Why I agree (gasp!) with Trump and the GOP — almost. Sunday, Nov 12 2017 


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

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Here is why I agree with Trump and the GOP — almost — even though he and they don’t understand exactly what they are lying about:

Deficit worries complicate path for Republican tax cuts
Reuters, By David Morgan

WASHINGTON (Reuters) – Unease among Republicans about a massive increase in the federal deficit could complicate passage of two tax-cut bills working their way through the U.S. Congress, endangering President Donald Trump’s top legislative priority.

The Committee for a Responsible Federal Budget (CRFB), a nonpartisan budget watchdog in Washington, on Friday called a Senate Republican tax plan a “fatally flawed budget buster,” likening it to Republican legislation in the House of Representatives that the House tax committee has approved.

Both measures would add $1.5 trillion over 10 years to the annual budget deficit and the $20 trillion national debt, according to congressional tax analysts.

O.K., immediately you know Trump and the GOP are wrong — for two reasons:

  1. They are worried about the increase in the economy’s money supply (aka the misnamed “deficit”), the increase that stimulates economic growth
  2. They are taking advice from the notorious “debt Henny Pennys, the CRFB, who have issued the same old warning about the debt “ticking time bomb,” year after year, for more than 35 years. During that period, the federal “debt” has risen an astounding $13 Trillion, from under $1 Trillion to $14 Trillion — and still, we wait for that “time bomb” to explode.

The so-called federal “debt” is the total of deposits in T-security accounts, which are similar to interest-paying savings accounts. 

Image result for savings account passbook

A T-security account is like a bank savings account.

When you deposit your dollars in your bank savings account, they become a debt of your bank.

Your bank owes you the dollars, but does not spend or lend your dollars.

To lend, your bank creates brand new dollars.

Your dollars stay in your account, accumulating interest until you withdraw them. Their only function is to provide legal reserves.

Similarly, when you “lend” to the federal government, you actually make a deposit in your T-security account. The government does not spend or lend your dollars. Your dollars remain in your T-security account, accumulating interest until the government pays it back.

As with a bank savings account, the government does not spend your T-security account dollars.  To pay off the “debt,” the government does not use tax dollars. It merely gives you back the dollars that currently exist in your T-security account.

The primary difference between a T-security account and a bank savings account is semantic. We call the former, “debt,” and the latter, “deposits.”

Ironically, we worry about the size of federal “debt” but not the size of bank “deposits,” though the federal government cannot go bankrupt, and banks can.

I know. I know. It makes no sense.

Nearly 10 months into his presidency, with his party in control of the House and the Senate, Trump is still without a major legislative victory.

There are two reasons Trump hasn’t had a victory:

  1. He can’t comprehend anything much longer than a paragraph. He had no idea what was in the multitude of awful “repeal & replace” Obamacare plans, so he couldn’t give Congress any guidance. Similarly, he has no idea what is in the various tax plans. He only wants to sign something, anything, no matter how terrible, so he can say he did something.
  2. The voters may be ignorant of the facts, but they are not stupid, and they can see that everything the GOP puts in front of them will take from the 99% and reward the richest 1%.

The Tax Foundation, another nonpartisan group, said the Senate plan would add $1.78 trillion to the deficit over a decade.

Translation: It would add $1.78 million more to the economy over a decade.

It estimated that over the same time frame lower taxes would expand the U.S. economy by 3.7 percent, add 925,000 full-time jobs, raise wages by 2.9 percent and generate enough new tax revenue to erase all but $516 billion of the deficit effect.

Now think very closely about the above two paragraphs. Together they tell you (rightly) that because tax cuts (i.e. deficit increases) will add dollars to the economy, they will grow the economy, add jobs and raise wages.

Those are good things, right? So if deficit spending will accomplish those good things, why is anyone opposed to deficit spending?

Here’s why:

For decades, Republicans positioned themselves as deficit hawks, refusing to raise the debt limit, opposing Democratic spending programs and warning of crushing federal debts being passed on to future generations of Americans.

The deficit Henny Pennys are afraid to admit they have been lying to you and the rest of the voters about the “dangers” of what really benefits you: Federal deficit spending.

Today, they are hung on their own lies, and will try to double-talk you into believing “federal deficits aren’t so bad after all, but anyway, there won’t be deficits” — or something.

In short, they think you’re stupid.

The tax plans now being debated represent a stark reversal, with congressional Republican leadership and tax law writers urging passage of deficit-expanding tax changes. Only a handful of Republican senators already have publicly voiced misgivings.

This is one more demonstration of the Republican Party’s utter bankruptcy. Most of them hate Trump, but are frightened to say it. And most of them know that deficits grow the economy, but are afraid to tell you the truth.

This is disgusting, even for politicians, because their lies directly harm you and the economy.

