Tag: monetary sovereignty

The “unsolvable” elderly

When my wife died, I decided I didn’t need two homes, so I gave my Illinois home to my children and moved permanently to Florida. Because we don’t have snow and ice, the weather here generally is more accommodating for us elderly than up north, though the occasional hurricane can be stressful. An article in the South Florida Sun Sentinel describes a growing problem- local and national. Here are some excerpts:
As South Florida’s seniors grow older, experts warn of the ‘silver tsunami’ financial crisis By Lisa J. Huriash | lhuriash@sunsentinel.com, November 18, 2024 Aging experts unveiled a grim outlook for aging seniors who increasingly are impoverished and dependent on government help to get by. And in South Florida, they say the numbers are reaching more of a crisis level as the number of seniors grow, often with no pensions and not enough savings — relying instead on Social Security benefits. “If you aren’t being kept up at night by the impending ‘silver tsunami,’ then you aren’t paying attention,” declared Broward County Commissioner Steve Geller, who is also the chair of the South Florida Regional Planning Council.
Also, keep in mind the tsunami of misinformation and disinformation regarding the so-called “impending insolvency” of Social Security and Medicare, the two main federal benefits received by the elderly.
Commonly referred to as the “silver tsunami,” residents age 65 and older are projected to number more than 2.13 million in the seven-county region by 2050, reflecting an increase of 54.5% since 2021, according to the Planning Council.
While the article discusses South Florida, the situation is nationwide. The U.S. population of 65 and older has grown significantly over the past decade. From 2010 to 2020, this age group increased by 38.6%, from 40.3 million to 55.8 million, the fastest growth rate since 1880 to 1890. Over the past decade, the increase of 15.5 million people in this age group is the largest-ever 10-year numeric gain. This rapid growth is largely driven by the aging of the Baby Boomer generation (those born between 1946 and 1964), who began turning 65 in 2011.
Of these residents, 520,000 will be 85 years of age or older, reflecting a projected increase of 133.6% from 2025 to 2050. A conference about “preparing for the silver tsunami” was held Friday at Florida Atlantic University in Boca Raton, presented by the South Florida and Treasure Coast Regional Planning Councils. There, experts shared what the future could look like, using figures from the U.S. Census, and studies by state agencies, the Federal Reserve Bank, and more:

— By 2034, Americans ages 65 and older will outnumber those 18 and younger for the first time.

— Nearly half of elderly unmarried women rely on Social Security for 90% of their income, compared to 22% of all seniors.

— Older Americans are carrying more debt into retirement.

— The age-85-and-older population in southeast Florida will more than double in 25 years, which means the need for more elder care.

— The median income for American adults is $50,290 while their average annual expenses are $57,818.

