Trade War! Oh, woe is US ? Friday, Mar 10 2017 

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

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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..
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I just received an Email from FT Exclusive. Here is the entire text:

White House civil war breaks out over trade

A civil war has broken out within the White House over trade, leading to what one official called “a fiery meeting” in the Oval Office pitting economic nationalists close to Donald Trump against pro-trade moderates from Wall Street.

According to more than a half-dozen people inside the White House or dealing with it, the bitter fight has set a hardline group including senior adviser Steve Bannon and Trump trade adviser Peter Navarro against a faction led by Gary Cohn, the former Goldman Sachs executive who leads Mr Trump’s National Economic Council.

At the centre of the debate is Mr Navarro, a firebrand economist who has angered Berlin and other European allies by accusing Germany of exploiting a “grossly undervalued” euro and calling for bilateral discussions with Angela Merkel’s government over ways to reduce the US trade deficit with Europe’s most powerful economy.

The officials and people dealing with the White House said Mr Navarro appeared to be losing influence in recent weeks. But during the recent Oval Office fight, Mr Trump appeared to side with the economic nationalists, one official said.

When evaluating the above, the key thing to remember is the U.S. government is Monetarily Sovereign. It creates unlimited dollars at will.

Bannon et al want the other nations to make our imports more expensive and our exports Image result for trade warless expensive, so we can export more and import less. That leaves us with two questions:

  1. Should we want our Net Imports to be more expensive?
  2. Should we want to increase Net Exports?

Question #1 seems like a no-brainer.  Do you really want all the things you import to cost you more? Do you really want inflation?

No? Well, that’s the way to reduce imports, which is what Bannon and Trump want. (Though not even Trump knows what Trump wants, today. Tomorrow’s 4:00AM tweet could change everything.)

Which gets us to the meat of the argument, question #2. Should we want to increase Net Exports?

That is a no-brainer too, but not in the way you may think.

The fundamental effect of increased Net Exports is to increase the money supply, which on the surface would seem to be a good thing.

But remember, the U.S. government is Monetarily Sovereign. It has the unlimited ability to increase our money supply.

Congress controls the money supply by spending, which it has the unlimited ability to do. So, there is no money-supply need to increase or to decrease imports or exports.

Some may argue that increasing Net Exports by weakening the dollar helps American businesses that exportbut it hurts American businesses that import, as well as hurting consumers who will need to pay more dollars for imports.

And if our government really wants to help American business, it simply would reduce or even eliminate business taxes. Then there would be no need for silly trade conflicts like the Bannon, Cohn, Navarro, Trump ado about nothing.

Ah, but if the government reduced or eliminated business taxes, the populace first would complain about business not paying its “fair share,” as though business expenses somehow benefit the populace.

And then after the “fair share” argument ran its course, the populace might come to see that the federal government neither needs nor uses the tax dollars anyway.

Imagine the kerfuffle when government flunkies try to explain why our Monetarily Sovereign government does not need tax dollars, but has been collecting them all these years.

Here is the teapot on this tempest:

  1. A Monetarily Sovereign nation does not need to export. It can control its money supply, and can support its industries, endlessly.
  2. Importing benefits the nation. When we import we exchange dollars, which cost essentially zero to create, for goods and services which cost time, materials, and labor to create.

In effect, when a Monetarily Sovereign nation imports it gives nothing and gets something.

For instance, when we import from China, we give them dollars we create at the touch of a computer key, and they give us products and services that cost them the blood, sweat, and tears of their workforce along with their precious raw materials.

So who comes out the winner? Clearly, the importer. That so-called “grossly undervalued euro” benefits America.

Those are the simple facts of import/export for a Monetarily Sovereign nation.

Now, sit back and watch the fighting dispassionately, and shake your head in wonder at the treachery of our leaders and the ignorance of the populace.

Rodger Malcolm Mitchell
Monetary Sovereignty

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THE RULES

•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.

•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

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

•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.

•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)

•Deficit spending grows the supply of money

•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control. The limit to non-federal deficit spending is the ability to borrow.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Progressives think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

•The single most important problem in economics is the Gap between the rich and the rest.

•Austerity is the government’s method for widening the Gap between the rich and the rest.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

MONETARY SOVEREIGNTY

The Student loan con Saturday, Dec 31 2016 

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

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Three truths support the student loan industry:

  1. America needs college educated, young people in order to compete in the world economic and military power structure
  2. Lending is profitable.
  3. The very rich, who run America, promulgate  the Big Lie that the U.S. can run short of its own sovereign currency, so federal taxes are necessary to fund federal spending.

