Is it possible to use Monetary Sovereignty (MS), succeed with MS, and still not understand it? (The U.S. and Japan.) Wednesday, Feb 12 2020 

If you are unfamiliar with Monetary Sovereignty (MS) and Modern Monetary Theory (MMT), you should know they fundamentally are alike.

Where they differ most is:

  1. In certain applications (for example, a Jobs Guarantee) which MMT recommends and MS does not, and
  2. The primary purpose of federal taxes. MMT says they are to give value to money; MS says they are to control the economy and to deceive the public and:
  3. Inflation: MMT says curing inflation requires tax increases. MS says curing inflation requires deficit spending to eliminate shortages, usually of food or energy.

But they agree on the key fundamentals, for instance:

Image result for pouring money

Money moves between the economy and the government.

  1. The federal government invented the U.S. dollar, creates dollars at will, and so cannot run short of dollars.
  2. The federal government does not borrow to fund spending, but rather creates new dollars every time it pays a bill.
  3. So-called “federal debt” is nothing more than the total of deposits into T-security accounts, which easily are repaid by returning the dollars deposited, are not paid by taxpayers.
  4. No level of federal debt is unsustainable.
  5. Federal tax dollars are destroyed upon receipt.

In short, deficit spending by the government goes into the economy, and taxes paid by the economy go into the government. The difference: Monetarily sovereign governments have infinite access to money; economies do not.

The following are excerpts from an article that appeared in the June 5, 2019, New York Times, and written by Ben Dooley

Modern Monetary Theory’s Reluctant Poster Child: Japan
Despite its huge debt, the country remains an economic powerhouse. Some say it provides a model for the United States, but its leaders disavow the idea.

Immediately, the article is misleading. Rather than saying “Despite its huge debt . . .” it should read, “Because of its huge debt . . . ” or even more accurately, “Because of its massive deficit spending, which led to a huge amount of deposits into government bond accounts.”

TOKYO — Spend big and never mind the deficit. That’s what proponents of modern monetary theory, the unorthodox set of economic ideas that has inspired politicians like Bernie Sanders and Alexandria Ocasio-Cortez, see as the winning formula for American prosperity.

It may have “inspired” them, but even they cling to the false notion that federal taxes are necessary to fund federal spending.

For proof, its admirers point to Japan. Despite the highest debt in the developed world, Japan remains an economic powerhouse with high living standards.

Because the Japanese government, like the governments of Canada, the UK, Australia, China, and others, is Monetarily Sovereign (it creates its own sovereign currency), Japan remains an economic powerhouse with high living standards. ”

Japanese leaders wish they would point somewhere else.

Shinzo Abe, the Japanese prime minister, has dismissed the theory as “simplistic.” Finance Minister Taro Aso described it as “very dangerous.” And Haruhiko Kuroda, the head of Japan’s central bank, called it “extreme.”

Monetary Sovereignty saved Japan’s economy.

Had Japan been monetarily non-sovereign, like the euro nations or like cities, counties, and states, the Japanese economy would be shattered, and the Japanese people would be destitute.

Perhaps, Mr. Abe would respect something more complex than: “Adding yen to the economy helps prevent recessions” and “Monetarily Sovereign governments never can run short of their own sovereign currency.

Rather than embrace an idea that could explain or even justify the country’s situation, Japan is furiously debating it.

Lawmakers to Mr. Abe’s left are citing the theory — known as M.M.T. — to denounce his plan to raise taxes on the country’s consumers.

On the right, members of his own party have tried to link his policies to the theory, accusing him of running up gargantuan debts the country can never repay.

Japan could repay all of its debt tomorrow, if it chose. Like all Monetarily Sovereign nations, it has the unlimited ability to create its own sovereign currency.

Imagine you owned a legal, dollar-printing press. How many dollars of debt could you repay? The answer, of course, is: Infinite.

According to economics textbooks, when deficits grow, inflation and interest rates should grow along with them.

That is not what has happened in countries like the United States that racked up huge government debt after the global financial crisis in 2008.

