Self-immolation by the Dems

Image result for bernanke and greenspan
The rich don’t want us to let the rest know that federal taxes don’t fund federal spending.

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.”

Alan Greenspan: “Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency.”

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


To understand liars you must listen to (or read) liars, which is why I read Breitbart, the ultimate in prevarication and exaggeration. In Breitbart, you sometimes can uncover a tiny nugget of truth from the vast supplies of bovine excrement, or at least acquire a better understanding of fool’s thinking.

Here is a Breitbart story which I found both fascinating and disturbing, because amazingly, it contained what appears to be the abovementioned nugget:

WATCH — DNC CEO Seema Nanda: I Do Not Know How to Pay for ‘Medicare for All’
14 Nov 2018

Democratic National Committee (DNC) chief executive officer Seema Nanda admitted on Tuesday she does not know how to pay for the socialized medicine scheme known as Medicare for All, estimates of which are somewhere between $32 and $38 trillion.

Nanda, during Yahoo Finance’s “All Markets Summit: America’s Financial Future” event in Washington, DC, on Tuesday, the interviewer asked:

It would be very expensive, so, if this is going to be a winning issue for Democrats in 2020, how do you answer the question of how are you going to pay for this? Because there have been studies, credible studies that say it would cost three trillion dollars a year, you would have to double everybody’s taxes or maybe triple everybody’s taxes.

How do you answer the cost question?

“So, you know, your answer is I don’t know how we’re going to get there, but these are all big conversations that we need to be engaged in,” Nanda added.

Perhaps Nanda does know but doesn’t wish to give away the Democrat’s plans just yet. Or, more likely, she is as clueless as Sen. Bernie Sanders was when he first proposed Medicare for All.

Virtually everyone, left and right, believes that having medical insurance is important. Today’s medicine simply is so expensive that only the richest among us could risk not having a backup plan to pay.

So, the question becomes a simple one: Who should pay for medical insurance, the public or the federal government?

“The public,” which consists of people, businesses and local governments, is financially constrained. It does not have unlimited funds. The public can, and often does, run short of dollars. It is what is known as monetarily non-sovereign.

By contrast, the federal government is not financially constrained. It has the unlimited ability to create its own sovereign currency, the U.S. dollar. It is Monetarily Sovereign.

The U.S. government never can run short of dollars. Even if all federal taxing totaled $0, the federal government could continue spending, forever.

In fact, the federal government’s method for creating dollars and adding them to the economy, is to pay creditors.

So, before we continue with the Breitbart article, think about the answer to this basic question:

Who should pay for healthcare, the public which does not have unlimited money or the federal government which does have unlimited money?

Paying for Medicare for All remains a daunting task for Democrats. Multiple studies have estimated that the plan would cost between $32 and $38 trillion over the next ten years, contrary to Sen. Bernie Sanders’ (I-VT) claim that the plan would save America money.

In the unlikely event that the $38 trillion over ten years turns out to be correct, what does the seemingly simple term “save America money” mean?

If the federal government were to fund for Medicare for All, that indeed would save the American people money.

And the federal government has no need to save money, because it has the unlimited ability to create dollars.

So yes, Medicare for All would save America money.

The Associated Press (AP) even noted that the socialized medicine proposal would require “historic” tax increases to pay for the single-payer healthcare proposal.

Note the pejorative and incorrect term “socialized medicine.” In socialized medicine, the government would own all the medical facilities and employ all the medical workers.

I know of no one who suggests that. It’s a fake objection by Breitbart, the home of fake objections to anything that benefits the middle classes and the poor.

In Medicare for All, as with today’s Medicare, the federal government merely takes the place of private insurance carriers.

It does not own the hospital and clinics and pharmaceutical companies.e It does not employ the doctors, nurses and other personnel. It merely writes checks, which it can do endlessly.

Sen. Bill Cassidy (R-LA) said that Medicare will soon become bankrupt and that adding half of the country to the government health care program will not improve anyone’s health care.

Because the U.S. federal government has the unlimited ability to create U.S. dollars, it cannot unintentionally go bankrupt.

And because the federal government cannot go bankrupt, no agency of the federal government unintentionally can go bankrupt.

Even if all FICA taxes disappeared, the federal government could support Medicare for All forever, and I suspect Cassidy knows this.

“My point is Medicare for All is Medicare for none,” Cassidy told Breitbart News in October.

“Medicare is actually going bankrupt in eight years, and now Bernie Sanders wants to put 150 million more people into a system going bankrupt in eight years?”

No, Medicare will not go bankrupt in eight years or in eighty years, unless Congress wishes it.

Many in Congress do not understand the differences between federal financing and personal financing. They think federal debt is like personal debt, and is a burden on the government or on taxpayers.

It is neither.

Many others in Congress are well aware that the federal government has the unlimited ability to fund Medicare for All, and in fact, adding trillions of dollars would provide a dramatic stimulus to the overall economy.

These members of Congress do not want you to know this for fear you will make “unreasonable” demands on the government.

