Stated simply, the Big Lie in economics is: “Federal taxes fund federal spending.” Suckers believe it.
The Big Truth in economics is: Federal taxes don’t fund a damn thing. In fact, they are destroyed upon receipt at the Treasury.
No federal tax dollars are spent. The federal government creates new dollars, ad hoc, to pay all its bills.
The federal government never can run short of dollars. It has infinite dollars. Even if the federal government didn’t collect a penny in taxes, it could continue to spend, forever.
From the TV show 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.
To the federal government, which created the first US dollars from thin air, dollars are not physical things. They simply are numbers on balance sheets, and the government controls the balance sheets.
The government can put any numbers it wishes on those balance sheets. In short:
The government never can run short of numbers
The government never can run short of laws.
The government never can run short of dollars.
If you sent $100 trillion dollars to the federal government, it wouldn’t help to pay for anything, not even one little bit.
In the letter, dated Monday, the governors wrote that they “fundamentally oppose (Biden’s) plan to force American taxpayers to pay off the student loan debt of an elite few.”
Calm down, fellow taxpayers; we won’t pay anyof that student loan debt.
So why does the GOP claim it? Because they want you to help them widen the Gap between the rich and the rest of us
Note the words “elite few” in their letter? That’s part of the GOP con job. The party that gave a giant tax break to the rich wants you to believe they are all for the poor.
No, they don’t want the poor and middle classes to be able to afford college at all. They want the only people to afford college to be the “elite few.”
They create a phony culture war to make you believe the federal government can’t afford to pay for your benefits.
The rich falsely claim Social Security is going broke; Medicare is growing broke; the government can’t afford food stamps and other anti-poverty measures — and it’s all crap to widen the Gap.
Why widen the Gap? Because it’s the Gap that makes the rich rich. Without the Gap, no one would be rich, and the wider the Gap, the richer they are. Widening the Gap is a way for the rich to become richer.
The Republicans, including Texas Gov. Greg Abbott and Florida Gov. Ron DeSantis, also claimed that Biden’s plan would harm low-income families – writing, “hourly workers will pay off the master’s and doctorate degrees of high salaried lawyers, doctors, and professors. … Simply put, your plan rewards the rich and punishes the poor.”
What an ironic sham. Essentially, they say, “Federal aid to the middle and poor harms the middle and poor.” And people believe it!!
White House spokesperson Abdullah Hasan said, “These same Republican governors didn’t seem to object when their Republican colleagues in Congress passed a $2 trillion tax giveaway for the rich or had hundreds of thousands of dollars of their own small business loans forgiven.”
“While Republican elected officials try to keep working middle-class Americans in mountains of debt, President Biden is committed to delivering relief to the borrowers who need it most,” Hasan wrote in an email sent to USA TODAY Wednesday afternoon.
Hasan is absolutely correct. But so long as people believe the Big Lie that federal finances are like state and local government finances, and specifically, that federal taxes fund federal spending, the BIG LIE will continue to be told.
Federal taxes have three purposes:
To help control the economy by discouraging what the government wishes to limit and by encouraging what the government wishes to increase.
To provide demand value to the US dollar by required taxes to be paid with dollars.
And the most important one: To help the rich become richer by providing tax breaks available only to the rich. (which is how billionaire Donald Trump paid less taxes than you did.)
Hey, it works. The rich keep getting richer, and the suckers keep voting against federal spending that would help them.
Inflation is a general increase in the prices of goods and services. But what factors determine prices?
Economic growth: To lower prices, cut business costs. Recession: To lower prices cut business profits.
Sellers determine prices by answering the question, “What price would provide the most long-term profit?”
If pricing aims to maximize long-term profit, how is profit determined?
Profit is the difference between income and costs. The two ways to increase profit are to increase dollar sales and/or to decrease costs.This is all quite basic.
Pricing is constrained by costs, competitors, customers, and/or laws.
Costs generally set the lower boundary for pricing, as businesses only temporarily can allow costs to exceed total income.
The old joke, “We lose money on every sale, but make it up in volume” is just that. A joke, at least in the long term.
Competitors, customers, and/or laws set the upper boundary for pricing. Sellers set prices between the lower and upper boundaries by estimating where long-term profits are maximized.
