Readers of this blog are familiar with the “ticking time bomb” series; examples are here, here, here and elsewhere.
The point of this endless series is that since 1939, the media, politicians, and economists have been wringing their hands about the so-called federal debt, explicitly claiming it is a “ticking time bomb.”
That’s 84 years of “the-world-is-about-to-end” predictions that demonstrably have been wrong, and the predictors have learned nothing from their ongoing failures.
In 1939, the gross federal debt was $39 billion. Last year it was $27 TRILLION. If my math is correct, that’s a 30,000% increase, not even a firecracker.
Are the doomsday shouters embarrassed by failure? Nah. The New York Post just keeps vomiting up the garbage.
Worse yet, they combine that turd of ignorance by conflating the fake federal debt-that-isn’t-debt with real, private-sector debt.
Stephen Moore
America’s ticking time bomb: $66 trillion in debt that could crash the economy By Stephen Moore December 4, 2022, 6:29pm Updated
The national debt is $31 trillion when including Social Security’s and Medicare’s unfunded liabilities.
Wake up, America.
That ticking sound you’re hearing is the American debt time bomb that with each passing day is getting precariously close to detonating and crashing the US economy.
The “national debt” is not the “federal debt.” It is Moore’s strange amalgam of all sorts of things he lumped under the word “debt,” perhaps to make them look huge.
Federal debt is deposits into Treasury Security accounts, similar to safe deposit boxes. The federal government never touches those dollars. It merely safeguards them.
And when the accounts mature, and depositors want their money, the government merely sends them the dollars from their accounts.
This return of dollars is not a burden on the government or taxpayers. It’s significantly different from the federal government’s paying for goods and services.
In that case, the federal government creates new dollars ad hoc, which it has the infinite ability to do.
The federal government is Monetarily Sovereign, meaning it made (and still creates) the laws that create U.S. dollars. Because it has the infinite ability to create rules, it has the endless ability to create dollars.
You can’t do it. I can’t do it. Businesses and local governments can’t do it. That is why it makes no sense to lump federal finances with non-federal finances. The two bear no relationship. But that fact doesn’t stop the NY Post writers.
Businesses, consumers, and especially the federal and state governments have become hooked on red ink as if it were crack cocaine.
The federal government has scant red ink. It pays all its bills by creating new dollars. It cannot run short of dollars unless some damn fool politician decides not to allow the federal government to pay its bills (i.e., the so-called “debt limit).
Two factors have fueled this borrowing binge: an era of low-interest rates (that’s coming to an end) and falling real wages thanks to the 15% rise in prices of Bidenflation.
In addition to merging two different situations into one make-believe situation, the Post writer falsely claims the federal government’s non-existent “debt” comes from borrowing.
The federal government never borrows dollars. Given the infinite ability to create dollars, why would it borrow dollars? The writer, a senior advisor to Donald Trump (of course), thinks T-bills, T-notes, and T-bonds, are like personal notes and bonds.
They aren’t. You, your business, and your local government borrow when you need dollars. Not only does the Monetarily Sovereign federal government never need dollars – – it creates them at will — but it never touches the dollars invested in T-securities.
As Fed Chair famously said, “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.”
Why would such a government need to borrow dollars?
Let’s review the borrowing up-escalator that accelerated during COVID but hasn’t subsided.
The King Kong of borrowing is Uncle Sam. The national debt is $31 trillion when including Social Security’s and Medicare’s unfunded liabilities.
No federal obligations are “unfunded.” All are funded by the U.S. federal government’s full faith and credit, which includes the infinite power to create dollars.
That’s getting close to 150% of our national gross domestic product of $22 trillion.
The “debt”/GDP ratio is meaningless. It has neither predictive nor evaluative worth. It tells you nothing about the financial health of a Monetarily Sovereign government.
“Debt” is a many years measure of deposits. GDP is a one-year measure of spending. The two comprise the ultimate in an apples/anvils comparison.
