How To Prevent Economic Growth, by Maya MacGuineas of CRFB

No one can do a better job of describing how to thoroughly destroy the American economy than Maya MacGuineas, head of the Committee for a Responsible Federal Budget (CRFB).  She not only writes articles for the CRFB web site, but she often is invited to spew her wisdom before Congress. She is a true celebrity in Washington.

To give you a taste of her acumen, here are excerpts from an Email I just received from her:

Wed, Oct 7 at 8:29 AM, The Cost of the Trump and Biden Campaign Plans

Whoever is inaugurated on January 20, 2021, will face many fiscal challenges over his term.

Under current law, trillion-dollar annual budget deficits will become the new normal, even after the current public health emergency subsides.

Meanwhile, the national debt is projected to exceed the post-World War II record high over the next four-year term and reach twice the size of the economy within 30 years.

For reasons never explained, MacGuineas repeatedly compares the national “debt” (i.e. the federal “debt”), with Gross Domestic Product.

The former is nothing more than the total of deposits into Treasury Security accounts; the latter is total spending in America. The two are not directly related, co-dependent or in any way comparable.

The federal government could stop accepting deposits into T-security accounts tomorrow, at which time the so-called “debt” would begin to shrink to $0 — and this would have no effect on GDP. Or the government could accept twice as much in deposits, and this too would have no effect on GDP.

So her complaint that these deposits will “reach twice the size of the economy” is meaningless, meant more to shock you than to educate you.

Four major trust funds are also headed for insolvency, including the Highway and Medicare Hospital Insurance trust funds, within the next presidential term.

What MacGuineas (and many others) misleadingly term “trust funds” are not trust funds. They are nothing more than bookkeeping accounts that are 100% controlled by the federal government. These accounts cannot become insolvent unless Congress wants them to become insolvent.

The federal government, which has the unlimited power to create U.S. dollars, along with the unlimited power to change its bookkeeping, can put any numbers it wishes into those accounts, any time it wishes.

The federal government arbitrarily could decide to double or triple the balances in these so-called “trust fund” accounts, and as if by magic, the numbers would double, and MacGuineas could stop fretting.

Whenever you see or hear the words, “federal trust funds,” know you are not being told the truth. Though even federal sites refer to “trust funds,” these are like the Bank in the game of Monopoly™: Changeable according to the players’ desires.

Fiscal irresponsibility prior to the pandemic worsened structural deficits that were already growing due to rising health and retirement costs and insufficient revenue.

It is not fiscally irresponsible for the federal government to spend more. On the contrary, not spending more would be fiscally irresponsible. Federal deficit spending grows the economy, and insufficient federal deficit spending shrinks the economy.

The country’s large and growing national debt threatens to slow economic growth, constrain the choices available to future policymakers, and is ultimately unsustainable.

The above sentence is diametrically wrong. False complaints about the national “debt” being a ticking time bomb,” have been voiced since 1940, while the economy has grown massively.

MacGuineas herself has been making the same wrong predictions continually. and for many, many years, but has learned nothing from her predictive failures.

Yet neither presidential candidate has a plan to address the growth in debt. In fact, we find both candidates’ plans are likely to increase the debt.

Under current law, the so-called “debt” results from federal deficit spending, which pumps stimulus dollars into the economy. MacGuineas opts to remove dollars from the economy by running federal surpluses. She ignores the fact that removing dollars from the economy causes recessions and depressions.

A growing economy requires a growing supply of money. Federal deficit spending increases the supply of money, which grows the economy.

The formula for GDP is: GDP = Federal Spending + Non-federal Spending + Net Exports. All these terms are related to the money supply in the United States.

Under our central estimate, we find President Donald Trump’s campaign plan would increase the debt by $4.95 trillion over ten years and former Vice President Biden’s plan would increase the debt by $5.60 trillion.

Debt would rise from 98 percent of Gross Domestic Product (GDP) today to 125 percent by 2030 under President Trump and 128 percent under Vice President Biden, compared to 109 percent under current law.

Despite MacGuenias’s hand-wringing, both plans are insufficient to grow GDP over time. An average of 1/2 trillion dollars in deficit spending in a $20 trillion economy, amounts to only 5% per year, a level that on average, has led to recessions.