Social Security
The average monthly Social Security benefit is $1,907, or $22,884 a year. “There is a disconnect of how much people understand they have to save,” said Angela Antonelli, a research professor and executive director of the Georgetown University Center for Retirement Initiatives. One in five Americans rely on Social Security for 90% or more of their income, she said. “Social Security does not keep you out of poverty,” she said.
Social Security could and should keep you out of poverty. There is no excuse for a Monetarily Sovereign nation, with the infinite ability to create dollars, to allow its elderly citizens to fall into poverty. Affordability is not a factor for a Monetarily Sovereign government. Even without collecting a penny in taxes, the federal government could fund a generous version of Social Security, which would keep you out of poverty.  So why not?
On Friday, experts urged policymakers to use the information to try to think of ways to create change when it comes to crucial areas of health care, transportation, housing and finances. Nan Rich, a panelist, said “right now we have a crisis in our community when it comes to seniors,” especially as the condos they purchased in the 1970s now are in need of expensive repairs and maintenance.
New Pallet shelter village opens in Burlington, Washington - Pallet Shelter
Pallet shelters. Are these little boxes the solutions for your Grandma? Is this the best America can do for its elderly? “Pray it doesn’t rain, granny.”
Florida is monetarily non-sovereign. Unlike the U.S. federal government, Florida cannot create infinite money. It would need to levy taxes to fund senior healthcare, transportation, housing, and finances. The federal government, by contrast, could and should do it without taxes.
There is also an expectation that more seniors are facing being homeless, and Rich said she’s trying to make headway there, too: The county is expected to soon make a decision on whether to build Pallet shelters, tiny transitional houses for the homeless. Miami-Dade County has nearly half a million residents age 65 and older. But poverty is the highest for seniors than any other age group, said Tyler Moroles, assistant division director of the Section 8 Housing Choice Voucher Program for Miami-Dade. While housing is expensive for everyone — the median rent is $2,100 which requires a salary of $75,600 to be affordable — it’s nearly impossible for the thousands of seniors in public housing. The average senior income there is $14,691 a year. The county is now redeveloping 1,800 public housing units to create more living spaces. This year, 137,000 applicants have applied for housing vouchers, he said, and only 5,000 of those were chosen. “It’s a national issue, we’re trying to deal with it,”he said. There is no good reason why the states are left to deal with national issues where the fedeal government’s money provides a solution. Among the issues that the experts pondered: What changes does government need to prepare for, such as “granny flats” to allow housing additions so multiple generations can live together “to encourage senior-friendly housing” and allow seniors to age in place.
“Senior friendly” Pallet shelters? Really? Is that where you would like t0 spend your remaining days?
Health care There is a national shortage of 30,000 geriatricians, said Dr. Naushira Pandya, the chair of Geriatrics at NSU. “There will never be enough geriatricians for what we need,” she said. “The need is really great.” It’s an “intellectual challenge” to treat the host of medical issues, but it doesn’t get the same level of enthusiasm as other medical fields, she said.
Becoming a geriatrician requires 12-14 years of college and $200,000 – $350,00 in tuition, including undergraduate and medical school tuition, plus living expenses during residency and fellowship. While the government may be unable to give you back the years, it can undoubtedly underwrite the costs.
That panel conversation sparked an idea to attract more doctors to specialize in geriatrics by state Sen. Gayle Harrell, R-Stuart, who noted how this year’s “Live Healthy” legislation assists in loan repaymentsfor doctors who work in underserved areas.
What a concept! Put them deeply in debt and then force them to work in low-remuneration areas, so paying off the debt will be especially difficult. How about this: No loans. Have the federal government pay their all their expenses, and give them a supplemental salary if they work in “underserved areas.”
Transportation “Most adults will outlive their ability to drive by seven to 10 years,” warned panelist Laura Streed, the senior associate state director of AARP of Florida. Chris Stephenson, the transportation mobility director of the Senior Resource Association in Indian River County, which provides services including Meals on Wheels and adult day care: “Isolation can have profound health consequences. Yet if seniors don’t have adequate transportation they are homebound.} He shared a popular program in Palm Beach County that has adapted “to meet the needs of our senior population.” It uses Uber and other ride-sharing companies “to fill the gaps” to get seniors to public transit stations, which might be too far to reach by walking. Karen Deigl, president and CEO of Senior Resource Association urged policy makers to enhance public transit by creating routes that connect to neighboring counties, make transit accessible with wheelchair lifts and low floors, and a voice that calls out each stop, and allow same-day trip requests. Because “some people just shouldn’t drive,” she said. Lisa J. Huriash can be reached at lhuriash@sunsentinel.com. Follow on X, formerly Twitter, @LisaHuriash
CONCLUSION The population is aging which leads to multiple problems. Many possible solutions have been proposed, almost all of which involve funding. The federal government, being Monetarily Sovereign, has the infinite ability to fund anything without collecting taxes. Strangely, the resistance to “big government” seems not to extend to big state and local government—just big federal government—though the federal government is the one entity that easily can fund all the solutions without burdening taxpayers. Even more strangely, the resistance to” big government” comes primarily from the party that elevated a dictator wanna-be to the Presidency. Go figure. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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

