How To Prevent Economic Growth, by Maya MacGuineas of CRFB Thursday, Oct 8 2020 

No one can do a better job of describing how to thoroughly destroy the American economy than Maya MacGuineas, head of the Committee for a Responsible Federal Budget (CRFB).  She not only writes articles for the CRFB web site, but she often is invited to spew her wisdom before Congress. She is a true celebrity in Washington.

To give you a taste of her acumen, here are excerpts from an Email I just received from her:

Wed, Oct 7 at 8:29 AM, The Cost of the Trump and Biden Campaign Plans

Whoever is inaugurated on January 20, 2021, will face many fiscal challenges over his term.

Under current law, trillion-dollar annual budget deficits will become the new normal, even after the current public health emergency subsides.

Meanwhile, the national debt is projected to exceed the post-World War II record high over the next four-year term and reach twice the size of the economy within 30 years.

For reasons never explained, MacGuineas repeatedly compares the national “debt” (i.e. the federal “debt”), with Gross Domestic Product.

The former is nothing more than the total of deposits into Treasury Security accounts; the latter is total spending in America. The two are not directly related, co-dependent or in any way comparable.

The federal government could stop accepting deposits into T-security accounts tomorrow, at which time the so-called “debt” would begin to shrink to $0 — and this would have no effect on GDP. Or the government could accept twice as much in deposits, and this too would have no effect on GDP.

So her complaint that these deposits will “reach twice the size of the economy” is meaningless, meant more to shock you than to educate you.

Four major trust funds are also headed for insolvency, including the Highway and Medicare Hospital Insurance trust funds, within the next presidential term.

What MacGuineas (and many others) misleadingly term “trust funds” are not trust funds. They are nothing more than bookkeeping accounts that are 100% controlled by the federal government. These accounts cannot become insolvent unless Congress wants them to become insolvent.

The federal government, which has the unlimited power to create U.S. dollars, along with the unlimited power to change its bookkeeping, can put any numbers it wishes into those accounts, any time it wishes.

The federal government arbitrarily could decide to double or triple the balances in these so-called “trust fund” accounts, and as if by magic, the numbers would double, and MacGuineas could stop fretting.

Whenever you see or hear the words, “federal trust funds,” know you are not being told the truth. Though even federal sites refer to “trust funds,” these are like the Bank in the game of Monopoly™: Changeable according to the players’ desires.

Fiscal irresponsibility prior to the pandemic worsened structural deficits that were already growing due to rising health and retirement costs and insufficient revenue.

It is not fiscally irresponsible for the federal government to spend more. On the contrary, not spending more would be fiscally irresponsible. Federal deficit spending grows the economy, and insufficient federal deficit spending shrinks the economy.

The country’s large and growing national debt threatens to slow economic growth, constrain the choices available to future policymakers, and is ultimately unsustainable.

The above sentence is diametrically wrong. False complaints about the national “debt” being a ticking time bomb,” have been voiced since 1940, while the economy has grown massively.

MacGuineas herself has been making the same wrong predictions continually. and for many, many years, but has learned nothing from her predictive failures.

Yet neither presidential candidate has a plan to address the growth in debt. In fact, we find both candidates’ plans are likely to increase the debt.

Under current law, the so-called “debt” results from federal deficit spending, which pumps stimulus dollars into the economy. MacGuineas opts to remove dollars from the economy by running federal surpluses. She ignores the fact that removing dollars from the economy causes recessions and depressions.

A growing economy requires a growing supply of money. Federal deficit spending increases the supply of money, which grows the economy.

The formula for GDP is: GDP = Federal Spending + Non-federal Spending + Net Exports. All these terms are related to the money supply in the United States.

Under our central estimate, we find President Donald Trump’s campaign plan would increase the debt by $4.95 trillion over ten years and former Vice President Biden’s plan would increase the debt by $5.60 trillion.

Debt would rise from 98 percent of Gross Domestic Product (GDP) today to 125 percent by 2030 under President Trump and 128 percent under Vice President Biden, compared to 109 percent under current law.

Despite MacGuenias’s hand-wringing, both plans are insufficient to grow GDP over time. An average of 1/2 trillion dollars in deficit spending in a $20 trillion economy, amounts to only 5% per year, a level that on average, has led to recessions.

