It breaks my heart to see this headline. It should break your heart, too.

[Why would any sane person take dollars from the economy and give them to a federal government that has the infinite ability to create dollars?]

It breaks my heart to see the following headline. It should break your heart, too.

Millions of vulnerable Americans likely to fall off Medicaid once the federal public health emergency ends
By Amy Goldstein

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“Pay no attention to those many trillions behind me. I’m too broke to help you (unless you’re rich.)”

Begin with two central facts: The U.S. federal government is Monetarily Sovereign, and a Monetarily Sovereign entity cannot unintentionally run short of its own sovereign currency.

The federal government has infinite dollars.

Thus, your federal tax dollars do not fund federal spending.

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

All federal taxes are destroyed upon receipt.  Your M1 money-supply tax dollars cease to be part of any money-supply measure, once they reach the Treasury. They effectively are destroyed.

The government creates new dollars, ad hoc, every time it pays a bill. That is how the federal government creates dollars. The more debts the government owes, the more money it creates.

Contrary to what you repeatedly are told, your grandchildren are not liable for the federal “debt.” Not now, not ever.

WASHINGTON — The bipartisan spending deal that Congress cleared last week provides billions of dollars in aid for Ukraine, but it cuts other humanitarian programs meant to address mounting hunger crises elsewhere in the world, including Afghanistan and West Africa.

The initial House-passed bill and one offered in the Senate, written by majority Democrats, would have largely fulfilled the White House’s humanitarian funding request.

In interviews and statements, foreign aid advocates said they were “embarrassed” and “flabbergasted” that Congress reduced funds for dealing with the worst refugee displacements since World War II and other crises caused by mounting natural disasters and manmade conflicts.

The cuts to nonemergency humanitarian spending, as well as the lack of any international COVID-19 assistance in the omnibus, are a “self-inflicted wound” to America’s ability to recover from the pandemic and to pursue its long-term national security interests, said Liz Schrayer, president of the bipartisan U.S. Global Leadership Coalition.

Independent budget analysts have pinned blame on Republicans’ insistence that any increases in nondefense spending be kept roughly equal to increases in defense spending.

“We have more people who are hungry and people who are hungrier getting hungrier and we have no grain. It is absolutely catastrophic,” Peña said. “SFOPs got the raw end of the stick.”

The Senate’s lead foreign aid appropriator issued a similar view in an uncharacteristically blunt statement for a congressional appropriations cardinal criticizing his own bill.

Everywhere you turn, the phony belief that the federal government must operate under restrictive budgets, like you and I must, is a self-inflicted wound on America.

The so-called “federal debt” is not a debt (It is deposits in T-security accounts), and it is not a burden on anyone. (The “debt” is paid off simply by returning those deposits.)

Our federal government, having unlimited resources, pretends it is limited, and the public believes the lie.

The sole purpose of the lie is to keep you from asking for the same federal benefits that the rich (who pay no taxes year after year) receive.

So long as you are kept ignorant, the rich will keep getting richer and you will keep paying.

WHAT ABOUT INFLATION?
In addition to the lie about the federal debt being a burden, there is the lie that federal deficit spending causes inflation. It is widely believed, but it is a flat-out lie backed by no facts.

There is no relationship between federal deficit spending (red line) and inflation (blue line).

Inflations are caused by shortages, most often shortages of oil.

Today’s inflation is caused not only by shortages of oil but also by scarcities of food, shipping, labor, computer chips, vital minerals, lumber, and many other COVID-induced problems.

For many, many years, the US had massive deficit spending with low inflation, but now, with the effects of COVID and the Putin war, we suddenly see inflation. Clearly, deficit spending was not the cause.

The Fed’s attempt to address inflation by raising interest rates will not succeed while the real causes, shortages of oil et al, persist. Congress can address these shortages by spending more to facilitate the supply of all scarcities.

One good step would be to eliminate the harmful FICA tax, which doesn’t fund Medicare or Social Security but does discourage hiring by increasing the cost of labor.

And this is what breaks my heart. A Congress that never has to worry about having enough to eat, or a place to sleep, or good schools for their children, has decided America “can’t afford” to provide these things to the “lazy” poor.