MONETARY SOVEREIGNTY

The bad news that actually is good news, and the good news that’s bad

Today, we discuss an article that appeared in the November 12, 2024 Washington Post, describing good news that’s bad news and bad news that’s good news. Here are a few excerpts:
These tax cuts will go away without action by Congress and Trump Many of the tax cuts enacted during Trump’s first term are set to expire at the end of 2025, but keeping them could add trillions to the federal debt. By Julie Zauzmer Weil, November 12, 2024 at 11:30 a.m. EST Many tax cuts enacted during President-elect Donald Trump’s first term are set to expire at the end of 2025. That means taxes will rise for most Americans unless Congress acts to renew them.
That is really bad news.
Uncle Sam with tons of money
I am the U.S. government. When you send me your dollars, it does nothing for me. I already have infinite dollars. When I send you dollars, it grows the economy and improves your life. BUT FOR SOME WEIRD REASON, THE POLITICIANS AND MEDIA WORRY ABOUT MY FINANCES, NOT YOURS !!
Our Monetarily Sovereign federal government neither uses nor needs tax dollars; they are destroyed upon receipt by the Treasury. They are paid from the private sector’s M2 money supply measure, and when they reach the Treasury, they cease to be part of any money supply measure. Effectively, they are destroyed by being added to an infinite and immeasurable money supply.
Trump has promised to extend almost all of the cuts, but that would come at a hefty price. By some projections, renewing the cuts would add $4 trillion or more to the federal debt over the next decade.
Translation: Renewing the cuts would keep 4 trillion or more growth dollars in the economy. Great news. (The “federal debt” isn’t federal, and it isn’t debt. The dollars are deposits wholly owned by the depositors, not the federal government. The government never takes ownership of the dollars; it merely holds them for safekeeping. The closest corollary is safe deposit boxes.)
The 2017 law lowered tax rates, dropping the marginal tax rate for the highest earners to 37 percent from 39.6 percent, for example. Unless Congress acts, the rates will snap back in 2026.  Extending current law would reduce revenue by $1.8 trillion.
Translation: Not extending the current law would cause the highest earners to pay $1.8 trillion more. This would be a $1.8 trillion loss for the economy (bad news), but all other things being equal, a narrowing of the income/wealth/power Gap between the rich and the rest would be good news.
The 2017 law almost doubled the standard deduction, one of several steps that greatly reduced the number of people who itemize deductions (currently 1 in 10 taxpayers). If the standard deduction reverted to pre-2017 levels, less money would automatically be shielded from taxes and more households would itemize. Extending current law would reduce revenue by $1 trillion.
Translation: Extending the current law would leave $1 trillion more growth dollars in the economy (good news). But with fewer deductions, the effect on charities, homeowners, and other borrowers is complex and negative. On balance, the increased standard deduction may increase tax bills (bad news), especially for homeowners. This depends on whether tax rates go up to cover the increased deductions.
The 2017 law eliminated the personal exemption for each member of a household, which was $4,050 at the time. Without congressional action, that would return in 2026, which would allow people to shield more income from taxes. Extending current law would raise revenue by $1.6 trillion.
Translation: Extending the current law would remove $1.6 billion in growth dollars from the economy (bad news).
The maximum child tax credit doubled from $1,000 per child to $2,000. Extending current law to keep the $2,000 credit would reduce revenue by $592 billion.
Translation: Keeping the $2,000 child tax credit not only would keep $592 billion growth dollars in the economy (good news), but those dollars would go to average families. Otherwise, the Gap between rich and the rest would widen (very bad news).
Under the 2017 law, everyone but members of the military lost the ability to claim a deduction for moving expenses. The law also took away the option for employers to reimburse workers tax-free for moving expenses or for up to $20 a month in bike commuting expenses. Those benefits are set to return in 2026. Extending current law would raise revenue by $15.5 billion for moving expenses and $136 million for bike commuting.
