In previous posts (here, here, here, and others) I have given you many reasons why Modern Monetary Theory’s (MMT) “Jobs Guarantee” is naive foolishness.
For instance:
1. Jobs are not hard to find. Millions of jobs are available. It’s the right jobs that are hard to find. (Right skills, right pay, right location, right benefits, right working environment, right opportunities for advancement, right learning potential)
a. Find or create jobs,
b. interview,
c. hire,
d. supervise,
e. promote and demote,
f. switch jobs, and
g. fire the millions of people who should be fired.
h. while determining pay scales
for every kind of job in every city, suburb, and hamlet all over America.
3. The federal government is ill-prepared to provide healthcare, maternity leave, vacation days, IRAs and myriad other benefits appropriate to different employees all over the nation.
4. If people are hired only because they need jobs, rather than because the jobs need people, nothing prevents those jobs from being make-work.
“Good news! We just found you an interesting job. Stand around and look interested.”
And now comes proof, if more proof is needed, of the federal government’s incompetence in the whole “jobs” area:
The Department of Labor’s Job Corps program is supposed to teach disadvantaged young people the skills they need to get good jobs. But the program, which costs taxpayers about $1.7 billion per year, is apparently a failure.
O.K., it doesn’t cost taxpayers one cent.
A Monetarily Sovereign government has the unlimited ability to create its own sovereign currency, which it does by the simple act of paying creditors.
About 50,000 students enroll in the program each year, about two-thirds of whom are high school dropouts, according to The New York Times. Results aside, the program’s goals are admirable. As The Wall Street Journal reported in April:
Launched in 1964, Job Corps works with 16- to 24-year-olds who grew up homeless or poor, passed through foster care, or suffered other hardships.
The goal is to equip these young adults with skills for careers in advanced manufacturing, the building trades, health care, information technology, business and more.
Unfortunately, that’s not what’s happening. A March audit from the Labor Department’s Office of Inspector General sampled 324 Job Corps participants who were five years removed from graduation.
The median annual income of 231 of those participants (wage records weren’t available for the rest), was just $12,486 as of December 2016.
The audit acknowledged that “Job Corps could not demonstrate beneficial job training outcomes.”
And that is the point. The federal government bureaucrats were supposed to do what high school “Workplace Preparation” courses accomplish — and predictably, they failed.
(Workplace preparation courses prepare students to move directly into the workplace after high school or to be admitted into select apprenticeship programs or other training programs in the community.
Courses focus on employment skills and on practical workplace applications of the subject content.
Many workplace preparation courses involve cooperative education and work experience placements, which allow students to get practical experience in a workplace.)
That’s not all. Job Corps spends about $50 million a year on “transition services” to help graduates find jobs.
But in 94 percent of the cases sampled, “Job Corps contractors could not demonstrate they had assisted participants in finding jobs.”
A 94% failure rate: These are the same federal bureaucrats who are supposed to find jobs for millions of people all over the country — millions of people who don’t have the “benefit” of federal jobs training??
A terrible waste of time for the job-seekers.
One former North Texas teacher, who quit in 2015, says the entire program is failing. “Job Corps doesn’t work,” the teacher, Teresa Sanders, tells the Times. “The adults are making money, the politicians are getting photo ops.
But we are all failing the students.“
No surprise there. It’s what I’ve preached for years.
Labor Secretary Alexander Acosta admits the program “requires fundamental reform.”
“It is not enough to make changes at the margins,” he tells the Times. “We need large-scale changes.”
If a small program fails, the government’s approach is to make the program biggere, so that the failure can be bigger.
Despite its shortcomings, Jobs Corps is popular among both Republicans and Democrats in Congress (to Democrats, it’s a government program aimed at reducing poverty; to Republicans, it incentivizes hard work), so there’s only so much Acosta can do. “
Does that sound familiar, MMT? Reducing poverty and incentivizing work are two of MMT’s goals (i.e. excuses) for its Jobs Guarantee.
But why do we need to incentivize work? Why has sweat become a moral imperative?
You have a program with a rich and complicated history that’s one of the biggest leftovers from the war on poverty, and it is enormously complicated to make any significant changes,” Eric M. Seleznow, a former deputy assistant secretary for the Labor Department’s Employment and Training Administration during the Obama administration, tells the Times.
