Dollars exist, but in what form; who created them, and how?
The uninformed may respond that dollars are pieces of green paper printed by the U.S. Treasury.
That answer would be incorrect on every level.
Those green pieces of paper are not dollars. Rather they are bearer titles to dollars. They are official recognition that the bearer owns a dollar.
These are not dollars. They are bearer titles to dollars
A house title is not a house. It is official recognition that the named person owns a particular house.
A car title is not a car, It is official recognition that the named person holds a certain car.
Dollars exist only as bookkeeping notations. They have no physical form.
You cannot see, feel, hear, touch, smell, or taste dollars.
The Treasury does not literally print dollars. It just prints titles to dollars, which exist as numbers in bank accounts.
All dollars are created from thin air by marking up accounts. Banks do it every minute of every day.
Consider the following scenario:
1. You go to a store, make a $10 purchase, and pay with your credit card.
Because you have a contract with the credit card company, you essentially have signed a loan document (the credit card receipt) saying you owe the credit card company $10.
That loan document, and all dollar-denominated loan documents, are titles to dollars.
A dollar bill is a bearer check signed by the Secretary of the Treasury.
So, your use of a credit card makes dollars.
(The green dollar bill in your wallet is a loan document. It signifies debt. It is a federal reserve note. “Bill” and “note” are words denoting debts.)
2. The credit card company sends instructions (not dollars) to the store’s bank, telling it to increase the balance in its checking account.
When the bank obeys those instructions, new dollars are created. These instructions are in the form of a check or wire transfer.
Simultaneously, the balance in the credit card company’s checking account is reduced, which destroys dollars.
At this stage, your purchase has caused the creation of ten dollars, a few cents of which go to various governments’ banks for sales taxes.
This bearer check is identical to a dollar bill, with one exception. The full faith and credit of the U.S. government backs a dollar bill. The full faith and credit of the writer backs the check.
3. Instructions among the several banks pass through the Federal Reserve, while the credit card company sends you a ten-dollar invoice.
To pay the invoice, you instruct your bankto send instructions to the credit card company’s bank, telling it to increase the balance in the credit card company’s checking account.
Those instructions are cleared through the Federal Reserve, and when your bank receives them, it reduces the balance in your checking account and destroys dollars.
Your one-time use of your credit card creates and destroys dollars.
At no time are physical dollars exchanged for there are no physical dollars.
All dollars are nothing more than numbers on financial institutions’ books.
Not being physical, dollars cannot be “sent.” Instead, instructionsin the form of checks or wires are sent to banks.
The banks are instructed to create and destroy dollars by changing the numbers in bank accounts.
What if that $10 purchase were made in cash rather than by credit card? Cash, i.e., dollar bills, are bearer titles to dollars. “Bearer” title means whoever has the title in their possession owns the dollars, which are numbers on the Treasury’s books.
All money represents a debt of the issuer, which among other things, owes the user full faith and credit.
You accept dollar bills in exchange for goods and services because you trust the full faith and credit of the federal government.
It takes only two things to keep people in chains: The ignorance of the oppressedand the treachery of their leaders.
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Lies have many advantages. The so-called “white lie” is a social method that is welcome and considered courteous. On many occasions, it would be rude to tell someone the truth. (“Your plastic surgery makes you look ugly.” “Your child is stupid.”)
Lying can build relationships, and even when the recipient of a lie knows it’s a lie, the lie and the liar are appreciated. The harm of a social lie is minimal compared to the benefit.
Lying, in of itself, is part of the normal human experience. Humans tend to accept and believe lies. Otherwise, humans wouldn’t lie, as acceptance and belief are the purpose.
Some political lies are valuable to humanity.
Ozone in the atmosphere helps protect us from solar radiation. You’ve heard of the “ozone hole.” It’s a hole in the air above the north and south pole, that lets in dangerous radiation — except, there is no “hole.” There is some depletion, much of it natural and cyclical, but the notion of a “hole” is a lie.
