A Challege: Show me where I’m wrong.

Do you love learning?

Even though I passed right through 88, and am roaring toward 89, I still do, which means I love being shown where I’m wrong. How else can anyone learn but to be given new beliefs that replace former beliefs?

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Never be too old or too sure to learn.

So here is a challenge to you, my readers, plus the MMT gang (Stephanie, Warren, Randy et al.), CRFB, Fox viewers, mainstream economists, journalists, politicians of all stripes, and all others who may believe some or all of what I believe is wrong.

You may agree with me on many things but disagree on certain details (Hello MMTers). I’d love to hear from you.

Some of you may disagree with everything I write.

I’d love to hear from you (except from those whose main argument consists of comparing me to excrement. No learning there; I’ve heard it all).

Some of you merely may have questions, not necessarily disagreements, about what I believe. Send me your questions and I will try to answer those I feel may be educational.

Some of you agree with everything I write. Gotta love you.

Here’s the challenge: I will list certain things I believe. You tell me where I’m wrong, and this is the important part: Show me your data.

I’ll print worthwhile comments along with whether I feel you’ve made a valid point(s). Where appropriate, I’ll provide data or other evidence to substantiate my point. Or, I’ll simply agree with  you.

This way, we all can learn, and it will be fun.

I believe:

I. Our Monetarily Sovereign government never can run short of its sovereign currency, the U.S. dollar. It can pay for anything costing dollars, instantly, simply by pressing computer keys. This compares to city, county, and state governments, which are monetarily non-sovereign, and do not have a sovereign currency, so can and often do run short of dollars.

In the same vein, euro nations like Germany, France, Italy, Greece et al, do not have sovereign currencies, so they can and do run short of euros. The European Union is Monetarily Sovereign so it  cannot run short of euros.

II. Federal taxes do not fund federal spending. The primary purpose of federal taxes is to control the economy by taxing what the government wishes to limit and by giving tax breaks to what the government wishes to encourage.

Even if the federal government collected $0 taxes, it could continue spending, forever. In fact, the Treasury destroys all the tax ollars it receives, and orders new dollars to pay for goods and services.

A secondary (though not necessary) purpose of federal taxes is support demand for the U.S. dollar by requiring dollars to be used for tax payments.

III. The Federal government does not borrow dollars, nor does it use the dollars that are deposited into T-security accounts. After being deposited, those dollars remain the property of the T-security account holders and are not touched (including the interest dollars deposited by the government.)

The federal government easily could operate without accepting any T-security dollars. The purposes of T-securities are to provide a safe storage place for unused dollars (which stabilizes the dollar), and to aid the Federal Reserve in controlling interest rates.

IV. The federal deficits and debt are not, nor will they ever be, “unsustainable.” That word, “unsustainable,” is used by Libertarians and other debt hawks, yet never have I seen what it supposedly means. Does “unsustainable” mean the government will be unable to pay its bills? If not, what exactly does it mean?

The “debt ceiling” is an artifact of economic ignorance and should be eliminated. It’s sole purpose is to provide an excuse for outrage by the political party not in power. As such, it is a danger to America if used by traitors in Congress.

V. Federal deficit spending never causes inflation. Every inflation in history has been caused by shortages of key goods and services — most often oil and food — not federal deficits.

 Today’s inflation was caused by OPEC and Russia related shortages of oil, and by COVID-related of a litany of products and services.

The old saw, “Inflation is too much money chasing too few goods” is half wrong and half right. It should read, “Inflation is too few goods and services.” Period.

VI. Federal spending does not cause the above-mentioned shortages. Inflations tend to come suddenly. Federal spending does not cause a sudden increase in oil shortages (producers like OPEC, Russia and even America can and do suddenly contract production.)

Similarly, federal spending does not cause people suddenly to eat more food, thereby causeing a food shortage.

Thus, federal deficit spending does not cause inflation.

VII. All hyperinflations — pre-WW2 Germany, Zimbabwe, Argentina, et al. have been caused by shortages, not by government spending. The illusion of “excessive” spending (the infamous currency in a wheelbarrow) is created by an unknowledgable government’s poor response to inflation — printing higher denominations of currency rather than acquiring and distributing the scarce products and services.

VIII. Recessions are caused by reduced federal deficit spending and are cured by increased deficit spending to acquire and distribute the scarce products and services.

IX. Depressions are caused by federal surpluses and “balanced budgets,” and are cured by deficit spending.

X. The federal government can and should fund no-deductible, comprehensive Medicare coverage to every man, woman and child in America.

