Pete Peterson foundation, your center for economic ignorance, speaks again.

The Peter G. Peterson Foundation (PGPF), like the equally wrong, Committee for a Responsible Federal Budget (CRFB), continues to broadcast economic nonsense, the purpose of which is to widen the Gap between the rich and the rest.

On November 20, 2018, PGPF published a post titled “Top 10 Reasons Why The National Debt Matters.”

In typical PGPF fashion, some of its “top 10 reasons” aren’t really reasons at all, and the rest are utter nonsense.  Here is a sampling for your amusement or horror:

At $21 trillion and rising, the national debt threatens America’s economic future. Here are the top ten reasons why the national debt matters.

I. The national debt is a bipartisan priority for Americans. Nearly three-quarters of voters (71 percent) agree that the national debt should be a top-three priority for the country, including 69 percent of Democrats, 68 percent of Independents and 79 percent of Republicans.

The above is not a reason why “national debt matters.” It merely is the result of polling Americans who do not understand the economics of Monetary Sovereignty, and who mistakenly believe federal finances are like personal finances.

The so-called “debt” isn’t what most people think it is. It is ‘’DEPOSITS’‘ into T-security accounts.

When you (or China) “lends” to the federal government, you take dollars from your checking account and deposit them into your T-security account.

These accounts are similar to bank savings and CD accounts.

Then, to pay you back, the government sends your dollars from your T-security account back to your checking account. It’s a simple money transfer the Treasury does this every day as T-securities mature.

Banks boast about the size of their deposits. They don’t call them “debt,” though deposits are a form of debt.

Before maturity, your dollars remain in your T-security account. The government has no use for them, since the government creates new dollars, ad hoc, every time it pays a creditor.

The U.S. federal government, being Monetarily Sovereign, never can run short of its own sovereign currency. Even if all federal taxes were $0, and no T-security dollars were accepted, the government could continue spending forever.

The purpose of federal taxes is different from the purpose of state and local taxes, which supply state and local governments with money. The federal government neither needs nor uses tax dollars. It destroys them upon receipt.

The real function of tax dollars is to control the economy, so “desirable” things are encouraged by being taxed less than “undesirable” things.

The federal government has no need to borrow. The purpose of T-securities is:
1. To provide a safe parking place for unused dollars. This helps stabilize the U.S. dollar
2. To help the Fed control interest rates, which helps control inflation.

II. The return of trillion dollar deficits.  The Congressional Budget Office (CBO) projects that the budget deficit will rise from $779 billion in 2018 to $1.5 trillion by 2028, resulting in a cumulative deficit of $12.4 trillion over the 10-year period from 2019 to 2028.

“Reason” #II also is not a reason why federal debt matters, unless one believes all large numbers matter. Like the CRFB, the PGPF loves to quote big numbers without explaining why we should be concerned about them.

Deficits merely are the difference between federal taxes collected and destroyed, vs. the federal spending that grows the economy. There is no reason why we should be concerned about the federal government’s spending that helps grow the private sector. 

The PGPF quotes a big deficit number to make you think that, like you and me, the federal government can have difficulty paying large financial obligations.

But the federal government is not like you and me. Nor is the federal government like state and local governments. Being uniquely Monetarily Sovereign, the federal government never can run short of dollars. Never.

III. Interest costs are growing rapidly. Interest costs are projected to climb from $315 billion in 2018 to $914 billion by 2028. Over the next decade, interest will total nearly $7 trillion. By 2026, interest will become the third largest category of the budget. With our many important budget priorities, none of us wants interest to become the third largest government “program.”

Federal deficit spending grows the economy. In fact, when federal deficit spending is too low, we have recessions and depressions. And how are recessions and depressions cured? With increased deficit spending.

The more interest dollars the federal government pumps into the economy, the healthier is the economy.

Declining deficit growth leads to recessions (vertical bars) which are cured by increasing deficit growth. Federal interest payments stimulate economic growth.

IV. Key investments in our future are at a risk. In addition, growing federal debt reduces the amount of private capital for investments, which hurts economic growth and wages. A nation saddled with debt will have less to invest in its own future.

Growing federal “debt” increases the amount of private capital for investments. The so-called “debt” is related to federal deficit spending, which adds growth dollars to the economy.

