Good comes from bad Wednesday, Nov 9 2016 

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

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My family’s motto is, “Good comes from bad.”

It means that when bad things happen, they often provide lessons or opportunities that otherwise might not have appeared.

Unquestionably, the Donald Trump we all know, has the most awful résumé for filling the job of President of the United States.  His promises to “make America great again” (again?) ring hollow when coming from a compulsively lying, often bankrupt, misogynist, bigoted, inexperienced and ignorant egomaniac of infidelity.

Yet his victory, as bad as it seems, makes abundantly clear something we have been saying for years: The Democratic Party, the traditionally liberal party of the working class, neither is liberal nor cares anything for the working class.

Barack Obama is a right-winger who loves bankers more than workers, money more than principle, and compromise more than leadership. Hillary Clinton is an even more conservative version of Obama.

Did you see those thousands of people at Trump’s rallies, you know the “basket of deplorables” Hillary scoffed at? Those were working class people — people who should have been Democrats if only there were any Democrats running for President.

Not many “too-big-to-jail” bankers in those crowds — just ordinary working people, trying to make a life for themselves and their children. Unfortunately, they can’t get ahead; they can’t reach that elusive American dream. The rich have stolen it.

 The Gap between the rich and the rest has grown, as the middles have merged with the lowers, while the idle rich criticize the working poor as “takers.”

Ironically, along comes a classic example of the cruel rich, a billionaire who has cheated thousands of workers out of their salaries, a nativist who has his merchandise produced abroad and who tries to evict “deplorables” from his properties.

But he told the people what they wanted to hear, so desperately, they ignored his reality in favor of the tales he has spun. Who can blame them? The Democrats offered more of the same old, same old.

Republican leaders are proud to be conservative, but Democratic leaders, having spent their lives hobnobbing with the rich, want nothing to do with liberalism. Even union leaders, whose sole purpose ostensibly, is to fight for the working class, have become mere tools of the rich.

Money talks and big money screams through a megaphone.

The Democrats have lost their leadership, lost their direction, lost their liberalism, and as a result, have lost their base and this election.

Having lost to such as Donald Trump, the least qualified Presidential candidate in generations, shows just how far the Party has fallen.

Elizabeth Warren, perhaps the sole liberal in Congress, could have won this election.  She should have run.

I suspect she would have instituted the Ten Steps to Prosperity (below) or something very much like it.

Meanwhile, we must suffer years of a Donald Trump, and a Republican Party, and a right-wing, activist Supreme Court, that will continue to steal from the working class, and give to the rich, unless and until the Democrats return to their roots.

Good may come from yesterday’s bad, but at my age, I probably won’t live to see it.  I hope you will.

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 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:

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.

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

MONETARY SOVEREIGNTY

 

 

 

Lies, damned lies, and Treasury Direct Kids Sunday, Nov 6 2016 

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

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The federal government has been relentless in its efforts to brainwash us about the supposed similarities between federal deficit and debt vs. personal debt.

Here is a typical communication — a letter to me from United States Representative Bob Dold:

OUT OF CONTROL SPENDING

Rodger – As our state digs itself deeper into debt, families throughout Illinois are struggling just to get by. As a small business owner, I’ve had to make the tough decisions needed to meet a budget. But far too many so-called leaders have never had that experience – they’re solution to seemingly every issue is more government and more spending.

If hardworking Americans across the country need to live by a budget each and every day, then the government should have to do the same.

That’s why I’m a strong supporter of a balanced budget amendment to the Constitution, and it’s why I’ve voted for budgets that come into balance.

You’ll notice, that to confuse American voters, Rep. Dold mixes state, business, and pesonal (monetarily non-sovereign) finances in his first paragraph, with federal (Monetarily Sovereign) finances in his second paragraph.

It’s a perfect expression of the Big Lie (i.e. the lie that federal finance is like personal finance, and that federal taxes fund federal spending).

Not satisfied with brainwashing adults, the federal government has created a site called: Treasury Direct Kids.

Here are some of the lies your children will be fed:

Bureau of the Fiscal Service

It takes a lot of money to keep the U.S. Government running and a good deal of it is borrowed money.

That’s where we come in. Our job is to borrow the money needed to operate the federal government and account for that debt.

It’s sad that you must tell your kids their government is lying to them.  But it’s one of life’s realities.

The federal government does not need to borrow to “operate the federal government.” In fact, the federal government (unlike state and local governments) does not borrow at all.

