INFLATION! No, no, it isn’t the stimulus.

INFLATION! You can hear it now, can’t you? The sound of hands wringing in concert.

The GOP is owned by the very rich. And the rich are terrified that you ever-so-slightly will narrow the Gap between you and them.

So their GOP flunkees, having already given a huge tax deduction to their rich patrons, now will tell you that the Democrats’ stimulus packages are wrecking the economy and causing not just inflation, but hyperinflation.

It’s all a great big fat lie, a repeated myth designed to calm your requests for more stimulus dollars to flow to your benefit.

It goes like this:

  1. Because the unemployment benefits are too generous, people won’t come back to work. So the GOP solution is to cut benefits, thereby starving people into working for low pay at unpleasant jobs.
  2. The inflation theory is that increasing the supply of dollars when the demand for dollars remains constant, reduces the value of the dollar, and that reduction is known as “inflation.”

    Whip Whipping Hand - Free vector graphic on Pixabay
    The GOP solution to inflation and unemployment.

Nice hypotheses, except:

  1. There is a way to pay people good wages and also encourage work, and
  2. The value of dollars does not decrease just because the supply increases.

Dollars are not like oranges, oil, or opera tickets. Money is a unique commodity. Increase the supply and people want still more.

Give a person a million or a billion, and he will want yet another million or billion. Ask Jeff Bezos, Elon Musk, Mark Zuckerberg, or Warren Buffet. They all still work — for money.

The one thing that affects the demand for money is the reward for owning money, i.e. interest rates, and that effect is modest. So, though interest rates today are quite low, the demand for dollars remains high.

As I have demonstrated in previous posts, inflations have not been caused by federal deficits. Nor have hyperinflations. All have been caused by shortages.

Inflations are caused by shortages, not by money supply.

If deficit spending (red line) caused inflations (blue line) you would expect to see the two lines reasonably parallel. But there seems to be no relationship between the lines. Cuts in deficit spending lead to recessions (gray bars).

The shortages that most likely to lead to inflations involve food, energy, and personnel.

 Consumer prices surge again, rising 5% over the past year
By Martin Crutsinger Associated Press
WASHINGTON — American consumers absorbed another surge in prices in May — a 0.6% increase over April and 5% over the past year, the biggest 12-month inflation spike since 2008.

The May rise in consumer prices that the Labor Department reported Thursday reflected a range of goods and services now in growing demand as people increasingly shop, travel, dine out and attend entertainment events in a rapidly reopening economy.

The increased consumer appetite is bumping up against a shortage of components, from lumber and steel to chemicals and semiconductors, that supply such key products as autos and computer equipment, all of which has forced up prices.

And as consumers increasingly venture away from home, demandhas spread from manufactured goods to services — airline fares, for example, along with restaurant meals and hotel prices — raising inflation in those areas, too.

Among specific items in May, prices for used vehicles, which had surged by a record 10% in April, shot up an additional 7.3% and accounted for one-third of May’s overall price jump. The price of new cars, too, rose 1.6% — the largest one-month increase since 2009.

The jump in new and used vehicle prices reflects supply chain problems that have caused a shortage of semiconductors.

The lack of computer chips has limited production of new cars, which, in turn, has reduced the supply of used cars. As demand for vehicles has risen, prices have followed.

But higher prices were evident in a wide variety of categories in May, including household furnishings, which rose 0.9%, driven by a record jump in the price of floor coverings. Airline fares rose 7% after having increased 10.2% in April. Food prices rose 0.4%, with beef prices jumping 2.3%. Energy costs, though unchanged in May, are still up 56.2% in the past year.

The problem isn’t excessive money. Furnishings, floor coverings, airline tickets, beef, and oil prices all reflect the lack of production or availability, which in turn reflects the lack of demand during COVID-19.

Only now, is supply beginning to grow to meet demand.

