Tag: monetary sovereignty

Lies, damned lies, and Treasury Direct Kids

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

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The federal government has been relentless in its efforts to brainwash us about the supposed similarities between federal deficit and debt vs. personal debt.

Here is a typical communication — a letter to me from United States Representative Bob Dold:

OUT OF CONTROL SPENDING

Rodger – As our state digs itself deeper into debt, families throughout Illinois are struggling just to get by. As a small business owner, I’ve had to make the tough decisions needed to meet a budget. But far too many so-called leaders have never had that experience – they’re solution to seemingly every issue is more government and more spending.

If hardworking Americans across the country need to live by a budget each and every day, then the government should have to do the same.

That’s why I’m a strong supporter of a balanced budget amendment to the Constitution, and it’s why I’ve voted for budgets that come into balance.

You’ll notice, that to confuse American voters, Rep. Dold mixes state, business, and pesonal (monetarily non-sovereign) finances in his first paragraph, with federal (Monetarily Sovereign) finances in his second paragraph.

It’s a perfect expression of the Big Lie (i.e. the lie that federal finance is like personal finance, and that federal taxes fund federal spending).

Not satisfied with brainwashing adults, the federal government has created a site called: Treasury Direct Kids.

Here are some of the lies your children will be fed:

Bureau of the Fiscal Service

It takes a lot of money to keep the U.S. Government running and a good deal of it is borrowed money.

That’s where we come in. Our job is to borrow the money needed to operate the federal government and account for that debt.

It’s sad that you must tell your kids their government is lying to them.  But it’s one of life’s realities.

The federal government does not need to borrow to “operate the federal government.” In fact, the federal government (unlike state and local governments) does not borrow at all.

The federal government provides you with safe investments in the form of deposits in T-security accounts at the Federal Reserve Bank. These are the world’s most secure bank accounts.

To make your deposit, you instruct your local bank to deduct dollars from your personal checking account and deposit those dollars into your T-security account, which is very much like a savings account.

(The process is similar to taking dollars from your checking account and putting them into your savings account.)

The dollars stay in your T-security account and are not used to “operate the federal government.”

Instead, to pay its bills, the government instructs creditors’ banks to increase the balances in creditors’ checking accounts. When the banks do as instructed, dollars are created. Thus, the government actually creates brand new dollars, every time it pays a bill.

The government pays down its so-called “debt” (deposits) every day, simply by transferring existing dollars from T-security accounts back to the owners’ checking accounts.  No new dollars are needed.

Have you ever wanted to buy something, but didn’t have quite enough money? If you’ve borrowed money from friends, family, or anyone else and promised to repay them, then you are “indebted” to pay it back. This is called “debt.”

Debt is money one person, organization, or government owes to another person, organization, or government. Typically, the person who borrows the money has a limited amount of time to pay back that money with interest (an additional amount you pay to use borrowed money).

Again, you see the confusion between personal finances and federal finances.

While debt is money one person, organization, or government owes to another, the federal  “debt” is not borrowed and it is not debt in the usual sense. It is deposits.

Rather than being called “debt” it should be called “deposits.” 

The Beginning of U.S. Debt

Even before the United States was founded in 1776, debt existed. Paying for the American Revolutionary War (1775 – 1783) was the start of the country’s debt. Some of the founding fathers formed a group and borrowed money from France and the Netherlands to pay for the war.

That was personal debt, not federal debt.

To manage the new country’s money, the Department of Finance was created in 1781. The next year, Government debt was reported to the public for the first time. The U.S. debt in 1783 totaled $43 million.

That year, Congress was given the power to raise taxes to cover the Government’s costs. However, the taxes did not bring in enough money. The debt continued to grow as the Government grew and provided more services to the people.

Question: There were no dollars at all before the United States was founded. So, where did the new citizens get dollars to pay federal taxes?

To create the United States, a group of men first needed to create laws. These laws were arbitrary words, created from thin air.  

Laws are not physical things. They are just ideas, written down. You cannot touch or see a law.

Among these laws, created from thin air, were laws that created U.S. dollars, also from thin air.  Dollars are just accounting numbers. (Those paper things in your wallet are not in themselves dollars.  They are titles to dollars. The dollars themselves are just numbers in balance sheets.