Translation: Extending the current law would take $15.636 billion growth dollars out of the economy, mostly from average families (very bad news).
The 2017 law capped at $10,000 the amount of state and local taxes — often abbreviated as SALT — each household can deduct from federal income taxes. The cap is unpopular in blue states with high taxes, but removing it would benefit primarily the wealthiest households. On the campaign trail, Trump said he favors letting this provision lapse so people everywhere can deduct all their state and local taxes again. The Congressional Budget Office did not specifically estimate the cost of extending the SALT cap in and of itself, but the Penn Wharton Budget Model estimated in September that lifting the SALT cap would cost the federal government as much as $1.1 trillion over the next decade.
Translation: Cancelling SALT would add $1.1 trillion in growth dollars to the economy (good news).
The law made changes to several other itemized deductions, including allowing people to deduct more charitable expenses, restricting the mortgage interest deduction for newly purchased homes to the first $750,000 of the mortgage instead of $1 million, blocking victims of theft from claiming their losses, and removing tax preparation fees and unreimbursed employee expenses as eligible deductions. All of those changes are set to expire. Extending current law would raise revenue by $908 billion.
Translation: Extending the current law would take $908 billion in growth dollars from the economy (bad news).
The 2017 law raised the threshold at which estates are subject to federal taxation when someone dies, increasing it from just over $5 million to just over $11 million. Since then, inflation adjustments have raised the threshold to more than $13 million. The threshold is set to snap back, with adjustments for inflation, to an estimated $7 million in 2026.
Extending current law would reduce revenue by $126 billion.
Uncle Sam pockets inside out to show he's poor.
Hi, suckers, it’s me, your favorite uncle, Sam. I pretend I need your money, but I own a money-printing machine; I never can run short. Nevertheless, I whine about deficits and debt, and I tell you to send me more. It’s the greatest con the world has ever seen.
Translation: Allowing the threshold to snap back would take $126 billion in growth dollars out of the economy, mostly from upper-middle-class families, not from the rich, thereby widening the Gap between the rich and the rest (very bad news).
The 2017 law reduces the number of households subject to the Alternative Minimum Tax, a parallel tax system designed to ensure that wealthier households pay a minimum amount of income tax. The tax — often abbreviated as the AMT — has been criticized as overly complicated and hard to calculate. Many more households would be subject to this tax again if the provision expires. Extending current law would reduce revenue by $1 trillion.
Translation: Extending the current law would leave $1 trillion growth dollars in the economy, almost all of it in the hands of middle—and upper-middle-income families. The rich have found ways to avoid this law. (Extending the law would be good news)
The 2017 law created a generous deduction for business owners whose business income “passes through” to their personal income tax return (instead of being taxed as corporate income). The provision allows gig workers such as Uber drivers and dog walkers, partners in massive business interests, and others to deduct up to 20 percent of their business income. Some Republicans have concerns about the complex ways this deduction was structured and want to revise it in a 2025 tax bill. Others want to simply renew it to prevent it from expiring. Extending current law would reduce revenue by $548 billion.
Translation: If the calculation is correct, this would leave $548 growth dollars in the economy (on balance, good news). SUMMARY For reasons I cannot understand, the author, Julie Zauzmer Weil, and her peers seem to think that growth dollars coming out of the economy and going to the Monetarily Sovereign government that neither needs nor uses them is good news. By simple formula, economic growth requires money growth, while the federal government creates all the dollars it needs by passing laws. If someone can explain why a federal deficit is bad but an economic deficit is good, I would be delighted to publish your response. I have been trying to unravel this mystery for over a quarter century, and today, I am no closer to an answer than ever. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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