 

Vertical gray lines are recessions. Year to year reductions in federal “debt” growth lead to recessions, while increases in federal “debt” cure recessions.

President Donald Trump has issued a 54 bullet point agenda that calls for lowering taxes, strengthening the military, increasing infrastructure spending, expanding spending on veterans and space travel, lowering drug prices, expanding school and health care choice, ending wars abroad, and reducing spending on immigrants. He also has proposed a “Platinum Plan” for black Americans, which increases spending on education and small businesses.

Meanwhile, Vice President Joe Biden has proposed a detailed agenda to increase spending on child care and education, health care, retirement, disability benefits, infrastructure, research, and climate change, while lowering the costs of prescription drugs, ending wars abroad, and increasing taxes on high-income households and corporations.

Which of the above proposals does MacGuineas suggest should be eliminated?

She never says. She decries deficit spending while not saying where the deficit spending should be reduced. Why is she so reticent? Because she probably understands the economic need for federal deficit spending, but she is paid to deny it.

That is why she has been mouthing the same tripe for so many years.

Debt has already grown from 39 percent of the economy in 2008 to 76 percent in 2016, and is estimated to reach 98 percent by the end of FY2020.
Under current law, the Congressional Budget Office (CBO) projects debt will continue to rise to 109 percent of GDP by 2030.

Our central estimate of the Trump plan finds debt would rise to 125 percent of the economy by 2030, excluding the effects of further COVID relief. Under our central estimate of the Biden plan, debt would rise to 128 percent of the economy by 2030, again excluding COVID proposals.

Then next few paragraphs of MacGuineas’s letter comprise an endless recitation of “debt” as a percentage of “the economy” (GDP), all with the tacit — and completely wrong — assumptions that a low ratio is a good ratio, and a high ratio is a bad ratio.

Here is a list showing the Debt/GDP ratio for many nations:

Based solely on the percentages, which nations would you expect to have the healthiest and/or strongest economies”?

