Here is what true experts say about Monetarily Sovereign entities like the United States government and the European Union:
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
Alan Greenspan: “There is nothing to prevent the federal government from creating as much money as it wantsand paying it to somebody.”
Alan Greenspan: “The United States can pay any debtit has because we can always print the money to do that.”
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.”
Quote from former Fed Chairman Ben Bernanke when he was on 60 Minutes: Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.
Statement from the St. Louis Fed: “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. In this sense, the government is not dependent on credit marketsto remain operational.”
Press Conference: Mario Draghi, President of the ECB, 9 January 2014 Question: I am wondering: can the ECB ever run out of money? Mario Draghi: Technically, no. We cannot run out of money.
Here is what people who are ignorant of Monetary Sovereignty say:
Although it’s volatile (like personal bank balances often are), the treasury’s cash pile of $57.3bn, recorded last Thursday, is by far the lowest figure for more than a year — and it’s well below the $150bn minimum that the treasury reportedly likes to keep as a buffer.
The X-date Treasury Secretary Janet Yellen has said to lawmakers that the “X-date” — the date when the US can no longer guarantee its ability to pay bills— is June 1st.
If the US government does run out of money, the biggest problem is a default on its debt.
Most analysts agree that a default would lead to complete financial chaos but the reality is that it’s anyone’s guess, because it’s never happened before.
“Will someone please get me a longer rope, so I don’t have to kill myself.”
The current debt ceiling stands at a whopping $31.4 trillion, legally limiting how much the treasury can borrow.
Because the government has the infinite ability to create dollars, it never borrows dollars. Sadly, the public doesn’t comprehend that simple fact.
Talks between President Biden and Speaker Kevin McCarthy are set to resume today, as each side negotiates the latest fiscal package that would raise the limit, though both parties remain ideologically opposed on whether the new debt ceiling should come with deep cuts to, or caps on, federal spending.
The U.S. federal government has the infinite ability to pay its bills simply by pressing a computer key. It also has the infinite ability to raise the phony debt ceiling, which it already has done 94 times.
The spending that resulted in the current debt had been authorized by previous Congresses and previous Presidents. The current Republican House essentially is saying, “Even though the money already is spent, by both Democratic and Republican Congresses and Presidents — and even though we have infinite money to pay our bills — we aren’t going to pay what we owe.”
Sounds like something six-times-bankrupt Donald Trump would do. Despite being a billionaire, he has cheated many creditors, and now his party threatens to do what he has called “smart business.”
This is exactly what the 14th Amendment was written to stop.
(“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”)
Now, the party of the biggest crook in Presidential history threatens to cheat our creditors unless the current President yields to their demands to raise your taxes (though not the taxes of the very rich) or to cut your benenfits (though not the benefits of the very rich).
Ironically, if President Biden invokes the 14th Amendment, the party that wants to cheat our creditors will claim that this is cheating the Constitution.
The question is, will the Democrats follow the Constitution and end the ridiculous “debt ceiling,” once and for all.
Then, we can leave it up to the right-wing SCOTUS, beholden to the “party-of-law-and-order,” to wriggle a way to claim that the Constitution really doesn’t say what it says.
Hey, they did it for the 2nd Amendment with regard to well-regulated militias; why not the 14th?
Want to have a discussion about anything — ANYTHING —with an intelligent person? How about a discussion with a seemingly intelligent, seeming person?
Here’s a discussion I had with a pretty good facsimile, an exercise you can enjoy yourself by clicking the link.
We discussed the cause of inflation. Warning, it’s addictive. Unlike the humans I try to reason with, the computer never gets angry or even impolite. It always acknowledges points made. And its opinions are not its own.
Sadly, it doesn’t learn from arguments. It just keeps repeating what it already has been told by its references.
Rodger Mitchell: It widely is believed that “excessive federal spending causes inflation,” yet when I try to find an example of excessive federal spending causing inflation, I receive the explanation that, “It’s really a combination of factors of which excessive federal spending is one factor and not even an immediate factor.
“It could be a delayed part.”
Sadly, that could be said of anything. I could make the same statement about phases of the moon or children born with red hair — as being only one factor and not even an immediate factor in inflation.
A computer-generated illustration of: A computer on a stage, talking into a microphone.”
In short, federal spending is no more a demonstrable factor than is a sign of the zodiac.
Chat GPF:The relationship between federal spending and inflation is a complex and debated topic among economists.
While some people hold the belief that excessive federal spending directly causes inflation, the reality is more nuanced and not as straightforward as a simple cause-and-effect relationship.
Inflation is a general increase in prices over time, and it can be influenced by a variety of factors, including monetary policy, fiscal policy, supply and demand dynamics, international trade, productivity levels, and more.
Excessive federal spending can potentially contribute to inflation, but it is not the sole or immediate factor responsible for it.
When economists explain that excessive federal spending is only one factor and not an immediate one in inflation, they are acknowledging the multifaceted nature of inflation.
They are suggesting that while federal spending can have an impact on inflation, it needs to be considered alongside other variables that influence price levels.
Simply blaming federal spending without considering other factors would oversimplify the issue.
It is important to note that economic phenomena, such as inflation, are typically the result of multiple interacting factors. This complexity makes it challenging to isolate and definitively prove the direct causal relationship between any single factor and inflation.
Therefore, it is not accurate to compare federal spending’s role in inflation to unrelated factors like phases of the moon or hair color, as the former is subject to economic analysis and empirical research.
Computer-generated image of: “A computer pondering a question in economics.”
Economists continue to study the relationship between federal spending and inflation, and there are differing views within the field.
Some argue that excessive government spending, particularly when not matched by increased productivity or accompanied by monetary expansion, can contribute to inflationary pressures.
Others argue that other factors, such as changes in private sector spending, global economic conditions, or shifts in supply and demand, have a more significant influence on inflation.
In summary, while excessive federal spending can potentially contribute to inflation, it is just one factor among many.
The complexity of economic systems and the multitude of factors influencing inflation make it difficult to attribute it solely to federal spending. Economic analysis and research are ongoing to better understand these dynamics and their interrelationships.
Rodger Mitchell: It’s not terribly “challenging to isolate and definitively prove the direct causal relationship between any single factor and inflation.” Inflations historically are caused by shortages, usually shortages of oil or food. I see many parallels through history between oil or food shortages and inflation.
I do not see the same parallels between federal spending and inflation. Can you provide an example of an inflation that did not result from an oil or food shortage, but instead resulted from excessive federal spending?
ChatGPT:While it is true that supply shocks, such as oil or food shortages, have historically played a role in triggering inflationary episodes, it would be incorrect to assert that inflation is exclusively caused by these factors. Inflation can also arise due to other factors, including excessive government spending.
One example often cited as an instance where excessive federal spending contributed to inflation is the case of Zimbabwe in the late 2000s. The Zimbabwean government embarked on a policy of significant fiscal expansion, primarily through extensive money creation, to finance its expenditures.
This resulted in a substantial increase in the money supply, leading to hyperinflation.
During this period, Zimbabwe experienced a severe economic crisis, with skyrocketing prices, rapid depreciation of the currency, and a loss of confidence in the monetary system.
Four computer generated images of: “A computer laughing at a joke”
While there were other factors at play, such as economic mismanagement and a decline in agricultural productivity, excessive government spending and the consequent increase in the money supply were key drivers of inflation in Zimbabwe.
It’s important to note that this example is just one case among many, and the relationship between federal spending and inflation is not always straightforward.
The impact of government spending on inflation can vary depending on several factors, including the overall state of the economy, fiscal and monetary policies, and the credibility of the government in managing its finances.
In many instances, inflation may result from a combination of factors rather than being solely attributable to a single cause.
It is also worth noting that the effects of excessive government spending on inflation may not be immediate but can manifest over time as the economy adjusts to the increased money supply and the potential distortionary effects of government interventions.
In summary, while oil or food shortages have historically been associated with inflation, excessive federal spending can also contribute to inflationary pressures under certain circumstances.
The example of Zimbabwe illustrates how a combination of factors, including excessive government spending and monetary mismanagement, can lead to inflation.
However, it is important to recognize that the relationship between federal spending and inflation is complex, and various factors can interact to influence price levels in an economy.
Rodger Mitchell: The Zimbabwe inflation was caused by a food shortage. Farmland was taken from farmers and given to non-farmers. The result: Food shortage and inflation.
The money “printing” was a response to, not a cause of, inflation.
ChatGPT:While it is true that Zimbabwe’s land redistribution policies and subsequent disruptions in agricultural productivity were significant contributors to the country’s hyperinflation, it is essential to note that excessive money creation by the central bank played a crucial role as well.
The Zimbabwean government resorted to financing its budget deficit by effectively printing money, leading to a significant expansion of the money supply.
This, combined with the loss of agricultural output, created a situation of excess money chasing limited goods, fueling hyperinflation.
The land redistribution policy disrupted agricultural production by displacing experienced farmers and replacing them with individuals who lacked the necessary skills, resources, and incentives to maintain productive farms. This resulted in a decline in food production, contributing to shortages and price increases.
However, it is important to understand the sequence of events. The initial cause of the inflationary spiral in Zimbabwe was the disruption in agricultural productivity due to the land redistribution policy.
As the economy faced shortages of food and other goods, the government responded by printing money to finance its spending obligations, exacerbating the inflationary pressures.
Inflation is a complex phenomenon, and it rarely has a single cause. In the case of Zimbabwe, both the land redistribution policy and the subsequent monetary expansion played significant roles in the hyperinflationary episode. It is crucial to recognize the interplay between these factors rather than attributing the entire inflationary outcome to a single cause.
This example underscores the importance of considering multiple factors and their interactions when analyzing the relationship between excessive federal spending and inflation. While it is true that supply shocks like food shortages can trigger inflation, the subsequent monetary and fiscal responses to those shocks can amplify and prolong the inflationary effects.
Rodger Mitchell:
(At this point I decided not to get into the fact that Zimbabwe was not Monetarily Sovereign, so though it could print currency, it’s money was tied to the dollar, and important inflationary consideration.)
It would be helpful if you could point to a single inflation in history that was precipitated by government spending rather than being precipitated by a shortage of oil, food or some other critical factor.
I suspect all inflations really are caused by shortages.
ChatGPT:There have been cases in history where excessive government spending has contributed to inflation, even in the absence of shortages in critical factors like oil or food. One notable example is the hyperinflation experienced by Germany in the early 1920s.
After World War I, Germany faced significant war reparations and a massive budget deficit. The German government resorted to financing its spending by issuing large amounts of debt and, eventually, by printing money.
The excessive money creation, combined with a lack of corresponding increase in production and output, led to a rapid devaluation of the German mark and hyperinflation.
During this period, there were no significant shortages of oil or food in Germany. Instead, the excessive government spending and the resulting increase in the money supply caused a loss of confidence in the currency, leading to skyrocketing prices.
People’s wages and savings quickly became worthless as the value of the mark rapidly declined.
This example illustrates how excessive government spending and the subsequent expansion of the money supply, without corresponding increases in productivity or output, can lead to inflation.
It demonstrates that inflation can occur even in the absence of shortages in critical factors.
While supply shortages can certainly contribute to inflation, it is not accurate to claim that all inflations are solely caused by shortages. Economic phenomena such as inflation are influenced by a multitude of factors, including both demand and supply-side dynamics, monetary policy, fiscal policy, and other macroeconomic conditions.
It is crucial to recognize that inflation is a complex phenomenon with multiple potential causes, and it can arise from different combinations of factors in different historical contexts.
Rodger Mitchell: So, prices of food and oil went up even though there was no shortage of these products? And it was all due to government spending? Then the inflation was cured by even more government spending to create the greatest military force the world had ever known? Does any of this make sense to you?
ChatGPT:I apologize if my previous responses were not clear. Allow me to clarify.
In the case of Germany’s hyperinflation in the early 1920s, it is important to note that the excessive government spending and subsequent increase in the money supply were contributing factors to inflation.
However, it would be inaccurate to say that the inflation was solely caused by government spending without considering other factors at play.
During that period, Germany faced a complex set of circumstances, including war reparations, economic disruptions from World War I, and political instability.
The excessive government spending and the resulting expansion of the money supply added to these challenges, leading to hyperinflation.
Inflation is a multifaceted phenomenon influenced by various factors, including monetary policy, fiscal policy, supply and demand dynamics, productivity, external factors, and more. It is rarely driven by a single cause.
Regarding your statement about inflation being “cured by even more government spending to create the greatest military force the world had ever known,” it is important to differentiate between the context of post-World War I Germany and the broader discussion about the relationship between government spending and inflation.
Government spending, particularly in the context of wartime mobilization or rebuilding efforts, can have stimulative effects on the economy.
However, the impact on inflation depends on various factors, including the state of the economy, fiscal management, and monetary policies implemented.
It is crucial to approach the analysis of inflation and government spending with nuance, considering the specific historical context and the multitude of factors involved. There is no one-size-fits-all explanation, and each situation requires careful examination of the unique circumstances at hand.
Rodger Mitchell: There is a widespread fear that government spending causes inflation. It is the foundation of the “debt-limit” laws. Because the federal government cannot run short of dollars, the only ostensible purpose of the debt limit is to prevent inflation.
But, government spending alone doesn’t cause inflation. There needs to be, as you said, “war reparations, economic disruptions, and political instability.”
Absent these factors, which cause shortages of key goods and services, government spending does not cause inflation. Thus, the excuse for a debt limit disappears.
ChatGPT:You raise an important point about the relationship between government spending and inflation. While it is a common belief that government spending alone leads to inflation, the reality is more nuanced.
As you mentioned, inflation typically occurs when there are shortages in key goods and servicesor when there is excessive money creation that outpaces the productive capacity of an economy.
Government spending can potentially contribute to inflation if it is not matched by increased productivity or accompanied by appropriate fiscal and monetary policies.
The purpose of debt limits, including the ones imposed on governments, can indeed be aimed at controlling inflationary pressures. By limiting the amount of debt the government can accumulate, policymakers aim to prevent excessive money creation and potential inflation.
However, it is important to note that debt limits are just one of many tools governments use to manage their fiscal policies, and their effectiveness in curbing inflation can vary.
In practice, the relationship between government spending, debt limits, and inflation is complex and dependent on various factors. These factors include the overall state of the economy, fiscal management, monetary policies, external economic conditions, and more. Each situation requires careful analysis of the specific context to understand the potential impacts on inflation.
While shortages of goods and services can exacerbate inflationary pressures, it is not accurate to dismiss government spending as irrelevant to inflation in the absence of such shortages. The impact of government spending on inflation is influenced by a range of economic factors, and it is subject to ongoing debate and analysis among economists.
In summary, the relationship between government spending and inflation is multifaceted. While shortages of key goods and services can contribute to inflation, government spending can also have inflationary effects if not appropriately managed. The role of debt limits in preventing inflation depends on various factors and can differ from one economic context to another.
Note the repeated use of the “This, but on the other hand, that” argument.
Also, while the public believes excessive” “federal spending causes inflation, ChatGPT says other factors must be present. (It is these “other factors” that are the cause of inflation. Increased money creation is a response to inflation, not a cause.)
While the complaint often is made that https://chat.openai.com/ is not a reliable source of information, that same complaint can be made about every other source of information— books, newspapers, encyclopedias, and certainly the government, the Internet and television (perhaps except for FOX and Breitbart, which are reliably wrong).
For example, you’ll notice that https://chat.openai.com/ never does provide any data to demonstrate that federal spending causes inflation. It dances around that central point by making the “various factors” claim.
Unfortunately, it cannot yet receive pictures or graphs, else I would have provided it with graphs demonstrating the lack of a historical relationship between inflation and federal spending along with the profound historical relationship between oil shortages and inflation.
I suspect that by the time this year ends, we will be able to show the AI pictures, graphs, videos, and music.
It might even admit that debt limits are a lie foisted on the innocent public by the rich, the purpose being to widen the Gap between the rich and the rest.
We have discussed this for many, many years.But because of the new, ultra-partisan, endlessly repeated efforts led by the right wing to reduce any benefits to the non-rich, the truth must be repeated so it can fight through the fog of lies to be remembered.
No rational person would take dollars from the economy and give them to a federal government that has the infinite ability to create new dollars.
Yet, that same rational person approves collecting tax dollars from the private sector and giving them to the federal government.
It is illogical to the extreme, yet it is universally countenanced. So much for human mental superiority.
Economics is a combination of mathematics and psychology. Economists lose their place during attempts to blend the two, for instance, when they claim that something must happen when historically it seldom or never happens.
The most important problems in economics involve just two issues:
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Insolvency, the phony issue: Cutting SS and Medicare is again being touted as the “only” way to avoid national insolvency. It is a lie.
The federal government, being Monetarily Sovereign, has infinite money to support all its agencies. No federal agency becomes insolvent unless Congress and the President want that.
The notion that funds for Medicare and Social Security — and no other federal agency — are limited by a tax on the lower side of the income scale — FICA — is absurd. Billionaire Donald Trump doesn’t pay that tax; you do.
The fact that the so-called “debt ceiling” has arbitrarily been raised 94 times should give any thinking person pause to consider the idiocy of the ceiling itself.
An astounding 94 increases, the sky hasn’t fallen, and still we debate it.
Ask your neighbor why we have a debt ceiling that we have increased 94 times. I promise he will give you an ignorant answer. Why?
Because the sole purpose of the debt ceiling is to take advantage of the ignorant.
Your neighbors believe they understand economics. They don’t. They think federal financing resembles personal financing. It doesn’t.
If you try to explain it to them, they will resist understanding it. In their ignorance, they will laugh at what they perceive as your ignorance.
Their ignorance is akin to flat-earth believers, who assure you that ships sailing west eventually will fall over the edge. No amount of evidence can convince a flat-earther or a federal debt worrier. They are beyond the evidence.
Ignaz Semmelweis failed to convince doctors to wash their hands
How do I know? I’ve been doing this for nearly 30 years. Why do I keep doing it? Every so seldom, I meet someone open to learning, which requires changing one’s beliefs.
So despite meeting thousands of learning-resistant people, the relatively few who use their brains give me hope.
Federal Taxes: They do not fund federal spending. The U.S. Treasury destroys all dollars it receives and creates new dollars every time it pays a creditor.
To pay an invoice, the federal government sends instructionsas a check or wires (not dollars) to the creditor’s bank, telling the bank to raise the balance in the creditor’s checking account.
When you send your M2 tax dollars to the Treasury, those dollars immediately disappear from any money supply measure. The reason: Our Monetarily Sovereign government has the infinite ability to create dollars from thin air, so trying to measure its supply of dollars would make no sense.
Adding dollars to infinite dollars yields infinite dollars. No change.
The sole purposes of federal taxes are:
To discourage what the government doesn’t like and to give tax breaks to what the goverment likes
To create demand for the dollar by requiring taxes to be paid in dollars.
That’s it. Taxes do not provide the federal government with spending money.
The sole purpose of the debt ceiling is to sell the lower-income groups the false idea that the government cannot afford to give them benefits.
There is a political purpose, however: To give the party that is out of power leverage over the party that is in power.
Federal finances are nothing like personal finances.
The useless and misleading “debt limit” should be eliminated. The so-called “debt” is the net total of deposits into T-security accounts (T-bills, T-notes, T=bonds). These deposits are:
Like the contents of safe deposit boxes: Owned by the depositors, not by the federal government
Not used by the federal government
Not borrowed by the federal government. The federal government never borrows dollars.
Not touched by the federal government
Not a debt of the federal government
Paid back simply by returning the dollars in the accounts.
The useless and misleading Social Security “trust funds” are:
Not recipients of FICA tax dollars, which are destroyed upon receipt by the Treasury.
Not paying for Social Security or Medicare, which are funded by new dollar creation like all federal programs.
Illusions, established by President Franklin D. Roosevelt, in a (failed) psychological attempt to keep Congress from cutting Social Security.
And contrary to popular myth, federal deficit spending never has caused inflation. There is no historical relationship between federal spending and inflation.
If federal deficit spending (red) caused inflation (blue), the lines would be parallel. They are not.
Rather than causing inflation, federal deficit spending prevents and cures recessions.
Recessions (vertical gray bars) follow decreases in federal deficit spending (red line) and are cured by increases in federal deficit spending.
Federal “debt” reduction caused every depression in U.S. history.
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%. A recession began 2001.
All inflations in history have been caused by the scarcity of critical goods and services, mainly oil and food. This is demonstrated by the graph below:
The graph showing federal deficit spending vs. inflation shows no relationship between the two. The graph showing oil prices vs. inflation shows a strong relationship. Oil prices reflect oil scarcity. Thus, inflation is not caused by federal spending but rather by scarcity.
As we said, this has been discussed before on this site.
But past Republican parties, though heavily favoring the rich over the poor, were not led by demonic, psychopathic dictator wannabe who would burn down your house and our entire nation for the chance to rule the ashes.
IN SUMMARY
The federal government is uniquely Monetarily Sovereign. It cannot unintentionally run short of dollars.
When you are told that Medicare and Social Security benefits must be decreased and FICA taxes must be increased, that is a lie, and the person saying it is a liar, ignorant, or both.
The federal “debt” is not a problem, not even a debt, not paid for by your grandchildren, and is necessary for economic growth.
Efforts to decrease the federal “debt” are, in reality, efforts to make the rich richer by widening the Gap between the rich and the rest. The wider the Gap, the richer they are.
Unfortunately, when you try to explain this to your friends, their previous indoctrination will prevent them from believing what is in their self-interest.
So they naively will continue approving and justifying federal tax increases and federal benefit decreases, much to the amusement of the rich, who have blessed themselves with tax loopholes and income not subject to FICA taxes.
All you can do is to keep fighting, and forgive them, for they know not what they do.
Do you love learning?
Even though I passed right through 88, and am roaring toward 89, I still do, which means I love being shown where I’m wrong. How else can anyone learn but to be given new beliefs that replace former beliefs?
Never be too old or too sure to learn.
So here is a challenge to you, my readers, plus the MMT gang (Stephanie, Warren, Randy et al.), CRFB, Fox viewers, mainstream economists, journalists, politicians of all stripes, and all others who may believe some or all of what I believe is wrong.
You may agree with me on many things but disagree on certain details (Hello MMTers). I’d love to hear from you.
Some of you may disagree with everything I write.
I’d love to hear from you (except from those whose main argument consists of comparing me to excrement. No learning there; I’ve heard it all).
Some of you merely may have questions, not necessarily disagreements, about what I believe. Send me your questions and I will try to answer those I feel may be educational.
Some of you agree with everything I write. Gotta love you.
Here’s the challenge:I will list certain things I believe. You tell me where I’m wrong, and this is the important part: Show me your data.
I’ll print worthwhile comments along with whether I feel you’ve made a valid point(s). Where appropriate, I’ll provide data or other evidence to substantiate my point. Or, I’ll simply agree with you.
This way, we all can learn, and it will be fun.
I believe:
I. Our Monetarily Sovereign governmentnever can run short of its sovereign currency, the U.S. dollar. It can pay for anything costing dollars, instantly, simply by pressing computer keys. This compares to city, county, and state governments, which are monetarily non-sovereign, and do not have a sovereign currency, so can and often do run short of dollars.
In the same vein, euro nations like Germany, France, Italy, Greece et al, do not have sovereign currencies, so they can and do run short of euros. The European Union is Monetarily Sovereign so it cannot run short of euros.
II. Federal taxes do not fund federal spending. The primary purpose of federal taxes is to control the economy by taxing what the government wishes to limit and by giving tax breaks to what the government wishes to encourage.
Even if the federal government collected $0 taxes, it could continue spending, forever. In fact, the Treasury destroys all the tax ollars it receives, and orders new dollars to pay for goods and services.
A secondary (though not necessary) purpose of federal taxes is support demand for the U.S. dollar by requiring dollars to be used for tax payments.
III. The Federal government does not borrow dollars, nor does it use the dollars that are deposited into T-security accounts. After being deposited, those dollars remain the property of the T-security account holders and are not touched (including the interest dollars deposited by the government.)
The federal government easily could operate without accepting any T-security dollars. The purposes of T-securities are to provide a safe storage place for unused dollars (which stabilizes the dollar), and to aid the Federal Reserve in controlling interest rates.
IV. The federal deficits and debt are not, nor will they ever be, “unsustainable.” That word, “unsustainable,” is used by Libertarians and other debt hawks, yet never have I seen what it supposedly means. Does “unsustainable” mean the government will be unable to pay its bills? If not, what exactly does it mean?
The “debt ceiling” is an artifact of economic ignorance and should be eliminated. It’s sole purpose is to provide an excuse for outrage by the political party not in power. As such, it is a danger to America if used by traitors in Congress.
V. Federal deficit spending never causes inflation. Every inflation in history has been caused by shortages of key goods and services — most often oil and food — not federal deficits.
Today’s inflation was caused by OPEC and Russia related shortages of oil, and by COVID-related of a litany of products and services.
The old saw, “Inflation is too much money chasing too few goods” is half wrong and half right. It should read, “Inflation is too few goods and services.” Period.
VI. Federal spending does not cause the above-mentioned shortages. Inflations tend to come suddenly. Federal spending does not cause a sudden increase in oil shortages (producers like OPEC, Russia and even America can and do suddenly contract production.)
Similarly, federal spending does not cause people suddenly to eat more food, thereby causeing a food shortage.
Thus, federal deficit spending does not cause inflation.
VII.All hyperinflations — pre-WW2 Germany, Zimbabwe, Argentina, et al. have been caused by shortages, not by government spending. The illusion of “excessive” spending (the infamous currency in a wheelbarrow) is created by an unknowledgable government’s poor response to inflation — printing higher denominations of currency rather than acquiring and distributing the scarce products and services.
VIII. Recessions are caused by reduced federal deficit spending and are cured by increased deficit spending to acquire and distribute the scarce products and services.
IX. Depressions are caused by federal surpluses and “balanced budgets,” and are cured by deficit spending.
X. The federal government can and should fund no-deductible, comprehensive Medicare coverage to every man, woman and child in America.
IX. The federal government can and should fund Social Security benefits for every man, woman, and child in America.
X. The federal government should fund all education from pre-K through post-college-grad, while paying people to attend school. The pre-K through 12 financial burden should be taken from the monetarily non-sovereign cities, counties, and states and paid by the infinitely solvent federal government.
XI. Benefits from the federal government do not dissuade people from working.The vast majority of Americans wish to increase their incomes and/or move up the income/wealth/power scale, so they will work to augment whatever they receive from the federal government.
XII. All benefits should go equally, to everyone, rich or poor. This eliminates the onerous task of monitoring. incomes.
XIII. Gap Psychology (The desire of those near the top of any social scale to distance themselves from those below, and the desire of those below to approach those above) is the prime driver ofbigotry,poverty and street crimein America. Curing those social problems will require dealing with Gap Psychology.
XIV.Gold, silver, or any other physical substance never were money, nor have they ever “backed” money nor provided safety for money. They merely are products the federal government periodically decides to purchase or sell at prices stipulated by the whim of the federal government.
If I were writing a book, every paragraph, I – XIV, would warrent a separate chapter and supporting data. Instead, I’ll address your comments and questions, and most importantly, I’ll provide supporting data, as I hope you will.
Hoping to receive many objections, so we all can learn.
Sincerely,
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.
#Monetary Sovereignty - Mitchell 