Translating the absurd. Does having less money make the nation wealthier?

The Mueller /Barr report did not cover: Trump’s secret taxes, excusing Nazis and white supremacists, the fake Trump Foundation, the fake Trump University, paying Stormy Daniels et al, groping women, obstruction of justice, loving dictators Putin and Kim, phony loans from Deutsche Bank, Donald Trump, Jr., Jared Kushner, inauguration committee, emoluments, security clearances, 10,000 lies, Trump’s refusal to testify under oath, nepotism, secret Saudi deals, campaign expenses, Trump Tower Moscow, secret meetings with Putin, and the GOP’s trying to keep the “exonerating” report a secret.

So, now that all those things are forgotten by the press, by the public and especially by the GOP, we can return to the federal budget.

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Image result for ben bernanke — **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.”

The following is yet another misleading article, meant to make you think the Monetarily Sovereign federal budget is like your monetarily non-sovereign household budget.

(The idea is to get you to accept reductions in such federal benefits as Medicare, Medicaid, Social Security and other aids important to the non-rich.)

A translation of each section follows immediately after the section.

February’s Budget Deficit Was the Largest in American History
The feds are $234 billion in the red. Looking for hope? Sen. Mike Enzi has some ideas.
Eric Boehm, Mar. 25, 2019

The Treasury announced Friday that the federal government spent $234 billion more than it brought in during February, breaking the record for the largest monthly budget deficit.

Translation: In February, the federal government added more stimulus dollars to the U.S. economy than ever — $234 billion in economic stimulus.

Barack Obama’s Treasury Department set the previous record in February 2012 , with a deficit of $231 billion.

At that time, President Obama anticipated $1 trillion annual deficits for the rest of the decade

Translation: Barack Obama’s government set the previous record in February 2012, by pumping $231 into the economy, which was necessary grow the economy after the Great Recession of 2008.

At that time, President Obama anticipated $1 trillion annual private sector surpluses for the rest of the decade —almost identical to the projections offered by Donald Trump in his 2019 budget proposal, delivered earlier this month..

That Obama budget was roundly criticized by Republicans in Congress, who railed against the president’s “failure to control spending.”

Obama’s record deficit helped organize Republican policymaking around plans to cap spending growth and balance the budget.

The Republican Congress slowed the growth in government spending and as a recovering economy boosted tax returns.

Image result for alan greenspan — **Alan Greenspan:** “A government cannot become insolvent with respect to obligations in its own currency.”

Translation: That Obama budget was roundly criticized by Republicans in Congress, who railed against the president’s “failure to impose austerity on the economy.”

Obama’s record money creation helped organize Republican policymaking around plans to cap economic growth by balancing the budget.

The Republican Congress slowed money growth, which starved the recovering private sector of dollars.

The current record-high deficit is largely the fault of the same Republicans who once attacked Obama for spending too much.

Translation: The current record-high private sector is largely the success of the same Republicans who once attacked Obama for giving the private sector too much.

According to an analysis from the nonpartisan Committee for a Responsible Federal Budget, about 60 percent of this year’s expected deficit is the result of policies—mostly last year’s huge increase in spending that shattered those Obama-era budget caps—put in place by current legislators and signed by the current president.

Translation: According to an analysis from the extremely partisan Committee for a Responsible Federal Budget, about 60 percent of this year’s expected economic growth is the result of policies—mostly last year’s huge increase in spending that shattered those Obama-era growth caps—put in place by current legislators and signed by the current president.

They can’t blame a recession. They can’t blame Obama. After years of solid if not mind-blowing growth, the budget deficit should be shrinking, not expanding.

Failing to fix the budget now will have consequences for years to come.

Over the next 30 years, Social Security and Medicare are expected to run a combined $100 trillion deficit.

Image result for federal reserve bank — **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.

Translation: They can’t credit the recession. They won’t credit Obama. After years of solid if not mind-blowing growth, the stimulus should be expanding, not shrinking.

Failing to increase the budget now will have consequences for years to come.

Over the next 30 years, Social Security and Medicare are expected to run a combined $100 trillion deficit, that the federal government can and should pay for.

If you’re looking for a glimmer of hope, it might be found in the budget plan recently released by Senate Budget Committee Chairman Mike Enzi (R–Wyo.).

Translation: If you’re looking for a flash of terror, it might be found in the budget plan recently released by Senate Budget Committee Chairman Mike Enzi (R–Wyo.).

Enzi’s budget is supposed to reduce the deficit by $538 billion over five years by cutting spending—and also, alas, by projecting probably unrealistic economic growth in the next half-decade.

Translation: Enzi’s budget is supposed to reduce the economic stimulus by $538 billion over five years by cutting spending—and also, alas, by projecting probably unrealistic economic growth (because of Enzi’s disastrous austerity) in the next half-decade.

His proposal includes cuts to Medicare and Medicaid, which make up more than 60 percent of the federal budget in a single year.

Enzi’s proposal is a serious attempt to bring the deficit back under control, even though it would not balance the budget.

Translation: His proposal includes cuts to Medicare and Medicaid, which make up more than 60 percent of the federal budget in a single year. The rich always look for ways to cut benefits to the middle classes and the poor.

Enzi’s proposal is a serious attempt to widen the Gap between the rich and the rest, even though it might not completely destroy the middle- and poorer classes.

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In Economics, everything devolves to Monetary Sovereignty and Gap Psychology.

Economics studies the relationships among wealth, money, and human psychology.
Monetary Sovereignty studies a money issuer’s power over the money it issues.
Gap Psychology describes the human desire to widen the Gap below you on any economic or social measure, and to narrow the Gap above you.

The very rich control American politics. They never stop trying to widen the Gap between them and you.

Essential to that effort is convincing you of the lies that federal “debt” (deposits into T-security accounts) and “deficits” (private sector surpluses) are a threat to the U.S. economy and to future taxpayers.

The rich want you to accept the false notion that your federal benefits should be cut.

So long as their misstatements work, they will continue to promulgate those lies, and indeed, your benefits will be cut.

Only when you first understand the facts, and then protest the lies, will you be safe from the rich.

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

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The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

Medicare for All: The real stumbling block

Imagine that everyone in America — you, your family, your friends and neighbors — everyone, could receive health care from doctors, hospitals, rehab facilities, extended care facilities, and all pharmaceuticals and equipment, and never have to worry about cost.

Imagine you being forced to choose between your financial devastation vs. sickness or death for your loved ones.

Then, imagine the federal government paying all your health-related bills, leaving you free from worry.

The rich in America already live in such a glorious world, but for most of us, current and future health affordability is an ongoing concern.

Yet, many non-rich Americans oppose even the concept of Medicare for All. Why?

1. It’s unsustainable. Debt fear mongers have been promulgating that myth for at least 80 years.In 1940, when the federal debt was $40 Billion, the fear-mongers were calling it a “ticking time bomb.

“Every year afterward, they have pounded the same lies into our brains: “The federal government will go broke. It’s “unsustainable.” Your children’s taxes will have to go up.”

Today, the debt is $20 Trillion, and the government has not gone broke, and indeed cannot go broke, and taxes have not risen.

2. It’s socialism. Actually it isn’t. It’s progressivism. Socialism is government ownership and control, not merely government support.

The federal government supports many things: Social Security, Medicare, Medicaid, poverty aids, education, etc. Shall we eliminate them?

Additionally, we do allow many forms of real socialism: The military, roads, bridges and dams, public libraries, NASA, the VA, etc. Shall we eliminate those, too?

3. It will cause inflation or hyperinflation. Although in the past 80 years, federal debt has risen an astounding 50,000%, inflation has averaged close to the Fed’s 2.5% target.

The reason is that the Fed has tools it needs to prevent and cure inflations, among which is: Control over interest rates.

Raising rates increases demand for the dollar, making it more valuable, so fewer dollars are needed to buy goods and services.

While federal “debt” (blue, i.e. deposits into T-security accounts) increased massively, inflation (red) increased modestly.

4. We don’t have enough resources. What this really means is: “If the poor start using doctors, hospitals, et al, then there won’t be enough doctors and hospitals for me.”

These objectors believe that a viable health-care system relies on the poor not being able to afford health-care — that “limited” resources should be reserved for the wealthier among us. This is America?

A nation’s resources grow with the money available to pay for them. Funded by a government’s unlimited ability to pay, resources are unlimited.

5. It will take money and jobs from the health insurance industry. Right, just as public transportation takes money and jobs from taxi drivers.

Some jobs will be added in the federal sector. But in any event, the notion that the poor should do without healthcare so that the insurance industry can keep its jobs is ridiculous. It’s an example of misplaced priorities.

The above are fake reasons, used to conceal the real reason, which is described in the following, brief, “THE WEEK Magazine” (2/22/19) article:

Despite all the attention tech gets, the biggest five insurance and health benefits companies have greater revenues than the FAANGS – Facebook, Amazon, Apple, Netflix, and Google.

The top five health insurers and benefit managers expect &787 billion in revenue for 2019, compared with $784 billion for the FAANGS.

Pharmacy benefit manager CVS, the biggest of the health-care group, expects revenues of $246 billion.

In short, the insurance companies, that massively bribe politicians with campaign contributions and promises of lucrative employment later, don’t want the federal government to offer you better, more comprehensive, no deductible insurance at no cost.

OpenSecrets.org reveals:

One-third of Senate Democrats have cosponsored the Medicare for All Act, which Sanders introduced in September.

Democrats who haven’t cosponsored the bill received 146 percent more money on average from health insurance companies between 2011 and 2016 than those who have ($147,186 to $59,789)

If you’ve been told lies #1 thru #5, there is a good chance the source either is ignorant of economic reality or has been bribed by the health insurance industry.

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

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

Translating a letter from a debt nut

Herewith, for your education and amusement, we translate into correct economics, the opinions of a certifiable, wrong-headed debt nut:

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

President Trump’s budget aims to reverse an unsustainable fiscal situation and put debt on a downward path relative to the economy.

Unfortunately, as in previous years, he relies on far too many accounting gimmicks and fantasy assumptions and puts forward far too few actual solutions.

Translation: The Republican budget that President Trump has not, and cannot, read aims to continue a sustainable (since 1940) fiscal situation and put deposits into T-security accounts on an upward path.

Unfortunately, as in previous years, he relies on far too many accounting gimmicks and fantasy assumptions and puts forward far too few actual solutions.

Even full of accounting gimmicks meant to paper over deficits, the President’s Budget would still borrow $7.8 trillion over the next decade.

Under reasonable economic assumptions, however, we find it would be closer to $10.5 trillion.

Translation: Even full of accounting gimmicks meant to paper over stimulative additions to the economy, the Republican Budget that Trump hasn’t read, would still accept $7.8 trillion in T-security account deposits over the next decade.

Under reasonable economic assumptions, however, we find it would be closer to a $10.5 trillion addition to the economy.

Image result for signing blind — How Trump signs GOP bills.

President Trump has already signed into law debt-financed tax cuts and spending increases that will add $2.3 trillion to the debt over the next decade, despite budgets that proposed revenue-neutral tax reform and spending reductions.

This budget does nothing to address or pay for these expanded deficits – in fact, it assumes the tax cuts are extended without even recognizing the cost.

Translation: President Trump has blindly signed into law tax cuts and spending increases that will add $2.3 trillion to the economy over the next decade, despite recessionary budgets that proposed disastrous tax increases and spending reductions.

This budget does nothing to take advantage of the government’s unlimited ability to pay for these expanded additions to the economy – in fact, it assumes the tax cuts are extended without even recognizing the benefits.

Perhaps most disappointing is the decision to continue

Deficits –federal tax cuts and spending — add growth dollars to the economy.

And expand recent defense increases by funding almost $100 billion in new spending through an off-book emergency war account.

This Overseas Contingency Operations (OCO) gimmick is not new, but the proposed abuse of this account rises to a new level never before seen and sets a dangerous precedent.

Translation: Perhaps most encouraging is the decision to continue and expand recent defense increases by funding almost $100 billion in new spending.

This Overseas Contingency Operations (OCO) program is not new, but the proposed use of this account rises to a new level never before seen and sets a favorable precedent for stimulating the economy.

Meanwhile, a fantasy assumption of sustained 3 percent economic growth makes a return appearance in the budget.

Every independent forecaster foresees growth to average closer to 2 percent over the next decade.

Assuming an extra point of growth serves no purpose but to mask the high deficits and debt likely to materialize under the President’s budget.

Meanwhile, a typically Trumpist fantasy assumption of sustained 3 percent economic growth makes a return appearance in the budget.

Every independent forecaster foresees growth to average closer to 2 percent over the next decade.

Assuming an extra point of growth serves no purpose but to mask the economy’s surpluses and the deposits into T-security accounts likely to materialize under the Republican’s budget.

Thoughtful Medicare, disability, and other proposals in the budget deserve serious debate, but these policies are overshadowed by inflated economic growth, unrealistic policy assumptions, and a failure to recognize the deep hole that policymakers have dug in recent years.

Translation: Thoughtful Medicare, disability, and other proposals in the budget deserve serious debate, but these policies are overshadowed by inflated economic growth, unrealistic policy assumptions, and a failure to recognize the economic stimuli that policymakers have invested in recent years.

If the past two years are any indication, this budget will be followed by more debt, not debt reduction.

On our current course, Americans will soon face record levels of debt, leading to slower income growth, increased interest payments, and less opportunity.

If the past two years are any indication, this budget will be followed by more economic growth, not growth reduction.

On our current course, Americans will soon face record levels of economic growth, leading to higher income growth, increased interest payments into the private sector, and more opportunity that results from increases in the money supply.

In Summary:

If you merely substitute:

“deposits into T-security accounts” for “debt,”
“investments in the private sector” for “deficits,”
“sustainable since 1940” for “unsustainable,”
“favorable precedent” for “unfavorable precedent,” and
“Republican” for “Trump” (who never reads anything and will sign anything anti-Obama),

you will be able to glean the truths from the lies of Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

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

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

Inflation: The causes and cures

In one sense, inflations (and hyperinflations) must be complex, not only because so many nations have suffered from them and not known what to do, but because so many events can cause inflations.

But in another sense, many nations have figured out how to prevent and cure inflations, and the causes can be boiled down to just two. This post reveals the two causes of, and the two best cures for, inflation.

Inflation does not exist in a vacuum. It is a change in the relationship between the value of a currency and the average value of goods and services. In short, the value of the currency declines relative to the value of the goods and services.

Image result for hyperinflation germany wheelbarrow — Classic example of hyperinflation — wheelbarrow of money.

Popular wisdom holds that government deficit spending or “money creation” causes inflation. Many examples of inflation, particularly hyperinflation (an extreme form of inflation) do seem to correspond with money creation.

Weimar Republic (Germany) and Zimbabwe are perhaps the most cited examples.

Yet, in the U.S., the money supply has increased markedly with only moderate inflation.

The following graph shows indexes of three money measures, M1 (green), M2 (red), and M3 (blue), along with the consumer price index measure of inflation (purple). All indexes are based on January 1980 = 100.

While all three money measures have risen substantially, inflation has been comparatively modest, and within the Fed’s target of 2.5% annually. Why?

Here is another graph comparing the rise of federal debt (total of T-security accounts) with the consumer price index:

Federal debt grew massively while inflation remained moderate.

Again, there seems to be scant relationship between federal debt growth and inflation.

It would be difficult to look at these data and conclude that federal deficit spending (i.e. money creation) causes inflation. In fact, money creation seems to be a government’s response to inflation, not the cause.

Where does that leave us?

Inflation is based on the value of goods and service vs. the value of a currency. The value of goods and services is based on Demand/Supply. The value of a currency also is based on Demand/Supply.

The formula for the value of goods and services (Demand/Supply) is driven mostly by changes in the Supply side of the fraction. When food or energy are in short supply, inflation is inevitable. The Demand for food and oil (today’s stand-in for energy) is far less variable.

In the formula for the value of dollars, Demand/Supply, both Demand and Supply can be quite variable. The Demand for currency is based on Reward/Risk. The Reward for owning dollars is interest. The Risk would be the reduced “full faith and credit” of the issuer.

Because the full faith and credit of the U.S. essentially is perfect, Risk is not an important variable here.

This means that inflation comes when the Reward for owning dollars (interest) declines and/or the Supply of food and/or energy declines.

A larger economy has more money than does a smaller economy. For instance, California has a larger economy and more money than does Los Angeles. Therefore, to grow an economy requires growing the money Supply.

That indicates that trying to fight inflation by limiting the money supply (aka austerity), via reduced deficit spending and/or increased taxation, will lead to recession or depression.

Annual % change in Federal Debt shows that reductions lead to recessions (vertical bars), and increases cure recessions.

As for surpluses (i.e. extreme deficit reductions), they lead to depressions (i.e. extreme recessions):

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

Bottom line: Inflation devolves to two variables: The supply of food and/or energy and interest rates.

The prevention and cure for inflation is to make sure the Supply of goods and services (usually food or energy ) is adequate, and the Reward for owning dollars (interest), remains adequate.

Example: Zimbabwe’s hyperinflation began when its leader, Robert Mugabe stole farm land from white farmers and gave it to black people who had no experience farming.

The resultant food shortage caused inflation. Then, Mugabe’s response was to print currency, which did nothing to solve the fundamental shortage problem. And as the inflation worsened, more and more useless currency printing followed, and it was the currency printing that wrongly was blamed for the inflation.

It was as though someone prescribed wine to cure a cancer. As the cancer progressed, more and more wine was prescribed until the patient died, and the wine was blamed as the cause of the cancer.

In short, to prevent inflation don’t cut federal deficit spending. Rather, make sure the economy has plenty of food and energy and high enough interest rates.

And so, to cure an existing inflation, you must increase your supply of food and energy, and/or increase interest rates.

Printing more currency is an ineffective inflation cure, as is cutting deficit spending (aka “austerity.) Both exacerbate inflation and lead to recessions and depressions. Instituting austerity to grow an economy is like applying leeches to cure anemia.

What should a Monetarily Sovereign country do about inflation? Here are the best steps to take:

Increase interest rates to make the currency more valuable. This is the method the Fed uses to control inflation.
Support farmers by cutting farm taxes, passing farm support bills, support farm research to increase crop yields.
Support energy creation: Oil drilling, renewable energy.

Do not blame federal deficit spending for causing future inflations
Do not begin austerity (reduced deficit spending, increased taxation)
Do not print additional currency.
Do not borrow a foreign currency

What about monetarily non-sovereign nations like the euro countries, which do not have a sovereign currency?

If the EU cannot be convinced to prevent and cure inflations, while supporting economic growth, euro nations must re-establish their own currencies, and become Monetarily Sovereign, again.

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

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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 Gaps between the rich and you.

MONETARY SOVEREIGNTY

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