Even in the early days of America, days of a low-tech, agrarian America,  educating our young was recognized as necessary for the economic growth of this nation.

So cities, counties and states voted to provide free education through grades K-12. Some governments even have made such education mandatory for children up to the age of 18.

While cities, counties and states are monetarily non-sovereign, meaning they can run short of dollars and do require taxes or other income in order to spend, the U.S. federal government, being Monetarily Sovereign, cannot run short of dollars and can spend forever, with no income at all.

Yet, the less financially-viable states, counties and cities give money for education, while the unlimited-spending,  federal government has provided a lending system — a system that makes advanced education less available than if dollars simply were given.

Federal Student Loan History

The federal government began guaranteeing student loans provided by banks and non-profit lenders in 1965, creating the program that is now called the Federal Family Education Loan (FFEL) program.

The first federal student loans, however, provided under the National Defense Education Act of 1958, were direct loans capitalized with U.S. Treasury funds, following a recommendation of economist Milton Friedman.

One only can speculate about why Friedman wanted the Treasury to lend, rather than give, funds. The payback of those loans had no benefit to the Treasury, whatsoever, but it punished the private sector.

When Congress wanted to expand on that start, budget rules made the guarantee approach seem more attractive. Today, this system of guaranteed student loans has been entirely replaced, and all new loans are issued directly by the Department of Education.

Under 1965 budget rules, a direct loan would have to show up in the budget as a total loss in the year it was made, even though most of it would be paid back with interest in future years.

In contrast, a guaranteed loan, which placed the full faith and credit of the United States behind a private bank loan, would appear to have no up front budget cost at all — because the government’s payments for defaults and interest subsidies would not occur until later years.

This raised concerns among economists, who worried that the government was making financial commitments without accounting for the ultimate costs.

The so-called economists “worried” about the financial commitments of a government that never has had, and never will have, any difficulty paying those financial commitments.

In 1990, President George H.W. Bush’s  Federal Credit Reform Act (established that) all government loan programs—whether guarantees of commercial loans, or loans made directly from a federal agency—would have to account for their full long-term expenses and income. Every loan program would have an estimated “subsidy cost.”

The subsidy cost is the amount of money that needs to be set aside when the loan is made in order to cover the costs to the government over the life of the loan.

Here, federal financing is confused with private financing. While private lenders may need to “set aside money to cover costs,” the federal government has no such need.

Indeed, the federal government never sets aside money, simply because the federal government creates dollars ad hoc, by spending dollars.

According to the Government Accountability Office, the old approach “distorted costs and did not recognize the economic reality of the transactions,” while the new approach “provides transparency regarding the government’s total estimated subsidy costs rather than recognizing these costs sporadically on a cash basis over several years as payments are made and receipts are collected.”

The GAO completely confuses private financing with federal financing. The “economic reality” of federal transactions is: The federal government’s method for creating dollars is to spend dollars.

The federal government pays all its bills by sending instructions (no dollars) to each creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account.

At the moment the bank does as instructed, dollars are created.

This more rational approach to budgeting changed the nature of policy discussions on Capitol Hill. Student loan programs were among the first to be affected.

“More rational” means “irrational” for a Monetarily Sovereign government.

In 1993, newly elected President Clinton proposed replacing the guarantee program with the direct approach as part of his deficit reduction plan. Estimates from all of the government’s budgeting and auditing agencies showed that direct lending would deliver the same loans to students at significantly lower cost to taxpayers.

President Clinton’s administration ran federal surpluses (took dollars out of the private sector) in the final years of his term, which led to the recession of 2001. Every depression and most recessions in U.S. history have resulted from decreases in deficit growth.

Federal spending does not cost taxpayers anything. Even if all federal taxes were reduced to $0, the federal government could continue spending, forever.

In 1994, Congress  passed a law that prohibited the Department of Education from encouraging or requiring colleges to switch to the direct loan program.

Those profiting from the guarantee system could use their substantial resources to lure or retain colleges and universities, while the direct loan program was not allowed to make its own case. Not surprisingly, campus participation in the direct loan program declined.

As usual, Congress voted for a system favored  by their rich banker campaign contributors, despite it being more costly to the public.