MONETARY SOVEREIGNTY

Medicare and Medicaid easily could (should) be better

There are penalties for ignorance, and America pays them every day:
Almost Half of Medicare Patients Can’t Afford a Single Hospital Stay New University of Pennsylvania research highlights growing health care affordability crisis. By Huey Freeman
Read that headline again. Digest it’s meaning. You have original Medicare. You are sick. But you can’t afford to go to the hospital. And you are not rare. Almost half of Medicare patients are just like you. What the hell??
Americans who rely on Medicare to pay for hospital stays are often unable to pay the cost of the standard deduction,sometimes producing a financial shock.
Uncle Sam pockets inside out to show he's poor.
I’m Uncle Sam. I have the infinite ability to create dollars. Even if you don’t pay me one penny in taxes, I could keep spending forever. But don’t ask me for money to pay for your healthcare. I tell everyone I’m broke.
Think about it, more. The federal government is Monetarily Sovereign. That means:
  1. It never can run short of dollars.
  2. It neither needs nor uses tax dollars to pay its bills. It just creates new dollars, every time it pays someone.
  3. Those FICA dollars that are deducted from your pay, supposedly to fund Medicare, don’t fund anything. The govenment destroys them upon receipt, and creates new dollars to pay doctors, nurses, hospitals, etc.
But for some reason, which I’ll explain later, the government insists that you pay 20% of the bill. Three years ago, my wife died in the hospital after a 2-week stay. The bill was somewhere over $400,000 in total. Medicare paid $320,000. Fortunately, I paid for supplementary insurance, which covered nearly all the rest. But for most people, that $80,000 would have landed them in bankruptcy court. Why? Why does Medicare not pay the entire cost? And so long as we’re asking questions, why do we have an alternative called Medicare Advantage that covers some things Medicare doesn’t, but with restriction original Medicare doesn’t have. Why doesn’t original Medicare simply cover everything? Remember, the federal governmennt, being Monetarily Sovereign, cannot run short of dollars.
Researchers at the University of Pennsylvania Perelman School of Medicine found that almost half of such patients have insufficient funds to pay the $1,600 payment, the standard out-of-pocket cost.
Why, the out-of-pocket cost? Here are reasons given: Medicare doesn’t cover 100% of costs for several reasons:
  1. Cost Control: Having beneficiaries share in the cost helps control overall healthcare spending and prevents overuse of services. (The false beliefs are that the government can run short of dollars and people will visit the doctor too much.)
  2. Sustainability: Given the rising healthcare costs, partial coverage helps ensure the program’s financial sustainability. (Same false beliefs as #1)
  3. Incentive for Supplemental Insurance: Encourages beneficiaries to purchase supplemental insurance (Medigap) to cover the remaining costs, providing additional financial protection. (Apparently, the profits of private insurance companies are more important than the people’s finances.)
  4. Budget Constraints: Full coverage would require significantly higher government spending, which might not be feasible given budget constraints. (Unnecessary budget constraints).
And now for the real reason:

5. The politicians are bribed by the rich (via campaign contributions and lucrative jobs) to widen the income/wealth Gap between the rich and the rest. The Gap is what makes the rich wealthy, and the wider the Gap, the wealthier they are.

Federal funding for health care narrows the Gap, so politicians invent excuses to claim it can’t be done.

