Comment on MMT

I want to discuss the article above because it makes some errors beginning with calling Modern Monetary Theory (MMT) a “new idea.” The only thing “new” about MMT is that it doesn’t repeat the lies that everyone has told each other for centuries. MMT describes how government money has really worked throughout human history.

From the article…

In early 2013, Congress entered a death struggle—or a debt struggle, if you will—over the future of the US economy. A spate of old tax cuts and spending programs were due to expire almost simultaneously, and Congress couldn’t agree on a budget, nor on how much the government could borrow to keep its engines running.

The U.S. government does not “borrow to keep its engines running.” The government creates its spending money out of thin air, simply by crediting accounts.

Regarding the “debt ceiling” debate, this is simply about whether the U.S. government should continue to let the Federal Reserve accept more savings deposits by selling T-securities. Contrary to politicians’ lies, this has nothing to do with “funding the government.” Politicians might as well argue about how many angels can dance on the head of a pin.

A  solution bubbled up from the economic blogosphere. What if the Treasury minted a $1 trillion coin, deposited it in the government’s account at the Federal Reserve, and continued on with business as usual? The was authorized by an obscure law that applies to commemorative platinum coins, and it didn’t require congressional approval, so the GOP couldn’t get in the way. And the cash would not be circulated, so it wouldn’t cause inflation.

Perhaps you remember “the trillion dollar coin” notion.

Bloggers described this thought experiment as “ludicrous but perfectly legal” (Slate); “a monetary parlor trick” (Wired); “really thrilling” (Business Insider); “a large-scale trolling project” (The Guardian). The idea made its way onto late-night TV, political talk shows, White House press conferences, and lived on as a hashtag: #mintthecoin. At the heart of the attention was an acknowledgement that money wasn’t the problem—politics was.

The problem is indeed politics (not money). And politics is about who has power over whom.

The “trillion dollar coin” idea began circulating in 2011, and became headline news by January 2013. It was ridiculed by rich and poor alike. One group of hecklers consisted of bankers, politicians, and anyone else whose power and privileges would be threatened by a public awakened from the lies about money.

The other group consisted of slaves whose dream worlds would be threatened by a “trillion dollar coin.”

When a population is abused, its members cope with their misery by mentally withdrawing into various dream-worlds such as religion. (Statistically speaking, religious belief tends to increase with poverty and hardship. For example, prison inmates often “get religion,” and then drop it when they are released.)

Here are more dream-worlds that the peasants cling to in order to cope with their misery…

[1] It’s all the fault of the Goyim / Jews / Arabs / Muslims / Blacks / immigrants / whatever.

[2] It’s all the fault of the Fed, which lends all dollars into existence.

[3] If it sounds too good to be true, it is.

[4] I deserve to be poor because I’m stupid and lazy.

…and so on. Again the “trillion dollar coin” idea was ridiculed by rich and poor alike, albeit for different reasons.

 

 

 

 

 

 

 

 

 

Harriet Tubman (1822-1913) escaped from slavery and made thirteen missions to rescue about seventy enslaved families and friends. Tubman supposedly said, “I could have free more slaves if only they had known they were slaves.” There is no proof that Tubman ever said this, but the idea is valid.

For a small group of academics who adhere to a doctrine called Modern Monetary Theory (MMT), fiat currency is a social construct, and there are no fiscal limits on how much a sovereign currency-issuing nation can spend. Once we change the way we think about money, we can provide for everyone: We don’t have to “find” the money to “pay” for universal health care by “cutting” the budget elsewhere. In fact, our government already works that way: Spending must precede taxation, or there would be no dollars in the economy to tax. What’s lacking is not money, but political will.

True, except that the theory of MMT is not a “doctrine,” just as the theory of aerodynamics is not a “doctrine.” A theory does not entail guesses, hypotheses or opinions. A theory is a nexus of facts.

Neoliberalism, however, is a doctrine, since it consists of nothing but lies.

To a layperson, MMT can seem dizzyingly complex, but at its core is the belief that most of us have the economy backward. Conventional wisdom holds that the government taxes individuals and companies in order to fund its own spending. But the government—which is ultimately the source of all dollars, taxed or untaxed—pays or spends first and taxes later.

The truth only seems “dizzyingly complex” to us when we have been programmed with lies. Meanwhile “conventional wisdom” translates as commonly accepted bullshit.

