Is it possible for one human being to get so much wrong about our economy?

If someone sets a world record, perhaps they could expect applause. In that vein, let’s give a massive round of applause to Veronique de Rugy, who has set a world record for economic myth dissemination.

Her bio reads:

Veronique de Rugy is the George Gibbs Chair in Political Economy and Senior Research Fellow at the Mercatus Center at George Mason University and a nationally syndicated columnist.

Her primary research interests include the US economy, the federal budget, taxation, tax competition, and cronyism.

Her popular weekly columns address economic issues ranging from lessons on creating sustainable economic growth to the implications of government tax and fiscal policies.

She has testified numerous times in front of Congress on the effects of fiscal stimulus, debt and deficits, and regulation on the economy.

Presumably, she believes in using research results to come to her conclusions. Or at least, that is her claim. But what research supports the following nonsense?

WATCH: See How Leeches Can Be A Surgeon's Sidekick | WAMU
The Fed applies leeches to cure anemia. Ms. de Rugy agrees.

Congress and the Federal Reserve Could Be Setting Us Up for Economic Disaster
If lawmakers keep spending like are, and if the Fed backs down from taming inflation, then the government may create a perfect storm.
VERONIQUE DE RUGY | 12.29.2022 12:20 PM

In the final week of 2022, we Americans can foresee two significant economic risks in 2023. The first one is a probability that the Federal Reserve will get weak-kneed and stop raising interest rates before inflation is truly under control.

The second risk is that Congress will continue to spend and borrow money irresponsibly.

The likely mix of these two hazards would all but ensure that our economic misery lasts much longer than necessary.

At this point in the article, we don’t yet know which “misery” she means, especially since she considers not raising interest rates or increased spending “hazards.”

And by the way, the federal government never borrows dollars. It has the infinite ability to create its own sovereign currency, the U.S. dollar. So why would it ever borrow what it has the endless ability to create?

If ever it did borrow, it quickly could pay the dollars back simply by creating dollars.

Let’s start with the first risk.

In theory, to tame inflation, the Fed will need to push real interest rates not only high—as it has already done—but higher than the highest rate that the Fed is now targeting, and in fact much higher than most investors can remember.

Substitute the word “myth” for the word “theory,” and you have a correct statement. In the history of the universe, inflation has never been caused by interest rates that were too low. Anyone so devoted to research as Ms. de Rugy claims to be, should know this.

I challenge her, or anyone else, to provide an example of inflation caused by low-interest rates or cured by high interest rates.

There have been thousands of inflations worldwide, regular inflations and hyperinflations, and eventually, almost all have been cured — but never by raising interest rates.

All inflations in history have been caused by shortages of critical goods and services, and those cured were cured only when the shortages were cured.

It even is possible for high rates to cause shortages, i.e., cause inflations, by interfering with production.

The primary effect of raising interest rates is to reduce demand and supply. These reductions make the de Rugys of the world think that is the way to cure inflation. The reasoning is if demand drops, then people won’t pay higher prices. (If supply decreases, prices will rise, but de Rugy doesn’t consider that.)

What de Rugy et al. don’t understand is that recession is another word for reduced supply and demand.

GDP = Federal Spending + Non-federal Spending – Net Imports. Thus, reduced spending = recession.

In short, de Rugy wants to cure inflation by causing a recession. Not only is that nuts, but it can also lead to stagflation, the worst of all worlds.

Such high rates will have two main effects: popping the stock market and real estate market, along with any other asset bubbles that we’ve witnessed in recent years.

The economic downturn that would follow would increase unemployment rates significantly.

Here she admits she wants to “pop the stock market and real estate market,” aka cause a recession (“economic downturn”, maybe a depression.

She also admits she wants to “increase unemployment rates significantly.” Presumably, her employment is secure, so she feels comfortable increasing other people’s unemployment.

On the other hand, if the Fed stops tightening too early, we will continue to suffer high inflation and slower growth.

When is “too early” to begin curing inflation? She never says.

And why does tightening (raising interest rates) “too early” lead to more inflation? And why does “too early” cause slower growth when “the right time” doesn’t slow growth? She never explains.

Her whole concept is a confusing mess.