Instead, prices and borrowing costs have remained low.

The textbooks are wrong, as both Japan and the United States have proved. There is no relationship between today’s deficits (high) and inflation (low).

In the United States, politicians from both parties have begun to question decades of consensus that government debt is bad. President Trump’s tax cuts have widened the deficit.

Proposals floated by Democrats for universal health care and investments in renewable energy could make it even bigger.

“Have begun.” I’ve been questioning it for 20 years. Other economists have questioned it even longer.

Trump’s tax cuts have widened the deficit, yet inflation remains low and growth continues. Those are facts, not economic hypotheses.

Sadly, those proposals have been floated by politicians who do not have the courage of their convictions. They still try to answer the question, “How will you pay for it?” by advancing a complex, convoluted “solution,” in which federal deficits do not increase.

The numbers make budget hawks nervous. But proponents of modern monetary theory say they should take a deep breath.

Deficits are a good thing, they say, as long as the government doesn’t create inflation by pushing the economy too far, too fast.

“Pushing the economy” is not the way inflations are created. Price increases are caused by shortages, usually shortages of food and energy, not by increased government spending.

In fact, increased government spending can cure inflations if the spending is devoted to curing the shortages.

If there is a food shortage, there will be inflation. If the government responds to the food shortage by using deficit spending to purchase food from abroad and distributing it to the people, the inflation will end.

The idea has provoked criticism from established economists like Paul Krugman, the Nobel laureate and columnist for The New York Times, as well as Lawrence Summers, the former Treasury secretary.

Government spending may be necessary when times are tough or to meet national priorities, they argue. But the bill will eventually come due.

In the meantime, all of that spending could crowd out the private sector and make it harder for governments to borrow money in the form of bonds. Besides, they say, M.M.T. remains largely untested.

Krugman and Summers simply do not know what they are talking about. “The bill will eventually come due” makes no sense. There is no “bill” for deficit spending.

The federal government can deficit spend forever.

And the federal government, which has the unlimited ability to create dollars, it has no need to borrow, and indeed, the U.S. government does not borrow.

What erroneously is termed “borrowing,” really is the issuance of Treasury securities (T-notes, T-bills, T-bonds) which do not provide spending money to the government.

When you buy a T-bill, you deposit dollars into your T-bill account. There you dollars remain, accumulating interest, until maturity. The U.S. government does not use the dollars in your T-bill account.

Proponents of the theory disagree (with Krugman and Summers). It has been tested, they say. In Japan.

The country is their equivalent of Charles Darwin’s Galápagos Islands: a natural experiment that reveals a fundamental truth about the way the world really works.

Since the country’s boom ended in the early 1990s, Japan has borrowed deeply. Currently, its debt level is approaching 250 percent of its annual economic output (GDP). Critics say it is an economic basket case.

Despite all that, Japanese inflation and lending rates remain low. In fact, some bond rates are negative, meaning Japan can profit when it borrows money.

Its standard of living remains competitive with those of the United States and other developed countries.

Negative bond rates result from the mistaken idea that low rates are stimulative of negative rates really are stimulative. Utter nonsense. High rates force the government to pump more interest money into the economy, and that is stimulative.

Low rates are unprofitable for lenders, and because lending creates money, negative discourage lending, so negative rates are recessionary.

And because Japan is Monetarily Sovereign, it has no need to make a profit. It can create all the yen it needs, at the touch of a computer key.

Modern monetary theory explains it all, according to Bill Mitchell, a professor of economics at the University of Newcastle in Australia and one of the theory’s founders. He has been studying Japan since the 1990s.

“It is my laboratory,” he said, calling the country “a really good demonstration of why mainstream macroeconomics is wrong.”

Briefly stated, the theory holds that a country controlling its own currency like the United States and Japan cannot go broke no matter how much it borrows.

Government spending puts money in the hands of people and businesses. In other words, a government deficit is effectively a private sector surplus.