Incidentally the government is not “ultimately the source of all dollars,” since banks create dollars out of thin air when they make loans.

When the government funds programs, it literally spends money into existence, injecting cash into the economy. Taxes exist in order to control inflation by reducing the money supply, and to ensure that dollars, as the only currency accepted for tax payments, remain in demand.

This is the MMT claim that “taxes drive money” — i.e. federal taxes are what create demand for federal dollars. This claim is nonsense, since we would need the federal dollars even if all federal taxes were eliminated.

Also, controlling inflation is not the sole function of federal taxes. The key is to maintain a balance between the supply of money and the demand for money.  Balance can be maintained by either reducing the supply of dollars (i.e. getting dollars out of the economy via austerity, or by taxation, or by selling special bonds) or by reducing or increasing the demand for dollars via adjusted interest rates.

The real purpose of federal taxes is that they are the ultimate expression of federal power over you. The gubmit giveth, and the gubmit taketh away.

MMT’s adherents point out that the federal government never “runs out” of money to fund the military, but routinely invokes budget constraints to justify defunding social programs. Money, in other words, isn’t a scarce commodity like silver or gold.

 There is limitless money for the military, but no money for social programs that help average people. How do average people justify their belief in this lie? They claim that the U.S. government borrows all its dollars, and this is why we have a $20 trillion “national debt.” Thus, they claim that dollars are not limitless. (Sigh.)

The decisions about how to issue, lend, and spend money come down to politics, values, and convention. Inflation, MMT’s proponents contend, can be controlled through taxation, and only becomes a problem at full employment—and we’re a long way off from that.  

Inflation is not caused by full employment, but by “too many dollars chasing too few goods.” For example, during World War II the U.S. employment rate dropped to nearly zero, but there was a shortage of consumer goods to spend one’s salary on, since consumer goods were rationed for the war effort. The surfeit of dollars, plus the shortage of goods, created the potential for inflation. To control inflation during the war, the U.S. government instituted the federal withholding tax, and also encouraged people to buy “war bonds” by (falsely) telling the masses that the bonds were necessary to “fund the war.”

Today there is no shortage of consumer goods. Therefore a massive increase in deficit spending would not cause inflation. It would boost employment, which America’s rulers do not want, since your suffering is their pleasure. The poorer you are, the richer they feel by comparison.

The article then quotes Warren Mosler.

“If you eliminate the tax on workers and let them keep more money, the average family would have $625 of payroll pay. Why won’t politicians do that? Because they believe the tax money is used to make Social Security payments. But that’s a mistake.”

MMT people ridiculously believe that politicians “mean well” but are “misinformed.” You and I know that politicians are liars. Politicians know that the U.S. government creates its spending money out of thin air, but politicians don’t want you to know it, since they want you to grovel to them for every penny.

In Europe, where a generation of young people remain unemployed, more spending, better social welfare, and a guaranteed job are a particularly attractive combination. But eurozone countries share a common currency, so the European Union would have to allow all of its members to borrow more, not less, to stimulate the economies of its more beleaguered states.

Except that euro-zone nations with large trade surpluses, like Germany, do not need to borrow their euros. They suck euros from nations that have trade deficits, like France and Greece.

In Greece, for example, Rania Antonopoulos, who runs Bard’s “Gender Equality and the Economy” program, serves as the alternate minister of labor in the Syriza government. She’s proposed pushing the government to be the employer of last resort.

NONSENSE. Since Greece has a huge trade deficit, and cannot create euros out of thin air, Greece must borrow all its euros from bankers, who use the debt load as leverage to force privatization. There is no possible way that the Greek government can employ more workers. The SYRIZA hacks are all liars on the bankers’ payroll.

Despite the lack of official interest, austerity has given these MMT economists rock-star status. Kelton recalls a conference a few years back in Rimini, Italy, where her group sold out their initial venue and had to move the event to a basketball stadium.  

MMT is irrelevant to Italy, since the Italian government cannot create euros out of thin air. In fact, because of the euro, Italy would be as horrible as Greece if Italy did not have a trade surplus, which Italy has enjoyed since 2012.

It’s hard to imagine radical changes being made to the way politicians talk about money. It could take decades, even centuries, to make a dent in entrenched ideas about debt, scarcity, and supply.

The problem is politics. More for me. Less for you. If the human species somehow overcame its basic selfishness, then MMT would catch on like wildfire.