All the government did was create a balance sheet, and into this balance sheet, men wrote an arbitrary number that represented a number of dollars. Because the men completely controlled the balance sheet, they wrote whatever number they wished.

Then they paid people for goods and services with these newly invented dollars. That is how the American people obtained the dollars with which to pay taxes.

The U.S. Treasury Department was created in 1789 to help the country borrow money and manage the debt. Alexander Hamilton was the first Secretary of the Treasury and one of the country’s founding fathers.

By 1789, the federal government no longer could create more dollars from thin air, because it had passed laws arbitrarily stating how much silver each dollar represented. These laws limited the government’s ability to create new dollars.

This silver was collateral for dollars, with the federal government arbitrarily deciding how much collateral each dollar needed.

He felt getting into a reasonable amount of debt would help the country get its feet on the ground. He said, “A national debt, if it is not excessive, will be to us a national blessing.” By 1791, he estimated the federal government’s debt to be $77.1 million. To help raise money, federal bonds were issued by the Government.

The government convinced people to deposit dollars into T-security accounts, which the government used as collateral for obtaining more silver with which to create more dollars.

Through the years, the government has enacted many laws changing the amounts of silver, and then gold, it required itself to have as collateral before creating new dollars. These were arbitrary, self-imposed limits.

That all changed on August 15, 1971, when President Richard Nixon created new laws once again, and thereafter, the government arbitrarily allowed itself to create dollars without having any gold or silver as collateral.

Today, the only collateral for dollars is the full faith and credit of the United States government.

Because the government has an unlimited supply of full faith and credit, it has the unlimited ability to create dollars. And given the unlimited ability to create dollars, the federal government has the unlimited ability to pay any bill, and to service any debt, of any size.

The U.S. government never can run short of its own sovereign currency.

Previously we mentioned the government’s web site, Treasury Direct Kids

This site has a “Contact Us” page that allows you to ask questions about T-securities. Some good questions might be:

  1. “Is it possible for the federal government to run out of U.S. dollars?”
  2. “Why does the government borrow dollars if it has the unlimited ability to create dollars?”
  3. “Has the government ever been unable to pay off its loans?”
  4. “Why did President Nixon take us off the gold standard?”
  5. “If the federal government runs a balanced budget, how will the economy grow?”

If you receive answers to any of your questions, be sure to add them to the comments section of this blog. 

That should be interesting.

 Rodger Malcolm Mitchell
Monetary Sovereignty

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

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

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

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

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY

The hidden connection between cutting your state & local taxes and growing America.

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

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Most state and local taxes have to do with education, support for the poor, and infrastructure. Instituting the Ten Steps to Prosperity (below), especially Steps #3, #4, #5, and #10, will cut your state and local tax bill.

Because the federal government is Monetarily Sovereign, and neither needs nor uses tax dollars, it could assume, tax-free, much of the spending by the (monetarily non-sovereign) state and local governments.

Less state & local spending; less state & local taxes necessary. Further, the state and local governments rely largely on sales taxes, which are highly regressive, and far more poverty-inducing.

(Yes, I know. Libertarians tell you the federal government is too big, thus requiring state and local governments to carry the burden of service to the public. It makes no sense, but it’s what passes for economics these days..)

Additionally, Steps #1,  #2, #6, and #7 would reduce poverty . And all ten Steps would help narrow the Gap between the rich and the rest.

So what is the connection to growing America?

NewScientist Magazine
Childhood poverty can be a life sentence – we must act
The science tells a clear story. Politicians now have a duty to do something other than pay lip service to the problem

It’s rare that scientists are moved to tears by their research projects, but for Harvard neuroscientist Charles Nelson, that was once a daily experience.

In the late 1990s he and his team set up a long-running study of children living in Romanian orphanages. What they witnessed was so distressing that they had to make a rule: if you couldn’t hold back the tears, make sure you didn’t let the children see you cry.

Nelson set up the study to find out what early adversity does to child development – especially cognitive development. Institutionalised children are in terrible distress.

A more recent project in the slums of Bangladesh is likely to reach a similar conclusion. Poverty and squalor in childhood can be a life sentence.

Children in the West rarely endure the desperate levels of deprivation seen in the orphanages of Bucharest or the slums of Bangladesh, but many do experience genuine hardship.

In the US, 15 million children live in households with an income below the official poverty line. For a couple with two children, that’s $24,036 – about $16 per person per day. For everything.