From the cereal maker General Mills to Chipotle Mexican Grill to the paint maker Sherwin-Williams, a range of companies have been raising prices or plan to do so, in some cases to make up for higher wages they’re now paying to keep or attract workers.

The GOP’s solution to the shortage of workers is to stop paying unemployment compensation.

For the benefit of the rich, the GOP wishes to starve the people until they are forced to return to low wages and poor working conditions.

That “solution” is a disgusting, medieval approach when a modern solution is available.

The solution is not for the federal government to pay the unemployed instead of salaries, but rather for the government to pay everyone in addition to salaries.

Don’t compensate people for staying home. Compensate people for being people. Institute Social Security for all.

That way, there would be no temptation to stay home (when salaries are lower than the unemployment pay), and the public would be enriched, which means the entire economy would be enriched.

This week, for example, Chipotle Mexican Grill announced it was boosting menu prices by roughly 4% to cover the cost of raising its workers’ wages. In May, Chipotle had said that it would raise wages for its restaurant workers to reach an average of $15 an hour by the end of June.

Andrew Hunter, a senior U.S. economist at Capital Economics, noted that the price category that covers restaurant meals jumped 0.6% last month. He took that as evidence that labor shortages at restaurants, hotels and other service sector companies are beginning to fuel wage and price increases.

The best cure for inflation, i.e. the best cure for shortages, is for the federal government to spend more either to obtain and distribute the scarce goods or to encourage the production of the scarce goods.

Rather than paying people to be unemployed, let employment serve as the marginal reward for labor.

And finally, the purpose of federal taxes is not to supply money to the federal government, which already has the unlimited ability to create money.

The purpose of federal taxes is to discourage what the government doesn’t want by taxing it, and to encourage what the government does want by giving tax breaks.

So why does the federal government tax businesses? To discourage the profits that pay salaries? It makes no sense.

Rather than discouraging business profits by taxing, encourage business profits and salaries by eliminating business taxes.

Punishing the poor to send them back to work, is a solution only in the eyes of the rich and the GOP.

SUMMARY

  1. Federal deficit spending does not cause inflations. Shortages of goods and services cause inflations.
  2. Cuts in federal deficit spending lead to recessions and depressions.
  3. A Monetarily Sovereign federal government can prevent/cure inflations by more spending to cure shortages
  4. Paying people not to work (unemployment compensation) should be eliminated in favor of Social Security for All.
  5. The purpose of federal taxes is not to provide the government with spending money, but rather to discourage what the federal government wishes to limit.
  6. Federal taxes on businesses should be eliminated

Rodger Malcolm Mitchell

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

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

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. 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.

MONETARY SOVEREIGNTY

 

 

What to do about the states’ poor finances

The 50 U.S. states each have a great many financial obligations, which they satisfy in one of several ways:

  1. Income taxes
  2. Sales taxes
  3. Tolls and user fees
  4. Borrowing
  5. Lotteries
  6. Cheating creditors by late or non-paying of debt
Uncle-sam-taxes
Take some. There’s plenty more where that came from.

It all is an unnecessary routine that has been foisted not only on the states but on the counties, cities, and the other political subdivisions of America.

All of the above-noted sources of money tend to be regressive, with sales taxes, tolls, user fees, and lotteries being dramatically so.

But a solution to the insufficient, inefficient, regressive money collection is available, and even has been tested successfully.

Flush states bask in fiscal sunshine
By David A. Lieb Associated Press

JEFFERSON CITY, Mo. — Just a year ago, the financial future looked bleak for state governments as governors and lawmakers scrambled to cut spending amid the coronavirus recession that was projected to pummel revenue.

They laid off state workers, threatened big cuts to schools and warned about canceling or scaling back building projects, among other steps.

States, counties, and cities are responsible for financing education, grades K through 12. Why is this a state responsibility?

The reason may be partly historical, with the original colonies each being entities unto themselves, and the subsequent federal government not understanding the power and availability of Monetary Sovereignty.