There is, particularly among young people, an enormous appetite for new solutions to the problems that modern economies face, from automation to offshoring. And the financial crisis has shaken the public’s trust in established ways of thinking.

Yes. At any point in time, the current paradigm hurts some people, and benefits others. A paradigm does not change until the people who benefit from it die off. Then the cycle repeats with a new paradigm.

Take the universal basic income: A few years ago, it seemed unrealistic and utopian, but today, versions of the UBI have been embraced by Silicon Valley moguls, economists on the left and the right, and politicians around the world.

Unfortunately the UBI will go nowhere until the masses first understand that money is limitless.

The U.K. elects a parliament

“A rose by any other name would smell as sweet.” ~ Shakespeare, Romeo and Juliet

And bullshit by any other name would smell as bad.

Tomorrow (8 June) the U.K. will have a parliamentary election. Most predictions have the Conservatives retaining their current majority by a slim margin. Therefore privatization, austerity, inequality, and poverty will continue to grow.

If, however, the Conservatives lose their majority to the Labour Party, then privatization, austerity, inequality, and poverty will still continue to grow. Why? Because both parties maintain the lie that the U.K. government must have deficit reduction, and that the government “can’t spend money it doesn’t have.”

Conservative politicians maintain this lie so they can steal more money for themselves, and give less money to the lower classes. (“The well has run dry!”)

Labor politicians maintain this lie so they can keep the masses on the edge of starvation while telling them, “We are your only protection from the conservatives!”

As you know, here in the West, the rulers of each nation (i.e. the money powers and the dug-in bureaucrats) make constant adjustments that will keep them in power and you in chains. This time around they may choose the Conservatives to win (or the Republicans in the USA). Next time around they may choose the Labour Party to win (or the Democrats in the USA, or the “Socialists” in Europe, or the “hard left” SYRIZA coalition in Greece).

All these parties are radical right-wing neoliberals, since all of them are puppets of the national rulers. Bought and owned. However the public sometimes grows tired of one style of bullshit, at which point the national rulers install the other style of bullshit. No matter how many times this happens, the public never catches on. Many Americans still insist that neoliberal Hillary would have been better than neoliberal Trump. Some Americans still like Sanders, even though Sanders has proven himself countless times to be a sell-out and a hack, e.g. his loyalty to the Democrat Machine even after it torpedoed him.

I mention all this because the neoliberal British media outlets are now cheering for the neoliberal Labour Party over the neoliberal Conservative party. Therefore the professional prognosticators may be wrong about the Conservatives retaining their majority. The U.K.’s rulers may have decided that the British public is restless, and the neoliberal Conservatives should be replaced by the neoliberal Labour Party.

The media outlets are focusing in Jeremy Corbyn’s criticisms of austerity. This is bullshit, since Corbyn favors deficit reduction — i.e. austerity.

Austerity has strangled Britain. Only Labour will consign it to history. ~ U.K. Guardian

Corbyn has caught the mood of a UK grown tired of austerity ~ Financial Times

Bernie Sanders is super excited about Jeremy Corbyn’s anti-austerity campaign ~ The Nation

Austerity renders the lives of disabled people invisible, unliveable, and invalid ~ Open Democracy UK

Government austerity demands that we die within our means ~ Common Dreams

That last article notes that “austerity” has become a dirty word. Therefore British PM Theresa May says, “You call it austerity. I call it living within our means.”

And then that same article says this…

Ending austerity would mean, as all the political parties except the Conservatives recognize, taxing the rich.

“Tax the rich!” This is a gun that “progressives” always hold to their heads. Since the U.K. government creates its spending money out of thin air, there is no need to cut spending on social programs or raise taxes on the rich (who don’t pay taxes anyway).

Perhaps I am in error. Perhaps the corporate media outlets have indeed chosen the Conservatives to win a majority, and they are boosting the Labour Party in order to make the election seem “close.” Here in the West, national rulers choose their puppet, and then they rig the election so that their puppet “wins” by a mere 51%. This slim margin keeps the peasants from questioning the rigged election. The same trick is used with national referendums.


Occasionally this scam malfunctions, in which case the peasants are made to vote again and again until the electronic machines show the “correct” result.

Anyway it doesn’t matter who wins the UK election. Nothing will change until the masses snap out of their trance.

As an added bonus for the new owners, the infrastructure is already built. The owners will have nothing to do but sit on their yachts and watch their fortune grow.

