Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
Quote from Ben Bernanke when, as Fed chief, he was on 60 Minutes:
Scott Pelley: Is that tax money that the Fed is spending?
Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.
Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”
Press Conference: Mario Draghi, President of the (Monetarily Sovereign) ECB, Question: I am wondering: can the ECB ever run out of money? Mario Draghi: Technically, no. We cannot run out of money.
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The Big Lie in economics, simply stated is: The U.S. government unintentionally can run short of U.S. dollars.
In 1792, the U.S. government created the first U.S. dollars from thin air. It arbitrarily passed laws that created as many dollars as it wished, and gave those dollars the value it wished.
Since then, the U.S. government continues to create U.S. dollars, and it arbitrarily has changed the value of the dollar many times.
Since its founding in 1776, the United States has had a variety of monetary systems including bimetallic systems where the dollar was backed by both gold and silver (1792-1862), a fiat monetary system (1862-1879), a full gold standard (1879-1933), and a partial gold standard (1933-1971).
Each new system changed the value of the dollar.
From 1971 to present the United States has been on a fiat monetary standard.
The U.S. government can create laws from thin air, and those laws can create dollars from thin air. The U.S. government cannot unintentionally run out of laws or dollars.
For that reason, no agency of the U.S. government can run out of dollars unless Congress and the President wish it.
Any time you hear or read about the U.S. government not being able to “afford’ some expenditure, or about some federal agency running short of funds, or about federal taxes needing to be increased, you are subject to The Big Lie.
Being Monetarily Sovereign, the federal government neither needs, nor even uses, tax dollars to fund its spending. It creates dollars by spending; that is its primary dollar-creation method.
Similarly, any time you read or hear that the federal “debt” is unsustainable, or the federal deficit is “unaffordable,” you are being told The Big Lie.
Here is an article that exemplifies The Big Lie you are expected to believe:
Go-broke dates pushed back for Social Security, Medicare
The annual Social Security and Medicare trustees report says Social Security’s trust fund will be exhausted in 2035, instead of last year’s estimate of 2034.
By Fatima Hussein and Tom Murphy Associated Press
WASHINGTON — A stronger-than-expected economic recovery from the pandemic has pushed back the go-broke dates for Social Security and Medicare, but officials warn that the current economic turbulence is putting additional pressures on the bedrock retirement programs.The annual Social Security and Medicare trustees report released last week said Social Security’s trust fund will be unable to pay full benefits beginning in 2035, instead of last year’s estimate of 2034.
The year before that it estimated an exhaustion date of 2035. The projected depletion date for Medicare’s trust fundfor inpatient hospital care moved back two years to 2028 from last year’s forecast of 2026.
In the post titled, “’Wolf,’ ‘The sky is falling.’ ‘Social Security and Medicare will be insolvent'” you read why the Medicare and Social Security so-called “trust funds” are not trust funds at all, but rather are mere balance sheet notations on the government’s books — notations that the federal government can change at will.
You might ask, “How is it possible for an agency of a government to run short of the dollars the government has the infinite ability to create.”
The answer: It isn’t possible unless that is what the government wants.
If Congress and the President wanted Medicare and Social Security to pay more benefits, they simply would pass a law mandating Medicare and Social Security to pay more benefits.
And, if Congress and the President wanted to reduce or even eliminate the FICA tax, they would pay for the mandate the same way they pay for the military and all other federal expenses: By writing checks. No tax dollars are involved.
And if Congress and the President wanted the nation to have free, no-deductible, comprehensive Medicare for every man, woman, and child in America, they could do that by passing laws. No tax dollars necessary.
And if Congress and the President wanted every man, woman, and child in America to receive Social Security — even with triple the current benefit levels — they could pass the appropriate law. Again, no tax dollars need to be collected.
The article continues:
“Economic recovery from the 2020 recession has been stronger and faster than assumed in last year’s reports, with positive effects on the projected actuarial status of the trust funds in these reports,” the report states.
The “actuarial status” assumes the FICA tax funds Medicare and Social Security “trust funds.” It doesn’t. FICA funds nothing. FICA,indeed all federal taxes are destroyed upon receipt.
(This is not true of state/local taxes, which remain in the economy.)
The federal government funds Medicare and Social Security by creating new dollars, ad hoc.
President Joe Biden said in a statement that the report “shows that the strong economic recovery driven by my economic and vaccination plans has strengthened programs that millions of Americans rely on and has put our nation in a better fiscal position.”
The U.S. cannot be “in a better fiscal position”; it already is in a perfect fiscal position. The government has zero fiscal need for taxes. Even without taxes, the federal government has the infinite ability to pay any bills it ever receives.
Social Security pays benefits to more than 65 million Americans, mainly retirees as well as disabled people and survivors of deceased workers.
Medicare covers roughly 64 million older and disabled people.
When the Social Security trust fund is depleted, the government will be able to pay 80% of scheduled benefits, the report said.
Medicare will be able to pay 90% of total scheduled benefits when the fund is depleted.
Wrong. The government already pays 100% of benefits and will be able to pay 100% of future benefits, no matter how many people are collecting benefits or how large those benefits prove to be.
All dollars sent to the U.S. Treasury are destroyed upon receipt.
Income for Medicare’s hospital insurance fund is projected to be higher than estimates from last year because the number of covered workers who help fund it and their average wages are both expected to be higher.
Income is irrelevant for a government that has the infinite ability to create dollars.
A main source of financing is payroll taxes on earnings paid by employees and employers. About 183 million people paid those taxes in 2021.
Payroll taxes are nothing more than a deduction from the private sector — a net loss for Gross Domestic Product and the economy. They do not finance anything. The sole source of federal financing is the federal government’s Monetary Sovereignty.
The trustees of Social Security and Medicare include the secretaries of Treasury, Health and Human Services, and Labor, as well as the Social Security commissioner.
They are supposed to be joined by two public trustees, however those positions have been vacant since 2015.
The “Trustees” do nothing. They have no power. It’s all just a bookkeeping function, which is handled automatically by computers. That is why trustee positions can be vacant without harm.
A representative from the White House did not respond to an email inquiry about whether the president intends to nominate new public trustees.
Trustees are unnecessary.
The trustees report is an added reminder of the U.S. government’s financial troubles, as it juggles historically high inflation, recovery from a pandemic and Russia’s war in Ukraine.
The economy may have “financial troubles.” It can run short of dollars. But the government cannot have financial troubles. It has infinite dollars with which to pay its bills. And it has the unlimited ability to control inflation.
AARP CEO Jo Ann Jenkins said the reports “send a clear message to Congress: despite the short-term improvement, you must act to protect the benefits people have earned and paid into both now and for the long-term.”
The first step to “protect the benefits” is to stop telling The Big Lie.
“The stakes are too high for the millions of Americans who rely on Medicare and Social Security for their health and financial wellbeing,” she said.
This year, Social Security retirees got a 5.9% boost in benefits, the biggest cost-of-living adjustment, also known as COLA, in 39 years.
You, retirees, could have received a 10% or 100% or greater boost in benefits if Congress and the President wished it. Congress and the President have absolute control over benefits.
The destructiveness of The Big Lie, is shown in the following article:
500,000 Floridians could lose health coverage, study says
Christopher O’Donnell,Tampa Bay Times
More than 500,000 Floridians could lose their health insurance if Congress fails to extend tax credits passed through the American Rescue Plan Act, a new report warns.
The tax credits dramatically lowered premiums for millions of Florida families who this year obtained their health insurance through the Affordable Care Act.
But those subsidies will expire at the end of this year as attempts by Congress to extend them have stalled.
Can you answer this question? Why would a Congress, that has infinite dollars at its fingertips, not be able to lower premiums for millions of families?
If lawmakers cannot reach an agreement, premiums could rise by 53% in 2023, forcing millions of Americans to go without health insurance.
Florida would be one of the states hardest hit, according to a study by the Robert Wood Johnson Foundation and the Urban Institute.
Roughly 96 percent of the 2.7 million Floridians enrolled in the Affordable Care Act were eligible for the tax credits this year. Without them, a household of four with an income of $111,000 will pay hundreds of dollars more in premiums next year.
Families that earn above that limit would no longer be eligible for the program. They could face an average increase of about $2,000 per year in premiums if they have to purchase private insurance.
The likely impact, the study warns, is the number of uninsured in Florida could rise by 25 percent, from 2 million to 2.5 million.
Families without health insurance typically forego critical preventative and early treatment of health issues until their condition forces them to seek emergency room care — the same strain on hospital resources and budgets that the Affordable Care Act was intended to relieve.
“A 53% increase on premiums could be very painful for a whole lot of families in the state of Florida.”
Of course, it’s not just Florida. The unnecessary pain will extend to families all over America. Can you answer this question? Why is this even an issue, for a government having unlimited financial resources?
Opposition to extending the tax credits has focused on the cost.
Extending them would increase the federal deficit by $25.3 billion in 2023 and by $305 billion over 10 years, the study says.
House Democrats can extend the credits via a reconciliation bill to clear Republican opposition.
But the fate of that program and many others depends on negotiations between President Joe Biden and West Virginia Sen. Joe Manchin to get the president’s social spending bill through the Senate.
Can you answer this question? Why are 100% of Republicans plus one Democrat opposed to providing federal financial aid to families?
U.S. Rep. Charlie Crist, D-St. Petersburg was critical of Republican Gov. DeSantis. Florida is one of only 13 states that continues to reject a provision of the Affordable Care Act — passed over a decade ago — that would expand Medicaid eligibility to more than 400,000 of the poorest Floridians.
The federal government pays 90% of the cost. So by expanding Medicaid, Florida will pay only 10 cents to receive each dollar the federal government pumps into its economy.
Can you answer this question? Why would Florida refuse those many millions of support dollars? And why does Florida reject federal aid for its poorest residents?
In 2021, Florida lawmakers did pass legislation to make Medicaid available for for mothers and babies, extending their coverage from 60 days to a full year following childbirth.
But Floridians who earn less than the federal poverty level of $13,590 are not eligible for Medicaid as they would be in states that have fully expanded Medicaid.
Can you answer this question? Why are the poorest Floridians not eligible to receive federally supported Medicaid?
Since it took effect in 2014, the Affordable Care Act — often called Obamacare — has made health insurance affordable to more Americans by creating health insurance marketplaces and subsidizing the cost of premiums.
It helped the program add 2.5 million more Americans this year, expanding nationwide enrollment to a record 14.4 million.
“People who previously turned away and looked at alternative options like short term insurance were able to reconsider and saw a really affordable rate,” said Katie Roders Turner, executive director of the Family Healthcare Foundation.
She said a family of four that her group helped find insurance had just been hit with a $6,000 emergency room bill after their child developed a high fever because their short-term insurance policy included a large deductible.
Desperate people were buying junk insurance policies because they couldn’t qualify for federally supported insurance.
A lady named Graciela Lopez said subsidies in the Affordable Care Act enabled her to afford the coverage she needs to cover life-saving treatment. She was diagnosed with breast cancer three years ago and had a double mastectomy.
She sees an oncologist every three months and another specialist twice a year. She is also on daily medication that would cost $1,000 per month without insurance.
Most of the cost is covered through a marketplace plan offered by Blue Cross Blue Shield, which costs her $169 per month.
Insurance also pays for a substantial portion of the daily medication she takes to lower hormone levels that could trigger her cancer.
She is worried she won’t be able to afford a substantial premium hike.
“If I change my insurance, I have to find different oncologists,” she said. “I have to keep my insurance as long as I can.”
Can you answer this question? Why does Gracie Lopez, along with millions of other Americans, not receive free, comprehensive, no-deductible health care insurance paid for by the federal government?
The answers to all of the above financial questions are:
- The widespread (and false) belief the federal Monetarily Sovereign finances are the same and your personal (monetarily non-sovereign) finances, and that the federal government, like you, can run short of dollars.
- The widespread (and false) belief that federal taxpayers fund federal spending or that the federal government borrows dollars.
- The widespread (and false) belief that if Monetary Sovereignty were correct “someone” would have done “something” about it, and provided free Medicare, free Social Security, and other financial aids (See “Ten Steps To Prosperity” below) to every man, woman, and child in America.
- The widespread (and false) belief that federal spending “overheats the economy” and causes inflation.
- Gap Psychology, the desire of the rich who run America, to widen the income/wealth/power Gap beween them and those below them.
- Both political parties are responsible for disseminating The Big Lie. The Republican party, being the party of the rich, is somewhat more culpable, but both parties, virtually all media, and most economists are guilty to some degree.
ANY TIME YOU READ OR HEAR . . .
. . . the U.S. government can’t ‘afford’ some expenditure, or about some federal agency running short of funds, or about federal taxes needing to be increased, you are a victim of The Big Lie.” (The federal government can’t unintentionally run short of dollars.)
. . . in reference to some proposed federal expenditure, “Who will pay for it?”, you are a victim of The Big Lie. (The government will create the dollars.)
. . . the phrase “taxpayers’ money” in reference to federal spending, you are a victim of The Big Lie. (Federal taxpayers’ dollars are destroyed, not spent.)
. . . that the federal deficit or debt are “unsustainable,” you are a victim of The Big Lie. (Federal deficits and so-called “debt” are infinitely sustainable.)
. . . concerns that China will stop lending to us, you are a victim of The Big Lie. (The federal government does not borrow dollars.)
. . . that federal spending causes inflation, you are a victim of The Big Lie. (Inflation always is caused by shortages, and actually can be cured by federal spending.)
Congress and the President could repudiate The Big Lie by changing laws, with a few strokes of a pen.
We are now heading into midterm elections. Congress and the President care about two things: Money and votes.
If you disagree with The Big Lie, contact your political leaders, and tell them how they can receive your money and/or vote.
Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
The most important problems in economics involve:
- Monetary Sovereignty describes money creation and destruction.
- Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:
Ten Steps To Prosperity:
- Eliminate FICA
- Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
- Social Security for all
- Free education (including post-grad) for everyone
- Salary for attending school
- Eliminate federal taxes on business
- Increase the standard income tax deduction, annually.
- Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
- Federal ownership of all banks
- Increase federal spending on the myriad initiatives that benefit America’s 99.9%
The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 