How can the federal government possibly service $30 trillion in deficits.

Three measures of federal “debt,” none of which are debt in the usual sense of the word.

THINK: Depending on how you count it, the federal government’s “debt” totals about $30 trillion.

That means it has to pay interest on and pay back $30 trillion worth of deficits. (So-called “debt” is the net total of all previous deficits.)

How can it possibly service that amount?

Taxes can’t do it because if taxes could do it, there would be no deficits (which are defined as spending minus taxing).

Borrowing can’t do it. Who has $30 trillion dollars they are willing to lend to a “deadbeat” government — a government that continues to run growing trillion-dollar deficits year after year?

Where does the money come from?

There are all sorts of lies: Big lies, small lies, white lies, obvious lies, humorous lies, political lies, and “no-one-would-believe-that” lies. You encounter them all almost every day.

For example, despite what you have read, the IRS does not plan to hire 87,000 more agents to look over your shoulder.

Here is an excerpt from a Time Magazine article published in August 2022:

A Treasury Department report from May 2021 estimated that (the Inflation Reduction Act) would enable the agency to hire roughly 87,000 employees by 2031.

But most of those hires would not be Internal Revenue agents and wouldn’t be new positions.

Despite all the political huffing and puffing about agents coming after you, the entire rumor is a QAnon-style invention designed to inflame the naïve MAGA group, who have proven they will believe anything, no matter how outrageous (or especially outrageous).

Although the whole 87,000 IRS agents story is a load of right-wing, scare-monger poppycock, it is related to two facts that should get you angry enough to eat nails.

Fact #1. You shouldn’t have to pay any federal tax, because federal taxes pay for nothing.

Forget about how many IRS agents there are; focus on the real issue: Why are there any IRS agents at all?

Since the day of your birth, you have been immersed in the same belief: The federal government collects taxes to pay for the goods and services it buys. And because you have heard it again and again, you will find it very difficult to unlearn.

But it’s all a lie — A Big Lie.

The U.S. federal government is unique. It is not like state and local governments. It also is not like businesses, you, or me. The federal government uniquely is Monetarily Sovereign.

It is sovereign over its own sovereign currency, the U.S. dollar. It can create as many dollars as it wants, merely by touching a computer key. And it can give those dollars any value it wishes.

The federal government never unintentionally can run short of dollars.

Former Federal Reserve Chairman, Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

Even if the U.S. federal government didn’t collect a penny in taxes, it could continue spending, forever.

The whole tax collection scheme, the IRS, the federal tax laws, tax evasion laws — everything to do with federal taxes — all are part of a performance to convince you that the federal government needs or uses your tax money to pay its bills.

And it simply is not true.

There’s the debt-limit fight that comes up ever few months. It’s the one where the political party out of power threatens the party in power that nothing will get done unless spending is reduced.

It’s all a charade. A lie. A Big Lie.

And they prove it’s a lie by simply agreeing to keep spending. The misnamed “debt” isn’t reduced or even limited.

Former Federal Reserve Chairman, 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.”

The handwringing over the federal “debt” (that isn’t a real debt) and the threatened demise of Social Security and Medicare “trust funds” (that aren’t real trust funds) — there is not an ounce of truth in any of it.

The federal government could (and should) eliminate the FICA tax while continuing to pay Social Security and Medicare benefits, forever. It even could double or triple those benefits, and still not ask you for a penny in taxes.

Quote from the 60 Minutes TV show: Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

The federal government is lying to you. The politicians are lying to you. The economics professors and newspaper writers, virtually everyone who tells you anything about federal taxes either is lying to you or doesn’t understand reality.

While state and local taxes do fund state and local government spending, federal taxes do not fund federal spending. Period.

The federal government being Monetarily Sovereign, is unique. The sole purpose of federal taxes is to help the government control the economy by taxing what it wishes to discourage and by giving tax breaks to what it wishes to encourage.

Unlike state and local governments, the federal government (specifically, the U.S. Treasury) destroys all the tax dollars it receives. Those tax dollars, nearly all of which are part of the M1 money supply measure, cease to be part of any money supply measure when they are received.

Not being part of any money supply measure, they effectively cease to exist. (I know an economist who claims that the purpose of federal taxes is to give value to money. Utter beeswax. Has he never heard of bitcoin? No taxes there.

No, the sole function of federal taxes is economic control.) Federal taxes simply are a whip to beat you if you get out of line, and to refrain from beating you if you obey the government’s wishes.

