Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 15:47:50 -0400 · Flag
Chuck,

MS is different from personal financing, and people find those differences difficult to visualize. There is no alternative to full faith and credit, as all money, even commodity money like gold, requires some variation on full faith and credit. One still must have faith there will be acceptance of gold, by somebody.

Commodities are quite volatile — more volatile than the dollar — so trying to use gold as money always becomes an adventure. And of course, there’s the supply problem.
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 15:31:51 -0400 · Flag
Scott, in fairness to MMT ( relative of Monetary Sovereignty), it does not want money flowing to bond holders. It (and MS) don’t even want bonds.

Both MMT and MS show how federal borrowing is unnecessary and should be eliminated.

“Putting money into the stock market” does nothing for the economy, one way or the other. It merely takes dollars out of a stock buyer’s checking account and puts it into a stock seller’s checking account.

There is no sense " penalizing the Fed for pumping money into 1% institutions." Anything the Fed does to add dollars to the economy, benefits the economy. Fed spending doesn’t cost you one penny; it puts dollars into your pocket.

Yes, you may disagree with how the federal government spends, but all spending by the federal government creates dollars, and dollar creation grows the economy.

Again, I urge you to study http://rodgermmitchell.wordpress.com/2009/09/07/introduction/
and
http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 5. A Fair Tax Code 2012-03-15 15:22:37 -0400 · Flag
Nathan said, " I consider “wealth” to be that which is created by human effort."

Sounds good to me. That’s the definition of Gross Domestic Product, the formula for which is: Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

Gross Domestic Product is measured in good old U.S. dollars.

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 5. A Fair Tax Code 2012-03-15 15:15:44 -0400 · Flag
OMG, Dorothy, I just realize you pulled out the hoary, old Wiemar Republic and Zimbabwe examples, which debt hawks, in ignorance, have used for so many years.

Wiemar’s hyperinflation was caused by the onerous, WWII terms put on Germany by the Allies. Zimbabwe’s hyperinflation was caused by Robert Mugabe’s land grab, which took farmland from people who knew how to farm and gave it to people who didn’t.

In both cases, the hyperinflation caused the money printing, and not the other way around.

I wonder why, in all its history, the U.S. never has had hyperinflation. I mean, if a $15 trillion debt hasn’t caused it . . .

Anyway, you will be pleased to know I’ll not answer any more of your comments. I enjoy teaching, but I hate teaching those who are determined to remain ignorant of the subject.

Learn Monetary Sovereignty, and you can progress. That, by the way, is the same advice I have for the leaders of #Occupy, who not only are unfocused, but ignorant of Monetary Sovereignty, the basis for all economics.

And I had great hope for this group.

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 5. A Fair Tax Code 2012-03-15 15:06:46 -0400 · Flag
Dorothy, if wealth is your measure of the economy, and money is not, exactly how much wealth is there in America? Measure the economy for me.

That seems to be a reasonable question. Or, you can continue to avoid it and keep calling me names.
Rodger Malcolm Mitchell commented on 5. A Fair Tax Code 2012-03-15 15:04:54 -0400 · Flag
So, if wealth is your measure, exactly how much wealth is there in America?
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 14:58:57 -0400 · Flag
Tim, you want "real national currency, based upon the value of the US assets, and not a debt based system with interests going to a banking cabal who distribute our wealth to themselves. "

But, you don’t know what the U.S. assets are. You want to " inventory all the public commons," but have no idea what any “public commons” are worth in dollars. What are Michigan Boulevard and State Street in Chicago worth? What about the Montrose Beach and its breakwater, also in Chicago? What’s the Chicago sewer system worth?

You want to inventory the “resources of our country,” yet have no idea what those resources are and how much they are worth. How much oil, iron, gold, methane, etc., etc., etc., are buried under American soil, and what are they worth today, tomorrow and next year. You have no idea.

Are the Great Lakes and the Mississippi River “resources”? If so, what are they worth? What about the continental shelf? Is that a resource? How big is it? What is it worth?

You want, “federal government restored to public democratic control,” whatever that means. Is that something different from democratic voting?

Let’s get down to basics. You the 1%, and you think that by totally destroying the current money system, somehow something good will happen. But, like the #Occupy leaders, you have no real plan. Just a bunch of anger at the “haves.”

Here’s a plan for you and the #Occupy leaders. Learn the differences between Monetary Sovereignty and monetary non-sovereignty. That’s the first, necessary step.

Those who do not understand Monetary Sovereignty do not understand economics.

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 13:29:20 -0400 · Flag
Mary Bell,

The so-called “debt” is nothing more than the total of T-securities outstanding. Anyone can purchase a T-bill. So how is that “theft”?

