The one picture that shows why Bernie Sanders is foolish to call himself a “socialist.” Tuesday, Mar 10 2020 

Here, from The Economist, is the one picture that shows why Bernie Sanders is foolish to call himself a socialist:

Graph of voters.png

Socialists are the least likely of the above groups to be political winners in America. (Well, at least they probably beat child molesters and telemarketers.)

The fact is that despite his strange claims, Bernie is not a socialist.

Merriam-Webster Definition of Socialism
1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2a: a system of society or group living in which there is no private property
b: a system or condition of society in which the means of production are owned and controlled by the state
3: a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done

Medicare-for-All, Sanders’s signature proposal, is not a socialist program.

1. It does not propose governmental ownership and administration of anything.
2. It does not propose the elimination of private property.
3. It does not propose that the means of production be owned and controlled by the state.
4. And it does not propose the unequal distribution of goods and pay according to work done.

What it does propose is federal funding of programs vital to the health and welfare of the people. Mere funding is not socialism. It’s what every government in history has done.

Contrast Medicare for All, which proposes paying the private sector (hospitals, doctors, nurses and other hospital employees, medical equipment manufacturers, pharmaceutical companies, etc.) with the socialist Veterans Administration, which owns its own hospitals and other medical facilities, and employs their personnel.

So why does Sanders continue to call himself a “democratic socialist”? Perhaps Bernie merely is stating the obvious. The entire government of the democratic United States is a combination of functions, having some socialist and some capitalist characteristics.

By not explaining to the voters what socialism really is, and also not explaining how Monetary Sovereignty could pay for his Medicare for All, Sanders has made serious mistakes, perhaps electorally fatal.

Even with Professor Stephanie Kelton advising him about Monetary Sovereignty, Sanders has exhibited a troubling stubbornness that may sink his candidacy.

It’s a shame.

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

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

The 2nd dumbest, most overused word in economics Saturday, Feb 29 2020 

Here are a few excerpts from a February 11, 2020 article in the Washington Post.

Economy
Fed Chair Powell warns Congress that $1 trillion budget deficits are unsustainable
Powell also said it is ‘very likely’ the coronavirus will impact the U.S. economy, but it is too early to tell how much or for how long
By Heather Long, an economics correspondent, former senior economics reporter at CNN and a columnist and deputy editor at the Patriot-News in Harrisburg, Pa. Also worked at an investment firm in London.

Federal Reserve Board Chair Jerome H. Powell told Congress on Tuesday that now would be a good time to reduce the federal budget deficit, which is expected to top $1 trillion this year.

Think about it. Powell told Congress two things:

  1. It is ‘very likely’ the coronavirus will impact the U.S. economy. By “impact,” he doesn’t mean “stimulate growth.” He means that to some degree, he doesn’t know how much, the coronavirus will reduce economic growth.
  2. Now would be a good time to reduce the federal budget.

Consider those two opposing ideas coming from one mouth on one day to one audience.

Is it possible the Chairman of the Federal Reserve Board doesn’t know that the only way to overcome the recessionary effects of the virus is with federal deficit spending?

Yes sadly, it is possible.

Equally sad is his repeated use of the 2nd dumbest, most overused word in economics, and that word is “unsustainable,” when referring to federal deficit spending.

(The dumbest word, or rather three words, are “ticking time bomb” also when referring to federal deficit spending. We have discussed these three dumb words on several occasions, most recently on February 14th.)

“Ticking time bomb” and “unsustainable” are proven wrong. The federal debt, a consequence of the federal deficits, has risen more than 50,000% — from $40 Billion to $20 Trillion in the past 80 years, and the government has “sustained” quite well, thank you, and no “ticking time bomb” has exploded.

One might think (hope) the self-anointed Experts would take their prediction failures as clues.

The words are dumb and not explained, coherently. That is, the dire warnings never come with this simple sentence, “If we don’t cut deficits the federal government will run out of dollars.”

Why don’t we see those sentences? Because they would be so obviously and patently wrong, that to proffer them would be to admit stupidity. Better to just stick with vague “bomb” and “sustainability” comments, and let people believe you are an Expert.

Continuing the article:

“Putting the federal budget on a sustainable path when the economy is strong would help ensure that policymakers have the space to use fiscal policy to assist in stabilizing the economy during a downturn,” Powell said in testimony to the House Financial Services Committee.

Let’s translate, ” . . .  have the space to use fiscal policy to assist in stabilizing the economy during a downturn” is mumbo jumbo.