Unlike our current, Monetarily Sovereign, federal government, the states do not have a sovereign currency, and therefore do not share the federal government’s unlimited ability to create a sovereign currency.

The states can, and regularly do, run short of the federal government’s sovereign currency: the U.S. dollar.

This ability by the federal government to create unlimited dollars has been hidden from the general public for almost the entire 245 years of America’s life.

But no longer.

Today, many of those same states are flush with cash, and lawmakers are passing budgets with record spending. Money is pouring into schools, social programs and infrastructure.

At the same time, many states are socking away billions of dollars in savings.

“It’s definitely safe to say that states are in a much better fiscal situation than they anticipated,” said Erica MacKellar, a fiscal analyst with the National Conference of State Legislatures.

Spending plans for the budget year that begins July 1 are up 10% or more in states spanning from Florida and Maryland to Colorado, Utah and Washington.

In Oklahoma, pandemic uncertainties last year prompted lawmakers to trim $1.3 billion from their anticipated general revenue. That resulted in across-the-board cuts for public education and most state services.

This year, the new budget is up nearly 18%. That includes money to reduce class sizes in kindergarten anid first grade, funding for a new children’s behavioral health center and new incentives for businesses to make movies in Oklahoma.

The Republican-led Legislature even set aside money to cut individual and corporate income tax ratesand expand tax credits for a school choice program.

“Last year: shaky foundation. This year: solid foundation,” said Republican state Sen. Roger Thompson, chairman of the chamber’s budget-writing committee.

Think of it. The states went from the impoverished cutting of education and building projects (roads, dams, schools, etc.) to spending for education, social programs, infrastructure, services, business incentives, along with tax cuts and savings.

How did this magic happen?

Many states experienced a similar turnaround. Fiscal analysts cite a variety of reasons.

The federal government poured billions of dollars into state coffers through a series of pandemic relief packages.

Federal aid also sent billions more to households and businesses that, in turn, pumped money into the economy.

Consumer spending rebounded to shore up sales tax revenue, and state income taxes were bolstered by a strong stock market and high-wage earners who kept working remotely while others were laid off.

The result is that states now face “a very promising fiscal and economic outlook over the next couple of years,” said Justin Theal, a state fiscal research officer at The Pew Charitable Trusts.

And there it is. The federal government is like the billionaire uncle; the states, counties, and cities are like his impoverished nieces and nephews.

In the last 12 months, the billionaire uncle finally opened his purse, and with no sacrifice on his part, took his nieces and nephews, and their children and grandchildren out of poverty.

The federal government has the unlimited ability to take the states and their residents out of unnecessary financial distress. As the former chairman of the Fed said:

 

The $212 billion budget enacted in New York is up almost 10% over the previous one.

Federal COVID-19 relief provided the bulk of that growth. But state spending still is up by 3.8% in the new budget, according to Gov. Andrew Cuomo’s administration.

New York’s bigger budget includes a $1.4 billion boost in basic aid for schoolsand a $1.3 billion plan to overhaul Penn Station.

Florida’s record $101.5 billion budget is up roughly 11%, with bonuses for teachers, police and firefighters, and new construction projects at schools and colleges.

Lawmakers decided they had money to spare, expanding sales tax breaks for school and hurricane supplies and creating a new tax-free week to buy museum and concert tickets and recreational gear for camping, fishing and surfing.

Florida is among several states that amplified their 2021-22 budgets with at least part of their share of a $195 billion state aid package from the recent American Rescue Plan Act signed by President Joe Biden.

 

All those worthwhile projects to improve the lives of Americans, and there is nothing to prevent them, except Congress and the President.

Many Republicans in Congress had criticized the Biden relief plan as excessive, especially in the amount of money going to state governments.

Why is it termed”excessive”?

One excuse often given by debt-scarers is that federal spending will cause inflation. In previous papers, we have shown that scarcity, not spending, is the root cause of all inflations.

