The solution to joblessness Thursday, Oct 6 2016 

This site is devoted to “Monetary Sovereignty (MS),” a sister to “Modern Monetary Theory (MMT).

Both explain that:

  1. Federal taxes do not fund federal spending
  2. The federal government neither needs nor uses tax dollars
  3. Neither the federal debt nor federal deficits are burdens on the government, future taxpayers or on the economy.
  4. And a great many other facts about federal finances.

However, we disagree dramatically on one important issue: What to do.

Isn’t it interesting that two groups can agree on all the underlying facts, yet come to radically different conclusions about what to do with those facts?

Last I heard, MMT economists still believe in something called “JG” (Jobs Guarantee), wherein the government will provide a job to anyone who wants a job. In several previous posts,  we have described why this not only is a bad idea, but a disastrously bad, economically naive idea.

You can see the details of the argument by clicking the above link.

Meanwhile, I just came across a very nice synopsis you may find interesting:

From Your Quora Digest

There are almost 6 million job openings in the US. Why are Trump supporters not getting these jobs instead of complaining there are no jobs available?

Because you’re not going to convince a guy whose family spent three generations on a manufacturing line in Detroit that he should uproot his family and move to Austin, sign up for community college classes on how to program Java, a take a job at half the pay and benefits he used to get.

He’s an American, too. He worked hard his whole life to achieve the American Dream, just like everybody said he would, and then “they” pulled the plug on him.

He doesn’t know who that ubiquitous “they” is. But Donald Trump does. And Trump says only he can fix it.

So they grab on, because they want to believe in something, in someone, who says he’s got the answers. Sadly, he doesn’t, and their hopes are going to be dashed once again.

By Robert Dixon

And there, in one short paragraph beginning with the word “Because,” Mr. Dixon shows you one of the fundamental problems with JG.

Unknowingly, JG parallels Donald Trump in recommending virtually the same, unrealistic solution to joblessness. They had it first, he came in later, and both are wrong.

Joblessness is not the problem; it is the symptom of the real problem: The wide Gap between the rich and the rest. Narrow the Gap, and unintentional joblessness will all but disappear — and the jobs will be better.

It is naive to address a symptom without treating the basic problem.  And that treatment is The Ten Steps to Prosperity (see below).

I respect MMT, because it tells the realities of federal finances and fights against the “Big Lie” (that federal taxes fund federal spending).

Now, if only I could convince them to get off the JG horse, and promote the 10 Steps.

If only.

Rodger Malcolm Mitchell
Monetary Sovereignty

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

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 afford better health care than 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:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

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 benefiting 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.

MONETARY SOVEREIGNTY

 

–Even the President of the United States doesn’t get it Wednesday, Apr 13 2011 

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.
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Bloomberg, on line, By Hans Nichols and Roger Runningen – Apr 13, 2011

“We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt,” Obama said in prepared remarks for a speech today at George Washington University.”

What are the “means” of a Monetarily Sovereign government? What data shows that a smaller deficit benefits America? What is the reason to pay down the debt?

When the President of the United States, a man surrounded by famous economists, displays such abysmal ignorance of economics, is there any hope for our future?

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetarily Sovereign, and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember the next time you’re tempted to ask a dopey teenager, “What were you thinking?” he’s liable to respond, “Pretty much what your generation was thinking when it screwed up the economy.”

MONETARY SOVEREIGNTY

Is John Mauldin winning the battle with Barry Ritholtz for economic ignorance? Saturday, Apr 2 2011 

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.
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John Mauldin is an author who repeatedly will remind his readers his book has been on the New York Times best seller list for weeks, along with several other books of fiction.

He spends so much time with self-promotion, he may not have the energy for learning. He writes about economics, yet seems not to understand Monetary Sovereignty, the basis for all modern economics.

Here is what he said in a recent article titled, “The Plight of the Working Class”

. . . the only way you can show a positive GDP for the last decade is with government spending. . . . Without government spending, “real” GDP would be at levels it was over ten years ago.

And it is real growth that drives wages and creates jobs.

Correct. He makes it sound like some sort of crime, but the need for federal spending increases is a fundamental tenet of Monetary Sovereignty, as is demonstrated in these charts: “Is federal money better than other money?”

My book calls for a large increase in funded infrastructure spending through a fuels tax. . .

How is it possible to be a famous economics writer, yet repeatedly confuse monetarily non-sovereign governments with Monetarily Sovereign governments? It’s like a musician confusing a piano with an oboe.

A Monetarily Sovereign government (i.e. the U.S.) does not spend tax money. If federal taxes were zero, this would not reduce by even one penny, the federal government’s ability to spend.

