Duck! The sky is falling and the “debt” is rising! Wednesday, Feb 13 2019 

Here we go again: The same old story — the same old lie — we have documented since 1940. Nothing has changed and nothing has been learned.

National debt tops $22 trillion for the first time as experts warn of ripple effects by Michael Collins, USA TODAY Feb. 12, 2019

WASHINGTON – The national debt surpassed $22 trillion for the first time on Tuesday, a milestone that experts warned is further proof the country is on an unsustainable financial path that could jeopardize the economic security of every American.

Yes, way, way back in 1940, the federal budget was a “ticking time-bomb which can eventually destroy the American system,” said Robert M. Hanes, president of the American Bankers Association. Image result for time bomb

Every year since then, the self-proclaimed experts have told you the federal debt either is a “ticking time bomb,” “unsustainable,” “a threat to the economic security of every American,” or some other bit of scare nonsense.

In 1940, the so-called “debt” (It actually is “deposits,” but why be accurate when you want to fool the public?) was only $40 Billion. Today, it is about $17 Trillion, a gigantic 45,000% increase.

(The $22 Trillion figure includes internal debt, money one department of the government owes another department of the government — left pocket owes the right pocket. The debt scare-mongers use the larger number so as to scare you more.)

Despite that massive debt increase in the past 80 years, where is the “threat to economic security?” Why has that “ticking time bomb” not exploded? Eighty years is a long time to keep ticking and nothing happens.

The Treasury Department reported the debt hit $22.012 trillion, a jump of more than $30 billion in just this month.

The national debt has been rising at a faster rate following the passage of President Donald Trump’s $1.5 trillion tax-cut package a little more than a year ago and as the result of congressional efforts to increase spending on domestic and military programs.

The nation has added more than $1 trillion in debt in the last 11 months alone.

“Reaching this unfortunate milestone so rapidly is the latest sign that our fiscal situation is not only unsustainable but accelerating,” said Michael A. Peterson, chief executive officer of the Peter G. Peterson Foundation, a nonpartisan organization working to address the country’s long-term fiscal challenges.

Here is all you need to know about the Peter G. Peterson Foundation, an organization devoted to spreading the “Big Lie,” that the federal government’s finances are like state and local government finances, and the debt is “a ticking time bomb,” etc., etc., etc.

These folks never seem to be embarrassed about being wrong, wrong, and wrong yet again, year after year. They just keep on making those wrong predictions as though reality means nothing.

The “unfortunate milestone” is the kind of milestone banks boast about: An increase in total deposits.

For Americans, the growing debt should be a concern, experts said, because over time it can push up interest rates for consumers and businesses.

The higher rates can ripple through the economy, nudging up rates for mortgages, corporate bonds and other types of consumer and business loans.

The above two paragraphs are so far out of touch with reality, they are laughable.

First, if the growing debt could “push up interest rates,” why hasn’t the 45,000% increase in debt already pushed up interest rates, which today remain quite low?

Second, the Fed controls interest rates by fiat. When the Fed wants low rates, it mandates low rates. When it wants high rates, it mandates high rates.

If it wants to issue T-securities at a certain rate, and the public doesn’t buy them, the Fed simply can buy the T-securities, itself.

Being Monetarily Sovereign, i.e. sovereign over the dollar, the government can do anything it wishes with the dollar.

Third, higher interest rates actually grow the economy by increasing the number of interest dollars the government pumps into the economy.

The most common measure of the economy is Gross Domestic Product. GDP = Federal Spending + Non-federal Spending + Net Exports. Notice the words “Spending”? They include interest.

Fourth, private interest does not inhibit an economy; it merely circulates dollars. The borrower pays interest to the lender. It’s a cost to one, and income for the other. The total of dollars stays essentially the same.

Then, we come to the biggest lie of all:

A big national debt can also make it harder for the government to increase spending to combat the next recession or devote more money to retraining workers and helping the poor, among other programs.

Here, Peterson confuses federal finances with monetarily non-sovereign state and local finances.

