The major reason why we have rich and poor is that most people indulge in sloppy thinking about money. For example the video at the bottom of this post shows the U.S. Bureau of Printing and Engraving, which prints all U.S. currency notes.
At 19:22 the video mentions that in 1956 the U.S. Congress decreed that “In God we trust” shall be printed on U.S. currency notes. (The words were already being printed on coins.). In November 2005 Michael Newdow filed a lawsuit claiming that “In God We Trust” was an unconstitutional endorsement of religion. A federal judge rejected Newdow’s lawsuit, saying the words did not dictate anyone’s beliefs.
Then at 19:53 the video shows Tom Ferguson, who was Director of the U.S. Bureau of Printing and Engraving when the video was made in Dec 2005. Ferguson says that in order to remove the words “In God we trust” from currency notes, the printing plates would all have to be changed, and that this would, “Add to the cost of currency,” and…
The U.S. Bureau of Printing and Engraving has no “costs,” since the bureau creates $650 million dollars out of thin air every day (and the Federal Reserve shreds over $500 million worth of old worn-out notes every day.)
If something “costs” a dollar, then I must surrender a dollar to buy it. However the Bureau of Printing and Engraving does not surrender money. It creates money. Therefore it has no “costs.” Neither does the U.S. government. The words “cost” and “save” is for entities that cannot create money out of thin air.
And this silliness about “cost” is from the bureau’s director! I suppose this should not surprise us, since most people who work for the U.S. Treasury are likewise confused regarding the nature and function of money. Popular columnist Paul Craig Roberts has a PhD in economics, and was an Assistant Secretary of the Treasury – and yet Roberts still thinks the U.S. government borrows its spending money, and therefore has a “national debt crisis.”
By the way, the bureau periodically alters the plates to thwart counterfeiters, and does not have to worry about “costs.” Also, currency notes must change every time there is a new U.S. Treasury Secretary, since his signature appears on the notes.
What all of this shows is that people fail to understand money because they confuse themselves with contradictory assertions. This is why we have rich and poor.
- The U.S. government creates as much money as it likes out of thin air.
- The U.S. government is near bankruptcy.
This contradiction is idiotic.
Some people rationalize their idiocy by falsely claiming that all dollars are lent into existence by banks. Therefore the U.S. government must borrow all its dollars. Therefore the U.S. government is “near bankruptcy.” Therefore the U.S. government must impose austerity on us. It must privatize.
Once you fall into this mental error (about banks creating all dollars) you cannot be saved by anyone except yourself.
Other people rationalize their idiocy by compounding it. They admit that yes, the U.S. government could create all the money it liked out of thin air, but if it did, then everyone would want things like Universal Medicare and a Basic Guaranteed Income. Everyone would sit on their yachts, enjoying life like rich people do. This would be evil.
Still other people rationalize their idiocy by simply shutting down. They admit that yes, the U.S. government can create all the money it likes out of thin air, but the U.S. government is nonetheless “bankrupt.” Why? It just is. Politicians and the corporate media outlets say so. And they never lie. Right?
Speaking of sloppy thinking, at 43:40 the video claims that, “Money used to get its value from gold.” Wrong. Money never got its value from gold. On the contrary, gold has always gotten its value from money. If there was no money, then a ton of gold would not be worth a cent. When the U.S. government first started using standardized dollars in 1865, it pretended that dollars were “backed” by gold in order to make people habituated to using dollars. The amount of dollars created always far exceeded the market value (in dollars) of available gold. In 1971 the U.S. government finally did away with this pretense, but many people still delude themselves that gold is the only “real” money, even though gold was never money. Nor did gold ever physically “back” money. Gold is a commodity. The “gold standard” was merely a gimmick; a pretense.
At 43:50 in the video, Tom Ferguson (then-Director of the U.S. Bureau of Printing and Engraving) says that money today gets its value from something that makes no sense. What is that something? I have no idea, nor does Ferguson. His comments are meaningless gibberish.
After that garbage, the video finally gets it right. At 44:18 the narrator says, “The U.S. dollar is only valuable because we say it is.”
Exactly. A dollar is worth a dollar of “full faith and credit” of the U.S. government, plus every person in the world who thinks a dollar is worth a dollar.
Then the video says that if the U.S. government created more money than it creates now, it would cause inflation. Wrong. It would only cause inflation if there was a shortage of things to spend the extra money on. There is no such shortage in the USA. All of us want more dollars, so we can buy more stuff.
Then at 44:50 the video notes that some people think that pennies are obsolete, while other people disagree, saying the U.S. government cannot monetarily “afford” to eliminate pennies. That is, since it “costs” the U.S. government 0.7 cents to make a penny, the government is “making money” off pennies.
Here again is the silly nonsense about the U.S. government having “costs,” and needing to “profit” in money that the U.S. government creates out of thin air.
This kind of bullshit is what sustains poverty and inequality.