Fifty Lies You Have Been Told About Our Economy - Do You Believe Any?

It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders.
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I like lists. Not only do they help to organize thought, but by their length, they can demonstrate quantity better than can mere paragraphs.

Here is a long list of lies you have been told about our economy. Most first were published back in 2011, but they even are more relevant today.

Following each lie is a quick truth in parentheses. If you don’t understand why any are lies, or don’t understand the truths, feel free to ask via the comment section.

There is no difference between Monetary Sovereignty and monetary non-sovereignty. (The former cannot run short of its own sovereign currency; the latter can.)

Like us, the federal government should live within its means. (Unlike state and local governments, the federal government has unlimited “means.”)

Money and debt are two different things. (All money is debt, though all debt is not money.)

A growing economy does not need a growing supply of money. (GDP measures money spent; a greater money supply allows more to be spent.)

Federal surpluses help the economy grow. (Federal surpluses are the economy’s deficits; taking dollars from the economy, surpluses cause recessions and depressions.)

Some federal spending must be cut to allow room for other spending. (The federal government’s ability to spend is unlimited.)

The federal debt is too large. (The “debt,” unlike personal debt, consists of deposits in T-security accounts at the Federal Reserve Bank, neither too large nor too small.)

The federal debt is the total of federal deficits. (The federal debt is the total of deposits in T-security accounts at the FRB. Deficits are the difference between taxes and spending. Completely different.)

The federal debt ceiling has a beneficial function. (The “debt ceiling” is 100% harmful with no redeeming qualities.)

The current level of deficits is unsustainable. (There is nothing about a deficit that needs to be “sustained.” The U.S. can “sustain” deficits, forever.)

Current federal debt growth is unsustainable. (The so-called “debt” is the total of deposits in T-security accounts. The FRB can accept deposits in T-security accounts, forever.)

Federal taxes help pay for federal spending. (Unlike state and local governments, the federal government destroys tax dollars upon receipt, and does not use them for anything. They disappear from the money supply.)

The federal government cannot create money; only the Fed can. (The federal government causes new dollars by paying creditors. Banks create dollars by lending. )

State, county, and city finances are similar to federal finances. (States et al can run short of dollars. The federal government cannot.)

Federal borrowing helps pay for federal spending. (Federal “borrowing” pays for nothing. So-called “borrowing” is just deposits in T-security accounts, which are not used for anything by the federal government.)

The federal government spends taxpayers’ money. (The federal government does not spend tax dollars. It destroys tax dollars upon receipt and causes brand new dollars each time it pays a bill.)

Our children and grandchildren will pay for today’s federal deficits. (No one pays for deficits. They are just an arithmetic calculation — the difference between taxes and spending — not a financial obligation.)

Each of us is liable for a share of the federal debt. (No one is liable for the federal debt [i.e. deposits]. Taxpayers do not pay for the federal debt.)

A balanced federal budget is more prudent than running federal deficits. (Deficits are more prudent; they grow the economy. Balanced budgets shrink the economy by removing dollars from the economy.)

The federal debt/GDP ratio measures the government’s ability to service its debts. (The federal government always has the unlimited ability to service any debts, no matter what GDP may be.)

The federal debt/GDP ratio measures the health of the economy. (GDP growth is one of the economic health measures. The federal “debt” is irrelevant to economic health.)

Federal earmarks, pork barrel spending and unnecessary spending hurt the economy. (To the degree they add dollars to the economy, they are beneficial.)

The single biggest cause of inflation is excessive federal deficit spending. (Inflation is a function of the Supply & Demand for dollars and goods, not of federal spending.)

Inflation is too much money chasing too few goods. (Inflation = Supply/Demand for money vs. Demand/Supply for goods and services.)

Consumer saving helps the economy grow. (Consumer spending helps the economy grow.)

In fractional reserve banking, banks keep a fraction of deposits and lend the rest. (Bank lending is not constrained by reserves, but rather by bank capital.)

The best way to cure inflation is to increase taxes and/or to cut federal spending. (Tax increases and spending decreases cause depress the economy. Interest rate increases, which increase the Demand for money, are the best way to cure inflation.)

FICA taxes pay for Medicare and Social Security. (Federal taxes do not pay for any federal spending).

The Medicare and Social Security Trust funds are running short of money. (These so-called “Trust Funds” are accounting fiction, and do not fund anything.