He notes that “competing interests from Congress, program operators, advocates, as well as complex legal requirements present a lot of challenges.”
If Job Corps is salvageable, then it can do some real good. But if real reforms aren’t going to happen, Congress should shut it down.
So let this be the final nail in the coffin of the “Jobs Guarantee, and instead, let us begin to focus on the Ten Steps to Prosperity (below).
The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
We could have begun each answer with the words, “Contrary to popular wisdom . . .” for much of economics differs from what you, the public, are being told.
The federal government uniquely is Monetarily Sovereign. It invented and rules all the laws that create and regulate its sovereign currency, the U.S. dollar.
Federal financing is substantially different from your personal financing, your business’s financing, and your state’s, county’s, and your city’s financing.
If ever you have attempted to explain (or understand) Monetary Sovereignty, you probably have encountered these 10 questions:
1. “Is federal debt unsustainable? (I.e., can we continue running deficits forever. If you and I need to live within our means, must the federal government live within its means?)
A Monetarily Sovereign government never can run short of its own sovereign currency, so it has no “means” to live within.
Having the unlimited ability to create new dollars, the federal government can pay any obligation denominated in dollars, no matter how large. The federal government doesn’t even need to levy taxes.
The very act of paying its bills is the method by which the government creates new dollars. To pay a creditor, the federal government sends instructions (in the form of a check or a wire) to the creditor’s bank, instructing the creditor to increase the balance in the creditor’s checking account.
The moment the bank does as instructed, brand new dollars are created and added to the money supply called “M1.” No tax dollars are involved.
There are two ways dollars are created and two ways they are destroyed:
Dollars Are Created By:
A. Federal bill paying
B. All forms of dollar lending
Dollars Are Destroyed By:
A. Federal Taxing
B. Repayment of loans
2. “If the federal government doesn’t need tax dollars, why does the federal government levy taxes?”
There are two primary reasons:
A. To control the economy. The government taxes things it wishes to rein in, and cuts taxes on things it wishes to encourage.
B. To fool the public. The very rich, who run the government, want the 99% to believe federal spending must be limited. This discourages the populace from asking for benefits and thereby widens the gap between the rich and the rest.
(The Gap is what makes the rich rich. Without the Gap, no one would be rich; we all would be the same. The wider the Gap, the richer they are.)
3. “If the government doesn’t need to obtain tax dollars in order to pay its bills, why does the government borrow dollars?”
Unlike state and local governments, the federal government doesn’t need to borrow, and indeed, it doesn’t borrow. The misnamed federal “borrowing” and “debt” is the total of deposits into T-security accounts.
When you buy a T-bill (or T-note or T-bond), you instruct your bank to take dollars from your checking account and deposit them into your T-bill account.
Because the federal government has no need for your dollars, it simply leaves your dollars in your account until your T-bill matures. It even adds dollars in the form of interest.
Then it “pays off” your T-bill by sending your dollars back to your checking account. Sending your dollars back to you is no burden on the federal government, and because no tax dollars are used, it is no burden on taxpayers, either.
4. If the federal government doesn’t need to borrow, why does it issue T-bills, T-notes, and T-bonds?
The purpose of T-securities accounts is not to acquire spending money. The purposes are to:
A. Provide a safe place for dollar-users to hold dollars. This safe-haven availability increases the demand for dollars and stabilizes the dollar.
B. To help the Fed control interest rates.
5. “If we just print money won’t we be like Zimbabwe and Argentina?”
Those sick economies not only have dysfunctional governments, but are in the midst of hyper-inflations, which are caused by shortages, most often shortages of food.
In fact, all hyperinflations are caused by shortages. Money “printing” is a wrong-headed government response to hyperinflations, much like pouring gasoline on a car fire.
Government money “printing” is a response to hyper-inflations, not a cause.
Decreases in deficit growth (red line) lead to recessions (vertical, gray bars). Inflation (blue line) does not correlate with deficit spending.
Deficit growth adds dollars to the economy, which increases Gross Domestic Product
GDP = Federal Spending + Non-federal Spending + Net Exports
All three of the above variables add dollars to the economy, which is necessary for economic growth.
Not only do decreases in deficit growth lead to recessions, but federal surpluses lead to depressions:
1804-1812: U. S. Federal Debt reduced 48%. Depression began in 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began in 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began in 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began in 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began in 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began in 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began in 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began in 2001.