Australia has already done this.

Are you a sloppy thinker?

I want to comment about Mexico and Guatemala, as a lead-in to comments about money.

In my house I have some tenants from Guatemala whose rent payments help me with my monthly expenses. (Each tenant has his own bedroom. There is also a Mexican tenant in another bedroom.)

One tenant from Guatemala speaks a Mayan language called Popti. Another speaks a Mayan language called Q’eqchi’.  Still another speaks a Mayan language called Tz’utujil.  When these three tenants want to talk with each other (or with me) they must speak in Spanish. I have listened to them talk on their cell phones in their own languages, and I have marveled how different their languages are from each other, and how totally different they are from Spanish and English. If my tenants did not speak Spanish (in addition to their native languages), then I could not communicate with them at all. I speak Spanish, but I do not understand one word of their indigenous languages.

Now, on this topic of languages, the conquistador Hernán Cortés invaded Mexico in 1519 to secure the area for Spanish colonization. Cortés and his men interacted with native tribes, fought some tribes, allied with others, and then attacked the Aztecs with the help of his native allies, and then he…

Hold it.

When Cortés’ expedition left Cuba en route to Mexico, not one of his 500 men in eleven ships spoke any of Mexico’s sixty-five indigenous languages. Nor did anyone in Mexico speak any Spanish. None.

So how did Cortés and his men communicate with the natives?  It was not through “sign language,” or through grunting and pointing. Cortés and the natives actually spoke to each other. But how? I’ll give you a second to think about it.

People (including most historians) don’t stop to think. They take it for granted that Cortés and his men communicated with the natives, ummm…somehow.

This is an example of what I call sloppy thinking. It is pandemic among people when they discuss money, and it is one reason why there is so much poverty and inequality.

To answer our question, when Cortés landed in Yucatan, the Mayan Indians used hand gestures to convey to him that another Spaniard was already there, and was nearby in what is today Guatemala. When Cortés found this other Spaniard, his name was Aguilar, and he had previously been shipwrecked and taken captive by the Mayans.  During Aguilar’s time as a prisoner, he learned to speak a Mayan language called Mopan. Cortés took Aguilar as his translator, sailed up north around the Yucatan Peninsula, and arrived at the Mayan town of Potonchan (Mexico) on 22 March 1519.  When Cortés defeated the natives there, the natives gave Cortés a peace offering of food, gold, and twenty women.  One of women, called Malanale, just happened to speak Mopan, plus the Nahautl language of the Aztecs. Therefore Cortés spoke Spanish to Aguilar, who spoke Mopan to the girl, who spoke Nahuatl to the Aztecs.

If Cortés had not chanced upon this woman, then the Spaniards probably could not have succeeded in Mexico, since they could not have communicated with the natives. This is a small detail but a crucial one, like the fact that the U.S. government does not need loans or tax revenue. Failure to note such details is sloppy thinking. And sloppy thinking is why we have so much poverty and inequality today.

Below are more examples of sloppy thinking…

Today I watched a video about the Battle of the Teutoburg Forest (9 A.D.) in which German tribes wiped out three Roman legions, plus six cohorts of mercenaries employed by Rome, a total of about 25,000 invaders killed. The video said the Germans were angry because Roman governor Publius Quinctilius Varus extracted money from them and…

Wait.

Huh?

The German tribes did not use money, and even if they had, their tokens would have been useless to the Romans. Nor did the Germans use Roman money. So how could Publius Varus have extracted money from them?

He didn’t. He extracted tribute in the form of grain, crops, slaves, livestock, leather goods, and so forth.

Again, this is a small detail but a crucial one, because if we don’t stop to ask questions, we will have false beliefs about money. And what keeps us enslaved  by rich people is not guns and armies, but our false beliefs.

When I distinguish between money and tribute, you say, “Yes of course. That goes without saying.”

But does it? The video was in error. And if we don’t catch errors like this, we will be slaves of the rich. We will let politicians get away with their lies.

More examples…

Before the French Revolution of 1789, French peasants criticized Marie Antoinette for spending lavishly on clothes. Peasants nicknamed her “Madame Deficit,” as though deficit spending was a bad thing, and as though the French crown could not create as many French livres out of thin air as it liked.