After the Senate plan was released on Thursday, Republican Senator Jeff Flake said in a statement, “I remain concerned over how the current tax reform proposals will grow the already staggering national debt by opting for short-term fixes, while ignoring long-term problems for taxpayers and the economy.”

Flake repeats the Big Lie that taxpayers will have to pay off the federal “debt” (deposits). They won’t.

Questions:

  1. Do you consider your bank’s savings account deposits to be “staggering.”
  2. Do you even know or care what those deposits are?
  3. Do you think you and your children will have to pay off those deposits?

If your answers rightfully are “No,” “No, and “No,” you similarly should not care about the federal government’s so-called “debt.”

Senator James Lankford said in a statement, “As we work on tax relief, we must also not lose sight of our responsibilities to protect the nation, provide basic government services and confront our federal debt.”

Senator Bob Corker, another Republican and a critic of Trump, did not comment after the Senate bill’s release but signaled fiscal concerns after the House issued its plan, saying he did not want tax cut legislation that added to the deficit.

And then there’s the CRFB, with its usual misstatement:

“The current tax reform debate shows Congress just can’t seem to shake its addiction to debt,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

“If tax cuts paid for by debt are signed into law, Congress will have sent a massive, budget-busting tax bill to our children to pay, and it will result only in a short-term sugar high with little to no economic improvement over the long term,” she said.

May MacGuineas, would you please shut up.  Just shut up.

You should be ashamed of yourself. Either you don’t know what you are talking about or, more likely, you have been paid to spread the Big Lie for all these years.

Either way, you will do America a great service if you simply shut up.

I agree with Trump’s and the GOP’s desire to cut taxes, and I agree with the resultant, increased deficit, simply because that would do exactly what The Tax Foundation predicted: Grow the economy, add jobs and raise wages.

What I don’t agree with is the nature of the GOP’s deficits, because as always, they favor the rich, and widen the Gap between the rich and the rest.

Instead, we should increase deficits by instituting The 10 Steps to Prosperity (below).

If Congress and the President merely took Step #1 — eliminate the FICA tax — that alone would go a long way toward growing the economy, adding jobs and raising wages, while narrowing the Gap.

So, enough! Enough with calling deposits in T-security accounts “debt.” Enough with plans that favor the rich and punish the 99%. Enough with widening the Gap between the rich and the rest.

Enough with the Big Lie.

At long last, Congress and the President, forget the political BS and do what you’re paid to do. Do what’s right for the people.

Is that too much to ask?

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

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The 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 (Economic Bonus)) 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
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

Examples of CNBC, Reuters, et al shoveling BS on your head. It’s Hollywood. Tuesday, Oct 24 2017 

Searching for an honest man

.

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

 

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Being Monetarily Sovereign, the U.S. government has the same money-creation powers as does the “Bank” in a game of Monopoly®. Neither can run short of their own sovereign currency.

Image result for Monopoly® money

If the Bank doesn’t have these . . .

If you open a Monopoly® box and discover there are no printed dollars inside, you still can play the game. The Bank simply could create an account ledger — on paper or electronic — and add new money to each player’s account whenever necessary.

Image result for four column chart

. . . it can create money from thin air with this.

The ledger could be something as simple as the piece of paper pictured at left, on which the Banker would tally a balance for each player.

Every time the Bank owed one of the players’ money  — for instance the $200 for passing “Go” — the Bank would add that amount to the player’s column.

In short, the Monopoly® Bank has the unlimited power to create new dollars from thin air — as does the U.S. government.

Both are Monetarily Sovereign.

The Bank never can be unable to pay its debts, unless the players wanted that to happen. To the Bank, no debt can be unsustainable.

You can play a full game of Monopoly® without having even one printed Monopoly® dollar in the box.

Similarly, the U.S. federal government never can run out of dollars. When it owes dollars to anyone, it simply marks up the creditor’s checking account. It has the same power to create dollars from thin air as does the Monopoly® Bank.

What then is the credit rating of the Monopoly® Bank and of the U.S. Treasury? Obviously, perfect — AAA+ or whatever the rating agency calls its highest level — a fact that makes the following CNBC/Reuters article so ridiculous.

YAHOO! Finance:
US to keep Aaa-rating after debt ceiling: Moody’s, Published 13 March 2017

Moody’s Investors Services said on Monday the United States will retain the rating agency’s top-notch debt rating as long as it meets its interest payments even if the government’s borrowing cap is reinstated on Thursday.

“While the periodic impasse over raising the debt ceiling is a credit negative feature of the country’s debt management, it has not affected the sovereign’s credit rating to date,” Moody’s analysts wrote in a research report published on Monday.

Like Moody’s, Fitch has kept its top AAA-rating on U.S. government debt.

However, Standard & Poor’s downgraded the U.S.’ rating by one notch to AA+ in August 2011.

It cited its high level of debt and uncertainty about the federal government’s ability to manage that debt load following a debt ceiling showdown.