IX. The federal government can and should fund Social Security benefits for every man, woman, and child in America.

X. The federal government should fund all education from pre-K through post-college-grad, while paying people to attend school. The pre-K through 12 financial burden should be taken from the monetarily non-sovereign cities, counties, and states and paid by the infinitely solvent federal government.

XI. Benefits from the federal government do not dissuade people from working. The vast majority of Americans wish to increase their incomes and/or move up the income/wealth/power scale, so they will work to augment whatever they receive from the federal government.

XII. All benefits should go equally, to everyone, rich or poor. This eliminates the onerous task of monitoring.  incomes.

XIII. Gap Psychology (The desire of those near the top of any social scale to distance themselves from those below, and the desire of those below to approach those above) is the prime driver of bigotry, poverty and street crime in America. Curing those social problems will require dealing with Gap Psychology.

XIV. Gold, silver, or any other physical substance never were money, nor have they ever “backed” money nor provided safety for money. They merely are products the federal government periodically decides to purchase or sell at prices stipulated by the whim of the federal government.

If I were writing a book, every paragraph, I – XIV, would warrent a separate chapter and supporting data. Instead, I’ll address your comments and questions, and most importantly, I’ll provide supporting data, as I hope you will.

Hoping to receive many objections, so we all can learn.


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.




Who wants you to believe that nonsense? The rich, of course. They want to widen the income/wealth/power Gap between them and you — and REASON is happy to oblige.

Let’s begin with the headlines:

Inflation Means Interest Rates Could Rise. Higher Interest Rates Will Make the National Debt More Expensive.
The Fed may soon get serious about hitting the monetary brakes to slow the economy.

They say the so-called “national debt” will be “more expensive.”

The definition of “more expensive” is: An entity having infinite dollars (the U.S. governement) will pump more stimulus dollars into the private sector (aka “the economy’), thus not only helping the private sector grow, but also accomplishing many important economic tasks.

That’s what REASON means by “more expensive.”

10-Year US Treasury Note - Guide, Examples, Importance of 10-Yr Notes
The U.S. government can’t run short of these, 
One1 REAL ONE Dollar UNCIRCULATED United States Gem Mint image 1
or these,
United States Treasury Check For Either A Federal Tax Refund Or Social Security Payment Isolated On White Stock Photo, Picture And Royalty Free Image. Image 137893207.
or these.

The Treasury bond, the dollar bill and the Treasury check all are titles to dollars. Just as a car title is not a car, and a house title is not a house, the above three titles are not dollars. They merely represent dollars, which have no physical existence.

The so-called “national debt” refers to the total of dollars deposited from non-federal sources into T-security (T-bills, T-notes, T-bonds) accounts.

They are not debts of the federal government, which neither needs, uses, nor even touches the dollar in those accounts, except to return them upon maturity. Unlike real debts, the “national debt” is not a financial burden on the federal government or on taxpayers.

The sole purposes of the “national debt” are to provide a safe parking place for unused dollars (thus helping to stabilize the dollar), and to help the Federal Reserve control interest rates (by setting a base rate).

Recent comments from Federal Reserve Chair Jerome Powell hinted that the Fed may soon get serious about hitting the monetary brakes to slow the economy.

Until recently, inflation was described as transitory. But at some point, that story has to change.

For REASON, economic growth is bad, so the economy must be “slowed.” Actually, for REASON, government and all government spending are bad, and there is no acceptable level of either.

Price levels likely will rise into 2022. The all-item consumer price index (CPI) was up more than 5 percent on a year-over-year basis for July, August, and September. The increase for October was 6.2 percent—the largest jump since 1990.

The Fed considers 2 percent inflation to be its goal. Obviously, there is a large gap between that and what we are seeing.

The inflation rate is reflected in interest rates that borrowers must pay, especially for longer-term debt. Lenders hope to be paid back with at least as much purchasing power.

If they believe inflation will tick away at 4 percent, interest rates will tend to rise. Higher interest rates mean higher interest costs on all forms of public and private debt.

As a result, mortgage rates will rise, all forms of construction will suffer, and businesses will postpone making large investments in plants and equipment.

REASON, which wants the economy to “hit the brakes,” suddenly becomes conserned about construction, and businesses investing in plants and equipment, thus criticizing both sides of the same stimulus question.

Now consider the public debt—especially the federal debt, which ballooned as a result of large budget deficits in recent years. (In 2020, the federal government raised $3.4 trillion in revenue and spent $6.6 trillion.)

Translation: The federal government pumped $3.2 trillion net growth dollars into the economy, and you should be shocked.

The interest cost of the national debt was $253 billion in 2008, equivalent to $325 billion in 2021 dollars; it remained around that level through 2015.

