Medicare for All: The real stumbling block Sunday, Mar 17 2019 

Imagine that everyone in America — you, your family, your friends and neighbors — everyone,  could receive health care from doctors, hospitals, rehab facilities, extended care facilities, and all pharmaceuticals and equipment, and never have to worry about cost.

Related image

A choice?

Imagine you being forced to choose between your financial devastation vs. sickness or death for your loved ones.

Then, imagine the federal government paying all your health-related bills, leaving you free from worry.

The rich in America already live in such a glorious world, but for most of us, current and future health affordability is an ongoing concern.

Yet, many non-rich Americans oppose even the concept of Medicare for All. Why?

1. It’s unsustainable. Debt fear mongers have been promulgating that myth for at least 80 years.In 1940, when the federal debt was $40 Billion, the fear-mongers were calling it a “ticking time bomb.

“Every year afterward, they have pounded the same lies into our brains: “The federal government will go broke. It’s “unsustainable.” Your children’s taxes will have to go up.”

Today, the debt is $20 Trillion, and the government has not gone broke, and indeed cannot go broke, and taxes have not risen.

2. It’s socialism. Actually it isn’t. It’s progressivism. Socialism is government ownership and control, not merely government support.

The federal government supports many things: Social Security, Medicare, Medicaid, poverty aids, education, etc. Shall we eliminate them?

Additionally, we do allow many forms of real socialism: The military, roads, bridges and dams, public libraries, NASA, the VA, etc. Shall we eliminate those, too?

3. It will cause inflation or hyperinflation. Although in the past 80 years, federal debt has risen an astounding 50,000%, inflation has averaged close to the Fed’s 2.5% target.

The reason is that the Fed has tools it needs to prevent and cure inflations, among which is: Control over interest rates.

Raising rates increases demand for the dollar, making it more valuable, so fewer dollars are needed to buy goods and services.

While federal “debt” (blue, i.e. deposits into T-security accounts) increased massively, inflation (red) increased modestly.

4. We don’t have enough resources. What this really means is: “If the poor start using doctors, hospitals, et al, then there won’t be enough doctors and hospitals for me.”

These objectors believe that a viable health-care system relies on the poor not being able to afford health-care — that “limited” resources should be reserved for the wealthier among us. This is America?

A nation’s resources grow with the money available to  pay for them. Funded by a government’s unlimited ability to pay, resources are unlimited.

5. It will take money and jobs from the health insurance industry. Right, just as public transportation takes money and jobs from taxi drivers.

Some jobs will be added in the federal sector. But in any event, the notion that the poor should do without healthcare so that the insurance industry can keep its jobs is ridiculous. It’s an example of misplaced priorities.

The above are fake reasons, used to conceal the real reason, which is described in the following, brief, “THE WEEK Magazine” (2/22/19) article:

Despite all the attention tech gets, the biggest five insurance and health benefits companies have greater revenues than the FAANGS – Facebook, Amazon, Apple, Netflix, and Google.

The top five health insurers and benefit managers expect &787 billion in revenue for 2019, compared with $784 billion for the FAANGS.

Pharmacy benefit manager CVS, the biggest of the health-care group, expects revenues of $246 billion.

In short, the insurance companies, that massively bribe politicians with campaign contributions and promises of lucrative employment later, don’t want the federal government to offer you better, more comprehensive, no deductible insurance at no cost.

OpenSecrets.org reveals:

One-third of Senate Democrats have cosponsored the Medicare for All Act, which Sanders introduced in September.

Democrats who haven’t cosponsored the bill received 146 percent more money on average from health insurance companies between 2011 and 2016 than those who have ($147,186 to $59,789)

If you’ve been told lies #1 thru #5, there is a good chance the source either is ignorant of economic reality or has been bribed by the health insurance industry.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

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 you.