Japan 237.54%, Venezuela 214.45%, Sudan 177.87%, Greece 174.15%,
Lebanon 157.81%, Italy 133.43%, Eritrea 127.34%, Cape Verde 125.29%,
Mozambique 124.46%, Portugal 119.46%, Barbados 117.27%, Singapore 109.37%,
United States 106.70%, Bhutan 103.85%, Cyprus 101.04%, Bahrain 100.19%,
Belgium 99.57%, France 99.20%, Spain 95.96%, Jordan 94.83%, Jamaica 94.13%,
Belize 92.64%, Angola 90.46%, Brazil 90.36%, Republic Of The Congo 90.19%,
Antigua And Barbuda 88.35%, Canada 88.01%, Egypt 86.93%, United Kingdom 85.67%,
Aruba 83.57%, Sri Lanka 82.99%, Tunisia 81.55%, Mauritania 80.61%, Zambia 80.50%,
Dominica 79.84%, Gambia 78.67%, San Marino 77.12%, Pakistan 77.00%, Argentina 75.90%,
Sao Tome And Principe 74.10%, Sierra Leone 72.37%, Suriname 72.05%,
Saint Lucia 71.62%, Saint Vincent And The Grenadines 71.38%, Uruguay 71.34%,
Austria 71.17%, Croatia 70.73%, Montenegro 70.58%, Togo 70.39%, India 69.04%,
El Salvador 68.10%, Mauritius 67.50%, Hungary 66.62%, Slovenia 65.44%, Albania 65.13%,
Morocco 65.11%, Laos 64.13%, Burundi 63.54%, Djibouti 62.99%, Ireland 62.42%,
Ukraine 62.03%, Senegal 62.00%, Ghana 61.99%, Maldives 61.43%, Oman 61.29%,
Bahamas 60.49%, Nauru 60.39%, Finland 59.88%, Saint Kitts And Nevis 59.49%,
Malawi 59.01%, Israel 58.96%, Gabon 58.48%, South Africa 57.81%, Puerto Rico 57.70%,
Ethiopia 57.43%, Vietnam 57.36%, Guyana 57.22%, Bolivia 57.11%, Germany 56.93%,
Malaysia 56.32%, Costa Rica 56.15%, Grenada 56.12%, Kyrgyzstan 56.09%, Niger 55.60%,
Kenya 55.50%, China 55.36%, Guinea Bissau 54.92%, Yemen 54.51%, Seychelles 54.49%,
Mexico 54.11%, Benin 54.00%, Qatar 52.74%, Vanuatu 52.18%, Netherlands 52.04%,
Namibia 51.60%, Belarus 51.08%, Serbia 50.95%, Ivory Coast 50.92%, Iraq 50.25%,
Fiji 50.22%, Rwanda 50.00%, Trinidad And Tobago 49.75%, Tajikistan 49.46%,
Samoa 49.44%, Ecuador 49.20%, Colombia 49.16%, Armenia 47.95%, Poland 47.48%,
Algeria 46.92%, Slovakia 46.90%, Liberia 46.66%, Guinea 45.98%, Georgia 45.05%,
Uganda 44.81%, Chad 42.91%, Burkina Faso 42.47%, Malta 42.46%,
Central African Republic 42.25%, Dominican Republic 41.92%, Thailand 41.47%,
Eswatini 41.11%, Australia 41.10%, Madagascar 41.02%, Nicaragua 40.88%,
Honduras 40.80%, South Korea 40.54%, North Macedonia 40.48%, Switzerland 39.49%,
Myanmar 39.19%, Philippines 39.10%, Cameroon 38.11%, Romania 37.99%, Lesotho 37.95%,
South Sudan 37.81%, Panama 37.81%, Papua New Guinea 37.72%, Equatorial Guinea 37.49%,
Sweden 37.23%, Mali 36.93%, Norway 36.75%, Latvia 36.66%, Tanzania 36.57%,
Bosnia And Herzegovina 36.34%, Haiti 36.23%, Comoros 35.08%, Bangladesh 34.81%,
Taiwan 33.91%, Lithuania 33.79%, Denmark 33.61%, Iceland 33.13%, Nepal 33.07%,
Czech Republic 31.57%, Turkmenistan 30.25%, Nigeria 30.05%, Iran 30.04%, Turkey 29.93%,
Cambodia 29.57%, Indonesia 29.29%, Moldova 28.82%, New Zealand 28.07%, Peru 27.18%,
Chile 27.17%, Guatemala 24.76%, Saudi Arabia 23.71%, Kiribati 23.48%,
Marshall Islands 23.37%, Uzbekistan 23.23%, Paraguay 22.37%, Tuvalu 21.81%,
Luxembourg 21.61%, Zimbabwe 20.99%, Kazakhstan 20.90%, Bulgaria 19.33%,
United Arab Emirates 19.20%, Micronesia 18.41%, Kuwait 17.78%, Azerbaijan 17.59%,
Solomon Islands 14.56%, Dr Congo 14.01%, Russia 13.79%, Botswana 12.78%, Estonia 7.61%,
Afghanistan 6.88%, Brunei 2.63%

If you say there seems to be no relationship between “debt” and GDP you would be correct, for several reasons:

  1. Some nations are Monetarily Sovereign, which means they have the unlimited ability to create their own sovereign currency. Any liability denominated in their own currency is serviced simply by creating new currency. They cannot become insolvent if they owe their own currency.
  2. Some nations are monetarily non-sovereign, which like you, me, the euro nations, and all local governments, cannot arbitrarily create money, and so can become insolvent.
  3. The word “debt” means something entirely different, depending on what is owed, and why. If the “debt” consists of optional deposits, as does America’s, Japan’s, Canada’s, Australia’s, and the UK’s, paying it off merely requires returning the money on deposit.
  4. But if the debt is necessary for the purchase of goods and services, like state and local government debt, then taxpayers must fund it, or the government will become insolvent.
  5. If the “debt” adds net money to the economy, as with Monetarily Sovereign governments, it will grow the economy.
  6. But, if the debt must be paid by taxpayers, which subtracts net money, as is the case with monetarily non-sovereign governments. it will shrink the economy.

Conclusion: Even before the onset of the COVID-19 pandemic and subsequent global economic crisis, the federal government was on an unsustainable fiscal path.

Under our central estimate, neither major candidate for President of the United States in 2020 has put forward a plan that would address our unsustainable fiscal path.

The favorite word used by debt critics is “unsustainable.” They never explain what they mean by that word.