The value of the ozone “hole,” or more specifically the value of calling it a “hole,” is that it creates a picture in our minds.
This picture makes us amenable to paying the cost and suffering inconvenience of eliminating chlorofluorocarbons(CFCs), halons, and other ozone-depleting chemicals, which are used in air conditioning and spray propellants.
So the hole is a lie, but it’s a “good lie.” The harm is minimal compared to the benefit.
The Pacific Garbage Patch
In the same vein, you may have heard of the “Great Pacific Garbage Patch.” It’s an area of the Pacific Ocean where the natural currents create a swirl that entraps all floating trash, which builds up into piles of plastic, wood, bottles, sludge, chemicals, and other floatables.
It is a disgusting example of how mankind is polluting even our largest ocean, and is a good reason why we should exert every effort to reduce pollution — except the Great Pacific Garbage Patch is a lie. It doesn’t exist, at least not the way you might visualize it.
The words probably draw to your mind a picture of a huge floating island of garbage, but in fact, the “Great Pacific Garbage Patch” is invisible. It merely is an area of the ocean that has a slightly higher concentration of particulate matter, especially plastic particles. You could boat or even swim right through it and not realize it.
The problem is that when fish swim through it, a few of those tiny plastic particles might be ingested and enter their flesh, and when we eat those fish, the plastic enters our bodies, with potentially harmful physical effects.
The value of the “Great Pacific Garbage Patch” lie is that by drawing a vivid pollution picture, it might encourage stricter anti-pollution laws (except under the current American political administration, which seems not to worry about pollution).
So it’s a lie, but a “good” lie. The harm is minimal compared to the benefit.
Because lying is such a common part of our daily experience, we have evolved ways to deal with lies. To survive in our society, we must know which lies to accept as courteousness, which to believe as fact, and which to disbelieve.
And it isn’t easy.
There are several aspects to lies that help make them seem believable, among which are:.
Source: Do we trust the source delivering the lie?
Logic: Does the lie sound reasonable?
Desire: Do we have a personal motive to believe the lie?
Repetition: Does the lie square with what we previously have heard?
On this site, we often discuss “The Big Lie,“ a group of lies that deny Monetary Sovereignty.Within that group of lie are such statements as:
*Federal finances are like your personal finances (They aren’t.)
*Federal taxes fund federal spending. (They don’t.)
*The federal deficit and debt are unsustainable (They aren’t.)
*Federal spending causes inflation (It doesn’t.)
*And the federal government can run short of its own sovereign dollars. (It can’t.)
Though this blog discusses, in detail, why each of these statements is false, many people resist the facts. That is, despite proof showing otherwise, they continue to believe the lie, because.
Trusted sources like the media, the politicians, and many economists promulgate The Big Lie.
Because The Big Lie equates federal financing with people’s own personal financial experience, the lie sounds reasonable.
People want to believe The Big Lie because it justifies their desire to cut benefits to those who are poorer.
The incessant, unrelenting repetition of the lie.
The Big Lie is harmful because it vindicates widening the Gap between the rich and the poor. It justifies reductions in federal spending for such social programs as Medicare, Medicaid, Social Security, poverty aids, education aids and other benefits for the “not-rich.”
It condones the easing of federal regulations meant to stop criminal bankers. It rationalizes the reduction in budgets for food, drug, and environmental protections. It reduces federal spending that grows the economy.
The Big Lie clearly is harmful, but does it have any redeeming qualities?
Some would say, “Yes.” They would say The Big Lie discourages Americans from constantly asking the federal government for benefits and it lessens the likelihood Congress will provide an endless succession of those benefits.
They would say that without The Big Lie, federal politicians, hoping to please constituents with gifts and tax cuts, would be helpless to prevent the massive growth of federal spending.
Said as briefly as possible, The Big Lie prevents “excessive” deficit spending. And that leaves us with a question: What is “excessive” deficit spending?