The federal government provides you with safe investments in the form of deposits in T-security accounts at the Federal Reserve Bank. These are the world’s most secure bank accounts.

To make your deposit, you instruct your local bank to deduct dollars from your personal checking account and deposit those dollars into your T-security account, which is very much like a savings account.

(The process is similar to taking dollars from your checking account and putting them into your savings account.)

The dollars stay in your T-security account and are not used to “operate the federal government.”

Instead, to pay its bills, the government instructs creditors’ banks to increase the balances in creditors’ checking accounts. When the banks do as instructed, dollars are created. Thus, the government actually creates brand new dollars, every time it pays a bill.

The government pays down its so-called “debt” (deposits) every day, simply by transferring existing dollars from T-security accounts back to the owners’ checking accounts.  No new dollars are needed.

Have you ever wanted to buy something, but didn’t have quite enough money? If you’ve borrowed money from friends, family, or anyone else and promised to repay them, then you are “indebted” to pay it back. This is called “debt.”

Debt is money one person, organization, or government owes to another person, organization, or government. Typically, the person who borrows the money has a limited amount of time to pay back that money with interest (an additional amount you pay to use borrowed money).

Again, you see the confusion between personal finances and federal finances.

While debt is money one person, organization, or government owes to another, the federal  “debt” is not borrowed and it is not debt in the usual sense. It is deposits.

Rather than being called “debt” it should be called “deposits.” 

The Beginning of U.S. Debt

Even before the United States was founded in 1776, debt existed. Paying for the American Revolutionary War (1775 – 1783) was the start of the country’s debt. Some of the founding fathers formed a group and borrowed money from France and the Netherlands to pay for the war.

That was personal debt, not federal debt.

To manage the new country’s money, the Department of Finance was created in 1781. The next year, Government debt was reported to the public for the first time. The U.S. debt in 1783 totaled $43 million.

That year, Congress was given the power to raise taxes to cover the Government’s costs. However, the taxes did not bring in enough money. The debt continued to grow as the Government grew and provided more services to the people.

Question: There were no dollars at all before the United States was founded. So, where did the new citizens get dollars to pay federal taxes?

To create the United States, a group of men first needed to create laws. These laws were arbitrary words, created from thin air.  

Laws are not physical things. They are just ideas, written down. You cannot touch or see a law.

Among these laws, created from thin air, were laws that created U.S. dollars, also from thin air.  Dollars are just accounting numbers. (Those paper things in your wallet are not in themselves dollars.  They are titles to dollars. The dollars themselves are just numbers in balance sheets.

All the government did was create a balance sheet, and into this balance sheet, men wrote an arbitrary number that represented a number of dollars. Because the men completely controlled the balance sheet, they wrote whatever number they wished.

Then they paid people for goods and services with these newly invented dollars. That is how the American people obtained the dollars with which to pay taxes.

The U.S. Treasury Department was created in 1789 to help the country borrow money and manage the debt. Alexander Hamilton was the first Secretary of the Treasury and one of the country’s founding fathers.

By 1789, the federal government no longer could create more dollars from thin air, because it had passed laws arbitrarily stating how much silver each dollar represented. These laws limited the government’s ability to create new dollars.

This silver was collateral for dollars, with the federal government arbitrarily deciding how much collateral each dollar needed.

He felt getting into a reasonable amount of debt would help the country get its feet on the ground. He said, “A national debt, if it is not excessive, will be to us a national blessing.” By 1791, he estimated the federal government’s debt to be $77.1 million. To help raise money, federal bonds were issued by the Government.

The government convinced people to deposit dollars into T-security accounts, which the government used as collateral for obtaining more silver with which to create more dollars.

Through the years, the government has enacted many laws changing the amounts of silver, and then gold, it required itself to have as collateral before creating new dollars. These were arbitrary, self-imposed limits.

That all changed on August 15, 1971, when President Richard Nixon created new laws once again, and thereafter, the government arbitrarily allowed itself to create dollars without having any gold or silver as collateral.

Today, the only collateral for dollars is the full faith and credit of the United States government.

Because the government has an unlimited supply of full faith and credit, it has the unlimited ability to create dollars. And given the unlimited ability to create dollars, the federal government has the unlimited ability to pay any bill, and to service any debt, of any size.

The U.S. government never can run short of its own sovereign currency.