It functionally is impossible to grow an economy while reducing the money supply. This would be like trying to cure anemia by applying leeches.
6. If federal “debt” growth is economically beneficial, why is my state (or county, or city) broke?
Your state (or county, or city) is monetarily non-sovereign. It does not have a sovereign currency. It uses the dollar, which is the sovereign currency of the federal government.
Monetarily non-sovereign entities (like you and me), can run short of dollars and be unable to pay our bills. The federal government cannot run short of dollars, or be unable to pay its bills. Federal finances are different from non-federal finances.
Your state, county, or city are broke because their outgo exceeds their income, and they cannot create dollars at will, the way the federal government can.
7. So why doesn’t the federal government merely give everyone a million dollars and make us all rich?
“The Ten Steps to Prosperity,” recommends that the federal government give more money to Americans (via deficit spending) than it currently does.
There, of course, is a limit.
The limit to federal deficit spending is an inflation that cannot be managed via interest rate control.
Inflation is a reduction in the value of a dollar vs. the value of goods and services. The value of a dollar is: Value = Demand/Supply. So if we increase the Supply, without increasing the Demand enough, the dollar Value goes down, and we have inflation.
The formula for the Demand for dollars is: Demand=Reward/Risk. The government increases the Reward for owning dollars by raising interest rates. That is why raising rates is said to “strengthen” the dollar.
In short, the government should give more dollars and dollar-denominated benefits to the people. This would grow the GDP and narrow the Gap, so long as the Fed can control inflation by increasing the Demand for dollars.
8. Which is better for the U.S. economy: Exports or imports?
Imports of goods and services have more value to the U.S. economy than do exports.
Exports of goods and services actually means “importing dollars in exchange for labor and scarce materials.” But because our Monetarily Sovereign nation has the unlimited ability to create dollars, importing dollars has no value to the nation as a whole.
Imports of goods and services (i.e. “exports” of goods and services) add valuable and scarce assets to the economy while requiring less labor and scarce materials than would products and services created here.
The question can be restated: Which is better: Importing something that we have the unlimited ability to create and at no cost (i.e. dollars), or exporting something that costs effort and valuable raw materials (i.e. goods and services) to create?
9. Are illegal aliens a danger to, and a burden on, America?
This question usually devolves to several concerns, none of which have anything to do with the legalstatus of immigrants.
Concern 1. Illegal aliens cause crime. This repeatedly has been shown to be false. The crime rate for illegal aliens is lower than the crime rate for citizens.The reasons probably relate to the fear of being apprehended and deported, and to the reasons why desperate people elect dangerous illegal immigration.
Concern 2. Illegal aliens don’t work and don’t pay taxes, but use our benefits. This too has been shown to be questionable.These people made the hazardous trip to the U.S. in order to create better lives for their children and themselves. Though the federal government doesn’t need tax dollars, illegal immigrants tend to be hard-working, tax-paying people, who often are precluded from using most social services.
Concern 3. Illegal aliens bring drugs. The vast majority of drug smuggling is not done by illegal aliens. Drugs come in through legal entrances, via boats, trains, trucks, buses, and cars, rather than via the piddling amounts mothers and children could sneak through.
On balance, illegal aliens provide a huge benefit to the U.S., by being highly motivated to succeed, and by purchasing products and services from American businesses.
10. Even if the federal government never can run short of dollars, and can afford Medicare for All, won’t we run out of resources, like doctors, hospitals, and medicines?
A. Every major change, from cars, to phones, to planes, and to high-rise buildings leads to shortages of labor and materials that previously were not used. Medicare itself created a shortage of medical personnel, so today hospitals all over the country have been expanding to provide more services.
B. Personnel shortages lead to higher pay which draws more people into the profession.
In summary, everyone has strong intuitions about economics, though economics realities are not intuitive. The reason is: Our federal government is Monetarily Sovereign, which is very unlike the personal experiences of the populace.
The people have been given the mistaken belief that federal finances are like personal, state, and local finances.
The above questions illustrate the common misunderstandings about our nation’s economy.
The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
It’s our little secret. Don’t tell the people we don’t need their tax dollars.
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.”
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e.,unable to pay its bills.
What is there about economics that every doofus sitting on a bar stool, thinks he is an expert, and entitled to voice loudly his doofus opinions about federal financing?