MONETARY SOVEREIGNTY

Translating a letter from a debt nut Monday, Mar 11 2019 

Herewith, for your education and amusement, we translate into correct economics,  the opinions of a certifiable, wrong-headed debt nut:
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

President Trump’s budget aims to reverse an unsustainable fiscal situation and put debt on a downward path relative to the economy.
Unfortunately, as in previous years, he relies on far too many accounting gimmicks and fantasy assumptions and puts forward far too few actual solutions.
Translation: The Republican budget that President Trump has not, and cannot, read aims to continue a sustainable (since 1940) fiscal situation and put deposits into T-security accounts on an upward path.
Unfortunately, as in previous years, he relies on far too many accounting gimmicks and fantasy assumptions and puts forward far too few actual solutions.
Even full of accounting gimmicks meant to paper over deficits, the President’s Budget would still borrow $7.8 trillion over the next decade.
Under reasonable economic assumptions, however, we find it would be closer to $10.5 trillion.
Translation: Even full of accounting gimmicks meant to paper over stimulative additions to the economy, the Republican Budget that Trump hasn’t read, would still accept $7.8 trillion in T-security account deposits over the next decade.
Under reasonable economic assumptions, however, we find it would be closer to a $10.5 trillion addition to the economy.
Image result for signing blind

How Trump signs GOP bills.

President Trump has already signed into law debt-financed tax cuts and spending increases that will add $2.3 trillion to the debt over the next decade, despite budgets that proposed revenue-neutral tax reform and spending reductions.
This budget does nothing to address or pay for these expanded deficits – in fact, it assumes the tax cuts are extended without even recognizing the cost.

Translation: President Trump has blindly signed into law tax cuts and spending increases that will add $2.3 trillion to the economy over the next decade, despite recessionary budgets that proposed disastrous tax increases and spending reductions.

This budget does nothing to take advantage of the government’s unlimited ability to pay for these expanded additions to the economy – in fact, it assumes the tax cuts are extended without even recognizing the benefits.
Perhaps most disappointing is the decision to continue
Image result for money pouring into a hand

Deficits –federal tax cuts and spending — add growth dollars to the economy.

And expand recent defense increases by funding almost $100 billion in new spending through an off-book emergency war account.

This Overseas Contingency Operations (OCO) gimmick is not new, but the proposed abuse of this account rises to a new level never before seen and sets a dangerous precedent.
Translation: Perhaps most encouraging is the decision to continue and expand recent defense increases by funding almost $100 billion in new spending.
This Overseas Contingency Operations (OCO) program is not new, but the proposed use of this account rises to a new level never before seen and sets a favorable precedent for stimulating the economy.
Meanwhile, a fantasy assumption of sustained 3 percent economic growth makes a return appearance in the budget.
Every independent forecaster foresees growth to average closer to 2 percent over the next decade.
Assuming an extra point of growth serves no purpose but to mask the high deficits and debt likely to materialize under the President’s budget.
Meanwhile, a typically Trumpist fantasy assumption of sustained 3 percent economic growth makes a return appearance in the budget.
Every independent forecaster foresees growth to average closer to 2 percent over the next decade.
Assuming an extra point of growth serves no purpose but to mask the economy’s surpluses and the deposits into T-security accounts likely to materialize under the Republican’s budget.
Thoughtful Medicare, disability, and other proposals in the budget deserve serious debate, but these policies are overshadowed by inflated economic growth, unrealistic policy assumptions, and a failure to recognize the deep hole that policymakers have dug in recent years.
Translation: Thoughtful Medicare, disability, and other proposals in the budget deserve serious debate, but these policies are overshadowed by inflated economic growth, unrealistic policy assumptions, and a failure to recognize the economic stimuli that policymakers have invested in recent years.
If the past two years are any indication, this budget will be followed by more debt, not debt reduction.
On our current course, Americans will soon face record levels of debt, leading to slower income growth, increased interest payments, and less opportunity.
If the past two years are any indication, this budget will be followed by more economic growth, not growth reduction.
On our current course, Americans will soon face record levels of economic growth, leading to higher income growth, increased interest payments into the private sector, and more opportunity that results from increases in the money supply. 
In Summary:
If you merely substitute:
  • “deposits into T-security accounts”  for “debt,”
  • “investments in the private sector” for “deficits,”
  • “sustainable since 1940” for “unsustainable,”
  • “favorable precedent” for “unfavorable precedent,” and
  • “Republican” for “Trump” (who never reads anything and will sign anything anti-Obama),
you will be able to glean the truths from the lies of Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