Generally, sellers don’t cut costs just to be nice guys. Their sole purpose is to maximize long-term profits. If long-term profits were not a goal, sellers would have no motivation to cut costs.
This is all basic economics 101, yet economists seem to have forgotten that inflation is price increases and recession is economic growth decreases, and the two are unrelated. The opposite of inflation is not recession. The opposite of inflation is deflation.
You can have price increases with growth decreases, and that’s called “stagflation (stagnation and inflation).
And that is what the Fed and Congress are creating: Stagflation.
There are two ways to cut prices:
Cut business profits, which causes a recession, or
Cut business costs which encourages economic growth.
The best way to fight inflation, i.e. to cut prices, is to cut costs because higher costs lead to higher prices. An important component of most business costs is the cost of labor.
What if I told you there is a simple way to cut the cost of labor without cutting the number of employees or cutting pay scales?
Well, there is, and it is dead simple: Eliminate the FICA tax and provide free, comprehensive Medicare for All.
FICA costs employers 15,3% of all salaries under $143,000. This means, that for every salaried employee you, as the employer, pay as much as $22 thousand dollars per employee to the federal government. Those are dollars that come directly out of your profits.
They are non-productive dollars that must be made up with higher prices. They are inflation dollars.
And don’t think the employees pay any those dollars. If you, the employer, told your employees they no longer would have FICA deducted from their paychecks, you could lower gross salaries and still leave them with the same net salaries.
Employers pay the full 15.3% to the government.
As for health care, why has this become a financial burden for businesses? Why does your business pay for any part of health care insurance when the federal government can provide it? Those are lost, non-productive dollars.
And no, federal taxpayers do not fund federal spending. The government could provide Social Security and Medicare to every man, woman, and child in America without collecting a single dollar in taxes.
The federal government cannot run short of dollars. Not ever. Being Monetarily Sovereign, it has the unlimited ability to create U.S. dollars. It neither needs nor uses tax dollars.
The federal government’s trillions of tax dollars extracted from the economy are lost forever. Unlike state and local tax dollars, federal tax dollars are not recirculatedback into the economy. They are destroyed upon receipt.
The federal government always has infinite dollars, and adding tax dollars to that does not change how many dollars the federal government has.
IN SUMMARY
Inflation is a general increase in prices.
This increase always is caused by shortages of key goods and services, not by so-called “excessive government spending.”.
The Fed increases interest rates to ease those shortages by reducing demand, but reduced demand is the definition of recession. Thus, the Fed tries to cure higher prices by causing a recession.
The non-recession way to reduce higher prices is to reduce shortages and business costs.
Shortages can be reduced by more federal spending to acquire or encourage the production and distribution of scarce goods and services.
Business costs can be reduced by reducing employment and business taxes. When a business pays less in taxes, its prices can be lowered while generating the same desired long-term profits.
The instant solution to inflation is to eliminate FICA taxes and to provide free Medicare to every man, woman, and child. This will reduce business costs, allowing businesses to lower prices.
The long-term solution to inflation is for the federal government to address shortages by investing in the production and distribution of scarce items: Renewable and nuclear energy, shipping (roads, ships, railroads, airplanes), food, water, computer chips, lumber, and lower federal taxes on businesses and individuals below the upper-income group.
Federal taxes and interest rate increases are recessionary and do not prevent inflation.
Based on the Fed’s reliance on interest rate increases to combat inflation, I predict we will have a long period of stagflation until business profits increase sufficiently to cause business growth.
Does this sound painfully familiar? It is the new conservative explanation for past, present, and future losses. Apparently, the U.S. isn’t unique in having to deal with fascists.
Kate Linthicum, Los Angeles Times
RIO DE JANEIRO — Standing atop a trailer with the Atlantic Ocean behind him, Brazilian President Jair Bolsonaro complained to a crowd of roaring supporters about a vast conspiracy against him.
Two women carried a banner calling on the armed forces to “protect our constitution, our liberty and our elections.” Demonstrators griped about “fake news” and the journalists who had slandered their candidate.
Bolsonaro had summoned tens of thousands of his supporters to this city’s signature Copacabana beach Wednesday to protest what he insisted was a rigged vote. Never mind that the election hasn’t actually taken place yet.