There are those of a Libertarian bent, who believe the federal government is too big and powerful (to use their favorite word a “Leviathan”), and most or even any deficit spending is too much.
That belief cannot be argued. There is no proof possible that the federal government is “too big.” It is an emotional, not a factual, judgment.
We can observe however that in 1940, the federal “debt” was $40 billion, and some called it a “ticking time bomb.“ Today, it is $14 trillion, and that time bomb still is ticking.
We also can observe that every recession and depression has been introduced by reduced deficit growth, and every recession and depression has been cured by increased deficit growth.
Then, there are those who believe “excessive” federal deficit spending causes inflations, even Zimbabwe-style hyperinflations.
However, we can observe that despite periods of massive deficit spending, the U.S. never in its history has had a hyperinflation.
And we can observe that even with the massive deficit spending that brought us out of the “Great Recession” of 2008, and which has continued to this day, our rate of inflation is somewhat lower than the Fed’s target of about 2.5%. The reasons:
Finally, what about the theoretical helplessness of politicians to resist demands for deficit spending, if the public realized the federal government cannot run short of dollars, and does not use tax dollars?
Politicians already yield to demands for gifts and tax cuts — but from their biggest contributors, the rich. Public understanding of Monetary Sovereignty would put the 99.9% on a par with the richest .1%.
Deficit spending and tax cuts stimulate economic growth and enrich the populace, especially the 99.9% who benefit from social spending, the largest part of the federal budget. Cuts to regressive taxes — FICA, sales taxes, and remarkably even net income taxes (after special deductions for the rich) also would benefit the 99.9%.
And would the politicians really be “helpless”? Today’s politicians already resist deficit spending.They do it by telling a lie, The Big Lie: “Taxpayers and the government can’t afford it.”
They just as well could resist deficit spending by telling the truth:
Deficit spending is limited only by an inflation the Fed cannot control via interest rates.
The Fed alreadydetermines current and future inflation. It adjusts interest rates upward when it believes inflation will rise above its target rate of about 2.5%. It lowers rates when it believes inflation will fall below its target rate.
The Fed already acts not only as a control but as a barometer.
If the Fed ever merely were to announce, “We predict inflation will be too high and we will not be able to control it reasonably close to our 2.5% target,” the politicians could use that announcement, not The Big Lie, as their excuse to resist further federal spending, or even to cut federal spending.
In summary, there are no excuses for The Big Lie. There is no value to The Big Lie. The harm is enormous compared to the non-existent benefit.
How about telling The Big Truth: Monetary Sovereignty.
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 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.
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
………………………………………………………………………………………………………………………………………………………………………….. It takes only two things to keep people in chains: The ignorance of the oppressedand the treachery of their leaders..
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In the unlikely event you hope to be clueless about Social Security, boy, have I got an article for you. Here are some excerpts:
The Social Security and Medicare trustees issued their 2017 annual report on Thursday, and it began with an alarm bell.
“Both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing,” the trustees wrote in the summary of the 268-page document. “The Trustees recommend that lawmakers take action sooner rather than later to address these shortfalls.”
O.K., that part is true. Under currently scheduled benefits and financing, there won’t be enough money.
Insolvency is on track for 2028 for the disability fund and 2034 for seniors. Insolvent, however, does not mean empty; it means that the funds would not be able to completely fulfill its debts to the public.
You may think of these “funds” as being like money pots, into which your FICA dollars are placed, and Social Security dollars are removed. And when the pots run out of dollars, that is called “insolvency.”
The government invented the dollar and owns the books. It can enter any numbers it chooses.
Wrong.
The so-called “funds” are nothing more than bookkeeping accounts over which our Monetarily Sovereign federal government has absolute, 100% control.
The federal government owns the “books” and has the unlimited power to enter any numbers it chooses into those accounts.
If a “fund” shows $1 million, and the government wishes to spend $2 million, the federal government simply can change the “1” to a “2.” Or a “10.” That is what the word “Sovereign” in Monetarily Sovereign means.