It’s not just a belief; it’s an absolute fact. A federal deficit adds money to the economy, which grows the economy. It is simple arithmetic.

To spur growth, the theory says, governments should run up deficits to give consumers and companies more to spend. If leaders need more money, they can print it.

That is basically what Japan has done on and off for the last 20 years. Its economy boomed after World War II. Then the go-go 1980s ended with a bust. The economy stagnated. Deflation drove down prices and corporate profits.

The debt “Henny Pennys” are so spooked by non-existent inflation that they forget about the real curse: Deflation.

Japan borrowed and spent to get growth going again.

When that didn’t work, it pioneered techniques, like quantitative easing, to inject money into its financial system. The idea — basically printing lots of money and spending it on large-scale asset purchases — went on to be used by central banks around the world to deal with the effects of the global financial crisis.

The measures were necessary, but Japan’s conservative policymakers were not happy about them, according to Gene Park, an expert on the Japanese economy at Loyola Marymount University in Los Angeles, and they were soon dropped.

Translation of the above: Adding yen to the economy cured the deflation and grew the economy. It worked.

But it violated the beliefs of the mainstream economists, so they stopped doing what worked.

Similarly, deficit spending cured America’s 2008 “Great Recession” (as well as the 1929 “Great Depression), so again, the economists railed against what works, and try to install what doesn’t work: Austerity.

That has led to 80 years of complaints that the growing federal debt is a “ticking time bomb,” — while the American economy has grown — a complaint that continues to this day.

Economics may be the only science in which the mainstream denies what always works and insists on implementing what never works.

“The ideas came from outside of Japan, and they only tried them when they were backed into a corner,” he said.

Still, inflation did not budge. Interest rates stayed low.

Of course.

Inflation is not caused by deficit spending. Inflation is caused by shortages. Period.

While Mr. Abe’s policies may resemble those put forward by supporters of the theory, they differ in one major way: Since his election, he has pledged to find a way to pay down the debts run up under his administration.

Mr. Abe is following the usual mainstream economists’ dictum: If it works, stop doing it, and if it never works, keep doing it.

To fulfill that promise, Mr. Abe has said, he will raise Japan’s consumption tax to 10 percent from 8 percent by October.

The pledge is controversial with lawmakers on both the left and right.

A similar tax increase in 2014 may have pushed Japan’s already sluggish economy into recession. This time, the economy has already been weakened by China’s slowing demand for its goods.

Does it get any dumber than that? The economy is sluggish, so let’s take money away from consumers.

Many in Mr. Abe’s party also oppose the tax increase, arguing that the government should address the deficits once Japan’s economic condition has improved and the country is better able to withstand the shock.

In the meantime, they fear that if Japan continues piling up debt, it will be even harder for the country to climb back out.

“A crash is going to come at some point,” said Kohei Otsuka, an opposition member of the Upper House finance committee who has warned about the country’s debt for over two decades, “and then we’ll see that M.M.T. didn’t have any merit after all.”

Get it? We know that cutting deficits will create a shock, so let’s do it. And we have been warning about debt for over two decades, and nothing bad happened, so that is evidence we have been right.

Only in economics could that be considered logical.

Pavlina Tcherneva, an associate professor of economics at Bard College in New York and part of a core group of M.M.T. theorists, said the debate demonstrated an important point: While the Japanese case may validate the ideas, there is a difference between the theory of M.M.T. and its practice.

“Japan has been the clearest case of some of the things that M.M.T. has been saying,” she said, but “that doesn’t guarantee you good policy.”

Yes, stunningly in the weird world of economics, where intuition rules over proven fact, you even can get statements of belief in deficit spending, but then the leaders cannot believe what their eyes tell them, and they regress into the nightmare world of austerity.

In the past, economists wrote textbooks that claimed: “Excessive government spending causes inflations.” This became dogma, when Weimar Republic, Zimbabwe et al had hyperinflations that corresponded to currency printing.

So when the likes of Krugman and Summers went to college and learned that deficits cause inflation, they not only were indoctrinated, but continued the flow of false information to young people, who themselves indoctrinated even younger people.

