The almost-too-easy way to grow the economy and narrow the Gap Tuesday, May 9 2017 

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

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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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Following the “Great Recession” of 2008, our economy has grown at an achingly slow pace. Look at the graph (below) and compare the past ten years with the period beginning 1972 (the year in which the U.S. went off a gold standard and became more completely Monetarily Sovereign):

GDP Growth Line (Vertical bars are recessions)

Meanwhile, the Gaps between the richer and poorer, as expressed by the GINI ratio, (below) have widened. [A Gini ratio of 0 indicates perfect equality, where everyone has the same income. A Gini ratio of 1 indicates total inequality, where one person has all the income]:

Income inequality has grown substantially in the past 50 years

In short, the economy has grown quite slowly, while the rich have become relatively richer, and the poor have become relatively poorer.

We have suggested the Ten Steps to Prosperity (see section below), as a process by which the economy can grow faster and the Gap can shrink. Some of those steps require significant changes in federal law, together with significant bureaucratic expansions.

But there is one Step that requires only minuscule changes in federal law together with a reduction in the bureaucracy: Step 1. Eliminate the FICA tax.

  1. FICA is the most regressive tax in America, punishing lower-income, salaried workers, while barely touching higher income salaried workers, and having no effect on people who get their incomes from non-salary sources — mostly the retired and the rich.
  2. Corporations submit half of all FICA collected, but corporations don’t actually “pay” taxes.  They merely are legal conduits between customers and corporate employees and owners.  Functionally, employees pay all FICA taxes; corporate managers consider FICA to be as much a cost of paying employees as are salaries.
  3. The Federal government neither needs nor uses FICA dollars. Being Monetarily Sovereign, the federal government creates dollars ad hoc, every time it pays a bill. Tax dollars you send to the Treasury cease to be part of the money supply. Your tax dollars effectively are destroyed.

The elimination of FICA would add a $1 trillion+ to the money supply, which would stimulate the economy by increasing Non-federal Spending:

Gross Domestic Product = Federal Spending + Non-federal Spending + Net Exports.

Spending by consumers is by far the largest part of the U.S. GDP.  It accounts for an average of about two-thirds of GDP in the United States.

With GDP at about $18 Trillion, an addition of $1 Trillion (from FICA) would create about 5% of GDP growth (broad estimate, less investment).

Social Insurance Receipts*
          Year  | $ Trillions
          
2010 | 0.9
2011 | 0.8
2012 | 0.8
2013 | 0.9
2014 | 1.0
2015 | 1.1
2016 | 1.1
2017 | 1.1
2018 | 1.2

*Amount of Revenue by Source

With GDP growth averaging about 4% in the past ten years, an additional 5% growth (to 9%) would be quite significant — similar to the growth rate in the 1971-1981 period.

This brings us to the subject of inflation. There have been many changes to the methods for calculating inflation (a general increase in prices), and these changes have resulted in somewhat different results.

But, there does not seem to have been a relationship between GDP increases and inflation. (See graph below.)

GDP increases were not marked by inflation

While an increase in the Supply of money is inflationary, an increase in the Demand for money is deflationary: Value = Demand/Supply.

The Demand for money is based on the formula: Demand = Reward/Risk.

Interest is the Reward for owning money. The Federal Reserve controls inflation to its target rate (2%-3%) by increasing the Reward, i.e. by increasing interest rates.

We cannot end this article without referring to the brainwashing conducted by our thought leaders, including the U.S. government.

The Office of Retirement and Disability (Social Security) publishes a bulletin titled, “Social Security Trust Fund Flows and Reserves.”

The bulletin includes such sentences as:

Social Security benefits are paid from the reserves of the Old-Age, Survivors, and Disability Insurance (OASDI) trust fund.

The reserves are funded from dedicated tax revenues and interest on accumulated reserve holdings, which are invested in Treasury securities.

There is no “trust fund” for Social Security any more than there is a “trust fund” for other federal agencies.