What is an “unreasonable” demand? Anything that narrows the Gap between the rich and the rest. (See: Gap Psychology)

In summary: Every person in America should be able to afford health care, and not to be financially devastated by illness. But someone has to pay for such insurance.

The public’s funds are limited, but the federal government’s funds are unlimited. The only logical solution is for the federal government to pay for Medicare for every man, woman, and child in America — which the federal government easily can do.

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


The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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 The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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


–Why Robert J. Samuelson wants to cut Social Security, Medicare and Medicaid.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.

Robert J. Samuelson is a weekly columnist for The Washington Post, writing on political, economic and social issues. His column usually appears on Wednesdays. Add his name to the long list of economics writers who are ignorant of Monetary Sovereignty, the basis of all modern economics.

In a March 7, 2011 column titled, “Why Social Security is Welfare,” he makes the following comments:

Recall that Social Security, Medicare and Medicaid, the main programs for the elderly, exceed 40 percent of federal spending. Exempting them from cuts – as polls indicate many Americans prefer – would ordain massive deficits, huge tax increases or draconian reductions in other programs. That’s a disastrous formula for the future.

Yes, Robert, not cutting Social Security, Medicare and Medicaid would “ordain” (?) deficits. However, because the U.S. now is Monetarily Sovereign, there is zero connection between deficits and taxes. For your benefit, Robert, I’ll say again what you as an economics writer already should know: “Federal taxes do not pay for federal spending.”

And so far as those draconian reductions in other programs, why do you believe a nation with the unlimited ability to create dollars, needs to cut spending, when inflation is nowhere in sight?

Here is how I define a welfare program: First, it taxes one group to support another group. . .

Robert, now repeat after me until you get it: “Federal taxes do not pay for federal spending.” State taxes do pay for state spending, and city taxes do pay for city spending. The states and cities are not Monetarily Sovereign. But, federal taxes do not pay for federal spending. In fact, FICA could be eliminated, and this would not reduce by even one penny, the federal government’s ability to support this program – even were benefits doubled.

Since the 1940s, Social Security has been a pay-as-you-go program. Most benefits are paid by payroll taxes on today’s workers.

Things have changed markedly since the 1940’s, and Robert has not kept up with the changes. In August, 1971, one of the biggest economic changes in our lives occurred. We became Monetarily Sovereign. At that instant, Social Security ceased being a “pay-as-you-go” program, because FICA no longer supported benefits. In a Monetarily Sovereign nation, tax dollars are destroyed upon receipt. They do not, and cannot, support federal spending.

Think about it, Robert. Why would a government with the unlimited ability to create dollars, need to use taxes to pay for anything? It makes absolutely no sense. Sadly, Robert still lives in a gold-standard (aka “flat-earth”) world.

Annual benefits already exceed payroll taxes. The gap will grow.

Yep, the difference between FICA collections and benefits will grow. More net money will be created. This will stimulate economic growth. So what is the problem?

No doubt people would be outraged (by benefit cuts). Having been misled, they’d feel cheated. They paid their taxes, why can’t they get all their promised benefits? But the alternative is much worse: imposing all the burdens on younger taxpayers and cuts in other government programs. Shared sacrifice is meaningless if it excludes older Americans.

No, shared sacrifice is meaningless if it is purposeless. There is absolutely, positively no reason to cause widespread human misery by cutting Social Security, Medicare and/or Medicaid benefits. Causing misery out of sheer ignorance is unforgivable.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity, nor grow without money growth.

–What will help the poor? Taxes vs. Spending

The debt hawks are to economics as the creationists are to biology. Those, who do not understand monetary sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.

Now that the new tax bill has passed, three related issues will remain in the news:

1. Will tax reductions cause inflation? (In the unlikely event they do, the Fed will prevent/cure inflation by raising interest rates)

2. Will tax reductions bankrupt Social Security and Medicare? (No. Because the federal government is Monetarily Sovereign, federal spending is not constrained by taxes. If FICA were reduced to $0, this would not affect by even one penny the federal government’s ability to support Social Security and Medicare. Tax reductions cannot bankrupt the U.S. or any of its agencies.)

3. Should taxes on the rich be increased as soon as the current law expires? That is the question discussed in this post.

Some people favor higher taxes on the rich, because they believe this somehow will help the poor. The concept is that by taxing the rich, we close the “gap” between rich and poor, and this closed gap benefits the poor.

I discuss this “gap” further at Closing the Gap and at A Partial Solution for the Gap.

I strongly empathize with the desire to aid the poor. But bringing down the rich is not the way. Whether Bill Gates has $50 billion or is brought down to “only” $10 billion, does not affect the poor. We have had 90% top tax rates, and that did nothing to help the poor. In fact, increasing taxes on anyone, rich or poor, removes money from the economy, which slows the economy. Slowed economic growth always hurts the poor more than the rich, as witness the most recent recession. Who was hurt most, the rich or the poor?

As I mentioned, the federal government does not spend tax money. Unlike state and local governments, which are not Monetarily Sovereign, the federal government spends money it creates ad hoc. If the wealthy were taxed at the 99.99% rate, this would not increase by even one cent, the federal government’s ability to spend, i.e. to help the poor.