Every inflation in history has been caused by a scarcity of key elements, most often food and/or energy.

 

monetary sovereignty
While federal debt (blue and green lines) has risen massively, inflation (red) has risen moderately.

 

monetary sovereignty
There is no relationship between annual changes in federal debt (blue and green) vs. annual changes in inflation.

 

monetary sovereignty
There is a close relationship between annual changes in the prices of oil (blackand purple) and inflation (red)

Another excuse is that federal spending is “socialism.” It isn’t.

Socialism is government (or the nation as a whole) ownership and control over production, distribution, and exchange. Merely handing money to the states, would not be socialism. Not even close.

America does have some socialism. The development of the atomic bomb was socialism. The government owned and controlled every step. Federal benefits are not socialism.

Another concern is that the state governments will spend the money unwisely. But that concern merely expresses the desire for socialism, i.e. federal control.

Sen. Bob Rankin, a Republican member of the Legislature’s Joint Budget Committee, said he is concerned about how that additional $3.8 billion of federal aid will be spent.

“I’m afraid that we are spending money and making commitments that we will not be able to sustain once that one-time federal money goes away,” he said.

But rather than worry about the federal money going away, the politicians should be pushing for the federal money never to go away.

The fundamental purpose of government — the only reason why people create governments — is to protect and improve the lives of the people.

Governments are formed solely to be the servants of the people. We do not form any organization with the hope and intention that we will be ruled. Quite the opposite. We want to be served.

If ever a government stops protecting and improving the lives of the people, that government should be replaced with one that does.

The U.S. government has all the power and tools it needs in order to improve our lives. We do not want the dubious pleasure of being taxed. Rather we should want to tax the federal government.

After all, the federal government has no need for our tax dollars. It has infinite dollars at its disposal. It is we who can run short of dollars.

The people and the states, all being monetarily non-sovereign, should levy a per-capita tax on the federal government, to pay for our protection and our life improvement.

If the people do it, we might want to call it Social Security for All.

 

Rodger Malcolm Mitchell

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

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

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. 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.

MONETARY SOVEREIGNTY

 

 

Well, there goes another excuse for not giving poor people money.

The sole purpose of government is to improve and protect the lives of the people.

Most people would like to have more money. This includes many of the rich, who already have more money than they can spend, but seem motivated to have even more.

How Florida Is Pushing Back Against Government Overreach
The sole purpose of government is to improve and protect the lives of the people.

Gap Psychology describes the human desire to distance oneself from those below, on any social scale, and to approach those above.

Thus, growing “richer” requires widening the Gap. This involves not only gaining more for oneself but also depressing others.

Either approach widens the Gap.

That is why the rich, and the Republican Party of the rich, seem so adamant that giving people money will disincentivize people to work.

Strangely, or perhaps not so strangely, the rich do not feel the “disincentive” applies to them, for they generally claim to work just a hard as always, no matter how much more money they own.

Their story is that the poor and middle-classes are congenitally lazy, who only will labor if whipped by hunger, homelessness, or other deprivations.

The fact that millions of people work at demanding, or even dangerous jobs, for low or moderately low pay, does not seem to occur to those who claim that if people are given money, they will refuse to work.

It is a lie, or if not a lie, then at least an ivory tower misunderstanding by academics.

Ask a police officer or a fire-fighter or a public school teacher why they work. It is in the nature of human beings that most of us like to work, and we feel such emotions as worthlessness and boredom when we are not working.

In fact, lack of “something to do” is a major problem for retirees.

All of the above is the hypothesis. Here is some fact:

When a California city gave people a guaranteed income, they worked more — not less
Stockton’s experiment shows what $500 per month in “free money” can do for employment, mental health, and more.
By Sigal Samuel Mar 6, 2021

The city of Stockton, California, embarked on a bold experiment two years ago: It decided to distribute $500 a month to 125 people for 24 months — with no strings attached and no work requirements.