Children who grow up poor lag behind at school and have worse health than their wealthier peers.

But even Western levels of poverty can have detrimental and long-lasting effects.

Children who grow up poor lag behind at school and tend to have worse physical and mental health than their luckier peers.

That’s 15 million children who are more likely to lag behind at school and have worse health.

That’s 15 million children who are less likely to be educators, researchers, inventors, physicists, doctors, or economic leaders — 15 million children who are less likely to win a Nobel prize — 15 million children less likely to help America grow.

Instead, these 15 million children are more likely to be sicker and to need help rather than giving help.

The negative effect of poverty on children’s brains is well documented:
Poverty Stresses The Brain So Much That It’s Like Losing 13 IQ Points
and
Poor concentration: Poverty reduces brainpower needed for navigating other areas of life
and
Poverty shrinks brains from birth

Alleviating child poverty can be done, but it requires political will.

From 1998 to 2010, approximately 800,000 children in the UK were lifted above that poverty line, largely because of policies designed to do so. But progress is fragile. Over the past five years 500,000 have slumped back in.

The Institute of Fiscal Studies forecasts that by the end of this parliament the number will have climbed back to its late-1990s peak, despite legally binding targets to reduce child poverty.

That is a shameful statistic. Politicians paying lip service to the goal while spectacularly failing to deliver it might be jolted into action by the fact that their abject performance is costing the taxpayer huge sums of money.

According to one recent analysis, dealing with the consequences of child poverty directly costs the UK government £15 billion a year, £3 billion more than in 2008.

The problem is not the financial cost of dealing with poverty.  After all, the UK  and American governments, being Monetarily Sovereign (though pretending they are not), can afford anything — and without levying taxes.

Here in America, we are so proud of our accomplishments — our moon landing science, our wealth, our democracy. But how much more would we have accomplished if we had educated an additional 15 million young people, using their brain power to grow America.

Why aren’t UK opposition parties holding the ruling Conservatives to account for not just failing to live up to their own targets, but for letting the gains of the early 2000s be lost – and squandering billions in the process?

Why isn’t the Labour party trumpeting its own admirable record on this issue, if only to highlight the fact that it is possible to make a difference if you actually want to?

Pardon the generality, but conservatives and liberals seem similar everywhere, the former tend more toward selfish and tight-fisted, and the latter tending more toward meek and weak-willed.

The conservatives angrily brand the poor as lazy takers, who do not “deserve” government assistance. The liberals softly offer solutions as humanitarian charity.

But helping the poor is not charity. Helping the poor is national self-serving.

Lifting children from poverty enables them to become productive adults, using their born-with intelligence to strengthen America.

Bottom line: Those who oppose poverty aid because the poor “don’t deserve help,” are simply forcing economic suicide on America, and are harming our nation and themselves far more than could a foreign enemy.

Rodger Malcolm Mitchell
Monetary Sovereignty

……………………………………………………………………………………………………………………………………………………………………

The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

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

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

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

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY

“That guy is another Trump”

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

………………………………………………………………………………………………………

By any reasonable measure, Donald Trump is among the worst, if not the worst Presidential candidate in American history.

He is a mean-spirited and vindictive bigot and a compulsively endless liar.  He is anti-black, anti-brown, anti-immigrant, anti-gay, anti-science, anti-women, anti-fact and anti-truth.

He is a hate-monger, a fear-monger, and a rumor-monger. He lacks morality and judgment.

He is inexperienced in, and ignorant of, both international and domestic matters, but is so egocentric he seems not to recognize his ignorance — a most dangerous combination.

He claims personal superiority in all areas, from war knowledge superior to that of trained generals, to tax knowledge superior to that of all previous Presidents, to physical fitness superior all previous candidates, to athletic ability superior to everyone living in New York, to superior business ability — despite ample evidence he actually is inferior in all these  areas.

Yet despite his obvious failings, he has a massive and passionate following.

One hint to this seeming anomaly might be found in an article from the November 2016, issue of Scientific American Magazine. Here are a few excerpts:

Why Political Pessimism Trumps Optimism
The psychology of political pessimism
By Michael Shermer

“If you had to choose a moment in time to be born, any time in human history, and you didn’t know ahead of time what nationality you were or what gender or what your economic status might be,” what time would you choose? Paleolithic? Neolithic? Ancient Greece or Rome? Medieval times? Elizabethan England? Colonial America? The 1950s?