Rather than using tax punishment to discourage, the government can use rewards to encourage. While taxes weaken the economy by removing dollars from your pockets, rewards would strengthen the economy by adding dollars.

The above are the absolute facts, and you probably believe none of them. You would need remarkable mental strength to ignore the false indoctrination you have received from so many trusted sources for so many years.

At first hearing, Monetary Sovereignty might seem complicated and hard to understand, yet it is the simplest idea possible. It can be expressed in one short sentence:

The federal government has the unlimited ability to create dollars.

Dollars are not found in nature. They are created by laws. The U.S. dollar exists because of U.S. laws.

Laws created the first dollar and all subsequent dollars. So long as the U.S. government has the unlimited ability to create laws, it has the same unlimited ability to create dollars.

You have no trouble visualizing that the government can create all the laws it wants. So, you just as easily should be able to visualize the government creating all the dollars it wants.

Think of the board game, Monopoly. The Monopoly dollars exist because of Monopoly rules, which are written by people.

Current rules dictate that the Monopoly Bank cannot run short of dollars. If during a game, it would run short of paper dollars, you simply cut some paper and create new dollars.

So it is with the U.S. government. It always can create new dollars.

Remember that the next time someone tells you the federal government “can’t afford” something, or the government should run a balanced budget, or the federal debt is a burden on the government or on taxpayers. Or the Social Security trust fund is going bankrupt. All lies.

Here is the federal government taking billions, no trillions, from the economy, all for naught. It is the single biggest money scam in all of human history, and it is based on the Big Lie.

Imagine what that Big Lie has cost us: Healthcare, food, education, poverty, progress in every form, research, millions of great things that could have been done were it not for the falsely perceived shortages of money — the most expensive lie, ever.

Fact #2: The overriding goal of the Republican Party is to make the rich, richer.

The rich become richer, not just when they make more money, but rather when the income/wealth/power Gap between them and the middle widens. The goal of the Republican party is to widen the Gap, i.e., to make the rich richer.

They truly are the party of the rich. They proved it when they gave tax breaks to the rich. They proved it when they repeatedly tried to destroy Obamacare.

They prove it when they refuse to expand Medicare. They prove it when they refuse to support gun control (It’s mostly poorer Americans who die from gun killings).

They prove it when they cry crocodile tears about federal spending coming from taxpayer pockets (which it doesn’t.) They proved it when they voted against the veterans’ health bill, expanding other veterans’ benefits, paid family leave, and most other benefits for the poor.

Why the focus on the Republicans? Because they are the primary debt complainers. They are the ones who most want to cut federal spending. And here is where that spending goes:

While the rich receive the most lucrative tax breaks, the “not-rich” receive most of the spending. So, the focus of the GOP always is on spending cuts, which come from middle-class wallets.

The rich seldom want to cut the tax breaks that allow people like billionaire Donald Trump to pay far less in federal taxes than you do.

The rich love to pretend the federal government can’t afford to provide Americans with healthcare, retirement funds, free transportation, school lunches, good housing, education and other benefits that rich people accept as their due in life.

In Summary, the broad populace suffers because of economics ignorance. They believe the federal “debt” is a real debt when it merely is the total of deposits into privately owned accounts resembling safe deposit boxes.

The government doesn’t owe the debt any more than it owes the contents of those boxes. It merely returns the debt to the owners.

The populace believes the Social Security and Medicare “trust funds” are real trust funds. They believe the Big Lie that federal spending must be paid for by federal taxes.

These beliefs make them passive about paying for things that should be free, while the rich avoid paying.

False beliefs make the people accept the notion that the rich are concerned about those 87,000 IRS agents going after the poor and middle classes, when their real concern is that more agents would check on the rich.

If you are one of the people who believes federal taxes are necessary to pay for your federal benefits than you will go to your grave ignorant about your own complicity in cheating . . . YOU.

I understand why you believe the lies. Everyone around you has been spouting them for decades. But it’s time for you to use your own brain. Ask yourself this:

“How could the federal government service $30 trillion in deficits, unless it had the unlimited ability to create dollars?”

The answer: It couldn’t. No amount of clever bookkeeping could service deficits of that magnitude — unless the government had infinite dollars at its disposal.

And that is the answer to the title question.

The federal government created the first U.S. dollar from thin air and gave it an arbitrary value, by creating laws from thin air.

Ever since, the government has been doing that same thing. It can continue, forever. No taxes necessary. Just laws.

