The real reason why Congress failed to act. The Broken Generation. Sunday, Aug 2 2020 

The United States, being Monetarily Sovereign, has the unlimited ability to create its own sovereign currency, the U.S. dollar.

Thus, the federal government has the unlimited financial ability to eliminate poverty in America.

It has the unlimited ability to provide healthcare to every man, woman, and child.

The federal government has the unlimited ability to provide education, all the way up through doctorates, for everyone in America who wants it.

The federal government could pay to repave every road, to fix every failing dam, to rebuild every unsound school, to provide good housing for every family, and to feed every hungry child.

It could pay to provide renewable energy, while saving the world from global warming, forest depletion, and air and water pollution.

It could fund colonies on the moon and Mars, and search for life on Europa.

And it could do all this without collecting a penny in federal taxes or allowing the nation to suffer from recession, depression, inflation or deflation.

That is how absolute the federal government’s financial power is.

Yet, this is what we have:

Yahoo Money
Coronavirus stimulus: Extra unemployment benefits cannot restart for at least several weeks, experts warn
Denitsa Tsekova·Reporter

Whether Congress agrees to resume the extra $600 per week or decreases the amount to $200 — as some Republicans propose — experts say that roughly 30 million jobless Americans collecting benefits will not receive any extra stimulus for several weeks.

Unemployed Americans will see a drop in their unemployment benefits between 52% to 72%, according to an analysis by Evercore ISI. Graphic: David Foster / Yahoo Finance

To simply restart the extra $600 now that they’ve expired would take up to five weeks, according to an estimate by the National Association of State Workforce Agencies (NASWA).

The Democrat-controlled House of Representatives passed the $3 trillion HEROES Act, which would have extended extra UI benefits among other stimulus measures, through the end of the year.

The Senate never considered the HEROES Act.

“Republicans just came to the table in the middle to the end of July to start the negotiations,” Ajilore. “The question is what the Republicans and the White House were doing all the month of June and early July.”

Even the Democrats’ $600 per month is inadequate, but the Republicans claim it is too much. They want to keep the working class in poverty, as an incentive to return to work.

But the problem is not a lack of incentive. The problem is a lack of jobs.

Heidi Shierholz, senior economist and director of policy for the left-leaning Economic Policy Institute said, “Concerns about the work disincentive simply ignore the realities of the labor market for working people, who will be very unlikely to turn down a job for a temporary boost in benefits, particularly when it is now clear that jobs are going to be scarce for a very long time.”

“Cutting off the $600 cannot incentivize people to get jobs that aren’t there.’’

The Republicans’ “incentive” claim is a lie. The real reasons for their reluctance to support the poor and middle classes are:

  1. The rich, who run America, and especially run the Republican Party, have not been hurt financially. The stock markets are doing just fine, thank you.

Until the rich begin to feel the pinch, the Republicans will find reasons for not acting.

Even during the current recession, the S&P 500 index, has returned nearly to its highest level, ever.

2.  The rich actually want the poor and middle classes to suffer, so they will be desperate for income, and will be willing to accept low-income jobs with poor working conditions and low benefits.

The real concern of the rich is that the poor and middle classes won’t be desperate enough. That is what the Republicans’ misleading “incentive” claim is all about.

Though federal support for the poor and middle classes would protect the economy, and Donald Trump would benefit politically from a healthy economy, the rich do not care about Trump. 

They know that Trump will be gone, probably in three months, or at worst, in four years.

The rich know how to take the long view.

The current recession will have lasting effects, probably for decades. Millions of American families will feel these effects all during the lives of current wage-earners and even beyond.

Young people will forego education just to eke out a living in a limited job market. Their economic futures will be dim. They will become “The Broken Generation.”

Jobs will disappear, as small businesses disappear. Large companies will have learned they don’t need as many full-time people as they did in the past, and in the “Zoom world,” part-time, work-from-home will become a much larger part of the economy.

As desperate demand for the remaining jobs continues to exceed the supply, salaries will shrink. Job-related benefits will shrink or disappear.

Company profits will grow. The top will disassociate further from the middle.

The rich want to become richer. Since “rich” is a comparative term. there are only two ways to become richer: Have more, and/or force those below to have less. 

That is the lesson of Gap Psychology, the desire to distance oneself from those “below.” It is that distance that makes one rich, and the distance has been growing.