By contrast, monetarily non-sovereign governments, example: Illinois, do spend tax money. Mr. Mauldin still doesn’t get it, despite many reminders.

Yes, we have to make cuts to government programs. A 33% growth in federal discretionary spending (not including stimulus money) the last three years alone is not reasonable, given the size of the deficit.

Double talk. What does “reasonable” mean? And why is money creation unreasonable? And specifically, what is wrong with the deficit? A growing economy requires a growing money supply. The misnamed “deficit” is the federal government’s method for adding money to the economy. So what is the problem? He never says anything supported by facts.

The last recession was not caused by too little government.

More double talk. There is a massive difference between too little government and too little federal spending. The last recession was precipitated by several factors, one of which was too little federal government spending. Every depression and most recessions follow decreased federal spending growth. See: What causes GDP growth?

I am worried about the survival of the country economically. Another crisis caused by the bond market driving up interest rates . . .

The market does not determine interest rates; the Fed does. It controls the Fed Funds rate, which translates to all other interest rates. So this best selling author doesn’t understand bond markets, either. By the way, what are the rates these days? Too high?

. . ., because they become concerned about the size of the debt and deficits, will seriously reduce the choices we have – with none of them being good. Ask Ireland or Greece how it feels.”

Can you imagine? He does not seem to realize Ireland and Greece are monetarily non-sovereign, while the U.S. is Monetarily Sovereign! He is making a patently false comparison, something like saying since water and gasoline both are liquids, it doesn’t matter which liquid you pour on a fire.

. . . my friend Barry Ritholtz . . .

Two prolific economics authors, neither of whom displays even the vaguest concept of Monetary Sovereignty, are friends. Wouldn’t you know it.

As I have written many times, cutting government spending will mean lower GDP numbers in the short term, but survival in the longer term.

As is typical with debt hawks, there never is any data or even a mechanism for the stated claims. These people think it is sufficient to say, in effect, “Debt is big; therefore debt is bad,” without such details as:

–What kind of debt? Personal or government?
–What kind of government? Monetarily Sovereign or monetarily non-sovereign?
–Specifically, how will a reduction in federal money creation raise GDP in the short or long terms?
–Why would the federal government be unable to “survive” federal spending?

In short, I view Mr. Mauldin as a prominent fraud, who makes his money by quoting popular wisdom, and by supporting his views with no facts. He just goes along with the intuitive “debt is bad” mantra, and by doing so, hurts America.

But he is a best selling author, which says much about the reading habits of the American public.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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

MONETARY SOVEREIGNTY

–Who will be at fault for the return to recession? Wednesday, Mar 30 2011 

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.
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The horror the politicians will visit on us, all in the name of winning:

Former Democratic National Committee chairman Howard Dean said he would be “quietly rooting for” a government shutdown. “I know who’s going to get blamed – we’ve been down this road before.”

Yes, who cares whether the nation burns down so long as we point at the Republicans as arsonists.

South Carolina Sen. Jim DeMint (R),“I just hope that we are not so afraid of a government shutdown that we are not willing to make the right decisions. That is what the tea party is for.”

Ah, so that’s what the Tea Party is for: Closing down the government.

The politicians are playing games with our lives, but don’t blame them. They’re politicians, i.e immoral, amoral, ignorant, selfish, uncaring and untruthful. You know it, so why do you listen to such people? The fault lies with you who allow yourself to believe the absolute lie that the federal deficit is unsustainable and should be reduced. The fault lies with you who refuse to heed the facts showing federal deficits are absolutely necessary for economic growth, and the federal debt easily could be eliminated tomorrow, at the click of a computer key.

The fault lies with you who stand meekly aside while the sneering, insulting, foul-mouthed debt hawks dominate the discussion to deride the people bringing you the truth. The fault lies with you who ask for no evidence to support what the liars tell you, but rather allow yourselves to be led like lambs to the slaughter, and even grow angry when you are not led more quickly.

And when the Tea Party has its way, and valuable government services are emasculated or eliminated, and the economy enters another recession, perhaps worse than the previous one, the fault will lie with you who surely will whine and complain you didn’t realize this is what less government really means. “It’s not my fault. I didn’t know. Why didn’t they warn me I would lose my hopes and my dreams and my family and my life?”

You were warned. You just refused to listen. Who gave the Tea Party its power? “They sow the wind, and reap the whirlwind.” Though the Tea Party is sowing the wind, it is you, and the rest of us, who will reap the whirlwind.

Ignorance provides its own reward.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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

MONETARY SOVEREIGNTY

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