And so it went, with successive generations of economists ignoring the facts on the ground, and disseminating the false beliefs.

The facts are:

  1. The currency printing does not cause the inflations; the inflations caused the currency printing, because the leaders did not understand that shortages caused their inflations. So out of ignorance, they printed currency to keep up with inflation.
  2. Economic growth requires money growth. Deficit spending causes money growth. Therefore, economic growth requires deficit spending. Lack of money growth causes recessions and depressions.
  3. Monetarily Sovereign governments cannot run short of money with which to pay any size obligations.Oh, and one last point that has become an issue, lately’
  4. Deficit spending is not “socialism.” Socialism is government ownership and control, not mere spending.

For example, the U.S. Veterans Administration is socialism. Medicare is not.

Economics may be the only “science” in which the lay public believes it knows everything, and the university-trained scientists rely more on intuition than on facts.

What next, economists? Do you recommend we apply leeches to cure anemia?

The great “socialism” fakeout Friday, Jul 27 2018 

Either by ignorance or intent, those opposed to anything progressive, paint every government spending initiative as “socialism.”

So let’s begin by erasing that bit of misdirection:

Merriam Webster, Definition of socialism
1 : any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2 a : a system of society or group living in which there is no private property
b : a system or condition of society in which the means of production are owned and controlled by the state
3 : a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done

In short, socialism means government ownership and administration, not merely government spending and aid.

One would think (hope) that the media would understand that before writing negative articles about America’s so-called “socialism,” but the desire to misinform the public on behalf of the rich 1% seems eternal.

Here are excerpts and comments from a typically wrongheaded article from the 7/27/18 issue of the Chicago Tribune:

Spoiled children of America drawn to socialism
Cal Thomas

For the current generation, it appears one thing is more seductive than sex — and that’s socialism.

Sen. Bernie Sanders, I-Vt., and 28-year-old Alexandria Ocasio-Cortez, winner of a New York Democratic primary, are the old and new faces of socialist America.

Their platforms, it appears, hinge on the concept of shared wealth — in other words, handing out free stuff to just about everyone.

Not only does Mr. Thomas express his disdain for fact by claiming “the current generation” is “socialist,” but he also exhibits disdain for narrowing the Gap between the rich and the rest.

He and the rich, dislike “shared wealth.” In his dystopian world, the poor should stay poor, or perhaps become even poorer. How dare they wish for more?

And seemingly, only the rich deserve “free stuff” in the form of massive tax breaks and business subsidies, unavailable to us of the riffraff.

Note to Mr. Thomas: “Free stuff” is not “socialism.” Free stuff is what the federal government provides to the populace, every time it deficit spends.

1. The “free stuff” includes military protection, roads, dams, and bridges, research and development, along with Social Security, Medicare, Medicaid, aids to education, poverty aids, and thousands of other benefits that provide the reasons for the government to exist.

2. The “free” part comes from the fact that our federal government is Monetarily SovereignIt has the unlimited ability to create its sovereign currency, the U.S. dollar. The federal government never can run short of dollars.

(If you doubt this, try to learn how many dollars the federal government has.)

Thus, it does not need to ask anyone for the dollars it creates at will. It doesn’t need to ask you for tax dollars and it doesn’t need to ask China for dollars. And when the government receives those dollars, it doesn’t use them.

U.S. dollars sent to the U.S. government simply disappear from any definition of the world’s dollar supply. Effectively, dollars received by the U.S. government are destroyed.

3. And merely handing out or spending dollars is not “socialism.” It is what the federal government is designed to do. It is the way government functions.

Mr. Thomas’s primary concern seems to be that the not-rich 99% might receive a decent share of federal spending. But rather than honestly stating that concern, he hangs the “socialism” pejorative on it.

Continuing with excerpts from his article.

How far we’ve come from JFK’s admonition not to ask what your country can do for you, but what you can do for your country.