The current recession gives the rich their opportunity to do both — have more, and force those below to have less — simply by allowing America to starve.

Each day of the recession, the rich will grow ever richer by comparison with middle-class America, who will see wages and benefits stagnate.

And that is why Congress, and especially the Republicans, do not do what obviously needs to be done: They do not sufficiently support the economy by supporting the working class.

They offer crumbs to the starving, and hope the starving will not notice the loaves of bread the rich carry.

This is the disgrace of America, and the real reason why Congress failed to act.

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 left’s suicidal insistence on purity: Chapter II Monday, Jul 6 2020 

Last month we published, “The left’s suicidal insistence on political purity.”

The post compared the right-wing’s easy acceptance of Donald Trump’s lies, criminality, hate-mongering, infidelity, nepotism, conspiracy theories, incompetence, bigotry, and ignorance, vs. the left’s demand for purity.

The right’s lust for power is prompted by its fear and loathing of the poor. It’s called  “Gap Psychology,” the psychological desire to distance oneself from those “below” on any status measure and to approach those above.

Because money is power, those of the right-wing ultimately care only about money — gaining it, keeping it, and preventing those “below” from having it.

Cutting healthcare for the poor is a money/power example. Right-wing bigotry against blacks, browns, immigrants is about money.  Anti-semitism is about money. Even the anti-abortion movement is about money; the rich always can get abortions.

For the right, whites don’t have enough power, i.e. money. Despite owning the Presidency and the Senate, it is not enough.

By contrast, the left’s lust for power has to do with purity. In an earlier text, I termed it “political purity,” but on reflection, I should have called it “moral purity.”

For the left, no one is moral enough. The left finds pleasure in digging for unpunished sinners, like paleontologists digging for undiscovered fossils.

Trump is a psychopath, so his immorality and amorality lie on the surface as the obvious foundations of his being — so obvious, in fact, that some on the left feel obligated to search for other, less apparent examples.

George Washington owned slaves. So did Thomas Jefferson. Despite their accomplishments for America, they are not pure enough for some liberals. Tear down their statues.

Ulysses S. Grant owned a slave, whom he later freed, and he was not opposed to slavery.  The same is true of Francis Scott Key, the lyricist for our national anthem. Tear down their statues and find a new national anthem written by someone pure of heart?

And as a Jew, I might remind you that several American Presidents were anti-Semites, even the sainted Franklin Delano Roosevelt. Shall we destroy his memory?

I once again was reminded of the left’s demand for purity, by this tweet from Colin Kaepernick:

Colin Kaepernick tweet.png

What? The 4th of July, the date of the Declaration of Independence, is a “celebration of white supremacy”? Is that a fair analysis? And what does he visualize as “liberation”?

I greatly respect Kaepernick. He talked the talk and he walked the walk — by taking a knee — when the monetary and emotional costs to him proved to be enormous.

He is correct to feel especially aggrieved when his protest against white bigotry was mischaracterized by many whites and even by the POTUS, to be a protest against America’s armed forces and the flag.

Even the cowardly and bigoted National Football League owners joined in by blacklisting this good man.

So, I get it. I really do. I agree, for instance, with Germany having no statues of Adolf Hitler.

But in addition to expressing well-deserved moral outrage, you must understand how to to make your point without turning your allies against you.

Fight the fight that matters. Winning a meaningful battle advances a cause more than heroically losing a symbolic battle. Or does it?

Yes, tear down any Hitler statues, Mussolini’s, too. But shall I also demand that every statue of every anti-Semitic politician in European history also be torn down, along with every American slave owner’s statue?

Shall we dishonor every imperfect human being?

What about the bigoted popes, who loved Jesus but murdered Jews? And what about history’s Jew-hating artists who created anti-Semetic pieces showing Jews with horns. Shall I set out to destroy all their artwork? The great impressionist, Edgar Degas, was a notorious anti-Semite. Should I demand that all his artworks be destroyed? Where do we draw the line?

Columbus statue taken down in Tower Grove Park in St. Louis | Law ...

Columbus’s statue comes down.

What is seen as extreme in one decade might very well be acceptable in another.

Giving women the right to vote once was unthinkable. Mixed-race marriages. Voting by Blacks. Legal marijuana. Online porn. Shooting an unarmed man if you feel “threatened.” A POTUS cheating on multiple wives.

All once were outrageous, now are acceptable by some, to varying degrees.