S&P ranked the U.S. government lower than the highest rated corporation, conveniently neglecting the fact that if ever the U.S. government decided to default, the dollar would crash, and U.S. corporations would find themselves in serious financial difficulty.

The “borrowing cap” is a limit that Congress, in all its brilliance, has placed on the federal government’s ability to pay for what it already is obliged to pay.

The U.S. government does not borrow, in the usual sense. Like a bank, it accepts deposits. The so-called “debt” is the total of these deposits in T-security accounts.

The idea that the U.S. government arbitrarily, and for no reason, will decide not to pay its creditors is stupid or mendacious, even by normal Congressional standards of stupid mendacity.

If your Congressperson has voted for the “borrowing cap” (aka “debt ceiling”) you have ample proof that he or she either has a single digit IQ or is a liar. No other alternatives are possible.

As for S&P’s stated concern about “high level of debt” and “ability to manage that debt load,” one only can attribute this to duplicity approaching criminality.

While S&P may imagine a politically insane Congress spitefully refusing to pay its bills, a “high level of debt” is absolutely meaningless for an entity having the unlimited ability to add numbers to bank accounts.

The Treasury Department said last week it will embark “extraordinary measures” to meet its debt obligation if the debt ceiling goes into effect.

Year after year, the charade plays out like this:

  1. One party of Congress (Congress is a U.S. federal agency) pretends it is being frugal and prudent by enacting a debt limit, in a game of “chicken,” to prove the other party is composed of wastrels.
  2. The Treasury Department (another U.S. federal agency) goes along with the game by heroically embarking on “extraordinary measures” to keep America afloat. The “extraordinary measures” consist of rearranging payments and furloughing poor employees, while making sure that rich people and foreign nations are paid on time.
  3. The President (also a U.S. federal employee) will thunder outrage at those in the opposing party, for endangering America.
  4. Finally, when all other alternatives have been explored and rejected, the agencies of the U.S. federal government will halt the charade temporarily, by establishing a larger “debt limit,” as a prelude to a repeat of the charade the following year.

In short, the U.S. government agencies waste time and energy staging useless games among themselves. It’s all theater, to mystify an audience (you and me).

And that, folks, is why you pay Congress, the President, and the Secretary of the Treasury those high salaries and delicious perks — just like Hollywood actors.

U.S. Treasury Secretary Steven Mnuchin on Thursday called on Congress to raise the federal debt ceiling “at the first opportunity.” and announced the first of several likely cash management measures aimed at staving off a U.S. default.

Given his exalted position, Mnuchin should have said, “The ‘debt limit’ is a farce and should be ended forever.” He didn’t, nor did his predecessors. In politics, one keeps a job by going along with his bosses’ lies. Mnuchin is paid to read from the script.

Meanwhile, U.S. Senate majority leader Mitch McConnell told Politico on Thursday the United States will not default on its debt and will raise its debt limit in some fashion.

He too, should have admitted that the “debt limit,” which will require many hours of useless and senseless debate, must be eliminated. He didn’t, nor did his predecessors. He keeps his job by giving the electorate the lies they have been trained to demand.

The lies come at you from everywhere.  For instance, here is Mark Zandi, chief economist at Moody’s Analytics:

Moody’s Analytics chief economist: Why the Republican tax plan is set up to fail
Yahoo Finance, October 23, 2017
By: Mark Zandi

The Trump administration and Republican Congressional leadership want to go big on tax reform. They have proposed a broad set of changes to the corporate and personal income tax codes, including tax cuts and revenue raisers.

Remember, as you read the rest of these excerpts, that Zandi is the chief economist for Moody’s. (If he is the CHIEF ECONOMIST, one wonders what the subordinate economists are like.)

While the proposal is light on many important details, taken in total, it would not add significantly to economic growth, but it would add significantly to future budget deficits and the nation’s debt load.

The use of the words “debt load” tells you what Zandi wants you to believe: “Debt is bad.”

Never mind that the so-called “debt” merely is the total of deposits in T-security accounts, quite similar to bank savings accounts. 

Zandi wants you to believe these deposits are some sort of threat or burden. They are neither. They are deposits. Nothing more. You probably own some bank accounts. Banks love deposits. In days of yore, banks gave toasters to people who open accounts.

Businesses would be big beneficiaries of the Republican plan, enjoying an estimated net tax cut of $2.5 trillion over 10 years on a static basis—ignoring the impact of the tax cuts on the economy and thus tax revenues.

See that little phrase, “tax revenues.” Calling them “revenues” is part of the pretense that the federal government uses taxes to fund federal spending.

In business accounting, income is necessary to pay for outgo. In federal accounting, income pays for nothing. The federal government uniquely doesn’t use income.

Unlike state and local taxes, federal taxes cease to be part of any money supply measure. In short, federal tax dollars are destroyed upon receipt. The federal government creates brand new dollars, every time it pays a bill, just as the Monopoly® Bank can create brand new dollars to pay bills.

Neither the federal government nor the Monopoly® Bank needs tax dollars. Both can “play the game” with zero income.

The biggest corporate tax expense is the proposed reduction in the top marginal rate from 35% to 20% and repeal of the corporate alternative minimum tax.

Lowering the top tax rate on pass-through income and allowing businesses to reduce their tax bill by completely expensing their investment for at least five years are also costly.

To help pay for this largess, the plan eliminates business-related tax loopholes, although they are not spelled out, and even closing them all would not raise much revenue.

We’ve bolded the words “costly,” “pay for this largess,” “loopholes” and “revenue,” to demonstrate Zandi’s sly attempt to equate federal finances with state and local government, and personal, finances.

  1. Cutting federal taxes does not “cost” anyone anything — not you, not me, not the federal government. On the contrary, tax cuts put money into your pocket and mine. The federal government has no use of tax dollars. It destroys them.
  2. No one “pays for” tax cuts. Rather, we all “pay for” taxes. Reducing taxes reduces what taxpayers “pay for.”
  3. The word “largess” implies that you receive a generous gift from the government when they don’t pay taxes. The opposite is true. Tax dollars belong to you, the public, until they forcibly are taken by the federal government. If a thief fails to steal your money, you don’t consider that you have received “largess.”
  4. “Revenue” implies that the federal government has received something of value. But, in fact, while it is of value to you, it is of no value to the government. If you flush your dollars down the toilet, that is not considered “revenue” for your city sanitation department.

The big winners are the top 5% of taxpayers, with current incomes well over $300,000 per year. Taxpayers that make between $150,000 and $300,000 per year benefit the least, and would actually eventually pay more in taxes. Taxpayers making less than $150,000 will take home a modestly higher sum after-tax.

To help pay for these cuts, the plan eliminates personal exemptions except for mortgage interest and charitable giving along with most itemized deductions.

The big revenue raiser is the elimination of deductions for state and local income, sales tax and property taxes.

There are those misleading words, again: “Pay for” and “revenue.” Apparently, Zandi understands that repeating a lie makes it more believable.

Boosters of the Republican tax proposal argue that it will significantly increase economic growth,  this additional growth will generate roughly enough additional tax revenue for the plan to pay for itself.

That is, there would be large so-called supply-side effects from the tax cuts. So large that on a dynamic basis—after accounting for the bigger economy—the plan will not add to the nation’s deficits and debt.

The nation’s deficits are income for the nation’s people. Every dollar of deficit is a dollar that goes into the public’s pockets. Zandi, and others of his ilk, want you to believe that more dollars in your pocket is a bad thing.

They also want you to believe that your investments in your T-security account (aka “debt”), which the federal government easily could return to you today via money transfer,  (i.e. “pay off” the debt) are bad for you. Utter nonsense.

The plan will not meaningfully improve economic growth, at least not on a sustained basis.

Given that the economy is currently operating at full employment, however, stronger inflation and higher interest rates will result.

The higher rates wash out the economic benefit of the lower tax rates on investment, and the economy ends up no bigger than it would have been without the tax cuts.

These are widely promulgated misunderstandings.

  1. “Economic growth” most often is measured by Gross Domestic Product (GDP), the formula for which is: GDP=Federal Spending+Non-federal Spending+Net Exports. Tax cuts, which add to the gross money supply, increase GDP.  
  2. Inflation is not increased money supply. Inflation is the value of money (Money Demand/Supply) vs. the cost of goods and services (Goods & Services Demand/Supply). Many factors other than money supply and employment affect inflation, not the least of which are efficiency and productivity. With each passing day, labor has become a smaller inflationary factor. Thus, despite low unemployment and massive deficits, we currently have low inflation.  (See “Debt Henny Pennys.”)

We’ll conclude with a short article that appeared in The Week:

Trump rejects limiting before-tax 401(k) deductions to pay for tax cuts

President Trump on Monday rejected the possibility of raising money to pay for Republican tax cuts by reducing the pre-tax contributions Americans can make to their 401(k)s.

Trump’s position on the matter removes one option as Republicans rush to push through the legislation by the end of the year.

Republicans are looking for ways to help pay for more than $1 trillion in corporate and individual tax cuts, including eliminating the federal deduction for state and local taxes.

The notion that a federal tax increase can “pay for” a federal tax decrease is wrong, wrong, horribly wrong. While that can be true of state and local taxes, it simply is not true of our Monetarily Sovereign government’s federal taxes.

In the next few weeks, you will read and hear about Congress struggling mightily to cut taxes without increasing the debt or deficit.  It’s all performance art for your befuddlement — a comedy of errors that has run since at least 1940.

Deficits, i.e. cutting your taxes and giving you benefits, enrich you by putting dollars into your pocket. Federal deficits are the economy’s surpluses. Deficits grow the economy.

The so-called “debt” is just safe, interest-bearing deposits in T-securities accounts, similar to bank savings account deposits. The entire debt could be paid off tomorrow, without creating one new dollar, simply by transferring existing dollars from the T-security accounts back to the checking accounts of the T-security owners.Image result for ocsar

Neither federal deficit nor federal debt is a threat, or a burden, or anything to be minimized.

Your politicians lie at the behest of the rich because they are bribed by the rich. The rich want you to believe the federal government can’t afford to give you such benefits as Medicare for All, Education for All,  poverty aids, lower taxes, and other help that would narrow the Gap between you and the rich.

It is a gigantic, ongoing con job. It’s all Hollywood.

Tell your Congressperson you aren’t fooled or amused.

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

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The 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 (Economic Bonus)) 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
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

 

No, it isn’t “the economy, stupid.” It’s another issue, and you know what it is Wednesday, Sep 27 2017 

Image result for freedom

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

——————————————————————————————————————————————————————————————————

Bill Clinton famously said, “It’s the economy, stupid,” meaning that ultimately, Americans will vote their wallets, with all other issues being secondary.

He was wrong.  There is another, more important, though less logical, issue, and if you think about it, you know what it is.

Toward the end of the 1800’s, the Democrats came to control the Southern states, and it wasn’t pretty.

White Democrats began to use strategies you’ll find eerily familiar today. They made the entire voting process much more difficult for poor blacks, including the passage of poll taxes. Though poor whites fell into the same trap, the poll tax was aimed at the blacks.

Poll taxes were “necessary,” because someone had to pay for the cost of elections, right?

And then there were the literacy tests, which were “necessary,” because if you can’t read and write, how can you cast an intelligent vote, right?

And strict, complex residency tests were “necessary,” because if you weren’t a long-time resident, you shouldn’t be telling residents what to do, right? Today, those residency tests have morphed into citizenship tests, the primary purpose of which is as before: To deny anyone of color, the right to vote.

Blacks even were denied the right to be jurors, because they weren’t “qualified,” so every facet of Southern law was tilted against them.

As blacks were denied the vote, they also were denied representation, so all the national Southern votes went to the then dominant party, the Democrats. In the South, there virtually were no Republican Senators, Representatives, Governors, Mayors, Sheriffs, Judges — it was all Democrats all the time. It was known as the “solid South.”

Because Democrats seldom lost Southern elections, the incumbents controlled the gerrymandering that solidified their positions. This gave them seniority, not only in local and state politics, but in the national arena, where Chairmanships of important Congressional committees were held largely by Southerners.

And all of this enormous political power had its beginnings, and its ongoing expansion, with wall-to-wall racial bigotry.

Then, in the late 1940’s, the Democrats began to adopt some measure of morality, and morality would prove to be their undoing in the South.

President Truman desegregated the Army and the Dixiecrat party was formed, the sole purpose of which was to retain segregation and Jim Crow laws. The Dixiecrats nominated Strom Thurman for president, and he won in South Carolina, Alabama,  Louisiana, and Mississippi.

After Democrat Lyndon Johnson passed many civil rights laws, Thurman became a Republican.

And then came Richard Nixon and the “Southern Strategy,” as cynical a political strategy as ever has been devised. Here is the summary of the strategy, in the words of the man who popularized the term, political advisor, Kevin Phillips:

“From now on, the Republicans are never going to get more than 10 to 20 percent of the Negro vote and they don’t need any more than that…but Republicans would be shortsighted if they weakened enforcement of the Voting Rights Act.

“The more Negroes who register as Democrats in the South, the sooner the Negrophobe whites will quit the Democrats and become Republicans.”

“That’s where the votes are. Without that prodding from the blacks, the whites will backslide into their old comfortable arrangement with the local Democrats.”

To appeal to Southern whites, Nixon pushed two philosophies, “law and order” and “states rights,” which remain popular excuses, today.

“Law and order” were the code words that brought into existence the notorious Southern Sheriffs, in the Joe Arpaio mold. The sole purpose had nothing to do with “law” or with “order,” but rather was to keep the blacks frightened and powerless.

“States rights” were the code words used by the Southern states to tell the federal government, “Don’t interfere with our version of bigoted “law and order.”

After Nixon, no Northerner has won the Presidency . . . until our first 1/2 black President, Barack Obama.

And that is the 2nd part of our story.

ElectoralCollege2012.svg

2012 Presidential Election of Obama

In his first Presidential election, Obama won 68% of the electoral votes. In his second election, Obama won 62% of the electoral votes.

Both were resounding victories, yet in neither case did he win in any Southern state, except Florida.

Remember the description of the Southern Strategy:

“The more Negroes who register as Democrats in the South, the sooner the Negrophobe whites will quit the Democrats and become Republicans. That’s where the votes are. Without that prodding from the blacks, the whites will backslide into their old comfortable arrangement with the local Democrats.”

Obama proved to be the ultimate “prodding from the blacks.” His black face created terror in the minds of whites who already were predisposed to hate or fear blacks.

Though Obama won his second election (by a much smaller margin than the first), he was a special case of a charismatic, only 1/2 black, great speaker with a terrific election committee, and uncharismatic opponents.

And he was unable to extend his election success to the rest of the Democratic party.

The Democratic Party suffered huge losses at every level during Obama’s West Wing tenure. The grand total: a net loss of 1,042 state and federal Democratic posts, including congressional and state legislative seats. Democratic governorships also became a rarity during this eight-year period, slipping from 28 to 16.

Then came Hillary Clinton and Donald Trump: This essentially was a fact-free election, based solely on emotions.

She, an uncharismatic female, a poor speaker and a with a seemingly clueless election committee. He, a charismatic, male TV star and an excellent speaker who used mass meetings as his “election committee.”

Clinton campaigned on intellectual ideas and on herself: HER experience and HER being able to make history as the first female President and HER inheriting the Obama legacy.

But while the man, Obama, was much loved, at least in most quarters, his legacy was minimal. Ask people today what he accomplished and they might say, “Obamacare,” (to which, in truth, he contributed little. The Democratic Congress did all the work).

Others might include the recovery from the “Great Recession,” and the “worst” ones (from the standpoint of the “Southern Strategy) were the rights he gave to gays and immigrants. These latter, along with his skin color, energized the unfortunately-large bigot community of America. 

Trump campaigned on viscerals and you: YOUR fears and YOUR hatreds.

Trump said, “I’m going to protect YOU from blacks, browns, gays, foreigners, Muslims and people who will take away the guns YOU need for your protection.”

Today, the Republicans continue to rely on the “Southern Strategy,” nationally. And it works on a public made frightened.

There was a time when the phrase, “It’s the economy, stupid,” was considered the holy script to election success. But no more.  Now, “It’s beware of THEM, and kill THEM,” with “them” including all those who are not white, straight, and citizens.

He is a compulsive liar who has changed his positions on dozens of issues.

Once, being a “flip-flopper” was the formula for public ridicule and political defeat.  By that history, Trump should have zero followers.  He is a compulsive liar, and there were at least 141 Stances Trump Took During His White House Bid) :

–19 contradictory positions on immigration and his wall,
–4 contradictory positions on undocumented children of immigrants,
–16 positions on banning Muslims,
–5 different positions on H1-B visas (for highly skilled workers),
–4 different positions on border control,
–9 different positions on how to defeat ISIS,
–7 separate positions on gun-free zones,
–2 opposing positions on nuclear first-strike,
–8 different positions on minimum wage,
–7 contradictory positions on tax reduction,
–4 opposing positions on climate change,
–8 different opinions about what to do with the national debt,
–4 opposing opinions about abortion,
–9 different comments about Obama’s citizenship,
–2 opposing comments about voting for the Iraqi war,
–5 different opinions about the Libya intervention,
–2 opposing positions on whether Japan should have nukes
–3 opposing positions about accepting political donations
–3 different opinions about military torture
–3 different comments about his relationship with David Duke
–2 opposing positions regarding the Iran nuclear deal
–5 opposing positions regarding Obamacare (also his vow to sign any R&R law)
–8 different positions about whether the election was “rigged”
–3 different promises about accepting the results of the election

And then there’s this:

Over the course of just one day, President Trump declared different positions than he took during the campaign on four issues.

In an interview with The Wall Street Journal and at a press conference on Wednesday, President Trump declared that China is not a currency manipulator, entertained the possibility of re-appointing Janet Yellen as chair of the Federal Reserve, asserted that NATO is a relevant alliance and expressed a favorable view of the Export-Import Bank.

None of it matters.

The GOP spent seven years and 50+ votes trying to “Repeal & Replace” ACA, without even having a replacement plan, and then in the 8th year, they proposed several replacement plans that would have disenfranchised millions. In years past, this alone would logically have destroyed them as a party. It did not.

In years past, this incompetence alone would have destroyed them as a party. It did not.

Now, the GOP is proposing tax “reform,” that despite denials, undoubtedly will benefit the rich far more than it helps the rest of us. In all likelihood, this disparity will not cost them any seats in Congress.

To the electorate, it’s not the most important issue.

Having no consistent position, and especially no position that benefits 99% of the electorate, logically would prevent the people from aligning themselves with Trump and/or the GOP.

But the electorate is not moved by logic. The GOP politics of fear and hatred, and the adoption of bigotry and a prime directive, has remained consistent. And that is the real GOP power.

For much of the rest of the country, race is a top-three importance issue. For the South, it is the only issue.