Previously we mentioned the government’s web site, Treasury Direct Kids

This site has a “Contact Us” page that allows you to ask questions about T-securities. Some good questions might be:

  1. “Is it possible for the federal government to run out of U.S. dollars?”
  2. “Why does the government borrow dollars if it has the unlimited ability to create dollars?”
  3. “Has the government ever been unable to pay off its loans?”
  4. “Why did President Nixon take us off the gold standard?”
  5. “If the federal government runs a balanced budget, how will the economy grow?”

If you receive answers to any of your questions, be sure to add them to the comments section of this blog. 

That should be interesting.

 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 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:

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.

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

MONETARY SOVEREIGNTY

Big data, uncertainty, prediction, and approximations Tuesday, Oct 11 2016 

A few thoughts on uncertainty:

Nothing is certain. We live in a universe of approximations.

There is, in physics “the Heisenberg uncertainty principle,” which describes certain limits of what we can know.

We simultaneously cannot know both the position (in space) of a subatomic particle and its momentum (speed times mass). The more accurately we measure one, the less accurately we can know the other.

This counter-intuitive fact has nothing to do with the act of measurement (aka “the observer effect”) somehow changing the result. It has to do with what we absolutely never can know, despite out best, most careful efforts.

At any moment in time, each particle has both a position and a momentum. But we cannot know both.

Nature has decided some knowledge will be hidden from us, today, tomorrow and forever.

If you find this hard to believe, perhaps a slightly more familiar situation will be instructive: We simultaneously cannot know the diameter and the circumference of a circle.

We can measure the diameter of a circle. We can measure the circumference of a circle. But no matter how hard we try, we cannot measure both for the same circle.

We can measure the diameter as precisely as we wish. Let’s call it exactly “1” (1 inch, 1 foot, 1 mile, 1 light year).

No matter how precisely we create that circle, we never can know the diameter, which is based “1” multiplied by the infinite sequence known as π. Being an infinite sequence, π cannot be measured precisely.

In mathematics, there is a workaround, or rather a convenience, that says an infinite sequence can be expressed as the rounding of the last terms. For instance, 1.9999999 . . . can be treated as being the “same” as 2, because the difference would be infinitely small..

Pi is an infinitely long sequence. You can see a million digits of Pi here.

The first few digits are 3.14159 . . . , which sometimes are rounded to 3.14 or to 3.1416 if greater precision is desired.

True, the word “pi” represents a number, just as the word “one” and the numeral “1” each represent a number, but there is no way to measure both the circumference of a circle and the diameter, by the same number system.

If, for instance, one uses pi to measure a circle’s diameter, no fraction of pi will measure the same circle’s circumference.

Every circle has both a specific circumference and a specific diameter but you never can know both.

The uncertainty principle of physics and the uncertainty of pi in geometry are distant cousins. Physics at its core is mathematics, and mathematics at its core is geometry.

Because of the uncertainty found in geometry, mathematics, and physics, they all function only as approximations. Everything we know devolves to an approximation.

(In mathematics, even simple “1+1 = 2” is equivalent to the approximation:  .99999 . . . + .99999 . . . = 1.99999 . . .)

Economics, at its core, is psychology, and the measures in psychology are even less certain that are those of geometry.

Consider inflation (or as some call it, “price inflation”). It is defined as a general increase in prices. Though we can look back and declare with some confidence that there has been inflation, we cannot say how much.

Like subatomic position and momentum, or pi, inflation is unmeasurable.

Circulating through America’s and the world’s economies are billions, perhaps trillions, of different products and services, each changing through time. Today’s overall mix of products and services is different from yesterday’s. Tomorrow, just one day later will see a different mix.

How then does one compare the pricing of yesterday’s product/service mix “A” with the pricing of today’s product/service mix “A+1”?

If “A+1” has a higher price than does “A” does this represent inflation? Or does it merely represent the fact that two different product/service mixes have two different prices?

Consider a basic example: The price inflation of milk. We can’t even measure that . Too many alternatives. Skim, 2%, or regular; gallon, quart, or pint; Pasteurized, flavored, or raw;glass bottle, paper carton or plastic; grass-fed cow from Wisconsin, grain-fed cow from Illinois or a goat from Missouri.

Only fourteen such questions will yield nearly five million alternatives. What then is the better measure of price inflation in milk?

One sometimes hears that the federal government fudges the inflation statistics to make some point — to exaggerate or to minimize the measure of inflation. And this often may be true.

But since there can be no accurate measure of inflation, the best that can be attained is an approximation. The argument then becomes, “Whose approximation is ‘better'”?

“Better” for what? Is it “better” to know the position of a subatomic particle or its momentum? Or an approximation of both?