There are, to my knowledge, no statues of the notorious traitor, Benedict Arnold, but we countenance statues of an even greater traitor, Robert E. Lee.

Again, where do we draw the line?

Think of street names, town names, school names, and county names, all over America, so many of which honor politicians. Do you know of any perfectly moral politicians? Or perfectly moral people?

Amazon.com: Homebody Accents Columbus City Limit Metal Sign, Ohio ...

Next?

Shall we change all our street, town, school, and county names because they honor imperfect people? Yet again, where do we draw the line?

Today, the statue of Christopher Columbus? Tomorrow Columbus School? The next day Columbus, Ohio?

Shall we destroy any memory of those who voted against suffrage or against abolition?

Virtually all advances in the arts and sciences, including philosophy, are initiated by the extremists.

Bob Dylan wrote, “The times, they are a’changin’.” It’s true that times change, but someone has to change them. The times don’t change by themselves. And changes often seem extreme, especially to conservatives, whose fundamental belief is the conservation of the past.

Now, we have a psychopathic President, whose followers rant about “extreme liberals.” You know, those liberal “extremists” who kneel during the Star-Spangled Banner or who want the poor to have health care, or who created Social Security.

It all leaves me with many questions about Kaepernick, not the man, but the symbol for resistance against white bigotry:

  1. As a symbol, is Kaepernick so “extreme” that his efforts actually will aid the right-wing bigots, and lose independent voters for Biden?
  2. Or, will Biden not be extreme enough, causing the emergence of a 3rd party, even more liberal candidate, whose “extremism” will pave the way for a Trump win.
  3. Or, will “extremism” accustom us to thinking about bigotry in a new way, so that future bigotry will be less or more tolerated?
  4. Can any person be pure enough to satisfy the demands of anti-bigots?

To the left, one cannot be pure enough. That is the left’s voting weakness. To the right, one needs only to be anti-liberal. That is the right’s voting strength.

The right will stay consistently anti-poor and anti-middle class. It has no competing ideology. Trump will continue to promulgate hatred to his bigoted followers, and the GOP leaders will follow. There will be few compromises of doctrine among the faithful.

Will the left find common ground within itself, or will it eat upon itself, like an auto-immune disease, for lack of perceived ideological purity?

The coming election will be a moral and philosophical test for the American left. Today they lead the polls. But will their demands for moral purity manage to snatch defeat from the jaws of victory as they did in 2016?

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

Unemployment down? Now a depression is assured. Saturday, Jun 6 2020 

There was a time recently, when even a recession was unthinkable. The latest Republican budget had indicated more than a trillion dollars in new deficit spending — more than a trillion new growth dollars added to the economy.

Then came COVID-19.

How Far Will The Market Fall?

Coming to you, courtesy of the GOP.

The economy was crushed and continues to be crushed, by many trillions of dollars. How many? No one knows.

Months ago, I wrote that at least $7 trillion in new deficit spending would be needed to save the economy.

Now, it could take at least ten trillion dollars, probably much more.

Whatever the actual number, it definitely is far more than the three trillion the government already has voted in, and even that came from great pressure by the Democrats.

Yes, to prevent a recession, or even a depression, many more trillions are needed.

And then we read this:

 Will Republicans doom Trump by declaring premature economic victory?
Ryan Cooper, THEWEEK

For the first time since the coronavirus pandemic struck, we now have a pretty decent jobs report.

There were 2.5 million new jobs in May, the biggest number recorded since statistics started being recorded in 1939.

The unemployment rate fell somewhat to 13.3 percent. Republicans were jubilant. “It’s a stupendous number. It’s joyous, let’s call it like it is. The Market was right. It’s stunning!” President Trump posted during his usual morning cable news live-tweet.

White House economic adviser Stephen Moore told the Washington Post‘s Jeff Stein that no more rescue was needed: “There’s no reason to have a major spending bill. The sense of urgent crisis is very greatly dissipated by the report.”

A Senate Republican aide added: “This definitively kills any chance of trillions of new spending.”

At the May rate, we will not reach the pre-crisis employment level for about eight months — or January of 2021.

But there is little reason to suspect even that will happen. The economic rescue payment has long passed, applications to the small business grant program will end at the end of June, and super-unemployment is set to expire at the end of July.

The gigantic austerity and layoffs from state and local governments will be a further ongoing drag on recovery.

