sovereign over the U.S. dollar, the federal government has the unlimited ability to set the value of the dollar i.e. control inflation.

Yet a leader of MMT, Professor Randall Wray  has written: “Taxes or other obligations (fees, fines, tribute, tithes) drive the currency.”

This forces one to ask, “Specifically, what does ‘drive’ mean?” Does it mean:
1. When taxes are reduced, the value of money falls?
2. If taxes were zero, the value of money would be zero?
3. Do cryptocurrencies, which are not supported by taxes, have no value?

The answers: No, no, and no.

Professor Wray also claims, “the Jobs Guarantee (JG) is a critical component of MMT. It anchors the currency and ensures that achieving full employment will enhance both price and financial stability.”

Specifically, what does “anchors” mean?
1. Since JG does not currently exist, is the U.S. dollar “unanchored”?
2. Does providing college graduates with low-intelligence, ditch-digging jobs enhance price and financial stability?
3. Is forcing people to work morally and economically superior to giving them money and benefits?

Again, no, no, and no.

We often have criticized the JG here, here, here, and elsewhere.  JG is an impractical, obsolete concept, more suited to the Industrial Age than to the current and future Artificial Intelligence (AI) age.

Reader John Doyle wrote, “Professor “Bill Mitchell (no relation) goes to considerable lengths to diss most ideas of what passes for a Jobs Guarantee. I feel one should take careful note of his views:” http://bilbo.economicoutlook.net/blog/?p=40464#more-40464

The essence of Bill Mitchell’s article can be found in this line:

Image result for people as robots

“We are buffer stock. We must labor to receive benefits.”

The MMT Job Guarantee . . . is a buffer stock mechanism which unconditionally hires at a fixed priced in order to redistribute labour resources from an inflating sector to a fixed price sector or from a zero bid state to a fixed price state.

Translation: JG sets salaries at a single, low level, where raises are not allowed, but provides jobs at those levels where none are available.

Is this what our nation needs?

According to Randall Wray, the essence of MMT is JG, and according to Bill Mitchell, the  JG is a buffer stock (of human labor) mechanism to control inflation.

Thus Modern Monetary Theory adherents believe the central economics problems addressed by MMT primarily involve employment and unemployment.

Supposedly, the Jobs Guarantee (JG) and a “buffer stock” control over inflation are the key solutions to what ails an economy.

By contrast, Monetary Sovereignty (MS) suggests that providing a job to each person who wants money already is an outmoded view, as robotics augmented with Artificial Intelligence (AI) increasingly demonstrates every day.

The notion that humans must labor in order to receive the fruits of an economic system reflects a combination of biblical work ethic applied to increasingly obsolete manufacturing methods.

On the horizon lurks the day when very few people will be “employed,” as we now understand the term. Machines will do the vast majority of the work, and people will reap the benefits, without human labor.

Why focus on work when we should focus on benefits?

In short, employment is not what people crave. Rather, they crave money, or more specifically people crave what money can buy.

The central economics problem addressed by MS, is the widening income/wealth/power Gaps between the richer and the poorer, and it is the Ten Steps to Prosperity (below), not JG, that addresses those gaps.

(There’s an old line that goes something like this: “Not many people die whispering,  ‘I wish I had spent more of my life in the office.'”).

JG doesn’t address fundamental human desires. It ignores them.

Here is Wray’s summary of his JG version:

1. The JG should pay a living wage with good benefits.
In line with other progressive proposals, the JG wage should establish a national minimum wage at $15 per hour, with free Medicare-style healthcare. It should also provide free childcare to enable parents to participate in the program.

Image result for ignoring a beggar

Because you don’t work, you get no money.

Comments:
A “living wage” is not, and never can be, “a national minimum wage” of any specific amount. A “living wage” (whatever that term may mean) in Manhattan or San Francisco is considerably different from a living wage in a Mississippi town.

Further, while adding Medicare and childcare makes JG more palatable, they are not intrinsic parts of JG. They are parts of the Ten Steps to Prosperity.

What about free education, and why not offer “Medicare-style” benefits to those not participating in JG? Is there a moral objection?

2. Congress will appropriate the necessary funds to pay program expenses. No additional taxes will be levied.

Comments:
Correct: Federal taxes do not fund federal spending. No federal program ever requires taxation.

3. The JG should be universal in the sense that it serves every community, offering jobs where people live and providing real benefits to their communities.

Comments:
Here is where the academic ignorance of reality comes to play.

Exactly how will the government be able to “offer jobs where people live”? How will JG offer jobs in every city, every town, every village and every hamlet in every state in the U.S.?

I may have missed it, but I have not seen an MMT description of the department structure and mechanism by which the U.S. government can accomplish this task.