He means, but won’t say, “Have the money to use deficit spending to help grow the economy if it begins to shrink.”

So, this Chairman of the Fed, the world’s most important financial officer, nominated by the President of the United States and approved by the Republican Senate, this financial guru, has wrongly implied (but not said) that the federal government can run short of money, while simultaneously admitting that deficit spending grows the economy.

Back to the article:

In past recessions, the Fed has played a large role in reviving the economy by sharply cutting interest rates.

But Powell has been warning lawmakers that the central bank won’t have much ammunition left to fight the next downturn because interest rates are so low (the benchmark rate is just below 1.75 percent, far below rates above 5 percent in the past).

More government spending is likely to be needed to aid the economy in the next recession.

The effect of interest rate cuts is minimal because it’s a mixed effect. Cuts encourage borrowing, but they discourage lending. Can’t have one without the other. So, mixed.

And while low rates leave dollars in consumers’ pockets, they cause the government to pump fewer T-security interest dollars into the economy. Again, mixed.

The real economic stimulus is federal government spending, and not just spending, but deficit spending. It’s deficit spending that adds net stimulus dollars to the economy.

Very simply:

Federal deficits are stimulative; surpluses are recessive.

The Fed chair’s warning comes as the U.S. federal debt has grown by about $3 trillion since President Trump took office, and the president’s latest budget proposal submitted this week would add another $5 trillion to the debt over the coming decade.

“Add another $5 trillion to the debt” is just another way of saying, “Add 5 trillion growth dollars to the economy” thereby assuring that we won’t have a recession (unless we have a worldwide crisis like a huge meteor impact or the most serious effects of a pandemic),.

Economists worry that so much U.S. government debt can dampen private investment by driving investors to buy public bonds instead of private ones.

The above sentence is short, but it packs into few words a great deal of misinformation  The sentence wrongly implies:

  1. The federal government needs to sell T-bonds. NO.  Being Monetarily Sovereign, the federal government does not need to sell T-bonds. It never can run short of its own sovereign currency, the U.S. dollar. Who says so?
    Image result for greenspan

    Greenspan

    Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
    Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
    St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

  2.  The federal government will need to raise interest rates to sell its T-bonds. NO. Not only does the federal government not need to sell T-bonds, but when it wants to sell them, the Fed can and does buy them, via regular open market operations or  “quantitative easing,” both of which reduce interest rates
  3. Deficit spending dampens private investment. NO. Deficit spending adds investment dollars to the economy, thus stimulating private investment.

The most concerning part of all this is that Powell surely must know it, or at least he should know it.

Yet, he persists in disseminating misinformation. Or could it be intentional disinformation?

“A more sustainable federal budget could also support the economy’s growth over the long term,” said Powell, who spent time before he joined the Fed educating Congress about the debt limit as a Bipartisan Policy Center scholar.

The debt limit?? “Scholar” Powell was educating Congress about the phony debt limit, which not only is harmful, but unnecessary, and it isn’t even a debt limit.

It’s a limit on the federal government paying for its existing debts. The next time you receive a credit card bill, call them to say, “Sorry, but I can’t pay you. I have a debt limit.”

See how well that goes.

Trump blasted Powell, tweeting in the middle of the congressional hearing that the Fed chair was keeping interest rates too high.

“When Jerome Powell started his testimony today, the Dow was up 125, & heading higher. As he spoke it drifted steadily downward, as usual, and is now at -15.

Germany & other countries get paid to borrow money.

We are more prime, but Fed Rate is too high, Dollar tough on exports,” Trump wrote on Twitter.

The Dow Jones  industrial average ended the day flat.

Donald Trump doesn’t know what he is talking about. You might think that a rich man would understand finance, but he seems clueless.

He tweeted that the Fed “should get our interest rates down to ZERO, or less,” allowing the federal government to refinance its massive debt at a lower cost.

Why would anyone think the federal government, which creates dollars at the touch of a computer key, needs or even wants to “refinance its massive debt at a lower cost?” It makes no sense at all.

As we discussed earlier, low rates have a mixed effect on the economy.

And as for exports, the supposed benefit is that America gets to trade precious goods and services for dollars. But, the U.S. government has the unlimited ability to create dollars. So what is the purpose of sending precious goods, created by the sweat of American workers, overseas while we create unlimited dollars at the touch of a computer key?

All that exports accomplish is to add dollars to the U.S. private sector, which the federal government can do directly, at no cost, either by eliminating taxes or by direct contribution.

For a Monetarily Sovereign nation like the U. S., exports are unnecessary, and somewhat harmful, and at least dramatically overrated.