In 2003, a team of investigative reporters at U.S. News and World Report looked into what was causing some colleges to switch back to the guarantee program.

Their front-page story found that much like old-time political ward bosses, the student loan industry “used money and favors, along with their friends in Congress and the Department of Education, to get what they wanted.”

The #1 criminal enterprise in America is the U.S. Congress.  It freely and legally (Congress makes the laws) accepts bribes to favor the rich.

If the RICO laws ( Racketeer Influenced and Corrupt Organizations Act) applied to Congress, every Senator and Representative would be in jail.

By 2007, new volume in the direct loan program had reached the lowest share of total federal student loan volume since it began in the 1990s. This trend, however, reversed in 2008.

Widespread credit market disruptions in 2008 and 2009 threatened the ability of many private lenders to make loans under the federal guaranteed student loan program, and numerous private lenders discontinued participation in the program.

In response, schools that previously participated in the guarantee program switched to the direct loan program, and direct loan program volume, as share of total loan volume, began to increase in 2008.

Note that no consideration was made regarding what was best for students or for the American public at large. The sole concern was for bank profits.

Congress and President George W. Bush enacted a temporary program in May 2008 to allow the U.S. Department of Education to buy guaranteed loans made by private lenders. The proceeds from the loans would be used to originate new student loans.

The temporary program, the Ensuring Continued Access to Student Loans Act (ECASLA), marks a major historical change in the guaranteed loan program, as it provides federal capital to private lenders making student loans. In this regard, the guaranteed program now shares more characteristics with the direct loan program.

In 2010, Congress passed and the President signed into law a bill that eliminated the FFEL program for all new loans made as of July 1, 2010.

With ECASLA, the banks lend to students; then the government buys the loans, giving the banks immediate profits. The banks use that money to make new loans, and thereby their profits multiply.

The Congressional Budget Office estimated that the elimination of the FFEL program under the law would generate $68.7 billion in savings over the next ten years. These savings were used to increase funding for the Pell Grant program.

The supposed “savings” to the federal government are not used to fund Pell or any other government program. All dollars sent to the U.S. government are destroyed upon receipt. They cease to be a part of the money supply. The government creates new dollars, ad hoc, when it spends.

“Pell” provides one drop of water when the entire Great Lakes are needed.

The Federal Pell Grant Program supplies grants for students who have limited income with funding to pursue an undergraduate post-secondary education. The Pell Grant does not have to be repaid, and eligible applicants are determined by specific criteria.

Federal Pell Grants are awarded via participating colleges and institutions to individuals who are enrolled in specific programs that are directed towards teacher certification or licensing.

According to the Federal Student Aid website, “The maximum Pell Grant award for the 2008-09 award year (July 1, 2008 to June 30, 2009) is $4,731.

The student loan scam is brilliant in that it widens the Gap between the rich and the rest in three ways.

  1. It saddles “the rest” with a debt from which they have difficulty recovering, even into retirement, thus forcing them to work longer and harder. Unlike Donald Trump, who “smartly” used the bankruptcy laws for his own profit, students can’t discharge their loans in bankruptcy.
  2. The burden of debt makes it difficult for the young people to start businesses that would allow them to move up the financial ladder.
  3. The prospect of debt forces not-rich young people to seek out less prestigious, cheaper universities (making them less competitive in the job market) or to give up college altogether (making financial advancement less likely).

The student loan program guarantees the rich a large and desperate population of underpaid workers to toil in job slavery.

What makes the program truly brilliant is that the populace doesn’t object. Aside from FICA, the student loan program is our single, most regressive federal program, and the people happily accept both.

If Congress were sincere in its desire to educate the American public it would provide Steps #4 and #5 of the Ten Steps to Prosperity:

Step 4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans

Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.

Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.

An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.

Step 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.

The public is well aware of the need to educate our young people, but the elite .1% have bribed all sources of information.

The Politicians are bribed with campaign contributions; the media are bribed via ownership and advertising budgets; the university economists are bribed with university donations.

Thus the public is led to believe that the federal government can’t afford to provide free college education, and that the 99.9% don’t deserve free education.

As always,  the Big Lie  dominates political and economics discourse, and no one of influence seems to have the knowledge or the desire to debunk it.

The federal student loan programs constitute a gigantic con, and the public has bought into it, like fish rushing with mouths agape, at a hooked worm.

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 have-mores and the have-less.

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

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

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 benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

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

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

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

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