It’s a pie-in-the-sky wish, not a plan.

4. The JG should not devolve to either workfare or welfare. The social safety net should not be dismantled; no existing social services should be eliminated.

Individuals should be able to continue to receive existing benefits if they do not want to work in the JG program.

Comments:
But workfare is exactly what JG is. You must work at a minimum-wage job, to get money and many social benefits are contingent on employment and income.

All those laws would need to be changed, somehow.

At the same time, the JG should not provide income support to those that do not work in the program. The JG should be seen as an employment program in which workers are paid for work.

The program should have visible benefits to communities so that the workers in the program are recognized as making positive contributions in return for their wages. The program’s purpose is to provide paid work, not welfare.

Comments:
Do communities really feel that minimum-wage workers — street sweepers, fast food workers, Walmart greeters — must make “positive contributions”?

Workers can be fired for cause—with grievance procedures established to protect their rights, and with conditions on rehiring into the program

Comments:
Visualize millions of minimum-wage workers spread all over the 50 states, each working in different jobs. Who will supervise each of them? What are their rights and who will protect their rights? What are the conditions for firing and rehiring them, and who will do the rehiring?

It’s all very nebulous, as though these human “details” don’t really matter.

5. However, there should be room in the JG for time-limited training and education.

While on-the-job training should be a part of every project, proposals can be solicited for specific training and basic education programs that will prepare workers for jobs in the JG — and, eventually, for work outside the JG. It is important that these are time-limited and that the training is for jobs that actually exist.

Comments:
Who will do the training?
Who will train and supervise the trainers?
Who will create and conduct the basic education programs?
Why “time-limited” and what is the time?
And this is the big one, visualize trying to figure out which jobs “actually exist” and are wanted by each trainee in America.

6. Project implementation and management will be decentralized. There should be diversity in the types of employments and employers —- to help ensure there are projects that appeal to workers and their communities.

Projects should go through several layers of approval before implementation (local, state or regional, federal) and be evaluated at these levels once in progress.
Decentralization helps to protect the program from whatever political winds emanate from the du jour occupant of the White House.

Comments:
The above is so ridiculous it was difficult to keep from laughing as I read it. Think about bureaucrats making sure there is:
–Diversity of types of employments
–Diversity of types of employers
–Several layers of approval (local, state, regional, federal)
–Decentralization

Surely, this cannot be serious. It describes the largest bureaucracy in American history. It would dwarf the military. In of itself, it would eliminate unemployment in America.

7. Where possible, proposals should scale-up existing projects with proven track records and with adequate administrative capacity to add JG workers. Federal spending should not subsidize administrative expenses.

Comments:
Scale up existing projects? That’s like growing companies. Who in the U.S. bureaucracy would do that?

How would these government funded businesses not compete with the private sector that is not blessed with federal funding?

And if administration is not federally funded, who would do the administering?

8. The JG should not be used to subsidize the wages of workers employed by for-profit firms. This distorts markets and is not likely to generate substantial new employment.

Image result for mathematician

According to my formulas, JG should work if you’re buffer stock.

Private business is already heavily subsidized by all levels of government. The JG should not be used as yet another corporate welfare program.

However, private firms will benefit indirectly (and greatly) from the program as it provides a pool of hirable labor and as it contributes to economic growth that improves markets for firms.

Comments:
Are the workers employed by the government or by private industry. If by the government, that competes with private industry.

If employed by a private industry, that subsidizes the wages of that industry.

The notion that private industry is “heavily subsidized” by the government, is mysterious. Does being “subsidized” mean being a vendor? I wouldn’t call that a subsidy.

Or does being subsidized mean receiving tax credits, i.e. being penalized less, which also is not a subsidy.

9. Direct employment by the federal government for the JG should not dominate the program. Most employment should be administered at the local level -— where the workers are, in the communities where they will work.

Comment:
So, it’s partly government workers and partly private workers. So who will hire for the government and in what departments?
And who will be the employment agency for private jobs?
Who will “administer” employment at the local level, in the thousands of communities across this vast nation?

The JG program will probably need to create 15 million new jobs—six times greater than the number of federal employees today.

Comment:
The federal government is going to supervise 15 million new jobs all over America?? Who is qualified to do that? How will they do it?

If all 15 million were to join the federal workforce, supervision of all these new workers would, alone, require hiring a large number of additional federal employees. This would be politically difficult even if the massive scaling-up of the federal workforce were administratively possible.

Comments:
Politically difficult” is the understatement of the year. It would be functionally a disaster.

The federal government’s role in the direct provision of jobs should be focused on providing projects to underserved communities and workers—after not-for-profits and state and local governments have employed as many as they can.