Of course, the “can’t afford” meme is a blatant lie. America can afford anything that costs dollars.

But the rich, who bribe and control our government, don’t want the Gap between them and the rest of us to narrow. The wider the Gap, the richer are the rich, so widening the Gap is the way our spineless Congresspeople vote.

“Spineless” is the only way to describe the 100% refusal of one party to approve spending for the poor. These subservient sheep do exactly as they are told by the rich, then collect their excessive salaries and bribes, while the less fortunate among us pay the price.

So long as you believe that your federal taxes fund federal spending and that federal spending causes inflation — so long as you believe those two lies — then the rich will have won and you will have lost.

Ignorance has its costs.

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

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  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. 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

The only way to teach children right from wrong

“Right” and “wrong” are social conventions that differ among societies. Canibals think eating people is just fine. Aztecs supposedly enjoyed ripping out hearts. Slavery was de rigueur in America.

You were not born knowing right from wrong. You learned from your family and friends. You learned from your schools and other outside sources.

There is only one way to teach children right from wrong. Children must be taught what is right and taught what is wrong. They must be taught the truth.

So, for instance, if your family and friends were bigots — — i.e. intolerant of people because of their race, religion, or sexual orientation — and your schools said nothing about bigotry, you probably would have become a bigot.

Why would your family and friends teach you bigotry? Because their families and friends taught them bigotry, a chain extending down through the generations, families and friends teaching bigotry as a standing tradition.

Why would your schools say nothing? Perhaps because of laws that prevented them from teaching you right from wrong, for fear you would find such teaching “uncomfortable.”

Although you, like most people, probably harbor some forms of bigotry in your heart, you probably also agree that bigotry, in general, is a sin. How do we solve that dichotomy and break the historical chain?

I was reminded of that question when some years ago, on a visit to Germany, I toured the Dachau concentration camp.

Dachau’s commandant, Theodor Eicke, introduced a system of regulations which inflicted brutal punishments on prisoners for the slightest offenses, while scientists there conducted cruel experiments.

Prisoners were subjected to injections of malaria and tuberculosis, and the untold thousands that died from hard labor or torture were routinely burned in the on-site crematorium.

As Allied units approached, at least 25,000 prisoners from the Dachau camp system were force-marched south.

During these death marches, the Germans shot anyone who could no longer continue; many also died of starvation, hypothermia, or exhaustion.

When American forces liberated Dachau, they found more than 30 railroad cars filled with bodies.

I was able to tour the camp because the German government neither hid nor denied the existence of the horrors committed there. In fact, they use the camp as a reminder of the past, to help prevent a repeat.

A movie describing in detail, the horrors of the camp, is shown to daily busloads of German school children as a right-vs.-wrong lesson.

The German people, but for a small minority, do not celebrate the misdeeds of Naziism. There are no statues of Hitler in Germany. The Holocaust is revealed and decried.

The Germans do not fear admitting this dark period of their history. In fact, they actively teach it.

I think of that approach to the shameful parts of Germany’s heritage when I compare it to the American — or rather, the right-wing — approach to the horrors of our past and even of our present.Nearly 100 Confederate Monuments Removed In 2020, Report Says; More Than  700 Remain : NPR

Slavery was an abomination that was celebrated by statues which, at long last, were pulled down despite claims of “Southern heritage.”

And today, in America, “well-meaning, good citizens,” protest against teaching the parts of our past that shame us. Their stated concern is that such reminders and revelations would make their children “uncomfortable.”

But ignorance is uncomfortable. Bigotry is uncomfortable. Denial does not change reality.

Today, our black families continue to undergo hardship. No, it isn’t of Holocaust levels, but still is terribly destructive and wholly unnecessary in our wealthy nation.

GOP advocated denial is the worst approach because it teaches no lessons. It condemns us to repeat the sins of the past.

Those who cannot remember the past are condemned to repeat it.”
George Santayana, The Life of Reason, 1905. From the series Great Ideas of Western Man.