If you wonder how it is possible for the federal government arbitrarily to change the dollar value in the “fund,” remember that the government has made many such arbitrary changes with our money.
The U.S. government invented the dollar — created it out of thin air — and arbitrarily gave it a value. The Coinage Act of 1792 mandated that a “dollar” be between 371 and 416 grains of silver.
The government could have mandated any value for the dollar. It arbitrarily chose 371-416 grains of silver. It could have chosen three French hens, two turtle doves, or a partridge in a pear tree.
The federal government had, and still retains, absolute power over the dollar, the value of the dollar and the bookkeeping for the dollar.
Since our beginnings, the federal government has exercised absolute power over the value of the dollar, repeatedly, arbitrarily valuing, revaluing and devaluing the dollar relative to gold and to silver.
The most recent value was $35 per ounce of gold until in 1971, President Nixon arbitrarily said the dollar’s value would not be measured against gold.
We describe a corollary to this process here, where we use the game of Monopoly as an example.
A root cause for the financial woes for Medicare and Social Security is the aging baby boomer population, and the trustees estimate the cost jumps will be higher than any GDP growth that could potentially offset things.
Meanwhile, lawmakers have not made progress addressing the difference between these two numbers by raising more money, raising the retirement age or dialing back payments.
The phrase “raising more money” is misleading. The federal government never needs to “raise” money. It creates dollars, ad hoc, every time it pays a bill.
To pay a creditor, the federal government sends instructions (not dollars) to the creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account. These instructions can be in the form of a check or a wire.
The instant the bank obeys those instructions, new dollars are created and added to the money supply.
Thus, to pay all your Social Security benefits, the federal government sends instructions to your bank, telling your bank to increase the balance in your checking account. Because our Monetarily Sovereign government never can run short of instructions, it cannot run short of dollars.
“The gap is getting bigger, and politicians have their heads in the sand,” said Marc Goldwein of the Committee for a Responsible Federal Budget.
The CRFB is owned, operated, and financed by the rich, whose goal is to widen the Gap between the rich and the rest. For many years, they continually have tried to cut federal spending on all social benefits.
They promulgate the “Big Lie” that federal taxes fund federal spending. The truth is, the federal government (unlike state and local governments) neither needs nor uses tax dollars. It created brand new dollars, every time it pays a bill.
Politically, the available options are incredibly explosive. Raising taxes is unpopular, and restricting payments to seniors is also unpopular. This leaves both Democrats and Republicans at an impasse.
It is a self-created “impasse,” since the federal government has the unlimited power to send instructions to banks, i.e. to create dollars. The government never can run short of instructions or dollars.
Lawmakers have proposed changing how benefits are calculated, raising the payroll tax slightly, or subjecting all wages to payroll taxes (right now, wages up to $127,200 get taxed for Social Security).
For example, raising the payroll tax 0.7% and subjecting all wages to payroll tax would keep the program solvent for another 75 years. However, it would still be on a road to running out.
On the benefit-cutting side, slowing benefit growth for the top 70% of earners, increasing the retirement age, and modifying cost-of-living adjustments would close the funding gap, but also not permanently.
All of these so-called “options” are utter nonsense, based on the ridiculous premise that the federal government can run short of its own sovereign currency.
State and local governments can run short of dollars; businesses can run short of dollars; you and I can run short of dollars.
But the U.S. federal government never has, and never will run short of the currency it originally created from thin air, and still creates simply by sending instructions to banks.
The so-called Social Security “trust fund” is a bookkeeping account, that the federal government can change at will. So, why doesn’t it?
Why doesn’t the federal government simply admit the fact that it can pay any bill of any size at any time? Why doesn’t the federal government admit that neither it, nor any of its agencies, can be “insolvent,” unless that is what it wants to happen?
Why doesn’t the federal government provide Social Security to every man, woman, and child in America?