The rise in unemployment might be pushed back for a while, but because no inflationary policy can continue forever, it will inevitably arrive.

And the longer we delay its arrival, the worse it will be. Unfortunately, facing such challenges, I worry that Fed Chair Jerome Powell will not make the better (and more complex) choice and hold the line on inflation.

Does anyone understand what the hell she is saying? “Too soon,” “too late,” “hold the line.” What exactly is she suggesting Powell do?

It doesn’t matter because her suggestions are so deviant from reality that trying to understand them would be useless.

First, the pressure that he already faces from, for example, Sens. Bernie Sanders (I–Vt.) and Elizabeth Warren (D–Mass.) to stop raising rates will only intensify as the economy slows down and the unemployment rate increases.

Yes, Sanders and Warren are likely to say, “Stop raising rates” when we start sliding into recession, and people lose jobs. To de Rugy, Sanders and Warren are wrong. She apparently wants full foot on the brakes so we can go into complete depression.

Second, as interest rates increase, the amount of interest payments on the government’s debt will grow.

With no money to pay those interest obligations, the Treasury will increase borrowing—a move that will further raise the budget deficit.

This is beyond ignorant. She believes there will come a time when the government runs out of money. This person supposedly specializes in “the US economy, the federal budget, taxation, tax competition, and cronyism.” Incredible.

She also believes that the Monetarily Sovereign U.S. government, which has the infinite ability to create U.S. dollars, resorts to borrowing U.S. dollars.

What do real experts think?

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

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

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

Get it, Ms. de Rugy? The government cannot become insolvent. It does not borrow dollars (i.e. it does not depend on credit markets). It ca,n produce as many dollars as it wishes.

So there never can be a time when, as you said, the government “will have no money to pay those interest obligations.” It always has money, and you should know that.

When complaints about rising deficits become loud, it won’t be long before President Joe Biden’s administration, and others in Congress demand an end to the interest rate hikes.

This practice is called fiscal dominance and it creates a real risk of further fueling inflation.

Never in history has an end to interest rate hikes caused inflation.

Finally, there is the risk that market actors will also pressure the Fed to protect them against losing the inflated wealth they’ve reaped as a result of two decades’ worth of irresponsible monetary policy.

“Irresponsible monetary policy is Ms. de Rugy’s term for a growing economy. By formula, adding dollars to the economy causes an increase in Gross Domestic Product, not inflation.

In fact, as of now Wall Street investors are showing signs that they believe the Fed may soon abandon its policy of high-interest rates to avoid a recession.

It’s hard to blame them because that’s precisely what the Fed has done in the past.

That’s right. In the past, high-interest rates have led to recessions, which is precisely what Ms. de Rugy recommends.

So, will the Fed blink? Politicians aren’t known for doing the right thing when times get hard, and it would be naïve to assume that Fed chairs are immune from this.

Powell, too, is a politician, as he demonstrated with his unwillingness to acknowledge the surging inflation problem—created by the government’s own spending and stimulus—until it was too late. He could surprise us, of course, by courageously enforcing much-needed monetary discipline.

No, no, no. The inflation was NOT created by the government’s spending. The inflation was created by COVID-related shortages of oil, food, transportation, computer chips, lumber, housing, etc.

The spending and stimulus prevented a depression.

The second threat comes from politicians in Washington, right and left, doing their best to make the mess caused by the Fed just that much worse.

Indeed, just as the Fed is pushing interest rates sharply higher, irresponsible “leaders” are launching a new “spend and borrow” spree to the tune of $1.7 trillion all wrapped in a reckless end-of-the-year omnibus bill.

The Fed is pushing interest rates higher, which will do nothing to cure the shortages that cause inflation.

However, the $1.7 trillion spending bill may defeat inflation if it is directed toward obtaining and distributing the scarce goods and services.

This 4,155-page bill is guaranteed to be inflationary.

No such thing. The bill will not cause inflation. It will grow GDP by $1.7 trillion.

It will make Powell’s job harder and the rate hikes needed to control inflation larger. That will only increase the chance that the Fed will cave to pressure to extend the crisis further into the year 2023.