Even if U.S. exports totaled $0, the federal government could support the private sector, while not wasting precious resources or adding CO2 to the climate.

The United States has never had a negative interest rate. When asked about that possibility on Tuesday, Powell said that’s “not a tool we are looking at.”

Economists widely view negative interest rates as only worth doing when the economy is in a terrible situation. Trump keeps calling for lower interest rates to further boost growth and the stock market.

A negative interest rate would mean you would pay a bank to store your dollars. The belief is that you would prefer not to pay the bank but instead go out and spend and invest all your dollars, thus stimulating the economy.

Not only doesn’t that work but more realistically, why would any administration want the citizenry to have no cash reserves in the bank, while wildly spending on stocks and “stuff”?

And why would any administration want to cut bank deposits (i.e. reserves) and bank profits against which banks lend?

Any economists who would use negative rates “when the economy is in a terrible situation” are the same boobs who would apply leeches to cure anemia, or who think cuts to deficit spending will stimulate the economy.

In summary:

Chairman Powell acts as though he doesn’t understand the federal government is Monetarily Sovereign.

He acts as though he is the bookkeeper for a monetarily non-sovereign town, wondering where the next dollar will come from and how they can borrow enough to spend. For that bookkeeper, the debt truly might be “unsustainable.”

Not for the federal government.

The next time you read that the federal debt is “unsustainable,” know that the author either is lying or ignorant about federal economics.

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

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

How YOU can help cure the coronavirus crisis. Yes, you. Friday, Feb 28 2020 

The coronavirus is not just a medical crisis. It is a crisis of ignorance, a financial crisis that easily could be avoided if anyone in Washington had a brain.

Sadly, with a proven psychopathic leader, who has dismissed all the knowledgeable and experienced people who did not worship him sufficiently, and replaced them with brainless, corrupt sycophants, the likelihood of coronavirus morphing into full-blown economic crises is quite strong.

Here are excerpts from an excellent, THE WEEK Magazine article, that was written with more intelligence than exists in the entire, Trump administration:

How to fight a coronavirus recession
Jeff Spross, THE WEEK, February 27, 2020

At this point, the spreading COVID-19 coronavirus is not just a clear and present danger to American lives, but to our economy as well.

The major quarantines in China have curtailed both the country’s exports of goods and parts, as well as its imports from the U.S. and the rest of the world.

Other outbreaks of the virus are popping up around the globe, and U.S. officials are saying it’s all but certain to spread domestically as well.

But there are steps the U.S. government could take to protect the American economy from a recession, if they move as quickly as possible.

Specifically, the Federal Reserve should cut interest rates, and Congress and President Trump should put together a fiscal stimulus package to support the economy going forward.

There are four things history, both long and recent, should have taught us, they are:

  1. To cause recessions, cut deficit spending, and to prevent and cure recessions increase deficit spending. Recessions are symptoms of money shortages.
  2. Cutting interest rates does little to cure recessions. Cuts do not stimulate purchases enough to overcome the fact that low interest rates reduce the amount of interest money the federal government pumps into the economy.
  3. The federal government has the unlimited ability to deficit spend. It never can run short of dollars, and never needs to levy taxes to fund spending.
  4. Federal deficit spending does not cause inflations. All inflations and hyperinflations are caused by scarcity, usually shortages of food and/or energy (oil).  To cure inflations, the government must cure the scarcities, which generally requires more, not less, deficit spending.

.

Reductions in federal debt growth lead to inflation

This graph demonstrates that insufficient deficit growth (blue line) leads to recessions (vertical gray bars), and those recessions are cured by increases in deficit growth.

Almost half of U.S. companies that have business with China told a recent survey they expect to see revenue declines if things can’t return to normal by May — and one-fifth said they could lose half their revenue if COVID-19 isn’t contained by the end of August.

The Fed’s next meeting is not until mid-March. But to some degree, Fed officials could convince the financial markets to begin offering more credit right now simply by declaring unequivocally that they will cut at the next meeting.

This might be a good psychological step if it doesn’t convince Washington that nothing else is needed.

During the Obama administration, at the height of the “Great Recession,” rates were cut significantly, but fiscal stimulus was necessary to grow the economy.

The vertical gray bar is the “Great Recession.” The blue line is interest rates.

Here is a closeup of the graph showing how little effect interest rate cut had:

Rates were beginning to be cut in 2007. Yet, the recession began in 2008 and didn’t end until 2009.

