It figured: New Speaker Johnson’s first act is to propose austerity. Anyone surprised?

With a new House Speaker who is an extreme right-winger, a leader in attempts to overturn the election, and who justifies everything by his conversations with God, you could only expect idiocy.

Johnson has not disappointed.

He even receives plaudits from Libertarian Eric Boehm, further evidence of his woolyheadedness.

Here are some excerpts from Reason.com, aka “Nonsense.com.”

New Speaker Mike Johnson’s First Good Idea: A Debt Commission A debt commission won’t solve any of the federal government’s fiscal problems, but it’s the first step toward taking them seriously. ERIC BOEHM | 10.27.2023 1:10 PM

Just moments after picking up the gavel, newly elected Speaker of the House Mike Johnson (R–La.) endorsed an idea that manages to be both eye-roll-inducing and really important.

“The greatest threat to our national security is our nation’s debt,” Johnson said during his first speech from the speaker’s dais in the House chamber.

It isn’t the most stupid comment any politician ever has made, but it’s right up there with “Global warming is a Chinese hoax” and “COVID is like the common cold. It’ll just go away.”

Not only does the statement omit Russia and China as threats to our national security, but says the national debt is more to be feared. Johnson won’t tell you:

It isn’t “national.” It’s T-securities owned by private citizens and by governments.
It isn’t even “debt.” It’s deposits into accounts wholly owned by the above-mentioned private citizens and governments, not by the U.S. government. The federal government, which never borrows U.S. dollars, neither needs nor even touches those deposits.
It isn’t a threat to anything or anyone. It’s just deposits easily paid back by simply returning the deposits. That is how the federal government always pays back T-security deposits.

“We know this is not going to be an easy task, and tough decisions will have to be made, but the consequences—if we don’t act now—are unbearable.”

What exactly are the “unbearable consequences”? Johnson, like all the other debt nuts, never says, probably because there are zero consequences to the government accepting deposits into T-security accounts. Zero.

There are consequences to large deficits, from which the “national debt” evolves, but those are good consequences, including economic growth and more benefits to Americans (health, infrastructure, military security, etc.) Federal deficit spending grows GDP.

Then, Johnson promised to “establish a bipartisan debt commission to begin working on this crisis immediately.”

This is, in some ways, a pretty silly idea. After all, Johnson is the newly elected leader of Congress, a group of elected officials from two political parties with the constitutionally granted power to control the federal government’s fiscal policies like borrowing and spending.

Congress is, quite literally, a bipartisan commission tasked with managing the debt.

Within Congress, there’s also a Budget Committee, which is, of course, a bipartisan group of lawmakers tasked even more explicitly with determining how much the government can afford to spend, what it should spend tax revenue on, and when there’s been too much borrowing.

Anyone who understands Monetary Sovereignty knows that the federal government’s ability to “afford to spend” is infinite.

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.”

So, yes, the very notion of a new and special bipartisan commission that’s going to do the thing Congress is already supposed to be doing is a little funny and more than a little redundant.

And yet, it’s obvious that something new has to be tried. “In the time it will take me to deliver this speech, we’ll go up another $20 million in debt. It’s unsustainable,” Johnson pointed out on Wednesday—and it wasn’t a very long speech.

And there’s the favorite word of the debt nuts: “Unsustainable.”

Why is it unsustainable? The debt nuts never say. The so-called, misnamed “debt” (deposits) has been growing for over 80 years, and still, we sustain it.

“Unsustainable” falls into the same category as “unbearable consequences.” It’s a frightening term that has no basis in reality.

Even if it were a debt (which it isn’t), our Monetarily Sovereign government services any obligation of any size simply by creating dollars, which it has the infinite ability to do.

And no, the “debt” doesn’t cause inflation, recession, depression, crime, poverty, or disease. About the only thing the debt-that-isn’t-debt causes is muddle-brained thinking by Libertarians and other debt nuts.

As an oft-given reminder to our readers, here is what happens when the “debt” is reduced by cutting deficits and running surpluses:

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807

1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819

1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837

1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857

1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873

1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893

1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929

1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

The above happens when the federal deficit is eliminated and becomes a federal surplus. And this is what happens when the federal deficit simply is reduced, not eliminated.

The red line is the annual change in the federal deficit. Vertical gray bars are recessions. Recessions occur when federal deficits decline because economic growth requires a growing money supply. Recessions are cured by increased federal deficits.

Economic growth, by its definition, requires the economy to have more money. When the federal government isn’t adding dollars by running deficits or even adding too few dollars by adding too-small deficits, we have recessions.

What can a bipartisan commission on the debt accomplish? The Committee for a Responsible Federal Budget (CRFB), which has been advocating for such a commission, argues that special congressional task forces can focus discussions, generate greater public awareness of major issues, and create the opportunity for lawmakers to put all ideas on the table.

You can’t discuss “issues” and “ideas” when the starting point is, “All deficits and debt are bad.” It’s like discussing ideas for curing thirst when your starting point is, “Water is bad for you.”

In 1983, for example, Social Security was approaching insolvency—a problem that sounds familiar today—when a commission of congressional leaders and presidential appointees worked out a series of potential fixes. Afterward, Congress enacted many of those reforms, making Social Security solvent for another five decades.

Social Security, being an agency of the U.S. federal government, is as solvent as the government itself, i.e., infinitely solvent. The so-called insolvency comes from the lie that FICA funds Social Security.

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

FICA funds nothing. All FICA dollars originate in the M2 money supply measure. When they reach the Treasury, they cease to be part of any money supply measure because the Treasury has infinite dollars.