The Fed may cave to pressure — by raising interest rates and thereby creating more inflation together with a recession.

But that’s assuming the Fed won’t cave to the administration and monetize all that new borrowing, adding more fuel to the inflation fire.

There is no “borrowing” to monetize. The U.S. government does not borrow U.S. dollars. PERIOD. 

Contrary to popular misunderstanding, T-bills, T-notes, and T-bonds do not represent federal borrowing. They represent deposits into privately owned accounts.

The deposited dollars never are touched by the federal government. They are owned by depositors.

The government creates its own dollars each time it pays a bill.

The bottom line is this, people: Grab your antacids because if our leaders don’t start thinking differently, 2023 is likely to be painful.

The above statement is the only correct line in Ms. de Rugy’s entire article.


Federal spending increases GDP. The U.S. federal government cannot run short of dollars, so it never borrows dollars. Inflations always are caused by shortages of goods and services and never by federal spending.

Government spending does not lead to shortages. Government spending can cure shortages by aiding the production and obtaining of scarce goods and services.

Ms. de Rugy simply does not understand economics. She advocates causing a recession to cure inflation, like applying leeches to cure anemia.

You are correct if you believe I am angry at Ms. de Rugy. If she does research, she should know that raising interest rates does not cure the shortages that cause inflation.

Ms. de Rugy is in a position to promulgate the truth, yet she spreads a lie that harms America. And yes, that makes me angry. It should make you angry, too.

Rodger Malcolm Mitchell
Monetary Sovereignty

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


The Sole Purpose of Government Is to Improve and Protect the People’s Lives.


Recession: Not If, But When

Raj Subramaniam | FedEx
Raj Subramaniam

FedEx CEO says he expects the economy to enter a ‘worldwide recession’
Krystal Hur

FedEx CEO Raj Subramaniam told CNBC’s Jim Cramer on Thursday that he believes a recession is impending for the global economy.

The CEO’s pessimism came after FedEx missed estimates on revenue and earnings in its first quarter. 

As we have been telling you for months (years, actually), Jerome Powell will fail to stop inflation and instead will cause a recession or depression. There are two reasons.

  1. He has no idea what causes and what cures inflations, and
  2. He doesn’t have the tools, even if he knows.

So, today he, in essence, is using a chainsaw to slice the wedding cake and applying leeches to cure anemia. And then, when the chainsaw and the leeches make things worse, what will Powell do? He will use a bigger chainsaw and apply more leeches.

As I predicted, his interest rate increases have failed to end inflation. So, what will he do? He will raise interest rates again and again, of course. (The definition of insanity is doing the same thing repeatedly and expecting a different result.)

He refuses to learn from failure.

The primary reason why prices — any prices — rise is scarcity. It would be quite rare for overall prices to increase because consumers suddenly have more money in their pockets and spend more on everything.

When something prevents the supply of any one product (other than oil) from growing, we have an increase in that product’s price. (Oil is a special case because it has universal use.) To cause inflation — a general rise in prices — a general restriction in supply is required.

And that general supply restriction was provided by COVID., which caused so many supply disruptions that recovery is difficult. And to some degree, the pandemic still is with us.

Our recovery from covid is delayed COVID partly because the GOP didn’t want us to recover. They denied the need for masking, and vaxing, so they continued to spread the disease.

They wanted to be able to complain about Biden and the Dems.

Not that the Dems are entirely innocent. They still join the GOP in promulgating the false notion that federal deficit spending causes inflation.

Not only does federal deficit spending not cause inflation, but targeted deficit spending, to acquire and distribute scarce goods and services is the only government solution to inflation.

Powell thinks consumer demand is causing inflation. He wants to force consumers to demand less by making borrowing more expensive. But demand less what? Should we demand less oil? Less food? Less housing? Fewer cars?

If he fails to quell demand, which is likely, inflation will continue. If he succeeds in reducing demand, we will have a recession, for that is precisely what a recession is: Lack of demand.

In short, Powell is trying to fight inflation by causing a recession. Stagflation next? Then depression?

Inflations are caused by shortages. PERIOD. The only way to cure inflation is to remedy the shortages.