The people were randomly chosen from neighborhoods at or below the city’s median household income, and they were free to spend the money any way they liked. Meanwhile, researchers studied what impact the cash had on their lives.

The results from the first year of the experiment, which spanned from February 2019 to February 2020, are now in. And they’re extremely encouraging for its participants, and for advocates who see unconditional cash transfers as an effective way to help people escape poverty.

The most eye-popping finding is that the people who received the cash managed to secure full-time jobs at more than twice the rate of people in a control group, who did not receive cash.

Within a year, the proportion of cash recipients who had full-time jobs jumped from 28 percent to 40 percent. The control group saw only a 5 percent jump over the same period.

When confronted with a non-intuitive result, you surely must wonder, “How can that be? How would giving people money increase their desire to work for money?”

The researchers wrote in their report that the money gave recipients the stability they needed to set goals, take risks, and find new jobs.

In other words, when you’re drowning, all you can think about is staying afloat in the moment. That focus on the now, occupies all your energy and resources.

But if you are given a boat, you now can begin to think about getting food, shelter from the elements, finding land, signaling potential rescuers, etc.

One man in his 30s had been eligible for a real estate license for over a year but hadn’t gotten it because he just couldn’t afford to take time off work. Thanks to the freedom offered by the extra $500 per month, he said, his life was “converted 360 degrees … because I have more time and net worth to study … to achieve my goals.”

That’s a short-term example, but it also works in the longer term. Many intelligent youngsters do not stay in school, because their families need money now. So they are forced to find whatever low-paying jobs they can.

Eventually, these low-level jobs are the first to disappear. During any period or hard times, the under-educated are the first to need unemployment compensation.

Given money, they can continue in school, and find even better jobs, and/or create their own companies. They will be less likely to need unemployment compensation, later.

In the research done to date, unconditional cash does not tend to disincentivize work. In several programs — from Alaska and North Carolina in the US, to Finland and Spain in Europe — it has had no effect on employment either way.

In some cases, it seems to embolden people with an entrepreneurial bent; for instance, in Japan, initial survey results have shown that recipients are 3.9 times more interested in launching a new business.

Employment aside, there are clear benefits to unconditional cash programs. The Stockton experiment shows that getting unconditional cash tends to boost happiness, health, school attendance, and trust in social institutions, while reducing crime.

At its basic level, giving people money reduces their poverty, and crime, especially street crime, is an outgrowth of poverty.

(In the Stockton experiment, money) recipients spent most on necessities like food (37 percent), home goods and clothes (22 percent), utilities (11 percent), and car costs (10 percent). They spent less than 1 percent on alcohol or cigarettes.

These numbers offer a counter to harmful stereotypes and faulty assumptions: that people who become poor get that way because they’re bad at rational decision-making and self-control, and that they’ll blow free money on frivolous things or addictive substances. The evidence does not support these beliefs.

As part of its obligation “to improve and protect the lives of the people” government should give people money. This notion has been criticized on moral grounds. It’s as though not helping a drowning person will force a sink-or-swim mentality, which somehow is morally better.

But, allowing someone to drown is the ultimate immorality.

Here are excerpts from an article describing results around the world.

Everywhere basic income has been tried
Which countries have experimented with basic income — and what were the results?
By Sigal Samuel Updated Oct 20, 2020.

The general idea — that the government should give every citizen a regular infusion of free money with no strings attached — has been around since the 16th century. But it’s recently experienced a remarkable resurgence: Advocates ranging from tech billionaire Mark Zuckerberg to libertarian economist Milton Friedman to former Democratic presidential candidate Andrew Yang have endorsed it.

Many people, who otherwise might favor such a plan, are reluctant to “give money to people who don’t need it.” This belief is founded on two concerns:

  1. The false belief that federal taxes fund federal spending, while in fact no one — not you, not me, not our grandchildren — ever pay for federal spending. The concern, “Why should my money go to rich people?” does not apply to Monetarily Sovereign federal spending. The government creates, from thin air, all the dollars it spends.
  2. The legitimate belief that federal spending should help narrow the Gap between the rich and the rest. I suggest that the simplicity of “Give the same amount to everyone” is far more actionable, and just a fair, as an income-based (or wealth-based?). The rich always find a way to game the system, and they would game this system, too.