And why does every said doofus, whose interest in economics has not progressed beyond buying the daily Lotto scratch-off, think he understands the effects of federal trade deficits and federal budget deficits. (Attention all doofusi: They are different.)
And why does an equally uninformed columnist, whose professed forte is political philosophy and baseball (yes baseball), and definitely not the science of economics, continue to confound himself and his readers, by conflating federal finances with personal finances?
Here, for instance, are excerpts from an article by the above-described George Will:
Do economic expansions die of old age (the current one began in June 2009), or are they slain by big events or bad policies?
What is known is that all expansions end. God, a wit has warned, is going to come down and pull civilization over for speeding.
When He, or something, decides that today’s expansion, in its 111th month (approaching twice the 58-month average length of post-1945 expansions), has gone on long enough, the contraction probably will begin with the annual budget deficit exceeding $1 trillion.
How prescient. “All expansions end, and “God or something” will do it. Did you know that? Are you stunned by these brilliant words?
And when the expansion ends, what does that have to do with the deficit exceeding $1 trillion? Nothing.
Equally meaningless: The expansion also will end with a U.S. population above 330 million and with the rich even richer than they are now. So?
The president’s Office of Management and Budget projects that the deficit for fiscal 2019, which begins in six weeks, will be $1.085 trillion. This is while the economy is, according to the economic historian in the Oval Office, “as good as it’s ever been, ever.”
Wow, the deficit will be $1,085 trillion, and the economy is “as good as it’s ever been, ever.” What does that tell us about the deficit?
The deficit (red line) has gone up and up, especially to cure recessions (vertical bars), while the economy (GDP) has grown and grown, too.
What is the connection between federal deficit spending and the economy? Doofuses don’t realize that federal deficit spending adds growth dollars to the economy, which is why the government increases deficit spending to get us out of recessions.
Federal deficit spending is stimulative.
Doofuses also don’t know this formula: GDP = Federal Spending + Non-federal Spending + Net Exports. Federal deficit spending increases the first two of the three right-side terms of the equation.
Continuing with George Will’s article:
Another hardy perennial among economic debates concerns the point at which the ratio of debt to GDP suppresses growth: Within a decade, the national debt probably will be 100 percent of GDP and rising.
As Irwin Stelzer of the Hudson Institute says, “If unlimited borrowing, financed by printing money, were a path to prosperity, then Venezuela and Zimbabwe would be top of the growth tables.”
Here’s the scary part:
“Irwin Stelzer is a Senior Fellow and Director of Hudson Institute’s Economic Policy Studies Group. Prior to joining Hudson Institute in 1998, Stelzer was Resident Scholar and Director of Regulatory Policy Studies at the American Enterprise Institute.
He also is the U.S. economic and political columnist for The Sunday Times (London), a contributing editor of The Weekly Standard, and a member of the Advisory Board of The American Antitrust Institute.”
This guy, with all his background, is hopelessly clueless about how a Monetarily Sovereign nation, with a functioning government, operates.
He thinks the U.S. borrows (it doesn’t), and that the federal government finances this non-existent borrowing by printing money (it doesn’t), and finally that the U.S. is in any way similar to Venezuela and Zimbabwe (it isn’t).
The word “borrow” refers to obtaining money in order to spend or save. When you borrow, you do that to spendor save the money you borrow.
But, the U.S. creates money, ad hoc,by spending. And it does not save money. Having the unlimited ability to create dollars, it has no need to save dollars.
The misnamed federal “debt” isn’t money the Monetarily Sovereign federal government needs or uses. It is dollars that are deposited by investors (and never touched) into T-security accounts. To pay off those accounts, the government merely sends those dollars back to the account owners.
And, when Seltzer mentions Venezuela and Zimbabwe, he is talking about hyperinflation, which is not caused by money “printing.”
All hyperinflations are caused by extreme shortages, usually shortages of food, and only after the hyperinflations have begun do countries respond with money creation. That is what happened to Venezuela and Zimbabwe, et al.
In all our history, through wars, recessions, depressions, a multitude of Presidents, and economic misrepresentations about deficits and debt, the U.S. never has had a hyperinflation. But still, the doofuses compare us with Zimbabwe.
Our federal “debt” went from $40 billion in 1940 to $16 trillion today — a 40,000% increase — and inflation remains near the Fed’s annual goal of 2.5%.