For months, Bolsonaro has been preempting his own expected loss in October’s presidential vote by borrowing from the playbook of former President Donald Trump, whom he describes as his “idol”and with whom he shares several political advisers.
He has repeatedly criticized the integrity of Brazil’s voting system and has suggested that he may not accept the results of the election,which most polls predict he will lose decisively in a runoff with former President Luiz Inacio Lula da Silva, known as Lula.
Is it possible that Balsonaro also has started a fake university like Trump, cheated on his taxes like Trump, and cheated on his three wives?
Oops, believe it or not, this guy has had 3 wives, just like Trump!
“If needed,” Bolsonaro has said, he and his supporters “will go to war.”
What exactly that means is anybody’s guess. Some analysts fear that Bolsonaro, a former army officer who praises Brazil’s not-so-distant military dictatorship, could be plotting a coup or an insurrection modeled on the attempted takeover of the U.S. Capitol by supporters of Trump.
Attention, MAGAs. Bolsonaro is the perfect guy for you. Please move to Brazil, and save the sane Americans more grief.
They place Bolsonaro among a global tide of leaders with authoritarian leanings who have weakened democracies in recent years, from Hungary to El Salvador.
“We have learned the hard way over the years to listen to these kinds of leaders when they tell us what they’re going to do,” said Brian Winter, vice president for policy at the Council of the Americas, who predicted that Brazil is headed for “an institutional crisis.”
With the president and his family members facing a number of corruption investigations, Winter said, “Bolsonaro has a lot to lose.”
Hmm, corruption investigations, just like Trump.
Many here believe that if Lula wins — polls currently show him with a 10-point lead — a peaceful transition of powerwill depend on the depth of Bolsonaro’s backing within the military — and the reaction of his supporters.
Trump, like Bolsonaro, wanted to hold a vast military parade, but the generals wouldn’t do it. Thank goodness our military leaders recognize Trump for the psychopath he is and didn’t go along with his lies. Very Hitlerian.
Bolsonaro criticized efforts to legalize abortion, complained about what he calls “gender ideology” and warned that if the left takes power, Brazil will become like “Venezuela and Nicaragua.”
He called the opposition “evil” and warned that his rival would flout the constitution.
And the beat goes on. The parallels between Trump and Hitler and Mussolini are remarkable.
Not unlike the United States, political polarization has risen markedly here over the last decade, with political conflicts and culture wars shattering friendships, ruining family gatherings and on occasion spilling violently into the streets.
IF IT ALL SOUNDS FAMILIAR, IT IS FAMILIAR. NOTHING IS NEW
Trump’s followers believe they have discovered the final solution and that Trump would save them from the “swamp.”.
Through the centuries, all dictatorships begin and end the same way. They start with a man, usually a man, claiming that times were great in the past and things are terrible now, but he can make them great again.
Whether the soon-to-be dictator courted communists, fascists, Maoists, religious extremists, or conservative extremists, the problems always were blamed on “outsiders” or those who were “different.”
Hitler and Mussolini had the Jews and Gypsies. Stalin had the “Bonapartists,” Mao had the “intellectuals,” and Trump has his Mexican and Muslim immigrants to blame.
All dictators love the military, for it is the military that could aid, resist, or depose them. Trump loves the trappings of the military so much that he wanted to have that massive military parade in his honor. Strangely, he dissed the families of soldiers and the soldiers themselves who had died in service.
All dictators trust no one. They surround themselves with weak, immoral incompetents, often relatives, who would not be a threat to their own power.
Trump’s astoundingly long list of the weak, inexperienced, immoral, incompetent, or convicted swamp characters includes Joe Arpaio, Conrad Black, Ben Carson, Michael Cohen, Chris Collins, Dinesh D’Souza, Scott DesJarlais, Michael Flynn, Rick Gates, Dustin Heard, Duncan Hunter, Jared Kushner, Evan Liberty, Paul Manafort, Tom Marino, George Papadopoulos, Lynne Patton, Rob Porter, Scott Pruitt, Tom Reed, Wilbur Ross, Nicholas Slatten, Paul Slough, Steve Stockman, Roger Stone, Ivanka Trump, and Alex van der Zwaan.