 

Vertical gray lines are recessions. Year to year reductions in federal “debt” growth lead to recessions, while increases in federal “debt” cure recessions.

President Donald Trump has issued a 54 bullet point agenda that calls for lowering taxes, strengthening the military, increasing infrastructure spending, expanding spending on veterans and space travel, lowering drug prices, expanding school and health care choice, ending wars abroad, and reducing spending on immigrants. He also has proposed a “Platinum Plan” for black Americans, which increases spending on education and small businesses.

Meanwhile, Vice President Joe Biden has proposed a detailed agenda to increase spending on child care and education, health care, retirement, disability benefits, infrastructure, research, and climate change, while lowering the costs of prescription drugs, ending wars abroad, and increasing taxes on high-income households and corporations.

Which of the above proposals does MacGuineas suggest should be eliminated?

She never says. She decries deficit spending while not saying where the deficit spending should be reduced. Why is she so reticent? Because she probably understands the economic need for federal deficit spending, but she is paid to deny it.

That is why she has been mouthing the same tripe for so many years.

Debt has already grown from 39 percent of the economy in 2008 to 76 percent in 2016, and is estimated to reach 98 percent by the end of FY2020.
Under current law, the Congressional Budget Office (CBO) projects debt will continue to rise to 109 percent of GDP by 2030.

Our central estimate of the Trump plan finds debt would rise to 125 percent of the economy by 2030, excluding the effects of further COVID relief. Under our central estimate of the Biden plan, debt would rise to 128 percent of the economy by 2030, again excluding COVID proposals.

Then next few paragraphs of MacGuineas’s letter comprise an endless recitation of “debt” as a percentage of “the economy” (GDP), all with the tacit — and completely wrong — assumptions that a low ratio is a good ratio, and a high ratio is a bad ratio.

Here is a list showing the Debt/GDP ratio for many nations:

Based solely on the percentages, which nations would you expect to have the healthiest and/or strongest economies”?