The central bank’s recent cuts have been very modest adjustments of 0.25 percent each, and it should take the next meeting as an opportunity to do at least that much.

In fact, economist Kevin Warsh — a former Fed official, and usually a monetary policy hawk — has already called for the central bank to do just that. Financial analysts just told Politico they anticipate two rate cuts in April and June, and U.S. financial markets are already pricing in an 85 percent chance of a rate cut by mid-summer. 

Yet even with financial markets anticipating rate cuts, the stock market has dropped like a stone.

The reason. Rate cuts have at best, a modest stimulative effect, and may even have a recessive effect.

Fiscal policy should also get in on the act. Obviously, the government should be making whatever public investments are necessary to respond to the virus directly: more resources for health responders to screen for symptoms, monitor the spread, and care for people who have become infected.

Congress is already debating spending packages of $4 billion to over $8 billion — and policymakers have blasted the Trump administration for a tepid response so far.

No one should be surprised at the “tepid response.” Remember, this is the administration that moved heaven and earth to eliminate ACA (Obamacare), not because it was bad but because it has Obama’s name attached to it.

This also is the administration that favors cuts to Social Security and Medicare, increases in the FICA tax, and is rabidly opposed to Medicare for All.

But we also need broader measures to support economic activity as a whole, and get more spending money out there.

A good example is the tax cut passed in response to the 2001 recession: President George W. Bush signed the tax cut in February, and by the end of April rebate checks were going out to Americans in the mail.

And that 2001 recession ended in the 4th quarter of 2001.

Another example is the temporary payroll tax cut that was part of the 2009 stimulus under President Obama. Federal payroll taxes bring in a colossal amount of money — roughly six percent of GDP each year — and reducing them or even eliminating them for a temporary period would leave that money in the economy for spending.

Indeed, since payroll taxes are automatically collected out of each paycheck, a halt to the tax would immediately put more money in Americans’ pockets.

If there were a clear head in Washington, the payroll tax (FICA) would be permanently eliminated in its entirety. (See Step 1. of the Ten Steps to Prosperity, below.)

Contrary to popular myth, the FICA does not fund Social Security, nor does it fund Medicare. In fact, the FICA tax does not fund anything.

Every single FICA dollar deducted from your paycheck and every single FICA dollar paid by your employer is destroyed upon receipt by the U.S. Treasury. They cease to exist in any money supply measure.

The reason is quite simple. The federal government (unlike state and local governments) is Monetarily Sovereign. It has the unlimited ability to create its own sovereign currency, the U.S. dollar. It never can run short of dollars.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e.,unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

Even if the federal government collected $0 taxes, it could continue spending forever. It creates brand new dollars, ad hoc, every time it pays a bill.

Spending, i.e. paying bills, is the federal government’s method for creating dollars. 

Now, there are real limits to what monetary and fiscal policy can do in a situation like this.

Both an interest rate cut and deficit spending are ways to increase aggregate spending.

But when a disease like the coronavirus shuts down economic activity, people can’t shop and spend money, and they also can’t go into work to produce the goods and services that other still-healthy populations are ready and willing to buy.

As dramatic as the stock market’s 10 percent nose-dive is, this effect on normal consumers and workers is the real threat to the economy.

If workers can’t man a factory because they have to stay home — or have been ordered to stay home — to avoid spreading a disease, no amount of money pumped into the economy can coax more production out of them.

This is also why a fiscal response to the coronavirus should focus on pure cash stimulus, since it will be hard to predict what specific areas of real-world work and production will and won’t be affected.

The author of the article is correct that a substantial pure-cash stimulus is necessary. Checks should go out to every man, woman, and child in America.

But he overstates the “can’t shop, can’t spend, can’t go to work,” claim.

At any given moment, even under the worst of circumstances, only a very small percentage of American people will be homebound. The vast majority of people who contract the disease, will recover in a few days and be forever immune.

And remember, Amazon.com, online grocery, restaurant delivery, and all the other on-line services available to the home-bound.

That said, many businesses will be hurt, so not only should the federal government provide dollars to consumers; it should provide dollars to the businesses most likely to suffer and most critical to the economy.

Tax cuts and rebates should go especially to industries supplying food and oil (to prevent the scarcities that cause inflations), health care, transportation, communication, and infrastructure.

Finally, we should think about longer-term policy changes that could help prevent future outbreaks.

I would begin with the Ten Steps to Prosperity

For instance, if the U.S. had a national paid sick leave system, employees would not feel nearly so much pressure to come into work when they’re ill or showing symptoms.