You have been conned your entire lifetime and will be conned until you understand the facts, and then protest.

Rodger Malcolm Mitchell
Monetary Sovereignty

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

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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

MONETARY SOVEREIGNTY

Recession: Not If, But When

Raj Subramaniam

FedEx CEO says he expects the economy to enter a ‘worldwide recession’ PUBLISHED THU, SEP 15 20226:38 PM EDTUPDATED THU, SEP 15 20228:25 PM EDT Krystal Hur

FedEx CEO Raj Subramaniam told CNBC’s Jim Cramer on Thursday that he believes a recession is impending for the global economy.

The CEO’s pessimism came after FedEx missed estimates on revenue and earnings in its first quarter.

As we have been telling you for months (years, actually), Jerome Powell will fail to stop inflation and instead will cause a recession or depression. There are two reasons.

He has no idea what causes and what cures inflations, and
He doesn’t have the tools, even if he knows.

So, today he, in essence, is using a chainsaw to slice the wedding cake and applying leeches to cure anemia. And then, when the chainsaw and the leeches make things worse, what will Powell do? He will use a bigger chainsaw and apply more leeches. As I predicted, his interest rate increases have failed to end inflation. So, what will he do? He will raise interest rates again and again, of course. (The definition of insanity is doing the same thing repeatedly and expecting a different result.) He refuses to learn from failure. The primary reason why prices — any prices — rise is scarcity. It would be quite rare for overall prices to increase because consumers suddenly have more money in their pockets and spend more on everything. When something prevents the supply of any one product (other than oil) from growing, we have an increase in that product’s price. (Oil is a special case because it has universal use.) To cause inflation — a general rise in prices — a general restriction in supply is required. And that general supply restriction was provided by COVID., which caused so many supply disruptions that recovery is difficult. And to some degree, the pandemic still is with us. Our recovery from covid is delayed COVID partly because the GOP didn’t want us to recover. They denied the need for masking, and vaxing, so they continued to spread the disease. They wanted to be able to complain about Biden and the Dems. Not that the Dems are entirely innocent. They still join the GOP in promulgating the false notion that federal deficit spending causes inflation. Not only does federal deficit spending not cause inflation, but targeted deficit spending, to acquire and distribute scarce goods and services is the only government solution to inflation. Powell thinks consumer demand is causing inflation. He wants to force consumers to demand less by making borrowing more expensive. But demand less what? Should we demand less oil? Less food? Less housing? Fewer cars? If he fails to quell demand, which is likely, inflation will continue. If he succeeds in reducing demand, we will have a recession, for that is precisely what a recession is: Lack of demand. In short, Powell is trying to fight inflation by causing a recession. Stagflation next? Then depression? Inflations are caused by shortages. PERIOD. The only way to cure inflation is to remedy the shortages. Today, we face many shortages ranging from oil to food, computer chips, lumber, paper, and the entire supply chain, including shipping containers, port facilities, and labor. Some of the foods in short supply (and therefore experiencing price increases) are meat, poultry, dairy, eggs, and many vegetables. Will interest rate increases cure those shortages? Of course not. Will interest rate increases cure the oil, food, computer chip, lumber, paper, supply chain, shipping container, port facility, and labor shortages? The whole Powell concept is based on ignorance. Interest rate increases will exacerbate shortages by making production more difficult. Businesses will be less likely to borrow for upgrading machinery or hiring more and better quality labor. As a result, production will not grow sufficiently, which means more shortages. It will be the “leeches-to-cure-anemia” situation, where the supposed solution makes the problem even worse. Eventually, inflation will end, but not because of Powell (who will claim credit). Inflation will end because businesses will catch up and begin to produce more, sell more, and ship more. Meanwhile, we’ll have to suffer through sky-high interest rates, continual nonsense from Congress and Powell, ever more inflation, and excuses for cutting benefits to the not-rich. (There still will be plenty of tax benefits for the rich. Deficit worries don’t apply to them.)