“You’d choose today,” answered the man who posed this question in an April 2016 speech, President Barack Obama.

“We are fortunate to be living in the most peaceful, most prosperous, most progressive era in human history,” he opined, adding that “it’s been decades since the last war between major powers.

More people live in democracies. We’re wealthier and healthier and better educated, with a global economy that has lifted up more than a billion people from extreme poverty.”

If these facts are true—and they are —then why the doom and gloom heaped on us by politicians and pundits on both sides of the political aisle?

First, news media outlets are far more likely to report bad news than good. Another day in Turkey without a coup goes unreported, but just try and take over a country without the world’s media covering it.

Second, as psychologist Roy F. Baumeister explained, “bad emotions, bad parents, and bad feedback have more impact than good ones, and bad information is processed more thoroughly than good.

Bad impressions and bad stereotypes are quicker to form and more resistant to disconfirmation than good ones.” Why?

One answer, I suggest, is in the psychology of loss aversion, in which, on average, losses hurt twice as much as gains feel good.

To get someone to take a gamble, the potential payoff must be about twice the potential loss. Why? Because of the endowment effect, which is the tendency to value what we own more than what we do not own.

Why is our psychology wired this way? Evolution. According to Harvard University psychologist Steven Pinker, in our evolutionary past there was an asymmetry of payoffs in which the fitness cost of overreacting to a threat was less than the fitness cost of underreacting.

The world was more dangerous in our evolutionary past, so it paid to be risk-averse and highly sensitive to threats.

All of which helps to explain much political pessimism.

That is part of it — pessimism is stronger than optimism, and is widely considered to be wiser. The optimist often thought naive and innocent, while the pessimist is wrongly believed to be a realist.

A second factor is what we described in earlier posts, and what the philosopher, Eric Hoffer, calls the “true believers.” These are people who passionately follow a leader or a faith. Religious fundamentalists and group fanatics are true believers.

One of the characteristics of a true believer is certainty despite contrary fact, especially the certainty that the past was good, the present is bad, but the Leader can make the future good again.

When Donald Trump says, “Political correctness is killing us;” “Free trade is killing us;” “Globalization is killing us;” “China is killing us;” “Mexico is killing us;” he is speaking to true believers, who long for a mythical future and a beautiful past that never really existed.

Trump’s slogan, “Make America great, again,” is a paean to that belief.

Despite Obama’s optimism and factual statement of how things are better today, many people have things worse, or think they do, or are afraid they will in the future.

Trump speaks to those of the middle and low income/wealth/power groups, who have seen the Gap widen between them and the rich, and they are resentful and need someone to blame. 

True believers need a devil to blame, generally someone from a competing ideology (a different religion or nationality). Trump’s Mexicans, Muslims, gays, Chinese, etc. fit perfectly (though ironically, the real devils are the American rich who, like Trump, create and benefit from policies that widen the Gap).

Third, there is a characteristic commonly known as “charisma,” a hard to define quality that many people find attractive and convincing.  Barach Obama and Bill Clinton have it in the eyes of many. Hillary Clinton seems to lack it. Donald Trump has it.

If we combine general need of threat avoidance, the specific needs of true believers, plus charisma,  we have a leader. If we add to the mix, a frightening lack of job qualifications and morality, we have Donald Trump.

It is quite likely that, no matter the election outcome, Donald Trump’s name will live on as the epithet: “That guy is another Trump.”

Rodger Malcolm Mitchell
Monetary Sovereignty

……………………………………………………………………………………………………………………………………………………

The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

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

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

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

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY

How America becomes Turkey, Pakistan, Saudi Arabia

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

…………………………………………………………………………………

This is Turkey:

TURKEY detains opposition paper’s editor and columnists, Chicago Tribune, 11/1/61

ISTANBUL — Turkish police detained the chief editor and at least 11 senior staff of Turkey’s opposition Cumhuriyet newspaper on Monday, a move that signals a widening crackdown on dissenting voices.

Editor-in-Chief Murat Sabuncu, cartoonist Musa Kart, the newspaper’s lawyer and several columnists were detained, some following raids at their homes, Cumhuriyet reported. Police had warrants for the detentions of 16 staff members, according to the left-leaning and pro-secular paper.