Have you ever wondered why there is no “trust fund” to pay for the military, or for the White House, or Congress, or for the Supreme Court, or the CIA, the FBI, NSA, or any other agency you can mention? Have you ever wondered why no one claims these agencies soon will be

Have you ever wondered why no one claims these agencies soon will be insolvent?

The reason: The Social Security “trust fund” is an accounting fiction. It pays for nothing. Social Security and Medicare benefits are paid the same way as Congress’s salaries: By federal deficit spending.

“Trust fund” balances are available to finance future benefit payments and other trust fund expenditures–but only in a bookkeeping sense.

These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury.

The fake “trust fund” merely is a group of balance sheet notations, completely controlled by the government. The “trust fund assets” consist of nothing more than “liabilities” of the U.S. Treasury.  All the “trust fund” owns is what the Treasury owes it.

Thus, rather than paying Social Security and Medicare benefits out of a non-existent “trust fund,” the Treasury could pay benefits directly.  If the “trust fund” ceased to exist, this would have zero effect on the Treasury’s ability to pay Social Security and Medicare benefits.

The next time you read an article or see a graph telling you the Social Security trust fund will run short funds at some future date, know you are being treated to The Big Lie — the lie that federal taxes fund federal spending.

While state and local taxes do fund state and local spending, federal taxes do not fund federal spending. The federal government creates dollars, ad hoc, by spending, and never can run short of dollars.

Even if all federal tax collections fell to $0, the federal government could continue spending, forever.

IN SUMMARY:

Growing the economy, narrowing the Gap, and controlling inflation are three of the most important financial responsibilities of the federal government.  These responsibilities could be accomplished easily and simply by eliminating the useless and harmful FICA tax.

If we eliminated FICA tomorrow, you instantly would begin to reap the economic benefits.

Rodger Malcolm Mitchell
Monetary Sovereignty

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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 (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

The belief trap: How our children are taught “The Big Lie,” tax version Tuesday, Apr 18 2017 

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

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

A belief trap is a belief so powerful it is not even questioned, much less denied. The notion that gravity attracts was a belief trap until Einstein proved gravity, rather than attracting, changes space-time.”

A belief trap closes ones eyes to anything that doesn’t comport with the belief.

Image result for person trap

The Big Lie” denies the facts of  Monetary Sovereignty. Unlike state and local governments, our Monetarily Sovereign U. S. federal government never can run short of its own sovereign currency, the U.S. dollar. Even if all federal tax collections fell to $0, the government could continue spending, forever.

Thus, federal taxes do not fund federal spending

This is a fact that not taught in the vast majority of our schools — high school or college — nor is it revealed in our media.

Here is a classic example of the Big Lie from today’s Chicago Tribune:

The high cost of being tax-ignorant
By Professor Marjorie E. Kornhauser, Tulane University Law School

Immediately, we see that Professor Kornhauser has law expertise. She sees federal taxes as a law problem and does not present federal taxes as an economics problem and a social problem.

For the past few years, I’ve sat in New Orleans high school classrooms watching students debate the fairest way for government to raise revenue.

No differentiation is made between federal government vs. state and local governments. They all are treated as “government,” though their problems are diametrically different.

While state and local governments must balance spending needs with funding ability, the federal government has no such problem.  It can focus solely on spending.

But Profesor Kornhausers students are stuck in the “it-goes-without-saying” belief trap that “of course governments need to raise revenue,” though this is not true of the federal government.

They role-play — first as management consultants advising legislators, then as lawmakers, weighing what to tax — property vs. sales vs. income. Are there limits on what or who can be taxed? Is a flat tax or a progressive rate structure fairer? Sometimes their discussions are heated.

As we discussed at “Which Taxes Are Fairest? Which Taxes are Least Fair?”  no taxes, local or federal can be called “fair.” But federal taxes are especially unfair in that they have no funding purpose.