**Recessions (vertical gray bars) follow reductions in federal deficit growth (red) and are cured by increased federal deficit growth.**

**There is no relationship between federal deficit growth and inflation (blue). Peaks and valleys do not come close to matching.**

The GOP is hopeless. It has become a nut factory. But, perhaps I will live to see the day when the Dems begin to admit that federal deficits are beneficial because they add growth and scarcity-fighting dollars — i.e., inflation-fighting dollars– to the economy. Congress does the bidding of the very rich, who want the wealth Gap to grow. The pols promulgate the Big Lie that federal finances are like personal finances, where debt is a burden. But debt is not a burden on the federal government. This gives Congress the excuse to cut deficit spending. So, we will continue to lurch from one recession to the next, with the occasional depression thrown in for flavor. And as for the public ever understanding, don’t make me laugh. Seventy million people saw what Trump did for 4 years, then voted for him. That tells you all you need to know about the public’s intelligence. Come to think of it, the insanity of providing the same truths time and again and expecting a different result applies to me, too. I’ve been ready to quit for several years, but then I think of the world my grandchildren will endure, and hope springs eternal. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

MONETARY SOVEREIGNTY

It breaks my heart to see this headline. It should break your heart, too.

[Why would any sane person take dollars from the economy and give them to a federal government that has the infinite ability to create dollars?]

It breaks my heart to see the following headline. It should break your heart, too.

Millions of vulnerable Americans likely to fall off Medicaid once the federal public health emergency ends By Amy Goldstein

This image has an empty alt attribute; its file name is image-1.png — **“Pay no attention to those many trillions behind me. I’m too broke to help you (unless you’re rich.)”**

Begin with two central facts: The U.S. federal government is Monetarily Sovereign, and a Monetarily Sovereign entity cannot unintentionally run short of its own sovereign currency. The federal government has infinite dollars. Thus, your federal tax dollars do not fund federal spending. Even if all federal tax collections totaled $0, the federal government could continue spending, forever. All federal taxes are destroyed upon receipt. Your M1 money-supply tax dollars cease to be part of any money-supply measure, once they reach the Treasury. They effectively are destroyed. The government creates new dollars, ad hoc, every time it pays a bill. That is how the federal government creates dollars. The more debts the government owes, the more money it creates. Contrary to what you repeatedly are told, your grandchildren are not liable for the federal “debt.” Not now, not ever.

WASHINGTON — The bipartisan spending deal that Congress cleared last week provides billions of dollars in aid for Ukraine, but it cuts other humanitarian programs meant to address mounting hunger crises elsewhere in the world, including Afghanistan and West Africa.

The initial House-passed bill and one offered in the Senate, written by majority Democrats, would have largely fulfilled the White House’s humanitarian funding request.

In interviews and statements, foreign aid advocates said they were “embarrassed” and “flabbergasted” that Congress reduced funds for dealing with the worst refugee displacements since World War II and other crises caused by mounting natural disasters and manmade conflicts.

The cuts to nonemergency humanitarian spending, as well as the lack of any international COVID-19 assistance in the omnibus, are a “self-inflicted wound” to America’s ability to recover from the pandemic and to pursue its long-term national security interests, said Liz Schrayer, president of the bipartisan U.S. Global Leadership Coalition.

Independent budget analysts have pinned blame on Republicans’ insistence that any increases in nondefense spending be kept roughly equal to increases in defense spending.

“We have more people who are hungry and people who are hungrier getting hungrier and we have no grain. It is absolutely catastrophic,” Peña said. “SFOPs got the raw end of the stick.”

The Senate’s lead foreign aid appropriator issued a similar view in an uncharacteristically blunt statement for a congressional appropriations cardinal criticizing his own bill.

Everywhere you turn, the phony belief that the federal government must operate under restrictive budgets, like you and I must, is a self-inflicted wound on America. The so-called “federal debt” is not a debt (It is deposits in T-security accounts), and it is not a burden on anyone. (The “debt” is paid off simply by returning those deposits.) Our federal government, having unlimited resources, pretends it is limited, and the public believes the lie. The sole purpose of the lie is to keep you from asking for the same federal benefits that the rich (who pay no taxes year after year) receive. So long as you are kept ignorant, the rich will keep getting richer and you will keep paying. WHAT ABOUT INFLATION? In addition to the lie about the federal debt being a burden, there is the lie that federal deficit spending causes inflation. It is widely believed, but it is a flat-out lie backed by no facts.