We neither can, nor should try, to erase the blemishes of our past. Nor should anyone blame our children for our sins or for the sins of those who came before us. Leveling such blame would, in itself, be bigotry.

The purpose of teaching history is not to lay blame or to create guilt, but to help us know our own successes and foibles, and the circumstances that can move a nation to bigotry and hatred.

We are not pure. No nation is. Pretending purity is blindness and naivete. Let us be honest with ourselves. To some degree, we all receive mistreatment at times, but in America people of color have been, and still are, disproportionately mistreated. 

We allow the teaching of the Holocaust, and even have museums dedicated to that education. Few object, because it was the Germans, and to a degree, the Poles, Austrians, French and others who committed those crimes.

But the teaching of racism in America is an anathema to some Americans, because it is we, or more correctly, some of us, who are the perpetrators. And to hide that historical fact, we countenance angry denial.

This brings us to something called “Critical Race Theory,” perhaps the most reviled yet least understood and least taught academic subject in education.

Critical race theory (CRT) is an academic concept that is more than 40 years old. The core idea is that race is a social construct, and that racism is not merely the product of individual bias or prejudice, but also something embedded in legal systems and policies.

One example: In the 1930s, government officials literally drew lines around areas deemed poor financial risks, often explicitly due to the racial composition of inhabitants. Banks subsequently refused to offer mortgages to Black people in those areas.

Scholars who study critical race theory in education look at how policies and practices in K-12 education contribute to persistent racial inequalities in education, and advocate for ways to change them.

Among the topics they’ve studied: racially segregated schools, the underfunding of majority-Black and Latino school districts, disproportionate disciplining of Black students, barriers to gifted programs and selective-admission high schools, and curricula that reinforce racist ideas.

Solving racial inequalities first requires admitting that they exist and then admitting that they should be solved. 

And that requires study.

Sadly, there are those who deny any study is necessary, deny such inequalities exist to be solved, and claim any such equalities are the fault of the Black students — a “blame-the-victim” rationalization.

The Catholic confessional begins, “Forgive me father for I have sinned.” The confession of sin is the first necessary step for absolution. Without realization and confession, the sin compounds.

The Germans seem to have understood that the denial of sin is in itself a sin.

“Forgive America, father, for we have sinned.” Those are the words of the truly moral, truly righteous.

An evil man, like Donald Trump, would have you deny the obvious. He would have you deny the clear fact that people of color have received worse treatment in America than white Christians. That denial compounds the evil.

For you who are religious, here is are reminders:

John 1:9 If we confess our sins, he is faithful and just to forgive us our sins and to cleanse us from all unrighteousness.
James 5:16 Therefore, confess your sins to one another and pray for one another, that you may be healed. 
Proverbs 28:13 Whoever conceals his transgressions will not prosper, but he who confesses and forsakes them will obtain mercy.
Psalm 32:5 I acknowledged my sin to you, and I did not cover my iniquity; I said, “I will confess my transgressions to the Lord,” and you forgave the iniquity of my sin.
Romans 3:23 For all have sinned and fall short of the glory of God
James 4:17 So whoever knows the right thing to do and fails to do it, for him it is sin.

Perhaps you are one of those rare souls who has not sinned and has not felt bigotry in your heart. But to deny, or even to countenance the sins of others against strangers is in itself a sin.

Discomfort is not an excuse for denial.

Children must be taught about the existence of sin so they can recognize it and learn to avoid it. Without this teaching, the children can be sucked into sin by evil persons.

We are not born bigots. We learn to be bigots, unless we first learn about the evils of bigotry.

The people who object to the teaching of racism in America often blame their children’s sensitivity. But this is a false excuse. The real reason is, they are ashamed of our past, and want to bury it.

But the past has become the present, and it cannot be buried so long as it still lives. The only way to end the shame is to recognize it and to speak against it, else it will not only continue but multiply.

Perhaps, the real problem lies not in the reluctance to admit that bigotry exists but rather in the fear of the cures.

“Affirmative action” often has involved establishing racial quotas or preferences to “even out” representation in school admissions or job hiring. The problem here is that it invariably requires the less qualified to take precedence over the more qualified, and always will be seen as unfair.