Even beneficiaries with incomes above the federal poverty level sometimes cannot meet this expense after depleting their savings, according to the study results published in the Annals of Internal Medicine. However, the financial burden extends far beyond just the poorest Americans. “Many Medicare beneficiaries with modest incomes are at risk for financial hardship from costs of a single hospital stay,” the researchers wrote.
Think of yourself as a billionaire, and one of your kids can’t afford medical treatment. Would you allow him to go bankrupt? The federal govenment would.
“Nationally, 36 percent of beneficiaries report difficulty paying medical bills or delaying care due to cost concerns, and those with multiple chronic conditions and serious illnesses are at particular risk for high out-of-pocket costs and economic hardship,” they noted. While Medicaid (not Medicare) and private supplemental insurance can help cover these costs, qualifying for such assistance often requires proving extreme financial hardship.
First,  you must be destitute and prove it.
Patients must prove that their income is at or below the federal poverty level—currently set at $15,060 for individuals and $20,440 for couples in 2024. There are also asset limits of $2,000 for individuals, and $3,000 for couples.
However, some (red) states have set higher thresholds, extending Medicaid limits to 138 percent of the federal poverty level.
Why is there a need for Medicaid. Why not Medicare for All?
Additionally, access to full Medicaid benefits, including long-term care, depends on income criteria that varies by state—typically ranging from 75 to 100 percent of the federal poverty level.
Why should there be income criteria? Why must people go broke to be healthy?
Compounding the problem, fewer Medicare beneficiaries now carry supplemental insurance compared to previous years.
It’s too costly because it’s private, for-profit insurance
Among the 4,881 beneficiaries included in the Medicare study, 45 percent lacked sufficient funds in their checking and savings accounts to pay the Medicare hospital deductible.
Intolerable for the United States of America, a Monetarily Sovereign nation that acts like a 3rd world nation.
Seniors face many hardships resulting from health challenges that extend beyond just medical bills, according to Helen Levy, associate professor at the University of Michigan’s Institute for Social Research. Levy’s research identifies three main channels that lead to lower quality of life for seniors: decreased income, increased medical expenses, and the direct effects of health symptoms themselves. “The first two of these—lower income and higher medical spending—are much less quantitatively important than the third; in a nutshell, poor health makes it harder to get by with less,” Levy wrote in her article on the effects of poverty on older Americans.
Elon Musk making money
“How dare you people ask for free health care like I get. Do you think the government is made of money?” Uh, well . . . 
And then, what follows, is a clear expression of the ignorance that punishes us:
The key question that arises from this new study is how to respond to this insight, Dr. Chad Savage, an internal medicine physician, told The Epoch Times. “A common reaction is to expand insurance policies or government programs to cover an ever-growing range of medical costs,” said Savage, a member of Samaritan Ministries Inc., a group whose members share medical expenses. “However, this approach would increase the cost of coverage, thus, diverting more of the patients’ limited resources toward taxes and insurance premiums, and ultimately, depriving them of the funds they could have used for direct medical expenses.”
Dr. Savage’s comments are based on the wrong claim that the Monetarily Sovereign federal government cannot afford to fund a comprehensive Medicare for every man, woman, and child.
“The real issue, however, is why Americans remain so unprepared for medical expenses when they inevitably arise,” Savage added. “A legislative solution to address this could involve incentivizing proactive savings for medical costs that will inevitably occur as part of life.” “By creating incentives for Americans to contribute to Health Savings Accounts (HSAs) or Medical Savings Accounts (MSAs), they could gradually build up funds to cover out-of-pocket expenses for their own medical care when needed,” he said.
Dr. Savage is totally divorced from reality.
  1. Many people are unable to meet all financial obligations of food, rent, and clothing, much less contributing to HSAs
  2. For most Americans, saving enough in an HSA to cover major or recurring health issues would be impossible.
With infinite funds, the federal government can and should pay all medical expenses. The whole purpose of a government is to protect and improve the lives of the people. What is the purpose of a government that can’t or won’t do it? Here is what we need:

Free comprehensive Medicare for All.

Cover everything that Medicare Advantage covers, but do it in original Medicare. One program for all health needs.

No FICA payroll tax deductions. No fake “trust funds” (that aren’t trust funds). More generous payments to providers to attract more people into the field and more hospitals and clinics.

The federal government not only can afford it without collecting one additional penny in taxes, but the money spent by the government would grow Gross Domestic Product. And no, it wouldn’t cause inflation. See why. The Dr. Savages of the world seem to reverse reality. They think people’s purpose is to improve and protect the government, while the government’s desires come first. It’s nuts. But as I repeatedly have said, there is a penalty for ignorance, and the people of America are paying it. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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

MONETARY SOVEREIGNTY

Jamie Dimon has a good solution to the wrong problem and a bad solution to no problem.

Jamie Dimon is CEO of JP Morgan. As such, his words carry a lot of weight, even when he has no idea what he is talking about.

Here’s Jamie Dimon’s sure-to-fail plan:

Jamie Dimon - Bank Policy Institute
Jamie Dimon
Jamie Dimon says the ‘Buffett Rule’ approach to taxing the wealthy could solve America’s debt problem
Story by fdemott@insider.com Buisiness Insider

“The Buffet rule” proposed a minimum tax rate of 30% for individuals making more than $1 million a year. (Buffett had famously criticized the tax system for allowing him to pay a lower tax rate than his secretary.)