The number of dollars deposited into T-security accounts has no effect on the government’s ability to spend. The government doesn’t touch the dollars in T-security accounts.

When the federal government spends, it sends instructions (not dollars) to a supplier’s bank, instructing the bank to increase the balance in the creditor’s checking account.

When the creditor’s bank does as instructed, brand new dollars are created and added to the money supply measure, M1.

Peterson attributed the growing national debt to “a structural mismatch between spending and revenues.”

The biggest drivers are the aging population, high healthcare costs, and growing interest payments, combined with a tax code that fails to generate sufficient revenue, he said.

“Structural mismatch” is Peterson-speak meaning more dollars are spend than are received in taxes.

But this has no effect on the federal government’s ability to spend. Because the federal government creates brand new dollars, every time it pays a bill, it could continue spending forever, even if total tax collections were $0.

In fact, tax dollars are destroyed immediately upon receipt by the U.S. Treasury.

The debt eclipsing $22 trillion “is another sad reminder of the inexcusable tab our nation’s leaders continue to run up and will leave for the next generation,” said Judd Gregg and Edward Rendell, co-chairmen of the nonpartisan Campaign to Fix the Debt, a project of the nonpartisan Committee for a Responsible Federal Budget.

Let us dispense with the “next generation” nonsense. The “next generation” didn’t pay for the $40 Billion debt of 1940. The “next generation” didn’t pay for the $3 Trillion debt of 1992. And today’s generation is not paying for any past debt.Image result for the end is near

Taxpayers do not fund federal debt. The deposits themselves are returned upon maturity, and the interest on those deposits is paid by new dollars created by the federal government.

No tax dollars involved. They are destroyed.

Also, let us dispense with this “nonpartisan” nonsence. These guys are rabidly partisan. The root for the rich and against the poor.

They want taxes on the rich cut, and benefits for the poor cut. How much more partisan can you get.

With deficits rising and gross debt scheduled to jump by more than $1 trillion annually, Congress must take action to put the country on a more sustainable path, Gregg and Rendell said.

“The fiscal recklessness over the past years has been shocking, with few willing to step up with a real plan,” they said. “We need responsible leadership to fix the debt, not a worsening of partisanship.”

And that is exactly what the debt fear-mongers have been saying for the past 80 years.

Pretending federal finances are like state and local government finances, or like personal finances, is designed to fool the public.

Because few people understand the basics of economics, the plot seems to have worked.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: 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

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

Should the minimum wage be lowered? Saturday, Feb 9 2019 

The federal minimum wage rate is $7.25 an hour. It applies to hourly employees and has been in place since 2009.

The states also set minimum wage rates that are above or below the federal rate, and several states have no minimum wage rate at all. In those latter states, and in those states with no minimum wage laws, the higher rate is supposed to apply.

Here are a few facts about the minimum wage:

(By Debbie Lord, Cox Media Group National Content Desk)

The Fair Labors Standards Act of 1938 established a federal minimum wage or the minimum amount a person must be paid by the hour. It was created to help stabilize the country following the Great Depression of the 1930s.

A single person under the age of 65 is considered to be living below the poverty level if they are making less than $12,486.

The act applies to around 84 percent of the U.S. labor force or 130 million workers.

The states also can set minimum wages that are above or below the federal rate. In those states the higher rate is applies.

I mention all this because my home state, Illinois, plans to raise its minimum wage to $9.25 per hour next year and to $15 per hour by 2025, and the usual controversy has begun.

Why do we have minimum wage laws?

These laws tacitly acknowledge that at the lower end of the wage scale, employees have much less negotiating power than do businesses.

These laws also acknowledge that many, if not most, businesses will pay workers as little as necessary to attract workers, and this amount frequently leaves workers in poverty.

Minimum wage is an anti-poverty effort, but like virtually all anti-poverty efforts, it is disdained by the conservative side of the political spectrum:

Ten reasons economists object to the minimum wage

Mark J. Perry @Mark_J_Perry

December 8, 2015

1. Proposed minimum wages are almost always arbitrary and never based on sound economic analysis. Why $10.10 an hour and not $9.10? Why $15 an hour and not $16 an hour?

#1 is fundamentally true, though it is a red herring, mostly because such an analysis is impossible. There are far too many too many competing variables.

Some people will benefit; some will be injured, and by varying degrees. Some businesses too, will benefit and some will not. How would the competing benefits and injuries be weighed?

But all of the above is true of most laws. Should the fine for speeding be $50 or $100? Should a jail term for a crime be 1 year or 10 years? How is that determined?

Although America has many thousands of city, county, state, and federal laws, very few are subject to “sound economic analysis,” for the same reasons as our own personal decisions seldom are subject to “sound economic analysis.” Too many competing and non-comparable variables.

2. A uniform federal minimum wage may be sub-optimal for many states, and uniform state minimum wages may be sub-optimal for many cities. A one-size-fits-all approach to the minimum wage is really a “one-size-fits-none.”

#2 also is true of most laws, particularly federal laws. But federal minimum wage law merely is a bottom, from which cities and states may deviate upwards. Image result for minimum wage

In that sense, it is more flexible than are most federal laws.

3. Minimum wage laws require costly taxpayer-funded monitoring and enforcement mechanisms, whereas market wages don’t.

All laws require monitoring of some sort. The objection really is an objection to any minimum wage laws.

Said another way, the author implies that minimum wage should be $0.

This directly contradicts his earlier objections: (#1: “Why $10.10 an hour and not $9.10?”) Why $0? What is his “sound economic analysis” that shows minimum wage should be $0?

And (#2: “A uniform federal minimum wage may be sub-optimal for many states . . .”) A $0 minimum wage surely will be “suboptimal for many states, counties and cities.”  But what prevents powerful employers from paying starvation wages to weak, desperate employees?

4. Minimum wage laws discriminate against unskilled workers in favor of skilled workers, and the greatest amount of discrimination takes place against minority groups, like blacks.

Low pay, including $0 pay, “discriminates against unskilled workers in favor of skilled workers, and the greatest amount of discrimination takes place against minority groups, like blacks.”

Again, this begs the question, what level of pay is acceptable in today’s America, or is the author suggesting we should return to slavery?

5. Adjustments to total compensation following minimum wage laws will disadvantage workers in the form of reduced hours, reduced fringe benefits, and reduced on-the-job training.

“Adjustments to total compensation following minimum wage laws in the form of reduced hours” means the people will work fewer hours for the same pay. Is this a bad thing??

6. Many unskilled workers will be unable to find work and will be denied valuable on-the-job training and the opportunity to acquire -jobexperience and skills.

On-the-job training for minimum wage jobs generally is itself, minimum, and most often is of scant value. Handing off a burger or greeting a customer at the door, does not provide valuable on-the-job training.

Again, the author does not explain what level of pay is necessary to provide that training. Presumably, no level of pay is low enough to satisfy his criteria.

7. Minimum wage laws prevent mutually advantageous, voluntary labor agreements between employers and employees from taking place.

Minimum wage employees do not have the economic power or expertise to negotiate “mutually advantageous, voluntary labor agreements.

8. To the extent that higher minimum wages result in lower firm profits and higher retail prices, that’s a form of legal plunder by workers from employers and consumers that is objectionable.

The author may not realize it, but his #8 can be rephrased: “To the extent that any wages result in lower firm profits and higher retail prices, that’s a form of legal plunder by workers from employers and consumers that is objectionable.”

Even a 1 cent minimum wage fits that description. Once again, the author naively opts for a $0 minimum wage.

9. Market-determined wages are efficient, whereas government-mandated wages create distortions in the labor markets that prevent labor markets from clearing.

No definitions are given for “efficient,” “distortions,” and “clearing.” Is it “efficient” for a person to work 40 hours a week and still not be able to afford life’s necessities? Are markets distorted when a low-paid person makes one thousandth what a highly paid worker makes?

Similarly, when unions strike for wages and benefits, is that an example of “market-determined” efficiency?

10. Like all government price controls, minimum wage laws are distortionary. If you trust government officials and politicians to legislate and enforce a minimum wage for unskilled workers, you should logically trust those same bureaucrats to set all prices, wages and interest rates in the economy.

Realistically, if you agree that those economy-wide price controls would be undesirable, then you should also agree that the minimum wage law is also undesirable.

Forgetting for a moment that government price controls set maximums, and minimum wage sets minimums, the government already does many things to set prices on things. Medicare, for instance, one of the most popular social benefits in history, already sets maximum prices on thousands of procedures and drugs, by virtue of its compensation schedules.

Many state and local government set maximum prices on electricity, water, parking, and the largest single expense we all pay: Taxes. The notion that governments are incapable of setting a minimum on wages simply does not square with the facts.

Minimum wage laws benefit America, because allowing powerful companies to pay starvation, or even below-starvation, wages is not in the best short-term or long-term interests of America.

Minimum wage (red line) has not kept up with inflation (blue line).

The sole question is not “whether” there should be minimum wage laws, but rather “at what levels” those wages should be.

I suggest that no one ever should be paid at a poverty level.

Though all of America is subject to various levels of minimum wage, the nation’s economic growth has been impressive, while unemployment is low.

This belies the author’s contention that minimum wage laws, in of themselves, are harmful.

Of course, minimum wage laws would be much less needed if the nation adopted the “10 Steps to Prosperity, below.

The Ten Steps would cost businesses and taxpayers nothing, and would not discourage hiring.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

Search #monetarysovereigntyFacebook: 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

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

Pete Peterson foundation, your center for economic ignorance, speaks again. Sunday, Feb 3 2019 

The Peter G. Peterson Foundation (PGPF), like the equally wrong, Committee for a Responsible Federal Budget (CRFB), continues to broadcast economic nonsense, the purpose of which is to widen the Gap between the rich and the rest.

On November 20, 2018, PGPF published a post titled “Top 10 Reasons Why The National Debt Matters.”

In typical PGPF fashion, some of its “top 10 reasons” aren’t really reasons at all, and the rest are utter nonsense.  Here is a sampling for your amusement or horror:

At $21 trillion and rising, the national debt threatens America’s economic future. Here are the top ten reasons why the national debt matters.

I. The national debt is a bipartisan priority for Americans. Nearly three-quarters of voters (71 percent) agree that the national debt should be a top-three priority for the country, including 69 percent of Democrats, 68 percent of Independents and 79 percent of Republicans.

The above is not a reason why “national debt matters.” It merely is the result of polling Americans who do not understand the economics of Monetary Sovereignty, and who mistakenly believe federal finances are like personal finances.

The so-called “debt” isn’t what most people think it is. It is ‘’DEPOSITS’‘ into T-security accounts.

When you (or China) “lends” to the federal government, you take dollars from your checking account and deposit them into your T-security account.

These accounts are similar to bank savings and CD accounts.

Then, to pay you back, the government sends your dollars from your T-security account back to your checking account. It’s a simple money transfer the Treasury does this every day as T-securities mature.

Banks boast about the size of their deposits. They don’t call them “debt,” though deposits are a form of debt.

Before maturity, your dollars remain in your T-security account. The government has no use for them, since the government creates new dollars, ad hoc, every time it pays a creditor.

The U.S. federal government, being Monetarily Sovereign, never can run short of its own sovereign currency. Even if all federal taxes were $0, and no T-security dollars were accepted, the government could continue spending forever.

The purpose of federal taxes is different from the purpose of state and local taxes, which supply state and local governments with money. The federal government neither needs nor uses tax dollars. It destroys them upon receipt.

The real function of tax dollars is to control the economy, so “desirable” things are encouraged by being taxed less than “undesirable” things.

The federal government has no need to borrow. The purpose of T-securities is:
1. To provide a safe parking place for unused dollars. This helps stabilize the U.S. dollar
2. To help the Fed control interest rates, which helps control inflation.

II. The return of trillion dollar deficits.  The Congressional Budget Office (CBO) projects that the budget deficit will rise from $779 billion in 2018 to $1.5 trillion by 2028, resulting in a cumulative deficit of $12.4 trillion over the 10-year period from 2019 to 2028.

“Reason” #II also is not a reason why federal debt matters, unless one believes all large numbers matter. Like the CRFB, the PGPF loves to quote big numbers without explaining why we should be concerned about them.

Deficits merely are the difference between federal taxes collected and destroyed, vs. the federal spending that grows the economy. There is no reason why we should be concerned about the federal government’s spending that helps grow the private sector. 

The PGPF quotes a big deficit number to make you think that, like you and me, the federal government can have difficulty paying large financial obligations.

But the federal government is not like you and me. Nor is the federal government like state and local governments. Being uniquely Monetarily Sovereign, the federal government never can run short of dollars. Never.

III. Interest costs are growing rapidly. Interest costs are projected to climb from $315 billion in 2018 to $914 billion by 2028. Over the next decade, interest will total nearly $7 trillion. By 2026, interest will become the third largest category of the budget. With our many important budget priorities, none of us wants interest to become the third largest government “program.”

Federal deficit spending grows the economy. In fact, when federal deficit spending is too low, we have recessions and depressions. And how are recessions and depressions cured? With increased deficit spending.

The more interest dollars the federal government pumps into the economy, the healthier is the economy.

Declining deficit growth leads to recessions (vertical bars) which are cured by increasing deficit growth. Federal interest payments stimulate economic growth.

IV. Key investments in our future are at a risk. In addition, growing federal debt reduces the amount of private capital for investments, which hurts economic growth and wages. A nation saddled with debt will have less to invest in its own future.

Growing federal “debt” increases the amount of private capital for investments. The so-called “debt” is related to federal deficit spending, which adds growth dollars to the economy.

Additionally, growing federal debt requires growing federal interest payments, which also add growth dollars to the economy.

V. Rising debt means lower incomes. Based on CBO projections from last year, growing debt would reduce the income of a 4-person family, on average, by $16,000 in 30 years. Stagnating wages and growing disparities in income and wealth are very concerning trends. The federal government should not allow budget imbalances to harm American citizens.

There is no economic mechanism that would cause rising federal “debt” to reduce incomes.

The additional stimulus dollars that increased federal “debt” produce, would stimulate higher incomes, not lower.

VI. Less flexibility to respond to crises. On our current path, we are at greater risk of a fiscal crisis, and high amounts of debt leave policymakers with much less flexibility to deal with unexpected events. If we face another major recession like that of 2007–2009, it will be more difficult to work our way out.

Once again, the Peterson Foundation demonstrates abject ignorance of economics or intentional deception about economics. Take your pick.

“Reason” VI  assumes that the federal government can run short of dollars with which to “deal with unexpected results.” Fact: Our Monetarily Sovereign federal government, never can run sort of U.S. dollars.

Since 1940, the federal debt has increased from $40 billion to $20 trillion, a gigantic 50,000% increase. Yet the government never has lacked “flexibility” in dealing with unexpected events.

During the Great Recession of 2008, the federal government ran massive deficits to grow us out of the recession, and it continued to run deficits every year, thereafter. No lack of flexibility occurred.

VII. Protecting the essential safety net. Our unsustainable fiscal path threatens the safety net and the most vulnerable in our society. If our government does not have sufficient resources, these essential programs, and those who need them most, could be put in jeopardy.

“Unsustainable” is a favorite word of the deficit Henny Pennys. No one can explain how our Monetarily Sovereign government can find debt or deficits unsustainable.

Once again, the Peterson Foundation tries to tell you that the federal government, like state and local governments, can run short of U.S. dollars. To put it a charitably as possible, it’s a damn lie.