Blue line: Federal “debt.” Red line: Consumer price index. Where’s the hyperinflation?
Having learned nothing from history or economics, the Henny Pennys continue running in circles, shouting, “Unsustainable.”
In short, a columnist who doesn’t understand economics quotes someone else who doesn’t understand economics. The result: A steamy brown pile of bull excrement.
Jay Powell, chairman of the Federal Reserve, says fiscal policy is on an “unsustainable path.”
Click the link and you’ll read the 78 years of false claims that our federal deficit and debt will destroy the U.S. as we know it.
Wrong for 78 years; wrong today; wrong tomorrow. But the Henny Pennys, having no shame, still are at it.
A recent International Monetary Fund analysis noted that among advanced economies “only the United States expects an increase in the debt-to-GDP ratio over the next five years.”
The IMF seems to be telling us that the U.S. will have the worst economy among advanced economies, over the next five years. Do you believe that?
The debt/GDP ratio is absolutely, positively, 100% meaningless. Zero, zip, zilch. The size of my underwear has more economic meaning than does that ratio.
The debt/GDP ratio does not indicate the federal government’s (unlimited) ability to pay its bills.
The debt/GDP ratio does not indicate future recessions, depressions or stagflations.
The debt/GDP ratio does not indicate future inflations or deflations.
The debt/GDP ratio does not indicate stock market advances or regressions.
The debt/GDP ratio does not indicate a damn thing. Period.
The federal government could pay off all its T-bills, T-notes, and T-bonds tomorrow, if it chose, simply by returning the dollars that then currently exist in those T-bill, T-note, and T-bond accounts.
Oh, did I mention that, contrary to Will’s article, the U.S. ratio already is above 100%.
Seemingly, George Will didn’t realize that. He also didn’t realize Japan’s ratio is above 250%. By Mr. Will’s reckoning, Japan should have become Venezuela and Zimbabwe, long ago.
One would hope that a nationally published columnist and a professional economist, would at least look at the facts, rather than just writing intuitive nonsense.
Publicly held U.S. government debt has tripled in a decade.
From left to right, (the politicians have) had a permanent incentive to run enormous deficits — to charge, through taxation, current voters significantly less than the cost of the government goods and services they consume, and saddling future voters with the cost of servicing the resulting debt after the current crop of politicians have left the scene.
The line, “charge, through taxation, current voters significantly less than the cost of the government goods and services they consume” is a demonstration of consummate ignorance.
Unlike state and local taxation, federal taxation does not fund government goods and services. The federal government funds government goods and services by creating its sovereign currency, ad hoc — a currency of which it never can run short.
Even if the federal government didn’t collect a single penny in taxes, it has the power to continue spending, forever.
Compare the U.S.’s Monetarily Sovereign situation with that of monetarily non-sovereign Greece:
Greece’s exit from eight years of international bailout programmes on August 20 will be a defining moment in its emergence from the depths of austerity. But government and business acknowledge that this is just a milestone.
The end of the bailout does not end Greece’s commitments to its international creditors.
One of the most significant is that, in exchange for a major debt relief deal in June, the country needs to sustain a primary surplus — a measure of its budget balance that excludes debt payments — of 3.5 per cent of gross domestic product a year until 2022.
Failure would bring the risk that some debt relief could be withdrawn.
When the government runs a surplus, guess who runs a deficit. Right. The public. This is just another way of describing the austerity that already has destroyed Greece’s economy.
Government surpluses lead to depressions and recessions, by taking money out of the private sector:
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.
The above article contained this graph:
Euro nations’ citizens are excessively taxed because the euro nations are monetarily non-sovereign. They do not have a sovereign currency. They cannot stimulate economic growth except by going deeper and deeper into debt. Debt is a burden on monetarily non-sovereign governments and their citizens.
Not only are euro citizens overly-taxed but:
The government is speeding up foreclosures and auctions of repossessed property.
Bankers still expect the process to take as much as a decade. One said: “We are hitting our current targets on reducing non-performing loans but there is still a long way to go.”
Excessive taxation. Austerity. Foreclosures. Repossessed property. For as much as a decade. This is what the people of the euro can look foreward to, and this is exactly what our American economics doofuses wish you to suffer.
The crooked bankers get rich, while the taxpayers suffer.