Thus, FICA dollars effectively are destroyed. No federal agency can go bankrupt unless Congress and the President want it to go bankrupt.

That includes such agencies as the White House, Congress, the Supreme Court, and the military branches. The so-called reforms meant making Americans pay more and receive less.

It’s like solving the hunger problem by making poor Americans pay more for less food and calling that a “reform.”

More recently, there was the National Commission on Fiscal Responsibility and Reform, formed by President Barack Obama in the aftermath of the 2008 recession. It produced a plan that could have reduced the debt by $4 trillion over 10 years by raising taxes, cutting spending, and selling off federal property.

Translation: Obama’s plan would have taken dollars from the economy, given them to the federal government that doesn’t need them, and plunged America into a recession if we were lucky, but more likely a depression.

Even though most of those proposals were never enacted, the CRFB points hopefully to the fact that 11 of the 18 commission members supported the final recommendations, including five Republicans and five Democrats.

It is sad that 11 of the 18 commission members either were ignorant of economics or deliberately hoped for a recession or depression.

The idea for another commission on the deficit has been kicking around for a few years but has recently gained steam. The moderate lawmakers in the bipartisan Problem Solvers Caucus have endorsed the idea.

Polling by the Peter G. Peterson Foundation, which advocates for balancing the budget, shows that majorities of both Republican and Democratic voters support the formation of a commission.

As history shows, a balanced budget may be necessary for monetarily non-sovereign entities like cities, counties, states, businesses, and individuals; it unnecessarily will cause recessions and depressions in Monetarily Sovereign nations.

How would it work? Reps. Bill Huizenga (R–Mich.) and Scott Peters (D–Calif.) have introduced a bill to establish a 16-member commission that would include four experts from outside Congress (to be appointed by party leaders from both the House and Senate).

The commission’s recommendations would receive priority consideration by Congress and would be scheduled for a final vote during the lame-duck session after the 2024 election.

The problem is the commission, no doubt, will be as ignorant as Congress. Obama had his commission. Fortunately, its recommendations did not become law, so we avoided the depression.

That timing reveals something about the real reason why members of Congress like this sort of idea: because it allows them to avoid accountability for doing the thing they’re supposed to be doing in the first place.

It allows Congress to avoid economic facts and to do the bidding of the very rich, who grow when federal benefits to the poor are reduced. This widens the Gap between the rich and the rest, making the rich richer.

Recall what Johnson said on Wednesday: this will be a process that requires “tough decisions.” There’s nothing all that complicated about balancing the federal budget.

Members of Congress don’t need notable experts or a bipartisan commission to tell them that closing the deficit will require raising taxes or cutting spending (or some combination of the two). That’s literally all there is to it.

A prime measurement of the economy is the Gross Domestic Product. Raising taxes and/or cutting spending reduces the amount of money in the economy, which, by mathematical definition, reduces GDP.

A reduction in GDP is known as a “recession” or a “depression.” That’s literally all there is to it.

But those decisions become tough because politicians know that voters don’t like having their taxes raised. They also know that cutting even the most useless and wasteful government spending will spur outrage from whatever particular interest group benefits from it.

Imagine that. Voters don’t like money being taken out of their pockets. Who would have guessed that?

In the end, the right way to think about a bipartisan commission on the debt is as a sort of political suicide pact.

No, a commission to lower the debt or balance the budget is an economic suicide pact.

It means that members of both parties are committed to, at the very least, proposing ideas for balancing the budget—and that, in turn, should limit some of the partisan screeching that makes it so hard for Congress to make these decisions under normal circumstances.

Why do they assume that balancing the federal budget should be a goal? There is zero evidence that a balanced federal budget benefits the nation, the government, or anyone.

How about a commission to propose ideas for improving the lives of Americans?

Both sides will have to take responsibility for ending the government’s addiction to borrowing.

The article began with a lie (“The greatest threat to our national security is our nation’s debt”), and now it ends with a lie (“The government’s addiction to borrowing”). The U.S. federal government does not borrow.

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.”

Will it work? Probably not, but nothing else seems more promising right now. Johnson’s got his work cut out, but this is a worthwhile effort.

If this indeed is Johnson’s goal, he will be remembered as the most ignorant, traitorous, damaging Speaker in American history — a man who tried to overturn our democracy and now hopes to cause America’s first depression since 1929.

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.

MONETARY SOVEREIGNTY

The fundamental lie of Libertarianism

“Libertarianism” says Robert W. Poole (Reason Magazine’s early editor) is “about more than just economics and politics, it really is. It’s about human flourishing and what are the conditions for human beings to have satisfying, flourishing [lives].” Money is power.

Hoover Institution Acquires the Archives of Reason Magazine Co-founder Robert W. Poole Jr. | Hoover Institution — **Robert Poole, the voice of Libertarianism**

The fundamental philosophy of Libertarians is that power should be with the people, not with the government. Yet Libertarians espouse exactly the opposite when they opt for tax increases and/or benefit decreases to reduce federal deficits. Keep that in mind as you read the following excerpts from an article written by a leading Libertarian. See whether you believe he believes the money and power should be with the people:

Endlessly expanded federal borrowing and spending is not a realistic long-term transportation future

By Robert Poole, Director of Transportation Policy, September 12, 2023

(Robert Poole is one of the founders of the Reason Foundation [which publishes Reason Magazine] and served as its president and CEO from 1978 to 2000.He is currently director of transportation policy at the Reason Foundation and frequently writes about issues related to privatization.)

The national debt will affect the future of transportation funding, and the public-private partnership community needs to understand why and what the implications for P3s may be.