VIII. A solid fiscal foundation leads to economic growth. A solid fiscal outlook provides a foundation for a growing, thriving economy. Putting our nation on a sustainable fiscal path creates a positive environment for growth, opportunity, and prosperity.

With a strong fiscal foundation, the nation will have increased access to capital, more resources for private and public investments, improved consumer and business confidence, and a stronger safety net.

In Peterson-speak, “solid fiscal foundation” means cutting deficit spending, i.e austerity, the program that always, always, always lead to recessions and depressions.

Every depression in U.S. history was the result of a Peterson-like attempt at a “solid fiscal foundation.”

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

IX. Many solutions exist! The good news is that there are plenty of solutions to choose from. The Peterson Foundation’s Solutions Initiative brought together policy organizations from across the political spectrum to develop long-term fiscal plans. Each of those organizations developed specific proposals that successfully stabilized debt as a share of the economy over the long term.

“Many solutions exist” is not a reason why “National Debt Matters.” We can only assume this so-called “reason” was included to get the magic number up to 10.

We feel quite confident that any “solutions” put forward by PFPG will accomplish just one thing: They will widen the Gap between the rich and the rest. 

X. The sooner we act, the easier the path. It makes sense to get started soon. According to CBO, we would need annual spending cuts or revenue increases (or both) totaling 1.9 percent of GDP in order to stabilize our debt. If we wait five years, that amount grows by 21 percent. If we wait ten years, it grows by 53 percent. Like any debt problem, the sooner you start to address it, the easier it is to solve. 

Again, number X isn’t a reason, nor are annual spending cuts or revenue increases a solution to anything.

The rich always favor spending cuts, particularly to social programs the benefit the non-rich:  Social Security, Medicare, Medicaid, aid to education, poverty aids, etc.

And tax increases are welcome, so long as they are increases in the taxes the non-rich must pay: FICA and taxes on Social Security benefits. You seldom will see Peterson recommend increases in taxes on capital gains or on the tax loopholes the rich love.

In Summary:

The Peter G. Peterson Foundation is just another right-wing, pro-rich organization that masquerades as a non-partisan think tank. Its goal is to widen the Gap between the rich and the rest of us.

Federal finances are not like personal finances or state and local finances. The federal deficit and debt neither are a threat to the federal government nor burden on taxpayers. The federal deficit is necessary for economic growth. The federal debt could be paid off, tomorrow.

The public’s ignorance about Monetary Sovereignty allows the PGPF and the CRFB to spread misinformation about the federal debt and deficit.

 

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereigntyFacebook: 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 2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone 3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all) 4. Free education (including post-grad) for everyone 5. Salary for attending school 6. Eliminate federal taxes on business 7. Increase the standard income tax deduction, annually.  8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income. 9. Federal ownership of all banks 10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you. MONETARY SOVEREIGNTY

How does the federal government “pay for” a big federal tax cut? Thursday, Jan 31 2019 

How does the federal government “pay for” a big federal tax cut? The same way the federal government pays for a big federal spending increase. By creating dollars from thin air.

Back in the early 1780s, there were no U.S. dollars. Then, suddenly, the U.S. federal government created millions of them, simply by creating laws.

Just as the federal government faces no limit to laws, it faces no limit to the dollars laws create.

Today, the government continues to create dollars from thin air. Here’s the process:

When any agency of the federal government writes a check to pay a creditor, that payment actually instructs the creditor’s bank to increase the balance in the creditor’s checking account.

Those new dollars are added to the nation’s M1 money supply.

The check then is cleared through the Federal Reserve Bank, and the world has more dollars.

Image result for bernanke and greenspan

How do we get these guys to understand that federal taxes don’t fund federal spending?

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.”

Alan Greenspan: “Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency.”

St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e.,unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.

That is how the federal government “pays for” spending and for tax cuts. Thus, the federal government cannot unintentionally run short of its own sovereign currency, the U.S. dollar.

Though paying bills is the method the government uses to create dollars, you wouldn’t know that from reading articles that confuse federal finances with state and local government finances.