Does it mean the U.S. government will run short of dollars? No, that is impossible. The government has the unlimited ability to create dollars at the touch of a computer key.

Does “unsustainable” mean other nations will not lend to the U.S.? No, the U.S. never borrows from other nations. What erroneously is termed “borrowing.” actually is the acceptance of deposits, which has two purposes:

  1. To provide a safe, parking place for unused dollars, which helps stabilize the dollar.
  2. To assist the Fed in controlling interest rates.

Neither purpose has anything to do with the federal government acquiring dollars. The U.S. government does not need to “acquire” dollars. It creates all the dollars it needs. Those dollars on deposit never are touched. They merely are returned when the T-certificates mature.

Does unsustainable mean people will refuse to use the U.S. dollar? No, Despite an 80-year supply increase of more than 50,000%, the U.S. dollar remains a trusted currency. No knowledgeable person fears U.S. insolvency.

So what does the oft-used term unsustainable mean? It is a term that has no specific meaning, but is used to hint at some dark, unspecified, future event, to make you believe the federal debt is too high, without your knowing why.

This high and rising debt could have significant economic, generational, fiscal and distributional consequences.

What are the consequences of a high and rising debt? Answer: Economic growth and prosperity.

Addendum: As I write this, I am watching the so-called debate between Kamala Harris and Mike Pence. It isn’t a debate so much as a performance, but one thing struck me: The both repeat the Big Lie that federal government financing is like state/local government financing.

They both claim that federal taxes fund federal spending, and the “How will you pay for it?” question needs be answered via a complex, convoluted, Byzantine explanation involving increased taxes and money transfers.

The real answer: The federal government will do what it always has done: It will create new dollars, ad hoc, every time it pays a bill. It’s called “Monetary Sovereignty.”

It is the way, the only way, the U.S. economy has grown and will continue to grow.

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

Suddenly, I’m a genius.

Suddenly, I’m a genius. How did that happen?

Answer: The COVID-19 crisis. There’s nothing like a crisis to force people to re-think the myths that helped exacerbate the crisis.

For about 25 years, I’ve been telling anyone who would listen that, contrary to popular myths:

  1. The U.S. government’s finances are unlike state and local governments’, and unlike euro governments’, and unlike businesses’, and unlike yours and mine. The federal government uniquely is Monetarily Sovereign. Two hundred forty years ago, it created from thin air an arbitrary number of the first U.S. dollars. It did this by creating laws from thin air. The U.S. dollar is a product of U.S. laws.Greenspan quote.png
  2. The U.S. government still retains the ability to create laws and its own sovereign currency, the U.S. dollar from thin air. Using its laws, the government can give its dollars any value it chooses (which it arbitrarily has changed multiple times).
  3. Even if all federal tax collections fell to $0, the U.S. government could continue spending forever. It never can run short of U.S. dollars.Bernanke quote.png
  4. The government creates dollars by spending. To pay a creditor, the government sends instructions (via check or wire), to the creditor’s bank, telling the bank to increase the balance in the creditor’s bank account. The instant the bank obeys those instructions, new dollars are created and added to the M1 money supply.
  5. The federal government destroys all its income, including all your tax payments, upon receipt. When the government receives your tax dollars, your checking account is reduced, which reduces the nation’s M1 money supply. Meanwhile, the received tax dollars cease to be part of any money supply measure, so they effectively are destroyed.St louis fed quote.png
  6. The federal government does not borrow. It accepts deposits into T-security accounts. When you buy a T-security (T-bill, T-note, T-bond), you actually deposit your dollars into your T-security account at the Federal Reserve bank. There, the dollars remain, gathering interest, until maturity, at which time the government returns the dollars to you. No tax dollars are involved at any point in the process.
  7. Neither you, nor anyone else, owes or pays for the federal “debt.” Federal debt is not typical debt. It is the total of dollars deposited into T-securities accounts. The federal government, having no need for these dollars, does not touch them. They remain in your account until the T-securities mature.
  8. The purpose of T-securities is not to provide the government with dollars, which it creates at the touch of a computer key. The purposes are: To provide a safe storage place unused dollars (which stabilizes the dollar) and to make Americans believe dollars are scarce to the government (so the people will not ask for benefits).
  9. Neither the federal debt or federal deficit are a burden on anyone. The federal deficit is the net amount of money the federal government has added to the economy. Thus the federal deficit is the economy’s surplus.warren buffet quote.png
  10. A growing economy, by definition, needs a growing supply of money. Gross Domestic Product (GDP), the prime measure of an economy = Federal Spending + Non-federal Spending + Net Exports.
  11. Mathematically it impossible for an economy to grow unless its money supply grows. That is why federal deficits grow the economy (GDP.)
  12. Federal surpluses cause recessions and depressions by shrinking the supply of dollars in the private sector. Every depression in U.S. history has come on the heels of federal surpluses. Most recessions have resulted from reduced deficit growth.
  13. The GDP/Debt ratio, so often cited, is a meaningless fraction.  The amount of national (public and private) spending vs. the total of all T-security accounts has no relevance in economics. The federal government could accept deposits in T-securities’ accounts without running a deficit, and it could run a deficit without accepting deposits into T-securities accounts. The two are not related.
  14. Federal deficit spending does not “crowd out” private spending. The opposite is true. Because federal deficit spending adds dollars to the economy, it facilitates private spending. A more complete discussion can be found here.
  15. The U.S. government should not try to increase the balance of trade. Imports are more beneficial than exports. With imports, the federal government exchanges easily created dollars for difficult-to-create goods and services.
  16. Inflations and hyperinflations are not caused by government “excessive” spending. They are caused by shortages of key goods, usually food and/or energy. Ironically, inflations and hyperinflations can be cured by increased government spending to obtain the scarce goods and tribute them to the public.
  17. The most important problems in economics involve: Monetary Sovereignty, which describes money creation and destruction, and Gap Psychology, which 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.”
  18. The rich, who run America, wish to widen the Gap, because it is the Gap that makes them rich. Without the Gap, we all would be the same, and the wider the Gap, the richer they are.
  19. The sole purpose of government is to improve and protect the lives of the people. 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.
  20. The Ten Steps to Prosperity should be implemented to grow the economy and to narrow the Gap between the rich and the rest.