Some $5 trillion has been added in just the past three years. Balancing the budget seems like a pipe dream these days.
More confusion from the Trump writer. First, he talked about state governments. Now it’s unclear what he is talking about- federal or national finances?
In any event, balancing the federal budget would be a disaster for the U.S. economy. A growing economy (as measured by GDP) requires an increasing money supply. But “balancing the budget” implies no growth.
No growth is “recession,” and the word for no growth with population growth plus inflation is “depression.”
Next, add state and local government debt and unfunded liabilities. The American Legislative Exchange Council estimates that at just under $6 trillion.
State and local governments are part of the private sector, including businesses and people. When state and local governments levy taxes, one segment of the private sector ships dollars to another segment of the private sector.
There is no net money growth for economic growth. The sole source of net money growth is the federal government, which has the infinite ability to create dollars.
Now, what about American households? The latest estimate for consumer debt is $16.5 trillion, per the New York Federal Reserve. Most of that debt is mortgages, but increasingly Americans are taking on debt for routine expenses to pay monthly bills like groceries and gas at the pump. Thanks, President Biden.
The federal government easily could ameliorate private debt by enacting Social Security for All, Medicare for All, and other social benefits. Of course, Mr. Stephen Moore would hate that because . . . well, just because.
Then we have corporate America and small businesses. Their debt burden, according to the Federal Reserve Board, just surpassed $10 trillion for the first time. Business borrowing can be a good thing — indicating economic optimism. But we have to wonder how many more FTX-type bubbles are out there inflated by low-interest rates and all that helicopter money from Washington.
Then we have the National Enquireresque’s “we have to wonder” phrasing. He doesn’t know, so he wonders.
So add it all up, and American society now owes $66,000,000,000,000 of debt! That’s roughly three times our annual GDP.
You have just read perhaps the most misleading piece of nonsense you ever will encounter. Moore adds Treasury deposits to personal and business debt, most of which comprises the private sector owing the private sector.
What does he recommend? No mortgages? No business borrowing? If less, how much less?
If that phony “$66,000,000,000,000” is too much, what is the right amount? $0?
Moore never says because he is clueless about federal financing.
Another danger sign: With wages (5% growth) falling behind consumer price inflation (7.5% growth), American families are borrowing more just to maintain their current living standard. Americans on average have lost $4,000 in purchasing power and some $30,000 in 401(k) plans in the Biden era.
It’s not “the Biden era.” It’s the COVID era. Inflation is caused by COVID-related shortages. Prices go up when goods and services become scarce.
COVID, which Trump denied, caused scarcities of oil, food, transpiration, computer chips, and many other products. Staying home with COVID caused service shortages.
By far the biggest debtor has been Uncle Sam — which has created a national culture of living beyond our means.
An entity with infinite ability to create dollars has no “means” to live beyond. That national culture has existed for over 80 years, during good times and bad.
During COVID, President Donald Trump pumped $2 trillion of “stimulus” red ink into the country when the private economy was shut down. But then, in an act of near-criminal financial negligence, Biden entered office and shoveled out $4 trillion more in green-energy giveaways, state bailout funds, student loan bailouts and welfare handouts to families with no one working.
First, Moore complains about people having lost $4,000 in purchasing power and $30,000 in 401(k) plans. Then, incredibly, he complains about the government giving these people money to help with their finances.
That is the kind of idiocy one expects from a Trumpist graduate of the Heritage Foundation.
And now we come to Moore’s virtual admission that he knows nothing about economics.
A new-wave economic strategy called Modern Monetary Theory facilitated this borrowing blowout.
The loony idea is predicated on the notion that because the US dollar is the world reserve currency, we can run up the federal credit card by trillions and still feel good about ourselves in the morning.
Until that is, interest rates start to rise.
OMG! Modern Monetary Theory has nothing to do with the U.S. dollar being the most popular reserve currency. A reserve currency is a currency banks hold in reserve to facilitate trade among nations. It has nothing to do with U.S. borrowing.