Even though the debt doubled in those years, sharply falling interest rates and low inflation helped contain costs.

But that was yesterday. With today’s higher inflation and rising interest rates (perhaps with more to come), the Congressional Budget Office (CBO) estimates that the interest cost of public debt is $413 billion in 2021, stated in current dollars.

Obviously, any dollar spent on interest cannot be spent on government benefits or services.

REASON, demonstrates its ignorance about federal financing, by implying that if the government spends dollars on interest it doesn’t have enough dollars to spend on benefits or services (which REASON hates, anyway).

Of course, if REASON had evan an ounce of knowledge about federal financing, they would admit that the federal government has infinite dollars to spend, so interest payments do not in any way preclude other spending.

Looking ahead, the CBO expects more of the same. For 2026, it projects that the interest rate on 10-year Treasury bonds, currently 1.5 percent, will be 2.6 percent, and that the interest cost of the federal debt will rise to $524 billion.

For 2030, the projections are 2.8 percent and $829 billion, respectively, all stated in current dollars for the noted years.

In other words, the federal government will pump $524 billionand $829 billion interest into the economy in 2030.

Now we are talking about real money. To put $829 billion into perspective, in 2020 the United States spent $714 billion on the military, $769 billion on Medicare, and $914 billion on all nondefense discretionary spending, all stated in 2020 dollars.

Back-of-the-envelope calculations strongly suggest that some spending categories will have to give.

The above-mentioned “back-of-the-envelope calculations neglect to mention that the federal deficit spending is not constrained by lack of dollars. It is infinite.

Finally, we come to the heart of the issue.

The United States is experiencing an inflationary surge caused fundamentally by the injection into the economy of trillions of dollars—stimulus and other spending—without an accompanying rise in production of goods and services that might be purchased with the new dollars. It’s rising demand plus troubled supply.

All inflations are scarcity-based. None are spending-based. Increased deficit spending to cure shortages would end the inflation.

The government has been spending massively for many years, without the long-feared inflat

These forces will be with us until the stimulus dollars work their way through the economy and the federal government stops printing more money.

When the federal government stops “printing” (technically the wrong term) money we will have a recession, just as we always do when money creation stops.

Reductions in federal debt growth lead to inflation
Reductions in federal “debt” growth (blue line) cause receissions (gray vertical bars) which are cured by increases in federal “debt” growth.

As the process continues, our government—the source of inflation in the first place—will face hard choices when paying for past and future deficits and rising debt. 

The federal government pays for all its spending, promptly. Yet, the so-called federal debt is composed of T-securities that are as much as 30 years old. They pay for nothing.

All federal obligations are paid for immediately. The government faces no “hard choices” when paying its debts. It has the infinite ability to create dollars.

The federal government cannot unintentionally run short of dollars.

The so-called “debt is about $25 trillion. The U.S. government does not owe anyone or any thing $25 trillion.

The government could pay off the $25 trillion of T-securities today simply by returning the $25 trillion dollars already deposited into T-security accounts. No burden on the government. No tax dollars involved. No taxpayers burdened.

BRUCE YANDLE is a distinguished adjunct fellow with the Mercatus Center at George Mason University, dean emeritus of the Clemson College of Business and Behavioral Sciences, and a former executive director of the Federal Trade Commission.

This does not speak kindly of the Mercatus Center and GME or of the FTC, who seem to be devoid of information about federal financing.

–The G7’s backwards thinking about the Japanese yen. Save Japan from its friends.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.

Once again, the mainstream economists have things backwards. I recently came across this article:

Is G7 yen intervention a good idea? by MICHAEL SCHUMAN, 3/18/2011
In a highly unusual step, the G7 agreed on Friday morning to coordinate their efforts to control the sharp rise in the Japanese yen. The decision today was prompted by a sudden surge of strength by the yen that by Thursday morning (in Tokyo) had pushed the Japanese currency to a record high against the U.S. dollar. Though the yen had subsequently pulled back a bit, it was still at a level worrying to Japanese policymakers. Japan freaks out when the yen strengthens, because it makes Japanese exports more expensive in international markets and thus can dampen economic growth.

Last week, I posted about why charitable contributions to Japan were meaningless. Now, the economists want to facilitate Japanese exports. Before you read any further, stop and think about this question: What is the purpose of Japanese exporting? The answer is not what you may have been told.

The purpose of Japanese exporting is to import yen. Japan doesn’t want to expend massive amounts of time, energy, labor an raw materials just so they can supply us with cars, computers and television sets. The Japanese are a nice people, but they’re not that generous. No, the sole purpose of expending time, energy, labor and raw materials is to acquire yen.