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 you.

MONETARY SOVEREIGNTY

Inflation: The causes and cures Saturday, Mar 9 2019 

In one sense, inflations (and hyperinflations) must be complex, not only because so many nations have suffered from them and not known what to do, but because so many events can cause inflations.

But in another sense,  many nations have figured out how to prevent and cure inflations, and the causes can be boiled down to just two. This post reveals the two causes of, and the two best cures for, inflation.

Inflation does not exist in a vacuum. It is a change in the relationship between the value of a currency and the average value of goods and services. In short, the value of the currency declines relative to the value of the goods and services.

Image result for hyperinflation germany wheelbarrow

Classic example of hyperinflation — wheelbarrow of money.

Popular wisdom holds that government deficit spending or “money creation” causes inflation. Many examples of inflation, particularly hyperinflation (an extreme form of inflation) do seem to correspond with money creation.

Weimar Republic (Germany) and Zimbabwe are perhaps the most cited examples.

Yet, in the U.S., the money supply has increased markedly with only moderate inflation.

The following graph shows indexes of three money measures, M1 (green), M2 (red), and M3 (blue), along with the consumer price index measure of inflation (purple). All indexes are based on January 1980 = 100.

While all three money measures have risen substantially, inflation has been comparatively modest, and within the Fed’s target of 2.5% annually. Why?

Here is another graph comparing the rise of federal debt (total of T-security accounts) with the consumer price index:

Federal debt grew massively while inflation remained moderate.

Again, there seems to be scant relationship between federal debt growth and inflation.

It would be difficult to look at these data and conclude that federal deficit spending (i.e. money creation) causes inflation. In fact, money creation seems to be a government’s response to inflation, not the cause.

Where does that leave us?

Inflation is based on the value of goods and service vs. the value of a currency. The value of goods and services is based on Demand/Supply. The value of a currency also is based on Demand/Supply.

The formula for the value of goods and services (Demand/Supply) is driven mostly by changes in the Supply side of the fraction. When food or energy are in short supply, inflation is inevitable. The Demand for food and oil (today’s stand-in for energy) is far less variable.

In the formula for the value of dollars, Demand/Supply, both Demand and Supply can be quite variable. The Demand for currency is based on Reward/Risk. The Reward for owning dollars is interest. The Risk would be the reduced “full faith and credit” of the issuer.

Because the full faith and credit of the U.S. essentially is perfect, Risk is not an important variable here.

This means that inflation comes when the Reward for owning dollars (interest) declines and/or the Supply of food and/or energy declines.

A larger economy has more money than does a smaller economy. For instance, California has a larger economy and more money than does Los Angeles. Therefore, to grow an economy requires growing the money Supply. 

That indicates that trying to fight inflation by limiting the money supply (aka austerity), via reduced deficit spending and/or increased taxation, will lead to recession or depression.

Annual % change in Federal Debt shows that reductions lead to recessions (vertical bars), and increases cure recessions.

