Every month, millions of people are told the earth is flat Wednesday, Sep 25 2019 

The Balance, according to their website:

“The Balance makes personal finance easy to understand. It is home to experts who provide clear, practical advice on managing your money.

“With more than 24 million monthly visitors, The Balance is among the top-10 largest finance properties. Our more than 50 expert writers have extensive qualifications and expertise in their topics, including MBAs, PhDs, CFPs, other advanced degrees and professional certifications.

“The Balance family of sites have been honored by multiple awards in the last year, including The Telly Awards, The Communicator Awards, and Eppy Awards.”

That is truly impressive — 24 million people every month, 50 expert writers, multiple awards, college degrees. They are a major source of information for the public.

Specifically, let us consider their U.S. economy expert, Kimberly Amadeo:

KIMBERLY AMADEO
US Economy Expert
Kimberly is the author of The Obamacare Handbook and Beyond the Great Recession, and has been quoted as an economic expert by Fox Business, US News and World Report, and The Huffington Post.

She has authored hundreds of articles on economic topics ranging from health care reform to monetary policy to global trade. Kimberly has been the U.S. Economy Expert for The Balance, and prior to that, About.com, since 2006.

In addition, Kimberly has more than 20 years of senior-level corporate experience in economic analysis and business strategy, and received an M.S. in Management from the Sloan School of Business at M.I.T.

With that introduction, let us see what Ms. Amadeo has to say. Here are a few excerpts from one of this year’s articles:

US Federal Government Tax Revenue
Who Really Pays Uncle Sam’s Bills?
BY KIMBERLY AMADEO Updated May 18, 2019
The U.S. government’s total revenue is estimated to be $3.643 trillion for Fiscal Year 2020.

That’s the most recent budget forecast from the Office of Management and Budget for October 1, 2019, through September 30, 2020.

We pause to remind you that the federal government, which uniquely being Monetarily Sovereign and having the unlimited ability to create U.S. dollars, neither needs nor uses your tax dollars.

The federal government, unlike state and local governments, never unintentionally can run short of dollars.Related image

Taking more than $3.6 trillion from the economy every year represents a giant economic loss.

Visualize the effect of dumping more than $3.6 trillion down the toilet, every year.  That is what your federal taxes accomplish.

Continuing with excerpts from Ms. Amadeo’s article, I’ll comment directly to her:

So where does the federal government’s revenue come from? Individual taxpayers like you provide most of it. Income taxes contribute $1.822 trillion, over half of the total. Another third, $1.295 trillion, comes from your payroll taxes.

Corporate taxes add $256 billion, only 7%. The Tax Cut and Jobs Act cut taxes for corporations much more than it did for individuals. In 2015, corporations paid 11% and income taxpayers paid 47%.

The best way to reduce the individual tax burden is to reduce government spending, not shift the burden to corporations.

No, Ms. Amadeo, the best way to reduce the federal individual tax burden is to reduce federal individual taxes. 

Recessions (vertical gray bars) begin with declines in federal deficit growth (red line) and are cured by increases in federal deficit spending. 

Federal spending benefits Americans. Reducing federal spending would reduce those benefits, and lead to recessions and depressions.

The government’s annual income only pays for 77% of spending. It creates a $1.1 trillion billion budget deficit.

The $1.1 trillion budget deficit inserts $1.1 trillion growth dollars into the economy. It more properly should be called an economic surplus.

And, Ms. Amadeo, the federal government’s annual income pays for nothing. The government creates brand new dollars, ad hoc, every time it pays a creditor.

When the federal government pays a creditor, it sends instructions to the creditor’s bank, instruction the bank to increase the balance in the creditor’s checking account.

The instant the bank does as instructed, new dollars are created and added to the nation’s money supply. Deficit spending is the federal government’s primary method for creating economic growth dollars.

Shouldn’t Congress only spend what it earns, just like you and me?

Here, Ms. Amadeo, you had the perfect opportunity to explain the difference between a Monetarily Sovereign federal government’s finances,  and a monetarily non-sovereign individual’s finances.

While a Monetarily Sovereign entity never can run short of its own sovereign currency, I have no sovereign currency. So my income is less than my spending, I can run out of money. The federal government can’t.

Since the federal government neither needs nor uses income, and can create unlimited amounts of money, there is absolutely no reason for Congress to spend what it earns.

Pants on fire.png

Pants on fire

By failing to explain this difference, Ms. Amadeo, you help perpetuate the Big Lie of federal –  personal finance equivalence. Unfortunately, you expound upon the Big Lie, and write the single, most wrong-headed, completely false paragraphs in the entire article:

It depends on where the economy is in the business cycle. Congress should use deficit spending to boost economic growth in a recession. It uses stimulus spending to create jobs.