While the dollar is the most commonly held reserve currency, other currencies also are held in reserve. The euro, the yen, the lira, and others are reserve currencies. Moore is clueless about this.
Further, using a credit card implies borrowing, which the federal government doesn’t do.
Finally, rising interest rates have nothing to do with the federal government’s ability to pay its bills. It has the infinite ability to pay bills, no matter how high interest rates go.
Consumers are now engaged in the same reckless monkey-see, monkey-do behavior. The latest Federal Reserve Bank of New York report says credit card debt has skyrocketed by 16% this year to above $1 trillion.
The Christmas season is witnessing even more debt to buy Yuletide gifts. Low-income Americans are taking on debt at the fastest pace of all. Come January, don’t be surprised if Americans look at their credit card debt and suffer severe buyers’ remorse.
People may be borrowing more, which could bite them, but it has nothing to do with the federal government spending more. Moore is just lashing in all directions at anything involving more money.
For now, defaults and delinquencies are low, but we should have learned financial seas can shift on a dime. Meanwhile, the feds keep feeding the debt surge by increasing taxpayer mortgage insurance for million-dollar homes.
There is no such thing as “taxpayer mortgage insurance.” Federal taxpayers do not fund anything. All federal tax dollars are destroyed upon receipt by the U.S. Treasury.
The purpose of taxes is not to fund federal spending. Taxes help the government control the economy by punishing what the government doesn’t like and rewarding (tax breaks) what the government wishes to encourage.
You pay your taxes with dollars in the M2 money supply, and when they hit the Treasury, they cease to be part of any money supply measure. They effectively cease to exist.
Debt isn’t necessarily a bad thing. It depends on what we’re getting for it. When we borrow for roads or factories or homes or to finance our military to win wars, borrowing can be necessary and appropriate.
If you know what this last paragraph is supposed to mean, please feel free to let me know.
Stephen Moore is a senior fellow at the Heritage Foundation. He served as a senior economic adviser to Donald Trump. His latest book is “Govzilla: How the Relentless Growth of Government Is Devouring Our Economy.”
Quite a combination: Heritage Foundation + Donald Trump. That says it all.
Stephanie Kelton explains economics from the standpoint of Modern Monetary Theory and her own inside experiences with U.S. Senators.
She provides you with some her own take about why Congress refuses to acknowledge its unlimited ability to create dollars, and pay for benefits.
While “the DEFICIT MYTH” is not exactly on point with Monetary Sovereignty, the fundamentals are the same (the federal government’s infinite ability to pay for things and the need for federal “debt”). The book is an easy, enjoyable read.
No economics gobbledygook.
You’ll be able to see how her explanations for the causes of inflation and the need for federal taxes differ from those of Monetary Sovereignty. Read her book, and then we can discuss it from the standpoints of the differences and the similarities.
I recommend it to you. I also recommend it especially to your Congressional representatives, who would do well to learn the facts. After you read it, make a difference in the world by sending a copy to your most intelligent Congressperson.
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:
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.”
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We have written often about MMT’s “jobs guarantee” — the guarantee that the federal government either will give or find a job for everyone in America who wants a job.
The difference between “give” and “find,” is the difference between working for the federal government and working for private industry or local governments. In the former, the government is the employer of last resort. In the latter, the government is the employment agency of last resort.
There are two beliefs underlying the jobs-guarantee:
Jobs are hard to find, which is why people are unemployed
Working for money is morally superior to being given money
Both beliefs are wrong. The facts are:
Is this the guaranteed job you have been looking for?
Jobs are not hard to find. There a many millions of jobs available. Look in any newspaper and you will see hundreds of jobs. Go online and you will see many thousands of jobs. The problem is, they are the wrong jobs. Either they are in the wrong location, require the wrong skills, or simply are not something you want to do.
Working for money neither is moral nor immoral. It simply is working to obtain money.