As for surpluses (i.e. extreme deficit reductions), they lead to depressions (i.e. extreme recessions):

1804-1812: U. S. Federal Debt reduced by 48%. Depression began in 1807.
1817-1821: U. S. Federal Debt reduced by 29%. Depression began in 1819.
1823-1836: U. S. Federal Debt reduced by 99%. Depression began in 1837.
1852-1857: U. S. Federal Debt reduced by 59%. Depression began in 1857.
1867-1873: U. S. Federal Debt reduced by 27%. Depression began in 1873.
1880-1893: U. S. Federal Debt reduced by 57%. Depression began in 1893.
1920-1930: U. S. Federal Debt reduced by 36%. Depression began in 1929.
1997-2001: U. S. Federal Debt reduced by 15%. A recession began in 2001.

Bottom line: Inflation devolves to two variables: The supply of food and/or energy and interest rates.

The prevention and cure for inflation is to make sure the Supply of goods and services (usually food or energy ) is adequate, and the Reward for owning dollars (interest), remains adequate.

Example: Zimbabwe’s hyperinflation began when its leader, Robert Mugabe stole farm land from white farmers and gave it to black people who had no experience farming.

The resultant food shortage caused inflation.  Then, Mugabe’s response was to print currency, which did nothing to solve the fundamental shortage problem. And as the inflation worsened, more and more useless currency printing followed, and it was the currency printing that wrongly was blamed for the inflation.

It was as though someone prescribed wine to cure a cancer. As the cancer progressed, more and more wine was prescribed until the patient died, and the wine was blamed as the cause of the cancer.

 In short, to prevent inflation don’t cut federal deficit spending. Rather, make sure the economy has plenty of food and energy and high enough interest rates.

And so, to cure an existing inflation, you must increase your supply of food and energy, and/or increase interest rates.

Printing more currency is an ineffective inflation cure, as is cutting deficit spending (aka “austerity.) Both exacerbate inflation and lead to recessions and depressions. Instituting austerity to grow an economy is like applying leeches to cure anemia. 

What should a Monetarily Sovereign country do about inflation? Here are the best steps to take:

  1. Increase interest rates to make the currency more valuable. This is the method the Fed uses to control inflation.
  2. Support farmers by cutting farm taxes, passing farm support bills, support farm research to increase crop yields.
  3. Support energy creation: Oil drilling, renewable energy.
  • Do not blame federal deficit spending for causing future inflations
  • Do not begin austerity (reduced deficit spending, increased taxation)
  • Do not print additional currency.
  • Do not borrow a foreign currency

What about monetarily non-sovereign nations like the euro countries, which do not have a sovereign currency?

If the EU cannot be convinced to prevent and cure inflations, while supporting economic growth, euro nations must re-establish their own currencies, and become Monetarily Sovereign, again.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

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 Gaps between the rich and you.

MONETARY SOVEREIGNTY

FICA: The trillion dollar millstone around the neck of the American economy Friday, Mar 8 2019 

The Ten Steps to Prosperity, listed at the end of this post, are introduced by Step 1., Eliminate FICA. It is, by far, the easiest to implement Step.

According to the Brookings Institution: Payroll taxes are levied to finance Social Security, the hospital insurance portion (Part A) of Medicare, and the federal unemployment insurance program.

Revenue totaled just over $1.1 trillion, or about 6.1 percent of gross domestic product, in fiscal year 2017.

Of course, the first paragraph is completely false. It comprises “The Big Lie” that federal finances are like personal finances.

Because our federal government is Monetarily Sovereign, and so creates new dollars ad hoc, each time it pays a bill, federal taxes fund nothing. They are destroyed upon receipt.

Therefore, FICA does not “finance Social Security,” and comparing tax revenue to GDP is senseless. While monetarily non-sovereign entities (state/local governments, businesses, you, and me) need income in order to fund outgo, the U.S. government neither needs nor uses income.

Here is a graph published by The Motley Fool:

The gold colored box at the top of the 2nd column was given the negative term, “Deficit.” It more properly should be given the positive title, “Net Dollars Added to the Private Sector By the Federal Government.

Why is this important?

Remember how President Obama sent each family up to $500 to help end the Great Recession? And remember how President Trump boasted about how cutting taxes would stimulate the economy?