Additionally, growing federal debt requires growing federal interest payments, which also add growth dollars to the economy.

V. Rising debt means lower incomes. Based on CBO projections from last year, growing debt would reduce the income of a 4-person family, on average, by $16,000 in 30 years. Stagnating wages and growing disparities in income and wealth are very concerning trends. The federal government should not allow budget imbalances to harm American citizens.

There is no economic mechanism that would cause rising federal “debt” to reduce incomes.

The additional stimulus dollars that increased federal “debt” produce, would stimulate higher incomes, not lower.

VI. Less flexibility to respond to crises. On our current path, we are at greater risk of a fiscal crisis, and high amounts of debt leave policymakers with much less flexibility to deal with unexpected events. If we face another major recession like that of 2007–2009, it will be more difficult to work our way out.

Once again, the Peterson Foundation demonstrates abject ignorance of economics or intentional deception about economics. Take your pick.

“Reason” VI  assumes that the federal government can run short of dollars with which to “deal with unexpected results.” Fact: Our Monetarily Sovereign federal government, never can run sort of U.S. dollars.

Since 1940, the federal debt has increased from $40 billion to $20 trillion, a gigantic 50,000% increase. Yet the government never has lacked “flexibility” in dealing with unexpected events.

During the Great Recession of 2008, the federal government ran massive deficits to grow us out of the recession, and it continued to run deficits every year, thereafter. No lack of flexibility occurred.

VII. Protecting the essential safety net. Our unsustainable fiscal path threatens the safety net and the most vulnerable in our society. If our government does not have sufficient resources, these essential programs, and those who need them most, could be put in jeopardy.

“Unsustainable” is a favorite word of the deficit Henny Pennys. No one can explain how our Monetarily Sovereign government can find debt or deficits unsustainable.

Once again, the Peterson Foundation tries to tell you that the federal government, like state and local governments, can run short of U.S. dollars. To put it a charitably as possible, it’s a damn lie.

VIII. A solid fiscal foundation leads to economic growth. A solid fiscal outlook provides a foundation for a growing, thriving economy. Putting our nation on a sustainable fiscal path creates a positive environment for growth, opportunity, and prosperity.

With a strong fiscal foundation, the nation will have increased access to capital, more resources for private and public investments, improved consumer and business confidence, and a stronger safety net.

In Peterson-speak, “solid fiscal foundation” means cutting deficit spending, i.e austerity, the program that always, always, always lead to recessions and depressions.

Every depression in U.S. history was the result of a Peterson-like attempt at a “solid fiscal foundation.”

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

IX. Many solutions exist! The good news is that there are plenty of solutions to choose from. The Peterson Foundation’s Solutions Initiative brought together policy organizations from across the political spectrum to develop long-term fiscal plans. Each of those organizations developed specific proposals that successfully stabilized debt as a share of the economy over the long term.

“Many solutions exist” is not a reason why “National Debt Matters.” We can only assume this so-called “reason” was included to get the magic number up to 10.

We feel quite confident that any “solutions” put forward by PFPG will accomplish just one thing: They will widen the Gap between the rich and the rest. 

X. The sooner we act, the easier the path. It makes sense to get started soon. According to CBO, we would need annual spending cuts or revenue increases (or both) totaling 1.9 percent of GDP in order to stabilize our debt. If we wait five years, that amount grows by 21 percent. If we wait ten years, it grows by 53 percent. Like any debt problem, the sooner you start to address it, the easier it is to solve. 

Again, number X isn’t a reason, nor are annual spending cuts or revenue increases a solution to anything.

The rich always favor spending cuts, particularly to social programs the benefit the non-rich:  Social Security, Medicare, Medicaid, aid to education, poverty aids, etc.

And tax increases are welcome, so long as they are increases in the taxes the non-rich must pay: FICA and taxes on Social Security benefits. You seldom will see Peterson recommend increases in taxes on capital gains or on the tax loopholes the rich love.

In Summary:

The Peter G. Peterson Foundation is just another right-wing, pro-rich organization that masquerades as a non-partisan think tank. Its goal is to widen the Gap between the rich and the rest of us.

Federal finances are not like personal finances or state and local finances. The federal deficit and debt neither are a threat to the federal government nor burden on taxpayers. The federal deficit is necessary for economic growth. The federal debt could be paid off, tomorrow.