Once the recession is over, the government should live within its means and spend less. It should raise taxes, if needed, to reduce the deficit and the debt. That will keep the economy from overheating and forming dangerous bubbles. Congress should switch from expansionary to contractionary fiscal policy.

Think about it, Ms. Amadeo. Why would Congress want to “boost economic growth” only “in a recession”? It makes no sense at all. And later in your article, you contradict yourself on this point.

Today, as I write this comment, we are not in a recession. Why would I not want to “boost economic growth, today?

And stimulus spending creates jobs by growing the economy and by providing the goods and services the populace desires. Why is this a bad thing?

After missing the opportunity to educate, Ms. Amadeo, you execute a confused turnaround and write:

The revenue collected equals 16.3% of gross domestic product. That’s the nation’s measurement of economic output.

If that much production is going to the federal government, then you want to make sure it’s reinvested into the economy to support future growth.

Let’s examine that last phrase. “It” (federal tax revenue”) is not reinvested in anything. It is destroyed upon receipt.

Then, Ms. Amadeo, you admit that federal investment “into the economy to supports future growth,” but you previously opposed federal investment into the economy, unless there is a recession.

Revenues would be much higher without the Trump tax plan. It was also lowered by the extension of the Bush tax cuts and the Obama tax cuts. They were meant to fight the 2001 recession and the 2008 recession.

They were supposed to spur the consumer spending that drives almost 70% of economic growth.

But most people didn’t even realize this happened since the tax cut showed up as reduced withholding instead of a check.

Instead of spending the cuts, people used some of it to pay off debt. The recession scared people into saving more and using credit cards less. So, the budget didn’t expand enough to spur economic growth.

The above is mystifying. Do you, Ms. Amadeo, not realize that the deficit spending you decry — the deficit spending that began in 2008 — caused the recovery and 11-year massive growth that continues even today?

Now that the recession is over, those tax cuts should be reversed. Taxes should be increased, not cut.

An economic expansion is the time to pay off the debt, not add to it.

Uh, Ms. Amadeo, news flash: The recession has been “over” for 11 years. It ended because of federal deficit spending. Now you want to create another deficit by taking more dollars out of the economy?

And exactly why do you want to pay off the federal debt?

First, the federal government never can run short of dollars, so why does the “debt” trouble you?

Second, the so-called “debt” isn’t really debt in the classic sense. The federal debt is the total of deposits into Treasury Security (T-bill, T-note, T-bond) accounts, which are paid off every day, simply by returning the dollars in those accounts.

Thus, the so-called federal “debt” (unlike state and local government debts) is not a burden on the federal government, nor is it a burden on taxpayers.

What is a burden on taxpayers? Taxes.

IN SUMMARY
Kimberly Amadeo and THE BALANCE claim to reach more than 24 million readers each month. This platform would give them an excellent opportunity to educate the populace and to dismiss pernicious and damaging myths about the American economy.

Instead, out of ignorance or intent, they have chosen to perpetuate the Big Lie that federal finances are like personal finances, and that stimulative federal deficit spending should be reduced and limited to times of recession.

The Big Lie has led to many trillions of dollars unnecessarily being taken from the economy, a depletion that has resulted in repeated recessions and even depressions through the years.

Millions of people every month, rather than being enlightened, are told the world is flat.

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

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The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. 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:

1. Eliminate FICA

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

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

More scare nonsense from the CRFB. Monday, Dec 31 2018 

The nation’s leading supplier of federal debt lies, the Committee for a Responsible Federal Budget, has released its latest salvo of utter nonsense:

Here are a few of their baseless claims:

1. The Deficit Could Hit $1 Trillion This Year and $2 Trillion Within a Decade
Although deficits decreased from Fiscal Year (FY) 2011 to FY 2015, they’ve been rising ever since.

We now expect deficits to return to nearly $1 trillion this fiscal year (2019) and stay above that level indefinitely.

In fact, if lawmakers extend the costly tax cuts and spending increases indefinitely, deficits will be more than $2 trillion by 2028.

Although the above claims themselves are not baseless, the implication that somehow increases in the federal deficit are bad — that is baseless.

An increasing deficit merely means that the federal government pumps more dollars into the economy that it removes. That is a good thing. It is what grows the economy.

In fact, the opposite of deficits — i.e. surpluses — have been the cause of every depression in U.S. history.

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.