Obama was correct to send dollars to families — because that adds dollars to the private sector. And Trump was correct that tax cuts are stimulative — simply because they leave more dollars in the private sector.

A growing economy requires a growing supply of money in the private sector.

Now think of the federal government ripping more than a trillion dollars per year from the private sector. Think of what that does to economic growth. That is tantamount to the Federal government making a giant, trillion dollar bonfire out of your FICA dollars.

That is the negative effect of FICA.

But it gets worse. The government’s FICA bonfire mostly consumes dollars belonging to the middle- and lower income groups — salary dollars.

Image result for millstone on the neck

FICA: A giant millstone around the neck of the middle- and lower-classes

The rich have made sure that interest and capital gains are not subject to FICA — only salaries of employees.

All those millions and billions the rich make in the stock market or on real estate deals or as partners in a partnership — those are not subject to FICA.

But it gets even worse.  The Social Security tax rate is 12.4%; 6.2% is withheld from each of the employer and employee. But, the employee really pays the full 12.4%, because employers figure that in as a cost of salary.

The maximum taxable earnings for Social Security withholding for 2018 were $132,900. (Medicare withholding — 2.9% from salaries — has no maximum.)

If you make, say, $75,000 a year, your entire paycheck is subject to the 15.3% FICA tax, for a total of $11,475.

But, if you earn $1,00,000 a year, of which $250,000 is salary and the rest is stock market and real estate gains, you will pay $16,479 (12.4% x  132,900 for Social Security)  plus $7,250 (2.9% x 250,000 for Medicare) for a total of $23,729.

In short, the middle-class sucker pays 15.3% of his paycheck, while the rich guy pays only 2.4% of his paycheck.

But it gets even worse, yet. If you’re making millions a year, you have accountants who set up partnerships and offshore deals to shelter you (not only from FICA but from income taxes).

But, it gets even worse and worse. Incredibly, the federal government levies income tax on your Social Security benefits.

So here you are, ostensibly paying for your Social Security benefits via FICA, and then the government taxes the benefits you ostensibly paid for. (I say “ostensibly,” because FICA doesn’t actually pay for anything. No federal tax pays for anything.)

In summary, FICA is a giant scam, designed to widen the Gap between the rich and the rest. It’s classic Gap Psychology, the human desire to distance oneself from those below on any income/wealth/power scale, and to come closer to those above. It is the popular belief that people below us on the income/wealth/power scale are inferior and to be disrespected, while people above us are superior and to be admired.

Will allowing the middle class to keep its trillion dollars cause inflation? Let’s look at a bit of history:

Index scale value=100 for 2008. Blue: Federal Debt. Red: Inflation.

In the ten years since the “Great Recession,” federal debt rose $10 trillion, nearly a trillion a year (191%) while inflation rose a total of only 17%.

And even that modest increase in inflation could have been lower. Because it was below the Fed’s target of about 2.5%, the Fed kept interest rates artificially low, trying to increase inflation.

Had inflation threatened higher, the Fed would have controlled it by raising rates, as it has begun to do recently.

In summary, FICA is the most unfair, regressive, useless tax in America.

  • It pays for nothing.
  • It reduces economic growth by taking a trillion dollars out of the economy, and destroying them, every year.
  • The benefits it supposedly funds are taxed — a tax on a tax.
  • It impacts the middle-classes and the poor far more than the rich, widening the Gap between the rich and the rest.
  • It is the most easily implemented Step of the Ten Steps to Prosperity, requiring no bureaucracy; it could be done instantly.
  • It would save time and effort for businesses, which no longer would have to make the calculation and the deduction from every employee’s pay.

FICA is a trillion dollar millstone around the neck of America’s economy. Eliminating FICA is the easiest, fastest, fairest way for the federal government to stimulate economic growth.

The heavy burden called “FICA” should be eliminated, now.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

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 you.

MONETARY SOVEREIGNTY

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