Japan 237.54%, Venezuela 214.45%, Sudan 177.87%, Greece 174.15%,
Lebanon 157.81%, Italy 133.43%, Eritrea 127.34%, Cape Verde 125.29%,
Mozambique 124.46%, Portugal 119.46%, Barbados 117.27%, Singapore 109.37%,
United States 106.70%, Bhutan 103.85%, Cyprus 101.04%, Bahrain 100.19%,
Belgium 99.57%, France 99.20%, Spain 95.96%, Jordan 94.83%, Jamaica 94.13%,
Belize 92.64%, Angola 90.46%, Brazil 90.36%, Republic Of The Congo 90.19%,
Antigua And Barbuda 88.35%, Canada 88.01%, Egypt 86.93%, United Kingdom 85.67%,
Aruba 83.57%, Sri Lanka 82.99%, Tunisia 81.55%, Mauritania 80.61%, Zambia 80.50%,
Dominica 79.84%, Gambia 78.67%, San Marino 77.12%, Pakistan 77.00%, Argentina 75.90%,
Sao Tome And Principe 74.10%, Sierra Leone 72.37%, Suriname 72.05%,
Saint Lucia 71.62%, Saint Vincent And The Grenadines 71.38%, Uruguay 71.34%,
Austria 71.17%, Croatia 70.73%, Montenegro 70.58%, Togo 70.39%, India 69.04%,
El Salvador 68.10%, Mauritius 67.50%, Hungary 66.62%, Slovenia 65.44%, Albania 65.13%,
Morocco 65.11%, Laos 64.13%, Burundi 63.54%, Djibouti 62.99%, Ireland 62.42%,
Ukraine 62.03%, Senegal 62.00%, Ghana 61.99%, Maldives 61.43%, Oman 61.29%,
Bahamas 60.49%, Nauru 60.39%, Finland 59.88%, Saint Kitts And Nevis 59.49%,
Malawi 59.01%, Israel 58.96%, Gabon 58.48%, South Africa 57.81%, Puerto Rico 57.70%,
Ethiopia 57.43%, Vietnam 57.36%, Guyana 57.22%, Bolivia 57.11%, Germany 56.93%,
Malaysia 56.32%, Costa Rica 56.15%, Grenada 56.12%, Kyrgyzstan 56.09%, Niger 55.60%,
Kenya 55.50%, China 55.36%, Guinea Bissau 54.92%, Yemen 54.51%, Seychelles 54.49%,
Mexico 54.11%, Benin 54.00%, Qatar 52.74%, Vanuatu 52.18%, Netherlands 52.04%,
Namibia 51.60%, Belarus 51.08%, Serbia 50.95%, Ivory Coast 50.92%, Iraq 50.25%,
Fiji 50.22%, Rwanda 50.00%, Trinidad And Tobago 49.75%, Tajikistan 49.46%,
Samoa 49.44%, Ecuador 49.20%, Colombia 49.16%, Armenia 47.95%, Poland 47.48%,
Algeria 46.92%, Slovakia 46.90%, Liberia 46.66%, Guinea 45.98%, Georgia 45.05%,
Uganda 44.81%, Chad 42.91%, Burkina Faso 42.47%, Malta 42.46%,
Central African Republic 42.25%, Dominican Republic 41.92%, Thailand 41.47%,
Eswatini 41.11%, Australia 41.10%, Madagascar 41.02%, Nicaragua 40.88%,
Honduras 40.80%, South Korea 40.54%, North Macedonia 40.48%, Switzerland 39.49%,
Myanmar 39.19%, Philippines 39.10%, Cameroon 38.11%, Romania 37.99%, Lesotho 37.95%,
South Sudan 37.81%, Panama 37.81%, Papua New Guinea 37.72%, Equatorial Guinea 37.49%,
Sweden 37.23%, Mali 36.93%, Norway 36.75%, Latvia 36.66%, Tanzania 36.57%,
Bosnia And Herzegovina 36.34%, Haiti 36.23%, Comoros 35.08%, Bangladesh 34.81%,
Taiwan 33.91%, Lithuania 33.79%, Denmark 33.61%, Iceland 33.13%, Nepal 33.07%,
Czech Republic 31.57%, Turkmenistan 30.25%, Nigeria 30.05%, Iran 30.04%, Turkey 29.93%,
Cambodia 29.57%, Indonesia 29.29%, Moldova 28.82%, New Zealand 28.07%, Peru 27.18%,
Chile 27.17%, Guatemala 24.76%, Saudi Arabia 23.71%, Kiribati 23.48%,
Marshall Islands 23.37%, Uzbekistan 23.23%, Paraguay 22.37%, Tuvalu 21.81%,
Luxembourg 21.61%, Zimbabwe 20.99%, Kazakhstan 20.90%, Bulgaria 19.33%,
United Arab Emirates 19.20%, Micronesia 18.41%, Kuwait 17.78%, Azerbaijan 17.59%,
Solomon Islands 14.56%, Dr Congo 14.01%, Russia 13.79%, Botswana 12.78%, Estonia 7.61%,
Afghanistan 6.88%, Brunei 2.63%

If you say there seems to be no relationship between “debt” and GDP you would be correct, for several reasons:

  1. Some nations are Monetarily Sovereign, which means they have the unlimited ability to create their own sovereign currency. Any liability denominated in their own currency is serviced simply by creating new currency. They cannot become insolvent if they owe their own currency.
  2. Some nations are monetarily non-sovereign, which like you, me, the euro nations, and all local governments, cannot arbitrarily create money, and so can become insolvent.
  3. The word “debt” means something entirely different, depending on what is owed, and why. If the “debt” consists of optional deposits, as does America’s, Japan’s, Canada’s, Australia’s, and the UK’s, paying it off merely requires returning the money on deposit.
  4. But if the debt is necessary for the purchase of goods and services, like state and local government debt, then taxpayers must fund it, or the government will become insolvent.
  5. If the “debt” adds net money to the economy, as with Monetarily Sovereign governments, it will grow the economy.
  6. But, if the debt must be paid by taxpayers, which subtracts net money, as is the case with monetarily non-sovereign governments. it will shrink the economy.

Conclusion: Even before the onset of the COVID-19 pandemic and subsequent global economic crisis, the federal government was on an unsustainable fiscal path.

Under our central estimate, neither major candidate for President of the United States in 2020 has put forward a plan that would address our unsustainable fiscal path.

The favorite word used by debt critics is “unsustainable.” They never explain what they mean by that word.