Two reasons:
Some fear that if the public understood the truth, people would make endless demands on the government. The myth of money scarcity provides a rationale for limiting federal benefit payments.
The rich want to widen the Gap between them and the rest. It is the Gap that makes them rich (Without the Gap we all would be the same), and the wider the Gap the richer they are. The rich bribe the politicians with campaign contributions; they bribe the media with advertising dollars and ownership; and they bribe the economists with university contributions and with “think tank” salaries.
In summary, our Monetarily Sovereign federal government has absolute and arbitrary control over the supply of dollars and the value of those dollars (inflation). Even if all federal taxes were $0, the federal government could continue spending forever.
FICA could be eliminated and Social Security benefits could be doubled. The government has that power.
Thus, there is no danger to Social Security other than the false “insolvency” danger arbitrarily and unnecessarily placed on it by the federal government.
All those who do not understand Monetary Sovereignty do not understand Social Security financing.
But now, you no longer misunderstand Social Security.
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 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.
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
………………………………………………………………………………………………………………………………………………………………………….. It takes only two things to keep people in chains: The ignorance of the oppressedand the treachery of their leaders..
………………………………………………………………………………………………………………………………………………………………………………
The term “Theory of Everything” has been related to physics.
Quoting Wikipedia, “A theory of everything (T)E) is a hypothetical single, all-encompassing, coherent, theoretical framework of physics that fully explains and links together all physical aspects of the universe.
“Finding a ToE is one of the major unsolved problems in physics.”
The two primary “frameworks” in physics are General Relativity and Quantum Field Theory, which in their current interpretations are incompatible. A “theory of everything” would unite these two frameworks.
If we class General Relativity as a theory of big things, and Quantum Field Theory as a theory of small things, we might draw an interesting parallel in economics with macroeconomics and microeconomics.
And just as General Relativity is the basis for explaining how gravity affects big things, Monetary Sovereignty is the basis for explaining how money affects macroeconomics.
General Relativity is based on the relationships among mass, energy, time, space, and gravity. Monetary Sovereignty is based on the relationships between money creators and money users.
Consider such subjects as income and wealth distribution, health care, taxation, poverty, education, employment, inflation, deficit spending, and economic growth. Any intelligent discussion of these subjects requires an understanding of Monetary Sovereignty.
Obamacare Vs. Trumpcare:
You’ve been reading and hearing about the Democrats’ “Obamacare” vs. the latest iterations of the Republicans’ “Trumpcare.” Both are attempts to provide health care to Americans, and in different ways, both suffer from fundamental, incorrect assumptions.
The incorrect assumptions are that the federal government’s supply of dollars is limited, and an increase in federal spending requires an increase in taxes, an increase in borrowing, and/or inflation.
The facts are:
Our federal government, unlike state and local governments, is now Monetarily Sovereign (since 1971, when it went off a gold standard).
It cannot unintentionally run short of its own sovereign currency — the currency it originally created from nothing — the U.S. dollar. It instantly can pay any size debt denominated in dollars.
It needs neither to borrow nor to tax in order to obtain dollars, as it creates dollars ad hoc, by paying creditors.
Being sovereign, the federal government has the unlimited ability to increase or to decrease the value of its sovereign dollar, thus creating or preventing inflation.
Obamacare rightfully is criticized for taxing younger, healthier citizens and for not covering several million people, all because the realities of Monetary Sovereignty have been ignored.
Trumpcare reduces the taxation and the coverage for the same wrong reasons.
The U.S. federal government has the unlimited power to fund comprehensive, no-deductible health care and long-term care for every man, woman, and child in America.
It can fund “Medicare for All” without collecting any tax, and without borrowing, and without price inflation.
Trying to determine whether Trumpcare does or does not outweigh Obamacare, is a fool’s mission. Both are seriously lacking due to their false underlying assumptions about federal affordability.
“The nation’s most aggressive experiment in conservative economic policy is dead,” said Russel Berman in TheAtlantic.com. Supply-side economics “never works,” saod Eugene Robinson in The Washinbgton Post.