That’s a great number of popular myths, debunked. For lo these 25 years, I have enjoyed receiving epithets ranging from “commie” to “stupid,” to the carnal, to “lib,” and now suddenly, I’m a genius. And being a “lib” isn’t quite so outrageous.

With the government BV (before virus) already planning to run a $1 trillion deficit, and now DV  (During Virus) planning to add about $2 trillion more to the deficit — and all without raising taxes —  it has become clearer to my intelligent friends and enemies that the above 20 statements have validity.

Now, if only we could communicate the facts to the nation’s opinion leaders — the media, the politicians, and the economics professors — we might detach ourselves from the COVID-19 depression that hovers in our future.

Sadly, America needs more trillions than the government already has allocated, to stave off a massive depression. I calculate that at least $7 trillion is needed, depending on how it is allocated.

Though I now have become, in the eyes of some, an “instant” genius (after 25 years), the myths continue to dominate popular thought — just somewhat less.

But it doesn’t take a genius to see what is plain and simple right before your eyes. It doesn’t take a genius to understand the basics of Monetary Sovereignty and Gap Psychology.

You can do your part to disseminate the truth and to diminish the lies by repeatedly — daily, hourly — contacting your Senators and Representative, and telling them about Monetary Sovereignty. Do it, if not for you, then for your children and grandchildren.

You can help save the world. You have nothing better to do.

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

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

The most important problems in economics involve:

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

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

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

Ten Steps To Prosperity:

1. Eliminate FICA

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

3. 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

The secret Michael Bloomberg doesn’t want you to know.

It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders.

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You might think that a guy who is a businessman, a multi-billionaire, a guy who provides massive financial information to the world, a guy who has been both a Republican and a Democrat — you would think that guy would understand money.

Mike Bloomberg Headshot.jpg
I’m Michael Bloomberg and I (should)  know money.

Sadly, no. Or at least he doesn’t understand federal money.

It’s so disappointing, so disheartening, to read the same-old, same-old ignorance coming from this new guy on the Presidential block.

How Mike Bloomberg’s new retirement plans stack up vs. other Democrats
Dhara Singhand, Ben Werschkul, Yahoo Finance•February 16, 2020
Mike Bloomberg unveiled on Sunday his presidential campaign’s plans for retirement and Social Security, tackling the subject for the first time as a contender for the Democratic nomination.