And guaranteeing affordable health care access for all Americans, such as with a Medicare-for-all program, would allow everyone to get treated as soon as possible when they think they might be sick, as opposed to forgoing a doctor visit entirely in order to avoid the costs.

And our failures to properly regulate market structures or enforce antitrust law have left us with highly-concentrated and monopolized global supply chains with little redundancy; we’re vulnerable to shortages and collapse if one key part goes down.

Good ideas. There is no reason not to plan and implement them — other than Washington ignorance.

Trump economic advisor Larry Kudlow may have brushed off the need for stimulus, saying the outbreak isn’t likely to become an “economic tragedy.”

But when it comes to COVID-19, moving now with an aggressive emergency-style stimulus is the best way to ensure that prediction actually comes true.

We have written about Kudlow before, here, here, and here. I consider him to be at Trump-level in competence (i.e. incompetence). He is a Trump acolyte, whose knowledge of economics seeming can be purchased cheap. Either that or he truly is ignorant.

Finally, the title of this post is, “How you can help cure the coronavirus crisis. You can help by contacting to your Congresspeople and telling them what is in this post.

At first contact, you will receive a stock non-answer to which you should respond by trying again and again and again. Write letters interspersed with phone calls, Emails, and texts. And urge your friends and family to write, call and text. And urge them to do the same.

Pols respond to volume. A dozen contacts won’t do much, but ten thousand will make a dent.

This is an election year, when all Representatives and 1/3 of Senators are running, and are more responsive to constituents. Take advantage of it.

Ten contacts won’t do much. But ten thousand will make a huge dent. And follow up with letters and calls to your local newspaper, radio, and TV. Do a YouTube bit.

One young girl is making a dent regarding climate change.

Maybe, just maybe, you too can change the world.

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

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

Social Security and Medicare Funds Face Insolvency, Report Finds Tuesday, Dec 10 2019 

It’s old news, fake news, and a lie — a “Big Lie.” But it demonstrates why the public is so confused and misinformed about federal financing.

Image result for national enquirer fox newsThis following came from the venerable and venerated New York Times, but the article is as accurate as an article in Breitbart, Fox News, or the National Enquirer.

Social Security and Medicare Funds Face Insolvency, Report Finds By Alan Rappeport, economic policy reporter, who covers the Treasury Department and writes about taxes, trade and fiscal matters, April 22, 2019

WASHINGTON — The financial outlook for Medicare and Social Security, two of the nation’s most important social safety net programs, remains precarious, threatening to diminish retirement payments and increase health care costs for Americans in old age, the Trump administration said on Monday.

An annual government report on the status of the programs painted a dire portrait of their solvency that will saddle the United States with more debt at a time when the economy is starting to cool and taxes have just been cut.

Let’s get this straight. The NY Times incredibly is being as honest as Breitbart, Fox News,  and the National Enquirer.

But, the U.S. federal government cannot become insolvent. That is 100% impossible.

Who says so? How about:

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

Image result for greenspan

Greenspan

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.

Since the U.S. federal government cannot become insolvent, no agency of the federal government can become insolvent, unless the federal government wishes it.

Social Security and Medicare are agencies of the federal government. Therefore, neither Social Security nor Medicare can become insolvent unless the federal government wishes it.

And as far as “saddling the United States with more debt,” the scare-mongers have been shoveling this manure for at least 80 years (See: “It is 2019, and the phony federal debt “time bomb” still is ticking.“)

Neither the United States nor U.S. taxpayers are “saddled” with even one cent of federal “debt.” The misnamed “debt” is nothing more than the total of deposits into Treasury security accounts. These accounts are paid off, not with federal tax dollars, but rather by simply returning the contents of those accounts to the account holders. No “saddle” there.

The NY Times editors surely know this. So why do they scare-monger a lie? Why did they publish the “Big Lie”? There is a reason, which we will discuss.

According to the report, the cost of Social Security, the federal retirement program, will exceed its income in 2020 for the first time since 1982. The program’s reserve fund is projected to be depleted in 16 years, at which time recipients will get smaller payments than they are scheduled to receive if Congress does not act.

Meanwhile, Medicare’s hospital insurance fund is expected to be depleted in 2026 — the same date that was projected a year ago. At that point, doctors, hospitals and nursing homes would not receive their full compensation from the program and patients could face more of the financial burden.

The so-called “reserve fund” is an accounting fiction. It is not a fund and it is not held in reserve. It merely is a record showing the difference between FICA and spending. It’s just a piece of information about the difference in two numbers; it does not reveal anything about the government’s ability to pay for things.