Today, we face many shortages ranging from oil to food, computer chips, lumber, paper, and the entire supply chain, including shipping containers, port facilities, and labor.

Some of the foods in short supply (and therefore experiencing price increases) are meat, poultry, dairy, eggs, and many vegetables. Will interest rate increases cure those shortages? Of course not. 

Will interest rate increases cure the oil, food, computer chip, lumber, paper, supply chain, shipping container, port facility, and labor shortages?

The whole Powell concept is based on ignorance.

Interest rate increases will exacerbate shortages by making production more difficult. Businesses will be less likely to borrow for upgrading machinery or hiring more and better quality labor.

As a result, production will not grow sufficiently, which means more shortages.

It will be the “leeches-to-cure-anemia” situation, where the supposed solution makes the problem even worse.

Eventually, inflation will end, but not because of Powell (who will claim credit). Inflation will end because businesses will catch up and begin to produce more, sell more, and ship more.

Meanwhile, we’ll have to suffer through sky-high interest rates, continual nonsense from Congress and Powell, ever more inflation, and excuses for cutting benefits to the not-rich. (There still will be plenty of tax benefits for the rich. Deficit worries don’t apply to them.)


Recessions (vertical gray bars) follow reductions in federal deficit growth (red) and are cured by increased federal deficit growth.
There is no relationship between federal deficit growth and inflation (blue). Peaks and valleys do not come close to matching.

The GOP is hopeless. It has become a nut factory. But, perhaps I will live to see the day when the Dems begin to admit that federal deficits are beneficial because they add growth and scarcity-fighting dollars — i.e., inflation-fighting dollars– to the economy.

Congress does the bidding of the very rich, who want the wealth Gap to grow. The pols promulgate the Big Lie that federal finances are like personal finances, where debt is a burden. But debt is not a burden on the federal government.

This gives Congress the excuse to cut deficit spending.

So, we will continue to lurch from one recession to the next, with the occasional depression thrown in for flavor.

And as for the public ever understanding, don’t make me laugh. Seventy million people saw what Trump did for 4 years, then voted for him. That tells you all you need to know about the public’s intelligence.

Come to think of it, the insanity of providing the same truths time and again and expecting a different result applies to me, too. I’ve been ready to quit for several years, but then I think of the world my grandchildren will endure, and hope springs eternal.

Rodger Malcolm Mitchell
Monetary Sovereignty

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


How really to stop inflation without doing damage to the economy.

The oft-revised Hippocratic oath for doctors contains variations on the phrase, “Do no harm.” If only the Fed, the President, Congress, most economists and economic writers understood and adhered to that admonision.

Sadly the above-mentioned folks claim one very big and very wrong and very harmful thing. They claim Federal deficit spending causes inflation

Inflation is not caused by federal deficits or any other type of money creation. Inflation always is caused by shortages of key goods and services.


Pick any inflation or hyperinflation in history and you will find that the cause was certain scarcities. Despite the photos of money in wheelbarrows, there never has been an inflation caused by money creation.

In fact, the reverse is true: Inflation causes money creation by those who do not understand the problem. )See: Will the “Build Back Better” bill and “too much” federal debt cause inflation? An examination of myths. – #Monetary Sovereignty – Mitchell (

