[Why would any sane person take dollars from the economy and give them to a federal government that has the infinite ability to create dollars?]
The Committee for a Responsible Federal Budget (CRFB) is a fountain of misinformation, or should we say, “disinformation”?
Clearly, they are providing misinformation, i.e. wrong information, but the real question is, do they know it’s wrong, i.e disinformation?
Because they do extensive data analysis, I believe they simply must know their information is wrong. So why do they promulgate so much nonsense?
Before we answer that question, let’s see what they get wrong. Here are some excerpts from their website.
Gas Tax Holiday Would Take A Wrong TurnFEB 15, 2022 | TAXESThe White House and some in Congress are reportedly considering suspending the 18.3 cent federal gas tax for the remainder of 2022. The Committee for a Responsible Federal Budget recently estimated that such a proposal would reduce gas tax revenues by $20 billion and, without the general revenue transfer proposed in recent legislation, would advance the Highway Trust Fund insolvency date from 2027 to 2026.
Assuming their numbers are correct, what they really are saying is: “The proposal would reduce the amount of money taken out of the private sector (also known as ‘the economy’) by $20 billion.”
Adding dollars to the private sector is stimulative: taking dollars out of the private sector is recessive. In short, the reduced gas tax revenues would be a $20 Billion economic stimulus.
The CRFB seems to hate anything that stimulates the economy, especially if it directly benefits the middle- and lower-income groups as a reduced gas tax would do.
Further, the so-called Highway Trust Fund is not a real trust fund (see “The Phony Trust Fund Controversy”) and it cannot become insolvent unless Congress and the President want it to become insolvent.
The U.S. government, the creator of the U.S. dollar, cannot run short of dollars. Thus, no agency of the U.S. governmentcan become insolvent, unless that is what Congress wants.
(Former Fed Chairman, Alan Greenspan:“A government cannot become insolvent with respect to obligations in its own currency.”)
To prevent the insolvency of any agency, Congress merely passes a law that provides the agency with more dollars. Congress has the infinite ability to pass such laws.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:With inflation at a 40-year high, policymakers are appropriately focused on how to bring prices under control. But new tax cuts aren’t going to stop this inflation; after all, excessive tax cuts and spending are part of what caused high inflation.
Contrary to popular wisdom, no inflation in history ever has been caused by excessive tax cuts or spending. All inflations are caused by shortages of key goods and/or services.
Interest rates (blue) and inflation (green) have trended down, while federal debt (red) has increased.
For the past 10 years, federal deficit spending has increased massively, with minimal inflation. Now, suddenly, inflation has increased. Why?
Clearly, the cause is not deficit spending, otherwise it would have happened sooner.
Inflations are caused by shortages of key goods and services..
Today’s inflation is caused by the sudden confluence of several factors, all shortages: Labor, food, gasoline, computer chips, transportation, sand, among others.
(Yes, I said “sand.” U.S. Shale Production Hindered By Sand Supply Crunch.)
While massive federal spending has been with us for at least a decade, what has changed recently to cause the sudden change in inflation from low to high?
The answer: COVID.
The worldwide impact of the disease has caused the shortages that lead to inflation.
The only thing that will cure the inflation is to cure the shortages. And that can be accomplished by more federal spending to obtain the needed goods and services:
More federal spending to encourage oil drilling and/or renewable energy.
More federal spending to support farming
More federal spending to support chip manufacture
More federal spending to support transportation
More federal spending to support hiring (i.e. the elimination of FICA taxes and the reduction of income taxes at the lower end)
Reduced federal deficit spending will lead only to recessions, as it always has.
When federal deficit spending (blue) is reduced, we have recessions (vertical gray bars), which are cured by increases in federal deficit spending.
While a gas tax holiday might provide some temporary relief, much of the benefit may flow through to oil producers or lead to higher prices in other sectors of the economy.
It makes no sense for low gas prices to cause price increases elsewhere. While low gas prices may cause an increase in demand for cars, every industry would see lower production costs, which will ease inflation.
Benefitting oil producers is not something to be avoided. Financially encouraging them to pump more oil will ease the scarcity of oil.
By boosting demand in an already over-stimulated economy, the holiday would likely boost inflation in 2023 once it ends. The holiday will also undercut the Administration’s efforts to address climate change.
The CFRB would like you to believe the economy is “overstimulated.” No one knows what an “overstimulated” economy means, but it sure sounds terrible, doesn’t it?
Presumably, it means companies are making more profits so that they will hire more people and pay more salaries to the lower- and middle income people, thereby narrowing the income/wealth/power Gap between the rich and the rest.
Presumably, it means unemployment is low, so there are fewer impoverished children and their parents, again narrowing the Gap between the rich and the rest.
“Gap Psychology” is the desire to widen the Gap below and to narrow the Gap above. All groups are subject to Gap Psychology, but the very rich are the most expert at effecting it.
As for climate change, yes, encouraging more oil production will increase climate change, in the short term. But financially encouraging more use of renewables will have long-term climate benefits.
Meanwhile, the federal government would be out $20 billion this year alone – and much more if the holiday were extended.
The federal government has infinite money. Infinite minus $20 billion, still is infinite. The federal government always will have the infinite ability to write laws, and those laws have the unlimited ability to create dollars.
The CRFB cries crocodile tears for the infinitely rich U.S. government, but no tears for you. They want you to pay the infinitely rich government more of your scarce dollars.
The Highway Trust Fund is just five years from insolvency, and the last thing we need is to cut its primary revenue source or paper over shortfalls with yet another general revenue transfer.
No, the last thing we need is liars telling us that the federal government is running short of its own sovereign currency, so you poor folks need to pony up more dollars, or receive fewer, benefits.
“Insolvency” is the big, fake bogeyman with which the rich try to scare you.
The Big Lie in economics is: “Federal taxes fund federal spending.” While state and local taxes do fund state and local spending, the federal government, being Monetarily Sovereign, does not rely on, or even use, tax dollars.
In fact, the U.S. Treasury destroys all tax dollars upon receipt. It creates new dollars, ad hoc, every time it pays a creditor.
(How does the Treasuy destroy tax dollars? The dollars in your checking account are part of the M1 money supply. When the Treasury receives those dollars, they disappear. They no longer are part of any money supply measure.They effectively are destroyed.)
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.”
Thus, the federal government has infinite dollars; it can’t run short; and telling people to give the government more and to accept less is just an example of how the Big Lie works.
As it stands, the gas tax will only cover half of highway and transit spending by the time the trust fund runs out.
In fact, the gas tax covers none of transit spending. Those tax dollars are destroyed. All federal spending, including federal transit spending, is funded by ad hoc, federal money creation.
As inflation subsides, we should either raise that tax or find a new funding source to supplement or replace it.
We don’t need to find a new funding source. And we certainly don’t need to raise taxes. The federal government is the best funding source:
Former Fed Chairman 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.”
As we’ve stated, the CRFB, acts repelled by the fact that federal spending helps narrow the income/wealth/power Gap between the rich and the rest.
A well-designed carbon tax could generate ample tax revenue while substantially reducing carbon emissions and tempering excessive demand.
A well designed carbon tax might be a good idea from an ecological standpoint. But it’s a silly idea if the purpose is to give private sector dollars to a government that has the infinite ability to create dollars.
The pain Americans are feeling at the gas pump – and with rising costs throughout the economy – should be taken seriously and addressed thoughtfully.
The gas price pain will be eased by raising gas taxes??? That’s the utter nonsense the CRFB wants you to believe.
While cutting the gas tax may have political appeal, it would move in exactly the wrong direction, worsening rather than improving our nation’s economic challenges.
The rising costs should be taken seriously, which is why the cost of gasoline should be reduced — by cutting the gas tax.
Inflation takes dollars out of your pocket. The CRFB’s method of taking inflation seriously” is by taking even more dollars out of your pockets via tax increases.
Why does the CRFB act this way?
Because the rich, who run America, also run the CRFB, and support it with donations. The rich and the CRFB want to widen the income/wealth/power Gap between the rich and the rest.
The rich always wish to be richer. The only way to be richer is to widen the Gap. There are two ways the rich can widen the Gap: Obtain more money for themselves and/or make sure you have less money by paying more taxes.
Either one will make the rich richer, and the CRFB seems to be doing everything it can to reach that goal.
In that vein, I just received this Email from CRFB:
Trust Fund SolutionsFeaturing Senators Angus King (I-ME) and Mitt Romney (R-UT)
Maya MacGuineas:Paid by the rich to tell you that the federal government’s trust funds soon will be insolvent.The major government trust funds for Social Security, Medicare, and Highway spending face insolvency in the next decade-and-a-half.Policymakers need to act sooner rather than later to prevent abrupt across-the-board benefit cuts, assure a more sustainable debt path, promote faster economic growth, and achieve a number of important policy goals.
How raising taxes will help “promote faster economic growth” is a mystery the CRFB never really explains.
Trust Fund Solutions will feature opening remarks from Senator Angus King (I-ME) and a discussion between Senator Mitt Romney (R-UT) and Committee for a Responsible Federal Budget president Maya MacGuineas.The event will also feature a panel of experts, one focused on each trust fund. The Committee for a Responsible Federal Budget will also debut its new Trust Fund Solutions website and educational tools.
You can bet that the “solutions” for the mythical “Trust Funds” will involve tax increases (for which the rich will given loopholes) plus benefit decreases, both of which will widen the Gap between the rich and the rest.
Widening the Gap is what the rich pay the CRFB to do.SUMMARY
1. The Big Lie in economics is that the U.S. federal government can run short of its own sovereign currency, the U.S. dollar. Not only does the govarnment itself have access to infinite dollars, but no agency of the government can run short of dollars unless Congress and the President want that.
2. The government neither needs nor uses tax dollars, which are destroyed by the Treasury upon receipt.
3. Federal deficit spending never causes inflations (scarcities are what cause inflations). Federal deficit spending can cure inflations by curing scarcities. Reductions in federal deficit spending lead to recessions or depressions.
4. The rich grow richer by widening the Gap between the rich and the rest. Gap widening has two paths: Gaining more for the rich and/or forcing the rest to accept less.
5. The CRFB is paid to aid the rich by convincing the populace to accept Gap widening.
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
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:
Canadian truckers have decided not just to inconvenience everyone, but to cost themselves money, and to risk the lives of their neighbors, and to risk their own lives, and to cost Canada billions, if not trillions — all to demonstrate, with abject stupidity, that they either don’t accept the word of doctors or don’t like obeying laws.
My advice to the truckers is: If you get COVID, don’t see a doctor. See a trucker. They must know more than the doctors.
The problem with stupid people is they are too stupid to understand that they are stupid. No truth penetrates. They are incapable of differentiating fact from conspiracy, so they get their information from such grotesque lie disseminators as QAnon, Tucker Carlson, Alex Jones, Fox News, and proven psychopath, Donald Trump.
The stupids refuse not only to protect themselves with a vaccination, but they refuse to protect others, not because they are mean-spirited, but because they, very simply, are stupid.
“Legitimate Political Discourse”
They want to arrest Dr. Fauci for telling them to protect themselves with vaccines and masks (How dare he!)
When you see videos of the attempted coup, which continues even today, remember that the stupids say it was “Legitimate political discourse.”
And, notice the American flags among the Trump flags. Those Stupid Party fools actually believe waving a flag makes them patriots.
Sorry, but being a flag-waver (or hugger) doesn’t make you a patriot any more than holding up a bible in a photo op makes you religious.
Draft dodger claims to love America but says killed U.S. soldiers were “suckers.” Seldom been in a church. First time he’s touched a bible.
Barely a day passes without some prominent Republican doing or saying something stupid. Here is a message a GOP Presidential hopeful has promulgated for more than eight months.
July 14, 2021: Florida governor Ron DeSantis has released a new range of merchandise with slogans targeting Anthony Fauci, as well as requirements for face masks.
Two drink koozies and a t-shirt featuring the words “Don’t Fauci My Florida” and “How the hell am I going to be able to drink a beer with a mask on?” are among the items on sale.
This is what passes for clever humor in stupidland.
“You don’t want to miss out on this,” the DeSantis campaign wrote on Twitter on Monday.
“Shop the store and support your favourite freedom-loving Governor NOW”.
Freedom to die, apparently, as Florida has seen more than 66 thousand people die of COVIDand an above-average rate per thousand. Compare that with the outrage about the September 11, 2001 attacks that killed about 3 thousand people.
If you were the governor of a state that had lost 66 thousand of its citizens, wouldn’t you do everything possible to protect their lives? Not stupid DeSantis.
DeSantis, like Trump, directs his lies to the least intelligent among us, the real stupids who believe everything nonsensical, so long as it contains a modicum of liberal bashing.
He’s not only outlawed mask mandates and discouraged vaccines, but he hired a stupid, mask and vax denier, Florida Surgeon General Dr. Joseph Ladapo, who sets a perfect example for Floridians by refusing even to say whether he himself has been vaccinated.
Fauci has been one of the sane voices in this entire calamity. So, of course, the Republicans want to fire him, or arrest him, or do something more awful to him, just because he’s tried to speak truth to them.
Trump: “If these radical, vicious, racist prosecutors do anything wrong or illegal, I hope we are going to have in this country the biggest protest we have ever had in Washington D.C., in New York, in Atlanta and elsewhere, because our country and our elections are corrupt. They’re corrupt.”
It’s the prosecutors who are “radical, vicious, and racist,” not these “good people.”
Trump is not angry at the people who committed mayhem in attacking Congress and threatened its members. He’s angry at the Committee that is trying to uncover the facts. They are the ones who are “radical, vicious, and racist.” Stupid.
And when even butt-kissing Lindsey Graham said, the rioters should “not be forgiven,” Trump (who was hiding safely in Mar-a-Lago during the attempted coup) called Graham a “RINO.” (That’s Trump’s favorite word for anyone who disagrees with him.)
Sorry, Lindsey, but you forgotthe 6 rules of Trump. Rule #2: Eventually, Trump will stab you in the back.
Of course, Trump doesn’t consider Congress to be as important as a statue. He wrote:
“I have authorized the Federal Government to arrest anyone who vandalizes or destroys any monument, statue or other such Federal property in the U.S. with up to 10 years in prison, per the Veteran’s Memorial Preservation Act, or such other laws that may be pertinent.” Donald J. Trump (@realDonaldTrump) June 23, 2020
Trump’s followers stupidly agree that a statue of a Confederate general (a traitor on a horse) is far more important to democracy and America than are Congress and the Presidential election.
Then there’s the GOP’s Sen .Ron Johnson who continues to set records for stupidity by disseminating false information about virtually everything: He said he trusted the MAGA domestic terrorists over Black Lives Matter protestors, and while spreading Russian disinformation, is lately is being laughed at for his false claim about how Greenland got its name.
He may be America’s most stupid Senator, but he’s in a close match with Sen. Tom Cotton of Arkansas., who claims with zero evidence or expertisethat COVID is a Chinese communist plot.
And let’s not forget Olympic champion of stupid, Rep. Marjorie Taylor Greene’s (R-Ga.), who claimed theviolent mob of Donald Trump supporters who attacked the U.S. Capitol on Jan. 6, 2021, just wanted to talk to their representatives. (She also said Hitler’s secret police were “the gazpacho.”)
We would be remiss if we didn’t mention former Democrat, now Republican Sen. John Kennedy, who after becoming a Republican, has delivered tons of truly stupid bull manure including this doozy: After retracting his false claims about Hunter Biden in Ukraine, he went on CNN, and claimed Ukraine was the real country meddling in the 2016 election.
And then there is who might be not only the most stupid man in Congress, but the most stupid man who ever has been in Congress, Republican Sen. Rand Paul. Here is just one example of his dopiness:
“With regard to the idea of whether you have a right to health care, you have to realize what that implies. It’s not an abstraction. I’m a physician.
“That means you have a right to come to my house and conscript me. It means you believe in slavery.
“It means that you’re going to enslave not only me, but the janitor at my hospital, the person who cleans my office, the assistants who work in my office, the nurses.
“I’m a physician in your community and you say you have a right to health care. You have a right to beat down my door with the police, escort me away and force me to take care of you?
“That’s ultimately what the right to free health care would be.”
That is what a prominent Republican, a man Republican voters support, says: Your having healthcare will enslave him.
This post could be 100 times its current length, and still, it wouldn’t begin to cover the rampant stupidity in America, today. We like to view with derision, the stupidity exhibited by the populace in some banana-republics, or even in Europe or Asia.
We always have puffed up our chests and claimed we are the “most” and the “greatest,” and everyone should follow our example.
Well, guess what folks. We now have joined the most stupid with the greatest stupidity, and it seems we are setting a perfect example for the world.
Or . . . are the Republican pols engaged in something even worse than stupidity?
The ostensible purpose of a government is to improve and protect the lives of the populace. the
But that is not the goal of today’s Republican party. This is not the party that gave you Social Security, Medicare, Medicaid, the Affordable Care Act, the Civil Rights Acts, the Voting Rights Acts, food stamps, unemployment insurance.
The Republican party is bereft of ideas that benefit the populace. Instead, the Republicans focus on two goals:
Benefitting the rich at the expense of the middle and the poor
Winning elections by taking advantage of America’s peculiar minority-rule laws.
Of the last six Presidential elections, the Republicans have won the popular vote in only one (George Bush).
In 2016, Trump lost the popular vote by nearly 3 million votes, but won the election. He did even worse in 2020, when he lost by 7 million votes, but whines that he really won and falsely claims the election was “rigged.”
During Trump’s four-year term, his major accomplishments were:
Failure of his dozens of attempts to repeal Obamacare (which continues to grow in popularity).
Overturning many Obama-era regulations that protected the populace (Example: Ended an Obama regulation that prevented coal-mining companies from dumping debris and waste into nearby streams. Rolled back financial disclosure requirements for energy firms. Gave states the ability to drug test recipients of unemployment benefits, repealed an Obama rule prohibiting the mentally disabled from purchasing firearms.
Major tax cuts for the rich
At this point, you may believe that I have described the stupidity of the Republican Party. If so, you would be wrong, for I believe the GOP has been quite clever, though in a evil way.
For historical reasons, having to do with compromises necessary to get the original states’ agreement to join the United States, America does not use majority-rule election systems.
Cities, counties, states, and even the federal government, including the President, are elected by complicated methods that award extra power to numerical minorities of voters.
Gerrymandering, Senate rules, and the electoral college system have resulted, for instance, in the Supreme Court being 2/3 right-wing, despite the nation being slightly left-wing.
An even more telling example is abortion, where a slight majority of Americans favor it, but the Supreme Court, most of whose members claim to be conservative (i.e. conserve existing law), have decided to be activist as well as cruel, so seem intent on changing the laws allowing abortion.
A clue to Republican strategy is seen in this chart:
The educated favor abortion. The uneducated and the religious, people who are less likely to deal with facts and more likely to obey emotions, oppose.
Major religions, despite their claims of morality and virtue, are nothing more than giant cults, where the most important factor is not fact but belief.
The rantings and fables of QAnon and Fox News are neither more nor less based on fact than are the various saints, miracles and gods of the major religions. The highly pious are tend to be accustomed to acceptance above analysis.
Thus, when Trump claims, despite all evidence, that he actually “won” and election he lost by 7 million votes, his religious followers believe with all their hearts and souls, and no amount of factual information will dissuade them.
After all, no scientific evidence will convince a believer that the virgin birth is impossible.
Trump, despite (or because of) being irreligious himself, cleverly understands this.
The Republicans, rather than developing ideas about benefits for the masses as their vote motivators, have focused on emotional motivators: Hatred and fear of “others.”
This is why conspiracy theories, which are fact-deficient, and based on intuition and emotion, find such traction among the religious right-wing, and it is why lies and craziness are not deal-breakers for those Republican voters.
Economic growth within a country does not always translate into an increase in happiness. We provide evidence that this paradox can be partly explained by income inequality.
In two different data sets covering 34 countries, economic growth was not associated with increases in happiness when it was accompanied by growing income inequality.
Earlier instances of the Easterlin paradox (i.e., economic growth not being associated with increasing happiness) can thus be explained by the frequent concurrence of economic growth and growing income inequality.
These findings suggest that a more even distribution of growth in national wealth may be a precondition for raising nationwide happiness.
Being more concerned with power and with the happiness of the rich, rather than the power and happiness of the middle or poor, the Republicans focus on income inequality, aka Gap Psychology (the human desire to widen the Gap below you and to narrow the Gap above you).
Rather than trying to help the middle and lower-income/wealth/power groups, as the Democrats do, the Republicans execute the opposite: They cater to the rich with tax breaks and, importantly, they create anti-poor resentment in the middle, lower-middle, and even the lower-income groups by fomenting hatred of those receiving anti-poverty aid.
The Republicans effectively blame the Democrats for narrowing the Gap below the middle classes, and for widening the Gap above the middle classes. Thus, they are able to generate hatred of Democrats for supporting immigrants and lower-income ethnic groups.
The rich get money and everyone else gets outrage, a potent combination.
SUMMARY The cult-like, Republican base, being less affluent, less educated, and more religious, is accustomed to accepting myths and lies. To them, faith and belief are more influential than facts.
To them, Trump’s repetition of the lie that the election was stolen, needs no evidence. The Trumpers have faith.
Trump Republican pols are able to lie with impunity because they encounter very little blowback. Conspiracy theories abound in the GOP-world, and powerful media like FOX and Brietbart, cynically foster such belief.
Further, the Republican base revels in the notion that their “saints” help them rebel against control, which is why Canadian truckers, against their own best interests, do what they can to endanger everyone around them.
The rich segment of the Republican voters don’t care about the lies and myths so long as the tax breaks keep coming.
In the eyes of logical thinkers, the Republican myths are ridiculous (“How can the right-wing voters believe such nonsense?”), but right-wing, conspiracy theories are no more ridiculous than typical religious myths.
The Trump-Republicans (Trumplicans) cynically have learned that:
Over the short time of elections, fear and hate are far stronger than compassion, and myths are far stronger than facts.
Winning elections is more important than benefitting the people.
The rich always will run America, and they will pay handsomely for the privilege.
So the GOP focuses efforts toward those most responsive to myths, toward gerrymandered voting rules, and toward the rich.
How “stupid” is that?
In answer to the title question, “Are the Republicans really that stupid, or is it something more sinister?” it’s not the Republicans who are stupid. It’s the people who vote for Republicans; they are the stupids.
They give the charlatans their precious votes, and in return receive nothing, while the Gap above them widens every day.
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:
Being Monetarily Sovereign, the U.S. government owns infinite dollars.
You reasonably might expect that, of all the newspapers in the world, the Wall Street Journal surely would print articles by only writers who understand federal finances.
Ah, would that it were so.
Unfortunately, some writers published by WSJ either are as ignorant as the general populace or as intentionally ignorant as the bribed-by-the-rich politicians and university economists.
Here is an example saw in a recent WSJ edition (OK, the article printed in several papers, but I read in WSJ, which should know better):
U.S. National Debt Tops $30 Trillion as Borrowing Surged Amid PandemicThe record red ink, fueled by spending to combat the coronavirus, comes as interest rates are expected to rise, which could add to America’s costs.After a protracted standoff last year, Congress agreed in December to raise the nation’s borrowing cap to $31.4 trillion.By Alan Rappeport, Feb. 1, 2022
We can’t even get past the headline and subheads without being subjected to WSJ ignorance.
Federal “debt” is deposits into accounts similar to safe deposit boxes. The federal government never touches those deposits except to return them to the owners.
The so-called “national debt” neither is “red ink,” nor is it debt. It is the total of deposits into Treasury Security accounts.
When you invest in a T-bill, T-note, or T-bond, you do not lend the federal government money. You merely deposit your dollars into your T-security account. It’s an account similar to an interest-paying, safe-deposit box.
As with a safe deposit box, the federal government does not touch your dollars. It merely stores them for you, and allows you to accumulate interest.
Upon the maturity of your account, the government “pays it off” simply by returning to you, the dollars in your account. Since the dollars already exist in your account, and remain yours, this payoff is no burden on you, on the government, or on taxpayers. It’s merely a transfer of your dollars.
If the national “debt” were a real governemnt debt, it would go something like this:
The government needs dollars to pay its bills. Federal taxes are insufficient to pay all the creditors, so the government must borrow dollars, and in return it gives the lenders its IOUs in the form of T-securities (T-bills, T-notes, T-bonds).
Later, to obtain the dollars to pay off the T-securities, the government levies more taxes. This means we taxpayers ultimately are liable for the government’s debts.
You have just read what the Wall Street Journal and the vast majority of Americans believe about the federal debt.
And it is 100% wrong.
Back in the late 1770s, the federal government created the U.S. dollar from thin air. The government simply passed laws (from thin air) that created as many dollars as it wished, and gave those dollars whatever value it wished.
The first U.S. silver dollars were coined on Oct 15,1794. On that day, 1,758 of them were produced, but no more the rest of the year.
In 1794, a new coin called the Draped Bust Dollar, featuring a matronly Liberty of considerable endowment wearing a draped blouse. Over 40,000 Draped Bust dollars were minted in 1795.
Why 1,158 and 40,000? Because the government arbitrarily based its coin on silver. Each coin contained 0.7737 oz of silver. Why 0.7737? Because the government arbitrarily made its dollar similar in weight to the Spanish dollar.
Note the word “arbitrarily.” The government could have produced any numberof dollars, and could have made them equivalent to anything it wished. The base could have been gold, lead, tin, or nothing at all.
Because we were a new country, we tried to create demand for the dollar by making it equivalent to an existing coin. But it was all arbitrary.
The federal government arbitrarily has changedthe metal content of all U.S. coins many, many times over the years.
Today, the vast majority of dollars are nothing more than numbers on spreadsheets, and have no physical existence.
The federal government retains the infinite ability to create laws from thin air, and those laws have the infinite ability to create dollars from thin air.
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.”
Read the above quotes carefully, then ask, what is Alan Rappeport talking about when he refers to the federal “debt” (i.e. deposits) as “red ink?” How can accepting deposits into T-security accounts be considered “borrowing,” when, as Greenspan, Bernanke, and the St. Louis Fed say the federal government has the infinite ability to create dollars? Why would the government ever need to borrow?It wouldn’t and it doesn’t.
WASHINGTON — America’s gross national debt topped $30 trillion for the first time on Tuesday, an ominous fiscal milestone that underscores the fragile nature of the country’s long-term economic health as it grapples with soaring prices and the prospect of higher interest rates.
It’s not “ominous.” On the contrary, it’s a sign of a growing economy. It would be “ominous” if the misnamed national “debt” were declining. That would demonstrate we are in a recession or depression.
In fact, the so-called”debt” isn’t even debt or borrowing. It’s the total of investments in T-securities (T-bills, T-notes, T-bonds).
The government never touches the dollars invested in these securities, and the government pays them off every day, simply by returning the balances in the accounts. No tax dollars are involved. This is not a burden on the government or on taxpayers.
The sole purpose of T-securities is not to provide the federal government with its own dollars, but rather to provide a safe “parking place” for unused dollars. This stabilizes the dollar. It is not borrowing in any sense of the term.
The breach of that threshold, which was revealed in new Treasury Department figures, arrived years earlier than previously projected as a result of trillions in federal spending that the United States has deployed to combat the pandemic. That $5 trillion, which funded expanded jobless benefits, financial support for small businesses and stimulus payments, was financed with borrowed money.
No, no, no. It was NOT financed with borrowed money. Every penny the government pays for anything is created, ad hoc, with the press of a computer key. The federal government never borrows the currency it has the infinite ability to create from thin air. Here is how:
To pay a creditor, the federal government creates instructions. These instructions tell the creditor’s bank to increase the balance in the creditor’s checking account.
At the instant the instructions are obeyed, new dollars are created and added to the money supply measure called “M1.”
That is how the federal government creates money: By using its infinite ability to create instructions telling banks to increase checking account balances.
Why would the federal government borrow, when as Chairman Ben Bernanke said, it can “produce as many U.S. dollars as it wishes at essentially no cost.”
The borrowing binge, which many economists viewed as necessary to help the United States recover from the pandemic, has left the nation with a debt burden so large that the government would need to spend an amount larger than America’s entire annual economy in order to pay it off.
Utter nonsense. The so-called “debt” (that isn’t a debt) is not a debt “burden.” The government pays off all T-securities simply by returning the dollars in T-security accounts. It does this every day.
And the phrase, “entire annual economy” is a non-sequitur based on ignorance. The size of the U.S. economy (i.e. the Gross Domestic Product) does not pay for any part of the “debt.”
That comparison of the so-called “debt” vs. the US. economy — known as the “debt/GDP ratio — often is quoted as a way to shock the reader, though it is a meaningless comparison.
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Do you see any relationship between the Debt/GDP ratio and the economic strength of the nation? Of course not, because there is no such relationship.
The Debt/GDP relationship is meaningless. So why does Rappeport refer to it? Either he doesn’t understand federal finance or he is trying to scare you.
(The Wall Street Journal is designed for the rich, and the rich want to convince the populace that the government cannot afford to give benefits to the not-rich.)
Some economists contend that the nation’s large debt load is not unhealthy given that the economy is growing, interest rates are low and investors are still willing to buy U.S. Treasury securities, which gives them safe assets to help manage their financial risk. Those securities allow the government to borrow money relatively cheaply and use it to invest in the economy.
More nonsense. The so-called “debt load” is not unhealthy, and low interest rates are not a factor. The federal government, having the unlimited ability to create dollars, has no difficulty paying any amount of interest.Totally painless.
And the federal government doesn’t need investors to buy Treasury securities. These are offered as a benefit to investors, not to the government. And in any event, any unsold T-securities are purchased by the Federal Reserve.
For years, presidents have promised to limit federal borrowingand bring down the nation’s budget deficit, which is the gap between what the nation spends and what it takes in. Under President Bill Clinton, the United States actually ran a budget surplus between 1998 and 2001.
Yes, Presidents have made this promise, and every time they actually kept the promise, we had depression or a recession. Mr. Rappeport fails to mention that Clinton’s surplus led to the recession of 2001.
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.
But taming deficitshad fallen out of fashion in recent years, including during the Trump administration, when lawmakers blew through budget caps and borrowed money to fund tax cuts and other federal spending.
Deficits don’t need to be “tamed.” Remember what Greenspan, Bernanke, and the St. Louis Fed said about the government’s infinite ability to pay its bills.
Further, the federal government does not borrow its own sovereign dollars, the dollars it has the unlimited ability to create from thin air.
And all federal spending is funded, not by taxes, but by ad hoc creation of new dollars.
Why does the federal government levy taxes? To control the economy. It taxes what it wishes to discourage, and it gives tax breaks to what it wishes to encourage.
Further, taxes give the impression that federal benefits must be limited. The rich, who control Congress and the President, want the Gap between the rich and not-rich to widen. The wider the Gap, the richer are the rich.
It’s called “Gap Psychology“, the human desire to widen the Gap below and to narrow the Gap above.
“Hitting the $30 trillion mark is clearly an important milestone in our dangerous fiscal trajectory,” said Michael A. Peterson, the chief executive officer of the Peter G. Peterson Foundation, which promotes deficit reduction. “For many years before Covid, America had an unsustainable structural fiscal path because the programs we’ve designed are not sufficiently funded by the revenue we take in.”
The Peter G. Peterson Foundation is notorious for crying “wolf” about the deficit and predicting calamity that never happens — until we actually do reduce the deficit, at which time we have the aforementioned depressions or recessions.
Until then, it’s all warnings and hand wringing about the “ticking time bomb of debt.” It’s a “time bomb” that has been ticking since 1940 and still no explosion.
The gross national debt represents debt held by the public, such as individuals, businesses and pension funds, as well as liabilities that one part of the federal government owes to another part.
Right, the so-called debt (T-bills et al) are assets of the private sector. When you own a T-bill, that is one of your assets.
Alan Rappeport doesn’t want you to have that asset. He wants the government, which has infinite assets, to take that asset from you. Smart?
While Republican lawmakers helped run up the nation’s debt load, they have since blamed Mr. Biden for putting the nation on a rocky fiscal path by funding his agenda. After a protracted standoff in which Republicans refused to raise America’s borrowing cap, threatening a first-ever federal default, Congress finally agreed in December to raise the nation’s debt limit to about $31.4 trillion.
It was all political theater — cynical politicians trying to convince the innocent public that they are fiscally prudent. But if they really were prudent, they would spend more on global warming, poverty, healthcare, education, transportation, infrastructure, science, ecology, etc. — not debating about how to spend less.
In January 2020, before the pandemic spread across the United States, the Congressional Budget Office projected that the gross national debt would reach $30 trillion by around the end of 2025. The total debt held by the public outpaced the size of the American economy last year, a decade faster than forecasters projected.
Yes, as usual, the economic forecasters were wrong about the meaningless Debt/GDP ratio. So?
The nonpartisan office warned last year that rising interest costs and growing health spending as the population aged would increase the risk of a “fiscal crisis” and higher inflation, a situation that could undermine confidence in the U.S. dollar.
By “fiscal crisis,” we assume Rappeport means the federal government would be unable to pay its debts — which as we know is impossible for our Monetarily Sovereign government. (It can happen to state/local government, which are monetarily non-sovereign.)
And inflation always is caused by shortages, never by federal deficit spending.
In fact, federal deficit spending is one of the best methods for curing inflation, if the spending is for curing the shortages.
Todays inflation is caused by shortages of oil, food, computer chips, labor, and other needs. The federal government could stop inflation by spending more to support oil drilling, efficient farming, and chip manufacture, and by eliminating FICA (FICA lowers the net income of workers and makes them less willing to accept jobs).
Trillions in federal spending has left the United States approaching levels of red ink not seen since World War II.
Actually, the so-called “debt” is much higher than it was during WWII. And when spending for WWII ended, we had recessions.
The Biden administration has said the $1.9 trillion pandemic relief package the Democrats passed last year was a necessary measure to protect the economy from further damage. Treasury Secretary Janet L. Yellen has argued that such large federal investments are affordable because interest costs as a share of gross domestic product are at historically low levels thanks to persistently low interest rates.
Yes, the $1.9 Trillion in deficit spending did protect the economy, just as cuts to federal spending will injure the economy. So why cut?
Interest costs as a share of GDP are irrelevant, as are low interest rates. In fact, higher interest rates have one advantage: They force the federal government to pump more stimulus dollars into the economy.
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.
Inflation always is caused by shortages and always is cured by curing the shortages, which the federal government can do by federal deficit spending.
Esther L. George, the president of the Federal Reserve Bank of Kansas City, suggested during a speech this week that the Fed’s big bond holdings might be lowering longer-term interest rates by as much as 1.5 percentage points — nearly cutting the interest rate on 10-year government debt in half. As rates rise, so does the amount that the United States owes to investors who buy its debt. The Congressional Budget Office estimates that if interest rates rise in line with their own forecasts, net interest costs will reach 8.6 percent of gross domestic product in 2051. That would amount to about $60 trillion in total interest payments over three decades.
That’s 60 trillion stimulus dollarspumped into the economy — dollars the federal government easily can create with the touch of a computer key, and dollars the economy uses for growth.
“A larger amount of debt makes the United States’ fiscal position more vulnerable to an increase in interest rates,” the C.B.O. said in its long-term budget outlook.
What does he mean by “vulnerable”? Is he saying that our Monetarily Sovereign government, which has the infinite ability to create dollars, will not be able to pay interest? Nonsensical.
Biden administration officials insist that they view fiscal responsibility as a priority. They have pledged that their economic agenda will be fully paid for through tax increaseson wealthy Americans and corporations and by more rigorous enforcement of the tax code.
Biden wants you to believe that federal taxes fund federal spending. It is a lie. Federal taxes are destroyed upon receipt by the Treasury.
Taxes come out of checking accounts that are part of the M1 money-supply measure. When they reach the Treasury, they cease to be part of any money-supply measure. They effectively disappear.
There is no money supply measure that includes the federal government, because the government has infinite money. No one can answer the question, “How much money does the federal government have?” The only answer is, “Infinite.”
In recent months, the budget deficit has started to shrink as a stronger economy has boosted tax receipts and as government payments of pandemic relief money have slowed.
And this means economic growth will slow. If federal deficits fall enough, we will have a recession or depression.
And some economists argue that a more recent economic phenomenon — inflation — may have a silver lining in that it could chip away at the nation’s debt burden.
The federal “debt” is not a burden on the federal government or on taxpayers or on anyone else. It’s not debt, and even if it were, the federal government has the unlimited ability to pay.
Kenneth Rogoff, a Harvard University economist, said “You would rather have no debt, of course, but compared to other issues at the moment that’s not the principal problem.”
He’s a Harvard economist and he thinks that having no debt (which would require removing $30 trillion from the economy) is something we “would rather have”?? Is this the nonsense they teach at Harvard?
In summary:
A federal deficit is necessary for economic growth. The federal Debt/GDP ratio is meaningless as a measure of economic health.
The federal government creates dollars, ad hoc, by paying creditors, which it can do endlessly.
Unlike state/local governments, the federal government is Monetarily Sovereign. It has the unlimited ability to create its sovereign currency, the U.S. dollar, and instantly can pay any obligation based on dollars.
The government never unintentionally can run short of dollars.
Federal taxes are destroyed upon receipt and do not fund federal spending.
The federal debt is nothing more than the total of deposits in T-security accounts, which are “paid off” by returning the dollars in them. This is not a burden on the federal government or taxpayers.
Federal deficit spending does not cause inflation; shortages cause inflation. A prime way to combat inflation is with federal deficit spending to cure shortages.
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:
The U.S. federal government is Monetarily Sovereign. Even if all federal tax collections fell to $0, and expenses tripled, the government would not unintentionally run short of dollars.
The government unnecessarily charges you for such services as Social Security and Medicare.
Contrary to popular opinion, Medicare isn’t entirely free.In a video interview, Dana Anspach, the founder and president of Sensible Money, explained the components of Medicare and the costs associated with Part B and Part D.Medicare Part A, often referred to as hospital insurance, is free if you worked enough years in the U.S. to qualify. “Typically, if you’re eligible for Social Security benefits, you’re also eligible for Medicare Part A at no cost,” said Anspach.
This would be true if the federal government hadn’t socked you and your employer for FICA taxes, which purportedly fund Medicare and Social Security.
In reality, these taxes fund nothing. The federal government creates new dollars ad hoc, every time it pays an invoice.
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.
Medicare Part B covers other services and supplies, and it has a monthly cost that varies depending on your income.
The money deducted for Part B, like all other payments to the federal government, pay for nothing. All dollars received by the federal government are destroyed upon receipt.
When you pay federal taxes, dollars come out of your checking account. These dollars come from an money-supply measuren called “M1.”
When the Treasury receives your M1 dollars, they cease to be part of any money-supply measure. The reason: It is impossible to measure the amount of money the Treasury “has,” given that the government has the infinite ability to create its own sovereign currency, the U.S. dollar.
So those M1 dollars effectively are destroyed upon receipt.
And there is Part D, for prescriptions, and it is free if your income is low enough, but it has a cost once your income exceeds various threshold amounts.
The following chart outlines the payments — the unnecessary payments — you are forced to make in order to receive medical benefits from the federal government.
You have been brainwashed into believing the federal government, which created the U.S. dollar from thin air, now somehow can short of the dollars it created.
So, you are led to believe it financially is necessary for the federal government to receive your dollars, to pay for services.
It isn’t. The federal government has neither the need nor the use for your dollars. It has the infinite ability to create new dollars.
That is how it is able to sustain a debt of $25 trillion with no worries at all.
You are swayed by reasonable-sounding complexity:
“Like so many things associated with retirement, it’s more complicated than you may think“First, the Social Security office references your tax return data from two years prior to determine your premium level, so if 2022 is your first year enrolling in Medicare, they will use data from your 2020 tax return.”“Let’s assume you are turning 65 in 2022, and your MAGI from 2020 is below $91,000 if single/$182,000 if married filing jointly; in this case, your Part B premiums are $170 per month and Part D will be free. (Your MAGI is calculated by adding back any tax-exempt interest income to your adjusted gross income (AGI).)‘Now, if your MAGI exceeds additional threshold amounts, your premiums will be higher. ‘This is referred to as means testing and is technically called the IRMAA. You are notified of your premium amounts via a letter from the Social Security office called your Initial Determination Letter, said Anspach.The largest premiums of $578 for Part B and $78 for Part D apply to MAGI greater than $500,000 for singles and $750,000 for marrieds.Now if you are not yet enrolled in Social Security, you will receive a quarterly invoice for these premiums, said Anspach. But if you are enrolled in Social Security, the premiums are deducted from your monthly Social Security payment.
So many caveats; so many details. And it’s all a lie. The federal government destroys your FICA dollars and deductions from Social Security the moment they are received.
The federal government easily could and should pay for Medicare Part A, Part B, and Part D without charging you anything.
So why does the government force you to send it dollars that it destroys?
The following chart, from the aforementioned article, contains a hidden clue:
Did you see the clue?
Look at the last line. There is a ceiling on payments above a certain amount of income. That is, the person who makes a half million, or a million, or a hundred million dollars a year pays the same.
The increases in payments stop at a certain level.
This is the same trick the government uses when calculating FICA payments. In 2021, employees pay a 6.2% Social Security tax (with their employer matching that payment) on income up to $142,800. Any earnings above that amount are not subject to FICA tax.
The very rich are never satisfied. They always want to be richer.
“Rich” is a comparative. There are two ways to become richer: Obtain more for yourself or widen the income/wealth/power Gap between you and those below you by forcing them to receive less.
Because the very rich control the U.S. government, Congress and the President are only too happy to oblige by setting a ceiling on payments to the government.
As a share of disposable income, the rich pay far less than do you.
This effectively widens the Gap, thus making the rich richer.
2. It collects an unnecessary and huge FICA tax from salaried employees and their employers, not from dollars earned in non-salaried remunerations — more representative of the rich.
3. Employers count the FICA they pay as being part of salaries, thus reducing paid salaries.
4. Despite the fact that Social Security is quasi-insurance, ostensibly paid for by FICA, the government collects proportionately more taxes from lower-income people.
5. Lower-income people generally work for salaries that are taxed at the highest rates. Other forms of income, more usual for the rich, are taxed at lower rates or not taxed at all.
6. Wealth generally is not taxed.
7. Tax loopholes available primarily to the rich.
7. Tax complexity is intentional. It allows the rich, who can afford expensive tax accountants and lawyers, to take advantage of arcane tax laws, not understood by the general public.
8. Student loans.The rich can pay tuition. The not-rich are burdened by loans.
Keep in mind that all of the above taxation and fees, together with limits on federal benefits, are unnecessary. The federal government neither needs nor uses tax dollars, and its spending is not financially limited.
The rich want you to believe that federal finances, which are Monetarily Sovereign, are the same as state/local government finances, which are monetarily non-sovereign.
The fundamental difference is that the spending by state and local governments is limited by income from tax receipts and borrowing. Federal spending is not limited by any form of income.
The Federal government doesn’t need your hard-earned dollars. Ignorance is expensive.
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:
You have been brainwashed into believing the federal government, which created the U.S. dollar from thin air, now somehow can short of the dollars it created.
So, you are led to believe it financially is necessary for the federal government to receive your dollars, to pay for services.
It isn’t. The federal government has neither the need nor the use for your dollars. It has the infinite ability to create new dollars.
That is how it is able to sustain a debt of $25 trillion with no worries at all.
You are swayed by reasonable-sounding complexity:
Did you see the clue?
Look at the last line. There is a ceiling on payments above a certain amount of income. That is, the person who makes a half million, or a million, or a hundred million dollars a year pays the same.
The increases in payments stop at a certain level.
This is the same trick the government uses when calculating FICA payments. In 2021, employees pay a 6.2% Social Security tax (with their employer matching that payment) on income up to $142,800. Any earnings above that amount are not subject to FICA tax.
#Monetary Sovereignty - Mitchell 