Does it mean the U.S. government will run short of dollars? No, that is impossible. The government has the unlimited ability to create dollars at the touch of a computer key.

Does “unsustainable” mean other nations will not lend to the U.S.? No, the U.S. never borrows from other nations. What erroneously is termed “borrowing.” actually is the acceptance of deposits, which has two purposes:

  1. To provide a safe, parking place for unused dollars, which helps stabilize the dollar.
  2. To assist the Fed in controlling interest rates.

Neither purpose has anything to do with the federal government acquiring dollars. The U.S. government does not need to “acquire” dollars. It creates all the dollars it needs. Those dollars on deposit never are touched. They merely are returned when the T-certificates mature.

Does unsustainable mean people will refuse to use the U.S. dollar? No, Despite an 80-year supply increase of more than 50,000%, the U.S. dollar remains a trusted currency. No knowledgeable person fears U.S. insolvency.

So what does the oft-used term unsustainable mean? It is a term that has no specific meaning, but is used to hint at some dark, unspecified, future event, to make you believe the federal debt is too high, without your knowing why.

This high and rising debt could have significant economic, generational, fiscal and distributional consequences.

What are the consequences of a high and rising debt? Answer: Economic growth and prosperity.

Addendum: As I write this, I am watching the so-called debate between Kamala Harris and Mike Pence. It isn’t a debate so much as a performance, but one thing struck me: The both repeat the Big Lie that federal government financing is like state/local government financing.

They both claim that federal taxes fund federal spending, and the “How will you pay for it?” question needs be answered via a complex, convoluted, Byzantine explanation involving increased taxes and money transfers.

The real answer: The federal government will do what it always has done: It will create new dollars, ad hoc, every time it pays a bill. It’s called “Monetary Sovereignty.”

It is the way, the only way, the U.S. economy has grown and will continue to grow.

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 or a reverse income tax
  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 coming depression: The problem and the solution. Friday, Apr 17 2020 

There is no other way to say this. We (in the U.S.) are headed for a depression because we have an incompetent and untruthful government.

Our fundamental problem is the lack of money in the private sector. The solution is for the federal government, which being Monetarily Sovereign has unlimited money, to pump dollars into the economy.

Sorry, but it isn’t any more complex than that.

Problem: Lack of money. Solution: Add money. How much money? What the economy lost due to the virus.

The economy needs at least $7 Trillion net added from the federal government. But, our Congress is spending far too little and spending way too late. Unless Congress and the President deign to see the light, we have no way to prevent a depression.

Other nations understand this:

Pandemic Insolvency: Why This Economic Crisis will be Different
Bue Rübner Hansen, Mar 29, 2020This image has an empty alt attribute; its file name is bernanke-quote-1.png

A week ago, Denmark’s Social Democratic government announced it would cover 75% of the wages of workers who would otherwise be laid off. I don’t think anyone expected the UK to announce, just a few days later, a policy that would cover 80% of the wages of workers who were about to be sacked.

Why are right-wing governments considering, and in some cases implementing policies they called impossible and undesirable when the left suggested them?This image has an empty alt attribute; its file name is greenspan-quote-1.png

To put it briefly, the sight of governments bailing out not only banks but also consumers and mortgage holders isn’t a sign they have grown soft, but rather a sign of the kind of crisis we are entering.

This crisis is very different from the last, and so it demands a new range of government actions. This is likely to reshape politics and economics across the Global North for years to come.

Both Denmark and the UK are Monetarily Sovereign. They have the unlimited ability to create their own sovereign currency (the krone and the pound).

They are using this ability to try to save their economies.

America’s politicians, the media, and the economists have become so enamored of the Big Lie they have been telling, they may have come to believe it themselves.

The Big Lie is comprised of several myths:

  1. Federal taxes and federal taxpayers fund federal spending. Wrong.
  2. The federal deficit is unsustainable. Wrong.
  3. The federal debt is unsustainable. Wrong.
  4. Federal deficits cause inflation. Wrong.

While state and local governments can, and often do unintentionally run short of dollars, the U.S. government cannot.  It can create unlimited dollars.

Monopoly Money 3D Model

Official Monopoly™ money

For visualization purposes, the example I often give is the Bank in the game of Monopoly™. In any Monopoly game, there usually are about four players competing for Monopoly dollars.