The most recent parts of the story began on Aug. 1, when Fitch Ratings downgraded the federal government’s bond rating from AAA to AA+. For a company, that might not be a big deal, but for the government of the world’s largest economy, the downgrade was a shot across the bow.

This was the second time a rating agency took such an action with the federal government’s bond rating, with S&P doing so in 2011.

Headlines in the financial press, such as The Wall Street Journal’s “America’s Fiscal Time Bomb Ticks Louder” and “U.S. Downgrade Flashes Warning Sign.” indicate how seriously the downgrade should be taken.

The downgrades had nothing to do with the federal government’s ability to pay. They reflected the government’s willingness to pay, as evidenced by the ridiculous debt ceiling laws. Being Monetarily Sovereign, the federal government has the infinite ability to pay for anything. Mr. Poole confuses “ability”with “willingness.” We have written many times about the so-called fiscal “time bomb.” The first mention we noted was in 1940;

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

Subsequently, references to the federal “debt” as a ticking time bomb appeared regularly in all media, from scholarly journals to daily newspapers. The 1940 mention came when the total federal “debt” was approximately $48 Billion. Today, that debt is roughly $26 Trillion, an astounding 54,000% increase.

Despite that increase, the “ticking time bomb” still has yet to explode, but the doomsday preachers, having learned nothing from the many years of experience, continue to fret. Eighty-three consecutive years of wrong predictions, and people still believe? What word comes to mind?
As the Journal’s Greg Ip wrote: One reason for Fitch’s downgrade was the absence of any political will to deal with the main drivers of the deficit: spending programs for older Americans, including Social Security and Medicare, and repeated cuts to tax rates for most households.

No, the reason for the downgrade was the uncertainty caused by the useless debt limit laws. The word “useless” is appropriate. There is no use for a law that limits the federal government’s ability to pay for what it already has purchased. And should anyone believe the law has any purpose whatsoever, they should explain why, since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents. If the law had any value, why is it so easily and often increased without exploding as a “time bomb”? Money is power, so ironically, if one truly believed the power belongs with the people and not with the government, he would favor money flowing to the people and from the government. Yet the exact opposite is stated by the Libertarian writer.

Fitch noted how much worse U.S. fiscal metrics are than its peer countries. For example, The U.S. is on track to spend 10% of federal revenue on interest by 2025, compared with just 1% for the average triple-A-rated country and 4.8% for double-A-rated.

Why, then, isn’t the U.S. rating even lower?

Mr. Poole doesn’t give examples of those “triple-A” and “double-A” rated countries, probably because they aren’t comparable to the U.S. government. Perhaps, they don’t have a foolish, useless debt-ceiling law. Or perhaps, they are not Monetarily Sovereign nations that can issue their national currency in unlimited amounts, as the U.S. can. It would have been helpful for Mr. Poole to list the nations he refers to, but of course, he never will because that would destroy his argument.

Because the reserve status of the dollar and the size and safety of Treasury debt gives the U.S. unprecedented borrowing ability.

First, the U.S. government does not borrow U.S. dollars. It pays for goods and services by creating dollars ad hoc, which it has the unlimited ability to do. The U.S. government never unintentionally can run short of dollars.

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.”

“Not dependent on credit markets” means they don’t borrow dollars. Second, “reserve status” merely means that banks keep dollars on reserve to facilitate international trade. Not only does the U.S. dollar have reserve status, but so do numerous other currencies, depending on geography. Though the U.S. dollar is the most common reserve currency, other reserve currencies include: the euro, the Japanese yen, the Mexican peso, the British pound, the Canadian dollar, the Australian dollar, the Indian rupee, the Swiss franc, the Swedish krona, and many other currencies now being held in reserve by banks, worldwide. Being a reserve currency does not bestow special safety on a currency. It does not indicate a nation’s ability to pay its bills. Third, Mr. Poole mentions the size and safety of Treasury debt in the same article about its being a “ticking time bomb.” I suggest he has just exploded his own warning, as well as he should.

Indeed, it was hard to get presidents or Congress to worry about the deficit when interest rates were low. Today, a bond market signaling that the world is no longer safe for debts may be the first step to tackling them.

Interest rates have no meaning for a Monetarily Sovereign nation like the U.S., which has the infinite ability to create its own currency. Whether interest is 1% or 50%, or anything between, the U.S. federal government simply presses computer keys to pay. Further, the U.S. Federal Reserve pays whatever interest rate it wishes. It sets the rate by fiat. Unlike private borrowers, the Fed does not need to set a rate that is attractive to lenders because:

a. The government does not borrow. The purpose of T-bills, T-notes, and T-bonds is not to provide the government with spending money. The goal is to provide a safe storage place for unused dollars. The federal government never touches the dollars in T-security accounts.

b. If the Treasury wanted to issue T-securities that no one wanted to buy, the Federal Reserve could purchase them.

The long-term consequences of the growing debt were estimated in the latest Congressional Budget Office’s (CBO) 2023 Long-Term Budget Outlook.

Its baseline 30-year projection, which assumes no changes in existing laws and programs, is that by 2053, the national debt will constitute 181% of the U.S. Gross Domestic Product—compared with 98% today.

The debt/GDP ratio is the most misunderstood fraction in all economics. Contrary to widespread ignorance, that ratio has absolutely nothing to do with the ability of the U.S. to pay its bills. The federal government has the infinite ability to create dollars, which it does by pressing computer keys.

Alan Greenspan: “There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.”