A growing economy requires a growing supply of money. Austerity (i.e. reduced deficit spending) invariably leads to recessions and depressions.

2. The Long-Term Debt Outlook is Terrifying
This fall, CRFB released its own 75-year budget outlook, which projected an unsustainable fiscal outlook.

Under current law, debt will rise from 78 percent of Gross Domestic Product (GDP) in 2018 to 160 percent by 2050 and nearly 360 percent by 2093. Under the Alternative Fiscal Scenario, debt will exceed 600 percent of GDP by 2093.

Why is the high debt/GDP ratio “unsustainable”? It isn’t. 

There is no relationship between federal debt and GDP. The debt is not serviced by GDP, nor is it serviced with taxes, exports, or any other form of income.

The federal government is Monetarily Sovereign. It has the unlimited ability to service any amount of debt. It never can run short of dollars.

Japan, for example, carries a debt/GDP ratio exceeding 250%, and no one claims this debt is “unsustainable.” See graph, below.

Japan General Government Gross Debt to GDP

3. “Debt-Financed Laws” Offered a Temporary Stimulus
While the economy has grown by about 3 percent over the past year, our analysis Can America Sustain the Recent Economic Boost? showed that the growth rate would likely return to 2 percent per year.

As we illustrated, near-term growth was largely driven by one-time stimulus and other effects from the Tax Cuts and Jobs Act (TCJA), the 2018 Bipartisan Budget Act, and other deficit-financed legislation.

Unfortunately, the economic boost from these laws will be temporary – but the debt will be permanent.

The CRFB admits that economic growth is driven by deficit stimuli. 

They also admit that continuing economic growth requires continuing deficit stimuli, which our Monetarily Sovereign government has the infinite ability to provide.

The U.S. government never unintentionally can run short of U.S. dollars. Never. Even if the federal government collected zero taxes, it could continue spending, forever.

So, exactly what is the problem? The CRFB never says.

4. Rapid Economic Growth is Unlikely to Last
In the analysis of America’s recent economic boost, we showed that nearly all forecasters agree that current rapid rates of economic growth are unlikely to last.

For example, the Congressional Budget Office (CBO) projects that the economy will grow by 3 percent in 2018 and 2.8 percent in 2019, but then grow by between 1.6 and 1.9 percent per year for the remainder of the decade.

A primary factor in predicting economic growth is federal debt growth. Debt growth creates the dollars that stimulate economic growth.

Economic growth (red) parallels federal debt growth (green).

5. Deficits Shouldn’t Rise When the Economy is This Strong
Typically, a strong economy is paired with low deficits (or even surpluses) – both because strong economic performance produces more revenue and because it creates the economic space for deficit reduction.

Yet despite the economy performing at or even above its potential, deficits are widening.

In a recent analysis of deficits and the economy, we showed that the deficit has never been this high when the economy was this strong. 2018 and 2019 are extremely abnormal in that we are running high and rising deficits despite low unemployment, no significant output gap, no recession, and strong economic growth.

The above is a lie of Trumpian proportions. Rising deficits make the economy strong by adding dollars to the economy.

Reduced deficit growth leads to recessions, which are cured by increased deficit growth:

Reduced federal deficit growth leads to recessions (vertical bars) which are cured by increased deficit growth.

And as you have seen, federal surpluses do not create strong economies. Quite the opposite. Federal surpluses create depressions.

It is true that economic growth brings in higher taxes, but that does not create “economic space for deficit reduction.”

The term “economic space for deficit reduction” is gobbledegook. As long as there are deficits, they always can be reduced, so long as one wishes to experience recessions and depressions.

6. Policymakers are Responsible for More than Half of This Year’s Deficit
This year, the deficit will approach $1 trillion – and policymakers have no one to blame but themselves.

We estimate that 55 percent of this year’s projected deficit is the result of deficit-financed legislation enacted since 2015.

Recent spending hikes and tax cuts will cost $540 billion this year. Had these laws been offset or not enacted, the deficit would be $440 billion rather than $981 billion, as CBO projects.

Said more accurately, “Policymakers are Responsible for More than Half of This Year’s Economic Growth, simply because deficits create the dollars necessary for economic growth.”

7. Recent Tax and Spending Bills Both Cost Trillions, If Extended
The Tax Cuts and Jobs Act of 2017 and the Bipartisan Budget Act of 2018 both added tremendously to the national debt.

And while the tax cuts will cost significantly more ($1.9 trillion versus $435 billion) over ten years, that is largely an artifact of the most of the tax cuts enacted for eight years, while the spending boost was a two-year deal.