If the big companies “return that money to the public domain,” that will be identical with a tax, which does nothing to help the economy. The public domain (i.e. the government), can create unlimited amounts of money, and neither needs nor would use dollars coming from businesses.

If you wish to reduce the gap between the 1% and the 99%, the best way is not to punish the 1%, but rather to lift the 99%. The federal government has the unlimited ability to do that.

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 5. A Fair Tax Code 2012-03-15 13:19:55 -0400 · Flag
Dorothy, yes, we’re talking economics.

You reject dollars as a measure of the economy. Instead, you want to use “wealth” as a measure. So, if wealth is your measure, exactly how much wealth is there in America?

I’ve asked you twice already, so this is the third and last time.

If wealth is “the produce of the land and labor of society,” that sounds suspiciously like Federal Spending + Private Investment and Consumption + Net exports, which make up GDP, which is measured in dollars. True?

By the way, the backing for the U.S. dollar is not “goods, services or force,” but full faith and credit, which you can read about at: http://rodgermmitchell.wordpress.com/2011/06/20/why-a-dollar-bill-is-not-a-dollar-and-other-economic-craziness/

There, full faith and credit described as:

– The government will accept U.S. currency in payment of taxes
– It will pay it’s debts (T-bills et al) and its bills with U.S. currency
– It will force all your domestic creditors to accept U.S. currency, if you offer it, to satisfy your debt.
– It will not require domestic creditors to accept any other money
– It will maintain a market for U.S. currency
– It will continue to use U.S. currency and will not change to another currency.
– All forms of U.S. currency will be reciprocal, that is five $1 bills always will equal one $5 bill and vice versa.

But let’s not drift too far from the subject. If wealth is your measure of the economy, and money is not, exactly how much wealth is there in America? Measure the economy for me.

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 12:22:29 -0400 · Flag
Mary Bell said, " . . . we should bend down the curve of government debt if for no other reason than to shut them (conservatives) up."

We could eliminate federal debt, tomorrow, not by cutting deficits (which would cause recessions and depressions), but merely by debiting T-security accounts and crediting checking accounts. Instantly, no debt.

Because #Occupy leaders don’t understand that simple concept in Monetary Sovereignty, #Occupy will fail. Such a pity, too. As I said before, I had such hope for this group, but the failure to see economic fact dooms the whole enterprise.

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 12:17:42 -0400 · Flag
Tim says, ". . . we need to have a real national currency, based upon the value of the US assets. "

So Tim, exactly what are “US assets” and exactly what is their total value?

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 11:19:41 -0400 · Flag
Scott,

“Legal tender” is just another way of saying, the federal government owes the holder full faith and credit, which is described at: http://rodgermmitchell.wordpress.com/2011/06/20/why-a-dollar-bill-is-not-a-dollar-and-other-economic-craziness/
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 11:14:45 -0400 · Flag
Scott, the reason I bother to comment on this blog, is because I had great hopes for the #Occupy movement, and have seen those hopes dashed. The leaders of the movement, not only are unfocused, but have no clue about Monetary Sovereignty.

So they buy the obsolete notion that taxes and borrowing pay for federal spending, which sends them off on the wrong track of deficit reduction.

As you may have seen from the numerous posts, you may be the only other person who understands this concept. The rest still believe federal financing is the same as personal financing.

What a shame. #Occupy had such great promise, but it is going nowhere. So far, ignorance is winning the battle.

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 5. A Fair Tax Code 2012-03-15 11:08:28 -0400 · Flag
Dorothy, the total of dollars does not measure “wealth,” partly because no two people agree on what “wealth” means.

Is the Grand Canyon part of the “wealth” of our nation? What about the Mississippi river? The Great Lakes? The Lincoln Memorial? The Rocky Mountains? The air above us. The Declaration of Independence? Our children?

The whole notion of “wealth” is so subjective as to be useless in economics. You may have your definition; someone else has theirs. Anyone talking about wealth is talking philosophy, not economics.

What dollars do measure is Gross Domestic Product. The federal government creates dollars by paying bills. That is, to pay a bill, the government sends instructions (not dollars) to the creditor’s bank. The instructions tell the bank to increase the numbers in the creditor’s checking account. That increase of numbers is what increases dollars.

The creditor then uses those newly created dollars, and they become part of GDP, either via investment or consumption.

As I said, Gross Domestic Product is the total of four sums:
Federal Spending + Private Investment + Private Consumption + Net exports.


Is your personal definition of wealth covered by the four sums comprising GDP?