Someone who wins the lottery, or is born to wealthy parents, or who receives a multi-million dollar income because his stock options rose, is no more or less moral than a ditch digger.
The rich simply want the non-rich to believe there is something morally wrong about the non-rich doing what the rich do, namely receive money from the government or other sources for doing little-to-nothing.
Sadly, the not-rich have been brainwashed into adopting the notion that when poor people receive money for which they haven’t worked, they are considered “sloths who are gaming the system,” or termed “food stamp mamas.”
These guys do what you would call “work,” perhaps an hour a week. Money comes to them while they sleep. Are they moral or immoral for taking it?
But when the rich receive money, wealth, and power for essentially “being there,” that is their manifest destiny and moral right.
This is the moral nonsense that has been adopted by MMT with their “jobs guarantee.”
You don’t work for the love of work, nor do you work because it is morally right. You work to obtain money, so you can buy and do the things you really want to do.
Sure, you may like your job. But you do not prefer working to being on vacation, taking a free trip around the world and living in luxury.
Be honest. You look forward to weekends rather than to Mondays (unless you are paid on Mondays).
That said, the jobs guarantee is an idea only a politician or a university economist could love. It is completely, unworkable in the real world:
1. Exactly who in the government will find jobs for everyone — in NY city, in the empty reaches of North Dakota, in an island off the East Coast — jobs for each person who wants one?
I challenge anyone to describe the bureaucracy and the bureaucrats who can handle that assignment in every village and hamlet in America.
Or will millions of people be required to move away, to some other location from the one in which they wish to live?
2. Who exactly will:
–Find or create available jobs everywhere
–Interview everywhere
–Hire everywhere
–Supervise everywhere
–Promote, demote, and switch jobs everywhere
–Fire if need be, the millions of people who should be fired for the government’s firing criteria?
Geographically, where will all of the above be done?
3. Who exactly will find jobs for the people who are fired for each of the different causes? What are the criteria for being fired and how will those criteria be enforced?
4. What will workers of all levels be paid? Minimum wage (to lower America’s average wage) or above minimum wage (to compete with the private sector)? Will everyone be paid the same, or will workers be paid differently for different work?
5. What about healthcare, maternity leave, vacation days, IRAs and myriad other benefits? Where will those benefits come from?
6. And most important, will these be real jobs or “bullsh*t” make-work jobs (http://bit.ly/2JMFXjU)
If people are hired only because they need jobs, rather than because the job needs people, what prevents the jobs from being make-work?
Unfortunately, the public has not thought deeply about the jobs-guarantee plan. They just like the notion of a guaranteed job.
Does the prospect of a government-guaranteed job appeal to you? You’ve got company: nearly half of U.S. voters like the idea, according to a recent poll.
The proposal has been getting some traction on the left lately, after being floated by think tanks and embraced by likely Democratic presidential candidates including Sens. Cory Booker, Kirsten Gillibrand and Bernie Sanders.
In a new Rasmussen Reports poll, 46% said they favored such a program. Sanders, according to the Washington Post, backs a version that would see local and state governments offer proposals for public works projects.
Workers would be hired for at least $15 an hour with paid family and medical leave.
Whoops! Now the plan has morphed onto “local and state governments” most of which are broke or overtaxing their residents.
And what is this about “public works projects”? Will these be ditch-digging jobs for former executives, women, the infirm and others who have no background or desire in this area.
Or are we in the “beggars can’t be choosers” area, where if you want money, you must labor, because for the poor, labor is moral?
There are numerous practical questions about a jobs-guarantee plan, including its cost. In one proposal, the Center on Budget and Policy Priorities estimated an annual cost of $543 billion for the creation of 9.7 million full-time jobs.
The above paragraph is nonsense for two reasons:
Cost is irrelevant to a Monetarily Sovereign government that can create unlimited amounts of its own sovereign currency.
No one on earth can come up with a $543 billion number for creating 9.7 million full-time jobs. Those are numbers completely snatched out of the air.