The so-called “debt” is the total of T-security deposits accepted by the federal government. These are dollars in accounts owned by depositors, never touched by the federal government, and paid off simply by returning the dollars in the accounts. The misnamed “debt” consists of net deposits made between yesterday and ten or more years ago. By contrast, GDP (Gross Domestic Product) is a one-year spending measure. So, the debt/GDP fraction compares a multi-year total with a one-year total — mathematically senseless. Imagine your house mortgage being $300,000 and you earning $150,000 a year. That would be a 200% ratio that millions of people support all the time. The debt/GDP is even more senseless than that, because GDP doesn’t pay debt. Of course, you aren’t Monetarily Sovereign — you can’t create dollars at will — and the federal debt isn’t real debt. So, the whole thing is foolish, though no more foolish than current worries about Debt/GDP ratios. If you want to waste time evaluating the world’s most useless ratio, go here. It shows the percentages for dozens of countries. I challenge you to use those ratios to determine the world’s best and worst credit risks.

And paying interest on that debt will increase from taking 15% of federal revenue today to 35% of federal revenue in 2053 (more than any national budget item except Social Security and Medicare). And that’s just CBO’s baseline estimate.

Given that the federal government has the infinite ability to create dollars, why does Mr. Poole stress about paying interest? Ignorance or intent to deceive?

The Committee for a Responsible Federal Budget estimates that, given likely extensions of tax cuts and expansions of federal programs, the 2053 national debt will likely rise to 222% of GDP.

Whether the debt is 22%, 222%, or 2222% of GDP has zero effect on the federal government’s ability to pay its bills.

Where does transportation fit in the discussion about the national debt?

Well, in July, the House Appropriations Committee, in response to conservative members saying they’re concerned about out-of-control federal borrowing while a Democrat is in the White House—as opposed to mainly supporting massive deficit spending during the Trump administration—proposed trimming Fiscal Year 2024 Department of Transportation (DOT) discretionary grant spending by $5 billion.

Here is where we get to Congress’s misunderstanding (intentional or otherwise) of the federal government’s ability to pay for things.

Even if the federal government collected zero taxes, it could continue spending forever. There is no reason to cut spending for budgetary reasons. The government has infinite money.

This relatively minor cut would affect only a few programs in six modal agency discretionary grant programs totaling $22.5 billion last year. Yet a headline in Eno Transportation Weekly read, “FY24 House Funding Bill Has Massive Cuts to DOT Grant Programs.”

This proposal raised similar cries of alarm from highway, transit, and rail organizations, such as the headline “Transportation Funding Under Threat in House of Representatives” by United for Infrastructure, which advocates for more infrastructure investment.

Suppose we make the possibly innocent assumption that the Department of Transportation (DOT) had good reasons for its discretionary grant spending. In that case, we now will be forced to do without that spending. The people will be deprived of important transportation improvements, all because of economic ignorance.

Let’s think ahead a few years to when massive federal funding in the Infrastructure Investment and Jobs Act, often referred to as the bipartisan infrastructure law, and the Inflation Reduction Act’s budget has been expended.

At that point, state transportation budgets would be expected to revert to their pre-stimulus spending levels.

This is an important point. Though the federal government, being Monetarily Sovereign, can create infinite dollars, the states, counties, and cities are monetarily non-sovereign. They can and often do run short of dollars.

Why then are states asked to fund what the federal government could easily fund without collecting a penny in taxes? Economic ignorance.

But what can we expect transportation organizations and state DOTs to call for?

Based on history, it’s almost certain states will propose the most recent year of those expanded funding levels as their new budget baselines and ask Congress for federal funding.

And if Congress goes along with the calls for that level of infrastructure spending, there will be another massive amount of federal borrowing.

Reminder: The federal government does not borrow. It creates dollars at will.

Quote from former Fed Chairman Ben Bernanke when he was on 60 Minutes: Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

Since CBO’s dire debt forecasts don’t include this level of increased federal transportation spending, this increase would make all CBO’s 30-year projections seriously underestimating.

Many years ago, a chairman of the Council of Economic Advisers, Herb Stein, propounded what became known as Stein’s Law. “If something cannot go on forever, it will stop.”

But the longer that rude awakening takes to happen, the worse the consequences will be.

Someone, please tell Herb Stein that because the U.S. federal government is Monetarily Sovereign, it can continue to deficit spend forever. It never needs to stop.

America’s transportation leaders should think hard about lobbying for this unsustainable spending to continue.

Sorry, Mr. Poole, but federal spending has proved to be infinitely sustainable. There is no reason for it ever to stop.

The largest contribution to the out-of-control national debt is the impending bankruptcy of Medicare and Social Security.

Because the U.S. government is Monetarily Sovereign, it cannot go bankrupt. For the same reason, no federal government agencies- i.e., Medicare and Social Security- can go bankrupt unless Congress and the President want them to. The federal government could and should eliminate the FICA tax and fund Medicare and Social Security the same way it funds Congress and the White House: By creating dollars. Federal spending is not “out-of-control.” Congress and the President control it. It is exactly what Congress and the President want it to be.

If, or when, Congress finally gets around to grappling with the costs of those programs, it’s likely that most or all federal discretionary programs, including infrastructure programs, will be in for severe and long-term spending cuts.

Transportation leaders should start planning for that significant change now.

Does “severe, long-term spending cuts” in transportation sound like “human flourishing,” the Libertarian excuse for the existence of Libertarianism?

One ray of hope for the highway and bridge sector is the opportunity that comes with the urgent need to phase out per-gallon fuel taxes and replace them with per-mile road user charges, also called mileage-based user fees.

Unnecessary taxes. All federal tax dollars are destroyed upon receipt by the Treasury. Taxes are paid with dollars from the M1 money supply measure. When they reach the Treasury, they cease to be part of any money supply measure. Thus, federal taxes effectively are destroyed upon receipt.