The government cannot afford to fund Medicare or Social Security. (The federal government’s ability to pay for anything is unlimited.)

The U.S., like the euro nations, can go bankrupt. (The federal government never can run short of dollars. The euro nations can run short of euros.)

Without increased taxes or decreased spending, Medicare and Social Security will go bankrupt. (Neither the federal government, nor any of its agencies, can go bankrupt unless Congress wills it.)

Gold is safer and more prudent than “paper” (fiat) money. (Unlike fiat money, gold pays no interest and is costly to store, costly to ship, buy, sell, and insure. Also, fiat money is backed by the government whereas gold is not backed by any authority.)

The federal government needs to borrow to pay for deficit spending. (The federal government needs and uses no income — taxes or borrowing. It creates dollars ad hoc by paying bills.)

Federal borrowing reduces the availability of lending funds. (Federal “borrowing” [deposits] results from federal spending, which increases the availability of lending funds.)

The main reasons for the recent economic collapse were low interest rates and excessive bank regulation. (The main cause of the “Great Recession” was inadequate bank regulation.)

Low interest rates stimulate the economy; high rates slow it. (Historically, high rates have not slowed the economy. High rates stimulate the economy by forcing the government to pay more interest, increasing the money supply. )

Taxing the rich does not hurt the poor. (Federal taxes removed dollars from the economy, which hurts the poor.)

Cutting payments to doctors and/or taxing “Cadillac” health insurance plans, is one good way to help pay for improved health care. (The former cuts medical care; the latter hurts the economy by cutting the money supply.)

America should try to export more and import less, i.e. achieve a positive balance of payments. (America does not need a positive balance of payments; it creates dollars at will. Importing helps prevent inflation.)

The U.S. states, counties and cities should be self-supporting via local taxes, and not rely on federal assistance. (Being monetarily non-sovereign, local governments need net income to survive.)

Rather than being a net borrower, the federal government should be a net lender. (The government does not need to receive repayment of loans. Domestic repayment, like taxes, reduces the money supply.)

Greece, Ireland, and the other troubled euro nations need to exercise spending restraint and austerity. (Austerity drains an economy of money. These monetarily non-sovereign nations need to run a positive euro balance vs. the EU.)

Without tax increases, the federal government cannot afford to increase support for education, infrastructure improvements, bailouts for states, counties and cities, the military, research and local police. (The federal government can afford anything; it never can run short of dollars. Deficit spending stimulates the economy.)

Immigrants hurt the economy by taking jobs from Americans. (Immigrants are consumers and producers, who stimulate the economy via their spending and their labor. Even non-working immigrants receiving federal benefits are an economic plus.)

The poor are lazy “takers,” who won’t work if they receive federal benefits. (This never has been shown to be true. People receiving benefits work for more income than benefits alone can provide.)

Privatization is good because private for-profit organizations are more efficient, honest, creative, and hard working than are government agencies. (The opposite often is true. The basic motive of for-profit organizations is profit. The basic motive of government organizations to do a job.)

Federal regulations are bad for the public because they destroy businesses and jobs. (Federal regulations mostly destroy illegal businesses, while protecting the jobs in legal businesses and protecting the public.)

If the people ever realized the federal government’s spending is not limited by taxes, they would make incessant demands for more and more benefits, leading to excessive spending and inflation. (The demands would help close the Gap between the rich and the rest;  the federal government has absolute control over inflation via interest rate control, taxes, and the power to revalue.)

The biggest problem in economics is the debt, or the deficit, or unemployment, or health care, or crime, or immigration . . . etc. (Actually, there are two “biggest” problems: The wide and widening Gap between the rich and the rest, and the ignorance of Monetary Sovereignty).

If you would like to debate or question any, or add lies, feel free.

Rodger Malcolm Mitchell
Monetary Sovereignty

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

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

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

Ten Steps To Prosperity:

1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )

Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:  *FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and *The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.

2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )

This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”

3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

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

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.

4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans

Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers. Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families. An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.

5. SALARY FOR ATTENDING SCHOOL

Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study. If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.

6. ELIMINATE FEDERAL TAXES ON BUSINESS

Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.

7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.)

Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches. Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.

8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%. But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.

9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?) 

Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive. Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.

10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)

Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%. Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

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

MONETARY SOVEREIGNTY