In one sense, economics is logically simple. One pillar of economics is based on money, or more specifically the difference between the issuersof money (i.e. Monetarily Sovereign) and the mere users of money (i.e. monetarily non-sovereign).
All issuers of money create money the same way. They begin by creating laws or rules from thin air. These laws have no physical existence, and that fact gives the issuers the infinite ability to create laws.
The laws, in turn, create money, which also has no physical existence. You cannot see, taste, feel, hear, or smell a law or a number, or money.
What, for instance, does the number “ten” look like. Does it look like this: 10? Like this: X? Like this: Ten? Like this: 2×5? Like this: 20/2? Like this: Diez?
Laws, numbers, and money merely are concepts. They may be representedby paper forms or on computer screens but the actual laws, numbers, and money exist only as ideas which is why their creation is limited only by the desires of their creators.
The Monetarily Sovereign U.S. government could, if it wished, create a million laws and/or a trillion, trillion dollars, tomorrow, at virtually no cost.
Monetary Sovereignty and Gap Psychology
A functionary merely presses a computer key and presto, money is created, sent, or destroyed — from thin air, through thin air, or back into thin air.
Store coupons, for instance, represent one form of money. The issuer (the store) can issue as many paper or electronic coupons as it wishes, and it sets their value.
Representations of coupons can appear in a printed mailer, or the local newspaper, or online.
Those who shop at, for instance, Bed, Bath, and Beyond, have come to realize there hardly is an end to the number of coupons a store can issue.
Yet, that retailer does not tax anyone to provide coupons, nor does it borrow coupons. It does not need a source of coupons. Its coupon limit is the amount of merchandise it wishes to discount.
The federal government doesn’t even suffer that limit.
The government literally has no limit. It cannot unintentionally run short of dollars. Contrary to common myth, the federal government needs not levy taxes nor borrow.
(Think about that the next time you send the Treasury your precious tax dollars or read about the useless battle about the “debt ceiling.”)
That one pillar of economics, Monetary Sovereignty, though unintuitive to some, is logicallysimple: The US federal government has the unlimited ability to create dollars from thin air and to determine their value.
But economics is simply illogical because the other pillar is human psychology, a study so complex and so bereft of certainty it makes quantum mechanics look like child’s play.
While quantum mechanics has predictable randomness, psychology is laden with unpredictable randomness. Perhaps the very center of this randomness, as related to economics, is Gap Psychology.
Gap Psychology, an extraordinarily powerful motivator, 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 between any two persons or groups is referred to as “The Gap.”Gap Psychology dictates that while you may wish to narrow the Gap above you, those above you wish to widen that Gap.
Gap Psychology is the controlling motivator that makes you purchase luxury goods — cars, clothing, houses — rather than simply utilitarian products. It creates pride and shame, avarice and benevolence, desire and aversion. Beyond bare survival, Gap Psychology is the prime motivator for what we do, want, and believe.
The competing desires of the “have-more” and the “have-less” create a discord that is reflected in the aims of the two opposing political directions: The liberal vs. the conservative.
The real dissonance and complexity reveal themselves because all of us find ourselves, at times, in either camp. While the very top and the very bottom are less tergiversated, the vast middle majority is where much of the emotional conflict arises.
“Who am I”? “What am I?” “Where am I?” This is the sort of silent introspection most common at the middle, and most influenced by Gap Psychology.
You may be puzzled when someone of the middle-class shows scant concern for the plight of poor immigrants. You might have thought there would have been empathy rather than antipathy.
Yet, that person merely may have reflected the powerful push of Gap Psychology — the desire to widen the Gap below.
Example of Gap Psychology
To make matters even more complex, you also may have noted charitable generosity to the poor by someone of the middle class, and that could be a manifestation of the Gap Psychology pull — the desire of the middle to narrow the Gap above by acting as though they imagine a “have-more” acts.
You will see this play out in charitable organizations, where the donation amounts are announced for all to see. Universities and hospitals take advantage of Gap Psychology when they name buildings for large donors.
While this is heralded as “generosity” by the benefactors, mostly it is just a reflection of the desire to widen the Gap below and to narrow the Gap above.