So, the Center on Budget and Policy Priorities (who?) said it would cost $55,979.38 to create and implement and supervise each of various unknown jobs in unknown locations for an unknown length of time? That is beyond ridiculous.
A plan like Sanders’ is dead on arrival as long as Republicans control Congress.
It should be dead on arrival no matter which party is in control. It is ill-considered, uncontrollable nonsense.
It would be far simpler and far more beneficial to more people to institute the Ten Steps to Prosperity (http://bit.ly/2JLsg4E)
The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-lesses.
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 (Ten Reasons to Eliminate FICA ) Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons: *FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and *The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare. 2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All ) This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap. 8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
Modern Monetary Theory (MMT) understands that federal taxes do not fund federal spending. In that sense, MMT and Monetary Sovereignty (MS) are in perfect agreement.
However, we diverge in several areas, among which is MMT’s “Jobs Guarantee.” Stated in its simplest form, JG is: “The government will guarantee a job to anyone who wants a job.”
We have written about the naive impossibility of JG often, and will not repeat the various reasons here. (If you are interested, see the links in Step #3 of the Ten Steps to Prosperity below.)
Instead, I merely will direct you to an article that succinctly addresses one of the issues:
The economy is still shaky, (and) many parts of the country are suffering from the results of globalization. Employers have sent jobs to other parts of the world or axed them completely, in some cases.
Yet, there are still millions and millions of job openings out there. And incredibly enough, there are many employers who are complaining that they can’t find anyone to come work for them — or at least anyone who is qualified.
A July report from the Dallas Federal Reserve contained a couple of quotes from employers explaining their plight. “Entry-level candidates cannot read or follow instructions. Most cannot do simple math problems. What is wrong with the educational system? The ability to find qualified employees is our largest problem at this time.”
This is at odds with what we’ve been hearing for many years now — that there simply aren’t enough jobs out there, and that has caused the labor participation rate to fall, and for many American communities to suffer. But evidently, that’s not quite the case.
People want jobs. There are millions of jobs available. Yet, people don’t want the jobs that are available. Why? Because many of those jobs aren’t “good” jobs.
They may not pay enough
Or offer full-time hours.
Or require special hours
Or require special skills
Or require college degrees
Or the jobs are seasonal
Or there is no possibility of advancement
Or are in an inconvenient location
Or have unpleasant working conditions
Or require too much physical labor
Or the job availabilities are not known
Or all the other reasons why a person might not want a job, or an employer might not want an employee.
If you go back to read the links indicated in Step #3, you’ll find that the JG proposes paying minimum wage. (It does that to keep the government from competing with private industry, which would be contrary to the fundamental purpose of the JG.)
So, how will JG’s minimum wage solve the problem? Obviously, it won’t.
What’s an employer to do, given the circumstances?
The answer is incredibly simple, but evidently, many of the nation’s employers just don’t want to face the music: They need to pay more. Low pay is the number one reason people quit their jobs, and when people quit, companies need to spend more to recruit, train, and retain new employees.
For the time being, the economic environment is sending the signal that wages need to go up. Employers who refuse to budge are going to continue to be flooded with applications from workers they don’t want for jobs they can’t fill.
News flash: Employers will not offer higher salaries unless that is their only alternative. Instead, they will send jobs overseas, use automation, or simply not produce job-heavy products.
The solution is not an impossible “Jobs Guarantee” from the government. The solution is something indicated at the beginning of this article. Remember this line?
“Entry-level candidates cannot read or follow instructions. Most cannot do simple math problems. What is wrong with the educational system? The ability to find qualified employees is our largest problem at this time.”
Education and training is the solution, and the solution for that can be found at Steps #4 and #5 of the Ten Steps, below.
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 (Ten Reasons to Eliminate FICA ) Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons: *FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and *The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare. 2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All ) This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap. 8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
#Monetary Sovereignty - Mitchell 