(The French currency was called “livres” until 1795, two years after Marie Antoinette was executed. After 1795 it was called French “francs.” On 1 Jan 1999 France adopted the euro, thus falling into permanently growing debt and austerity.)

Incidentally the French Revolution had many causes, but the trigger – as always – was hunger. Years of bad harvests and foreign war debts caused food shortages, which in turn caused inflation, which worsened the shortages, which triggered the Revolution.

Regarding those French war debts, this is where we get into sloppy thinking territory. The 90-minute video below is a good one, but it has errors.

France played a role in the American Revolutionary War (1775–1783). Motivated by a long-term rivalry with Britain, and to avenge their territorial losses during the French and Indian War, France secretly began sending money to the Americans in 1775, and…Whoops.

There it is again. Sloppy thinking.

French livres had zero value for the American colonists. The French crown sent war supplies, not money.

“Yes of course,” you say. But until I exposed it, the error was invisible to you.

Here is another error from the video above, at 08:05…

“Louis XV had lost the Seven Years’ War in which Britain had relieved France of most of her North American colonies. The contest nearly bankrupted France, whose coffers were nearly empty.”

Excuse me? How could French “coffers” be “nearly empty” if the French crown created infinite livres out of thin air? This is the kind of sloppy thinking that makes people falsely believe that a currency issuer  is the same as a currency user. From this false belief comes the false belief that the central government is “bankrupt.” Therefore we must eliminate all social programs (except for multi-trillion-dollar bailouts and trillion-dollar wars and endless corporate subsidies and so on).

France did indeed have war debts, but in foreign currencies. Failure to distinguish between debts in domestic currencies and debts in foreign currencies is a classic example of sloppy thinking that keeps the masses impoverished and enslaved.  Corporate media outlets intentionally fail to make this distinction, since they are owned by the rich.

The French crown did not have “coffers” for French livres, since the crown could create as many French livres as it liked out of thin air. So why did France have debt problems?

Recall your basic economics…

Every nation must obtain imports, since no nation is 100% self-sufficient. If a nation’s currency is not accepted outside the nation’s borders, then a nation must obtain foreign currency in order to buy imports. To get foreign currency, a nation must borrow it, or else sell goods and services to foreigners in exchange for foreign currencies. (The USA does not need foreign currency, since U.S. dollars are accepted worldwide.)

Therefore, when we say that French support for the American colonists caused France to “go into debt,” we do not mean in French livres, which the French government created out of thin air. We mean debt in foreign currencies. The French crown purchased war supplies from foreigners on credit, and sent those war supplies to the American rebels. The foreigners who sold these these war supplies to France expected to be paid in their own foreign currencies, or else be paid in French goods and services. If France had no foreign currency, and could not offer any goods or services that foreigners wanted, then France went into foreign debt.  This caused foreigners to stop selling to France on credit. The result was French food shortages that triggered French inflation, followed by the French Revolution.

It’s all very basic, but sloppy thinking causes most people to shut up and submit to ever-worsening poverty and inequality.

From the video above at 14:35:

“French military intervention in the American war of independence cost France fifteen hundred million French livres; money raised from borrowing, and from taxing poverty stricken peasants.”

No. That is sloppy thinking again.  The French crown did not need to tax French peasants for the war, since the French crown could create as many French livres as it wished. Thus the crown incurred no “costs” in livres, and it needed no tax revenues in livres.  France’s war debts were in foreign currencies, not in French livres.

14:40:

“The enormous war bill hastened an impending financial crisis. America bankrupted France because the French monarchy could not pay those debts.”

Pay debts to who? The video does not say. Actually the debt holders were foreigners who supplied goods to the French crown on credit, and who did not want to be paid for those goods in French livres. France did not have anything to pay the foreigners with, such as grain, because of years of bad harvests. Therefore foreigners stopped selling to France on credit. The result was shortages in France, which led to chaos.

16:15:

Marie Antoinette continued to spend money on dresses and shoes and jewelry as if nothing had happened.

If those clothing goods came from France, then the spending of French livres (created out of thin air) helped the French economy until there were food shortages, at which point the livres caused inflation. But if the clothing goods came from outside France, then Marie Antoinette’s spending caused the French crown’s foreign debts to increase. Again the video is not clear about this, because of sloppy thinking. Therefore the video falsely pretends that the French crown needed tax revenues.