Interest rates (blue) and inflation (green) have trended down, while federal debt (red) has increased.
We have had massive federal deficit spending for more than a decade, and interest rates have been near zero. But, inflation remained low.
Now suddenly, we have inflation.
What is different, today? Think: What is different today from the past 10 years of low interest rates and high federal spending?
Today’s sudden inflation is not caused by deficit spending, which has been ongoing, not sudden, for decades, but rather by sudden shortages of oil, food, computer chips, shipping, lumber, labor, etc.
None of those shortages is related to federal deficit spending; most are related more closely to COVID.
We currently have a COVID inflation, not a deficit-spending inflation.
In reality, federal deficit spending can CURE inflation if the spending is directed toward obtaining and distributing the scarce goods.
To cure inflation, we must cure the shortages that caused the inflation.
The government could cure our inflation by spending to increase oil drilling (or better yet, spending to:
1. Increase the availability and use of renewable energy)
2. Aid more efficient and more productive farming,
3. Encourage more local computer chip manufacture
4. Develop a more efficient shipping and transportation systems
5. Facilitate more lumber-growing (and substitute-for-wood products)
6. Eliminating FICA and providing Medicare for All (allowing employers room to increase salaries, thus tempting workers back to work).
The primary power to cure inflation is in the hands of Congress and the President, not the Fed.
The Fed has some power, but it is small. Raising interest rates increases the value of the U.S. dollar, thus requiring fewer dollars to purchase the same amount of goods and services.
So when the Fed raises rates, this will help somewhat to reduce inflation. But if scarcities are not cured, inflation will continue to bedevil us.
Congress and the President, as usual, want to lay the responsibility anywhere but themselves. So, they ask the Fed to grow the economy and to control inflation, while the Congress and the President . . . well, what do they do about inflation? Not much, other than point fingers at the Fed.
Maybe they’ll continue to bicker like children about which party gets the credit for this and the blame for that. So while the Dems want to grow the economy, the GOP will vote against anything that grows the economy, lest the Dems get credit.
We are being led by a group of infantile liars. I would call them “useless,” except that doesn’t describe the damage they do.
Here is how the Fed plans to handle our scarcity-fueled inflation:

Inflation is still red hot, and it’s forcing the Federal Reserve into a new game plan
Updated December 15, 2021 SCOTT HORSLEY

The Federal Reserve is paving the way for possible interest rate hikesnext year, in an effort to contain stubbornly high inflation.

If oil, food, chip manufacture, shipping, and lumber-growing remain scarce, and FICA continues to chase people out of the labor poor, we will continue to have inflation, even if interest rates are raised to 10% or more.

At the conclusion of a two-day policy meeting Wednesday, the central bank announced plans to phase out its large-scale bond-buying program faster than initially planned.

The Fed started purchasing bonds during the pandemic as a way to keep borrowing costs across the economy low and to prevent any market disruptions.

What the Fed bond-buying program actually does is to pump growth dollars into the economy.

Unfortunately, turning off that money-creation pump will bring us closer to recession.

Reductions in federal debt growth lead to inflation
When federal debt growth (blue line) declines, we have recessions (vertical gray bars) which are cured by increases in federal debt growth.

Ending the bond purchases earlier would give the Fed more flexibility to raise interest rates sooner, if necessary, to keep prices from spiraling out of control.

The central bank said previously it wanted to stop its bond purchases before considering raising interest rates.

Utter nonsense. The Fed doesn’t need more “flexibility.” It has the infinite ability to raise interest rates. It merely does so by fiat, and up the rates go.

There is a zero relationship between bond purchases and the Fed’s ability to raise interest rates.

The Fed is taking a harder line against inflation after consumer prices in November jumped 6.8% from a year ago — the largest increase in nearly four decades.

The sudden jump in prices was not caused by the federal deficit spending, which will take place over as much as ten years. It was caused by COVID-related, OPEC-related, and regulation-related scarcities.

In a statement, the Fed acknowledged the rapid runup in prices. Although the central bank still believes inflation is largely driven by factors tied to the pandemic, which should ease when the health outlook improves, policymakers are no longer taking that as a given.

Yes, correct. Today’s inflation is not just largely driven, but totally driven, by pandemic factors.

Notably missing from Wednesday’s statement was the word “transitory,” which the Fed had used in the past to describe inflationary pressures.

“The risk of higher inflation becoming entrenched has increased,” Fed chairman Jerome Powell told reporters. “It’s certainly increased. I don’t think it’s high at this moment but I think it’s increased. And I think that’s part of the reason behind our move today.”

He is clueless about the future for the same reason we all are clueless. He has no idea how much oil will be pumped, how much food will be grown (including weather considerations), or how many computer chips will be manufactured or needed.

He has no way to know how and when the shipping situation will be fixed, and what we will do about the lumber shortage.

Like all of us, he doesn’t know what the effect of the omicron variant of COVID will have, nor if there will be other variants and what their effect will be. He has no idea what effect global warming will have on shortages, and when.

I would just as soon lay tarot cards on an ouija board as rely on economic predictions by the Fed chairman, or anyone else, including me.