In laying out his retirement security plan, the former Republican and New York City mayor’s plan echoed most of his fellow Democrats by promising an increase in Social Security payouts.

Yet he also drew distinctions between their proposals and President Donald Trump’s, by introducing a new minimum benefit to ensure that all recipients are at least above the poverty line.

O.K., so far, so good, depending on how big the increase will be and what form it will take.

I’m not a fan of trying to determine whether a person is above the poverty line; it’s too difficult because of the many different forms of “income” (free food, free education, free housing, etc.), but the sentiment is good.

That said, it all falls apart:

With Social Security projected to run out of funds in the coming years, Bloomberg’s proposal also made mention of “consider [ing] options for preserving and strengthening Social Security’s long-term finances, while maintaining and enhancing benefits for the neediest recipients.”

Social Security is an agency of the U.S. federal government. Social Security’s long term finances are identical with the long-term finances of the U.S. government, i.e. infinite.

The U.S. government cannot run short of dollars. Who says so?

Well, Alan Greenspan says so:

Image result for alan greenspan
Greenspan

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

Who else says so?

Well, Ben Bernanke 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.”

Image result for ben bernanke
Bernanke

Who else says so?

A representative from the St. Louis Federal Reserve Bank says so:

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 (borrowing) to remain operational.”

So, if it is impossible for the U.S. government to run short of dollars, it makes no sense to say that an agency of the federal government, the Social Security Administration, can run short of dollars. It is just plain wrong.

Yes, it impossible for Social Security, an agency of the government, to run short of dollars, unless that is what the government wantsor wants you to believe.

So, Mr. Bloomberg, please spare us your “considering of options.” There’s nothing to consider. Simply fund Social Security with federal spending. Period.

Get rid of the phony and regressive and useless FICA tax. It pays for nothing.

Get rid of the phony and useless Social Security Trust Fund. It pays for nothing. It’s a mirage, the sole purpose of which is to fool the peons into accepting limitations and reductions in benefits and increases in taxes, while the rich, like you, Mr. Bloomberg, receive endless tax benefits. 

The article continues:

It also lays out a plan to “supplement” lower-income retirement options by creating a public savings option with automatic contributions for all income earners — similar to what South Bend Mayor Pete Buttigieg and Minnesota Senator Amy Klobuchar have also proposed.

“Americans who have worked for decades deserve the opportunity to retire without facing constant financial pressure,” Bloomberg said in a statement.

“As president, I will strengthen Social Security to allow seniors to do just that.”

Sounds good on the surface, except for that “automatic contributions for all income earners” part. Is this one of those “work-’til-you-drop” plans, where you get nothing unless you have a job?

The rich love those kinds of plans because the rich always think of the poor as lazy slackers who will take unfair advantage of handouts from the government. (Of course, the rich sweat from their hourly labors, and receive no breaks from the government. Right?)

However, the candidate was vague about how he’d pay for his ideas, especially with some estimates showing the retirement trust fund could become insolventsometime within the next 20 years.

Bloomberg’s rivals have released much greater detail on how they’d fund big-ticket changes, which include taxes on higher salaries and capital gains.

And there you have it. The false premise that federal taxes are necessary to fund federal spending.

But if federal taxes were necessary to fund federal spending, how did net deficit spending total well over $20 Trillion (with a big “T”) in the past 80 years? That’s $20 Trillion of spending that was done without taxes.

Apparently, Bloomberg is like the rest of the pols, afraid to say the truth, that the U.S. government, being Monetarily Sovereign, neither uses nor needs tax revenue, as it creates new dollars, ad hoc, every time it pays a creditor.

Or, Bloomberg is like the rest of the pols, unwilling to say the truth, because he wants to prevent the poor from coming any closer to the rich — an example of Gap Psychology (the desire of those higher in any social hierarchy to separate themselves from those lower).

I had great hopes for Bloomberg, because much of his thinking is good, and he has the money to kick Trump’s butt.

I just wish, at long last, someone would tell the truth about Monetary Sovereignty, and cut the “How will you pay for it”? nonsense.

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

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

The most important problems in economics involve:

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

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

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

Ten Steps To Prosperity:

1. Eliminate FICA

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

3. 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