And there it is, folks. The suicide pact between Donald Trump and the Republican party now is signed, sealed, and delivered.

The Republicans — Moscow Mitch McConnell, Bill Barr, Lindsey Graham, et al — eventually will disavow their allegiance to Trump, i.e. claim they never were his puppets. But it will be too late.

Belatedly, all but the most mindless of Trump’s followers will accept what they already know, but have not yet allowed themselves to see: Trump concentrates into one hideous body, all of the bad qualities possessed by the entire human race. 

He single-handedly is destroying America.

Ironically, it is the Democrats who are calling for more growth trillions to be added to our economy. Seemingly, they are the sole party that actually cares about the futures of the planet, the nation, the states, and the people.

The Republicans care about the rich and votes, but will lose both by the time November rolls around.

Just as Donald Trump and the GOP are crowing about the current rebound from the deep depths to the shallower depths — a rebound which federal deficit spending made possible — the right-wing will try to distance themselves from the coming crash.

And if by some miracle, the GOP-led Senate adopts enough Democrat recommendations to cause even a tiny growth bump in our shattered economy, Trump and the GOP will crow about that, too.

But it will be too late. Too late for the economy, too late for Trump, too late for the GOP, and too late for suffering Americans.

Destroying is much easier than building. Trump and the trumpers will have destroyed what was America, and only an heroic effort by people of wisdom and vision could have any chance to rebuild us.

The irony of Trump’s slogan “Make America Great Again,” will not be lost.

Later, in an amazing display cluelessness, the rich will demand tax increases — on the poor, of course — to “pay for” the deficits.

Blackrock, Inc. Chief Executive Officer Larry Finkwarned clients on a call last week that the U.S. will have to raise taxes to pay for the emergency economic rescue.

Ray Dalio, founder of the investment management firm Bridgewater Associates LP told JPMorgan Chase & Co.’s private-banking clients to expect higher tax rates no matter who wins November’s race for the White House.

The above are examples of the rich “grooming the public” for tax increases (together with new tax avoidance mechanisms available only to the rich).

The truth is: Our Monetarily Sovereign federal government has no need for taxes. Even if all federal tax collections totaled  $0, the federal government could continue deficit spending forever.

Federal tax collects fall most heavily on the not-rich. Even corporate taxes batter the employees and the customers, far more than any effect on rich corporate executives.

In summary:

  1. The current administration will cause a depression by telling the Big Lie, that federal deficits are “unsustainable.
  2. Trump will take no blame, but will boast about any slight uptick in the long fall.
  3. During the depression, the Gap between the rich and the rest will widen.
  4. Poverty will increase dramatically.
  5. Desperate workers will be forced to accept the worst jobs at the worst pay under the worst conditions.
  6. The very rich will grow richer.

And the public will wonder how this could have happened.

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

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

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

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

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

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

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

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

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

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

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

Green, right?

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

Paper and about 6 inches?Image result for dollars

And what is the purpose of dollars?

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

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

.

Image result for pallet of dollars

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

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

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

No?? It doesn’t work that way??

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

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

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

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

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

Image result for car, house titles

Titles

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

A dollar bill is a bearer title to a dollar.

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

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

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

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

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

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

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

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

The term for that is Monetary Sovereignty.

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

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

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

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

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

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

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

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

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

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

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

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

Really.

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

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

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

Image result for monopoly dollars

Monopoly money

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

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

What would you have done?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Image result for poor man with a cow

A rich man

The rich run America.

Indeed the rich run the world.

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

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

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

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

The rich are motivated by Gap Psychology.

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

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

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

Loans are made to those who need money.

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

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

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

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

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

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

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

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

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

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

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

Why is this important?Related image

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The U.S. government is Monetarily Sovereign.

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

And that makes all the difference.

And remember that statement at the beginning of this post: “The U.S. dollar is not a physical entity. The dollar is a legal entity. It is a group of laws. You can’t see, smell, taste, feel, or hear a dollar any more than you can see, smell, taste, feel, or hear a law.”

If you don’t believe it, the kindly describe the dollars we Monopoly players used when the game didn’t have any paper certificates. What color were those dollars? What did they smell and feel like?

In summary:

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

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

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

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

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

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The most important problems in economics involve:

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

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

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

Ten Steps To Prosperity:

1. Eliminate FICA

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

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

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