Another example: You might wonder why anyone other than a “have-most” would vote Republican. After all, it is the Democrats who offer the free medical, educational, and social services needed most by the middle and lower levels of society.
The reasons are, first, the common ignorance about the finances of our Monetarily Sovereign federal government, and the false belief that federal taxes fund federal spending. As noted above, federal taxes fund nothing.
But beyond that, there is the antipathy many of the middle class have for those below them, an antipathy so powerful they even are willing to accept less for themselves, just so those below receive less yet.
For those middle-class Republican voters, widening the Gap below can be more important than narrowing the Gap, above.
That example of Gap Psychology — hatred and fear of the underclass — is the primary source of bigotry. It demonstrates why the particularly virulent forms of bigotry can be found in the lower-middle classes — those who fear most the narrowing of the Gap.
Dictators make use of Gap Psychology by first designating an underclass — a religion, a nationality, a political belief — then positioning that underclass as a grasping danger, and finally claiming that he, the dictator, is the only one who can widen the Gap between the underclass and the rest of the populace. Scapegoating is a symptom of Gap Psychology.
Gap Psychology also becomes an even greater issue when resources are limited. From an evolutionary standpoint, it then makes sense then to distance oneself from those who have less and to join with those who have more.
During recessions and depressions, Gaps tend to widen near the top, as the very rich are able to employ the rest at starvation wages, while not feeling the pinch of poverty themselves.
IN SUMMARY
The two great pillars of economics are Monetary Sovereignty and Gap Psychology.
As a science, the former is logically simple, in that it merely states: A Monetarily Sovereign money issuer has absolute control over the money it issues — its quantity and its value — and needs no exterior source of that money.
Though counterintuitive because of rampant false teaching, nothing could be simpler.
The latter is simply illogical “science,” because the goal of any science is predictability, while Gap Psychology relies on the unpredictable vagarities of human emotions and behavior.
Together, they determine the direction of all economics.
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
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:
Rachel Greszler is a research fellow in economics at The Heritage Foundation. David Ditch is a researcher specializing in transportation issues for Heritage’s Hermann Center for the Federal Budget.Rachel Greszler and David Ditch, The Heritage Foundation on Aug 5, 2021Most Americans realize the federal government spent a lot of money, including three rounds of so-called “stimulus payments” that most households received. But those $3,200 worth of individual checks pale in comparison to total spending.If ordinary Americans had spent like the federal governmentdid in 2020, the median household that earns $68,703 would have spent $131,620 and put $62,917 on the credit card, despite already being $541,287 in debt.
As of 2021, the U.S. debt comes out to roughly $220,000 per household. That’s enough to buy about eight years’ worth of groceries, gas, clothing, and housing for the typical household.
The above is a completely meaningless and misleading comparison, that is supposed to shock you, but not to inform you. You are not, and never will be liable for the so-called, misnamed federal “debt.”It isn’t a debt, and no one is liable for it.
And even that figure doesn’t include the unfunded liabilities of Social Security and Medicare. Without a significant reduction in the size of those programs, each household’s total debt is actually over $660,000. That’s equal to the cost of a median family home, a new car, plus over five years’ worth of a typical household’s income.
Utter nonsense. All federal liabilities are “unfunded” until the government funds them by creating dollars, ad hoc.
The real purpose of the article is to groom you for acquiescence to right-wing calls for Social Security and Medicare cuts. But even if the FICA tax were eliminated, the federal government could support Social Security for All and a comprehensive Medicare for All, forever.
Then follow more meaningless comparisons, all designed only to be shocking. Your household will not ever pay a single penny to pay off the so-called federal “debt.”
However, even this massive a debt doesn’t seem all that bad. Interest rates are low, and the federal government has had little problem seemingly borrowing into oblivion without consequence. (The same could be said of Greece before a financial crisis ensued.)
The fact that interest rates are low is yet more meaningless tripe. The U.S. government sets interest rates at any level it chooses, and it pays interest by creating new dollars, ad hoc, which it has the infinite ability to do.