The goal was to address the disproportionate tax burden on middle-class workers compared to the wealthy, who often earn a significant portion of their income through investments taxed at lower rates.

It’s Buffet’s way of narrowing the income/wealth/power Gap between the rich and the rest.

It’s a decent idea for that purpose. Unfortunately, Jamie Dimon has co-opted it for different idea—a terrible idea—reducing the so-called “federal debt,” which is neither federal nor debt.

It isn’t federal because the dollars deposited into Treasury Security Accounts are owned by the depositors and never touched or used by the federal government.

It isn’t debt because those accounts resemble safe deposit boxes, in which the government holds the contents but doesn’t use them and doesn’t owe them.

If someone deposits $1,000 into a bank safe deposit box, that bank’s “debt” does not rise.

By law, those Treasury account deposits equal the total of federal deficits, the difference between taxes and spending, which also are not owed to anyone.

The federal government pays all its bills in full and on time. It doesn’t owe dollars for past purchases, and it creates new dollars to pay for everything.

The sole purpose of offering T-bills, T-notes, and T=bonds to the public is to provide a safe storage place for unused U.S. dollars. This safety stabilizes the dollar.

Large dollar users like China, Canada, et. al. are loathe to keep vast dollar amounts in private banks, preferring the safety of the U.S. government for their dollars. Thus, the misnamed “federal debt” should be called T-security deposits and/or when they equal total deficits, federal dollar creation.

Wrongly calling these deposits “debt” gives the impression the federal government is “in debt,” which it is not.

JPMorgan CEO Jamie Dimon has put forth a solution to unrestrained US debt: Tax the rich at the same rate as middle-class people, or at a higher rate.

There is no good reason to “restrain” federal money creation.

1. It is not a burden on the federal government, which has the infinite ability to create dollars.

2. It is not a burden on taxpayers, because federal taxes do not fund federal spending

3. It benefits the economy by adding growth dollars.  

I. Infinite ability to add growth dollars. The federal government is Monetarily Sovereign. By passing laws (which the government has the infinite ability to do), it created the first dollars in the amounts it arbitrarily determined.

It retains the infinite ability to pass laws that create new dollars.

II. Not a burden on taxpayers. Having the infinite ability to create dollars, the federal government has no need to use tax dollars or to borrow dollars. The sole purpose of federal taxes is not to provide spending money but rather to:

–Assure demand for the dollar by requiring taxes to be paid in dollars –Control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to reward.

III. Benefits the economy by adding growth dollars. The most common measure of the economy is Gross Domestic Product (GDP) which is composed of Federal Spending, Non-federal Spending and Net Exports. Increases in federal spending grow the economy.

This graph demonstrates the essentially parallel courses of federal “debt” (dollars created) and GDP.

The following happens whenever the federal government reduces the so-called “debt” (dollars created). Every depression in U.S. history was introduced by deficit reduction:

1804-1812: U. S. Federal Debt reduced 48%. Depression began

1807. 1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.

1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.

1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.

1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.

1880-1893: U. S. Federal Debt reduced 57%. Depression began

1893. 1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.

1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

In August, Dimon told “PBS News Hour” that the country could clamp down on runaway borrowing without eliminating spending. Dimon said he expects that reducing the debt while still investing in the right initiatives is “doable.”

The U.S. government does not borrow dollars. If Dimon had only considered this, he would have known that a government with the infinite ability to create dollars has no reason to borrow them.

Unfortunately, misusing the word “debt” leads to the misunderstanding that the government borrows. It never does. To complicate matters further, the Treasury deposit documents are known as T-bonds, and in the private sector, the word “bond” is evidence of borrowing.

“I would spend the money that helps make it a better country, so some of this is infrastructure, earned-income tax credits, military,” he said. “I would have a competitive national tax system, and then I would maximize growth.”

Here, Dimon shows ignorance of federal finance. He thinks the government spends the dollars deposited in T-security accounts. It doesn’t. The government creates new dollars to pay for all purchases.

To pay a creditor, the federal government creates instructions (checks or wires), not dollars, instructing the creditor’s bank to increase the balance in the creditor’s checking account.

As soon as the bank follows those instructions, new dollars are added to the M2 money supply. That is the federal government’s method for creating money.

Calls for wealthier Americans to pay higher taxes have grown louder in the past year as economists have searched for answers to the federal government’s skyrocketing debt.

The “answers” to the federal government’s skyrocketing “debt” (i.e., growth dollars added to the economy) are to keep on skyrocketing. That is what has made the U.S. economy the healthiest in the world.

Anxiety has grown as the government’s debt pile has ballooned to a record $35 trillion. The Congressional Budget Office has projected that it could make up 6% of US GDP by the end of this year, far outpacing the 50-year average of 3.7%.

This takes us back to the meaningless debt/GDP ratio.

It is a number that predicts nothing, demonstrates nothing, and says nothing about the federal government’s financial health.

If you go to Debt-to-GDP Ratio by Country, you will find no relationship between those ratios and any country’s creditworthiness.

There is no relationship between Debt/GDP and a nation’s abiliy to pay its obligations.

The “best” (lowest) Debt/GDP ratios belong to ten nations I wouldn’t trust with ten cents. The “worst” ratios include two of the world’s strongest economies, Japan and the United States. This demonstrates the uselessness of Debt/GDP.

Banker Jamie Dimon amazingly doesn’t seem to understand federal finance. There is no connection between Debt and GDP that would reflect on a nation’s  — especially a Monetarily Sovereign nation’s — ability to pay its bills. Even this prominent banker is confused by the term “debt.”

If debt remains unchecked amid high interest rates, the government will face higher borrowing costs. Some say that this might compound debt levels and that the US could eventually spiral into a default.

You have just read the most ignorant paragraph in his entire commentary.

  1. The Fed sets interest rates to control inflation. It can set them at any level it chooses. The government does not need to attract depositors to T-securities. If there are not enough depositors to satisfy the current law, the government can simply change the law.
  2. The government does not borrow
  3. Even if it did borrow, it could pay high interest rates indefinitely.
  4. Higher debt (i.e., deposit) levels are not a concern. The government merely stores the T-certificate deposits at any level, so this is not a burden on anyone.
  5. The federal government cannot default. It has infinite money. The only possibility of default could come from Congress’s refusal to pay, for instance, because of the truly foolish “debt ceiling.”

Otherwise, higher borrowing costs mean Washington will have less to spend on social initiatives.

More ignorance. Washington always has infinite to spend of social initiatives.

A recent report from the Peter G. Peterson Foundation pointed out that the Congressional Budget Office has estimated that by 2054, interest payments on the debt will triple Washington’s historical spending on research and development, infrastructure, and education.

That makes no difference. When you have infinite money, spending more on anything simply grows GDP, a good thing.

Dimon has been among Wall Street’s most consistent voices to raise the alarm, frequently saying runaway borrowing will amplify inflation and interest-rate pressures through the coming decade.

This is the same nonsense that is continually spouted by the rich to discourage spending on social benefits for those who are not rich. If you would like to read 85 years of the same nonsense scare stories, go to: Historical BULLSHIT Claims the Federal Debt Is a “Ticking Time Bomb”: From Sept. 26, 1940 to October 10, 2024.

Not everyone shares Dimon’s optimism that tax hikes alone can solve this problem. Though some commentators have pushed for tax-hike proposals that embrace all income levels, others have urged both Democrats and Republicans to consider spending cuts as well.

Spending cuts would be good if you believe if you believe the rich should get richer and the rest should get poorer. Spending cuts would cure those “problems.” Does anyone believe that the CEO of JP Morgan thinks that way.

However, speaking with PBS, Dimon argued that the US should continue to spend money that helps maintain its economic strength and creates a more equitable income environment.

The previous sentence was the only sensible one in the entire Business Insider article. They saved the only good statement for last. If you happen to know Mr. Dimon, be sure to congratulate him on ending his comments with one true statement. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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

MONETARY SOVEREIGNTY