If done right, that transition could fully restore the users-pay/users-benefit principles on which the gas tax was based a hundred years ago.

It could even mean converting state highway systems into revenue-financed highway utilities analogous to electric, gas, and water utilities.

Public utilities, which can be government-owned or investor-owned, charge customers based on how much of the service they use. They also issue long-term revenue bonds backed by the projected income from their user charges to fund the costs of maintaining and improving the infrastructure.

This is the usual Libertarian “soak the private sector” (as opposed to “human flourishing,”), though the federal government has infinite money. Ironically, while Libertarians supposedly favor the private sector, they ask the private sector to give the federal government more money. Do these folks even know what they want?

Long-time traffic and revenue consultant Ed Regan has suggested that metro areas could add a transit tax to charges in the road user charge (RUC) future.

This would mean only residents of an urban area would pay for its transit subsidies—not rural taxpayers or federal taxpayers in general.

This isn’t ideal, but it would be more equitable than today’s system of diverting nationwide highway user tax revenue to transit in a few hundred metro areas.

It would be even more equitable for the federal government to stop pretending it spends tax dollars. The purpose of federal taxes is not to provide spending dollars to a government that has infinite dollars. The fundamental purposes of federal tax dollars are:

Primarily, to control the economy by taxing what the government wishes to discourage and giving tax breaks to what the government hopes to encourage.
Secondarily, to create demand for the U.S. dollar by requiring taxes to be paid in dollars.
In reality, to widen the income/wealth/power Gap between the rich and the rest by claiming that benefits to the poor and middle are “unaffordable” and “unsustainable.”

That is why you are falsely told that Social Security and Medicare benefits must be cut.

In the near term, as advocates of more spending point out, thousands of bridges still need refurbishment or replacement across the country.

But there is no way that federal taxpayers, via expanded federal spending, can address that total problem without massive tax increases.

That is a lie. Federal taxes do not fund federal spending. Period.

State and local transportation officials should start planning for a self-help transportation future that requires users to pay for the infrastructure they use and utilizes public-private partnerships to fund and operate significant projects.

Rather than taking from the private sector, the federal government should fund infrastructure the same way it funds everything else: By simply creating dollars.

A version of this column first appeared in Public Works Financing.

SUMMARY Unlike state and local governments, the U.S. federal government is Monetarily Sovereign. Two hundred and sixty years ago, the government created laws from thin air, and some of those laws created dollars from thin air. They created as many laws and dollars as they wished and gave those dollars the value they wished. It all was arbitrary. Today, the federal government retains the infinite right to create as many dollars as it wishes and to give those dollars whatever value it wishes. Thus the U.S. government never can run short of dollars and has absolute control over inflation. It can pay for anything instantly without collecting a penny in taxes. Unlike state/local taxes, federal taxes are destroyed upon receipt by the Treasury. Similarly, no federal government agency runs short of dollars unless Congress and the President want them to. This includes such federal agencies as the Supreme Court, the White House, Congress, all the branches of the military, Social Security, Medicare, Medicaid, and every federal Department. Libertarians claim to believe the federal government has too much power. Yet, to cure federal deficits, they want to cut benefits and increase taxes. Libertarians want to take dollars from the private sector and give them to the federal government — exactly the opposite of the Libertarian stated philosophy. They claim to wish for “human flourishing” and for “freedom,” but it is a freedom to be impoverished and without medical care and transportation, ultimately ending in anarchy. Libertarianism is a fraud that claims to want something noble, but in practice opts for something evil. 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.

MONETARY SOVEREIGNTY

Libertarians: Far right conservatives in disguise

The dictionary definition of “Libertarian” is: An advocate or supporter of a political philosophy that advocates only minimal state intervention in the free market and the private lives of citizens. The problem is that each self-proclaimed “Libertarian” invents his definition of “minimal.” So, the real, practical meaning is: “Libertarian is someone who decides how much state intervention he wants.” Period. Thus, everyone is a Libertarian. Or not. If you want to increase Medicare availability but cut Social Security, you can claim to be a Libertarian. If you want to cut them both, you also can claim to be a Libertarian. Do you want to eliminate all federal spending? You’re an extreme Libertarian. Want to stop all federal agencies? Extreme Libertarian. Want to cut federal spending by 99%, 75%, 25%, or 1%? You can do any of it under the guise of “Libertarianism.” Thus, for this reason alone, Libertarianism is the all-purpose bullsh*t excuse for doing whatever you want. But it worsens when we consider why Libertarians want to cut state intervention. There are two fundamental reasons:

Freedom from government control
Romina Boccia
Affordability of government spending

And self-proclaimed Libertarians vacillate between the two, depending on their mood.

1. Freedom: Every law reduces someone’s freedom. For absolute freedom, there would be no laws. Libertarians hate laws when their own freedom is reduced but accept laws that protect any of their freedoms.

A true Libertarian thinks people should be free to carry any weapon anywhere. Does that include machine guns, bazookas, flame throwers, drone bombs, poison gas?

Should people be free to keep slaves, spread smallpox, steal, kill, and kidnap? Well, no, that’s too much freedom. So, how much freedom should people have? Ask two Libertarians, and you’ll get five opinions.

Thus, Libertarians claim their right to tell you how much freedom you should have, and whatever they decide is based on their personal desires and their definition of Libertarianism.

2. Affordability: Because Libertarians feign ignorance about Monetary Sovereignty, they claim the thing called “federal debt” is like state/city debt, personal debt, monetarily non-sovereign debt, and business debt.