And by the way, Greszler and Ditch, is it ignorance, stupidity, or traitorousness that causes you to compare the Monetarily Sovereign United States (which has the unlimited ability to create its own sovereign currency, the dollar) with the monetarily non-sovereign Greece (which has no sovereign currency)?
But our currently low interest rate payments—equal to over $2,500 per household in 2021, or the cost of about 6 months’ worth of groceries—are on track to rise to about $6,400 per household in 2031. That’s four months of mortgage payments.
Again, more designed-to-deceive, meaningless, false equivalences between federal finances and personal finances
And that’s the equivalent of an interest-only mortgage. Those costs don’t even begin to reduce the principal amount of debt.
The so-called federal “debt” is not a debt in the usual sense. It is the total of deposits into Treasury Security accounts (similar to safe deposit boxes) which are no burden whatsoever on the government or on future taxpayers.
While ordinary Americans aren’t allowed to take out mortgages or open up new credit cards in their children’s names, the federal government does this every day.
Yet even more ignorant, stupid, or intentionally deceptive false comparisons between federal finances and personal finances. The Heritage fraud goes on and on.
The share of debt for a child born this year was $66,874. And that debt is on track to rise every year, reaching $111,552 by the time they’re 18 and either start working or head off to college. It will then hit $191,768 by the time they’re 30 and potentially raising young children.
The above implies that future children will have to pay for the so-called “debt.” It is a lie of the first order.
No one will pay for the “debt” because it is not debt. It is deposits that will be paid off as they always have been: By simply returning the dollars in those T-security accounts.
Fortunately, it’s not too late to prevent the nation from going broke.
It is impossible for the United States to “go broke.” Being Monetarily Sovereign (unlike Greece), the U.S. has the unlimited ability to create dollars. If needed, it could press one computer key and create a trillion dollars tomorrow.
Congress should cut out wasteful spending such as corporate welfare and excessive compensation for federal bureaucrats.
The Heritage Foundation, being right-wing, now complains about “corporate welfare.” Do they mean the Republicans’ tax cuts for businesses?
And really, how many federal bureaucrats receive “excessive compensation”?
Of course, the whole thing is meaningless, because all federal deficit spending, even so-called “wasteful” spending, benefits everyone by adding stimulus dollars to the economy.
Congress should stop shirking their responsibilities by placing an increasing amount of federal spending on autopilot, and instead seek to reform programs like Social Security and Medicare that are on a path to bankruptcy.
I have no idea what “autopilot” means in this context. I suspect the authors don’t know, either. But none of it matters.
The real purpose is to make you believe Social Security and Medicare should be cut. That is the goal of The Party of the Rich, the Republicans.
The rich, who support Heritage Foundation, always want to widen the Gapbetween the rich and the rest. The wider the Gap, the richer are the rich. It’s known as Gap Psychology — the desire to widen the income/wealth/power Gap below, and to narrow the Gap above.
So they repeatedly warn that Social Security and Medicare soon will run short of money, despite their being a federal agency that has available to them, infinite dollars.
Neither the federal government, nor any agency of the federal government, can go bankrupt unless Congress and the President want them to.
Congress should focus on core federal responsibilities and clear away countless programs that benefit narrow interest groupsat the expense of the public good.
The elderly and the poor — are they what Heritage considers to be “narrow interest groups”?? Or aren’t the rich — Heritage’s buddies — who really comprise the narrow interest groups?
Congress should recognize our looming debt disaster and step away from shortsighted spending plans.
Big problems like the unsustainable national debt won’t be solved quickly or easily. However, Congress must begin to take fiscal responsibility seriously as soon as possible.
The “unsustainable” national debt has been growing massively, and sustaining, since 1940, while organizations like Heritage have been crying “Wolf” again, and again, and again.
Otherwise, a Greece-like fate may await us.
And the article ends appropriately, with one, final, false comparison of monetarily non-sovereign Greece vs. Monetarily Sovereign America. The Big Lie is alive and well at Heritage.
Even, an organization as devoted to advancing the interests of the rich vs. the rest, should be embarrassed by the above article.
It is so wrongheaded and misleading as to be written by fools and approved by traitors. They do more to hurt America than do the most devoted Russian, Iranian, and Chinese spies.