Comments:
“Underserved communities” are communities with few jobs. But Professor Wray wants the government to find most of the nonexistent jobs in the private sector.

10.Inclusivity and experimentation should be encouraged. The federal government should solicit proposals for novel approaches to job creation. For example, workers’ co-ops could be formed to propose projects in which wages, benefits, and limited materials costs would be covered by the federal government for a specified time period.

Comments:
I have no idea what this means, and I suspect Professor Wray is similarly at sea.

11.Consistent with point 10, project proposals put forth should not be summarily dismissed simply due to political bias.

Comment:
You’ll have to go to the original proposal to figure this one out. I can’t.

12. With decentralization, the types of projects permitted would take account of local laws and rules, including prevailing wage laws and union wage rates. With the JG paying $15 per hour, this means that in many states and localities, rules and laws will prohibit various types of work, including construction. In those areas, JG workers will not build infrastructure, for example.

Comments:
As if the job weren’t complicated enough, the federal bureaucrats would have to keep track of, and follow, “local laws and rules.” That should prove interesting.

13.Exceptions to the uniform wage should be considered, but this should not become the norm. For example, state or local governments might want to subsidize (at their own costs) the federally paid wage of $15 per hour in order to increase wages to some higher level. This might be because of high living costs locally. Or some JG employers might want to offer additional benefits (at their own cost) to workers, including housing allowances for high rent areas.

Comment:
And of course, the federal bureaucrats would be expected to allow for these exceptions when offering federal jobs in each locality. What could possibly go wrong.

14. Limited pilot programs that experiment with different models deviating from what is described above might also be considered. For example, a pilot program run by the federal government, with all participants hired as federal employees, might be tried before the JG is imple-mented on a national scale

Comment:
According to the the 2012 US Census Bureau there were 90,000 local governments of all types in the United States, each with different sets of laws that an employer must consider.

Learning, keeping updated with, and following those myriad laws should be quite a challenge, something the JG folks have not even begun to consider.

Bottom line: JG is a program created by economists who are hoping that “some devil” will be able to figure out the details because these business-ignorant folks don’t bother with such trifles.

The sad part is the thousands of hours MMT people have devoted to the academic side of economics, without understanding business realities.

I personally have spent 50 years managing and owning businesses. The MMT professors, some of whom know me, could have asked for my thoughts before wasting all those years on naivete jobs and “buffer stock,” rather than on human needs.

I resent all those brilliant men and women, who are blind to the facts that jobs are not a human goal, and that no one wants to be buffer stock. These economists have focused on their charts, graphs, and mathematics, and have overlooked the personal element of their science.

The human problem is not jobs; the problem is the income/wealth/power gap between the rich and the rest. Not only does JG not solve the gap problem, but it exacerbates the gap by enticing people and families into a minimum-pay existence.

I have only two good things to say about JG:

  1. It would be expensive, requiring the federal government to pump many billions of stimulus dollars into the economy.
  2. It wouldn’t cost taxpayers one cent, because no federal spending requires or uses tax dollars.

Otherwise, the Ten Steps to Prosperity (below) is a far better, and easier-to-implement program, than JG, and it would narrow that damn Gap.

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

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

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

 

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

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

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

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

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

Image result for sign the end is near

Any minute, now

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

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

That is economics.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And then, there’s this:

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

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

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

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

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

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

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

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

Then there is this:

Podcast: Ticking Debt Bomb, Jul 2, 2018

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It works. You have been suckered.

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

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

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA

(Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.

2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE
(H.R. 676, Medicare for All )

This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”

3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All)
(The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) Or institute a reverse income tax.

This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.

4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE
Five reasons why we should eliminate school loans

Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.

5. SALARY FOR ATTENDING SCHOOL
Salary for attending school. Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.

6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.

7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.

8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME.
(TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.

9. FEDERAL OWNERSHIP OF ALL BANKS
(Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.

10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY

The end of social security? Wednesday, May 30 2018 

Image result for federal reserve bank of st. louis

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

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

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills.”

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

===============================================================

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

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

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

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

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

Image result for rich stay away from poor

Gap Psychology at work

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

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

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

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

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

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

Image result for endless money

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Continuing with excerpts from Ms. Elliott’s article:

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

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

1. You have a personal Social Security “account”

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

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

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

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

The concept makes no sense.

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

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

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

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

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

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

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

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

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

3. Younger workers won’t get a dime

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

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

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

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

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

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

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

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

4. You have to be a citizen to get benefits

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

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

5. The retirement age is 65

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

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

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

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

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

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

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

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

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

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

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

8. You can work and collect full Social Security benefits

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

Reducing benefits is absolutely unnecessary.

9. Social Security is a Ponzi scheme

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In Summary:

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

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

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

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

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY

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