His problem is not just his inability to predict the future, but also his inability to judge cause and effect.

The Fed has kept interest rates near zero throughout the pandemic in an effort to prop up the economy.

And during all that time of low interest rates, we had massive federal deficits with low inflation. That alone should provide any thinking person with sufficient evidence to determine that deficits and debt do not cause inflation.

Twelve of the 18 members of the Fed’s rate-setting committee now say they expect interest rates to rise by three-quarters of a percent or more in 2022.

That underscores the evolution in the Fed’s thinking. Three months ago, no one on the committee envisioned rates climbing by that much next year.

It’s not “evolution.” It’s ignorance. From just three months ago their thinking totally has reversed. Why would anyone trust their predictions?

The Fed has repeatedly been surprised this year by both the strength and staying power of inflationary forces. While average wages have been rising at a rapid pace, prices are climbing even faster.

Really? Given all their inside information, were they really surprised by the oil shortage? The computer chip shortage?

Committee members now say they expect inflation to be 2.6% at the end of next year, up from 2.2% that was projected in September. 

Raising interest rates is the Fed’s traditional tool for keeping inflation under control, but it comes with its own price. Higher borrowing costs typically lead to slower economic growth, and the Fed has been reluctant to raise interest rates until it feels the U.S. had achieved “maximum employment.”

Do higher borrowing costs (blue) typically lead to slower growth. (red)? Not according to this map.

The popular wisdom is that low interest rates make borrowing easier, and so are stimulative, and high rates are stagnating or worse. But the above graph seems to show the popular wisdom to be incorrect, even opposite to the truth.

While low rates make borrowing easier, they also mean that the federal government will pump fewer stimulus dollars into the economy (for interest on T-bills, T-notes, and T-bonds).

If anything, there seems to be a correspondence between high interest rates and high GDP growth.

That’s the challenge facing Fed policymakers.

“This was a different kind of recession that we’ve never really been through,” said Greene, who’s also chief economist at the Kroll Institute. “So the jury’s still out on what’s going to happen with the labor force.”

Powell suggested that if inflation goes unchecked, that in itself could jeopardize a complete jobs recovery.

The inflation can be checked, but not by the Fed. Congress can check the inflation by:

  1. Using tax policy and spending policy to encourage the development and use of renewable energy.
  2. Using tax policy and spending policy to encourage the development of more and better food crops and other foods, that are able to feed more people, using less land, labor, and fertilizers, while renewing the soil.
  3. Using tax policy and spending policy to encourage the supply of lumber and other building-related materials.
  4. Using tax policy and spending policy to encourage the development of U.S. based computer chips and other computer-related hardware and software.
  5. Using tax policy and spending policy to improve both international and domestic shipping and mail. The postal service should be funded by the government and not be required to make a profit.
  6. Eliminating FICA so that employers are encouraged to raise salaries.
  7. Providing Medicare for All so that employers do not need to fund healthcare insurance, and again, are encouraged to raise salaries.

“What we need is another long expansion like the ones we’ve been having over the last 40 years,” Powell said. “And to have that happen, we need to make sure that we maintain price stability.” 

“Price stability,” i.e. low inflation, is beneficial, but it does not lead to “another long expansion. The primary factor leading to a long economic expansion is ongoing and increasing federal deficit spending.

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



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
  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.


The dirty little secret of federal finances is even revealed on your tax return.

Inflation (blue line) is caused by shortages of oil, leading to price increases (red and green lines).
Let’s set the stage for that secret with a typically misleading article. The following is THE WEEK magazine’s summary of an article that appeared in the Washington Post. See whether you can locate the two words that are not just misleading but utterly wrong:
Taxing “the rich” won’t suffice, Henry Olsen, The Washington Post
“Progressives are afraid of taxes,” said Henry Olsen. To pay for trillion-dollar stimulus and infrastructure plans and expand the social safety net, Democrats always say they’re limiting their tax hike to “the rich.’
But “the trouble for the Left is that you can’t pay for the government they want by taxing only the rich.”
Every social democracy in the world has far higher tax rates for the middle class than the U.S. Canada pays for its single-payer health-care system and an extensive social safety net with a national 5 percent sales tax, provincial sales taxes of up to another 10 percent, and a top income tax rate in Ontario of 46.13 percent on income of more than $175,000.
In the U.K., taxpayers get hit with a 40 percent tax on incomes of just $52,100, and 45 percent at $208,600. That comes on top of a 20 percent value-added tax on all goods and services , and a $3-per-gallon gas tax.
In Denmark, the top tax rate of 55.9 percent kicks in at $86,500, and there’s a 2.5 percent falue-added tax.
If progressives want “a social democratic utopia,” they’ll have to persuade middle-class Americans “to pony up and pay for it.”
O.K., I made it too simple for you clever readers. The words, of course, are “pay for,” because:

Federal taxes do not pay for federal spending.

As former Federal Reserve Chairman Alan Greenspan said,
“There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.”
And Greenspan wasn’t the only one. As former Federal Reserve Chairman Ben Bernanke said,
“The U.S. government has a technology called a printing press (or its electronic equivalent) that allows it to produce as many U.S. dollars as it wishes, at essentially no cost.”
So, since the U.S. government can create as much money as it wants, at essentially no cost, and pay it to somebody, why in the world would the government use tax dollars for that purpose? Not only do federal taxes not pay for federal spending, but no form of federal government income pays for anything.  For instance, when you or your accountant filed your tax return, did you notice this little box? You, having a reasonable command of English, may think this means there is something called a “Presidential Election Campaign” fund, and by checking the box(es) you are directing the government to send $3 to this fund. Notice that you are told, “Checking a box below will not change your tax or refund. “Hey, wait!” you cry. “Even if such a fund exists, where would the $3 come from? If it won’t come from me, and if it won’t come from my taxes. So where?” Answer: It comes from the same place all federal payments come from: The federal government creates all payments from thin air by arbitrarily first creating a bookkeeping line, in this case called “Presidential Election Campaign,” and then, also arbitrarily increasing the total on that line, whenever it wishes. You see, money is not a physical thing. All dollars are created by arbitrary laws, and merely are numbers on someone’s books, most often owned by a financial institution like a bank, a securities brokerage, a credit card company, etc. Federal dollars are numbers on the federal government’s books, over which the federal government uniquely has 100% control.

No, those green pieces of paper in your wallet are not dollars. They are dollar bills. Dollar bills are titles to dollars. They are evidences that you own dollars, which are numbers on federal balance sheets.

Just as a house title is not a house, and a car title is not a car, a dollar bill is not a dollar. It is just a title, a form of contract between you and the federal government which essentially says, “The bearer of this bill owns one dollar.”

Laws forbid banks, brokerages, and credit card companies from arbitrarily entering any notation on their books at whim. But no law restricts our Monetarily Sovereign federal government from doing exactly that. It’s what the word “Sovereign” means. Why? Because the federal government “owns” all laws regarding its sovereign currency, the U.S. dollar. Remember Alan Greenspan’s phrase, “creating as much money as it wants”? Remember Ben Bernanke’s phrase, “as many U.S. dollars as it wishes”? That’s Monetary Sovereignty. The federal government, being the inventor and issuer of the U.S. dollar, can do anything it wishes on its books. So, with no “by your leave,” it can create an account called “Presidential Election Campaign,” and put whatever number it wishes next to that name. And that is the dirty little secret:

The federal government has absolute control over all aspects of federal finance.