Perhaps The Heritage Foundation should be renamed The Benedict Arnold Foundation.
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
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:
The federal government has the infinite power to create laws, and these laws have the infinite ability to create dollars. The government cannot run short of laws or dollars.
A. Federal laws are created from thin air by the federal government. The government creates any, and as many, laws it wants, so long as those laws are in keeping with the Constitution, which also was created from thin air by the government.
The federal government never unintentionally can run short of laws. It has the infinite ability to create laws.
B. Among the many laws the government created from thin air are the laws that created the U.S. sovereign currency: The U.S. dollar.
Initially, the government’s laws created as many dollars as the government wanted, and gave them the value the government wanted.
This infinite ability to create any number of dollars and to specify their value is known as “Monetary Sovereignty.”
The U.S. government is sovereign over the dollar.
This infinite ability to create dollars does not rely on tax collections. Even if the government collected zero taxes, it could continue creating dollars forever.
The federal government never unintentionally can run short of dollars or laws.
Similarly, the federal government has no need to borrow dollars, and indeed the government does not borrow dollars. It pays all its bills by creating new dollars, ad hoc.
The purpose of federal taxes is not to supply the government with dollars, but rather to control the economy by taxing what the government wishes to discourage, and giving tax breaks to what the government wishes to encourage.
C. Having absolute control over all aspects of the U.S. dollar, the federal government has absolute control over the value of the U.S. dollar, i.e. inflation. The government has the power to change the value of the dollar at will, a power it has exercised many times over the years.
Thus, the federal government has the absolute power to control inflation.
Keeping the above facts in mind, we can review the following article that describes how and why the federal government will cheat you out of your health care insurance.
High and rising prescription drug costs are contributing to the budgetary pressure faced by the federal government. Also, a significant number of patients face very high out-of-pocket costs.
Interesting choice of words: “budgetary pressure.” The government not only creates infinite dollars from thin air; it also creates infinite budgets from thin air. And it changes those budgets at will.
So, yes, the cost of drugs easily could exceed the budget, but since the government never unintentionally can run short of dollars, there is no financial pressure.
Any budgetary pressure the government may feel is self-inflicted and essentially meaningless. (Visualize Jeff Bezos budgeting $5,000 to buy a TV set, and discovering the TV set costs $5,001. He may feel budgetary pressure, but will not feel financial pressure.)
Our two new briefs focus on options to reduce prescription drug prices. They include:
Medicare Part B could inject price competition into drug classes that have clinically comparable options but wide price variation – blunting the advantage that higher-priced drugs have under the current formula.
Injecting Price Competition into Medicare Part B Drugs
Currently, Medicare Part B, which covers outpatient physician services, pays for physician-administered drugs by reimbursing physicians the average cost for each specific drug plus a 6 percent add-on percentage of that cost. This arrangement creates misaligned incentives that blunt price competition and advantage higher-priced drugs – especially within drug classes that have clinically comparable options but a wide variation in prices.
This policy option looks at implementing “clinically comparable drug pricing,” where Medicare payments for physician-administered drugs would be set at a single price for groups of drugs within the same therapeutic class. That price would be set at the weighted average of prices manufacturers charge for each of the clinically comparable drugs.
This reform should encourage physicians to administer lower cost drugs and manufacturers to lower prices to maintain market share. The policy would reduce Medicare costs and would likely result in savings for Medicare Advantage plans and commercial payers.
The federal government pays its bills by creating dollars ad hoc. Thus, the government legitimately can be said to have infinite dollars. Federal taxes do not fund federal spending. Tax dollars are destroyed upon receipt by the Treasury.
So, there is no economic value to price competition. In fact, each penny the federal government sends into the economy is economically stimulative, at no cost to anyone.
However, the CRFB seems to claim that physicians make more money when physician-administered drugs are priced higher, and this can influence the choice of drugs. I am not sure how prevalent this situation is, but in any event, there is no fair way to prevent it.
The “weighted average” approach can penalize patients by making some of the more effective, costlier-to-produce drugs unavailable.