Sloppy thinking causes people to be stupefied even as the ground is literally stolen from under their feet. For instance, neoliberals in England are steadily privatizing the National Health System by starving the NHS of funding, and selling off NHS land from under the hospitals.  I say England because this land theft is not (yet) happening in Scotland and Wales.

Prime Minister Theresa May is selling off (i.e. privatizing) the land on which clinics and hospitals sit, so the new owners can collect rent on it…forever. This will make healthcare prices rise so high that the British masses will beg for relief, even if it means privatizing the hospitals too.


 

 

CONCLUSION

Many people are good at spotting plot holes in movies, novels, and TV programs, but they remain blind to giant plot holes in the official narratives about government finances. In some ways people are sharp. In other ways they indulge in sloppy thinking.  The penalty for that is poverty.


One other thing. An afterthought. Just now I was reading the article below when something jumped out at me.

Under a Medicare-for-all, single-payer system, the United States would join virtually every other Western country in recognizing health care as a fundamental right and providing insurance for every citizen. It would reduce the burden on employers, which bear the brunt of the cost of insurance today. It would be paid for with tax hikes on the wealthiest Americans, including a financial transactions tax that would curb risky high-frequency trading.

Tax hikes are not necessary. Such idiocy is why Americans cannot have Medicare-for-all.

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Change of topic:

Q. What’s worse than Republican corruption?
A. Democrat hypocrisy.

Today’s Democrats sometimes make populist noises, but Democrats in practice are every bit as corrupt, plutocratic, and neoliberal as Republicans. And Democrats are even more pro-war than are Republicans.  Democrats are forced to be this way, since they have nothing to offer average Americans except more poverty and inequality, just like Republicans. Therefore all that Democrats ever talk about is Trump and Russia.

Jamin Ben Raskin is a Democrat U.S. Congressman from Maryland.  Last weekend Ruskin held a rally in Washington DC (video excerpt below). Did Ruskin call for Universal Medicare? Student loan debt relief?  And end to the wars? Of course not, since Ruskin is a Democrat.

In the video below at 01:55 Ruskin says:

“If you read the report prepared by seventeen of our own intelligence agencies, you know the truth. Donald Trump is a hoax perpetrated on Americans by the Russians.”

This is a lie and Ruskin knows it. (I’m transcribing the video’s words so you don’t have to sit through its trash.)

At 04:10 Ruskin says,

“We know that Vladimir Putin is conducting active measure operations to destabilize liberal democracies and promote his brand of oligarchy and corruption all over the world. Brexit was part of this. Support for the right-wing Gilders in the Netherlands was part of it. In France the Russians hacked and trashed Macron in a bid to elect the right-wing immigrant-bashing Marine Le Pen. Orbán’s Hungary, Duterte’s Philippines, Assad’s Syria, the recent chaos in Venezuela, all the despots, dictators and kleptocrats have found each other, and Vladimir Putin is the ringleader of the unfree world. But Putin’s biggest and arguably most successful operation was arguably right here in the USA with the election of Donald Trump. Back in the home office in Moscow they’re still celebrating their disruption of our election.” 

All lies, distortions, and neoliberal bullshit. For Ruskin, the entire planet is a “victim” of Russia.

Are you a neoliberal?

In response to the above post I counter that the road to rejecting neoliberalism begins with rejecting false beliefs about money.

As long as we falsely believe that money is physical and limited, and that the U.S. government needs tax revenue, and has a “debt crisis,” we will be neoliberals ourselves, if not consciously then subconsciously.

The neoliberal brain is governed by the program at right, as is the brain of anyone who believes the lie that federal dollars are “limited.” Naturally we want to get some of the government’s “limited” money ourselves. Naturally we do not want the poor to “get it all.”

Hatred of the poor sustains false beliefs about money. In turn, false beliefs about money sustain hatred of the poor (whose ranks grow every day).

That is, the reason we falsely believe that federal dollars are “limited” is so we can falsely believe that poor people are lazy — and vice-versa. This makes us neoliberals in our own way.

Most people in the lower classes tend to vote against their own interests because they believe the lies described here. Hence they are essentially neoliberals, seeking to screw the people below them, and thereby letting themselves be screwed by the people above then.

Long-winded analyses are unnecessary. Neoliberalism is simply the impulse to rob others, and to rationalize the robbery. This game is played in various forms at all levels of society.