Alaska: Since 1982, the state has given each citizen an annual check just for being alive, effectively wiping out extreme poverty. The money — which can range from around $2,000 per person when oil prices are high to $1,000 in cheaper gas years — comes from the Alaska Permanent Fund, a state-owned investment fund financed by oil revenues.

Economists investigated whether the payment was leading people to work less and found that “the dividend had no effect on employment” overall.

North Carolina: Since 1997, revenue from a casino on tribal land has been given to every tribal member, no strings attached. Each person gets on average somewhere between $4,000 and $6,000 per year. Economists found that it doesn’t make them work less. It does lead to improved education and mental health, and decreased addiction and crime.

Manitoba, Canada: Choosing one farming town, Dauphin, as a “saturation site” where every family was eligible to participate in a basic income experiment. The basic income seemed to benefit residents’ physical and mental health — there was a decline in doctor visits and an 8.5 percent reduction in the rate of hospitalization — and high school graduation rates improved, too.

Finland: The government chose 2,000 unemployed citizens at random and gave them a check of 560 euros ($635) every month for two years. Participants were assured they’d keep receiving the money if they got a job. The income didn’t help them get jobs, but it did make them feel happier and less stressed. The recipients also reported that they felt more trust toward other people and social institutions — from political parties to the police to the courts — than they did before getting a basic income.

Spain’s “B-MINCOME” experiment started offering a minimum guaranteed income to 1,000 households randomly selected from some of Barcelona’s poorest districts. Under the two-year randomized controlled trial, households could receive up to 1,675 euros ($1,968) per month. There was also a control group of 383 households. Preliminary results showed that the basic income boosted life satisfaction and mental health while making participants neither more likely nor less likely to find employment.

Iran rolled out a nationwide unconditional cash transfer program to compensate for the phase-out of subsidies on bread, water, electricity, heating, and fuel. The government gave out sizable monthly payments to each family: 29 percent of the median household income on average. Economists found that “the program did not affect labor supply in any appreciable way.” The program is still running, and it’s the only such program in the world to run nationwide.

Namibia: All residents below the age of 60 living in the Otjivero-Omitara region of Namibia received a basic income: 100 Namibian dollars ($6.75) per person per month, no strings attached, regardless of their socioeconomic status. As a result, child malnutrition dropped and school enrollment rates went up, while poverty-related crime (like theft) fell.

India: Between 2011 and 2012, a pilot project in the state of Madhya Pradesh gave a basic income to some 6,000 Indians. Every man, woman, and child in eight villages received a monthly payment: 200 rupees ($2.80) for adults and 100 rupees for each child. The results: Receiving a basic income led to improved sanitation, nutrition, and school attendance.

Japanese billionaire Yusaku Maezawa announced that he would give away 1 billion Japanese yen — about $9 million — to 1,000 random Twitter followers. Recipients of the cash benefit are now 3.9 times more interested in launching a new business. Recipients saw a decrease in divorce rates, from 1.5 percent to 0.6 percent. And more than 70 percent of recipients said they experienced a significant increase in happiness.

SUMMARY

Poverty is the lack of money, and the cure for poverty is to supply money to the impoverished.

We use the term “poverty” to describe merely being short of money. It does not need to be the abject, begging-in-the-street form of poverty, to have a negative effect on a family.

Just being unable to afford college or unable to live in a good home, are serious monetary and psychological negatives, not only for one family, but for that family’s economic surroundings.

Poverty does not indicate a moral lack. It is the result of bad fortune, whether at birth or at any time thereafter. Punishment does not cure poverty, because poverty itself is punishment.