As a rule, price competition shifts costs from the government to the private sector, which penalizes the economy as a whole, while also penalizing drug research and development.
Over the next decade (2021-2030), implementing “clinically comparable drug pricing” could:
Reduce total (gross) Medicare spending by at least $122 billion in just three drug classes. That includes $56 billion of savings to fee-for-service Medicare, $37 billion in lower beneficiary premiums and cost sharing, and $29 billion in savings for the Medicare Advantage program.
In more accurate words, implementing “clinically comparable drug pricing” could reduce the federal stimulus to economic growthby $122 billion in just three drug classes, while having no financial benefits for the private sector..
The policy would also generate private sector spillover savings. For example, in the rheumatoid arthritis class of drugs, the policy could reduce commercial drug costs by at least $21 billion.
Actually, there could be zero private sector spillover savings, if the government simply would pay, but the pharmaceutical industry would receive $21 billion less from the government.
Limiting Evergreening for Name-Brand Prescription Drugs To encourage medical innovation, the FDA grants temporary market exclusivities to new name-brand drugs. These exclusivities prohibit generic drug competitors’ access to the market for a limited period.
However, drug manufacturers are often able to take advantage of the current rules, using “evergreening” strategies to extend their exclusivity periods and either delay generic drug market entry or limit the number of patients who switch to a new generic.
One evergreening tactic manufacturers employ involves introducing a new “line” or version of their drug shortly before a generic competitor is released.
This new line can be granted its own exclusivity period. For example, a manufacturer may introduce an extended-release formulation just before a generic of the original immediate-release formulation enters the market. This can allow a brand manufacturer to maintain market share in the face of generic competition – increasing its profits and increasing payer and patient costs.
New FDA exclusivity rules could lead to meaningful savings for consumers, commercial insurers, and government payers. The policy change could also speed up the market entry of brand extended-release and other reformulations, providing clinical benefits to patients.
Under a comprehensive, no-deductible, Medicare-for-All plan, there would be no cost for consumers, and government payers (who have infinite dollars) need no dollar savings. More stimulus dollars would be pumped into the economy by federal spending.
As for commercial insurers, they probably would go the way of the manufacturers of street corner phone booths, horse-drawn wagons, Betamax, and audio cassettes. Medicare for All could offer better service at no cost (and no need to ask for permission to have surgery).
Over the next decade (2021-2030), this policy could:
Reduce federal deficits by at least $10 billion.
I.e. reduce federal economic growth and job stimulus by $10 billion
Save Medicare Part D $7 billion in drug costs and Medicare beneficiaries $4 billion in lower premiums and cost sharing.
I.e., reduce federal economic growth stimulus by $7 billion. If Medicare for All were free, as it should be, premiums would be cut hundreds of billions of dollars, and there would be no need for cost-sharing.
Reduce federal and state Medicaid drug spending.
Medicare for all would eliminate the need for federal and state Medicaid drug spending.
Reduce private sector drug costs by $9 billion.
There is no economic need for the private sector to spend anything for drugs.
In Summary: Incredibly, the CRFB seems to prefer saving money for the infinitely endowed federal government at the expense of the money-deprived.
The CRFB suggestions are based on these myths:
Federal finances are like private finances
The federal government is funded by federal taxes
The federal government can run short of dollars.
In truth, the federal government has infinite dollars available, has no need for tax dollars, and never can run short of its own sovereign currency. It needs to run deficits in order to grow the economy and prevent recessions, and it has absolute control over every aspect of the U.S. dollar including inflation.
Spending by the rich encourages the media, the politicians, and the economists to promulgate these myths. The purpose is to widen the income/wealth/power Gaps between the richer and the poorer, aka Gap Psychology.
Here are the CRFB notables, whose mission in life seems to be to help the rich become richer by widening the Gap between the rich and the rest. They have been quite successful.
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:
Economics is simple, though you wouldn’t know that if you ever were confronted with an economics text.
Filled with jargon and maths, an economics textbook can be a daunting read, intentionally so, because nothing tells the world “I am real science” better than arcane language and impenetrable maths.