Fear and hatred, our hottest emotions, defeat cold truth and logic. Every dictator in history has known this.

No, President Clinton, it isn’t “the economy, stupid.”

It’s fear hatred, stupid.

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

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

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

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

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

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
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 (Economic Bonus)) 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
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

The tax “reform” Trojan horse. A sneak attack on social benefits Saturday, Sep 2 2017 

Image result for the truth will set you free
It takes only two things to keep people in chains:
The ignorance of the oppressed and the treachery of their leaders.

————————————————————————————————————————————————————
“Reform” is such an appealing word. It implies “improvement,” but all it means is “change” (re- form). And when Congress changes things, it generally tries to benefit its biggest contributors, the rich.

So, next time you hear or see the words “tax” and “reform” in the same sentence, hide your wallet and take your impressionable children indoors. You are about to feel strong winds from Washington carrying heavy BS rain.

The GOP is looking for ways to pay for tax cuts. Your 401(k) may bear the cost.
By Thomas Heath, August 31, 2017 at 2:58 PM

President Trump called for “fundamentally reforming” the tax code, and said he would work with Congress to achieve it at a speech in Springfield, Mo., on Aug. 30. (The Washington Post)

Ah, yes. Donald Trump, the great reformer, having presented his non-existent plan to replace Obamacare (Romneycare), by trying to leave 20 million lower-income men, women, and children without health care, now will build on his success by “fundamentally reforming” the tax code.

We assume his attitude toward lower-income people will not change.

House Republicans may tinker with the hugely popular 401(k) retirement benefit as part of their tax reform package.

Politico reported that one proposal would be taxing the money that workers place into their 401(k) savings plans up front instead of imposing the tax when they take the money out in retirement — 20, 30 or 40 years hence.

The idea would raise billions of dollars. 

Image result for trojan horse

Tax “reform,” a Trojan horse for benefit reduction

Immediately, you see all “reform” plans will be based on the myth that the federal government needs and spends your tax dollars.

Contrary to popular myth, your tax dollars are not spent or even saved. Upon receipt, your tax dollars no longer are part of any money supply measure. Hence, federal taxes are destroyed.

While monetarily NON-sovereign state and local governments do need and use tax dollars, the Monetarily Sovereign federal government uniquely pays its bills by creating new dollars ad hoc.

Even if there were zero federal taxes, the federal government could continue spending forever. State and local governments do not have that privilege; their financial systems resemble your finances and are totally different from federal finances.

Not only does the federal government not need to “raise billions of dollars,” but doing so actually takes billions of dollars out of the economy, and cuts into economic growth. A federal tax is the economy’s deficit.

Unfortunately, both political parties have spent the last 75 years convincing you, the public, that federal finances are just like state and local finances, business finances and personal finances.

However, the facts are:

  1. Being uniquely Monetarily Sovereign, the federal government pays its bills by sending instructions (not dollars), in the form of checks or wires, instructing creditors’ banks to increase the balances in creditors’ bank accounts. At the instant the banks obey those instructions, brand new dollars are created.
  2. The so-called “debt” is nothing more than the total of deposits in Treasury Security accounts, which are very much like savings accounts, and are not a future burden on the federal government or on future taxpayers. The federal government could pay off the entire “debt” tomorrow, without collecting a penny in taxes, simply by returning the dollars currently residing in those T-security accounts.
  3. Federal deficits are merely the difference between spending and taxing; they and could be sustained forever. In fact, federal deficits are necessary for economic growth. Gross Domestic Product = Federal Spending + Non-federal Spending + Net Exports. Cut federal spending and you cut GDP. That is why a lack of deficits leads to depressions and recessions.
  4. Being the creator of the dollar, and being sovereign over the dollar, the federal government can give the dollar any value it wishes. The Fed controls inflation to its target rate of about 2.5% by controlling the Demand for the dollar. Through more than 75 years of wars, natural disasters, and recessions, the Fed has made inflation average close to the Fed’s target rate. The federal government also can control the value of the dollar simply by declaring a value, just as it did for the very first dollars in 1780.

The 401(k) program, which began with the Revenue Act of 1978, has a mixed bag of supporters and critics.

Some say the tax-deferred accounts are in­cred­ibly successful at encouraging Americans to save for retirement.

Critics say it favors wealthier people who can afford to save and get a nice tax break while leaving behind low-income workers who cannot afford to do without the cash now.

The 401k has encouraged people to save for retirement, for two reasons: People don’t understand the implications of “save today but pay tomorrow,” and they don’t understand the federal government’s unlimited ability to fund Social Security.

Save Today But Pay Tomorrow
There are many tax savings that are not available in a tax-deferred account.

Long term capital gains and dividends are taxed at lower rates than are such gains when taken from a tax-deferred account. Similarly, you never want to hold municipal bonds in a tax-deferred account.