The problem is not shortages, but maldistribution, caused by collective selfishness. When we as individuals moderate our selfishness, we cease believing that federal dollars are limited, and that poor people are lazy. We understand that Food Stamp benefits, for example, boost the overall economy, and thereby help recipients and non-recipients alike. Food Stamp benefits are a form of money that the U.S. government creates out of thin air, just like Social Security benefits, and just like dollars themselves.

(Incidentally the purpose of Food Stamps is to keep American peasants from revolting. Throughout history there have been many causes of revolutions, but the actual triggers have always been hunger. In any society, the peasants will submit to endless poverty and abuse, as long as they have something to eat. Therefore when the Trump talks about cutting Food Stamp benefits, he is just playing games. Democrats, meanwhile play their own style of games.)

Republicans and Democrats both get power by supporting the same lies about money. For Republicans the lies validate their desire to cut social programs in order to widen the gap between the rich and the rest. (“Social Security is insolvent!”) For Democrats the lies about money validate their false claim that, “We are your only protection against Republicans!”

Naturally the corporate media outlets work hard to sustain the lie that dollars are limited, and the U.S. government runs on loans and taxes. An example is the garbage below from the Washington Post, which has been reprinted by numerous blogs….

The entire article is premised on the lie that the U.S. government does not create its spending money out of thin air, and must rely on loans and on tax revenue.

The Treasury Department had $177 billion in its cash account as of Tuesday, a cash pile that it is drawing down because the government is limited in how much it can borrow by the debt ceiling.

Lies, lies, and more lies, all of them designed to make you falsely think that dollars are physical and limited, so that you meekly submit to poverty and inequality.

I read some of the reader comments below the  Washington Post article. Everyone believes the lies. Therefore everyone is more or less a neoliberal. Therefore few people squawk when Trump vows to privatize America’s infrastructure, turning national highways into toll roads, for example. After all, the U.S. government is “broke,” right?

Privatization of the national infrastructure will cause the price of all consumer goods to rise dramatically, but we would rather live with poverty than live without lies.

Trump says his first target for privatization will be air traffic control. He plans to fire more than 30,000 FAA workers (including 14,000 air traffic controllers). He says they will be better off working for a private owner who will do everything possible to drive down their wages, and cut the quality of the service. Don’t be surprised if mid-air collisions become routine.

Some people don’t want privatization to happen, but they will ensure that it does happen, because they insist on believing the lie that federal dollars are physical and limited.  Hence they have no answer when Trump falsely claims that, “We must privatize because the U.S. government is broke.”

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Gold is not money

Most people falsely believe that money is physical and limited. This false belief is one reason why societies separate into rich and poor. Rich people and their toadies starve people of money by claiming that “money is scarce.” The claim is false, but the starvation is real.

The delusion that money is physical and limited has many variants, one of which is the false belief that  only gold is “real” money, and that fiat money is not “real.”

In reality, only fiat money is “real money.” Physical gold is not money, and never has been, nor ever will be, since actual money is not physical. Actual money involves mental units of account (such as dollars or euros) that can be represented by written or printed numbers.

Gold can be traded (bartered) for money, or for goods or services, but gold cannot be “spent” like money. Gold and crude oil are commodities denominated in currencies such as dollars. Gold is presently trading for 1,240 U.S. dollars per ounce, while crude oil is trading at about 50 dollars per barrel.

If there were no currencies, then there would be no monetary value to oil or gold (or to anything else). However most people falsely believe that the reverse is true — i.e. that gold is what gives “value” to money. Again, this is part of the false belief that “real” money is scarce; a false belief that keeps billions of people enslaved.

“Gold traders” want you to think that only gold is “real money,” even though “gold traders” usually do not trade gold.  Instead, they trade “gold certificates,” which are mere numbers in a private database. If you buy a “gold certificate” from a “gold exchange,” and you ask for physical gold, you will not get any, since they do not have any. All they can do is offer to cash out your “gold certificate,” which is simply an account in their private database. The monetary value of your account is not physical.

Traders of “gold certificates” are constantly devising new scams to convince people to invest in “gold exchanges.” One of their scams is to falsely claim that gold is the only “real” money.

Gold hucksters are now claiming that on 22 May 2017 Arizona Gov. Doug Ducey signed a bill into law (HB2014) that makes gold into money in Arizona.

Nonsense of course.