Some he pardoned to gain their loyalty. Even today, he promises to pardon the felons who invaded Congress, threatened the life of the Vice President, and tried to overthrow the U.S. government. Trump claims these traitors are “badly treated,” though people have spent decades in jail for less serious crimes.
Dictators get very rich and keep close to a few who become very rich. We see it in Russia’s oligarchs and China’s billionaires. All are pals of the leader. The rest of the country suffers because dictators don’t care about the country but about personal power.
In short, Trump is nothing new.
He follows the modus operandum of all the dictators. And the MAGAs are not new, either. They follow in the footsteps of those who believed what Hitler, Stalin, Mussolini, Mao, Kim, Castro, et al. told them.
The outcome is always the same: A brutal dictatorship overthrown with much bloodshed and replaced by an even more brutal dictatorship.
Message to the MAGAs: When the dictator gains power, his followers are not spared. They suffer the same brutality as the rest of the population.
Be careful what you wish for and open your eyes. Dictators are psychopaths. None of them have mercy or loyalty. Trump is a proven psychopath.
What you do for Trump will not be rewarded or appreciated by Trump. You will be punished with the rest of us.
Evolution is trial and error, with the errors far outnumbering the successes. Evolution does not ignore failure; evolution learns from, and relies on, failure.
The realities of today are based on what evolution “learned” from yesterday’s failures. Evolution is highly imaginative, experimenting with combinations beyond human creativity.
Witness the octopus, the sponge, the venus flycatcher, the giraffe, the elephant, and the human. Witness quantum dynamics with its entanglement that even Einstein could not fathom.
Unlike human thought, nature has no pride, sympathy, compassion, or regret, which can strain comprehension. Nature is perfectly disinterested in outcomes and perfectly neutral regarding winners and losers.
Nature singularly does not care. It is amoral.
Humans argue on two levels. One level is the logical, “Which course is objectively the best?” level. The other is the emotional, “If you are right, I have lost the argument, and I am the lesser for it” argument.
Nature does not argue. It tries whatever comes along. Facts, not fiction, have all the power.
Before the Vietnam war, America’s leaders warned that if they placed American lives at risk, the loss of those first lives would prevent the war from ending. There would become, in American minds, the feeling of investment (“We can’t let all those boys die for nothing” syndrome).
It is a feeling that demands a further investment of lives lest the original investment be considered wasted.
And so it was.
The war, based on a lie, eventually cost too much, and after brutal losses, we surrendered. So many lives were wasted; so many were lost. We didn’t learn.
Thus, came Iraq and Afghanistan. The feeling of running on a treadmill toward hell permeated America. We no longer were invincible. We no longer were special. Someone was to blame for our depressed state. They had to pay.
American exceptionalism
And so . . .
Donald Trump was inevitable. He came at the right time. America had come to doubt our own myths.
We had believed in, then doubted, American exceptionalism.
While Germans and Japanese could be hypnotized by promises of returning to an earlier, imaginary time of greatness, Americans felt immune to that fancy.
We were too clever. Too realistic. Too self-reliant, yet mutually reliant.
We had won World War II. We became the wealthiest, most powerful nation on earth. We were cowboys on white horses in a world of savages. We were the best of everything, the “shining city upon a hill.”
We had a Constitution written by gods, a Supreme Court populated by ideals and truth, and a political system that was fair and strong. Because we had withstood the test of a mere two centuries, we thought we would stand forever.
Now, suddenly, Vietnam, Iraq, and Afghanistan showed us we were mere humans, neither better nor worse than the “power-mad” Germans, the “crazed” Japanese, and the “cowardly” Italians.
A vast gulf opened in our national psyche. And into that void stepped Donald Trump, who promised us he would “Make America Great Again.”
He never said how. He had no plan at all. But his very saying of it brought comfort to the most frightened and angriest among us.
This weak, draft-dodging, lying, cheating, semi-literate chiseler promised us whatever we wanted. What we wanted most was to believe.
Trump proved that Americans, as a group, are not a superior breed. We simply are people with all the weaknesses and warts of other people. It was a profoundly disappointing lesson.
We prospered in power and wealth because of circumstance and geography, not any inherent preeminence, the absence of which should be evident to any thinking person.