It isn’t. States, counties, cities, people, businesses, and euro nations can run short of whatever currency they use to pay their bills. The U.S. government cannot.

The finances of the Monetarily Sovereign U.S. government are unique. It alone can afford anything that can be purchased with U.S. dollars. Whether an obligation totals $1 or a hundred trillion dollars or any other number makes no difference to the federal government’s ability to pay for it.

The U.S. federal government pays for everything by creating U.S. dollars ad hoc. It never unintentionally can run short of dollars. Even if the government didn’t collect a penny in taxes, it could continue spending forever.

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

I suggest that Libertarian leaders are well aware of #1 and #2 above, and that there is a different reason for their objections to government spending. I suggest that the Libertarian party is a proxy for the Republican party in being tied to America’s richest 1%. “Rich” is a comparative, relying on the width of the Gaps between the top vs. the middle and bottom. Widening the income/wealth/power Gap between the richest and the rest of us makes the rich richer. Narrowing that Gap makes the rest of us richer.

You are rich if you have $1,000, while everyone else has $10. But you are poor if you have $1,000 while everyone else has $10,000. It is the Gap that determines how rich or poor you are. The wider the Gap below you and the narrower the Gap above you, the richer you are.

The Libertarians, as proxies for the Republicans, work to widen the Gap between the rich and you, making the rich richer. It is reflected in Gap Psychology, the desire to widen the Gap below you and to narrow the Gap above you. Keep this in mind as we review excerpt from the following Libertarian article:

Don’t Let the Government-Shutdown Charade Distract You From the Debt Crisis America’s biggest fiscal challenge lies in the unchecked growth of federal health care and old-age entitlement programs.

These programs primarily benefit those who are not rich. Therefore, they are fair game for the Libertarian budget-cutters, who seldom express concern about tax loopholes for the rich but constantly complain about benefits to the rest of us.

With the Senate and now the House reopening for business, Congress is resuming its negotiations over annual spending on discretionary programs. As Washington tinkers around the edges of the behemoth federal budget, members are steering clear of the biggest budget items—the ones sending U.S. debt to unprecedented heights.

Here are the facts:

The U.S. debt is not the dollars the U.S. government owes. It is the total of dollars deposited into T-security accounts. The so-called “debt” is not a debt of the government any more than your deposit into your safe deposit box is a debt of your bank.
When you open your T-security (T-bill, T-note, T-bond) account and deposit it, the dollars belong to you. The government never touches them other than periodically to add interest dollars.
When your T-security matures, those dollars are returned to you, just as the contents of your safe deposit box are returned to you.
Finally, almost every year, the U.S. debt moves to “unprecedented heights.” With rare exceptions, it has been doing that since 1940, and every year, those ignorant (intentionally or otherwise) about Monetary Sovereignty complain. Yet here we are, with a healthy economy and the federal government having no difficulty paying its bills.

Discretionary means that Congress hasn’t put these programs on autopilot, unlike so-called mandatory programs. Instead, Congress must vote to either continue or alter the spending. Otherwise, discretionary program funding expires.

While controlling discretionary spending is important for fiscal responsibility, for reducing government waste, and for negotiating the proper size and scope of federal activities, the current shutdown debate is largely symbolic.

To the Libertarians, “fiscal responsibility” and “government waste” refer to benefits received by the middle- and lower-income groups. Tax benefits that allow billionaires like Donald Trump to pay virtually $0 in taxes seldom concern Libertarians.

America’s biggest fiscal challenge lies in the unchecked growth of federal health care and old-age entitlement programs.

Oh, woe! Sick and elderly Americans, especially poor Americans, are receiving more money. To Libertarians, this is outrageous. Never mind that the federal government has the infinite ability to create the dollars that fund these programs. The Libertarians’ concern is not affordability. The federal government can afford anything. The real concern is that the poor and middle classes receive dollars, narrowing the Gaps between the rich and the rest. The rich hate that because it makes them less rich. And what the rich hate, the Libertarians and the Republicans also hate.

Alan Greenspan: “There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.”

Repeated shutdown fights and a slew of temporary continuing resolutions have gotten us no closer to reforming Social Security and Medicare.

In the Libertarian world, “reforming” means “cutting.”

Those paying attention to the debt limit debate that ended in early June may be wondering what all the shutdown fuss is about, given that Congress and the White House agreed to new spending limits just a few months ago.

Those limits, specified in the Fiscal Responsibility Act, were a sham from the beginning. Secretive side deals undermined the stated goals of the bipartisan agreement before the ink was dry.

President Joe Biden has requested $40 billion in additional emergency supplemental spending, with the Senate adding several more billion to its appropriations bills, a glaring attempt to evade even modest fiscal restraints.

The federal government has infinite dollars. What, then, is the purpose of “modest fiscal restraints”? The sole purpose is to impoverish the great mass of people so that the rich can continue to rule.

Alan Greenspan: “The United States can pay any debt it has because we can always print the money to do that.”

The debt limit deal did succeed in allowing both Democrats and Republicans to claim political victory while suspending the debt limit for more than 18 months.

The losers are the American people, as excessive federal spending and unchecked entitlement growth drive up inflation and interest rates and undermine stronger economic growth.