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 10:45:49 -0400 · Flag
Nathan, there are only three things anyone can do with dollars:
1. Spend
2. Invest
3. Pay taxes

Spending transfers ownership of dollars from one account to another.
Investing (which includes saving) also transfers ownership of dollars from one account to another. Paying taxes destroys dollars

Functionally, saving is the same as investing. Think of what you do with your dollars when you save. Do you bury them in the back yard? No, you put them in a bank account. Putting something in an account is called “investing.” The account may pay 1% interest or 0% interest. Either way, it’s an investment. The money is not lost to the economy.

The total of U.S. dollars is called “Debt Outstanding Domestic Non-financial Sectors” and can be seen at: http://research.stlouisfed.org/fredgraph.png?g=5It

The point is: Each dollar continuously flows, sometimes being used for more productive uses, sometimes for less productive uses. To reference something you personally might think is non-productive, is to miss the point. The very next use after that “non-productive” use might be very productive.

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 10:19:20 -0400 · Flag
Mary Bell said, " . . . the government spends all it’s incoming (and even more it borrows) for the most part in boosting the real economy of goods and services."

This is the “pass-through” hypothesis, which is correct for monetarily non-sovereign entities, such as the states, counties, cities, the PIIGS, you and me. It is not true of Monetarily Sovereign governments, which do not spend tax money or borrowed money.

There is zero connection between taxes and spending. The U.S. government creates dollars ad hoc, by paying bills. It merely sends instructions to banks to mark up the checking accounts of its creditors. The people who do this have no idea what taxes have been collected, nor do they care. The very act of marking up checking accounts is what creates dollars.

IMPORTANT: The federal government does not send dollars to pay its bills. It sends instructions to banks to mark up accounts. This marking up is what creates the dollars. The government has the unlimited ability to send instructions.

If taxes were $0, the government people would continue to send the same instructions to banks.

As for “borrowing,” the federal government is required by law, to issue T-securities in the same amount as the federal deficit. It is a legal requirement, not a functional requirement.

When someone buys a T-bill, the dollars in their checking account are transferred to their T-security account at the Federal Reserve bank. It is identical with you transferring money from your checking account to your savings account. The federal government neither receives nor needs those dollars. There is zero connection between those dollars and federal spending.

In fact, the federal government already has the legal power to create platinum coins (Don’t ask me why “platinum.”) in any denomination, without issuing T-securities. One of the solutions to the debt ceiling would have been to issue a $15 trillion platinum coin and use that to balance the books. That’s how convoluted the law has become.

Mary Bell, you are thinking of U.S. finances as being similar to your personal finances. They are not. The reason: Monetary Sovereignty.

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 09:56:04 -0400 · Flag
Scott, I empathize with your purpose in your lawsuit. You address an important point: The federal government does not need to borrow.

Being Monetarily Sovereign, the federal government pays its bills simply by instructing creditors’ banks to mark up checking accounts. It can do this endlessly. Borrowing is a relic of the gold standard days, when the government didn’t have the unlimited ability to create its sovereign currency.

The U.S. could eliminate all so-called “debt” (i.e. T-securities) tomorrow, simply by debiting all T-security accounts at the Federal Reserve Bank, and crediting all the checking accounts of T-security holders. This would take one second and would cost the U.S. government nothing. It merely would be an asset transfer, identical with you transferring dollars from your savings account to your checking account.

Unfortunately, your suit covers only a tiny fraction of total U.S. dollars — those represented by paper. The real suit should be to eliminate the law that requires the Treasury to create and sell T-securities in the amount of the federal deficit. Now that would have value.

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-15 09:30:17 -0400 · Flag
Scott, what gives a coin or stamp value?

The physical coin and the physical stamp have little-to-no value. What gives them value is a promise by the government. The government owes the holder of a coin or stamp something. That is a debt.

Every form of non-commodity money is debt. It’s the debt that has value, not the physical money.

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 5. A Fair Tax Code 2012-03-14 23:20:48 -0400 · Flag
Dorothy, I did answer your question, but you were too busy thinking up insults to read it. If you accept the notion that Gross Domestic Product is a reasonable economic measure, then here is how GDP is calculated:

Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

Federal Spending is a money measure
Private investment is a money measure
Private Consumption is a money measure
Net exports is a money measure.

Therefore GDP is a money measure. QED.

Now that I have answered your question, perhaps you will answer mine. You claimed, " . . . created wealth is the more common measure of the economy."

I asked, “If wealth is the measure of our economy, how much wealth is there?”

You so hate to see questions go unanswered that you called me a “Progressive.” (Oh horrors, not that!) So Dorothy, use your "more common measure of the economy. How much wealth is there in America?

Rodger Malcolm Mitchell
Rodger Malcolm Mitchell commented on 8. Debt Reduction 2012-03-14 23:08:06 -0400 · Flag
Tim, thank you for your “cockroach” memo, which contained zero information, zero data and zero courtesy. Very helpful to the dialog.
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