The poor benefit most when the economy is growing fastest, because that increases the availability of jobs and money. So to help the poor, we must stimulate the economy. That is, if we want to help the poor, we very simply should help the poor. The Federal government could:

–Increase Social Security benefits.
–Initiate free universal health care insurance.
–Increase unemployment benefits.
–Pay a salary to all students. ( SALARY)
–Eliminate FICA. (FICA)
–Increase the standard deduction on income taxes.
–Allow home rent to be tax deductible.
–Increase food stamps.
–Pay states and cities to reduce sales taxes

There are many ways to help the poor. We should focus on that, not on punishing the rich, which may provide some emotional satisfactions, but does not provide financial benefits to anyone. Let me see some of your ideas for helping the poor.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity. Those who say the stimulus “didn’t work” remind me of the guy whose house is on fire. A neighbor runs with a garden hose and starts spraying, but the fire continues. The neighbor wants to call the fire department, which would bring the big hoses, but the guy says, “Don’t call. As you can see, water doesn’t put out fires.”

–Fiscal Sustainability Teach-In and Conference

Mainstream economics has led us to an average of one recession every five years. People have been fed obsolete hypotheses for so long and so often, we now have knee-jerk agreement among the media, the politicians and some economists.

But deficits neither are normal nor inevitable. Many prominent economists have discovered a better way to foster economic growth. They will host a conference to discuss their ideas, and you are invited.

April 28th: Fiscal Sustainability Teach-In and Conference
“The Fiscal Sustainability Teach-In Conference will be the important event in Washington on April 28. This will feature important work by honest scholars. It deserves (your)attention, and […] respect.”
— James K. Galbraith, The University of Texas at Austin. [April 19, 2010 via email with permission]
The deficit hawks are at it again: attacking Social Security and Medicare with obsolete economic notions. We offer a counter-narrative to the false but conventional notion that Federal deficit spending is harmful, that it is a burden to the next generation, that deficit spending risks insolvency — basically that the Federal Government Budget is some how analogous to a household budget when, in fact, it is quite different.

The Teach-In Conference on Fiscal Sustainability on April 28th, 2010 in Washington, DC aims to do just that with some real world, honest economics.

We can move beyond the false economic orthodoxy that got us into the current economic mess and that is now being promoted to attack Social Security and Medicare — and harming our nation and it’s people. You can participate.

The tentative program schedule: Interesting topics and excellent presenters as of 04/16/10:

8:30–8:45 AM Welcoming Remarks
8:45–10:15 AM What Is Fiscal Sustainability? Bill Mitchell, Research Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW Australia, and blogger at billy blog

10:15–10:30 AM BREAK
10:30 AM–12:00 PM Are There Spending Constraints on Governments Sovereign in their Currency? Stephanie Kelton, Associate Professor of Macroeconomics, Finance, and Money and Banking, Research Scholar at The Center for Full Employment and Price Stability (CFEPS), University of Missouri – Kansas City, Research Associate at The Levy Economics Institute of Bard College, and blogger at New Economics Perspectives

12:00–12:15 PM BREAK
12:15–1:45 PM The Deficit, the Debt, the Debt-To-GDP ratio, the Grandchildren and Government Economic Policy Warren Mosler, International Consulting Economist, Independent Candidate for the US Senate in Connecticut, and blogger

1:45–2:00 PM BREAK
2:00–3:15 PM Inflation and Hyper-inflation Marshall Auerback, International Consulting Economist, blogger at New Deal 2.0 and New Economic Perspectives, and Mat Forstater, Professor of Economics, Director of CFEPS, Department of Economics, University of Missouri — Kansas City, Research Associate at The Levy Economics Institute of Bard College, and blogger at New Economic Perspectives

3:15–3:30 PM BREAK
3:30–5:00 PM Policy Proposals for Fiscal Sustainability L. Randall Wray, Professor of Economics, Director of CFEPS at the University of Missouri – Kansas City, and Senior Scholar at The Levy Economics Institute of Bard College; and Pavlina Tcherneva, Assistant Professor of Economics at Franklin and Marshall College, Senior Research Associate at CFEPS and Research Associate at The Levy Economics Institute of Bard College and bloggers at New Economic Perspectives

How you can participate:
1. Contribute to the cost of the Conference — Please click below and make a donation of $50 (or more if you want) to show support. It’s about strength in numbers (the entire budget is under $10,000).
Make Donation
2. Attend the Teach-In — watch these pages for location and other logistical information
3. Spread the word — write a blog post, talk with your friends.
4. Educate yourself — some great introductory resources are:
o Teaching the Fallacy of Composition: The Federal Budget Deficit, by L. Randall Wray
o Fiscal sustainability 101, by William Mitchell
o 7 Deadly Innocent Frauds, by Warren Mosler
o In Defense of Deficits, by James K. Galbraith
o A Quick Summary, by Rodger Malcolm Mitchell

Please do what you can to help bring the truth to light. Deficits are not normal. Social Security and Medicare can survive without benefit cuts.

Every little bit helps. Thank you.
Rodger Malcolm Mitchell