A quick quiz to see whether you are smarter than Fed Chairman Jerome Powell

Here is a quick quiz. Learn whether you are smarter than Federal Reserve Chairman Jerome Powell.

BACKGROUND:

We currently suffer from inflation, “a general increase in prices.” The Fed’s task is to bring inflation down while not causing a recession, i.e. “an economic decline during which trade and industrial activity are reduced.”

Prices have increased for food, oil, cars and motorcycles, shipping, labor, and household goods that use paper or cotton, such as diapers, incontinence supplies, sanitary napkins and tampons, and toilet paper, and labor.

THE QUIZ:

A. There is a shortage of food. The price of food has gone up. The solution should be either to:

Force people to eat less, or to
Help farmers grow more.

B. There is a shortage of oil. The price of oil has gone up. The solution should be either to:

Force people to drive less and to heat their homes less, or to
Help refineries produce more oil and help increase the availability of renewable energy.

C. There is a shortage of cars and motorcycles. The price of cars and motorcycles has gone up. The solution should be to:

Force people to buy fewer cars and motorcycles, or to
Help car manufacturers produce more cars and motorcycles.

D. There is a shortage of shipping ability (the “supply chain”). The price of shipping has gone up. The solution should be to:

Force manufacturers and sellers to ship less, or to
Help manufacturers and sellers to ship more.

E. There is a shortage of lumber. The price of lumber has gone up. The solution should be to:

Force builders to build fewer homes and buildings, or to
Help lumber growers grow more and/or help builders find substitutes for lumber.

F. There is a shortage of computer chips. The price of everything that uses computer chips has gone up. The solution should be to:

Force manufacturers use fewer chips, or to
Help computer chip manufacturers produce more chips

G. There is a shortage of household goods needing raw paper or cotton: diapers, incontinence supplies, sanitary napkins and tampons, and toilet paper. The solution should be to:

Make people use fewer diapers, fewer incontinence supplies, fewer sanitary napkins and tampons, and less toilet paper, or to
Help manufacturers produce more diapers, incontinence supplies, sanitary napkins and tampons, and more toilet paper.

H. There is a shortage of labor. The price of labor has gone up. The solution should be to:

Force labor to accept lower wages, or to
Help employers pay higher wages so more people will want to work.

THE ANSWERS:

If you think that in all cases, answer #2 is the correct way to cure inflation without causing a recession, you are correct. Congratulations, you are smarter than Fed Chairman Jerome Powell.

Incredibly, Powell thinks the answers all should be #1.

He says the economy is “overheated” (whatever that means), and the solution to inflation without a recession is to “cool” the economy (whatever that means).

So he raises interest rates and takes dollars from the economy.

By his actions, he is trying to force people to eat less, drive less, heat their homes less, ship less, build and buy fewer homes and buildings, buy less of everything that uses computer chips, use fewer tampons and less toilet paper, and work for lower wages,.

And these are the so-called “solutions” from Chairman Powell and his acolytes.

Really? Yes, really, That is exactly what “cooling the economy” means.

We know that Chairman Powell has dozens (hundreds?) of economists working for him, and we assume at least some of those economists see their own data, which we will share with you here:

This image has an empty alt attribute; its file name is image-1.png — **Federal deficit spending growth (blue line) and recessions (vertical gray bars)**

Every recession begins after a period of reduced federal deficit spending growth. Every recession is cured by a period of increased federal deficit spending growth.

Chairman Powell wishes to reduce federal deficit spending growth. What does history say about that?

If Chairman Powell truly wants to prevent a recession, he should recommend that Congress and the President spend to help cure the abovementioned shortages. The very last thing Powell ever should do is make curing the shortages more difficult.

All of the #2 answers require increased deficit spending by the federal government

For some unknown reason, Chairman Powell seems to believe that federal deficit spending causes inflation. We have no idea how he developed that belief since it is exactly opposite to his own statistics:

Here is the Federal Reserve graph comparing deficit spending with inflation:

**Federal deficit spending (blue line) vs inflation (red line).**

If federal deficit spending (blue line) caused inflation (red line), we would expect the blue and red lines to be essentially parallel. But that is nothing like what Chairman Powell’s own data show us.

According to the Fed’s data, federal deficit spending and inflation mostly move in opposite directions. Surely, nothing says that federal deficit spending causes inflation or “overheats” the economy.

The notion that “too much” federal deficit spending causes inflation is a myth, an illusion caused by the reaction of some governments to inflation.

Example: The notorious Zimbabwe hyperinflation was created when the government took farmland from farmers and gave it to people who didn’t know how to farm. The predictable result: A food shortage. The price of food skyrocketed.

Rather than spend to help farm owners grow more food, the government simply printed currency in higher denominations. This did nothing to cure the food shortage and its resultant inflation, but it created the illusion that currency printing caused the inflation.

All hyperinflations in history have followed the same scenario: Shortages cause higher prices; the government prints currency rather than curing the shortages.

Deficit spending to increase supplies of goods and services, instead of merely printing currency, is the way to cure inflation without causing a recession. Deficit spending prevents recessions and grows the economy, which is exactly what it did during the COVID crisis.

Were it not for federal deficit spending, we would have had a COVID depression in 2020 and 2021.

Today, the federal government should increase deficit spending to prevent recession, while using those additional dollars to encourage more farming, oil and gas drilling and refining, renewable energy production, sales of cars and motorcycles, home building, lumber growing and harvesting, and lumber-substitute development, computer chip manufacturing, and more people to join the workforce.

The latter can be accomplished by ending the FICA tax and raising the minimum standard deduction. Additionally, the federal government should fund Medicare for All, which would reduce employment costs for employees and employers.

Further, because the U.S. federal government is Monetarily Sovereign, deficit spending is not “paid for” by federal taxes. The U.S. federal government pays for all its spending by creating new dollars, ad hoc.

Even if the federal government collected $0 in taxes, it could continue to deficit spend, forever. (A little secret: The federal government destroys all the tax dollars it receives, creating new dollars as needed.)

The purpose of federal taxing is not to provide the government with the dollars it spends, but rather to control the economy by taxing what the government wishes to discourage, and by giving tax breaks to what it wishes to encourage.

In the unlikely event that America can escape inflation without suffering a recession, it will not be because of what Chairman Powell is doing. It will be despite what Chairman Powell is doing.

Fasten your seat belts. Powell doesn’t know what he is doing.

[No rational person would take dollars from the economy and give them to
a federal government that has the infinite ability to create dollars.]

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

………………………………………………………………………

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:

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

MONETARY SOVEREIGNTY

LOSING AMERICA: What we have lost, what we are losing, what we will lose

As readers of this blog know, federal spending costs you nothing. The government creates all the dollars it uses, ad hoc, every time it pays a bill. That is the absolute fact of federal financing that debt-liars try to deny

Since 1940, the federal government has created more than $22 trillion, net above taxes. That’s $22 trillion that even the tax scolds would have difficulty claiming as a taxpayers’ cost. Early in the 1780a, the government created the very first dollars from thin air.

It still creates dollars, and it will have no difficulty continuing to create endless dollars, also from thin air.

Even if all federal taxation ended, the government could keep spending forever. Federal taxes do not pay for anything. Watch a Raging Forest Fire Surround You in 360 Degrees - Scientific American

Deficit spending does not cause inflation. The lack of federal deficit spending leads to recessions and depressions, while increased deficit spending cures recessions and depressions.

Inflation is caused by the shortages of key products and services. Today’s inflation is caused by the scarcity of food, oil, computer chips, labor, housing, and shipping. Inflation can be cured by federal deficit spending to procure and make available the scarce goods.

Despite the lack of cost to anyone, the Republican Party unanimously has opposed such benefits as:

1. Universal prekindergarten: For all 3- and 4-year-olds. The claimed advantages of which are: social and emotional development, higher overall academic achievement, increased school success, less grade repetition, better high school graduation rates, higher achievement scores, and more advanced pre-literacy and math skills, and perhaps equally important, allows those parents who need to work, to provide a safe, educational environment for their young children.
2. Subsidized child care for families earning less than $300,000. Child care cost is often higher than the cost of housing, college tuition, transportation, or food. It can be hard to find quality child care that is affordable. High-quality child care programs may cost more than other options. But when children are in a quality child care program they are able to develop, explore, and grow.
3. Fighting climate change: Tax credits for the energy industry and consumers who switch to renewables, retrofitting buildings, and public transit to run on renewable energy, and giving tax credits for people to buy electric vehicles that could lower the cost of these vehicles by as much as $12,500.
4. Strengthened Medicare: Beneficiaries’ out-of-pocket spending for Medicare’s drug benefit (Part D) would be capped at $2,000 per year and the cost for some insulin would be limited to $35 per month. Hearing coverage would be included. (Dental and vision coverage were eliminated in a failed attempt to get debt-lie votes).
5. Extended tax credits and child payments: A one-year extension of the enhanced child tax credit (CTC). Lower-income workers in particular will be receiving these payments.
6. Improved public housing and more affordable housing: Rental assistance, and many other listed benefits for low-income housing.
7. Four weeks of paid family leave: Covers multiple reasons for leave-taking: To welcome a new child by birth, adoption, or foster care; to recover from a serious illness; or to care for a seriously ill family member. No one will have to choose between their paycheck and caring for a loved one or between their jobs and their own health.

If you’re among the very rich who don’t care what happens to those who aren’t rich, the above may not matter to you, though even you will not be immune to the ravages of climate change.

For the rest of us Americans and fellow human beings, the above constitute part of a long-overdue, financially wise, and moral effort. Sadly, ignorance hinders even the best-intentioned among us.

Consider Sen. Bernie Sanders:

“The American people overwhelmingly demand that the wealthy and large corporations pay their fair share of taxes.”

No, Bernie, corporations are not people. While proper taxing of wealthy people could narrow the Gap between the rich and the rest, taxing corporations has no economic value whatsoever. There is no “fair share” of a harmful program. The government doesn’t need or use tax dollars. Federal taxes simply take dollars from the private sector, and so, are recessionary.

“The American people overwhelmingly demand that we take on the greed of the pharmaceutical industry and lower the cost of prescription drugs.”

No, Bernie, it’s not “greed.” It’s just the normal profit motive. Price-fixing the drug industry simply will take research/development initiatives from the drug companies. There will be no benefit to the American public — if Medicare (aka the government) simply covers drug costs.

“The American people overwhelmingly demand that we expand Medicare to cover dental, eyeglasses and hearing aids.”

Yes, Bernie. There are zero good reasons why every part of the human body is covered, except teeth, eyes, and ears. What genius came up with those exclusions?

“The American people understand that we must act now to combat the existential threat of climate change and transform our energy system away from fossil fuels.”

Absolutely, Bernie. The human species faces several existential threats: Climate change, nuclear war, large meteors, supervolcanos, gamma-ray bursts, to name just a few. There’s not much we can do about what the universe will throw at us, but we have total control over climate change and nuclear war — or we would have total control if we could find a way to control the crazies.

Aside from avoiding the total obliteration of the human species, we have the power to improve our lot. We have the brains and money to support our health and wellbeing, by simply recognizing that our Monetarily Sovereign government has the infinite power to create money and to control its value.

We can educate all who want it, and provide shelter, food and medical aid to all who need it.

Despite being social “herd” animals, we have the brainpower to stop following dictators, dictator wannabes, rogues, charlatans, ne’er do wells, and false prophets, whose lies and selfishness have led us to disaster after disaster for their own benefit. (You already know who they are.}

As a people, we have lost so much to lies. The losses continue, accelerate, even. Today, American freedoms and democracy teeter on the edge. Fully two-thirds of the Republican party claims the presidential election was “stolen,” and that false claim provides the excuse for growing totalitarianism.

Today, dictatorships less often result from violent takeovers than by the creeping erosion of democracy. The rightward twisting of politics and laws, all justified by complaints from a psychopathic leader.

We see it happening in America, as it has happened around the world. It begins with: Pied Piper phishing scheme infests victims with FlawedAmmyy, RMS RATs | SC Media

A psychopathic and charismatic leader, who:
Acts not with reason but with bravado, vindictiveness, and feigned toughness.
Claims the nation is in danger from the poor and that only he can save it from invented enemies.
Helps the rich to become richer.
Flaunts the trappings of wealth and power, gold, jewelry, palaces
Boasts about cheating in his personal and his business lives.
Claims perfection in all things and denies ever being wrong or losing.
Takes credit for everything and the blame for nothing.
Demands strict loyalty to him personally, rather than to the nation.
Surrounds himself with immoral, even criminal, sycophants whom he can control.
Corrupts the judiciary to legalize his sins
Corrupts and undermines a free press.
Corrupts the military while expressing disdain for its leaders.
Corrupts the educational system when it does not support his bigotry.
Claims to be religious, but denigrates compassion.
Supports and disseminates demonstrably preposterous lies and conspiracy therories.
Is a traitor, who supports overthrowing the U.S. government.
Is a hate monger.
Is a nepotist and would-be dictator.
Claims, with no evidence, that America’s presidential election was illegal, and has coerced the Republican party into support his lies.

America is too big and powerful to lose its freedoms and democracy to an invader. We instead are losing our freedoms and democracy to internal rot.

The official mood no longer is “us.” It is “me only.” Selfishness is “smart.” The poor are “takers.” Foreigners are sinners. Cheating is clever. True patriots are “suckers.” Failure is someone else’s fault.

It is bad enough that we have lost, are losing, and will lose the benefits that President Biden originally proposed.

Worse, far worse, we are losing our heritage and our democracy.

We Are Losing America.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

……………………………………………………………………..

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.”

Ten Steps To Prosperity:

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

MONETARY SOVEREIGNTY

The end of poverty in America

Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

Poverty in America | The Economist

The poor you will always have with you, and you can help them any time you want. (Mark 14:7)

For there will never cease to be poor in the land; that is why I am commanding you to open wide your hand to your brother and to the poor and needy in your land. (Deuteronomy 15:11)

Is it true that there always will be poor people? Should it be true? Must it be true?

Yes, the poor have been with us in most societies, but it should not be true, and it need not be true.

Mathematically, in any scale of wealth, income, or power, some must be closer to the bottom. If “having less” is your definition of “poor” then yes, the poor always must be with us.

But what if your definition of “poor” referenced “insufficiency” rather than “less” — insufficiency of food, healthcare, education, housing — then perhaps the poor need not all ways be with us.

I suggest that it is not necessary for some people in America to be starving, sick, uneducated, and/or homeless.

Poverty fell overall in 2020 due to massive stimulus checks and unemployment aid, U.S. Census says
By Heather Long and Amy Goldstein
U.S. poverty fell overall in 2020, a surprising decline that is largely a result of the swift and large federal aidthat Congress enacted at the start of the pandemic to try to prevent widespread financial hardship as the nation experienced the worst economic crisis since the Great Depression.

Federal deficit spending for benefits to the poor “surprisingly” helped reduce the percentage of poor people. Who possibly could have expected that?

After accounting for all the federal relief payments, the so-called supplemental poverty measure declined to 9.1 percent in 2020 — the lowest on record and a significant decline from 11.8 percent in 2019.

The decline in the poverty rate means that millions of Americans were lifted out of severe financial hardship last year, the U.S. Census said. Poverty is defined as having an income of less than $26,250 a year for a family of four.

If you happen to believe that poverty is bad for America, and that honestly religious people wish to help the impoverished, then all that deficit spending opposed by debt-scare peddlers was good for this country.

If, however, you believe that the poor are lazy, good-for-nothing, takers, who deserve their poverty, then you will be saddened at learning the poverty rate declined.

And if you have been told that federal taxes fund federal spending, you will be flummoxed by all that spending with federal taxes staying the same.

And if you believe it’s better for the public to run a deficit with the federal government than for the federal government to run a deficit with the public, then you may be surprised to learn that federal deficit spending has allowed fewer people to be thrust into poverty.

Extensive federal relief assistance passed during the coronavirus pandemic is widely credited by economists and policy experts for preventing another Great Depression.

The stimulus payments provided $1,200 cash payments to most low-income and middle-class Americans last year, moving 11.7 million people out of poverty, the Census said.

Another 5.5 million people were prevented from falling into povertyby the enhanced unemployment insurance aid.

“This really highlights the importance of our social safety net,” said Liana Fox, chief of the U.S. Census Bureau’s Poverty Statistics Branch.

Try to remember the fight against deficit spending, put up mostly by the right wing (with just a couple faux Democrats dissenting). If they had had their way, we would have had a depression.

The annual findings also showed that median income declined by 2.9 percent in 2020 to $67,500. Still, after accounting for the government aid, every age group, racial and ethnic group and educational level saw a decline in poverty.

Some of the largest declines in poverty were reported for families headed by single moms, African Americans, Hispanic Americans and adults without a high school degree.

“The federal government responded quickly and significantly. And it’s very clear that those efforts prevented a sharp rise in poverty,” said James Sullivan, an economics professor at the University of Notre Dame.

“The concern is that we will see poverty rise again because we’ve now seen these relief packages expire.”

Remember also that the Monetarily Sovereign U.S. government has the infinite ability to create its own sovereign currency, U.S. dollars. It never can run short of dollars, and neither needs nor uses tax dollars for spending.

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.”

Despite current debates about “how will it be paid for,” the fact is that all federal spending is paid for the same way: The federal government, creates from thin air, its spending dollars. It can do so endlessly.

President Biden is urging Congress to enact more programs to help the poor and working class as part of a $3.5 trillion package that would make significant investments in many parts of the economy.

Top White House aides point to the success of the pandemic aid as an example of how additional resources can make a dramatic difference in lowering poverty and hardship.

You can be certain that 100% of the GOP will oppose any aid to the poor, though the same politicians will approve of aid to the rich.

All any insurance does is provide money, which the federal government is far more able to do. There is no advantage to your paying for health insurance, when the federal government is able to pay for health insurance.

The census data shows that the rate of uninsured was especially high in a dozen states that have chosen not to expand Medicaid eligibility under the ACA.

Unlike his predecessor, President Biden has been pressing to expand Medicaid in the dozen holdout states, and Congressional Democrats are considering proposals that would allow people frozen out of the program by their state governments to buy private ACA health plans inexpensively.

Here are the states whose political majority is Republican, and who do not consider poverty and lack of medical care to be a problem.

What happens next to family incomes and poverty will depend largely on how many Americans are able to return to work in the coming months and whether the U.S. government extends some aid to low-income Americans.

Contrary to popular wisdom, federal deficit spending does not cause inflation. All inflations have been caused by shortages of key goods and services, most often food and oil. Today’s inflation results from shortages of labor, food, and oil.

Sadly, some voters have so little regard for humanity that they vote against the federal financing to ease poverty — financing that costs them nothing, but that will lift their neighbors from agonizing poverty and free children from starvation, homelessness, illness, and lack of education.

SUMMARY

The U.S. federal government has demonstrated how federal deficit spending can reduce poverty in America.
The federal government, being Monetarily Sovereign, has the unlimited ability to deficit spend, without collecting taxes. It cannot unintentionally run short of dollars
Federal deficit spending never has caused inflation; shortages of key goods and services are the sole cause of inflation.
People who are homeless, uneducated, ill, and hungry are a drag on the economy. They are less able to produce and to consume.
Poverty in America could be cured by the adoption of the Ten Steps to Prosperity (below).

The U.S. federal government has all the tools it needs to end poverty in America. All it needs is the will.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

……………………………………………………………………..

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.”

Ten Steps To Prosperity:

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

MONETARY SOVEREIGNTY

Not enough guns in America

From the 7/16/21 Chicago Tribune:

It’s still unknown why an Iowa man allegedly had a rifle with a laser scope in his hotel room overlooking a downtown Chicago beach

Casteel, 32, of Ankeny, Iowa, was arrested at the hotel in the 600 block of North DuSable Lake Shore Drive on July 4 and charged with two counts of aggravated unlawful use of a weapon. In addition to the rifle, police recovered several rifle magazines and a .45-caliber handgun from his 12th-floor room, prosecutors have said.

“See, it’s like this. I’m going to Chicago on a vacation, so I decide that for . . . uh . . .protection . . . I need to take my rifle plus its laser scope, along with a few loaded magazines.

“Oh, and to be doubly safe, I even took, my .45-caliber handgun.

“So, if I’m walking down Michigan Avenue, and someone wants to rob me, I just can whip out my rifle, and get him sighted in my laser scope, and start blasting away. And then, if that doesn’t do the job, I can finish him off with my .45.

Ripper Street - Internet Movie Firearms Database - Guns in Movies, TV and Video Games — **Guy in a high-rise hotel room with a sniper scope, several loaded magazines, and a .45 handgun. What could possibly go wrong?**

“Really, it’s all for . . . uh . . . protection.”

OK, Casteel didn’t actually say those words.

Click the link at the top of this article. You won’t believe the real reason why he came to Chicago, packing major heat.

And then think about how all the gun-nuts, in cahoots with a right-wing Supreme Court and its claim that the “well-regulated militia,” mentioned in the Constitution, what just so much garbage, so fire at will — think about all the deaths and suicides this intentional misreading of the Constitution has cost America.

Thousands of murders and suicides, but the real danger to America is what . . . Mexican families at the border? The federal debt? Liberals? Black people?

Does it all get any more stupid than this?

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

……………………………………………………………………..

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.”

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

MONETARY SOVEREIGNTY

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