We found that if lawmakers extend both laws indefinitely, the tax cuts will cost about $2.7 trillion over a decade while the spending bill will cost $2.4 trillion. That’s $5 trillion of additional debt that this country simply cannot afford.

The CRFT prays that you not understand Monetary Sovereignty, otherwise you would know that:

8. Revenue Has Dropped, Not Risen
While some have claimed that revenue grew over the past year  . . . we estimated that actual revenue fell by 3.6 percent between tax year 2017 and tax year 2018. Revenue fell by 5.4 percent after inflation, and by 8.1 percent relative to GDP.

Said more accurately,  . . . “we estimated that 3.6 fewer dollars were taken from the economy between tax year 2017 and tax year 2018.”

Taking fewer dollars out of the economy helps the economy grow, and the government has no need for those dollars.

And now we come to the real reason why the CRFB exists, why it devotes all its resources to promulgating the “Big Lie”: The Committee for a Responsible Federal Budget is paid by the rich to convince you that your federal benefits should be reduced.

The single, biggest economic problem facing the U.S. and the world is widening Gaps between the richer and the poorer.

9. Entitlements and Interest Explain Long-Term Debt Growth
While near-term deficits are largely self-imposed, medium- and long-term debt growth are driven primarily by growing costs of Social Security, federal health spending, and interest on the debt. Indeed, these three categories of spending are responsible for over four-fifths of all nominal spending growth over the next decade alone.

Yes, nothing irritates the rich more than you receiving money. This irritation is “Gap Psychology,”   the human desire to widen the Gap below you on any economic or social measure, and to narrow the Gap above you.

Gap Psychology drives the appeal of expensive jewelry, cars, homes, and designer clothing. Gap Psychology drives the resentment some have for anti-poverty aids like food stamps and college preferences, as well as immigration.

10. Social Security is Hurdling Toward Insolvency
Social Security costs continue to grow faster than dedicated revenue, and its trust fund is running out.

CBO projected that just 13 years from now – when today’s 54-year-olds reach the normal retirement age and today’s youngest retirees turn 75 – the Social Security trust fund will be depleted.

The Trustees project insolvency in 16 years, when today’s 51-year-olds reach the normal retirement age and today’s youngest retirees turn 78. At that point, the law calls for a deep automatic across-the-board cut in benefits.

It is a perfect example of the “Big Lie.”

The federal government cannot run short of dollars, and because the federal government cannot run short of dollars, no agency of the federal government can run short of dollars unless that is what the federal government wants.

The rich run the federal government. The rich want you to believe Medicare and Social Security and Medicaid and every other government program that benefits the not-rich must cut spending. 

Image result for bernanke and greenspan

It’s our little secret. Don’t tell the people we don’t use their tax dollars.

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

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

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

There is no “Social Security trust fund.” It is a bookkeeping fiction. The federal government could, if the rich wished, supply unlimited funds to support Social Security and Medicare for every man, woman, and child, of all ages, forever.

11. Rising Health Costs Are Driving Up the Debt
Health care spending is rising even faster than Social Security spending – both as a result of population aging and rising per-person health care costs.

In our analysis of health spending and the federal budget, we found that If health spending were held constant at today’s level, debt would stabilize around 90 percent of GDP; if it had been held constant in 2010, debt would peak in about a decade and return to today’s level by 2040.

Said more accurately, “If only you people would spend more out of your own pockets on health care, and take less from the government, the federal debt would be lower, the economy would decline and the Gap between you and the rich would widen.”

12. Tax Expenditures Remain Costly
While Social Security, Medicare, and Medicaid are the fastest growing federal programs, tax breaks remain costly.

According to the Joint Committee on Taxation, income tax expenditures will cost about $1.5 trillion per year in lost revenue.

While one goal of tax reform was to dramatically shrink the size and number of these tax breaks, the Tax Cuts and Jobs Act actually only eliminated one significant tax expenditure, and it did little to reduce the overall cost of tax preferences.

In the misleading world of the Committee for a Responsible Federal Budget, the words “Tax Expenditures” are not expenditures at all. They are economic savings.

Those are the dollars not taken from your pockets. Those are the growth dollars that remain in the economy.

Then after telling us that Social Security, Medicare, Medicaid and other benefits to you should be cut, the CRFB suddenly expresses false concern for your future generations:

13. Policymakers are Prioritizing the Past Over the Future
Instead of leaving future generations better off, we’re leaving them with a stack of large bills.

Interest payments on the debt are expected to exceed federal spending on children by 2020 and all federal support for children (including tax expenditures and spending) by 2021.

That means we’ll soon be spending more financing the consumption of past generations than investing in our future.

All lies. Future generations will not pay for future federal deficit and debt, any more than current generations pay for current deficits and debt.

Who pays? The government pays for its deficits by creating dollars from thin air, just as it has done ever since it created the very first dollar, way back in the 1780s.

Federal taxes do not fund federal spending. All tax dollars are destroyed upon receipt, and brand-new dollars are created, ad hoc, each time the government pays a creditor.

If interest payments exceed federal support for children, the government could solve that “problem” simply by spending more on children.

Meanwhile, federal interest payments add growth dollars to the economy.

And finally, we come to the biggest whopper of them all:

14. Reducing Debt Would Increase the Size of the Economy
One consequence of a rising national debt is that it crowds out productive investment, which in turn slows income growth.

The corollary is that lower debt can actually boost income growth.

CBO estimates that if debt were reduced to its historic average of about 41 percent of GDP by 2048, per-capita GNP (a rough parallel for average income) would be about $6,000 (6.5 percent) higher than under current law.

Simply holding debt at current levels would boost income per person by $4,000 per year in 2048.

This is so laughably wrong, that one wonders how anyone with an IQ above 50 could possibly believe it.

Federal debt, by law and not by necessity, results from federal deficits. Federal deficits are economic surpluses. When the government runs a deficit, the economy runs a surplus — more money enters the economy than leaves it.

It takes a peculiar sort of illogic to claim that adding dollars to the economy “crowds out productive investment, which slows income growth.”

In short, the CRFB and its rich patrons want you to believe that cutting your federal benefits and/or increasing your federal taxes actually increases your income. 

If the people who wrote this nonsense actually believe it, they are woefully ignorant of basic economics, and if they don’t believe it, they are shameless liars.

Take your pick.

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

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

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

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

Ten Steps To Prosperity:
1. Eliminate FICA

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

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

 

Yet another article that relies on you being ignorant about federal finances and Social Security Sunday, Mar 11 2018 

It takes only two things to keep people in chains:
.

The ignorance of the oppressed
and the treachery of their leaders.

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Let us begin with three, very simple, related facts:

  1. It is 100% impossible for the U.S. federal government to run short of dollars unless the President and Congress want it to.
  2. Thus, it is 100% impossible for any federal agency to run short of dollars unless the President and Congress want it to.
  3. Social Security is a federal agency.

Therefore:

Social Security cannot run short of dollars unless the President and Congress want it to.

Image result for crocodile tearsIgnore all the crocodile tears about the Social Security “trust fund” running short of money.

Or, there not being enough FICA dollars to pay for future retirees.

Or, the “need” to cut benefits to certain groups, or to tax benefits to other groups.

They are all lies, there is no better way to say it — lies — designed to make you accept fewer benefit dollars, while the rich continue to grab more.

What set me off is the following Motley Fool article, that simply is loaded with the above-mentioned lies.

Will This New Social Security Proposal Gain Traction in Congress?
With Social Security facing a $12.5 trillion cash shortfall, this proposal aims to generate more revenue and reward those disadvantaged by the program.
By: Sean Williams  Mar 10, 2018

Social Security, arguably the most important program in the country as more than 42 million retired workers receive a monthly payout, is in trouble.

Yes, Social Security indeed is in trouble, but not because of any shortfall in cash. Rather trouble lurks because the President and Congress want to screw you, on behalf of the rich, who run this country.

According to the 2017 report from the Social Security Board of Trustees, Social Security is expected to begin paying out more in benefits than it’s generating in revenue by 2022.

Just 12 years later, in 2034, the roughly $3 trillion in excess cash held by the program is forecast to be completely gone.

Based on the current payout trajectory, there’ll be an estimated $12.5 trillion budget shortfall between 2034 and 2091.

All of the above nonsense would be true if Social Security were a private enterprise, owned and operated by a private company — a monetarily non-sovereign company.

But it is absurd nonsense when describing an agency owned an operated by the United States government — a uniquely Monetarily Sovereign entity.

The federal government created from thin air, the laws that in turn created the very first dollars, also out of thin air. Today, it continues to own the laws that allow it to create dollars at will, simply by paying bills.

For that reason, the federal government needs no “revenue.” It always pays its bills by creating new dollars.

Think about this for a moment:

Federal spending has risen 37,500% (from $40 billion to $15 trillion) since 1940. Where did the $14, 960,000,000 additional dollars come from?

They can’t have come from federal borrowing. Where would those borrowed dollars have come from?

And the new dollars can’t have come from taxes. Tax dollars already exist.