How Democrats’ tax obsession could backfire
W. James Antle III

When Sen. Kamala Harris (D-Calif.) announced her candidacy for president, she promised a laundry list of new federal programs — Medicare-for-all, universal pre-kindergarten education, debt-free college — plus the “largest working-class tax cut in decades.

Answer: Our Monetarily Sovereign federal government (unlike state and local governments) can pay for anything. It cannot unintentionally run short of dollars.

How did she propose paying for that tax cut?

By getting rid of President Trump’s tax cut for “corporations” and the “top 1 percent.”

But there’s a flaw in the plan: While repealing the Republican-passed tax cut in its entirety, including the parts of it that benefited neither corporations nor the top 1 percent, would save an estimated $2 trillion, Harris’ big ticket items would undoubtedly cost trillions more.

In other words, her grand tax plan just doesn’t add up.

It doesn’t “add up,” because it begins with the false assumption that federal finances are like personal finances, or like state/local government finances. It begins with the false assumption that the federal government needs tax dollars in order to spend.

It begins with the false assumption that deficits are a burden on the federal government and on taxpayers, when in fact, federal deficits are necessary for economic growth, and are a burden on no one.

This is a problem not just for Harris, but across the Democratic 2020 presidential field.

The candidates — and their voters — want a big increase in federal spending to support new social services.

But they seem to have yet to realize that simply nudging the top marginal income tax rate back up won’t pay for it all.

Deficits are already spiking even without this new spending, and over the long term, Republican tax cuts only account for so much of the red ink.

Red ink is a burden for state and local governments, for businesses, and for you and me. But federal “red ink” is what grows the economy.

When we don’t have federal red ink, we have depressions or, at best, recessions.

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

And there’s another downside to the idea of hiking the top marginal income tax rate: It could alienate affluent, college-educated suburbanites, which have become some of the Democratic Party’s most valuable voters.

Many of them used to vote Republican but refused to vote for Donald Trump. While many of them are in their peak earning years, they’re not wealthy enough to absorb a major tax increase. In fact, such an increase could drive them back into the GOP’s arms.

Nevertheless, freshman Democratic Rep. Alexandria Ocasio-Cortez (N.Y.) has suggested raising the top marginal tax rate all the way back to 70 percent, where Ronald Reagan found it 38 years ago.

She wants the cut-off to be at the “tippy top” — people making around $10 million a year. That won’t raise much revenue, but applying it to everyone who pays the current top rate would start dipping into valuable Democratic voters’ pockets.

Those are the people, who have the education and financial experience to understand Monetary Sovereignty, if it is explained to them.

Sadly, the Democrats are afraid even to try.

Sen. Elizabeth Warren’s (D-Mass.) “wealth tax” is a little bit different, and may be a more viable option for Democrats.

She wants to hit those Americans who have assets in excess of $50 million with a 2 percent tax, in addition to a 3 percent levy on those whose assets top $1 billion.

Economist Emmanuel Saez estimated to The Washington Post that the tax would raise $2.75 trillion over 10 years.

There is a real purpose for raising taxes on the very wealthy: Not to send dollars to the U.S. Treasury which has no need for income, but rather to narrow the gap between the richest and the rest.

The single most important problem facing America and the world — even more important Image result for poor in america 2017than the suicidal push to reduce the money supply — is the large and growing Gap between the rich and the rest.

That large and growing Gap is a direct threat to Democracy, for it gives the rich excessive power to bribe our politicians, to own our media, and even to influence universities and their economists.

The author of the above article, W. James Antle III, doesn’t understand Monetary Sovereignty, nor does Sen. Kamala Harris.

Either that, or they do not have the courage to disagree with the popular but false wisdom that federal financing is like personal financing.

Such a pity, because the understanding and then the application of Monetary Sovereignty, as discussed in the Ten Steps to Prosperity (below), could end poverty, and turn America into the “shining city on a hill” that of which President Reagon spoke.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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

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

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

Ten Steps To Prosperity:
1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

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