The detentions involving Cumhuriyet — one of Turkey’s oldest newspapers — come amid accusations by opposition parties and human rights groups that Turkey’s government is using the state of emergency imposed after a failed military coup to clamp down not only on alleged coup plotters but on all government critics.

And this is America:

America: Washington Post: 2/26/16
Donald Trump vowed to ‘open up’ libel laws to make suing the media easier. Can he do that?

Once elected president, Donald Trump promised, he will “open up” federal libel laws to make it easier to sue news outlets like The Washington Post and New York Times.

Trump on the media: “I’m gonna open up the libel laws so that … when they write hit pieces, we can sue them, and they can lose money.”

Trump could simply use the bully pulpit to promote a culture of frivolous libel suits that ultimately wouldn’t go anywhere but would force media companies to spend precious resources on defending themselves.

If his goal is to cause news outlets to lose money, Trump could achieve that objective without changing any laws at all.

Through judicial appointments, Trump could reverse decades of legal precedent that requires a public figure like him to prove “actual malice” in a libel case.

To win a defamation case, a plaintiff must show four things: 1) a false statement purporting to be fact; 2) publication or communication of that statement to a third person; 3) fault; and 4) damages, or some harm caused to the person or entity who is the subject of the statement.

Since the U.S. Supreme Court’s 1964 decision in New York Times v. Sullivan, defamation claims have been limited by First Amendment concerns. Thus, for instance, public officials and public figures (people who are famous) must show that statements were made with actual malice to recover in an action for defamation, by “clear and convincing” evidence rather than the usual burden of proof in a civil case, preponderance of the evidence.

The key here is that the “actual malice” standard for public figures is not codified in federal law; it is merely a longstanding legal precedent.

Precedents can change in the hands of the right judges. The Supreme Court’s 2010 Citizens United decision reversed at least 20 years of legal precedent on corporate spending in politics.

This is Pakistan:

Pakistan police arrest 1,500 supporters of Imran Khan

Pakistani police have arrested at least 1,500 supporters of opposition leader Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party ahead of a massive rally planned later this week in the capital Islamabad.

Security sources said on Monday that the number of those arrested overnight during a nationwide crackdown against PTI supporters ranges between 1,500 and 1,800.

And this is America:

Trump’s Promise to Jail Clinton Is a Threat to American Democracy
A candidate who accepted the nomination to chants of “Lock her up!” crosses a dangerous line.

If I win,” Donald Trump threatened Hillary Clinton during Sunday night’s debate, “I am going to instruct my attorney general to get a special prosecutor to look into your situation.” And he left no ambiguity as to the intended result.

“You know,” Clinton later responded, “It’s just awfully good that someone with the temperament of Donald Trump is not in charge of the law in our country.” Trump couldn’t resist. “Because you would be in jail,” he broke in.

This is Saudi Arabia:

The Saudi Arabian legal system was based on the sharia, or Islamic law.

The sharia was applied throughout the kingdom in strict accordance with the interpretation of the Hanbali school of Sunni Islam.

Because pious Muslims believed that the sharia was sacred law, they accepted as judges, only men who had spent a number of years studying the accepted sources of the sharia.

Historically, the decisions of judges were subject to review by the ruler. In effect, the judiciary was not an independent institution but an extension of the political authority.

And this is America:

Donald Trump rails against judge’s ‘Mexican heritage’

Donald Trump on Friday repeatedly defended his claims that a judge overseeing a lawsuit against Trump University is biased because of his Mexican heritage.

Trump said U.S. District Court Judge Gonzalo Curiel, a federal district judge in the Southern District of California, “He’s a Mexican. We’re building a wall between here and Mexico.”

Trump first broached these waters in an interview with The Wall Street Journal published Thursday, in which he said Curiel, who was born in Indiana, had an “inherent conflict of interest” in the Trump University lawsuit.

“If he was giving me a fair ruling, I wouldn’t say that,” Trump told Tapper, pointing again to Curiel’s background. “I think that’s why he’s doing it.”

“He’s of Mexican heritage, and he’s very proud of it.” Trump again called for Curiel to recuse himself from the case.

You are an American. You stand on the precipice, looking down at the undemocratic, lawless nations “below” you.

Donald Trump stands right behind you.

You feel his hands on your back.

Rodger Malcolm Mitchell
Monetary Sovereignty

The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

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

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

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

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY