Buy stocks. There is no end in sight to America’s economic boom. Thursday, Feb 13 2020 

Buy stocks. If the following Chicago Tribune/ Associated Press article proves to be correct, America’s economic boom will continue for at least another decade.

Here are some excerpts and translations:

Image result for pouring water out of a bucket

This is how the GOP, the Dems, and fill a bucket.

US on track for first $1T budget deficit since 2012
By Martin Crutsinger Associated Press

WASHINGTON — The U.S. budget deficit through the first four months of this budget year is up 19% from the same period a year ago, putting the country on track to record its first $1 trillion deficit since 2012.

Translation:  . . . putting the economy on track to receive 1 trillion growth dollars from the government this year.

The Treasury Department said Wednesday in its monthly budget report that the deficit from October through January was $389.2 billion, up $78.9 billion from the same period last year.

Translation: The Treasury Department said Wednesday in its monthly budget report that it sent 389.2 billion growth dollars into the economy from October through January, up $78.9 billion from the same period last year.

The deficit reflected government spending that has grown 10.3% this budget year while revenue was up only 6.1%.

For January, the deficit totaled $32.6 billion, compared to a surplus a year ago of $8.68 billion.

Translation: The deficit reflected government stimulus to the economy has grown 10.3% this budget year while taking dollars out of the economy was up only 6.1%.

For January, 32.6 billion growth dollars were added to the economy, compared to a year ago when $8.68 billion were removed from the economy.

Image result for leeches on the back

Cutting deficits to grow the economy is like applying leeches to cure anemia.

President Donald Trump sent Congress a new budget blueprint Monday that projects the deficit will top $1 trillion this year but then will decline over the next decade.

But the Congressional Budget Office is projecting that the deficit will top $1 trillion this year and remain above $1 trillion over the next decade.

Translation: President Donald Trump sent Congress a new budget blueprint Monday that projects sending more than 1 trillion growth dollars into the economy this year, but then would send less over the next decade.

However, the Congressional Budget Office is projecting that 1 trillion growth dollars will be sent into the economy this year and more than 1 trillion growth dollars will be sent in every year over the next decade.

The deficit for the 2019 budget year, which ended Sept. 30, was $984.4 billion, up 26% from the 2018 imbalance.

Translation: Growth dollars added to the economy for the 2019 budget year, which ended Sept. 30, totaled $984.4 billion, up 26% from the 2018 lesser surplus.

The rising deficits reflect the effect of the $1.5 trillion tax cut Trump pushed through Congress in 2017 and increased spending for military and domestic programs that the president has accepted as part of a budget deal with Democrats.

Translation: The rising economic stimuli reflect the effect of the $1.5 trillion tax cut for the rich Trump pushed through Congress in 2017 and increased spending for military and domestic programs that the president has accepted as part of a budget deal with Democrats.

In his new budget plan for the 2021 fiscal year that starts Oct. 1, Trump is proposing spending $4.8 trillion, but would seek to hold down deficits by cutting domestic programs like food stamps and Medicaid.

In his new budget plan for the 2021 fiscal year that starts Oct. 1, Trump is proposing adding 4.8 trillion growth dollars to the economy, but would seek to punish the poor and the economy, by unnecessarily cutting domestic programs like food stamps and Medicaid.

Trump’s plan projects that if Congress goes along with his spending cuts, which is unlikely, the budget would return to balance in 15 years.

Translation: Trump’s plan projects that if Congress goes along with his spending cuts, which is unlikely, the government will take more than a trillion dollars out of the economy, and destroy those dollars, preventing any hope for economic growth, and assuring a depression that would make the 1929 depression look like a garden party.

Through the first four months of this budget year, government spending has totaled a record $1.57 trillion, up 10.3% from the same period last year.

Revenue also set a record for the first four months of a budget year, increasing by 6.1% to $1.18 trillion.

The government first ran $1 trillion deficits from 2009 through 2012 as revenue fell during the worst recession since the 1930s.

Translation: Through the first four months of this budget year, government growth dollars added to the economy have totaled a record $1.57 trillion, up 10.3% from the same period last year.

Unfortunately, the growth dollars removed from the economy also set a record for the first four months of a budget year, increasing by 6.1% to $1.18 trillion.

The government pumped $1 trillion into the economy annually from 2009 through 2012, which helped the economy recover from the worst recession since the 1930s.

We can end this post by showing you excerpts from a truly ignorant article that appeared in

To Revive the Economy, Cut Federal Spending
Obama and Boehner are both big spenders. That’s the problem.

The Republican opposition, led by House Speaker John Boehner of Ohio, has signaled that the Republicans could stomach generating as much as $800 billion in new revenue over the next decade.

Such a large difference obscures a more fundamental agreement: Neither side is interested in addressing the central role federal spending plays in creating persistent deficits and, more important, damping economic growth.

The deficit for fiscal 2012, which ended on Sept. 30, came in at about $1.1 trillion, marking the fourth consecutive year that the nation has posted a trillion-dollar-plus spending gap.

It’s fun to look back in time to see what people, who are completely ignorant of Monetary Sovereignty, said.

We’ve done that when we repeatedly published those “The Deficit is a Ticking Time Bomb” articles since 1940. (The bomb still is ticking).

And now we have the’s daily serving of abject ignorance. You’ll note that the article makes dire predictions about the economy unless the government stops adding dollars to the economy.

(Thankfully, it didn’t stop; the dollar additions cured the Great Recession, and after the article was published, the economy continued to grow because of more dollar additions.)

Yet even today, if you go to, you’ll find those folks have learned nothing. They still publish the same blather about the danger of deficits.

And here’s the real knee-slapper:

The article quotes economists Carmen M. Reinhart, Vincent R. Reinhart, and Kenneth Rogoff who famously were discredited, partly because they didn’t take into account the differences between a Monetarily Sovereign nation and a monetarily non-sovereign nation. And these are “economists.”

They said that periods of “debt overhang” – when accumulated gross debt exceeds 90 percent of a country’s total economic activity for five or more consecutive years—reduce annual economic growth by more than one percentage point for decades.

Oh REALLY? Look at this graph:

United States Gross Federal Debt to GDP

GDP/Federal Debt Ratio

Every year since 2010 (lots more than ten years), the federal debt has exceeded that magic 90% number, and the economy . . . oops . . . well, look for yourself:

United States GDP

GDP growth for the U.S.

Is chastened by the facts? No, facts be damned. They have the “We know what we know and don’t bother us with facts” attitude.

And that is how the public is kept ignorant.

And that also is why we will not have a recession in the foreseeable future unless some politician can convince his/her peers that taking money out of an economy is a clever way to grow the economy. (Sort of like spilling water out of a bucket is a clever way to fill the bucket.)

So long as we keep running trillion-dollar deficits, and the deficits keep growing, my advice will be to buy stock.

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



The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. 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.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and 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 the rest.


–“How to Slash the State: 14 ways to dismantle a monstrous government, one program at a time” Friday, Oct 8 2010 

The debt hawks are to economics as the creationists are to biology.

The November 2010 issue of contains an article titled, “How to Slash the State: 14 ways to dismantle a monstrous government, one program at a time”

It’s a thoughtful article, but only if you believe the federal government should be smaller, the federal deficit should be lower and taxpayers pay for federal spending. Unfortunately, there is no evidence to support any of these three beliefs. In fact, all the evidence points to the need for ever increasing federal deficit spending, i.e. money creation. (A growing economy requires a growing supply of money.) Also, in a monetarily sovereign nation, taxes do not pay for federal spending (though taxes do pay for state and local spending, as the states, counties and cities are not monetarily sovereign).

Further, some of the “dismantling” they suggest is more like shifting, because some of the suggestions merely push expenses from the federal government (which has unlimited money) to state and local governments (which are having great difficulty paying their bills) – a terrible idea.

Nevertheless, here are the ideas, with my comments.

1. Overhaul Medicaid
“stop the matching grant funding process, in which states receive federal money for each Medicaid dollar they spend” or “scrap the program entirely in favor of a temporary assistance program that doesn’t create long-term dependency.”

The first part of the suggestion shifts more burden to the struggling states, which are not monetarily sovereign, and so cannot create unlimited money. The second part of the suggestion goes under the heading, “These Medicaid recipients aren’t really poor; they are lazy. If we stop giving them help, they’ll go to work.” That simply is nuts.

2. Bring the Troops Home
“. . . a swift and total deoccupation . . . probably would save “$50 billion to $70 billion in fiscal 2011 and perhaps $80 billion to $100 billion a year in 2012 and beyond.”

I’d like to see the troops come home, but not for financial reasons. I have no idea why we’re in Afghanistan, but saving money is a foolish way to manage a war. It kills soldiers.

3. Erase Federal Education Spending
“. . . the federal education budget is full of cuttable programs. If eliminating the entire Department of Education is politically impossible, then the programs with the most tenuous relationships to raising student achievement need to be the first to go.”

This falls under the “make government more efficient” heading. Sure, who can argue with that, but again, it’s not a money thing. It’s an effectiveness thing.

4. Slash State Budgets
“ . . . lawmakers have been living way beyond their means for far too long.”

Not sure what this has to do with the federal government, but I love it. Any specific ideas?

5. End Defined-Benefit Pensions
“ . . . public servants of the future should be put into 401(k) plans like the rest of us, with responsibility to contribute to and manage their own retirement nest eggs.”

This would mean federal employees would receive less money, which would be anti-growth. I agree however, for state and local government employees, as the state and local governments spend taxpayer money.

6. Declare Defeat in the Drug War
“To enforce drug prohibition, state and federal agencies spend more than $40 billion and make 1.7 million arrests every year. This effort wastes resources that could be used to fight predatory crime. . . While imprisoned (as half a million of them currently are), drug offenders cannot earn money or care for their families, which boosts child welfare costs.”

I agree, but again not for money reasons. Prohibition didn’t work in the 1920’s. I can’t imagine why the public and the politicians think it will work, today. Prohibition caused crime in the 1920’s. It causes crime, today. The war on drugs is a perfect example of how the government and the public are incapable of learning from experience.

7. Cancel the Federal Communications Commission
“. . . just about everything the FCC does is either onerous, constitutionally dubious, ineffective, or all three.. . . its role as broadcast censor . . . The best alternative is a world in which spectrum is freely tradable private property rather than a government-managed resource, interference is treated as a tort, and no one worries about whether their next on-air word will result in a seven-figure fine—in other words, a world with no FCC at all.”

The FCC’s role as public scold is useless – actually harmful. The Internet has eliminated the prohibition against swear words, as today one easily can find the most pornographic videos. Fining CBS for Janet Jackson’s 1 second breast reveal, while every sexual act imaginable is available on the Internet, is just plain silly. But, the limited public bandwidth has to be managed to prevent monopolies.

8. Uproot Agriculture Subsidies
“They distort markets and spark trade wars. They make food staples artificially expensive, while making high-fructose corn syrup—the bogeyman of crunchy parents, foodies, and obesity activists everywhere—artificially cheap. They give farmers incentives to tamper with land that would otherwise be forest or grassland. They encourage inefficient alternative energy programs by artificially lowering the price of corn ethanol compared to solar, wind, and other biomass options. School lunches are jammed full of agricultural surplus goods, interfering with efforts to improve the nutritional value (and simple appeal) of the meals devoured by the nation’s chubby public schoolers.”

I agree. Any time the federal government subsidizes an industry, it controls that industry. So you have bureaucrats determining what food is best. While those agriculture subsidies are stimulative, in that they add money to the economy, they distort the market.

9. Unplug the Department of Energy
“. . . more than half of the department’s $26 billion budget ($16 billion) was devoted to managing . . . facilities that make and dispose of materials used for nuclear weapons. . . If Congress and the White House must pursue the development of alternative energy via social engineering, a far more effective alternative to allowing DOE bureaucrats to pick technology “winners” would be a tax on conventional energy. The boost in energy prices would at least encourage inventors and entrepreneurs to get to work.”

All taxes hurt the economy. Taxing energy would tax us all, as we all use energy. The federal gasoline tax has accomplished nothing but take money out of the economy. It certainly has not reduced the consumption of gasoline. It has been an economic cost. This falls under the heading: “If something is harmful, do it again, only more so.” Once again, a failure to learn from experience.

10. Dismantle Davis-Bacon
“. . . which requires all workers on federal projects costing more than $2,000 to be paid the “prevailing wage,” which typically means the hourly rate set by local unions. . . . born as a racist reaction to the presence of Southern black construction workers on a Long Island, New York, veterans hospital project.”

I agree. See #8. It’s another example of the federal government distorting the market, this time the labor market.

11. Repeal the Stimulus
“. . . as of early September, 18 months after the stimulus was passed, an estimated $301 billion remained unspent. That money should be banked, not wasted . . . deficit spending has crowded out private investment.”

A demonstration of financial ignorance. There is no way federal money can be “banked.” And there is no way deficit spending can “crowd out” anything. This is a myth. Without deficit spending, we would be in the deepest depression one could imagine. Of all 14 suggestions, this is the most ignorant.

12. Spend Highway Funds on Highways
“ . . . just to maintain the Interstate Highway System at a decent level is $10 billion to $20 billion per year. . . . lesser highways should all be the states’ problem.”

In other words, transfer the cost from the federal government, which can afford it, to the state governments, which can’t. And how does this help the taxpayer?

13. Privatize Public Lands
“Letting the states manage this land instead would take up to $5 billion a year off the federal books. . .One Forest Service contractor in Arizona recently offered to take over six state parks targeted for closure amid budget cuts. The concessionaire would collect the same visitor fees the state charges today while taking the operations and maintenance costs off the state’s books entirely. Further, the company would pay the state an annual “rent” based on a percentage of the fees collected, turning parks into a revenue generator instead of a money eater.”

In the very few cases where a private company could do this, profitably and under federal supervision, it could be a good idea. Now let’s talk about the other 99% of the public lands. Get real.

14. End (or at Least Audit) the Fed

It’s not explained how auditing would cut federal spending. Bernanke warned that opening the Fed’s books would diminish the central bank’s political independence. I believe him. Imagine relying on Congress to make quick economic decisions. These people can’t decide to go to the bathroom without the threat of filibuster. Let’s face it. The most dysfunctional of all federal agencies is Congress.

In summary, most of these suggestions simply are foolish or would not save taxpayers anything. A couple have some value, not because they “save” money, but because they are good governing policy. All are based an the false assumption that federal spending should be reduced.

Think of the economy as a child and money is its food. Today, the child is starving. To make the child healthy, we must feed it. As the child grows, it will need an increasing amount of food. Yes, if you overfeed the child, it will become fat (inflate), but we are a long way from that. The debt hawks want to starve the child, and then always are surprised when it becomes ill.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity

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