Additionally, there is a Bank that both gives and receives dollars.

The Monopoly™ Bank is similar to the U.S. government in that, by rule, the Monopoly Bank cannot run short of money.

Here is the rule as printed in each Monopoly Game box:

“The Bank never can ‘go broke.’ If the Bank runs out of Monopoly money, the Banker may issue as much as needed by writing on ordinary paper.”

There are times in the game when players must pay money to the Bank and other times when the Bank must pay money to the players.

If you wish to play, and find that the game box doesn’t contain enough official Monopoly money, you don’t need to “write on paper.” You can create a table like this:

Table I
monopoly 4.png

The above table indicates that each player has started with 5,000 Monopoly dollars. Notice there is no column for the Bank. None is needed. The Bank has unlimited dollars.

The game begins and immediately Alice is instructed to pay the Bank 100 Monopoly dollars for taxes. The table then looks like this:

Table II

Monopoly 3.png

Again, since there is no column for the Bank, Alice’s 100 dollars disappear. They effectively are destroyed.

And that is exactly what happens to your U.S. tax dollars when you send them to the U.S. Treasury. Your federal tax dollars are destroyed.

Now some may object that U.S. tax dollars are not destroyed, because the U.S. government keeps a record of them on its balance sheets.

That is a false objection; we could have kept track of the Monopoly Bank’s dollars, and that would have changed nothing.

Table III

This image has an empty alt attribute; its file name is monopoly-bank.png

Like the U.S. federal government, the Monopoly Bank has an infinite number of dollars. If you add Alice’s 100 to the Bank’s infinite dollars, you still have infinite dollars. That is because ∞ + 100 =  .

In both the Monopoly Bank and Monetarily Sovereign federal government, all tax dollars are destroyed, and because all tax dollars are destroyed, it is nonsensical to talk about federal taxes or taxpayers funding anything.

The U.S. federal government does not spend tax dollars. It creates new dollars, ad hoc, each time it issues a payment. Those who complain about the poor, or any recipient, “receiving ‘my’ tax dollars,” simply are wrong.

Only the U.S. Treasury receives your federal tax dollars, and it is the Treasury that destroys them.

Why, therefore, does our federal government not eliminate the FICA and income taxes, fund Medicare for All, fund Social Security for All, fund College for All, and do what Denmark and the UK are doing: Pay people what they would have earned had they not been laid off?

Four reasons:

1. Public Ignorance about the differences between a Monetarily Sovereign government (federal) and a monetarily non-sovereign government (state/local).

The federal government pretends federal deficits are unaffordable and unsustainable, neither of which is true. The federal government can afford anything and sustain anything.

2. Gap Psychology: The desire of those higher in the socio-economic spectrum to distance themselves from those lower, as a way to become wealthier.

3. Deficit/debt and inflation fear:

A. Negative effects of deficits/debt have been disproved many times on this web site. The federal debt has increased more than 50,000% without negative effects.

On the contrary, it has been insufficient deficits that have led to recessions and depressions, and increased deficits have cured them.

B. Similarly, there has been no historical relationship between federal deficit spending and inflation.

4. The economic and moral concerns about “paying people not to work.”  Society already pays people not to work:

A. The military pays a pension to those with 20 years of service. Of course, as with all things military, there have been many changes and complexities added to the program, but in general, a military person can retire in his/her 40s, with about 40% of their salary.

Many (most) of then go to work after, to supplement their pension, and that probably is the key issue. Most people hope to receive raises, i.e. to make more next year than they do this year, so receiving 80% or 90% of this year’s pay usually is not a deterrent to future working.

B. The moral concerns about giving people money they didn’t earn extend only to the middle and poor classes. The rich, who receive more from the government in terms of tax advantages, are given a moral pass, as though being rich makes one more entitled.

Thus for all these reasons, Congress and the President move slowly and reluctantly to provide the economy with sufficient growth funds, and that reluctance leads to recessions, depressions, and articles like the following:

$349B federal small-business paycheck fund runs dry
By Robert Channick

The federal government’s $349 billion program to help small businesses stay afloat during the coronavirus pandemic has run dry, leaving thousands of small business owners whose applications are pending to wait on Congress to replenish the funds.