There is no relationship between federal deficit spending (red line) and inflation (blue line). Inflations are caused by shortages, most often shortages of oil. Today’s inflation is caused not only by shortages of oil but also by scarcities of food, shipping, labor, computer chips, vital minerals, lumber, and many other COVID-induced problems. For many, many years, the US had massive deficit spending with low inflation, but now, with the effects of COVID and the Putin war, we suddenly see inflation. Clearly, deficit spending was not the cause. The Fed’s attempt to address inflation by raising interest rates will not succeed while the real causes, shortages of oil et al, persist. Congress can address these shortages by spending more to facilitate the supply of all scarcities. One good step would be to eliminate the harmful FICA tax, which doesn’t fund Medicare or Social Security but does discourage hiring by increasing the cost of labor. And this is what breaks my heart. A Congress that never has to worry about having enough to eat, or a place to sleep, or good schools for their children, has decided America “can’t afford” to provide these things to the “lazy” poor. Of course, the “can’t afford” meme is a blatant lie. America can afford anything that costs dollars. But the rich, who bribe and control our government, don’t want the Gap between them and the rest of us to narrow. The wider the Gap, the richer are the rich, so widening the Gap is the way our spineless Congresspeople vote. “Spineless” is the only way to describe the 100% refusal of one party to approve spending for the poor. These subservient sheep do exactly as they are told by the rich, then collect their excessive salaries and bribes, while the less fortunate among us pay the price. So long as you believe that your federal taxes fund federal spending and that federal spending causes inflation — so long as you believe those two lies — then the rich will have won and you will have lost. Ignorance has its costs. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
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:

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

MONETARY SOVEREIGNTY

Will the “Build Back Better” bill and “too much” federal debt cause inflation? An examination of myths.

The big argument of the day has to do with federal deficit spending. The Republicans say they don’t like it because increasing the federal “debt” causes inflation. The Democrats agree that increased federal “debt” is inflationary, but that their proposals are “paid for” by increased taxes. So, according to the Dems. the federal debt wouldn’t increase enough to cause inflation. In total, both parties and all their hired economists wrongly agree that federal deficit spending leads to inflation, a false belief demonstrated in the following article:

House passes Build Back Better bill after overnight delay It’s unclear whether moderate Senators Joe Manchin and Kyrsten Sinema will agree to some of the provisions included by the House. “The Build Back Better Act is fiscally responsible,” Mr. Biden said in a statement. “It reduces the deficit over the long-term. It’s fully paid for by making sure that the wealthiest Americans and biggest corporations begin to pay their fair share in federal taxes. “Leading economists and independent experts on Wall Street have confirmed that it will not add to inflationary pressures. Instead, it will boost the capacity of our economy and reduce costs for millions of families.”
Yellen spreading the Big Lie that federal taxes fund federal spending and that the federal debt is too large.
The CBO said it would increase the deficit by more than $367 billion over 10 years. But the estimate did not include the revenue that could be generated from increasing IRS enforcement, which the CBO suggested would be $207 billion. Treasury Secretary Janet Yellen noted that the Treasury Department estimates that the crackdown on tax evaders would raise $400 billion, and her own department’s analysis “make it clear that Build Back Better is fully paid for, and in fact will reduce our nation’s debt over time by generating more than $2 trillion through reforms that ask the wealthiest Americans and large corporations to pay their fair share.” The White House, which estimated its framework would cost $1.75 trillion, claims it would reduce the deficit over time, generating more than $2.1 trillion over 10 years.

Sounds great, doesn’t it? The spending is “fully paid for,” and increased tax collections would “reduce our nation’s debt” and “reduce the deficit.” Thank heavens it’s all a lie, a Big Lie. Despite all the chest-thumping by Biden and friends, the bill will be “fully paid for” simply because all federal spending is fully paid for by federal money creation, never by taxes. The federal government uniquely is Monetarily Sovereign. Unlike state and local taxes, which do pay for state and local government spending, federal taxes pay for nothing. That is a fundamental difference between monetarily non-sovereign state and local governments vs. the Monetarily Sovereign federal government. State and local taxes are M1 (money supply) dollars that remain in the private sector, even after they are received by state and local governments. (The state/local governments deposit their tax dollars into private sector banks.) By contrast, Federal taxes are M1 dollars that are removed from the economy and destroyed when they hit the Treasury, where they no longer appear in any money measure. Anyone not understanding that fundamental truth simply doesn’t understand economics, and has no business voting on or commenting about federal spending. (In all probability, most of the federal politicians do understand, but don’t want you to understand, lest you ask for more benefits. Rich political benefactors want the Gap between the rich and the rest to widen, an event which makes the rich richer.) Worse yet, if in fact, the increased federal taxes equal or exceed spending (which is what the Dems claim will happen) then the removal of money from the private sector (aka “the economy”) will lead to a depression, as has happened so often n the past.i We only can pray the Dems are lying about reducing the debt and deficit. The other issue, perhaps the biggest issue currently, is whether increased deficits and debt will cause inflation. This is the one the GOP harps on, because they can’t complain about deficits, as they recently gifted the rich with major deficit-causing tax decreases (which by the way, increased the deficit and debt, but didn’t cause inflation). So what causes inflation? Is it the money supply, as so many economists claim? Do you see any relationship between the M2 money supply and inflation?