Affirmative action” also stigmatizes the very people it is supposed to help — the “You got in only because you are black” appearance, which further adds to the bigotry rather than reducing it.

Once we recognize the bigotry problem itself, and once we determine to solve it, the solution lies not at the top but at its foundation: Money and poverty, i.e. the income/wealth/power Gap at the bottom of the financial scale.

Lacking money, such minorities as Blacks and Latins suffer poorer primary schools, more crime, less family stability, poorer housing, poorer nutrition, and a desperate culture, where immediate needs take precedence over future plans.

These all lead to poorer primary-school academic results which, in turn, lead to less-educated older students and less qualified job- and college applicants.

The solution lies not in taking from the top to give to the bottom (which always will be fought by America’s most powerful), or in giving solely to the bottom (which will be viewed as unfair by America’s middle).

Rather, the solution is to lift the lower levels far enough above subsistence so that the problems of poorer primary schools, more crime, less family stability, poorer housing, poorer nutrition, and desperation culture cease to impact even the least fortunate among us.

This would be a “rising tide” approach that lifts all boats. Examples can be found in the “Ten Steps to Prosperity” (below). For example:

  1. Eliminate the FICA tax
  2. Offer free Medicare to All who want it.
  3. Offer Social Security to All who want it.
  4. Offer free College to All who want it.

Offering the same money to everyone, regardless of current income or wealth, will not affect the lifestyles of the rich, but can lift the poor to levels where school and job achievements are seen as being in reach.

It will not evoke cries of “unfairness” and “discomfort” that currently plague the accurate teaching of America’s history.

———-///———-

[Why would any sane person take dollars from the economy and give them to a federal government that has the infinite ability to create dollars?]

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

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  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. 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

You can rely on the CRFB to get it wrong. But why?

[Why would any sane person take dollars from the economy and give them to a federal government that has the infinite ability to create dollars?]

The Committee for a Responsible Federal Budget (CRFB) is a fountain of misinformation, or should we say, “disinformation”?

Clearly, they are providing misinformation, i.e. wrong information, but the real question is, do they know it’s wrong, i.e disinformation?

Because they do extensive data analysis, I believe they simply must know their information is wrong. So why do they promulgate so much nonsense?

Before we answer that question, let’s see what they get wrong. Here are some excerpts from their website.

Gas Tax Holiday Would Take A Wrong Turn
FEB 15, 2022 | TAXES
The White House and some in Congress are reportedly considering suspending the 18.3 cent federal gas tax for the remainder of 2022.

The Committee for a Responsible Federal Budget recently estimated that such a proposal would reduce gas tax revenues by $20 billion and, without the general revenue transfer proposed in recent legislation, would advance the Highway Trust Fund insolvency date from 2027 to 2026.

Assuming their numbers are correct, what they really are saying is: “The proposal would reduce the amount of money taken out of the private sector (also known as ‘the economy’) by $20 billion.”

Adding dollars to the private sector is stimulative: taking dollars out of the private sector is recessive. In short, the reduced gas tax revenues would be a $20 Billion economic stimulus.

The CRFB seems to hate anything that stimulates the economy, especially if it directly benefits the middle- and lower-income groups as a reduced gas tax would do.

Further, the so-called Highway Trust Fund is not a real trust fund (see “The Phony Trust Fund Controversy”) and it cannot become insolvent unless Congress and the President want it to become insolvent.

The U.S. government, the creator of the U.S. dollar, cannot run short of dollars. Thus, no agency of the U.S. government can become insolvent, unless that is what Congress wants.

(Former Fed Chairman, Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”)

To prevent the insolvency of any agency, Congress merely passes a law that provides the agency with more dollars. Congress has the infinite ability to pass such laws.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

With inflation at a 40-year high, policymakers are appropriately focused on how to bring prices under control.

But new tax cuts aren’t going to stop this inflation; after all, excessive tax cuts and spending are part of what caused high inflation.

Contrary to popular wisdom, no inflation in history ever has been caused by excessive tax cuts or spending. All inflations are caused by shortages of key goods and/or services.

Interest rates (blue) and inflation (green) have trended down, while federal debt (red) has increased.

For the past 10 years, federal deficit spending has increased massively, with minimal inflation. Now, suddenly, inflation has increased. Why?

Clearly, the cause is not deficit spending, otherwise it would have happened sooner.

Inflations are caused by shortages of key goods and services..

Today’s inflation is caused by the sudden confluence of several factors, all shortages: Labor, food, gasoline, computer chips, transportation, sand, among others.

(Yes, I said “sand.” U.S. Shale Production Hindered By Sand Supply Crunch.)

While massive federal spending has been with us for at least a decade, what has changed recently to cause the sudden change in inflation from low to high?

The answer: COVID.

The worldwide impact of the disease has caused the shortages that lead to inflation.

The only thing that will cure the inflation is to cure the shortages. And that can be accomplished by more federal spending to obtain the needed goods and services:

More federal spending to encourage oil drilling and/or renewable energy.
More federal spending to support farming
More federal spending to support chip manufacture
More federal spending to support transportation
More federal spending to support hiring (i.e. the elimination of FICA taxes and the reduction of income taxes at the lower end)

Reduced federal deficit spending will lead only to recessions, as it always has.

Reductions in federal debt growth lead to inflation
When federal deficit spending (blue) is reduced, we have recessions (vertical gray bars), which are cured by increases in federal deficit spending.

While a gas tax holiday might provide some temporary relief, much of the benefit may flow through to oil producers or lead to higher prices in other sectors of the economy.

It makes no sense for low gas prices to cause price increases elsewhere. While low gas prices may cause an increase in demand for cars, every industry would see lower production costs, which will ease inflation.

Benefitting oil producers is not something to be avoided. Financially encouraging them to pump more oil will ease the scarcity of oil.

By boosting demand in an already over-stimulated economy, the holiday would likely boost inflation in 2023 once it ends. The holiday will also undercut the Administration’s efforts to address climate change.

The CFRB would like you to believe the economy is “overstimulated.” No one knows what an “overstimulated” economy means, but it sure sounds terrible, doesn’t it?

Presumably, it means companies are making more profits so that they will hire more people and pay more salaries to the lower- and middle income people, thereby narrowing the income/wealth/power Gap between the rich and the rest.

Presumably, it means unemployment is low, so there are fewer impoverished children and their parents, again narrowing the Gap between the rich and the rest.

“Gap Psychology” is the desire to widen the Gap below and to narrow the Gap above. All groups are subject to Gap Psychology, but the very rich are the most expert at effecting it.

As for climate change, yes, encouraging more oil production will increase climate change, in the short term. But financially encouraging more use of renewables will have long-term climate benefits.

Meanwhile, the federal government would be out $20 billion this year alone – and much more if the holiday were extended.

The federal government has infinite money. Infinite minus $20 billion, still is infinite. The federal government always will have the infinite ability to write laws, and those laws have the unlimited ability to create dollars.

The CRFB cries crocodile tears for the infinitely rich U.S. government, but no tears for you. They want you to pay the infinitely rich government more of your scarce dollars.

The Highway Trust Fund is just five years from insolvency, and the last thing we need is to cut its primary revenue source or paper over shortfalls with yet another general revenue transfer.

No, the last thing we need is liars telling us that the federal government is running short of its own sovereign currency, so you poor folks need to pony up more dollars, or receive fewer, benefits.

“Insolvency” is the big, fake bogeyman with which the rich try to scare you.

The Big Lie in economics is: “Federal taxes fund federal spending.” While state and local taxes do fund state and local spending, the federal government, being Monetarily Sovereign, does not rely on, or even use, tax dollars.

In fact, the U.S. Treasury destroys all tax dollars upon receipt. It creates new dollars, ad hoc, every time it pays a creditor.

(How does the Treasuy destroy tax dollars? The dollars in your checking account are part of the M1 money supply. When the Treasury receives those dollars, they disappear. They no longer are part of any money supply measure. They effectively are destroyed.)

Statement from the St. Louis Fed:
“As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills.

In this sense, the government is not dependent on credit markets to remain operational.”

Thus, the federal government has infinite dollars; it can’t run short; and telling people to give the government more and to accept less is just an example of how the Big Lie works.

As it stands, the gas tax will only cover half of highway and transit spending by the time the trust fund runs out.

In fact, the gas tax covers none of transit spending. Those tax dollars are destroyed. All federal spending, including federal transit spending, is funded by ad hoc, federal money creation.

As inflation subsides, we should either raise that tax or find a new funding source to supplement or replace it.

We don’t need to find a new funding source. And we certainly don’t need to raise taxes. The federal government is the best funding source:

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

As we’ve stated, the CRFB, acts repelled by the fact that federal spending helps narrow the income/wealth/power Gap between the rich and the rest.

A well-designed carbon tax could generate ample tax revenue while substantially reducing carbon emissions and tempering excessive demand.

A well designed carbon tax might be a good idea from an ecological standpoint. But it’s a silly idea if the purpose is to give private sector dollars to a government that has the infinite ability to create dollars.

The pain Americans are feeling at the gas pump – and with rising costs throughout the economy – should be taken seriously and addressed thoughtfully.

The gas price pain will be eased by raising gas taxes??? That’s the utter nonsense the CRFB wants you to believe.

While cutting the gas tax may have political appeal, it would move in exactly the wrong direction, worsening rather than improving our nation’s economic challenges.

The rising costs should be taken seriously, which is why the cost of gasoline should be reduced — by cutting the gas tax.

Inflation takes dollars out of your pocket. The CRFB’s method of taking inflation seriously” is by taking even more dollars out of your pockets via tax increases.

Why does the CRFB act this way?

Because the rich, who run America, also run the CRFB, and support it with donations. The rich and the CRFB want to widen the income/wealth/power Gap between the rich and the rest.

The rich always wish to be richer. The only way to be richer is to widen the Gap. There are two ways the rich can widen the Gap: Obtain more money for themselves and/or make sure you have less money by paying more taxes.

Either one will make the rich richer, and the CRFB seems to be doing everything it can to reach that goal.

In that vein, I just received this Email from CRFB:

Trust Fund Solutions
Featuring Senators Angus King (I-ME) and Mitt Romney (R-UT)

Committee For a Responsible Federal Budget - Our Maya MacGuineas testified before the House Budget Committee yesterday on fiscal goals. Read her testimony http://crfb.org/papers/maya-macguineas-testimony-setting-fiscal-goal. Watch the video https://www ...
Maya MacGuineas:Paid by the rich to tell you that the federal government’s trust funds soon will be insolvent.

The major government trust funds for Social Security, Medicare, and Highway spending face insolvency in the next decade-and-a-half.

Policymakers need to act sooner rather than later to prevent abrupt across-the-board benefit cuts, assure a more sustainable debt path, promote faster economic growth, and achieve a number of important policy goals.

How raising taxes will help “promote faster economic growth” is a mystery the CRFB never really explains.

Trust Fund Solutions will feature opening remarks from Senator Angus King (I-ME) and a discussion between Senator Mitt Romney (R-UT) and Committee for a Responsible Federal Budget president Maya MacGuineas.

The event will also feature a panel of experts, one focused on each trust fund.

The Committee for a Responsible Federal Budget will also debut its new Trust Fund Solutions website and educational tools.

You can bet that the “solutions” for the mythical “Trust Funds” will involve tax increases (for which the rich will given loopholes) plus benefit decreases, both of which will widen the Gap between the rich and the rest.

Widening the Gap is what the rich pay the CRFB to do.

SUMMARY
1. The Big Lie in economics is that the U.S. federal government can run short of its own sovereign currency, the U.S. dollar. Not only does the govarnment itself have access to infinite dollars, but no agency of the government can run short of dollars unless Congress and the President want that.

2. The government neither needs nor uses tax dollars, which are destroyed by the Treasury upon receipt.

3. Federal deficit spending never causes inflations (scarcities are what cause inflations). Federal deficit spending can cure inflations by curing scarcities. Reductions in federal deficit spending lead to recessions or depressions.

4. The rich grow richer by widening the Gap between the rich and the rest. Gap widening has two paths: Gaining more for the rich and/or forcing the rest to accept less.

5. The CRFB is paid to aid the rich by convincing the populace to accept Gap widening.

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

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  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. 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

Will the “Build Back Better” bill and “too much” federal debt cause inflation? An examination of myths.

The big argument of the day has to do with federal deficit spending. The Republicans say they don’t like it because increasing the federal “debt” causes inflation.

The Democrats agree that increased federal “debt” is inflationary, but that their proposals are “paid for” by increased taxes. So, according to the Dems. the federal debt wouldn’t increase enough to cause inflation.

In total, both parties and all their hired economists wrongly agree that federal deficit spending leads to inflation, a false belief demonstrated in the following article:

House passes Build Back Better bill after overnight delay

It’s unclear whether moderate Senators Joe Manchin and Kyrsten Sinema will agree to some of the provisions included by the House.

“The Build Back Better Act is fiscally responsible,” Mr. Biden said in a statement. “It reduces the deficit over the long-term. It’s fully paid for by making sure that the wealthiest Americans and biggest corporations begin to pay their fair share in federal taxes.

“Leading economists and independent experts on Wall Street have confirmed that it will not add to inflationary pressures. Instead, it will boost the capacity of our economy and reduce costs for millions of families.”

Janet Yellen Not Planning a Wealth Tax, but Could Do Capital Gains Tax
Yellen spreading the Big Lie that federal taxes fund federal spending and that the federal debt is too large.

The CBO said it would increase the deficit by more than $367 billion over 10 years.

But the estimate did not include the revenue that could be generated from increasing IRS enforcement, which the CBO suggested would be $207 billion.

Treasury Secretary Janet Yellen noted that the Treasury Department estimates that the crackdown on tax evaders would raise $400 billion, and her own department’s analysis “make it clear that Build Back Better is fully paid for, and in fact will reduce our nation’s debt over time by generating more than $2 trillion through reforms that ask the wealthiest Americans and large corporations to pay their fair share.”

The White House, which estimated its framework would cost $1.75 trillion, claims it would reduce the deficit over time, generating more than $2.1 trillion over 10 years.

Sounds great, doesn’t it? The spending is “fully paid for,” and increased tax collections would “reduce our nation’s debt” and “reduce the deficit.”

Thank heavens it’s all a lie, a Big Lie.

Despite all the chest-thumping by Biden and friends, the bill will be “fully paid for” simply because all federal spending is fully paid for by federal money creation, never by taxes.

The federal government uniquely is Monetarily Sovereign. Unlike state and local taxes, which do pay for state and local government spending, federal taxes pay for nothing.

That is a fundamental difference between monetarily non-sovereign state and local governments vs. the Monetarily Sovereign federal government.

State and local taxes are M1 (money supply) dollars that remain in the private sector, even after they are received by state and local governments. (The state/local governments deposit their tax dollars into private sector banks.)

By contrast, Federal taxes are M1 dollars that are removed from the economy and destroyed when they hit the Treasury, where they no longer appear in any money measure.

Anyone not understanding that fundamental truth simply doesn’t understand economics, and has no business voting on or commenting about federal spending.

(In all probability, most of the federal politicians do understand, but don’t want you to understand, lest you ask for more benefits. Rich political benefactors want the Gap between the rich and the rest to widen, an event which makes the rich richer.)

Worse yet, if in fact, the increased federal taxes equal or exceed spending (which is what the Dems claim will happen) then the removal of money from the private sector (aka “the economy”) will lead to a depression, as has happened so often n the past.i

We only can pray the Dems are lying about reducing the debt and deficit.

The other issue, perhaps the biggest issue currently, is whether increased deficits and debt will cause inflation.

This is the one the GOP harps on, because they can’t complain about deficits, as they recently gifted the rich with major deficit-causing tax decreases (which by the way, increased the deficit and debt, but didn’t cause inflation).

So what causes inflation? Is it the money supply, as so many economists claim?

Do you see any relationship between the M2 money supply and inflation?

Inflation (blue) vs. The M2 Money Supply (red)

No, there doesn’t seem to be any relationship between the M2 money supply and inflation.

But wait. Some economists claim it isn’t just the increased money supply that causes inflation, but rather increases in the velocity of money that causes inflation.

The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. (per the Federal Reserve of St. Louis)

Inflation (bright blue) vs. the velocity of M2 (pale blue).

No, there is a massive difference between the two lines. The velocity of money doesn’t seem to be a cause of inflation.

So what about federal debt? That’s one that many economists claim causes inflation.

Inflation (blue) vs. Federal Debt Held By The Public (purple)

No, the peaks and valleys are completely different. Despite the bleating by Republicans and Libertarians, there doesn’t seem to be any relationship between federal debt and inflation.

Here’s another thought. Some folks worry that the world (China especially) won’t “lend” us enough dollars. It’s a ridiculous concern, because the federal government does not borrow dollars from anyone, and further, it never can run short of dollars.

But ridiculous concerns are part of what constitutes today’s economics. So, when the federal government doesn’t sell enough “debt” (Treasury Securities) to meet legal (though not financial) requirements, the Federal Reserve jumps in with its infinite supply of dollars.

So, is there a relationship between inflation and the Federal Debt held by Federal Reserve Banks?

Inflation vs. Federal Debt held by Federal Reserve Banks

Nope. No relationship there, either.

So, what does cause inflation?

Here’s one hint:

Inflation (blue) vs. Spot Crude Oil Price (orange).

That’s more like it. Notice how the peaks and valleys of inflation generally match up with the peaks and valleys of oil prices.

Of course, the match is not perfect because oil prices, which closely are related to oil shortages, are not the sole cause of inflation.

Today’s inflation is related to the shortages not only of oil, but also of food, labor, shipping, computer chips, and other vital resources. And that gives you the answer to the question, “What causes inflation?”

Inflation always is caused by shortages of key commodities, most often food and energy, along with other supplies. Inflation never is caused by “too much money,” never by federal spending, and never by federal deficits and debt.

Not only do shortages, not money supply, always cause inflation, but inflation can be cured by federal deficit spending to cure shortages and to distribute the scarce items.

Currently, the federal government is trying to ease inflation by distributing oil from the Strategic Petroleum Reserve. This is an example of government spending, because the government previously had deficit-spent to acquire that oil.

The government can reduce the shortages of food and shipping by strategic spending to aid growers and shippers. The government can spend to bring more computer chip manufacturing to our shores.

If the government would eliminate the nonsensical, useless FICA tax, (and act that would increase the federal deficit and debt) that would effectively raise salaries and encourage more people to come to work, thus easing the labor shortage.

In summary, all the worries about federal deficit spending causing inflation are completely misplaced and in most cases, dishonest. They are nothing more than an attempt to widen the Gap between the rich and the rest.

Finally, if federal deficit spending does not cause inflation, what does federal deficit spending do?

Federal deficit spending helps prevent and cure recessions:

Gold line shows increases and decreases in federal deficit spending. Vertical gray bars indicate recessions.

When federal deficit growth declines we have a recession, which is cured by a deficit growth increase.

SUMMARY
The federal government, unlike state/local governments, cannot run short of U.S. dollars. It can pay any debt denominated in dollars, simply by creating dollars.

Though state/local government taxes fund state/local government spendinng, federal taxes do not fund federal spending. Unlike state/local tax dollars, federal tax dollars are destroyed upon receipt by the Treasury.

No evidence supports the belief that “too much” federal deficit spending causes inflation. On the contrary, federal deficit spending can prevent and cure inflations.

Additionally, federal deficit spending can prevent and cure recessions and depressions.

There is no financial reason ever to restrict federal spending. The false belief that federal finances are similar to state/local government finances and personal finances is fostered by the very rich, who strongly influence the government via bribery.

The rich wish to widen the Gap between them and the rest of the citizenry. The wider the Gap, the richer are the rich. It is the fundamental reason why the rich bribe the politicians, the media, and the economists.

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

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  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. 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