The Small Business Administration said Thursday it is unable to accept new applications for the Paycheck Protection Program, passed by Congress as part of the $2.2 trillion CARES Act.

The SBA will not be able to issue new loan approvals if the paycheck program and the Economic Injury Disaster Loan Program, another heavily tapped funding resource for small businesses, experience a “lapse in appropriations,” officials warned.

Launched on April 3 as part of the federal coronavirus relief act, the program offers businesses with fewer than 500 employees loans of up to $10 million to cover eight weeks of payroll. The two-year loans, which are backed by the SBA, have a 1% interest rate.

Businesses do not have to pay back the portion of the loan used to cover payroll costs as long as 75% of the proceeds are used to keep paying employees during those eight weeks.

Small businesses are especially vulnerable to the economic disruption wrought by the coronavirus pandemic.

An April 3 study by MetLife and the U.S. Chamber of Commerce found that nearly one in four small businesses have temporarily shut down, and that more than half expect to be closed within weeks.

Providing payroll support — the largest expense for most small businesses — may be a crucial bridge to the end of the coronavirus shutdown and a return to something resembling business as usual.

For a government having access to infinite funds, to penny-pinch small businesses not only is economically outrageous, but callous and cruel.

Large businesses, with large lobbying staffs (and incidentally making large campaign contributions), receive instant attention, while small businesses, the heart of the American economy and the American public, are left to scramble and beg for funds.

This is the right-wing / Libertarian approach to governing.

We repeatedly have said that at least $7 Trillion in federal deficit spending would be needed this year and more next year. We may have understated the need.

Yet we see repeated hand-wringing about an infinitely wealthy government pumping “too much” free money into a needy economy.This image has an empty alt attribute; its file name is desperate-for-a-job.png

It is beyond disgusting, yet it has a hidden purpose: To keep the populace frightened, powerless and beholden to the very rich who run America — to keep the populace desperate and willing to accept miserable work at low pay.

This is the ongoing plan of the very rich.

Will Congress and the President climb down from their golden, guaranteed federal salaries and benefits to aid their impoverished believers? Only when these believers demand it.

This is the perfect time to begin those demands.

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

Watch Pelosi and McConnell debate the stimulus package Monday, Mar 23 2020 

Pelosi McConnell gold bars.png

Nancy and Mitch can’t agree on how much gold to pump into the economy.

Pelosi: “The economy is crashing.”

McConnell: “And The People are suffering.”

P: “And dying.”

M: “And we’re running out of time to prevent a severe recession.”

P: “Or more likely a depression.”

M: “Even worse than the Great Depression of 1929.”

P: “But we can’t agree on how much money we should pump into the economy.”

M: “I want to pump in one gold bar. We can’t afford more than one.”

P: “And I want to pump in two gold bars.”

M: “But I want to give at least 1 gold bar to business.”

P: “And I want to give at least 2 gold bars to the people.”

M: “We don’t know what to do.”

P: “So we’ll just keep arguing.

M: “And arguing.”

The People: “Why not pump in 4 gold bars? Then you Mitch, can give more than 1 gold bar to business, and you Nancy can give more than 2 gold bars to The People, and the economy will recover faster, and everyone will be happy.”

P & M (together): “Not everyone.”

The People: “Who won’t be happy?”

Image result for tons of gold bars

“Infinite but unsustainable”

P & M (together): “The rich. They say we can’t afford to give so much gold to The People. They say giving 4 gold bars would be ‘unsustainable.’ And it would be giving The People too much. They wouldn’t know what to do with all that gold, like we rich folks do.”

P: “And it would be ‘profligate.’ The people probably would just use the gold for food, clothing, housing, and education rather than hiding it in overseas tax shelters, like we do.”

M: “And the Libertarians agree that all government gold is socialism.”

The People: “But, look around you. The government has infinite gold. It never can run short. Why not enrich the economy?”

P:  No, sorry. We’ll have to keep arguing and arguing, to keep The People down.

M: “If ever we do anything, it will be too little and too late.”

P: “And make it look like we really, really are trying.

M & P (together): “And hey, while we argue, you and I still are getting paid. And isn’t that the whole point?”

Image result for pelosi and mcconnell smiling

“I’m OK. Are you OK?” “Yes, I’m OK.”

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

An update of the biggest con job in American history: Tick, tick, tick. 80 years and the federal debt “ticking time bomb” still is ticking. Sunday, Jan 26 2020 

An update of the biggest con job in American history, that still is running:

Once again, I am compelled by recent articles to remind you that in 1940, when the phony federal debt was described as a”ticking time bomb,” America had not yet entered World War II.

The most popular songs were: Tommy Dorsey’s “I’ll Never Smile Again,” Bing Crosby’s “Only Forever,” and Artie Shaw’s “Frenesi

 The median annual income for a man in 1940 was $956. 

A postage stamp cost $.03.

A new car cost about $800 and for 18 cents, you could buy a gallon of gas.

And yes, the federal debt was called a “ticking time bomb.”

In 1940, when the federal debt first became a “ticking time bomb,” it was only $40-50 Billion. Today it exceeds $22 Trillion.

Year after year, that “ticking time bomb” of federal debt has kept ticking, and here we are, in 2020, with a  healthy economy, and still that phony bomb hasn’t exploded.

Eighty years of warnings, eighty years of being wrong, eighty years and many people still believe the doomsday sayers.

As we dance down Memory Lane, here they are, again:

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Back in 1940, the federal budget was a “ticking time-bomb which can eventually destroy the American system,” said Robert M. Hanes, president of the American Bankers Association.

By 1960: the debt was “threatening the country’s fiscal future,” said Secretary of Commerce, Frederick H. Mueller. (“The enormous cost of various Federal programs is a time-bomb threatening the country’s fiscal future, Secretary of Commerce Frederick H. Mueller warned here yesterday.”)

By 1983: “The debt probably will explode in the third quarter of 1984,” said Fred Napolitano, former president of the National Association of Home Builders.

In 1984: AFL-CIO President Lane Kirkland said. “It’s a time bomb ticking away.”

In 1985: “The federal deficit is ‘a ticking time bomb, and it’s about to blow up,” U.S. Sen. Mitch McConnell. (Remember him?)

Later in 1985: Los Angeles Times: “We labeled the deficit a ‘ticking time bomb’ that threatens to permanently undermine the strength and vitality of the American economy.”

In 1987: Richmond Times–Dispatch – Richmond, VA: “100TH CONGRESS FACING U.S. DEFICIT ‘TIME BOMB’”

Later in 1987: The Dallas Morning News: “A fiscal time bomb is slowly ticking that, if not defused, could explode into a financial crisis within the next few years for the federal government.”

In 1989: FORTUNE Magazine: “A TIME BOMB FOR U.S. TAXPAYERS

In 1992: The Pantagraph – Bloomington, Illinois: “I have seen where politicians in Washington have expressed little or no concern about this ticking time bomb they have helped to create, that being the enormous federal budget deficit, approaching $4 trillion.

Later in 1992: Ross Perot: “Our great nation is sitting right on top of a ticking time bomb. We have a national debt of $4 trillion.”

In 1995: Kansas City Star: “Concerned citizens. . . regard the national debt as a ticking time bomb poised to explode with devastating consequences at some future date.”

In 2003: Porter Stansberry, for the Daily Reckoning: “Generation debt is a ticking time bomb . . . with about ten years left on the clock.”

In 2004: Bradenton Herald: “A NATION AT RISK: TWIN DEFICIT A TICKING TIME BOMB

In 2005: Providence Journal: “Some lawmakers see the Medicare drug benefit for what it is: a ticking time bomb.”

In 2006: NewsMax.com, “We have to worry about the deficit . . . when we combine it with the trade deficit we have a real ticking time bomb in our economy,” said Mrs. Clinton.

In 2007: USA Today: “Like a ticking time bomb, the national debt is an explosion waiting to happen.

In 2010: Reason Alert: “. . . the time bomb that’s ticking under the federal budget like a Guy Fawkes’ powder keg.”

In 2011: Washington Post, Lori Montgomery: ” . . . defuse the biggest budgetary time bombs that are set to explode.”

June 19, 2013: Chamber of Commerce: Safety net spending is a ‘time bomb’, By Jim Tankersley: The U.S. Chamber of Commerce is worried that not enough Americans are worried about social safety net spending. The nation’s largest business lobbying group launched a renewed effort Wednesday to reduce projected federal spending on safety-net programs, labeling them a “ticking time bomb” that, left unchanged, “will bankrupt this nation.”

In 2014: CBN News: “The United States of Debt: A Ticking Time Bomb

On Jun 18, 2015: The ticking economic time bomb that presidential candidates are ignoring: Fortune Magazine, Shawn Tully,

On February 10, 2016, The Daily Bell“Obama’s $4.1 Trillion Budget Is Latest Sign of America’s Looming Collapse”

On January 23, 2017: Trump’s ‘Debt Bomb’: Deficit May Grow, Defense Budget May Not, By Sydney J. Freedberg, Jr.

On January 27, 2017: America’s “debt bomb is going to explode.” That’s according to financial strategist Peter Schiff. Schiff said that while low interest rates had helped keep a lid on U.S. debt, it couldn’t be contained for much longer. Interest rates and inflation are rising, creditors will demand higher premiums, and the country is headed “off the edge of a cliff.”

On April 28, 2017: Debt in the U.S. Fuel for Growth or Ticking Time Bomb?, American Institute for Economic Research, by Max Gulker, PhD – Senior Research Fellow, Theodore Cangeros

Feb. 16, 2018  America’s Debt Bomb By Andrew Soergel, Senior Reporter: Conservatives and deficit hawks are hurling criticism at Washington for deepening America’s debt hole.

April 18, 2018 By Alan Greenspan and John R. Kasich: “Time is running short, and America’s debt time bomb continues to tick.”

January 10, 2019, Unfunded Govt. Liabilities — Our Ticking Time Bomb. By Myra Adams, Tick, tick, tick goes the time bomb of national doom.

January 18, 2019; 2019 Is Gold’s Year To Shine (And The Ticking US Debt Time-Bomb) By Gavin Wendt

[The following were added after the original publishing of this article]

April 10, 2019, The National Debt: America’s Ticking Time Bomb.  TIL Journal. Entire nations can go bankrupt. One prominent example was the *nation of Greece which was threatened with insolvency, a decade ago. Greece survived the economic crisis because the European Union and the IMF bailed the nation out.

July 11, 2019National debt is a ‘ticking time bomb‘: Sen. Mike Lee

SEP 12, 2019, Our national ticking time bomb, By BILL YEARGIN
SPECIAL TO THE SUN SENTINEL | At some point, investors will become concerned about lending to a debt-riddled U.S., which will result in having to offer higher interest rates to attract the money. Even with rates low today, interest expense is the federal government’s third-highest expenditure following the elderly and military. The U.S. already borrows all the money it uses to pay its interest expense, sort of like a Ponzi scheme. Lack of investor confidence will only make this problem worse.

JANUARY 06, 2020, JANUARY 06, 2020, National debt is a time bomb, BY MARK MANSPERGER, Tri City Herald | The increase in the U.S. deficit last year was about $1.1 trillion, bringing our total national debt to more than $23 trillion! This fiscal year, the deficit is forecasted to be even higher, and when the economy eventually slows down, our annual deficits could be pushing $2 trillion a year! This is financial madness.there’s not going to be a drastic cut in federal expenditures — that is, until we go broke — nor are we going to “grow our way” out of this predicament. Therefore, to gain control of this looming debt, we’re going to have to raise taxes.

 

In Summary
The U.S. government is Monetarily Sovereign. It has the unlimited ability to create its own sovereign currency, the U.S. dollar.

The government has absolute control over all aspects of the dollar, including its value. Unlike state and local governments, and unlike businesses, and unlike the euro nations, and unlike you and me, the federal government can service any size debt without collecting a penny of income.

Yet, tick, tick, tick, the fake debt time bomb of terror keeps on ticking. The only question, “How many years of proven-wrong fear-mongering will you, the public fall for before the debt charlatans are excised from the news?”

By now, after 80 years of false warnings, you should have learned that phony concerns about the federal debt constitute the biggest con job in American history — and it still is running. And you still are buying it.

The fundamental purpose of this con job is to keep you from asking for benefits from the federal government — benefits the rich already receive, but because of Gap Psychology, don’t want you to have.

Is it possible that the rich really can fool all the people all the time?

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

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The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

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

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

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

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

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

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

9. Federal ownership of all banks

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

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

MONETARY SOVEREIGNTY

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