These teenagers, however, have an edge that many adults don’t: basic tax literacy. Guided by Tulane law students, the high schoolers explore different philosophies and methods of taxation through TaxJazz, a program I began in 2013.

Students who take the weeklong course study issues of fairness and technical matters such as bases and rate structures. They examine key concepts such as the difference between marginal rates (the percentage of tax paid on the last dollar of income) and effective rates (the average percentage of tax paid).

They learn that narrower tax bases, such as sales tax, need higher rates than broader bases, such as income taxes, to raise equivalent amounts of revenue. They discover that changing the method of taxation increases how much some taxpayers owe and decreases that amount for others.

If more people knew what these students know, we’d have a far more reasonable tax debate and better tax laws.

Actually, the professor’s students are at a disadvantage, because rather than having no knowledge, they have the wrong knowledge.

Without an understanding of Monetary Sovereignty, and without understanding the differences between a federal tax and a local tax, discussions of “fairness” and “equivalent amounts of revenue” are futile.

We fight about taxes because we disagree about what is fair and what government should do. If we knew more, we’d still have disagreements, but at least our discussions would be more rational and produce more coherent policies.

Amen to that, Professor.

Real-world discussions often occur in a tax-ignorant universe. Many people say that some taxation is needed to pay for the government but that it should be lower and “fairer.”

We suspect that Professor Kornhauser is among those who believe “some taxation is needed to pay for the government,” though this is not true of the federal government.

At the local, state and national levels, lack of tax knowledge hampers the promulgation of rational laws that could help spur the economy and lead to prudent budgets.

A tax-literate electorate could demand that politicians provide coherent tax policy options.

We could not have said it better. Unfortunately, this professor, and with a few exceptions, all other professors, do not provide that knowledge, which is why we do not have coherent federal tax policy options.

How can more Americans become tax-knowledgeable? The first step, of course, is to include more discussion of taxes in schools — not just in high school and college, but even elementary school. This is no less important than the financial literacy programs many schools now incorporate into their curricula.

Without tax knowledge, voters enable politicians who spout inflammatory, empty rhetoric and perpetuate counterproductive, unfair tax policies. Democracies need informed voters to function properly. The cost of tax ignorance is too high.

The irony is palpable.

And the beat goes on. In the same issue of the Chicago Tribune, we found the following article:

Those who skirt ‘fair share’ annoy tax filers most
74 percent vexed by complexity of system, poll finds
By Gail Marks Jarvis, Chicago Tribune

Americans finishing off their tax returns are annoyed by the complexity of the task, but that’s not their top gripe.

Corporations and wealthy people who don’t pay their fair share in taxes are the largest source of frustration among filers, according to a recent survey.

Again, no differentiation was made between Monetarily Sovereign vs. monetarily non-sovereign taxation. In the research, all taxes are the same.

About 80 percent said in a Pew Research Center poll this month that they are bothered when corporations don’t pay “their fair share.” About 60 percent of those polled were very upset when wealthy people skirted their “fair share.”

The populace has not been taught that all taxes paid by the private sector reduce the amount of money in the private sector, and therefore reduce Gross Domestic Product. Asking corporations to pay more, or even to pay a mythical “fair share,” merely reinforces The Big Lie that the federal government needs tax dollars.

There is no “fair share” and the federal government has no need for taxes.

Roughly 54 percent of the filers surveyed this year said they thought they were paying “about the right amount of taxes.”

The “right amount” compared to what? This opinion probably is related not to how much in taxes are needed, but rather to what other people pay.

The popular belief trap ignores the likely fact that everyone pays too much in federal taxes, the fact that reducing federal taxes would grow *Gross Domestic Product (thereby helping everyone), and the fact that state & local taxes are in a completely different category from federal taxes.

*(GDP = Federal Spending + Non-Federal Spending + Net Exports)

The Big Lie has become a religion unto itself. To deny it is considered a heresy that must be denounced angrily. The public has been conditioned to assume federal taxes are necessary, and that’s that. No debate wanted.

Like religion, The Big Lie is taught to us from childhood. It cannot be doubted or even examined.

We are caught in the belief trap from which seemingly there is no escape. 

Where do we go from today? I believe Professor Kornhauser is sincere, but she is putting her children, her students, into the belief trap — and they will put their children in, and it continues.

Nothing enters that world. It is insulated like a religion, from scientific fact.

Great people have broken belief traps — Newton, Einstein. We need one, now.

Rodger Malcolm Mitchell
Monetary Sovereignty

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THE RULES

•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money no matter how much it taxes its citizens.

•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

•No nation can tax itself into prosperity, nor grow without money growth.

•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.

•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)

•Deficit spending grows the supply of money

•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control. The limit to non-federal deficit spending is the ability to borrow.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Progressives 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.

•The single most important problem in economics is the Gap between the rich and the rest.

•Austerity is the government’s method for widening the Gap between the rich and the rest.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

MONETARY SOVEREIGNTY

Objections to Medicare-for-All — and the first, necessary step Wednesday, Mar 29 2017 

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

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

The Republicans put forth their “Health Care Only for the Rich” plan, and saw the public, for some strange reason, not wanting health care to be available only for the rich.Image result for rich government poor people

So now, after 7 years of searching for an idea, the GOP is searching for an idea.

We long have recommended Step #2 of the Ten Steps to Prosperity: FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (See below). The Federal government, being Monetarily Sovereign, easily can fund the whole program, without any FICA collections.

Financially, the solution is a no-brainer. The federal government can afford it; the public is strapped for funds. So who should pay?

But a recent article in The Week describes problems other than mere finances. Here are some excerpts, along with our comments:

Why ‘Medicare for all’ is easy to say and near impossible to do
David Faris

Bernie Sanders premised his primary campaign in large part on a radical promise to ditch Obama’s signature legislative achievement in favor of extending Medicare to all Americans.

The phenomenal success of Sanders’ insurgent socialist campaign proved again that the ACA was unpopular in large part because millions of Americans think the state should be doing more rather than less. 

Yet there are a number of important questions about any single-payer plan that remain not just unanswered, but mostly unasked.

Let’s imagine that, somehow, progressives succeed in enacting “Medicare for all.” What does the transition period look like between the passage of such legislation and its full implementation?

What would happen to the health insurance companies that employ over half a million people? Would they be compensated for their losses?

Health insurance companies still could exist, though in a much-reduced form. They could provide coverage for those who do not like Medicare, either because they believe it to be too restrictive in its coverages, or because their doctors won’t accept it, or for other reasons.

If people have a choice between free health care from Medicare or paid health care from private insurance, most will choose free, but some will chose private.

So yes, like many industries through the years, the health care insurance industry will shrink. Think of the coal industry.  And the record-pressing companies.

And, when was the last time you used a public land-line telephone? Their manufacturers must be feeling the pinch.

Most industries that continue to exist today have become more efficient (i.e. use fewer people and more machines). Business evolves.

What would happen to the medical debt of doctors who would almost certainly face diminished economic prospects under single-payer? (Most Americans think physicians are rich — true in some cases — yet many doctors rack up over $200,000 in debt to attend medical school.)

These problems are not the fault of Medicare or of any future Medicare-for-All.  They result from the Big Lie, the ridiculous claim that somehow our Monetarily Sovereign federal government can run short of its own sovereign currency, so it needs to husband its financial resources.

For that reason, Medicare underpays doctors, a situation in need of change, whether or not Medicare-for-All is instituted.

And medical school, like all other schools, should be free.  See: Free education for everyone.  Again, this has nothing to do with Medicare-for-All.

Primary care doctors and rural areas — generally pay the worst and already have trouble attracting physicians for that very reason. What happens to the supply and demand of care when tens of thousands of doctors earn less?

And yet again, why pay them less? This has nothing to do with single payer.

Do we have even remotely the civilian bureaucratic know-how we would need to scale Medicare up to the entire 320-million-strong population of the United States? The Centers For Medicare and Medicaid Services employ more than 6,000 people. That number would probably need to be, conservatively, quadrupled.

That probably was one of the objections to the original Medicare.  Yet here Medicare is, functioning better than most federal programs.  It is far more difficult to begin a program from scratch than to expand an existing, functioning program, which federally funded, Medicare-for-All would do.

And note the concern about hiring more people, juxtaposed against the concern about insurance companies firing people.  Strange.

Remember that a committed and well-intentioned Democratic administration had trouble just setting up a website for a tiny fraction of the number of people who would be covered by a new single-payer system.

Running a nationalized health care system would be considerably more complicated than cutting monthly Social Security checks to people.

A Medicare-for-All  website would be nearly identical to the currently, well-functioning Medicare website.  The primary difference would be simply handling more people — an easily solved Internet problem, not a program problem.

Political questions abound as well. Republicans spent seven years hammering ObamaCare, which remained mired in negative approval ratings.

Medicare, by contrast, is not “mired in negative approval ratings.” Medicare-for-All transfers people from the less-loved ACA program to the highly appreciated Medicare program.

Americans who just months ago were complaining about the ACA’s deductibles and coverage options were faced with the prospect of losing their insurance coverage altogether, along with their right to be covered if they have a pre-existing condition.

ObamaCare has drifted into majority approval, and the Republicans’ hot, hastily conceived, cruel, vindictive mess of an alternative was opposed by a whopping 3-1 majority.

A similar problem would vex Democrats almost immediately, in the same way that it did when they got to work on the ACA in the first place. It’s what happens when various stakeholders in existing, complex, and flawed processes realize that their interests are deeply threatened.

The above is a rather pitiful argument for never making any big changes. It was true of Medicare, Social Security, Medicaid and enlisting women, blacks, and gays into the military, and going to the moon.

The maximal version of “Medicare for all” would involve, in a quite literal sense, stripping hundreds of millions of people of their existing private insurance coverage.

No, it would give people the choice of free health care insurance vs. paid-for health care insurance. Undoubtedly, more people would select free, but some people might prefer what the private insurance companies offer.

No one would be “stripped.”

There are only three hundred million people in all of America, so the notion that “hundreds of millions of people” would lose health insurance is laughable or outrageous, depending on one’s sense of humor.

The GOP has waged a scorched-earth campaign against the ACA and has failed spectacularly. For Democrats, launching another huge, divisive struggle over health care would be like if Truman had decided to go ahead and fight the Soviets over Eastern Europe at the conclusion of WWII.

What a ridiculous analagy. No, it isn’t like that at all (though then, the Soviets were weak).  The first step would be to convince the populace that the Big Lie indeed is a lie.  Once people understand Monetary Sovereignty, the institution of Medicare-for-All would be a “why-have-you-waited-so-long?”

Bottom line: Medicare-for-All is a natural outgrowth of Monetary Sovereignty. The only reason not to adopt it is the affordability myth, the notion that taxpayers would have to pay for it.

Once people understand that they would not have to pay for other people’s health care, and that yes, for a Monetarily Sovereign nation, lunch really can be free, objections to Medicare-for-All would melt like a snowman in a summer sun.

Rodger Malcolm Mitchell
Monetary Sovereignty

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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 (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 (Guaranteed Income)) 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

The perfect expression of the Big Lie Friday, Dec 23 2016 

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

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This blog frequently refers to the “Big Lie,” the lie that says our Monetarily Sovereign federal government uses taxes to pay its bills.

Based on the Big Lie, politicians and others tell you the federal deficit and debt are “unsustainable,” “dangerous,” and a “ticking time bomb”  — all lies.

And these lies lead to the lies that FICA must be increased, while Medicare, Social Security, and other social benefits must be decreased. The politicians say it because the rich want them to say it, and the rich want it, because those lies widen the Gap between the rich and the rest.

In various posts, we have addressed the specifics of many lies emanating from the Big Lie, but seldom have we seen them expressed in such concise fashion as in the following:

Trump’s Economic Plan is a Betrayal of the People Who Voted for Him

“President-elect Donald Trump’s race to enact the biggest tax cuts since the 1980s went under a caution flag Monday as Senate Majority Leader Mitch McConnell warned he considers current levels of U.S. debt “dangerous” and said he wants any tax overhaul to avoid adding to the deficit.

“‘I think this level of national debt is dangerous and unacceptable,’ McConnell said, adding he hopes Congress doesn’t lose sight of that when it acts next year. ‘My preference on tax reform is that it be revenue neutral,’ he said…

“The Committee for a Responsible Federal Budget, a nonpartisan think tank, has projected that Trump’s plans would increase the debt by $5.3 trillion over a decade, with deficits already over $600 billion a year and rising on autopilot…

“‘What I hope we will clearly avoid, and I’m confident we will, is a trillion-dollar stimulus,’ he said. ‘Take you back to 2009. We borrowed $1 trillion and nobody could find that it did much of anything. So we need to do this carefully and correctly and the issue of how to pay for it needs to be dealt with responsibly.'”

Let’s analyze this abominable series of lies:

Lie #1. “Current levels of U.S. debt (are) dangerous.”

Why? What is dangerous about the U.S. debt? Will the federal government run short of dollars to pay its debts? No. The U.S. cannot run short of its own sovereign currency.

Has the massive “debt” increase caused the much-feared, overblown threat of hyperinflation? No. Inflation has been running below the Fed’s target rate. In fact, the U.S. never has had hyperinflation.

Lie #2. Tax reform(should) be revenue neutral

No it shouldn’t. This is a restatement of the notorious “Balanced Budget Amendment” argument, in which somehow the U.S. economy is expected to grow without a growing supply of dollars. There is no known economic mechanism for that to happen.

Every depression and most recessions have come on the heels of reduced deficit growth.

Lie #3. The Committee for a Responsible Federal Budget, (is a) a nonpartisan think tank

While the CRFB does not self-identify as Republican, it strongly leans to the right, and it is highly partisan for one goal: Widening the Gap between the rich and the rest.

The CRFB invariably favors cuts to social programs along with increases in FICA.

Lie #4. Trump’s plans would increase the debt by $5.3 trillion over a decade

Whether or not the figures turn out to be correct, this is a lie by inference. The CRFB loves to quote large numbers, implying that somehow these numbers are bad. However, if you go to the CRFB website you will not find a single analysis telling you why the numbers are bad.

Because there are no reasons, the CFRB hopes you simply will believe the lie without substantiation.

Lies #5 and #6. We borrowed $1 trillion and nobody could find that it did much of anything.

These are the most outrageous lies of all.

The U.S. doesn’t “borrow.” The Federal Reserve Bank accepts deposits in T-security accounts. The intentionally misleading word “debt,” when applied to T-securities, should be changed to “deposits.”

“Nobody could find that it did much of anything” except the deficit spending is what brought us out of the worst recession since the Great Depression of the 1930s.

Mitch McConnell and his fellow liars have learned that if one repeats a lie often enough, and if many other people repeat the same lie, the populace will believe it, no matter how obvious the lie is.

Most people are aware the federal government cannot run short of its own sovereign currency. And most people also are aware that despite massive deficit spending, the Fed’s primary concern has been the lack of inflation.

Finally, most people are aware of what the above graph tells them: The sharp increase in stimulus spending (i.e. deficits) brought us out of the recession and into almost a decade of economic growth and reduced unemployment.

The rich have bribed McConnell and his fellow politicians to lie. But they haven’t bribed you to believe their lies.

So why would you?

Rodger Malcolm Mitchell
Monetary Sovereignty

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

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 AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) 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 EVERYONEFive 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 CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from 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 corporate 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
 

 

 

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