Three lies in just eleven words, a remarkable record:

Federal spending does not “drive up inflation.” All inflations are caused by shortages of critical goods and services, most often oil and food. Today’s COVID-induced inflation resulted from a scarcity of oil, food, transportation, metals, lumber, computer chips, labor, and other goods and services.Federal spending to cure these shortages, not interest rate increases, has been moderating inflation.
Federal spending does not “drive up interest rates.” Interest rates are up because the Federal Reserve falsely believes low interest rates lead to inflation, and high rates cure it. This is utter nonsense. Adding high interest to the cost of goods makes those goods more costly. The sole effect of high rates is to stagnate the economy by transferring dollars from borrowers to lenders. A stagnant economy is known as a “recession” or a “depression,” and neither recession nor depression is the opposite of inflation. Apparently, the Fed never heard of “stagflation,” the combination of inflation and a stagnant economy.
Stronger economic growth is defined as increased growth in Gross Domestic Product. (GDP). The formula for GDP is: GDP = Federal Spending + Nonfederal Spending+ Net Exports. Now I ask the Libertarian geniuses, given that formula, what can the federal government do to increase GDP growth? If you know basic algebra, your answer was “increase Federal Spending.” Seemingly, this is beyond the abilities of the Libertarians.

A more responsible way to raise the U.S. debt limit would have paired such an increase with a credible fiscal plan to stabilize the growth in the debt.

Hmm. “Raise the debt limit” by “stabilizing the debt growth.” If that makes sense to you, you are far wiser than me. By setting up a functional impossibility, the Libertarians make sure they always will have something to complain about.

The longer Washington waits to fix autopilot spending, the more damage they’ll do. The Congressional Budget Office’s latest long-term budget outlook projects that U.S. government spending will consume nearly 30 percent of the economy by 2053—almost 40 percent higher than the historical average.

Look again at the formula for GDP. Federal spending does not “consume” part of the economy but adds to it. By simple, mathematical formula, increased Federal Spending increases GDP. It also increases Non-federal Spending by adding dollars to the private sector. Thus, IF one wishes to increase economic growth, the last thing would be to cut Federal Spending. The word “if” is accented because increasing economic growth is not a Libertarian goal. They want to widen the Gap between the rich and the rest, a goal that often can be met by recessions or even by depressions.

Recessions and depressions provide opportunities for the rich to become richer. At those times, the rich can snap up assets at bargain prices while forcing labor to slave at meager salaries.

Congress is expected to rack up more than $100 trillion in additional deficits over those 30 years—more than four times what the U.S. government has borrowed over its entire history. Who will lend the U.S. government such vast sums?

More lies from the Libertarians. The federal government, having the infinite ability to create U.S. dollars, never borrows. Never.

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.”

Thus, no one lends to the federal government. Those dollars spent on T-securities do not go to the federal government. They go into T-security accounts, which are owned by the depositors. Those accounts provide a safe place to store unused dollars. This stabilizes the dollar. It does not give the federal government spending dollars, of which it already has infinite.

The main drivers of this increase are heightened interest costs and the growth in health care and Social Security spending.

With Medicare and Social Security responsible for 95 percent of long-term unfunded obligations, according to the Treasury Financial Report, there’s simply no way any serious fiscal reform effort can leave these programs untouched.

Yet another lie. All financial obligations of the U.S. government are “unfunded” until the government funds them by creating new dollars ad hoc. Federal taxes do not fund federal spending. Unlike state/local tax dollars, which remain in the private sector by being deposited into private banks, federal tax dollars are destroyed. When they reach the U.S. Treasury, they cease to exist in any money supply measure. (No money supply measure includes federal dollars because the federal government has infinite dollars. Thus, your federal tax dollars cease to exist once received by the Treasury.) The Libertarians define a “serious reform effort” as anything that takes dollars from the poor and the middle classes.

The most likely outcome from the current standoff is a continuing resolution into December, followed by a spending-laden Christmas tree bill before year’s end. This shutdown debate matters only so much, considering the huge fiscal challenge confronting the United States.

A “Christmas tree bill” is the Libertarian’s intentionally misleading description of anything that provides more money to the poor and middle classes.

By ROMINA BOCCIA , the director of budget and entitlement policy at the Cato Institute.

The Cato Institute claims it promotes “individual liberty, limited government, free markets, and peace, an honest description of an organization that wants the rich to rule. Nothing in that description is about reducing poverty, feeding the malnourished, educating the masses, narrowing the Gap, or being charitable. Quite the opposite. “Individual liberty” means the rich do whatever they want, and the rest do whatever the rich want. “Limited government” and “free markets” mean there will be no laws to prevent the rich from cheating and enslaving the rest of us. And as for “peace,” those angry protests by the poor can be messy. The Libertarians want the downtrodden to accept their lot in life, peacefully. What a perfect society the Libertarians try to force on us. 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.

MONETARY SOVEREIGNTY

More = less and other Big Lies from the Libertarians

BACKGROUND The federal government, being Monetarily Sovereign has infinite money. It neither needs nor uses tax dollars. It never can run short of dollars.

363 Unlimited Money Photos and Premium High Res Pictures - Getty Images — **The U.S. federal government has infinite dollars.**

Contrary to popular wisdom, federal taxpayers do not fund federal spending. Instead, the government creates new dollars, ad hoc, every time it pays a bill. The economy does not have infinite money and needs a continual input of dollars to grow. Gross Domestic Product, (GDP) a measure of spending, also is a measure of growth. Federal deficit spending provides that continual input, without which we would have recessions and depressions. Libertarianism is not the most ignorant idea on the planet. Trumpism surely wins the gold medal in that contest. But Libertarianism’s endless insistence that a gigantic nation should have a small government and that every expenditure always, always, always is too large puts them in the running for at least a bronze or perhaps even a silver medal. Here is their latest bit of humor masquerading as fiscal prudence.