It can’t run short of dollars because it creates them at will. After you ponder that a bit, you might ask, “If the federal government creates dollars at will, why am I paying taxes?” Good, legitimate question. You probably thought (because you were told) that the federal government collects taxes in order to pay its bills. That’s what Henry Olsen, of the Washington Post, seems to, or pretends to, and wants you to, think. But no, your federal taxes fund nothing. In fact, they are destroyed upon receipt by the U.S. Treasury. The day your tax dollars are removed from your checking account, they cease to exist in any money-supply measure. Gone. Poof! This is completely different from your state and local government tax payments. When those dollars are taken from your checking account, they are added to the state/local government’s account at a private bank. They continue to exist as part of what’s known as the M1 money supply. The U.S. federal government is not constrained by anything regarding U.S. dollars. It can create them and destroy them at will. It can revalue or devalue the dollar, whenever it wishes. It can change the terms of its contract with you, the bearer of dollar bills, simply by passing a law. The federal government has the legal power to do anything it wishes regarding U.S. money. Compare that with the monetarily non-sovereign states, counties, cities, villages, and businesses. They don’t have that legal power, nor do you. GOP leader John Boehner famously said, “We are broke,” referring to the U.S. debt.  He was lying. But, even those who dismissed his lie, did so with another lie that “federal debt is projected to shrink.” That is not the reason we aren’t “broke.” Federal debt has nothing to do with the federal government’s ability to pay its bills. The reason we aren’t broke is that we create dollars, ad hoc, every time we pay a bill. And by the way, the federal “debt,” isn’t even a debt. It’s more like a safe-deposit box, where dollars are held in accounts that never are touched. So when President Obama said the following, he either was ignorant or lying:
We need to reduce the deficit by $4 trillion. So what choices are we going to make to reach that goal?
Either we ask the wealthiest Americans to pay their fair share in taxes, or we’re going to have to ask seniors to pay more for Medicare. We can’t afford to do both.  
Either we gut education and medical research, or we’ve got to reform the tax code so that the most profitable corporations have to give up tax loopholes that other companies don’t get. We can’t afford to do both.  
It’s math. The money is going to have to come from someplace. And if we’re not willing to ask those who’ve done extraordinarily well to help America close the deficit and we are trying to reach that same target of $4 trillion, then the logic, the math says everybody else has to do a whole lot more:
We’ve got to put the entire burden on the middle class and the poor. We’ve got to scale back on the investments that have always helped our economy grow.
We’ve got to settle for second-rate roads and second-rate bridges and second-rate airports, and schools that are crumbling.
I will veto any bill that changes benefits for those who rely on Medicare but does not raise serious revenues by asking the wealthiest Americans or biggest corporations to pay their fair share. 
Ignorant or lying? I personally believe the man was lying through his teeth. He must have known this line, “We can’t afford to do both,” was an outright lie. After all, Ben (“. . . produce as many dollars as it wishes”) Bernanke was the Fed Chairman during Obama’s term. Are we to believe these men didn’t communicate? State and local government taxes fund state and local government spending. But, the sole financial purpose of federal taxes is to help the federal government control the economy, not to obtain spending money for the government. The government can tax what it wants to discourage, and it can give tax breaks to what it wants to encourage. Period. There is one other purpose — a not directly financial purpose — for federal taxes, and it is the reason the politicians, the media, and the economist try to keep secret from you: The very rich run America, and the very rich do not want you to narrow the income/wealth/power Gap between you and the very rich. The wider the Gap, the richer they are, but your receiving federal benefits would narrow the Gap. The rich want you to believe the government can’t afford to give you things like Medicare for All, Social Security for All, College Education for All, better housing, better food, better neighborhoods — all the things that separate the very rich from you. It’s called Gap Psychology: The desire to distance oneself from those below you on any social scale. So the rich bribe politicians via political contributions and promises of lucrative employment. And the rich bribe the media via advertising dollars and outright media ownership. And the rich bribe the university economists via donations to universities and lucrative jobs on think tanks. Almost all your sources of information are either bribed by the rich or are brainwashing those who are not bribed. They lie, to make you think the government is short of dollars. They lie, to make you think the federal “debt” is, like real debts, a burden on the government and will be paid by you and your children. They lie, to make you think the federal deficit is something other than a benefit to you. And now, as you read this, President Biden wishes to pump another $2 trillion into the economy, while the GOP wishes to cut back the amount you receive — for no good reason — and both lie that taxes will have to pay for it. And on top of those lies, they also lie that federal spending causes inflation, when in fact the only thing that causes inflation is shortages, most often shortages of oil or food. It’s all a dirty little secret, a lie, the Big Lie. And so long as you and the public believe it, the Gap between you and the rich will continue to widen. Now that you know the dirty little secret, what are you going to do about it? I asked, What Are You Going To Do About It? ………………………………………………………………………… 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:
  • Monetary Sovereignty describes money creation and destruction.
  • 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
  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