But, Japan is Monetarily Sovereign. It has the unlimited ability to create its sovereign currency, the yen. Even were Japan’s exports to fall to zero, the Japanese government could create sufficient yen to support its economic growth. Japan has no need to import yen (i.e. export goods and services).

The G7 (soon to be overtaken by the E7, but that’s another story) is using an obsolete gold-standard philosophy in a post-gold-standard world. Today, Monetarily Sovereign nations do not need to import their sovereign currencies. Stimulating Japan’s yen imports is like stimulating rain over the ocean.

And in any event, Japan soon will create and spend trillions of yen to rebuild its nation. That massive influx of yen will weaken the yen, and the G7 can breathe a sigh of relief. It also will engage in an orgy of back patting, for accomplishing something not only unnecessary, but something that would have happened naturally.

But what can you expect from a group that still has no concept of Monetary Sovereignty, perhaps partly because three of the “7” (France, Germany, Italy) were foolish enough to surrender their own Monetary Sovereignty.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity, nor grow without money growth.


–Interview with Abby Romaine on WNZF. Is she the smartest lady on the air?

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.

Today, Abby Romaine again interviewed me on her WNZF show, Center: Uncensored. From what I can tell, Abby is the only radio broadcaster in existence who understands Monetary Sovereignty. This is particularly frightening, as Monetary Sovereignty is the basis for all modern economics.

The two things I puzzle about: How did she come to understand, and why is she the only one? Yes, there are MMT economists who get it, but if anyone out there knows of another media person, whether radio, TV or newspaper, who understands Monetary Sovereignty I sure would like to know his/her name. The editors of the WSJ and the Chicago Tribune don’t get it. No newsperson gets it. No columnist gets it. But Abby does.

Those interested in writing to this brilliant lady can reach her at: abby.romaine@gmail.com

Anyway, today she and I discussed Ron Paul, perhaps the nation’s leading architect of economic ignorance, and the Tea Party (formerly known and the Republican Party) and John (“America is broke”) Boehner, and the deficit and the debt.

I enjoy talking with Abby, because I like talking with smart people, but I probably mouthed off too much (Old people do that). My only concern is that Abby gets it. She understands that a growing economy requires a growing money supply, and federal deficits are the federal government’s method for growing the economy. She understands that federal debt could be eliminated tomorrow, simply by crediting the bank accounts of T-security holders. She understands that federal debt is not the accumulation of federal deficits, but rather that debt could exist without deficits and vice versa. And she understand that a nation with the unlimited power to create money never can be “broke.”

Why am I concerned? Because not being a radio guy, I don’t know if listeners would rather hear two people argue, and she and I don’t argue. She does play excerpts from Tea Party speeches, and perhaps that provides enough counterpoint. But Ron Paul? This guy is so ridiculous, even staunch conservatives find him an embarrassment. Maybe she should play some excerpts from an Obama speech. He at least sounds more rational, though he too is ignorant about our economy.

By the way, I thought Obama, coming from the rough ‘n’ tumble of Chicago politics would be endowed with major testosterone. But, he seems to be wimping out. The Tea (Republican) Party has a plan: Cut federal spending, which will slow the economy. Obama and the Democrats will be blamed for the poor economic performance, and in 2012, the Teas will be able to foist their own guy or gal on the American public, which by the way is exactly how the Teas won the House last year.

Never mind that executing this plan will hurt America. That isn’t a Tea concern. Cynically, they are interested solely in power. Paraphrasing my question of Abby: “What do you call American citizens who knowingly hurt America?” Then I answered my own question: “I’d call them traitors.” The irony is, the Teas love to wrap themselves in the America flag.

Second thought: That’s not irony; it’s marketing. Address the negative head-on, and turn it into a positive. Remember when cigarette advertising featured doctors telling us how healthful smoking is? Or Volkswagon bragging about how ugly the Beetle was? The Teas make a virtue out of cutting the benefits Americans enjoy.

Anyway, Obama has allowed the Teas to define the discussion. He doesn’t argue, as he should, that cutting federal spending is the dopiest idea since taxing Social Security benefits. Instead, he forlornly whines that yes, the deficit is too big, and we should cut it — only please cut it less. Just when we need leadership, we get groveling. As a Chicagoan, I’m embarrassed. Mayor Daley never groveled. He lied (They all do), but he never groveled.

If Daley were president, I suspect he’d look the reporters in the eye and say, “To cut federal spending is just, plain stupid.” And he’d be right.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity, nor grow without money growth.