Dollars are created in two ways and destroyed in two ways:

Created: Lenders create new dollars when they lend, and the federal government creates new dollars when it spends.

Destroyed: Dollars are destroyed when loans are paid down, and when the federal government collects taxes.

When the federal government pays an invoice, it sends instructions (in the form of a check or wire) to the creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account.

The instant the creditor’s bank does as instructed, new dollars are added to the nation’s money supply. Thus, because the federal government creates dollars by spending, it never can run short of dollars.

This shortfall has a lot of people, including working Americans, pre-retirees, retired workers, people with disabilities, and survivors, very concerned.

Americans are concerned because writers like Sean Williams tell them to be concerned. The people seldom are told the facts, so in the absence of facts, the people believe the lies.

There’s good reason for that, as 62% of today’s retirees lean on Social Security for at least half of their monthly income, and a majority of future retirees are expected to rely on the program in some capacity to make ends meet.

Yet, the trustees’ report suggests that benefits could be cut across the board by up to 23% in order to preserve the solvency of the program through 2091.

How sweet. The people desperately need Social Security, while the lying politicians prepare excuses for cutting this already insufficient lifeline.

What sort of cruel minds would find this acceptable?

The silver lining is that Social Security can’t go bankrupt as a result of the payroll tax, which provides the bulk of its funding; but that doesn’t mean the current payout schedule is sustainable.

A lie. Social Security payouts are infinitely sustainable. The pols and the rich don’t want you to know that the federal government never can run short of its own sovereign currency — the currency it originally created by writing laws.

The only option for current and future retirees to avoid having their Social Security benefits slashed is through congressional action.

Yes, Congress and the President can set Social Security benefits and FICA taxes at any levels they choose. The first step should be to eliminate the FICA tax altogether, while increasing benefits.

Lawmakers in Washington, D.C., certainly aren’t denying that a problem exists. Unfortunately, they’ve been unable to come to an amicable solution.

However, a new Social Security proposal, laid out last week by Sen. Patty Murray (D-Wash.), is aiming to change that.

They are “unable” to come up with an “amicable” solution (i.e. a solution that would be approved by rich donors), simply because they don’t want a real solution.

They only want a “solution” that will further widen the Gap between the rich and the rest, exactly what their rich donors tell them to do.

Known as the Stronger Safety Net (SSN) Act, Murray’s proposal aims to modernize the 83-year-old program for women, children, people with disabilities, and survivors, while at the same time having those who can afford to pay more cover the long-term funding gap in the program.

“Modernize” is one of those deceptive words, like “reform” that implies improvement but actually means nothing.

Making anyone pay more does absolutely nothing to “cover the long-term funding gap.” It takes dollars from the private sector (aka, the economy), which is recessive.

The SSN Act has four key proposals.

1. Divorced people over 62 who were married for at least five years would qualify, with a 10% step-down for each year below 10. A divorced person who was married for seven years would have a maximum spousal benefit of 70%, whereas someone who was married for nine years could max out at 90%.

Women often take care of children or loved ones who are sick. This means they take time out of the labor force, which can reduce their lifetime earnings and retirement benefit.

All this cockamamie rejiggering is “necessary” because of the myth that FICA pays for benefits and dollars are limited. The entire problem could be solved by simply giving every recipient the same, more-generous benefit. (See: Ten Steps to Prosperity: Step 3: Monthly bonuses for all)

2. Establish an alternative benefit for the surviving spouse where both husband and wife are retired workers.

The surviving spouse would be entitled to 75% of the sum of the survivor’s own work benefit and the primary insurance amount of the deceased spouse. This alternative benefit would be paid if it’s higher than what survivors would receive under the current law, and would begin in 2019.

More cockamamie rejiggering. Who could understand such nonsense, much less justify it? 

The process resembles trying to feed a hundred people from one potato, by cutting the potato into a thousand pieces.

3. Under the current system, minor children have to be under the age of 18, or high school students under the age of 19, to qualify for benefits. But beginning in 2019, full-time students up to the age of 23 of retired, disabled, or deceased workers would be eligible to receive benefits.

Why age 18? 19? 23? Murray has no idea. It’s a complexity no one understands and no one needs.

Which leads us to this:

4. The SSN Act seeks to generate additional revenue for the Social Security Trust by imposing a 2% payroll tax on earned income in excess of $400,000. The current payroll tax of 12.4% does not apply to any income above $128,400.

The mythical Social Security “Trust Fund” doesn’t need additional revenue, especially since it is an accounting deception.

A Monetarily Sovereign nation can add to or subtract from any so-called “trust fund” at will. It’s all hocus pocus, smoke and mirrors, to make you believe the government can’t afford your benefits.

That said, taxing the rich to narrow the Gap between the rich and the rest is a good idea, even though those tax dollars disappear from the money supply.

The single most important problem in our economy and the world’s economies is the large and growing Gap between the rich and the rest.

I know what you’re probably thinking: “The rich aren’t reliant on Social Security, so they should pay extra tax to shore up the Social Security Trust.”

However, the $128,400 figure in 2018 — exists because there’s also a maximum monthly payout at full retirement age. It’s not “fair” to add a 2% payroll tax to an extra, say, $5 million in income if that individual won’t see an extra cent in Social Security benefits.

That’s not what I’m thinking. I’m thinking:

  1. The mythical “Trust Fund” doesn’t need “shoring up.” It needs to be eliminated as an excuse for not paying benefits.
  2. The government should increase benefits
  3. The benefits should be paid to every man, woman, and child in America.
  4. Taxing the rich more would narrow the Gap and benefit America (See: Ten Steps to Prosperity: Step 8: Tax the very rich more (dictatorship warning)

It’s unlikely that Republicans would go along with such a measure, and their votes will be needed in the Senate to pass the SSN Act.

I may be wrong, but I do not remember the Republican Party (the party of the rich) passing any legislation that was not designed to widen the Gap.

Undoubtedly, you have been told that Social Security (or Medicare, for that matter) will soon run short of money, and the “trust fund” will be empty.

And undoubtedly, you have been told your taxes must be increased and/or your benefits must be decreased.

And you will hear it from reliable sources with impeccable credentials:

The politicians, who have been bribed with campaign contributions and promises of lucrative employment when they leave office.

And the economists who have been bribed with university contributions and lucrative jobs with think tanks.

And the media, who are owned by the rich and have been bribed with advertising dollars.

It all is a lie, the biggest lie in economics. It is The Big Lie. So, next time you hear it, contact the liars and tell them you know: It’s a damnable lie paid for by the rich to widen the Gap between the rich and you.

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

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

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

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

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY

 

Why do you pay to visit a national park? Friday, Nov 10 2017 


It takes only two things to keep people in chains:
The ignorance of the oppressed
and the treachery of their leaders.

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BACKGROUND: The federal government is Monetarily Sovereign. It issues its sovereign currency, the dollar. It never can run short of its sovereign currency.

Even if the federal government were to collect $0 taxes, it could continue paying dollars for goods and services, forever. Paying dollars for things is the method by which the federal government creates new dollars.

You, your local and state governments, and all businesses, are monetarily NON-sovereign. The dollar is not your sovereign currency. In fact, you do not have a sovereign currency.

So you, your local and state government, and all businesses can, and sometimes do, run short of dollars.

Keep the above in mind as you read about yet another, in a long list of cases, where ignorance of Monetary Sovereignty, causes the public blissfully to accept unnecessary reductions in government benefits.

I live part-time, in the Chicago area, close to many public parks. The city alone has 570 parks, occupying many thousands of acres. The suburbs offer additional thousands of park acres.

Virtually all of these parks are free to visitors.

The question of the day: If local governments, all of which have limited funds, provide free parks, why does the national government, which has unlimited funds, charge for visiting national parks?

Charging More for National Parks is Not a Bad Idea
by Steve Chapman, Chicago Tribune

If you assume that anything the Trump administration does is bad, you will be right more often than not. But there is the occasional surprising exception. The administration’s proposal to raise entrance fees at 17 popular national parks is proof that even the worst presidents can’t always be wrong.

The idea has sparked predictable objections. A group of Democratic senators led by Maria Cantwell and Patty Murray of Washington accused Interior Secretary Ryan Zinke of plotting “to exclude many Americans from enjoying their national parks.”

Ninety House Democrats signed a letter saying, “Public lands belong to all Americans, not just wealthy families who can absorb the steep fee increases.”

They may forget that this approach didn’t start with Donald Trump. Democratic President Jimmy Carter liked the idea. It also found champions in President Bill Clinton, another Democrat, and his interior secretary, Bruce Babbitt, who had been president of the League of Conservation Voters.

In short, bad ideas are not exclusive to one party or one President. The ignorance of federal financing (Monetary Sovereignty) is promulgated by all sides.

It would be nice if visits cost nothing. Under this plan, critics should be glad to know, 299 of 417 national park sites would remain free.

Not only that, but the higher fees at the 17 parks would apply only during the busiest five-month stretch of the year. Anyone unwilling or unable to pay could visit the Grand Canyon in October or Acadia in May. There are also a number of free days each year.

Nor would the change be a huge obstacle to locals who make frequent use of nearby national parks. An $80 annual pass provides unlimited access to every national park site in the country.

Yes, indeed it would be nice if visits cost nothing. And it also is nice that 299 national parks are free to visitors. And it is nice that at 17 parks, fees don’t apply during the seven, least popular months.

If all these things are “nice,” why do 118 national parks charge any fees at all?

Writing recently in The New York Times, Timothy Egan took the contrary view that “all national parks should be free.” But free for whom?

Someone has to furnish the money required to run and maintain these vast sites, which last year endured the wear and tear of 330 million visitors.

Most of the National Park Service budget, which exceeds $3 billion a year, comes from taxpayers. The new charges would raise a mere $70 million a year.

And there, folks, you have a statement of the “Big Lie,” that federal taxes fund federal spending. It is an insidiously believable lie because it sounds so familiar.Image result for national park fee

After all, your city and state do need to receive dollars in order to spend dollars. And businesses do need an income of dollars so they can spend dollars. And you need a source of dollars for spending.

So “obviously” the federal government also needs an income of dollars.

Except it doesn’t. Being uniquely Monetarily Sovereign, the creator and issuer of dollars does not need to take dollars from anyone. 

The federal government doesn’t need to tax. It doesn’t need to borrow. It doesn’t need to charge fees.

It’s entirely fair to expect all taxpayers to contribute to preserving these priceless treasures, which belong to everyone. But it’s also fair to ask those who actually venture into them to kick in a bit more.

No, it isn’t “fair” at all. Not only is it misguided, but it’s an unnecessary burden on the poorest among us, who suffer for every penny they spend.

The money goes to a good cause — those roads, trails, bridges, campgrounds, water systems and visitors centers that make the parks accessible and enjoyable.

Federal law directs 80 percent of the revenue from entrance fees to the park where they were collected.

Right now, the maintenance backlog on park infrastructure totals nearly $12 billion. The extra income at the gate could only help.

Outrageous lies. The money goes nowhere. Not to a good cause, or a bad cause, or any other cause.

State and local tax dollars first are deposited in private banks, and then are spent. During that time they remain as part of the nation’s money supply.

Federal taxes cease to be a part of any money supply, the instant they are received by the government. In short, they are destroyed. They no longer exist.

If you ask economists, “How much money does the federal government have?” they will be unable to tell you.

The question is nonsensical, because the government has the infinite ability to create its sovereign dollars from thin air, simply by paying bills.

It’s like asking, “How many thoughts do you have?” or, “How many numbers are there?”  Nonsensical.

One objection to the fees is that they would discourage people from coming. But fees were raised in 2015, and the number of visits last year was 11 percent higher than in 2014.

The misleading statement is that unnecessarily taxing people is O.K. because more people are willing to pay the tax.  No, it’s never O.K. to take dollars from the economy.

Entrance fees at the national park are the rare tax that people will travel thousands of miles to pay.

A truly misleading statement. People don’t travel thousands of miles in order to pay a tax. It’s another unwelcome cost — an unnecessary cost, in this case — of a vacation.

The Trump administration has many bad ideas when it comes to preserving the environment and protecting national treasures. This isn’t one of them.

Steve Chapman, a member of the Tribune Editorial Board, blogs at http://www.chicagotribune.com/chapman, schapman@chicagotribune.com, Twitter @ SteveChapman13

In summary, you are told the Monetarily Sovereign federal government is just like monetarily non-sovereign state and local governments. But there is a diametric difference between Monetary Sovereignty and monetary non-sovereignty.

Only the U.S. government has the unlimited ability to create its sovereign currency, the dollar. All other entities are limited in their ability to create dollars.

Taxes are a burden on the public and on the economy. They remove dollars from the economy, and therefore are recessive. They punish the poorer among us more than the richer. They widen the Gap between the rich and the rest.

Even small taxes contribute to the “death of a thousand cuts” created by federal tax laws.

People like Steve Chapman help disseminate the Big Lie that damages you and your country.

If you look up the word, “tax,” you’ll find such synonyms as “deadweight,” “excess baggage,” “hardship,” “hindrance,” “millstone,” “misfortune,” “obstruction,” and “punishment.” They are especially appropriate for federal taxes.

The next time you plop down your $30 (per car) to enter Yellowstone National Park, know this. The $30 did is much to support Yellowstone as would the same $30 tossed into Old Faithful — in short, nothing.

Not only is it a waste of your money, but it takes $30 out of the economy.

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