Today, for many, it’s all about what you should expect from your country with little or no reciprocity.

JFK’s admonition was silly on its face. Government is a collection of laws — a tool invented by people.

The entire purpose of government is to benefit people.

Kennedy’s overly poetic line is akin to saying, “Ask not what your hammer can do for you; ask what you can do for your hammer.” Or perhaps more accurately, “Ask not what the law can do for you; ask what you can do for the law.

In a word, senseless.

And yes, the tool should not expect or be given “reciprocity.”

It is undeniable that capitalism has raised more boats than socialism has sunk. Yet, socialism’s appeal continues, despite historical and contemporary evidence that it delivers a bad deal for those who embrace it.

Every government has some elements of socialism, i.e government ownership and control. The federal government owns and controls the military, the FBI, CIA, federal highways, NASA, and a good deal of acreage, particularly in the West.

But those comprise only a small part of the giant U.S. economy, and are a long, long way from a “socialist” government.

In an article for Reason magazine in May, Steve Chapman, a columnist and editorial writer for the Chicago Tribune, referenced a University of Chicago GenForward Survey of Americans, ages 18 to 34.

The survey found that “62 percent believe we need a strong government to handle today’s complex economic problems.” Only 35 percent said “the free market can handle these problems without government being involved.”

Anyone who thinks “the free market can handle complex economic problems without the government being involved,” is a fool.

Is there any time in human history when the anarchy, Mr. Thomas seemingly favors, has benefitted the people?

The survey, noted Chapman, found that “Overall, 49 percent hold a favorable view of capitalism — and 45 percent have a positive view of socialism,” with socialism scoring higher approval among African-Americans, Hispanics and Asian-Americans.

Note the typical, right-wing dig at those “lazy” African-Americans, Hispanics and Asian-Americans.

Sixty-one percent of Democrats have a positive view of socialism, which is not surprising, while 25 percent of Republicans favor it, which is a surprise.

Nothing is surprising when people are asked questions about something of which they know nothing. The respondents were random people, 18 to 34. What percent of those young people know what “socialism” and “capitalism” are?

It is a ridiculous survey, comparable to asking 18-34-year-olds whether they would prefer a “noocracy” or a “kritarchy.” The sole effect is to demonstrate the ignorance of economics lingo by an age group’s (if one can call 18-34 a “group”) .

Continuing with the article:

I have at least three takeaways from this.

Related image

Mr. Thomas’s “spoiled rotten” poor who, seduced by socialism, have not sacrificed blood, sweat and tears.

The first is that it’s likely most of those who favor socialism have never lived in a country where it is practiced.

A few months in Venezuela might be the perfect cure.

Second, people who claim to prefer socialism to capitalism are probably reaping capitalism’s benefits.

This group of misinformed comrades includes parents who gave their pampered millennials a lifestyle they likely would never have enjoyed under a socialist regime.

The third takeaway is that those who favor socialism over capitalism and socialist countries over America are spoiled rotten.

They are part of a generation that has never had to serve in the military and, I would venture to guess, do not know anyone who is serving or has served, other than maybe a grandparent, whose values many seem to have rejected.

People seduced by socialism have likely not had to sacrifice much for their country.

They seem to take it for granted that the freedoms they enjoy, even the freedom to believe in a political and economic system that is anti-freedom, dropped from the sky and were not achieved by the hard work, blood, sweat and tears (which they think is the name of an old rock group) of others.

I have three takeaways from Mr. Thomas’s rant;

First he, like the respondents, not only has no idea what socialism is, so to claim that Americans actually want socialism is disingenuous. No Americans want a government similar to the dysfunctional, Venezuelan government — and Thomas surely knows it.

Second, Mr. Thomas strangely equates economics knowledge with serving in the military and with not being “spoiled rotten.”

I do not know what percent of U.S. soldiers understand the true meaning of socialism, though if they did, they would understand that they receive their pay and instructions from the most socialist organization in America — completely owned, funded, and administered by the federal government.