The public’s ignorance about Monetary Sovereignty allows the PGPF and the CRFB to spread misinformation about the federal debt and deficit.


Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell ………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less. Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity: 1. Eliminate FICA 2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone 3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all) 4. Free education (including post-grad) for everyone 5. Salary for attending school 6. Eliminate federal taxes on business 7. Increase the standard income tax deduction, annually.  8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income. 9. Federal ownership of all banks 10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

Fake federal trust funds and fake concerns

It takes only two things to keep people in chains:
The ignorance of the oppressed and the treachery of their leaders

The Peter G. Peterson Foundation is a self-described “nonpartisan” mouthpiece for the right wing.

Image result for pete peterson
Peter Peterson

Its “nonpartisan” leanings include advocating:

  1. cuts to federal support for Social Security
  2. cuts to federal support for Medicare
  3. increases to Social Security and Medicare taxes (FICA).
  4. increases to taxes on the middle-income groups.
  5. cuts to taxes for the rich
  6. cuts to the federal deficit spending that grows the economy

The Foundation continually publishes articles that falsely claim our Monetarily Sovereign nation somehow can run short of its own sovereign currency, and thus, Social Security, Medicare, and other federal “trust funds” are running short of dollars — all untrue.

It is 100% impossible for a Monetarily Sovereign entity to run short of its own sovereign currency. Similarly, it is 100% impossible for any agency of a Monetarily Sovereign entity to run short of the sovereign currency, unless that is what the entity wants.

Neither the U.S., nor Social Security, can run short of U.S. dollars, unless that is what Congress wants. Period.

So it was with amazement that I read these excerpts from an article published by the Peterson Foundation:

Sep 20, 2016, Peter G. Peterson Foundation

A federal trust fund is an accounting mechanism used by the federal government to track earmarked receipts (money designated for a specific purpose or program) and corresponding expenditures.

The largest and best-known funds finance Social Security, Medicare, highways and mass transit, and pensions for government employees.

Federal trust funds bear little resemblance to their private-sector counterparts.

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 does not set aside the receipts or invest them in private assets.

Rather, the receipts are recorded as accounting credits in the trust funds, and the receipts themselves are comingled with other receipts that Treasury collects and spends.

This is all correct. Federal so-called “trust funds” are nothing like state and local government trust funds and nothing like private trust funds.Image result for money printing machine

All private sector financing is constrained by one simple fact: The private sector is monetarily non-sovereign.

It does not have the unlimited ability to create its own sovereign currency, for the simple fact that it has no sovereign currency.

The U.S. private sector (which includes state and local governments) uses the sovereign currency of the federal government.

And then, having admitted that federal “trust fund” receipts are comingled with other Treasury receipts, the article promptly forgets what it said:

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

No need to raise or lower collections. The correct statement would be:

The federal government owns the accounts and can, by changing the law, unilaterally alter the purposes of the accounts and/or provide additional funding.

In the late 1770s, the federal government created the original U.S. dollars from nothing, and today it continues to create dollars at will.

Neither the federal government nor the misnamed “Social Security Trust Fund” (or any other federal trust fund) can run short of dollars unless Congress wants it to.

The Peterson Foundation, and far too many others, including those in the federal government, have been pretending that to save Social Security taxes must be increased or spending must be cut. It simply is not true.

The article continues:

What happens when a federal trust fund runs a deficit?
Treasury must finance trust fund interest payments and the redemption of trust fund securities through additional borrowing from the public (unless policymakers raise taxes or cut spending).

The above is wrong. Not only is it wrong about the supposed need for raising taxes and cutting spending, but it also is wrong about borrowing.

Unlike you and me and all other monetarily non-sovereign entities, our Monetarily Sovereign federal government creates unlimited dollars ad hoc, by paying creditors.

Thus, the federal government has no need for any kind of income. It has no need for tax income. It has no need to cut spending. And it has no need for borrowing.

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

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.”

St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills.”

Thomas Edison: If the Nation can issue a dollar bond it can issue a dollar bill.  The element that makes the bond good makes the bill good also. . . . It is absurd to say our Country can issue bonds and cannot issue currency.”

The federal government has several trust funds. The three most important trust funds are for Social Security, Medicare, and transportation projects.

Social Security Trust Funds
In 2034, unless reforms are enacted, the Social Security trust funds are projected to be fully exhausted. At that point, Social Security’s receipts will only be sufficient to cover 79 percent of benefits.

Benefits will then have to be cut by 21 percent to continue making payments to all beneficiaries. 


As the article previously said, Social Security “receipts are comingled with other receipts that Treasury collects and spends.Image result for shhh

This means the receipts cannot be “sufficient” to cover anything.

The dollars, once received by the Treasury and comingled, disappear from any money supply measure.

They effectively are destroyed upon receipt.

Asking how many dollars the Treasury has is akin to asking how many sentences you have. The Treasury creates its dollars as needed, and you create your sentences as needed.

Just as the Treasury is Monetarily Sovereign, you are “sentence sovereign.” You never have to ask anyone — via taxing or borrowing — for sentences, and you never can run short.

The Social Security Disability program is in worse condition. Its trust fund will be depleted in 2023, and unless its finances are addressed, its benefits will be cut by 11 percent.

The Social Security Disability benefits will be cut only if Congress wants them to be cut.

Medicare Trust Fund
In the Medicare program, payroll taxes are credited to the Medicare Hospital Insurance (HI) fund and premiums paid by Medicare beneficiaries are credited directly to Medicare’s Supplemental Medical Insurance (SMI) fund.

Unless reforms are enacted, Medicare’s Hospital Insurance Trust Fund is expected to be exhausted in 2028, which will precipitate a 13 percent cut in its payments to hospitals and other providers.

The SMI fund cannot be depleted — each year, general revenue contributions are set to cover whatever costs remain after beneficiary premiums are taken into account.

Wait! What?!

“The SMI fund cannot be depleted — each year, general revenue contributions cover whatever costs remain after beneficiary premiums are taken into account.”

SMI, which pays for Part B and Part D benefits, is funded by Congress. It doesn’t rely on a fake “trust fund.” Congress directly authorizes what funds are needed.

So you have the ridiculous situation in which, Medicare Part A supposedly runs short of funds, but Medicare Parts B and D do not. And you are expected to believe this??

Ask your Senator or Representative why all of Medicare and Social Security cannot be handled like SMI, with the federal government simply paying expenses.

That approach would end all talk of trust funds supposedly running short of dollars.

Highway Trust Fund
The Highway Trust Fund will be depleted by 2021. In this fund, taxes on gasoline and diesel fuel are credited directly to the Highway Trust Fund, but the fund’s income falls short of its spending.

This situation has already precipitated a slowdown of highway and other surface transportation projects as states prepare for a shortfall in federal funding.

The same fraudulent situation as with other phony federal “trust funds.” The result: Either infrastructure projects are delayed, not done at all, or are passed to the monetarily non-sovereign state and local governments.

Does it get any more outrageous than this? A Monetarily Sovereign government, which has an unlimited supply of dollars, claims poverty and passes spending responsibility to monetarily non-sovereign state and local governments, which are limited in their spending ability.

The article ends with these truths:

How do trust funds affect the overall budget?
Although many believe that the existence of trust funds guarantees the sustainability of programs in the future, trust funds are simply accounting mechanisms that are part of the way the federal government keeps its books.

The actual cash inflows and outflows of the programs are combined with all other federal programs and therefore contribute to federal surpluses and deficits.

If a program is in surplus, the federal government’s overall deficit balance improves because it uses the additional receipts from the program to fund costs of other programs.

In effect, the government is conducting transactions with itself but keeping track of inflows and outflows of funds through trust funds.

Ultimately, trust fund income and outlays are not separate from the rest of the federal budget, and the sustainability of trust fund programs, like Social Security, depends on the overall sustainability of the federal government.

That last sentence completely destroys any notion that the fake Social Security “trust fund” is running short of dollars and so, taxes must be increased and/or benefits decreased.

The U.S. federal government can “sustain” (i.e. pay for) any amount of expenses because it has the unlimited ability to create dollars. It never can run short.

Unlike you and me, and the states, and businesses, and the euro nations, the U.S government is Monetarily Sovereign.

Remember this whenever you hear that Social Security, Medicare and any other federal program will run short of money or become “insolvent.”

It is a lie designed by the very rich, to make you believe you must settle for fewer federal benefits or higher taxes.

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


The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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

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

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

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

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

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