Maintaining the Student Loan Forgiveness Application Will Cost an Estimated $100 Million

This latest expense is yet more evidence that sweeping student loan forgiveness will end up doing considerable economic harm. by Emma Camp | 10.14.2022 1:30 PM

While the incredible costs of the Biden administration’s federal student loan forgiveness plan are widely known, yet another expense of the program is stirring controversy: maintaining the online application for loan forgiveness is expected to cost nearly $100 million annually.

This latest expense—not included in the Congressional Budget Office’s recent estimate of the program’s cost to taxpayers—is yet more evidence that sweeping student loan forgiveness will end up doing considerable economic harm.

Why will adding $100 million stimulus dollars do “considerable economic harm”? Ms. Camp never explains why or what that “harm” is. Federal deficit spending is precisely what the government does to prevent and cure recessions. But Libertarians never acknowledge the facts that stare them in the face. Contrary to popular wisdom, the Great Depression of 1929 was not caused by the stock market crash. Nor was it caused by bank failures. Nor was it caused by Smoot-Hawley. Nor was it caused by drought. Nor was it caused by speculation. The Great Recession of 2008 was caused by insufficient deficit spending and years of federal surpluses, which took dollars out of the economy.

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807. 1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819. 1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837. 1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857. 1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873. 1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893. 1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929. 1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

Eventually, the Great Depression was cured by more deficit spending. Libertarians are oblivious to those facts.

**Every recession (vertical gray bar) is immediately preceded by a federal deficit spending growth reduction.**

It doesn’t take a genius to see this.

All Spending + Net Exports = GDP. GDP is a measure of our economy. It also is a measure of spending.
Spending relies on dollars. On average, more dollars = more spending. Add dollars to an economy, and GDP will increase.
Federal deficits add dollars to the economy.
Therefore, federal deficits increase GDP and prevent/cure recessions and depressions.

In August, President Joe Biden announced a sweeping federal student loan forgiveness plan.

Under the proposal, most borrowers making under $125,000 annually and married couples making less than $250,000 would receive $10,000 each in loan forgiveness.

For borrowers who received a Pell Grant, forgiveness is increased to $20,000.

The program stands to be wildly expensive, with recent estimates from the Congressional Budget Office predicting that its cost will be $400 billion.

Translation: The program will pump 400 billion growth dollars into the economy. (The program would fail to remove 400 billion dollars from the economy.)

However, as the Biden administration gears up to formally release the online application for loan forgiveness, other large costs are also becoming clear.

Documents submitted by the Education Department to the Office of Management and Budget show that the department estimates it will cost $99,900,000 per year to maintain the application and the program’s associated communications through March 2024.

According to the Department of Education, these costs are “related to development of website forms, servicer processing, borrower support, paper form processing and communications related to this effort.”

Translation: The program will also fail to remove an additional 99,900,000 growth dollars annually from the economy.

While the current estimate for application maintenance and support is high, there is reason for concern that the cost will come to exceed that.

For example, the ill-fated HealthCare.gov website was originally estimated to cost $93.7 million—yet it eventually grew to cost taxpayers over $2 billion.

Translation: The HealthCare.gov website pumped 2 billion growth dollars into the economy and cost taxpayers nothing. The Big Lie in economics is that federal taxes pay for federal spending. While state/local taxes pay for state/local government spending, federal taxes pay for nothing. They are destroyed upon receipt. All taxes are paid from checking accounts, the dollars which are part of the M2 money supply. Dollars paid to state/local governments are deposited into banks and remain in the M2 money supply. But tax dollars paid to the U.S. Treasury disappear from any money supply measure. There is no money supply measure of dollars held by the federal government. The reason: Unlike state/local governments, the federal government has infinite dollars. It is Monetarily Sovereign. It creates dollars at will.

Former Fed Chairman 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.”

Your federal tax dollars leave the M2 money supply and disappear into the infinity of the Federal government’s unlimited ability to create new dollars. That is how the federal government pays all its bills: By creating new dollars, ad hoc, not by using tax dollars.

Considering that the Biden administration already appears to be lowballing the cost of student loan forgiveness, estimating that federal student loan forgiveness will only cost $240 billion over the next decade, there is reason to worry that it is underestimating the cost of maintaining its application website as well.

Translation: There is reason to believe the program will pump even more than 240 billion growth dollars into the economy over the next decade.

This problem could have been avoided if student loan forgiveness had been enacted through the legislative process rather than by executive fiat.

Translation: The growth dollars wouldn’t have been provided by a Senate hamstrung by Republicans, who hate giving money to anyone but the very rich. So Biden had to do it via executive fiat.

The staggering price the Biden administration places on upkeep for the student loan forgiveness application is yet more evidence of the true, bloated nature of the policy. It should come as no surprise that student loan forgiveness will be riddled with extra costs—costs that will no doubt be pushed onto taxpayers.

Translation: The cost of upkeep is more evidence of the actual benefits of the policy. Student loan forgiveness will provide additional growth spending that will cost taxpayers nothing but benefit college students and the entire economy. SUMMARY The federal government is Monetarily Sovereign. It uniquely has the unlimited ability to create U.S. dollars. Federal deficit spending is necessary to prevent and cure recessions and depressions. It costs federal taxpayers nothing. Federal taxes are destroyed upon receipt by the Treasury. To pay for goods and services, the federal government creates new dollars ad hoc. Federal deficit spending does not cause inflation, and if used to purchase and disseminate scarce goods and services, federal deficit spending can cure inflation. Reducing students’ loan costs not only helps the students and America’s educational competitiveness but stimulates the economy, Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

……………………………………………………………………..

Government’s Sole Purpose is to Improve and Protect the People’s Lives.

MONETARY SOVEREIGNTY

Share this:

Share this:

Share this:

Share this: