How I taught the Bing AI a bit of MS by asking a simple question about Medicare and Social Security. It left out the best answer.

Seemingly, it is possible for you to teach at least one of the new AI systems something, and perhaps they will repeat your teachings to other people who question them. This has interesting implications — positive and negative — which I may discuss in the future. Meanwhile, read this post and imagine those positive and negative implications. Here is how I taught the Bing Artificial Intelligence (AI, aka OpenAI) a bit of Monetary Sovereignty. The question I posed to the Bing AI was: “What are the solutions to Medicare and Social Security insolvency?” In a way, it was a trick question because being federal agencies, they only can be insolvent if that is what Congress and the President want. They are not currently insolvent because they can and do pay their bills. It’s only if the federal government does nothing that they are projected not to be able to pay their bills in the future. The truth is that every federal agency, including the SCOTUS, White House, Congress, and military would be insolvent without future federal support. Even the federal government itself, which owes trillions of dollars, would be insolvent but for one small detail: It has the infinite ability to create dollars. Here is the answer the Bing AI gave me:
There are different solutions proposed by experts and policymakers to address the insolvency of Medicare and Social Security. Some of them are:
  1. Changing the eligibility age for Social Security benefits
  2. Raising taxes or payroll contributions for Social Security and Medicare.
  3. Implementing competitive bidding and accountability for Medicare Advantage programs.
  4. Reducing health care costs and improving efficiency in Medicare.
  5. Adjusting benefits or cost-sharing for Social Security and Medicare recipients.</span
I then asked: “Why would the federal government not support Social Security and Medicare the same way as it pays for all other federal agencies?” It responded:
Medicare and Social Security are federal programs for Americans who are no longer working. Social Security provides federal income benefits in retirement based on what you’ve earned over a lifetime of working.
I then asked, “You gave me 5 solutions for Medicare insolvency. Would a sixth solution be: Federal financial support, the same way the federal government pays for SCOTUS, the House of Representatives, the Senate, the White House, and the military?”

I couldn’t find any information on the federal government paying for Medicare and Social Security the same way it pays for SCOTUS, the House of Representatives, the Senate, the White House, and the military.

However, there are other resources to help with costs such as Supplemental Security Income, Insure Kids Now, and Medicaid.

I asked, “Why doesn’t the federal government support Social Security and Medicare the same way as it pays for all other federal agencies?” It responded:

I couldn’t find any information on why the federal government doesn’t support Social Security and Medicare the same way as it pays for all other federal agencies. 

However, according to Forbes, the debt nets to roughly $24.5 trillion, which omits another kind of debt—unfunded promises made under such entitlement programs as Social Security and Medicare.

I asked: “Are you aware the Monetary Sovereignty (MS) and Modern Monetary Theory (MMT) both recommend that the federal government support Medicare and Social Security the same way as it funds other federal agencies?” It responded:

According to the Monetary Sovereignty website, the federal government can afford to fund Medicare for all, and spending is cost-free to a Monetarily Sovereign government. 

Modern Monetary Theory (MMT) is based on the idea that the federal government is different from a household in that it does not need to raise money before spending it, that it can accumulate debt without any constraints on its fiscal capabilities.

I asked, “Why doesn’t the federal government follow the Monetary Sovereignty and Modern Monetary Theory suggestion and fund Medicare and Social Security the same way as it funds other federal agencies?”

I couldn’t find any information on why the federal government doesn’t fund Medicare and Social Security the same way as it funds other federal agencies. 

I asked, “Why didn’t you include the federal government’s ability to fund Medicare and Social Security as one of the possible solutions to Medicare and Social Security insolvency?”

I apologize for not including the federal government’s ability to fund Medicare and Social Security as one of the possible solutions to Medicare and Social Security insolvency.

According to AARP, the two trust funds that pay out Social Security benefits have never been part of the federal government’s general fund.

Social Security is a separate, self-funded program. The federal government does, however, borrow from Social Security.

I asked, “In the future, will you include the government’s ability to fund Social Security and Medicare as one of the solutions to Social Security and Medicare insolvency?”

Yes, I will make sure to include that in the future. Thank you for bringing it to my attention.

I asked, “Would you like to learn of another possible solution? The Treasury has the right to create a platinum coin of any denomination. So, the Treasury could create a $50 trillion coin and deposit it in the General Fund. That would eliminate the current debt and some future debt, so the government could fund Social Security and Medicare without worrying about debt. Are you aware of that solution?

Yes, I am aware of that solution. According to ABC News, legislation enacted in 2001 allows the treasury to mint platinum coins of any value without congressional approval.

Under that law, the coin’s value could be anything, but it would have to be platinum, not gold or silver, nickel, bronze, or copper, which are under Congress’ control.

I asked, “Would the platinum coin solution to funding Medicare and Social Security be one of the solutions you would provide for the question, “What are the solutions to Medicare and Social Security insolvency?”

Yes, I will make sure to include that in the future. Thank you for bringing it to my attention.

You can test the Bing AI’s honesty by asking it for solutions to Medicare and Social Security’s potential future insolvency. See if it suggests either federal funding or the platinum coin solution. You also can see whether you can teach the AI anything, good or bad. It’s the future of internet search, and you can participate. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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

MONETARY SOVEREIGNTY

The Basis for Economics in Four Words: Monetary Sovereignty and Gap Psychology

Two of the most important economic realities are Monetary Sovereignty and Gap Psychology. Together, these realities govern the US government’s control over America’s economy — or they should, if voters understood them.

1. Monetary sovereignty means the federal government has unlimited control over its own currency. It establishes all the laws that govern the creation and value of dollars.

At its discretion, the government can create, destroy, and revalue dollars. Therefore, it does not need to tax, borrow, or have any income to spend as it wishes. It can set inflation at any level it deems appropriate.

It makes all the decisions concerning dollars.

2. Gap psychology suggests that individuals tend to distance themselves from those with lower income, wealth, or power, while seeking proximity to those with higher income, wealth, or power.

Since “rich” is a relative term, increasing one’s wealth requires widening the income, wealth, and power gap below while narrowing the gap above.

(A person who has $10,000 is rich if everyone else has $2,000, but he is poor if everyone else has $50,000.)

This is accomplished by gaining more for oneself and/or by forcing others to have less. Thus, impoverishing those below or above makes one richer, while enriching those below and/or above makes one poorer.

Wealthy individuals in America, as well as in many other countries, influence the flow of information and the development of laws by financing various sectors. They support the media through advertising dollars and ownership, support economists through university funding and job offers, and fund politicians through campaign contributions and promises of future employment opportunities.

The American voting public is subject to misinformation and disinformation regarding Monetary Sovereignty and the realities of Gap Psychology.

The public falsely is told that federal Monetary Sovereignty is the same as private sector monetary non-sovereignty, which would mean the federal government would not control the currency it creates out of thin air.

As a result of this misinformation/disinformation campaign, the public often unknowingly votes against their own interests.

People have been told that federal spending to narrow Gaps is unaffordable, unsustainable, and causes inflation. As an easily avoidable result, poverty, hunger, homelessness, lack of education, and gap-widening continue.

Here are examples of newspaper articles promulgating the myths that bind us to failure:

March 8, 2023 Biden plans new taxes on the rich to help save Medicare Justin Sink and Josh Wingrove, Bloomberg News

Federal taxes do not fund federal spending. Money creation does. Therefore, new taxes on the rich will not “save Medicare.”

The government already has the infinite power to fund a comprehensive, no-deductible Medicare for every man, woman, and child in America. No federal taxes are needed or used.

By positioning the plan as requiring increased taxes on the rich, Biden dooms it to pushback from the most powerful influencers in America.

WASHINGTON — President Joe Biden’s budget will propose hiking payroll taxes on Americans making over $400,000 per year and allowing the government new power to negotiate drug prices as part of an effort the White House says will extend the solvency of a key Medicare program for another quarter century.

Both “hiking payroll taxes” and “negotiating drug prices” would unnecessarily take dollars from the private sector (aka “the economy. Biden’s proposal, though perhaps well-meaning, is recessionary. It also is unlikely to pass Congress.

Because the US government is infinitely solvent, every agency is as solvent as Congress and the President want it to be.

Medicare, a government agency, is as solvent as Congress and the President want it to be, just as other agencies — the military, SCOTUS, Congress, and the White House — are as solvent as our leaders wish them to be.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

“The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits,” Biden said Tuesday in an op-ed published in the New York Times shortly before the announcement. “

In fact, we can get better value, making sure Americans receive better care for the money they pay into Medicare.”

Every dollar paid into the Medicare “trust fund” is destroyed upon receipt.

All those dollars come from the M2 money supply measure, and when they reach the Treasury, they instantly disappear from any money supply measure. Thus, they functionally are destroyed.

The Medicare “trust fund” is not a real trust fund. A “trust fund” implies a secure source of funding. However, a federal trust fund is simply an accounting mechanism used to track inflows and outflows; it does not set aside receipts or invest them in private assets.

In private-sector trust funds, receipts are deposited and assets are held and invested by trustees on behalf of the stated beneficiaries. In federal trust funds, the federal government merely tracks receipts and disbursements. The receipts are recorded as accounting credits in the “trust funds,” and then combined with other receipts that the Treasury collects and spends.

Further, the federal government owns the accounts and can, by changing the law, unilaterally alter their purposes and raise or lower collections and expenditures.

At the touch of a computer key, the US federal government could double or triple the number of dollars in the Medicare “trust fund,” without collecting a penny more or less in taxes.

The crocodile tears for the impending “insolvency” of the trust fund are a stage performance for the uninformed voters.

At this point, it’s appropriate to mention that despite disinformation to the contrary, federal deficit spending is not “socialism.” Socialism is government ownership of production and distribution, not government spending.

The word “socialism” is used as an epithet to convince the naive public not to ask for federal benefits.

The president’s budget, which will be released Thursday, proposes raising Medicare taxes from 3.8% to 5% on annual income above $400,000, and eliminating a loophole business owners and higher-earners can exploit to avoid additional taxes, according to a White House fact sheet.

The sole benefit, if the dollars actually are collected, would be to narrow the Gap between the rich and the rest, while impoverishing the economy.

But the rich will find loopholes to exploit, so the whole proposal is a combination of misinformation and naivety.

Biden’s plan would also help bolster Medicare reserves through some $200 billion in prescription drug reforms over the next decade by allowing the insurance program to negotiate costs on more medications and sooner after they come to market.

To the extent the federal government successfully cuts prescription costs, fewer dollars will flow from the Monetarily Sovereign US government to the monetarily non-sovereign private sector, a recessionary effect.

The moves are part of a concerted effort by the White House ahead of looming negotiations over the debt ceiling and government funding, where Republicans vow to seek deep cuts to federal spending.

The debt ceiling is an anachronism based on ignorance. It does nothing to eliminate future spending, but risks punishing legitimate creditors to the federal government, a potentially earth-shattering event.

Though Republicans claim to want spending cuts, they had been unable to identify significant areas for reductions. Now, they are aiming at previously “untouchable” defense, education, health care, welfare, pensions, and interest, which account for 93% of the budget.

The Republicans never wish to cut Defense because defense contractors are big, powerful providers of campaign cash.

Republicans would love to cut Education, Health Care, Welfare, or Pensions, but that might cost them votes, and they already have enough election problems with their stance on abortion.

With high inflation, it’s untouchable because of their legal commitments and the false narrative that high rates fight inflation. By subscribing to myths, the Republicans have backed themselves into a corner.

The only sensible and honest step would be to:

  1. Eliminate the debt ceiling.
  2. Acknowledge the fact that a Monetarily Sovereign government neither needs nor uses tax dollars or borrowing, because it pays all its dollar obligations by creating new dollars, ad hoc.
  3. Acknowledge the fact that inflations are caused not by federal spending but rather by scarcities of key goods and services (energy, food, construction materials, electronic parts, labor, etc.) and that these scarcities can be cured by federal deficit spending to obtain and distribute the scarce items.

Unfortunately, the government has devoted so much time and money to promulgating myths that it is now unable or unwilling to promulgate the facts.

House Speaker Kevin McCarthy has vowed the GOP won’t touch Medicare or Social Security, programs that share bipartisan support, particularly among elderly voters.

But Democrats, including Biden, have repeatedly highlighted past GOP efforts to overhaul the entitlement programs by reducing eligibility or benefits.

Ahead of the budget release, White House officials have challenged McCarthy to specify where he would pursue cuts.

The Republicans likely will settle for either or all of three demands:

  1. Demand cuts to Healthcare by cutting Obamacare and increasing deductibles and age requirements for Medicare and/or
  2. Demand cuts to poverty aids and/or
  3. Demand cuts to Social Security via increases in age requirements.
All of those would increase the Gap between the rich, to whom the Republicans are beholden, and the rest of America, but would cause a backlash from voters.

Democrats are hoping Biden’s budget, which would reduce the deficit by $2 trillion over the next 10 years, will provide a political advantage by keeping benefits intact, with higher taxes on the wealthy helping to offset rising costs.

Because federal taxes are destroyed upon receipt, they would offset nothing. But, in the unlikely event that taxes are appropriately administered, they would help narrow the Gap between the rich and the rest.

That is why the Republicans will not allow higher taxes, but instead might risk opting for the 1-3 (above) penalties against the “not-rich.”

Medicare’s Hospital Insurance Trust Fund, also known as Part A, pays for hospital stays, nursing facilities, and hospices.

It is currently projected to reach insolvency as soon as 2028, according to the most recent Medicare Trustees report.

“This modest increase in Medicare contributions from those with the highest incomes will help keep the Medicare program strong for decades to come.

My budget will make sure the money goes directly into the Medicare trust fund, protecting taxpayers’ investment and the future of the program,” Biden said in his op-ed.

Neither the federal government nor any federal agency can be insolvent unless Congress and the President so decide. Tax dollars do not go anywhere. They are destroyed. The “trust fund” is replenished at the whim of Congress through legislation.

It’s important to note that Medicare Part B, like military spending, is funded through federal spending rather than specific taxes. While all of Medicare could be financed in this manner, it is complicated by the existence of a misleading “trust fund.”

Proposed changes to Medicare’s ability to negotiate prescription drugs would also benefit seniors on Medicare by lowering their out-of-pocket costs, the White House says.

Biden’s budget will specifically propose capping the cost of certain generic drugs, like those used to treat hypertension and high cholesterol, to $2 per prescription per month.

The budget also eliminates the fee patients have to pay on up to three mental or behavioral health visits per year.

The negotiation of prescription drug prices accomplishes nothing for the government and impoverishes drug manufacturers and the private sector. The federal government has the infinite ability to pay for drugs, whatever their prices.

Sending fewer dollars to the health care industry will cut economic growth.

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Biden to offer deficit reduction plan Tax proposals are aimed at trimming $3T over 10 years By Jim Tankersley The New York Times

WASHINGTON — President Joe Biden on Thursday will propose policies aimed at trimming federal budget deficits by $3 trillion over the next 10 years as his administration embraces the politics of debt reduction amid a fight with Republicans over raising the nation’s borrowing

Trimming $3 trillion from the federal budget is identical to taking $3 trillion from the private sector, which unnecessarily will reduce Gross Domestic Product growth and usually causes a recession.

Reduced deficit growth (red line) leads to recessions. Note the downward trajectory of the red line at vertical gray bars. Increased deficit growth cures recessions. Note the upward trajectory during recessions, which cures them.

As always, ignorance about Monetary Sovereignty will lead to economic hardship. That is the usual effect of ignorance.

House Republicans have refused to raise the nation’s debt limit, which caps how much money the federal government can borrow, unless Biden agrees to steep cuts in federal spending.

To help increase federal revenues and reduce the nation’s reliance on borrowed money, Biden is expected to announce a new tax on American households worth more than $100 million that would apply to both their earned income and the unrealized gains in the value of their liquid assets, like stocks.

What Is an Oasis in the Desert?

Taking dollars from the private sector and sending them to the US Treasury is like pumping water from an oasis and pouring it into the sea.

The voting public does not understand that it makes no sense to take dollars from the economy, which relies on dollars for growth, and give them to the federal government, which can create dollars at will.

Taking federal taxes from the private sector is like pumping water from an oasis and pouring it into the sea.

The federal government has run deficits every year since 2000, spending more money than it receives in tax revenue.

Translation: The economy has received more dollars from the government than it has sent to the government. This is necessary for economic growth.

The deficit ballooned under President Donald Trump after the onset of the pandemic recession, which spurred Congress to approve trillions of dollars in relief for individuals, businesses and state and local governments.

It remained elevated in 2021 under Biden, who signed a $1.9 trillion economic aid package he signed soon after taking office, but declined last year.

Deficit spending under Trump and Biden prevented recessions that otherwise would have been caused by COVID-related shortages.

Federal deficit spending grows the economy. The lack of federal deficit spending causes recessions. This lesson has not been acknowledged by Congress, the President, or the voting public.

The nonpartisan Congressional Budget Office projects the deficit will grow slightly this fiscal year, to $1.41 trillion from $1.375 trillion, then continue to rise for the course of the decade, topping $2 trillion in 2032.

Translation: The federal government is projected to pump 1.41 trillion to three trillion growth dollars into the economy.

From 2024 to 2033, the budget office projects, deficits will total more than $20 trillion, driving gross federal debt to nearly $52 trillion.

Translation: The budget office projects that the Monetarily Sovereign US government will have pumped a net total of 52 trillion growth dollars into the economy, at no cost to taxpayers (Taxes don’t fund spending).

Through laws he has signed and executive actions he has issued, Biden has approved policies that would add about $5 trillion to the national debt over a decade, according to estimates by the Committee for a Responsible Federal Budget in Washington.

Translation: The CRFB projects that $5 trillion will be added to Treasury Security deposits over the next 10 years.

Summary Monetary Sovereignty and Gap Psychology are two of the most essential realities of the US economy. Because the public has not been given the facts about these realities, voters have voted against their own best interests.

The current budget stalemate between the Republicans and Democrats is a manifestation of the misinformation/disinformation campaigns so detrimental to the US economy, and especially to Americans who are not rich.

Ignorance is expensive.

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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

MONETARY SOVEREIGNTY

Dollars exist, but in what form; who created them, and how?

Dollars exist, but in what form; who created them, and how?

The uninformed may respond that dollars are pieces of green paper printed by the U.S. Treasury.

That answer would be incorrect on every level.

Those green pieces of paper are not dollars. Rather they are bearer titles to dollars. They are official recognition that the bearer owns a dollar.

Why is the US currency called dollar? what is its origin and meaning? - AS USA
These are not dollars. They are bearer titles to dollars

A house title is not a house. It is official recognition that the named person owns a particular house.

A car title is not a car, It is official recognition that the named person holds a certain car.

Dollars exist only as bookkeeping notations. They have no physical form.

You cannot see, feel, hear, touch, smell, or taste dollars.

The Treasury does not literally print dollars. It just prints titles to dollars, which exist as numbers in bank accounts.

All dollars are created from thin air by marking up accounts. Banks do it every minute of every day.

Consider the following scenario:

1. You go to a store, make a $10 purchase, and pay with your credit card.

Because you have a contract with the credit card company, you essentially have signed a loan document (the credit card receipt) saying you owe the credit card company $10.

That loan document, and all dollar-denominated loan documents, are titles to dollars.

Mark Wagner | IOU | Artsy
A dollar bill is a bearer check signed by the Secretary of the Treasury.

So, your use of a credit card makes dollars.

(The green dollar bill in your wallet is a loan document. It signifies debt. It is a federal reserve note. “Bill” and “note” are words denoting debts.)

2. The credit card company sends instructions (not dollars) to the store’s bank, telling it to increase the balance in its checking account.

When the bank obeys those instructions, new dollars are created. These instructions are in the form of a check or wire transfer.

Simultaneously, the balance in the credit card company’s checking account is reduced, which destroys dollars.

At this stage, your purchase has caused the creation of ten dollars, a few cents of which go to various governments’ banks for sales taxes.

This bearer check is identical to a dollar bill, with one exception. The full faith and credit of the U.S. government backs a dollar bill. The full faith and credit of the writer backs the check. 

3. Instructions among the several banks pass through the Federal Reserve, while the credit card company sends you a ten-dollar invoice.

To pay the invoice, you instruct your bank to send instructions to the credit card company’s bank, telling it to increase the balance in the credit card company’s checking account.

Those instructions are cleared through the Federal Reserve, and when your bank receives them, it reduces the balance in your checking account and destroys dollars.

Your one-time use of your credit card creates and destroys dollars.

At no time are physical dollars exchanged for there are no physical dollars.

All dollars are nothing more than numbers on financial institutions’ books.

Not being physical, dollars cannot be “sent.” Instead, instructions in the form of checks or wires are sent to banks.

The banks are instructed to create and destroy dollars by changing the numbers in bank accounts.

What if that $10 purchase were made in cash rather than by credit card? Cash, i.e., dollar bills, are bearer titles to dollars. “Bearer” title means whoever has the title in their possession owns the dollars, which are numbers on the Treasury’s books.

All money represents a debt of the issuer, which among other things, owes the user full faith and credit.

You accept dollar bills in exchange for goods and services because you trust the full faith and credit of the federal government.

In, “Understanding Federal Debt. Full Faith and Credit,” you will see this explanation:

All debt requires collateral. The collateral for federal debt is “full faith and credit.”

This may sound nebulous to some, but it involves certain, specific, and valuable guarantees, among which are:

A. –The government will accept only U.S. currency to pay debts to the government.

B. –It unfailingly will pay all its dollar debts with U.S. dollars and will not default.

C. –It will force all your domestic creditors to accept U.S. dollars to satisfy your debt if you offer them.

D. –It will not require domestic creditors to accept any other money.

E. –It will take action to protect the value of the dollar.

F. –It will maintain a market for U.S. currency.

G. –It will continue to use U.S. currency and will not change to another currency.

H. –All forms of U.S. currency will be reciprocal; that is, five $1 bills always will equal one $5 bill and vice versa.

There is no law prohibiting the issuance of other forms of currency. For example, I have every right to issue “Mitchellbucks” to pay my debt to you.

 

Rodger Malcolm Mitchell
Monetary Sovereignty

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

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

MONETARY SOVEREIGNTY

A misleading graph: Federal income vs. federal spending

Self-evaluation corresponds with intelligence. If you are smart, being smart lets you understand that you are smart. If you are stupid, being stupid keeps you from knowing you are stupid. Thus, everyone thinks they are smart. In related issues, everyone thinks they are above-average drivers and that the federal government can run short of dollars.