There are penalties for ignorance, and those who do not wish to understand Monetary Sovereignty will pay those penalties, just as the euro nation people are.
The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity: 1. ELIMINATE FICA (Ten Reasons to Eliminate FICA ) Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons: *FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and *The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL Salary for attending school. Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
Every so seldom, I feel compelled to remind you of the #1 idiocy in economics, the daily, weekly, monthly, and annual warnings that the U.S. federal “debt” is a ticking time-bomb, ready to explode at any moment.
This repeated forecast has been promulgated for at least the 78 years since 1940, with no end in sight.
In any other science, a repeated failed prediction would be a strong signal that either the facts are wrong or misinterpreted, and its forecasters are wrongheaded.
But, because mainstream economics is not a real science, but rather is akin to a religion, its asinine, proven-wrong forecasts are treated with solemn respect.
Any minute, now
Imagine the cult leader who tells his followers to climb the mountain and await the world’s end.
When the world fails to end, they climb back down, but still believe the cult leader’s next “world-is-ending” prophecy.
That is economics.
By way of reminder, the debt in 1940 was $40 Billion, and today it is $16 Trillion. Surely, a gigantic 40,000% increase should have caused that debt bomb to explode.
But no, the debt bomb ticks, perhaps the slowest time bomb in recorded history. And our cult leaders continue their false warnings.
Waiting, waiting, waiting for that debt bomb to explode. Still waiting.
By way of further reminder, here is a bit of history from previous posts:
By 1960: the debt was “threatening the country’s fiscal future,” said Secretary of Commerce, Frederick H. Mueller.
By 1983: “The debt “probably will explode in the third quarter of 1984,” said Fred Napolitano, former president of the National Association of Home Builders.
In 1984: AFL-CIO President Lane Kirkland said. “It’s a time bomb ticking away.”
In 1985: “The federal deficit is ‘a ticking time bomb, and it’s about to blow up,’ U.S. Sen. Mitch McConnell.
Later in 1985: Los Angeles Times: “We labeled the deficit a ‘ticking time bomb’ that threatens to permanently undermine the strength and vitality of the American economy.”
In 1987: Richmond Times–Dispatch – Richmond, VA: “100TH CONGRESS FACING U.S. DEFICIT ‘TIME BOMB’”
Later in 1987: The Dallas Morning News: “A fiscal time bomb is slowly ticking that, if not defused, could explode into a financial crisis within the next few years for the federal government.”
In 1989: FORTUNE Magazine: “A TIME BOMB FOR U.S. TAXPAYERS”
In 1992: The Pantagraph – Bloomington, Illinois: “I have seen where politicians in Washington have expressed little or no concern about this ticking time bomb they have helped to create, that being the enormous federal budget deficit, approaching $4 trillion.”
Later in 1992: Ross Perot: “Our great nation is sitting right on top of a ticking time bomb. We have a national debt of $4 trillion.”
In 1995: Kansas City Star: “Concerned citizens. . . regard the national debt as a ticking time bomb poised to explode with devastating consequences at some future date.”
In 2003: Porter Stansberry, for the Daily Reckoning: “Generation debt is a ticking time bomb . . . with about ten years left on the clock.”
In 2004: Bradenton Herald: “A NATION AT RISK: TWIN DEFICIT A TICKING TIME BOMB”
In 2005: Providence Journal: “Some lawmakers see the Medicare drug benefit for what it is: a ticking time bomb.”
In 2006: NewsMax.com, “We have to worry about the deficit . . . when we combine it with the trade deficit we have a real ticking time bomb in our economy,” said Mrs. Clinton.
In 2007: USA Today: “Like a ticking time bomb, the national debt is an explosion waiting to happen.”
In 2010: Reason Alert: “. . . the time bomb that’s ticking under the federal budget like a Guy Fawkes’ powder keg.”
In 2011: Washington Post, Lori Montgomery: ” . . . defuse the biggest budgetary time bombs that are set to explode.”
In 2014: CBN News: “The United States of Debt: A Ticking Time Bomb”
*On Jun 18, 2015: The ticking economic time bomb that presidential candidates are ignoring: Fortune Magazine, Shawn Tully,
*February 10, 2016, The Daily Bell: “Obama’s $4.1 Trillion Budget Is Latest Sign of America’s Looming Collapse”
*On January 23, 2017: Trump’s ‘Debt Bomb’: Deficit May Grow, Defense Budget May Not, By Sydney J. Freedberg, Jr.