Part of the problem with labeling economics a science is that it is the study of the psychology of money, and psychology is a “science” only in the broadest, most charitable definition:
Wikipedia: Science (from Latin scientia ‘knowledge’) is a systematic enterprise that builds and organizes knowledge in the form of testable explanationsand predictions about the universe.
Sadly, neither psychology nor its little sister, economics, are systematic, provide testable explanations or worthwhile predictions. Rather than being sciences, they are faith/belief systems (religions without mythical gods), filled with self-congratulatory experts, who endlessly expound with certainty, while providing scan proof, few tests, and laughably wrong predictions.
I apologize to tell you, I am an economist.
In this post, I provide you with none of the aforesaid maths and as little jargon as I can manage, hoping only to provide a bit of counterbalance to the flood of woolly-headed, faux expertise that confronts you every day.
Economics is simple because you can understand virtually everything of importance by understanding just two simple things — Monetary Sovereignty and Gap Psychology — and having understood them, you will know more than any politicians, any media pundits, and any economics professors, who don’t wish you to understand these simple things.
Monetary Sovereignty“Monetary” means relating to money. “Sovereignty” means having ultimate power or authority. Thus the term “Monetary Sovereignty” means having ultimate power or authority over money.
The U.S. government created the first dollar from thin air by creating laws from thin air. These laws are entirely arbitrary in inception and they repeatedly have been changed, arbitrarily.
Because the laws that created U.S. dollars were created by the U.S. government and remain under the complete control of the U.S. government, and no other entity, dollars themselves are under the complete control of the U.S. government.Laws have no physical existence. You cannot see, smell, taste, feel, or hear a law. It is an idea, a concept, a description. A lawbook might contain descriptions of thousands of laws, but the book itself contains no laws. The paper and ink that comprise the book are not laws. They merely representlaws.
This does not mean that laws are not real. Laws are very real. They just are not physical.
Consider, for instance, a law against murder. What does that law look like? How does it feel to the touch? How does it taste or smell? Despite being non-physical, the law is real, and because it is non-physical the law can be anything its creators deem it to be.
The U.S. government is legally sovereignover U.S. laws. These laws can be anything the government and the American voters wish them to be. The degree to which voters influence laws is known as “democracy.”
Not only are the U.S. government and the American voter sovereign over our laws, but we never can run short of laws. The federal government does not need to collect laws from you in order to create more laws. The U.S. government creates endless laws, ad hoc, arbitrarily.
Even if American voters did not supply a single law to the federal government, the government could continue creating new laws, forever. This difference between the number of laws supplied to the government, and the number of laws created each year might be known as a federal “deficit of laws,” and the totality of all laws in existence might be known as the federal “law debt.”
Among the laws created by the federal government and the people, are the laws creating dollars. Just as laws have no physical existence, dollars also have no physical existence.
The reason gold coins, for instance, are not money, is that laws cannot create gold coins. Laws cannot create gold, and laws cannot create coins. Only people can do that. And just as law books are not laws — they represent laws — gold coins only represent money.
Similarly, paper dollars are not dollars. They represent dollars, which are non-physical bookkeeping entries.
To create dollars, the federal government neither needs nor uses any input of dollars. Even if all federal taxes were eliminated, the Monetarily Sovereign federal government could continue creating new dollars, forever.
The mathematical difference, each year, between dollars sent to the federal government vs the dollars created by the federal government is known as the federal “deficit,” and the total of all deficits is known a the federal “debt.”
Money, like the laws that create it, is ideas, concepts, abstractions. And because laws and ideas are not physical, they are whatever their creator deems them to be at any given moment.
Very soon, we will endure the annual “debt limit” fight, a fake conflict having absolutely nothing to do with the federal government’s ability to service its debt. The federal “debt” is not a debt and even if it were, the federal government has the unlimited ability to fund anything.
Why the fight? It’s all theater, the purpose of which is to convince you that the actors are financially prudent. So the party that is out of power will protest, and the party in power will assure, and everyone one will huff and puff, and eventually, having made their points, the fakers, feigning anger, reluctantly will agree to set a new, higher debt limit for the future.
There can be no greater proof of government duplicity than the federal “debt” limit.