Blaming the needy for their situation provides no benefit, moral or monetary, either for the impoverished or for the rest of humanity.

Withholding money from the impoverished is like withholding medicine from the sick.

The U.S. federal government, being Monetarily Sovereign, has the unlimited ability to create dollars. It is infinitely rich. The dollars it would give in the form of a basic income are not tax dollars. No one ever will pay for those dollars. They are created ad hoc, from thin air.

People receiving money are not less likely to work; the reverse is true. And they are more likely to be more productive members of society and less likely to commit crimes.

Giving “no strings” money to people has time and again proved to benefit the people themselves and the rest of the private sector. Everyone benefits.

See Step #3, Social Security for All (below).

There are no downsides.

Rodger Malcolm Mitchell

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

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

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. 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.

MONETARY SOVEREIGNTY

Which party will be remembered as “the party of too-little, too-late”?

Before the virus crisis, the 2020 federal budget looked like this:

BUDGET PROJECTIONS FOR FY 2020

(As of  )

OUTLAYS

$4.6 Trillion

REVENUES

$3.6 Trillion

DEFICIT

$1.0 Trillion

DEBT HELD BY THE PUBLIC (End of Fiscal Year)

$17.9 Trillion

We were here:

Trump says coronavirus is ‘under control’ despite warnings from health officials of ‘severe’ disruptions
Courtney Subramanian, John Fritze USA TODAY 2/25/2020

NEW DELHI – President Donald Trump and White House officials downplayed coronavirus concerns Tuesday, describing the epidemic as “very well under control in our country” despite a sharp increase in cases globally and warnings of “severe” disruptions.

Speaking to reporters in India, where he was taking part in a state visit, Trump noted that few people have been diagnosed with the virus in the U.S. and claimed that the “whole situation will start working out.”

But markets tumbled hours later as health officials warned of a more extensive impact in the United States.

“Disruption to everyday life may be severe,” said Nancy Messonnier, director of the Centers for Disease Control and Prevention’s National Center for Immunization and Respiratory Diseases. Schools could be closed, public gatherings suspended and employees forced to work remotely, she said.

And here:

Schumer counters Trump, announces $8.5-billion proposal for emergency coronavirus funding
Nicholas Wu, 2/26/20 USA TODAY
WASHINGTON — Senate Minority Leader Chuck Schumer, D-N.Y., released an $8.5 billion counter-proposal to the Trump administration’s request for emergency coronavirus funding.

“This proposal brings desperately-needed resources to the global fight against coronavirus,” Schumer said in a statement. “Americans need to know that their government is prepared to handle the situation before coronavirus spreads to our communities. I urge the Congress to move quickly on this proposal. Time is of the essence.”

The Trump administration requested $2.5 billion Monday to tackle the virus, an amount Democrats deemed insufficient. According to Schumer’s office, Congress appropriated $6 billion for the 2006 avian flu, and $7 billion for the H1N1 flu in 2009.

Testifying before a subcommittee of the House Appropriations Committee on Wednesday, Health and Human Services Secretary Alex Azar defended the administration’s request, saying the amount was “appropriate, and if not, if it doesn’t fund it enough, we’ll come back to you and work with you.”

Now, we are here:

Trump’s coronavirus rescue package could approach a trillion dollars
PA Media: World News
By Lisa Mascaro and Zeke Miller, Associated Press
PA Media: World News, 18 March 2020

Donald Trump has asked Congress to speed emergency cheques to Americans, enlisted the military for hospitals and implored ordinary people to do their part by staying home to stop the spread of the coronavirus.

In a massive federal effort, the president’s proposed economic package alone could approach a trillion dollars, a rescue initiative not seen since the Great Recession.

He wants cheques sent to the public within two weeks and is urging Congress to pass the stimulus package in a matter of days.

As analysts warn the country is entering a recession, the government is grappling with an enormous political undertaking with echoes of the 2008 financial crisis.