The U.S. government is Monetarily Sovereign, and so has the unlimited ability to create its own sovereign currency, the U.S. dollar. Even if all FICA collections totaled $0, the federal government could pay infinite Social Security benefits, forever.

An infinite account cannot be “depleted.”

The article continues:

“Lawmakers should address these financial challenges as soon as possible,” the trustees of the program wrote.

“Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”

There are no trustees because there is no trust. It is just an accounting record, that has none of the qualities of a trust. (See: Fake federal trust funds and fake concerns)

The above makes the naive and false assumption that federal (Monetarily Sovereign) financing is the same as personal (monetarily non-sovereign) financing.

For the federal government, there are no “financial challenges” that need “solutions.” And while the author of the article claims benefits will need to be cut or taxes increased, the public should not be prompted to “prepare” for those unnecessary changes.

It is all the “Big Lie.

Some Republicans sought to take credit on Monday for the fact that the news was not worse while also calling for changes to the programs.

“Following historic reforms to America’s tax code, this strong economy has strengthened these important programs, but today’s reports remind us of a fact we have known for far too long: Medicare is going broke and Social Security is not solvent,” Representative Kevin Brady, Republican of Texas, said in a statement.

Either Rep. Brady either is incredibly ignorant about economics, or he is an incredible liar. Pick one. There are no other alternatives.

The United States will not become insolvent, and for the same reasons, neither Medicare nor Social Security will go broke, unless a bribed Congress forces that to happen. 

Lawmakers have been struggling to come to grips with a solution for the country’s eroding entitlement programs, which have for years been at the center of a political tug of war between Republicans and Democrats.

No. Lawmakers have been struggling to find more ways to continue fooling the public. It’s been a struggle because arguing against plain facts always is difficult.

Mr. Trump was initially resistant to calling for cuts to the programs, but his budget proposal last month did just that. The request, which is being ignored by Congress, proposed shaving $818 billion from projected spending on Medicare over 10 years.

Completely unnecessary.

It also called for $26 billion less on Social Security programs, including a $10 billion cut to Social Security Disability Insurance, which provides benefits to disabled workers.

Well, of course, Mr. Trump wanted to cut Social Security and Medicare, two programs that benefit the middle classes and the poor. Isn’t that what the GOP always wants to do?

And of course, the GOP Congress passed tax cuts that mostly benefitted the rich. Isn’t that also what the GOP always wants to do?

The problem is not that the GOP, the party of the rich, wants unnecessarily to gut programs that benefit the non-rich. The problem is that the Democrats, supposedly the party of the middle- and lower-income groups, go along with the fiction of federal insolvency. 

“That fact that we now can’t guarantee full benefits to current retirees is completely unacceptable, and it should be cause enough for every policymaker to rally around solutions to restore solvency to those programs,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget.

“Certainly we should be focused on saving Social Security and Medicare before we start promising to expand these programs.”

She added that “now isn’t the time for partisan bickering — we need solutions.”

Just as Wayne LaPierre, of the National Rifle Association (NRA) is a mouthpiece for gun manufacturers, Maya MacGuineas, of the Committee for a Responsible Federal Budget (CRFB) is a mouthpiece for the very rich.

The rich in America, and all over the world, for that matter, never are satisfied. They want to become richer and richer. To become richer, you must widen the income/wealth/power Gap between you and those below you on any economic scale.

It isn’t sufficient that your income increases if the incomes of those below you increase even more. Without the Gap, no one would be rich; we all would be the same.

It is the Gap that makes you rich, and the wider the Gap, the richer you are.

This is known a “Gap Psychology,” the desire to distance yourself from those below and to approach those above.

So the rich bribe your three main economic information sources — the media,  the politicians, and the economics professors — to tell you the Big Lie, that federal spending is funded by federal taxes rather than by money creation.

–The rich bribe the media via advertising dollars and media ownership.
–The rich bribe the politicians via political contributions and promises of lucrative employment after they leave office.
–The rich bribe the economics professors via contributions to universities and with jobs at think “tanks.”

The public accepts the Big Lie because it equates to personal experience, where personal spending is funded by personal income.

One day, perhaps within your lifetime, the general public will learn that federal taxes do not fund federal spending, that the federal government and its agencies cannot become insolvent, and that social programs can and should be funded for the benefit of all America.

It will have to begin with a moral billionaire, a moral politician, or a moral economist who has both the money and the influence to promulgate the truth, and to have it accepted.

Waiting.

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

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The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

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