**Inflation (blue) vs. The M2 Money Supply (red)**

No, there doesn’t seem to be any relationship between the M2 money supply and inflation. But wait. Some economists claim it isn’t just the increased money supply that causes inflation, but rather increases in the velocity of money that causes inflation.

The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. (per the Federal Reserve of St. Louis)

**Inflation (bright blue) vs. the velocity of M2 (pale blue).**

No, there is a massive difference between the two lines. The velocity of money doesn’t seem to be a cause of inflation. So what about federal debt? That’s one that many economists claim causes inflation.

**Inflation (blue) vs. Federal Debt Held By The Public (purple)**

No, the peaks and valleys are completely different. Despite the bleating by Republicans and Libertarians, there doesn’t seem to be any relationship between federal debt and inflation. Here’s another thought. Some folks worry that the world (China especially) won’t “lend” us enough dollars. It’s a ridiculous concern, because the federal government does not borrow dollars from anyone, and further, it never can run short of dollars. But ridiculous concerns are part of what constitutes today’s economics. So, when the federal government doesn’t sell enough “debt” (Treasury Securities) to meet legal (though not financial) requirements, the Federal Reserve jumps in with its infinite supply of dollars. So, is there a relationship between inflation and the Federal Debt held by Federal Reserve Banks?

**Inflation vs. Federal Debt held by Federal Reserve Banks**

Nope. No relationship there, either. So, what does cause inflation? Here’s one hint:

**Inflation (blue) vs. Spot Crude Oil Price (orange).**

That’s more like it. Notice how the peaks and valleys of inflation generally match up with the peaks and valleys of oil prices. Of course, the match is not perfect because oil prices, which closely are related to oil shortages, are not the sole cause of inflation. Today’s inflation is related to the shortages not only of oil, but also of food, labor, shipping, computer chips, and other vital resources. And that gives you the answer to the question, “What causes inflation?” Inflation always is caused by shortages of key commodities, most often food and energy, along with other supplies. Inflation never is caused by “too much money,” never by federal spending, and never by federal deficits and debt. Not only do shortages, not money supply, always cause inflation, but inflation can be cured by federal deficit spending to cure shortages and to distribute the scarce items. Currently, the federal government is trying to ease inflation by distributing oil from the Strategic Petroleum Reserve. This is an example of government spending, because the government previously had deficit-spent to acquire that oil. The government can reduce the shortages of food and shipping by strategic spending to aid growers and shippers. The government can spend to bring more computer chip manufacturing to our shores. If the government would eliminate the nonsensical, useless FICA tax, (and act that would increase the federal deficit and debt) that would effectively raise salaries and encourage more people to come to work, thus easing the labor shortage. In summary, all the worries about federal deficit spending causing inflation are completely misplaced and in most cases, dishonest. They are nothing more than an attempt to widen the Gap between the rich and the rest. Finally, if federal deficit spending does not cause inflation, what does federal deficit spending do? Federal deficit spending helps prevent and cure recessions:

**Gold line shows increases and decreases in federal deficit spending. Vertical gray bars indicate recessions.**

When federal deficit growth declines we have a recession, which is cured by a deficit growth increase. SUMMARY The federal government, unlike state/local governments, cannot run short of U.S. dollars. It can pay any debt denominated in dollars, simply by creating dollars. Though state/local government taxes fund state/local government spendinng, federal taxes do not fund federal spending. Unlike state/local tax dollars, federal tax dollars are destroyed upon receipt by the Treasury. No evidence supports the belief that “too much” federal deficit spending causes inflation. On the contrary, federal deficit spending can prevent and cure inflations. Additionally, federal deficit spending can prevent and cure recessions and depressions. There is no financial reason ever to restrict federal spending. The false belief that federal finances are similar to state/local government finances and personal finances is fostered by the very rich, who strongly influence the government via bribery. The rich wish to widen the Gap between them and the rest of the citizenry. The wider the Gap, the richer are the rich. It is the fundamental reason why the rich bribe the politicians, the media, and the economists. 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:

Monetary Sovereignty describes money creation and destruction.
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.”

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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