The Chicago Tribune has a very special department. It should be called “The Department of the Big Lie,” but strangely it is called “The Editorial Page.”
This department is populated by such luminaries as:
Par Ridder, General Manager
Colin McMahon, Editor-in-Chief
John P. McCormick, Editorial Page Editor
Margaret Holt, Standards Editor
Christine W. Taylor, Managing Editor
along with directors of Content:
Jonathon Berlin, Amy Carr, Phil Jurik, Amanda Kaschube, Todd Pamagopoulos, George Papajohn, and Mary Ellen Podmolik
Considering that the Tribune Department of the Big Lie employs these twelve experts, and perhaps many others, who devote their lives and expertise in crafting their Big Lies, the Department should have honed its skills to a fine point.
And so it has, for some of their “best” editorials are replete with Big Lies — direct statements, hints, and untrue inferences — as today’s post will demonstrate.
Before we begin the demonstration, we should tell you exactly what the Big Lie is:
The Big Lie is the false claim that federal taxpayers fund federal government spending.
While state and local taxpayers do fund state and local government spending, federal taxpayers dollars do not fund federal spending.
The difference comes from the fact that the federal government is Monetarily Sovereign, while state and local governments are not.
Way back in the 1780s, the U.S. federal government created the U.S. dollar from thin air. It did it by passing arbitrary laws from thin air.
These laws arbitrarily provided for the number of dollars and for the value of each dollar.
While the details of these laws have arbitrarily (note the repeated use of the word, “arbitrary”) been changed over the years, the fundamentals remain the same.
The federal government still arbitrarily creates dollars and their value.
As distinguished financial leaders have told us:
Fed Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
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.”
Famous Wealth Manager Warren Buffet: “Those who regularly preach doom because of government budget deficits (as I regularly did myself for many years) might note that our country’s national debt has increased roughly 400 fold during the last of my 77-year periods. That’s 40,000%!” [Today it’s over 50,000%]
By contrast, your state and local governments are monetarily non-sovereign. They did not create the U.S. dollar. They only use it. They cannot, as Federal Reserve Chairman said, “produce as many dollars as (they) wish at essentially no cost.”
Now think about this very closely: If the federal government cannot become insolvent, and can produce as many dollars as it wishes, what is the purpose of federal taxes? Obviously, not to pay for spending.
The primary purposes are:
1. To control the economy by rewarding activities the federal government wishes to encourage and by punishing the activities the government wishes to discourage, and
2. To make the populace believe the government’s ability to spend is limited by taxes, so that the people will not ask for more benefits.
This has been well-known for many years. As President Franklin D. Roosevelt said, with regard to Social Security (FICA) taxes,
“With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.”
And it is in political Purpose #2 that the Tribune’s Department of the Big Lie plies its trade. Here are the promised examples from the editorial of 3/33/2020. We begin with the title:
Immediately, we see the disdain for federal spending exhibited by the Department of The Big Lie. The clear inference of the word “reflex” and the repetition of the word “spend” is that this is spending profligate and somehow foolish.
The facts are that federal spending is necessary to grow the economy, and massive federal spending is necessary to prevent today’s economy from falling into a depression.
Further, to date, Congress has not shown the proclivity to spend enough. In these perilous times, the deficit spending for the Ten Steps to Prosperity, which would stop a depression before it starts, requires at least $7 trillion, probably more.
The article says:
The federal government has the power to commit near limitless amounts of taxpayer money to replace every missing paycheck, protect every nervous employer and save every buckling business.
To go big, as President Donald Trump vows. To spread cash around. To make payrolls. To save airlines.
And there’s the first outright statement of The Big Lie, for while the state and local governments do spend taxpayer money, the federal government does not.
You will be saddened (outraged?) to learn that those federal tax dollars you sweat and strain to earn, then sweat and strain to calculate, then are obliged to pay under penalty of law — those dollars are destroyed upon receipt by the U.S. Treasury.
Instead, the government creates brand new dollars, every time it pays a bill. The process: When your dollars reach the Treasury, they disappear from all measures of the U.S. money supply. In that sense, dollars held by the government cease to exist.
It thus, is nonsensical to ask, “How many dollars does the federal government have?” It “has” infinite dollars.
To pay a creditor, the federal government sends instructions (in the form of a check or bank wire) to the creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account. The moment the bank follows those instructions, new dollars are created and added to the money supply (M1).
The federal government can issue such instructions endlessly, whereas the state and local governments are limited by the dollars held in their own bank accounts.
There’s panic selling on Wall Street and panic promising in Washington, where Congress is compiling a $1 trillion-plus emergency fiscal stimulus package.
How much exactly and to benefit whom? As The Associated Press notes ominously: All the pressure is for the package to keep growing.
The growth of the “package” is “ominous” only for those who wish to convey the false notion that federal debts, i.e. debts of a government that has the unlimited ability to pay its debts, are “ominous.”
The caution we express is about the secondary coronavirus effect: the rush by politicians to throw money at this crisis in hopes of making all negative and unanticipated consequences go away.
It’s business as usual for government to spend other people’s money aggressively. When in doubt, spend. When not in doubt, spend. When in crisis, spend more.
That’s the only way to look at the White House plan to fight the virus by, yes, writing checks to most Americans.
Note the load of pejorative words: “Rush,” “throw money at,” and “business as usual.” Finally, we are treated to a sentence that contains the word “spend” three times.
If the crisis were a fire, and the politicians were firefighters, would the Tribune’s Department of The Big Lie criticize them for rushing to throw water on the fire, as “business as usual”?
How much of your money, taxpayers, is Washington willing to hand out? Treasury Secretary Steve Mnuchin suggests a family of four would receive $3,000 a month, as both assistance and stimulus for the stagnating economy. Senate Majority Leader Mitch McConnell likes the sound of $1,200 per person.
Again, it’s not taxpayer money. Even if all federal tax collections totaled $0, the government could give that family of four $3,000 — or $13,000, or more. Federal spending is not limited by taxes.e
And then the little jab at McConnell, who is to blithely to “like the sound of” $1,200.
But people still working don’t need the cash. It will arrive as a gift (remember, a gift you are paying for). This is profligacy. Past exercises in government largesse suggest many recipients will save the money instead of spend it.
More lies from the Department of The Big Lie. First, all federal government spending can be considered a “gift” to someone; no one pays for it.
And if some recipients save money instead of spending it, is that supposed to be a bad thing? Having some money saved gives the populace the confidence to spend money.
If you want the people to spend, you must allow them to save, and this is especially true of big-ticket items.
Bailouts also create a moral hazard, establishing the notion that business owners and investors can take aggressive risks — such as running up enormous debt during good times — because they believe the government will save them.
This creates a destructive cycle: Companies act recklessly, get bailed out, then go forward (even the weaker ones) while still being reckless. Remember that the airlines got bailouts after 9/11.
Ah, “moral hazard.” Apparently, the Tribune’s ever-so-moral Department of The Big Lie has forgotten the following, from Wikipedia:
On December 8, 2008, the Tribune filed for Chapter 11 bankruptcy protection. Company plans originally called for it to emerge from bankruptcy by May 31, 2010, but the company would end up in protracted bankruptcy proceedings for another four years. With the company’s overall debt totaling $13 billion, it was the largest bankruptcy in the history of the American media industry.
Oops.
During the Great Recession, General Motors and Chrysler received government help. Ford didn’t ask — because it was in better shape. It had prepared.
That’s why we didn’t like those bailouts. If Americans weren’t willing to save automakers by buying their vehicles, they shouldn’t have had to save them with their tax dollars.
The same principle should apply to United Airlines, Boeing and other companies.
The previous paragraphs are not just misleading; They are childish. They make the tacit assumption that allowing General Motors, Chrystler, United Airlines, Boeing and other companies to go out of business doesn’t harm the American public.
While true that this unforeseen epidemic caused passenger airline traffic to virtually disappear, it’s also true airlines failed to prepare for a few months’ disruption.
Few companies operate as though customers will disappear for months. In fact, that is an inefficient way to run a business.
There are ways for struggling companies to survive, such as enticing new investors to provide loans.
(Like the Tribune didn’t do??)
The scariness of this moment is balanced by a certainty: Chicago’s empty streets, closed dining establishments and reduced business activity represent part of a temporary freeze.
The pandemic will lift, and then the economy will roar back to life. Many analysts expect a deep recession with high unemployment followed by recovery within a year.
The above is typical Trump-like “Ho hum, no problem. It’s temporary.” And as for that high unemployment, that will recover in a year — except for the millions of people who cannot sustain a year without income.
This is The Department of The Big Lie’s clueless version of “Let them eat cake.”
Government should be there to provide appropriate assistance. “Appropriate,” we’d add, isn’t a synonym for “unnecessary” or “unlimited.”
And, we would further add, “Editor,” “Manager,” and “director” are not synonyms for “intelligent,” “truthful,” or “compassionate.”
Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell
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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
The most important problems in economics involve:
- Monetary Sovereignty describes money creation and destruction.
- Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:
Ten Steps To Prosperity:
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 the rest.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 