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A rose by any other name may smell as sweet, but what if they called it “stinkwort”? Labels do matter. Visualize this scenario:
Man row a row boat at sea — Stock Video © lucidwaters #82323100
The boater must take more water from the ocean than he receives from the ocean. That is, the ocean must run a water deficit for the boater to survive, just as the federal government must run a dollar deficit for the economy to survive.
A man sits in a rowboat in the Pacific Ocean. Using his desalinization kit he fills his canteen with one pint of water, which he later drinks and excretes as urine, But, because of perspiration evaporation and breathing, he excretes only 9/10th pint of urine. So, for boater the Pacific Ocean runs a deficit of 1/10th pint of water. Does anyone care? No, the Pacific Ocean running a 1/10th pint of water deficit is meaningless, because for all intents, the ocean has infinite water. Infinite water minus 1/10th pint still equals infinite. No change. Now imagine the same scenario, except instead of viewing it from the ocean’s standpoint, view it from the boater’s standpoint.  The man has drunk a pint of water, 9/10th of which he has excreted as urine into the ocean, and used the rest for perspiration, and other bodily functions. That pint of water has allowed him to live for a certain time. Without the pint of water, he would have died. That’s important. In both scenarios we gave you the same information, but in one case we labeled it as a water measure from the standpoint of the ocean, and in the other case we labeled it as a water measure from the standpoint of the boater. The following graph comes from https://www.chartr.co/newsletters/2023-02-08/. It labels money flow from the standpoint of the U.S. government:
This graph shows the nation’s money flow from the standpoint of the U.S. government, not from the standpoint of the economy.
Here are excerpts from the accompanying article:

State of the union’s wallet Last night, President Biden held the annual State of the Union. A big theme was the economy. He threatened to veto any proposal that would cut spending on Social Security and Medicare while also imploring Congress to raise the debt ceiling.

I O U $1.4 trillion: In fiscal year 2022, the federal government collected nearly $5tn in revenue, with more than 50% of that coming from individual income taxes.

However, the US government spent even more, leading to a nearly $1.4tn deficit

To make up for the difference the US government does what everyone who overspends their budget does — they borrow.

This then adds to its already enormous tab (AKA the national debt), which currently sits at the $31.4tn debt ceiling limit.

With a debt pile that big, the interest payments aren’t small. Indeed, last year the US government spent ~$480bn on net interest payments, just shy of IrelandNorway or Nigeria’s annual GDP.

There are three major problems with the above scenario.
  1. It draws a false parallel between the finances of our Monetarily Sovereign government and the finances of monetarily non-sovereign “everyone.” The former has infinite money and the latter does not.
  2. It falsely states that the federal government must borrow in order to “make up the difference.” The federal government, having the infinite ability to create its sovereign currency, never borrows dollars, and never needs to “make up the difference.” To pay all its obligations, the federal government creates new dollars, ad hoc. It destroys all the tax dollars it receives.
  3. It labels the money movement from the standpoint of the federal government rather than from the standpoint of the economy.
Think of the Pacific Ocean as analogous to the U.S. federal government, and the boater as analogous to the economy. Like the Pacific Ocean’s water, the federal government has infinite dollars. And like the boater’s limited water supply, the economy has limited dollars.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it 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 from 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 markets to remain operational.”

(The final sentence, above, is Fed-speak for, “The government does not borrow to pay its bills.”)

The U.S. government is not the only Monetarily Sovereign government. The European Central Bank also is Monetarily Sovereign (and like the U.S. economy, individual euro nations are monetarily non-sovereign.)

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.

To survive, the boater needs the Pacific Ocean to run a water deficit. Similarly, to survive, the economy needs the federal government to run a dollar deficit. The Pacific Ocean does not need to receive any water from the boater nor does the Ocean “owe” the boater any water. Similarly, the economy should not be asked to give the federal government any money, nor does the government “owe” the economy any money. Finally, the Pacific Ocean does not borrow water to give water to the boater. Think of the Pacific Ocean and the boater the next time you hear about federal debt limits and taxes. Labels matter. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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

MONETARY SOVEREIGNTY