The Wall Street Journal, in an editorial said (Kansas Governor) Brownback was “unlucky in his timing. . .” Said Pat Garofalo in USNews.com, “Conservatives always try to explain away supply-side failures by saying the reforms weren’t quite right.
The big question is whether national Republicans will heed the lessons of Kansas, said Jordan Weissmann in Slate.com. President Trump is being advised by the same economists who engineered Brownback’s disastrous scheme, and he has proposed a similar strategy of massive income tax cuts and pass-through exemptions for businesses. “Kansas has admitted its mistake” — but Republicans may try to repeat it anyway.
Total tax collections based on various tax rates.
Supply-side economics, often exemplified by “the Laffer curve,” teaches that tax-rate cuts can pay for themselves by increasing taxable income.
This supposedly will happen because lower taxes will increase both the Supply and the Demand for products and services.
In this vein, Arthur Laffer said that tax rates of 0% or 100% will generate zero taxes, so somewhere between 0% and 100% there is a “best” tax rate that will generate the maximum tax.
“Best” is defined as the point at which taxes collections are maximized, but not the point of maximum benefit to an economy.
Supply-siders fail to take into consideration four facts:
The federal government has no need for taxes, so federaltax cuts always will be pro-growth for the economy.
Federal deficit spending adds dollars to the economy and so is pro-growth
Federal taxes always remove dollars from the economy, but a growing economy requires a growing supply of dollars. Thus, federal taxes always are anti-growth.
State and local governments do need taxes, though complexity prevents knowing what that magical “best” tax rate is. For each state, it could be lower or higher than the current rate. State and local government deficit spending neither adds nor removes dollars from the economy, so may or may not facilitate growth.
Berman, Robinson, the Wall Street Journal, Garofalo, Weissmann, Brownback, and Trump do not seem to understand the differences between Monetary Sovereignty (the U.S. federal government) and monetary non-sovereignty (the states, counties, cities, you, and me).
The federal government, having neither the need for, nor the use of taxes, should not use the Kansas experiment as a model. Unlike Kansas, the federal government could eliminate all taxes today and yet continue spending, forever.
Kansas needs and spends tax dollars. It can, and has, run short of dollars. Though the Kansas experiment seems to have failed — tax rate reduction did not generate enough taxable income to “pay for itself” — exactly the same experiment might work for other states.
Florida, Alaska, and others have no income tax, simply because they receive dollars from outside sources, Florida from tourism and Alaska from oil. The Kansas experiment may apply to some states and not to others, but it definitely does not apply to the federal government.
The common element among the arguments about Obamacare, Trumpcare, and the Kansas experiment is Monetary Sovereignty, or rather, the lack of understanding it.
A need to understand Monetary Sovereignty is at the foundation of meaningful discussions about education access, federal and local tax reform, income and wealth inequality, poverty, Social Security, immigration, inflation, unemployment, infrastructure, climate change, war, scientific research, states’ rights, charity, business regulation and many other dollar-related subjects.
In that sense, Monetary Sovereignty is the “theory of everything” only in macroeconomics. It is not a Theory of Everything in all of economics because it barely touches on microeconomics
(Monetary Sovereignty does include “Gap Psychology,” the popular desire to distance ourselves from people below us on the income/wealth/power scale, whom we view as inferior, while wishing to come closer to people above us, whom we deem superior).
Microeconomics, being a subset of Psychology, is like Quantum Field Theory in that both involve predictable unpredictabilities we have yet to master. Thus, like physics, economics will have to wait for its Theory of Everything (though I suspect individual humans will continue to be even less predictable than quantum particles).
In summary:
Those who do not understand and use Monetary Sovereignty, do not understand federal economics, and cannot develop workable economics plans.
They are fixated on cost-cutting and budget-balancing, when the federal government needs neither, and both are anti-growth.
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 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.
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#Monetary Sovereignty - Mitchell 