In short, a tax deferred account such as 401k, saves you taxes today but depending on your future income, you may pay far more in taxes, tomorrow.

Funding Social Security
The funding for Social Security, as with the funding for all other federal programs, is widely misunderstood.

You have been told that Social Security (and Medicare) are funded by FICA tax payments via “Trust Funds.” You probably visualize your FICA payments going into an account, where they are saved until they are distributed to pay your benefits — something like an annuity insurance policy.

Wrong. You’ve been scammed.

Because the federal government is Monetarily Sovereign, it creates brand new dollars every time it pays a bill. The so-called “trust funds” are accounting fictions. Even if there were zero FICA collections the federal government could continue paying Social Security and Medicare benefits, forever.

The federal government has the financial ability to provide Social Security  (Step #3, below)and Medicare (Step #2, below) benefits for every man, woman, and child in America, without collecting a single penny in FICA taxes.  (Step #1, below)

President Roosevelt, the originator of Social Security knew this. His stated reason for collecting FICA was not to provide funds, but rather to ensure that the government could not take away Social Security.

Roosevelt reasoned that if people thought they paid for SS, they would rebel against eliminating it.

As FDR foresaw, endowing Social Security with its own revenue stream has protected it over the years from grasping politicians — mostly conservatives, who have aimed since 1935 to eviscerate the program.

The weekly or bi-weekly payroll deductions that go to the program have given workers a proprietary interest in benefits that has been hard to undermine.

Not only have you been scammed by the completely unnecessary collection of FICA from your paycheck, but you have been scammed in a 2nd way: Rich people don’t pay FICA.

First, there is a payroll limit, above which no FICA is collected. And second, there are many categories of income — categories like capital gains, partnership profits, etc. that rich people generally are in — which are not subject to FICA.

In short, FICA is an unnecessary tax on the 99%, a perfect way to widen the gap between the rich and the rest — exactly what the rich want.

But it gets even worse. By pretending that FICA pays for benefits, the rich-bribed politicians not only have reduced your Social Security benefits (to “save” SS), but your benefits are taxed at your highest tax rate.

At this point in the post, we know:

  1. The federal government cannot run short of its own sovereign currency, the dollar.
  2. The government creates brand new dollars, every time it pays a bill.
  3. Therefore, the federal government, unlike state and local governments, has no need for taxes, and in fact, destroys your tax dollars upon receipt.
  4. Federal deficit spending is necessary for economic growth
  5. The federal “debt,” just being deposits in T-security accounts, is infinitely “sustainable.”
  6. The federal government, being sovereign over the dollar, can give the dollar any value it chooses, and so has the unlimited power to prevent inflation.

Everything you read and hear about “tax reform” and the “debt limit” is based on the lie (“The Big Lie”) that dollars are scarce to the federal government. 

When you begin a proposal with a lie, everything that comes after is tainted by that lie.

We already have demonstrated that FICA not only is unnecessary, but being regressive, it punishes the 99% and widens the Gap between the rich and the rest.

So it is with some surprise that we hear Donald Trump and the GOP wish to eliminate FICA. It is so unlike them to want to benefit the middle class. What is going on, here?

Read this:

Trump’s proposal to eliminate the Social Security payroll tax may be his worst idea yet.

President Trump’s tax reform agenda is in trouble. That’s not news, but one proposal that his team has floated as a way, ostensibly, to cut taxes on the middle class is.

According to the Associated Press, they’re toying with the idea of eliminating the payroll tax, which funds Social Security and part of Medicare, or cutting it drastically.

This is an absolutely terrible idea, partially because it smells like a back-door way of cutting Social Security benefits. It needs to be nipped in the bud.

“This proposal is a Trojan horse,” the veteran Social Security advocate Nancy J. Altman told me. “It appears to be a gift in the form of middle-class tax relief, but would, if enacted, lead to the destruction of working Americans’ fundamental economic security.”

Get it? Roosevelt was right.

Yes, FICA should and could be eliminated. It is an unnecessary and regressive tax on the 99%.

But so long as the public believes the federal government needs and uses tax dollars, eliminating FICA is an open door to the justification of SS & Medicare benefit reduction.

Not only has the public been brainwashed into believing federal taxes are necessary to pay for federal spending, but the tax “reformers” wish to cut taxes on the rich so they can justify cutting benefits to the rest of us.

We should adopt the Ten Steps to Prosperity (below), but only if the public understands why the government has the unlimited ability to take those steps.

Bottom line: Today’s breed of tax “reformers” will be delighted to make you poorer and the rich richer, by cutting your benefits and raising your taxes, and telling you this is good for America (meaning the 1%).

Learn the truth. Demand the truth. Fight like hell.

Otherwise, you and your children are screwed.

Rodger Malcolm Mitchell
Monetary Sovereignty

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

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 (Economic Bonus)) 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
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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