I also do not know why Mr. Thomas considers soldiers less “anti-freedom,” and less “spoiled rotten” than the rest of America’s workers.

Soldiers do exactly as they are directed and live exactly where they are told, and in return are given room, board, and education. How “free” and “unspoiled” is that?

Third, Mr. Thomas seems to think that people receiving benefits from the government do not have the moral right to those benefits, because they have not worked hard nor sacrificed blood, sweat, and tears.

Really? Yes, that is the right-wing mantra: The poor don’t work as hard as the rich. Does it get any more foolish than that?

And finally, we come to the typical right-wing, pseudo-moralistic rant about the poor receiving federal benefits:

Socialism stifles incentive and makes people dependent on government, not themselves, which appears to be the liberal ideal.

Some would rather get a check than earn one. Look at the TV ads advertising toll-free numbers, free shipping and other free incentives, which are not free at all. Their cost is simply added to the product you purchase.

It’s enlightening to learn that self-reliant Mr. Thomas does not depend on government. Apparently, he will refuse protection from our military and from his local police and fire departments, and from the CIA, FBI, NSA et al.

He will refuse Social Security benefits and Medicare benefits. He will refuse to ride on the highways, streets, and roads built by governments. He will not take medicines or eat foods judged safe by government agencies.

He will not fly in airplanes, because they all are supervised by a federal agency.  His children will not attend school grades 1 – 12, most of which are government owned and directed. Nor will any attend federal military colleges.

He will refuse FDIC protection for his money, and indeed, he will not use U.S. dollars, for they are created by the federal government.

And of course, he never, never will use a toll-free number or accept that free shipping he loathes.

The list goes on and on about all the things Mr. Thomas will forego to maintain his unique, manly, and moral self-reliance.

And just when you believe his nonsense has reached its apex, Mr. Thomas ends his article with a bit more:

Socialism is little more than mutually shared poverty, a version of “spreading the wealth around” with government taking from the productive and giving to the nonproductive.

Progressivism is not socialism, and absolutely is none of the above. Rather than mutually shared poverty, it is mutually shared prosperity. (See The Ten Steps to Prosperity.) It does not involve the government taking from the productive (presumably the 1%) and giving to the nonproductive (we folks of the 99%.)

But Mr. Thomas acts clueless about that, though at the very end of his article, he makes one good point:

Do Democrats really want to embrace socialism heading into the next two elections? If so, they can expect the same defeats they have suffered in the past — think George McGovern and Walter Mondale.

Each thought the American people were taxed too little and that big government was the answer.

It isn’t, and it never will be.
Tribune Content Agency
caeditors@tribpub.com

Messrs. McGovern and Mondale were not socialists, nor did they think the American people were taxed too little, two common, right-wing lies.

They believed the gap between the rich and the rest is too wide, and that the federal government should obey its mandate of benefitting the people by narrowing that gap.

This does not require increasing federal taxes for the simple reason that federal taxes do not fund federal spending.

Because the federal government cannot run short of U.S. dollars, it does not need taxes. Even if all federal taxes were $0, the federal government could continue spending forever.

But Mr. Thomas is right about one thing: The public has been misled, and does not understand the meaning of “socialism,” “capitalism,” and “Monetary Sovereignty.”

So progressives wrongly are tarred with the “socialist” label, which costs them votes.

Lying that federal benefits are socialism is the way the wealthy keep the 99% down, and Mr. Thomas is just a pawn in their chess game.

The GINI ratio measures income inequality. Higher ratio = more inequality.  US inequality is the highest in 50 years, and perhaps ever.

In summary, equating progressivism with socialism is a Big Lie, the sole purpose of which is to widen the Gap between the rich and the rest.

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

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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.

2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE
(H.R. 676, Medicare for All )

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.

5. SALARY FOR ATTENDING SCHOOL
Salary for attending school. 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.

6. ELIMINATE FEDERAL TAXES ON BUSINESS
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.

8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME.
(TROPHIC CASCADE)
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.

MONETARY SOVEREIGNTY

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