Trump demonstrated that within every population, there are groups of aggrieved, anti-social, resentful, angry people, who blame their own shortcomings on others, and who welcome a leader telling them, “It’s not your fault. It’s someone else’s fault. I will protect you. I will lead you to the greatness you deserve.”
In America today, those people comprise what is known as the MAGA group. Trump is their god, and their religion is whatever Trump says it is.
They dare not admit his weaknesses for fear it will weaken them.
Present them with a fact that is adverse to their god, and their belief only strengthens.
So when the FBI discovered Trump had stolen dozens of classified documents belonging not to him but to the government, he immediately produced dozens of lies and excuses.
His followers fervently supported all of them, though many were self-contradicting.
The other Trump followers are the opportunists.
They know Trump is a liar, psychopath, and traitor, but they see in him a path to their own advancement.
This is the Republican party.
The GOP is not oblivious to facts.
They know the facts.
But they don’t let facts stand in their immoral path to power.
If you have been astounded that the revelation of Trump’s misdeeds has had little effect on his followers, it simply is because they already know what he is but don’t wish to care.
The enemy of my enemy is my friend, and for Trump followers the enemy is reality.
Now Trump has done us the favor of exposing our weaknesses. He exposed the electoral college system, with its patently undemocratic system. Rather than using the popular vote as a basis, it gives excessive power to chosen “electors.”
Our founders created the system as a sop to the rich and to thinly populated states to encourage them to join the union. It has proved to be an expensive gift.
Escaping a dictatorship by an eyelash and benefitting from the patriotism of a few, America and its electoral college did not replace an elected President with an unelected rogue.
The Senate is another undemocratic organization, with its rules allowing 2 people to represent each state. So you have California’s 40 million people owning an equal vote with the half million peopleof Wyoming.
Democracy lies in tatters.
Trump exposed the power of the mob, the mindless elation one feels upon being part of a cheering, stomping, screaming mob.
Think of Hitler preaching to his Nazis. Think of the thrill of being in a packed football stadium when the home team scores. Think of the group’s anger at a bad call by the officials.
Why the thrill and why the anger? Objectively, these should have been mere observations, not highly emotional events. But we are humans, and we feel each other’s passions. This is MAGA.
It’s difficult to express how close America has come to disaster and how close we remain. Trump remains. The MAGA;s remain.
And though some GOP rats have begun to flee the sinking Trump ship, most remain, with their surfaceloyalty (for they have no real loyalties) given to Trump rather than to America.
We cannot blame the MAGAs. They are just people, not necessarily evil, but more aptly described as weak and frightened.
You cannot logic them out of their dread. They are people who, rather than loving America, fear Americans. They need a leader who will stand between them and the poor, the blacks, the Muslims, the immigrants et al whom they fear.
Have you noticed that the white supremacist, fascist, coup mob carried American flags? Many, many American flags. They display flags on cars, trucks, shirts, tweets, at Trump rallies, and in the rioters’ hands as weapons.
Presumably, they feel the urgent need to prove to themselves, their fellows, and the nation that they are patriots.
The superabundance of American flags can be interpreted as “Thou dost protest too much” signs, for these people are not patriots. They hate America, or at least, they hate their perception of America.
They may be the least patriotic people on the planet. They long for an America that never was, an America where they are admired, respected, and important.
If there is one word that can encompass the mood of Trump followers, it would be “angry.” They are angry at the poor for receiving help. They are angry at the rich for looking down. They are angry at the middle-class for their perceived comfort. They are angry at their own failures.
For many, the anger that has taken over their lives can be ameliorated only by angry words from Donald Trump.
Like a religious leader, Trump provides hope for the forlorn, power for the weak, retribution for the aggrieved, joy for the depressed, and the lifting of spirits for the self-perceived downtrodden.
They are addicted to him. Take away an addict’s drugs and he will lash out at you. His logical mind knows the drug is bad, but his emotional mind doesn’t care.
That is which is why MAGA anger becomes violent should anyone express disagreement with even Trump’s most outrageous lies.
Reason doesn’t work on addicts. And now, like the citizens of Germany, Russia, China, and many other dictatorships, we have seen insanity here, in the shining city.
So thank you Donald Trump for showing us hell before we actually stepped into that black hole. Now, if only we are wise enough to have learned that lesson and can quietly back away.
#Monetary Sovereignty - Mitchell 