*On April 28, 2017: Debt in the U.S. Fuel for Growth or Ticking Time Bomb?, American Institute for Economic Research, by Max Gulker, PhD – Senior Research Fellow, Theodore Cangeros
And now, for your amusement, here is a sampling of this year’s Henny Penny, sky-is-falling, ticking-time-bomb, scare articles:
America’s Debt Bomb By Andrew Soergel, Senior Reporter, Feb. 16, 2018, Conservatives and deficit hawks are hurling criticism at Washington for deepening America’s debt hole.
Paying debt servicing costs associated with what America owes is also tying up federal dollars that could be used elsewhere.
The U.S. must pay interest on its outstanding debt, and, given the trillions and trillions of dollars that the country owes, those payments are becoming particularly expensive.
This latest article drips with ignorance. Here are the facts:
The U.S. government is Monetarily Sovereign. It has the unlimited ability to create its own sovereign currency, the U.S. dollar. The U.S. government cannot run short of dollars.
Because the federal government has infinite dollars, its dollars cannot be “tied up,” and there always are plenty of dollars to be “used elsewhere.”
Federal deficit is necessary for economic growth, so the interest the government pays into the economy stimulates economic growth.
CBO Director Keith Hall said that by 2048, “as interest rates rise from their currently low levels and as debt accumulates, the federal government’s net interest costs are projected to more than double as a percentage of GDP and to reach record levels.”
Hall said interest costs would equal spending for Social Security, currently the largest federal program, by 2048.
CBO has long warned that rising debt poses a risk to the economy, and Hall made the point again Tuesday.
“The prospect of large and growing debt poses substantial risks for the nation and presents policymakers with significant challenges,” he said in the statement.
It’s all a lie. Debt/GDP is one of economics’ more meaningless ratios.
Debt/GDP does not indicate the federal government’s ability to pay its bills, nor does it indicate the likelihood of inflation, recession, depression, economic growth, stagflation or any other economic measure.
Being meaningless, it naturally is a favorite of mainstream economists and the media.
The Congressional Budget Office recently issued an alarming report on the nation’s debt outlook, which CQ senior budget reporter Paul M. Krawzak says should worry millennials.
“A tidal wave of interest payments on the debt is about to hit us.”
And from the reliably wrong, Committee for a Responsible Federal Budget:
As a result of an unprecedented debt binge by Congress over the past year, the national debt is about to roar back to life as a pressing issue after years of hibernation.
The debt didn’t go away. It has been growing by the second ever since, and the dominoes are about to start falling.
These sums accelerate a coming fiscal freefalland will push the nation over a psychological barrier as soon as next year: trillion-dollar annual deficits.
You would expect worries about debt to center on affordability. If you experience debt problems, your primary concern is, “Can I afford to pay it off.”
You would expect warnings about federal debt to include words similar to: “The government will run short of money.”
But those words never are used because unlike state and local governments, thefederal government cannot run short of money.
It can pay off any size financial obligation at any time, and despite the massive debt increase, through wars and depressions, the federal government never has failed to pay a debt.
Instead, we are treated to such meaningless generalities as “ticking time bomb,” “looming collapse,” “tidal wave,” “the dominoes are about to start falling,” “coming fiscal freefall,” “psychological barrier,” and “alarming report.”
After seventy-eight years, that ole’ federal debt bomb still is ticking. Meanwhile, it also has been “unsustainable,” “insane,” and “irresponsible,” a “mounting debt crisis,” and servicing is “problematic.”
All of the above are not based on mere ignorance. Instead, they are part of an intentional plan to deceive you.
The very rich .1%, who run America, do not want you of the 99.9% to know that the federal government has the ability to provide far more benefits for you than it currently does.
They want you to believe falsely, that benefits are a burden on the government and require tax increases. In short, they want to convince you to vote against yourself.
The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity: 1. ELIMINATE FICA (Ten Reasons to Eliminate FICA ) Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons: *FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and *The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL Salary for attending school. Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
Economic Policy Studies Group. Prior to joining Hudson Institute in 1998, Stelzer was Resident Scholar and Director of Regulatory Policy Studies at the American Enterprise Institute.
#Monetary Sovereignty - Mitchell 