At the Capitol on Tuesday, Senate majority leader Mitch McConnell vowed the Senate would not adjourn until the work was done.

“Obviously, we need to act,” he said. “We’re not leaving town until we have constructed and passed another bill.”

He said the Senate will vote on a House-passed package of sick pay, emergency food and free testing, putting it back on track for Mr Trump’s signature — despite Republican objections.

Overnight, the White House sent legislators a 46 billion dollar emergency funding request to boost medical care for military service members and veterans, fund production of vaccines and medicines, build 13 quarantine centres at the southern border for migrants and make federal buildings safer, among other measures.

The Trump request also reverses cuts to the Centres for Disease Control and National Institutes of Health that Trump proposed in his February budget for next year and would create a 3 billion dollar fund for unanticipated needs.

Bigger than the 700 billion dollar 2008 bank bailout or the nearly 800 billion dollar 2009 recovery act, the White House proposal aims to provide a massive tax cut for wage-earners, 50 billion dollars for the airline industry and 250 billion dollars for small businesses.

“This is a very unique situation,” said Treasury secretary Steve Mnuchin, exiting a private briefing of Senate Republicans. “We’ve put a proposal on that table that would attract a trillion dollars into the economy.”

And it still is nowhere near enough.

Consider just Steps 2. and 3. of the Ten Steps to Prosperity.

Step 2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone. Sanders’ “Medicare for all” proposal has been estimated to cost $1.38 trillion per year. Other health policy experts have put the single-payer health plan price tag much higher, with price tags ranging from $2.4 trillion a year to $2.8 trillion a year.

Step 3. The cost of Social Security for all would depend on how many people receive it, and how much each person receives. Current SS costs about $1 trillion which is doled out to about 61 million people. There are about 212 million people over 21 in the U.S., so giving all of them the same SS amount would require about $3.5 trillion.

Then add in the remaining Steps and the total easily could exceed $7 trillion. Yet, the 10 Steps are needed to prevent/cure recessions and depressions while improving the lives of Americans. In “Trumpese,” the 10 Steps can “make America great, again.”

Two questions:

  1. Can the federal government afford the Ten Steps?
  2. Would implementation cause inflation?

1. Can the Monetarily Sovereign federal government afford $3 trillion – $7 trillion to give Americans prosperity?

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. In this sense, the government is not dependent on credit markets to remain operational.”

Perhaps, the real question should be: Can the private sector (you and me) afford to continue paying trillions, and still not receive what the Ten Steps could offer?

Today, the private sector pays or does without. That is how these services are funded. The federal government, being Monetarily Sovereign, has unlimited financial resources. The private sector does not. Question answered.

2. Would it cause inflation? Contrary to popular wisdom, federal deficit spending does not, and has not, caused inflation. Inflation is caused by shortages, usually shortages of food and/or energy. See: Only 450 words answer the question, “Does printing money cause inflation?”

Why then doesn’t Congress budget spending the money?

I suspect the primary answer is: They want to add just enough dollars to prevent a depression, which would tempt voters to throw them out of their cushy jobs — but still stick the public with a mild recession. In short, Gap Psychology rules.

(Gap Psychology is the desire to distance oneself from those considered “below” you in any socioeconomic ranking, and to come closer to those above.)

The richer do not want the less rich to prosper. They resent aid to poorer people who are felt to be “lazy takers.” It is Gap Psychology that demands those receiving aid to seek employment, though there is no financial reason for this.

In Summary: We are in a perilous situation that can lead to many deaths and a financial disaster, perhaps a full-fledged, long-lasting depression.

Both the health and the financial problems can be cured with ample inputs of money, which the federal government can provide at no cost to anyone.

Which political party will be remembered as the “too-little, too-late party”?

For no good reasons, the government drags its feet. With every passing day of inaction or inadequate action, more people will suffer. Who is at fault?

Only the rich will thrive. And that seems to be the point.

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.

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.

MONETARY SOVEREIGNTY