INFLATION: Can there be too many laws? Can the annual “deficit of laws” and the “law debt” be too high? In essence, can there be law “inflation,” in which the addition of new laws depreciates the value of existing laws?
For instance, can the creation of say, a new law against speeding, make all other laws less valuable, i.e. cause law inflation?
Or by parallel, can the creation of new dollars make all other dollars less valuable, i.e. cause inflation?
The federal government has access to infinite laws and to infinite dollars, both of which it sends into the economy, at will.
Neither the creation and promulgation of new laws nor the creation and promulgation of new dollars depreciates the laws and dollars already in existence. New ideas, concepts, and abstractions do not depreciate existing ideas, concepts, and abstractions.
Infinity plus one equals infinity.
The U.S. government is uniquely Monetarily Sovereign over the U.S. dollar. No other entity has this God-like power over the dollar.
Having this power and authority means the government can control the supplyof dollars at whatever levels it arbitrarily chooses. It never can run short of dollars. The federal government can afford anything and does not need to have income. It simply creates, by fiat, any number of dollars whenever the mood strikes.
(That is why the term “fiat money” is a redundancy. All money is fiat, i.e. created by fiat.)
The government also can control the value of the dollar in relation to any other product or currency. It can decide, by fiat, that a dollar is worth an ounce of silver, a pound of beef, or a partridge in a pear tree.
This means inflation is not caused by government spending but rather is caused by scarcities of key goods and services.
Inflation can be prevented and cured by preventing and curing scarcities. The federal government can accomplish this by federal deficit spending to obtain, or facilitate the creation of, the scarce goods and services.
Example: The notorious Zimbabwe hyperinflation was caused by food scarcity. The government took farmland from experienced farmers and gave it to inexperienced non-farmers. The resultant inflation could have been cured by government financing to support farming via education and material support.
Instead, the Zimbabwean government merely created money, while the scarcities grew unabated.
The other “simple thing” upon which economics stands is:
Gap Psychology
The “Gap” represents the distances between those who have more income, wealth, privilege, and power vs. those who have less.
The Gap (or rather, “Gaps”) are what makes the richer richer and the poorer poorer. Without the Gaps, no one would be rich; we all would be the same. And the wider the Gaps, the richer are the richer.
The richer always wish to grow richer yet.
The rich can grow richer, that is widen the Gaps, by gaining more for themselves or by making sure those below them lose, or at least gain less.Either method will do.
The rich generally oppose and demean aids to those who have less. They claim Social Security and Medicare are running short of dollars, though no federal agency runs short of dollars unless that is what Congress and the President want.
The rich, who control Congress, have made sure the FICA tax falls most heavily on the poor and middle classes. It is why capital gains are taxed more lightly than salaries. These are evidence of the rich growing richer by widening the Gaps.
The rich despise the poor. Hatred is a symptom of fear. There can be no hatred without fear, and the rich fear the poor masses. The rich fear not only lanterns and pitchfork uprisings, but more realistically, the latent voting power of the masses.
If the masses ever were to realize how false are the claims by the bribed media, the bribed politicians, and the bribed economists, those masses would rise up and demand that the Gaps be narrowed.
Yes, bribed. The media are bribed by rich ownership and advertising dollars. The politicians are bribed with campaign contributions and promises of lucrative employment. The economists are bribed with university endowments and promises of well-paying jobs at think tanks.
Wide Gaps are economically corrosive. They negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
IN SUMMARY
Economics studies money and its movement, which is controlled by human psychology.
The foundation of today’s economics is Monetary Sovereignty, the ability of an entity, usually but not always a nation, to create and control unlimited amounts of money and to determine the value of that money.
The engine that drives economics is Gap Psychology, the common human desire to widen the income/wealth/power Gaps below, and to narrow the Gaps, above.
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
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:
Filled with jargon and maths, an economics textbook can be a daunting read, intentionally so, because nothing tells the world “I am real science” better than arcane language and impenetrable maths.
Part of the problem with labeling economics a science is that it is the study of the psychology of money, and psychology is a “science” only in the broadest, most charitable definition:
#Monetary Sovereignty - Mitchell 