Is it “better” to know the diameter of a circle or the circumference or some approximation of each?

Is it better to know the price inflation of milk, or of some static and selected basket of products and services, or of some evolving and selected basket of products and services?

Our approximations tell us there has been some inflation in the past 20 years, though how much, we cannot know, nor do we know how much is “best.”

We can try to impute inflation by determining the changing value of money itself.  The formula is: Value = Demand/Supply.

Sadly, we have no measure for those terms, either.

Gross Domestic Product (GDP), another often-used measure, suffers the same problem. Without knowing inflation, a gross measure like GDP is all-but-meaningless. In fact, all the measures in economics are based on approximations, and when approximations are compounded by other approximations, results can vary wildly.

But it gets worse, for economics is massively complex, with all factors being related. Employment is related to GDP, which is related to education, which is related to income inequality, and on and on — trillions upon trillions of inter-relationships of approximations.

Much of science, including economics, has as its goal, prediction. Unless one can say, “If ‘A’ happens, ‘B’ will result,” of what value is economics?

And that is exactly the problem facing economics: It lacks predictability.

When someone predicts kicking a ball will send the ball into the air, that is not an impressive forecast. And when someone predicts that a triangle will resist deformation better than a square, that is expected.

But, when someone predicts a recession or inflation or a stock price increase, and that recession, inflation or stock price increase happens near the predicted time, the person is acclaimed, so rare is even somewhat accurate, prediction in economics.

Given that geometry is far more predictive than psychology (despite the effects of infinity), one might think economics would attempt to incorporate geometry into its calculations.

And indeed, it has, in the form of graphs and charts. Look in any economics text or read any economics blog, and you will frequent use of graphs and charts.

Unfortunately, the graphs and charts are constructed from the same uncertain data that makes economics prediction so difficult. Extending trend lines usually fails.

Finally, psychology is based on the brain, and the brain is an approximation device. We do not actually see an object. We translate a two-dimensional sensing of the light coming from the object, into a three-dimensional approximation, which is why illusions can be so convincing.

Approximations can make for good science, so long as we understand their limitations. Consider the Ten Steps To Prosperity (below), the plan for narrowing the income/wealth/power Gap between the rich and the rest.

Step #1 is “Eliminate FICA.” That tax is highly regressive, being imposed only on salaries (not on all income and not on wealth). Its primary effect is on the low- and middle-income workers.

We believe:

  1. The Gap is too wide and has been widening, though we don’t know how wide it is or how wide it should be.
  2. One measure of the Gap is via the GINI ratio, but this ratio is based on many variables, the measure and weighting of which can be debated.
  3. Eliminating FICA would narrow the Gap, but there is no way to determine how great the narrowing would be.
  4. Because the federal government is Monetarily Sovereign, and never can run short of its own sovereign currency, it neither needs nor uses FICA tax dollars.
  5. The only negative to eliminating FICA might be inflation, though we don’t know whether that negative is real, nor how much inflation might occur, nor whether, for certain,  inflation could be contained.

We see many beliefs, unknowns, and uncertainties indicated in those points. We cannot quantify them, nor prove them.

So why do we believe them?

The human belief system is based on translating insufficient information into certainty.

Everything is approximate. Looking out the window, I am certain I see a tree. But my brain has made an approximation. It has interpreted certain light quanta, falling on my retina to approximate a tree and a window, though upon closer inspection, the whole approximation might be a shadowbox or a photo or just a play of light.

Physics, geometry, and economics can grow only as we reduce the human element, i. e. the human interpretation and intuition as solutions to uncertainty.

The purpose of human intuition is quickly to interpret a massive amount of information that otherwise cannot be factored. But machines are good with massive amounts of data. A machine could find relationships in the huge data described in the milk illustration.

Think of Google’s web crawler, then think of more advanced computers crawling the web for every mention of every product and service.

At some future point, the computers will “know” the relationships between all past sales, uses and prices of everything, and from these past relationships, be able to estimate the future.

Big data will be the solution to big uncertainty, as we creep ever closer to knowing the position and mass, the diameter and circumference, the future of the Gap and of inflation.

Closer is as good as it ever will be.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================

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.

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

MONETARY SOVEREIGNTY

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

=======================================================================================================================================================================================================================================================================================================

PLEASE HELP US GET THE WORD OUT
LOOK FOR US ON GOFUNDME.COM: RODGER MALCOLM MITCHELL

===================================================================================
===================================================================================

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

 

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