HB2014 simply ends state taxation on capital gains derived from the trading of precious metals. For example, if you buy gold at 1,000 dollars per ounce, and you sell it for 1,500 dollars per ounce, the 500 dollars difference is considered capital gains. Arizona will no longer tax state residents on that 500 dollar gain. That is, Arizona residents no longer have to list this kind of capital gain on their state income tax forms.

The bill was introduced by Republican Mark Finchem who claims that taxing exchanges of “legal tender like gold coins” is a tax on money.

This is more nonsense. Gold coins are not legal tender. I’ll bet that Finchem is a gold huckster. If so, then he pushed for removing the tax in order to boost his “gold exchange.”

Former presidential candidate Ron Paul has commented on this AZ bill, saying,

“Every supporter of free markets should cheer Arizona’s passage of HB 2014. There is no more justification for forcing individuals to use government-created money than there is for forcing individuals to drive government manufactured cars. In fact, as the Federal Reserve’s 114 years of failure shows, giving monopoly control over our money supply to a secretive central bank is the most dangerous form of government intervention.”

Except that gold is not money, and never gas been. If I have a gold coin whose face value is one dollar, then the coin represents one dollar, and can be used or traded as a dollar, but technically the physical coin is not a dollar, since a dollar is not physical. The coin is simply a token, as is a dollar bill. In the United States, the monetary units of account are not gold, or coins, or currency notes, but dollars and cents. A ten-dollar bill represents ten dollars. It is a credit for ten dollars, but the currency bill itself is not ten dollars. It is just a piece of paper.

Again, this is not mere sophistry. The mass refusal to understand that money is not physical is one reason why we have global inequality. Because most people falsely believe that money is physical, rich people and their puppet politicians can falsely claim that “money is scarce,” and there is “no money” for social programs that help average people.  

Incidentally, notice Ron Paul’s self-contradiction. He condemns “government-created money,” but he also condemns the Fed as a “secretive central bank” that has “monopoly control over our money supply.”

So who creates money, the government or the Fed? (The correct answer is both.)

More nonsense from Ron Paul…

“By allowing the people of Arizona to use an alternative to Federal Reserve-created fiat currency, HB 2014 will help the people of Arizona survive the next Federal Reserve-created recessions. Passage of this bill will also help make Arizona more attractive to the growing number of people seeking alternatives to fiat money in order to protect themselves, their families, and their business from the effects of Federal Reserve policy. Thus, this bill will help attract new investments and jobs to Arizona.”

Either Ron Paul is a moron, or a gold huckster, or he was paid by gold hucksters to say this. U.S. federal law says that the U.S. currency is dollars and cents, not gold or gold coins. If gold was an “alternative currency,” then I could use gold to buy groceries. But I cannot. I can trade gold for groceries at agreed-to-dollars per ounce, but I cannot “spend” gold.

And note how Ron Paul falsely thinks that all dollars are created by the Fed.

Regarding recessions, these can be caused by austerity (i.e. the government putting insufficient money into the economy) or else they occur when private debt loads become too big to pay off. The first type of recession is caused by politicians. The second type is part of the “business cycle,” and can be triggered by the Fed if interest rates rise too far too fast.

One person says that, “Gold holds its value better than anything else on the planet.” Nonsense. The monetary value of gold depends on fluctuating gold markets, which are denominated in dollars, euros, etc. Monetary equivalents can rise and fall rapidly. As much better investment is Treasury securities. That is why various investors of all kinds have collectively deposited 20 trillion dollars in Fed savings accounts (the so-called “national debt”).

By the way, if gold is not money, then why did President F.D. Roosevelt sign Executive Order 6102 on 5 April 1933, which banned any individual or corporation from holding more than five ounces of gold?

The stated reason was that hard times had caused a “hoarding” of gold, stalling economic growth and making the depression worse.

This was a lie.

The actual reason was twofold.

First, in 1933 the USA was still on the “gold standard.” This was always a farce, since the U.S. government could always create money out of thin air, regardless of what gold happened to be trading for. Politicians mentioned the “gold standard” so they could pretend that federal money was scarce. Politicians ignored the “gold standard” when they wanted to create money for things like wars. Executive Order 6102 helped to buttress the “gold standard” pretense.

Second, U.S. dollars were not accepted globally in 1933. The world was marching toward a Second World War, and the U.S. government wanted the ability to obtain imports on an emergency basis. If foreigners in 1933 would not accept dollars for their imports, they might accept gold in trade, denominated in British pounds.

After World War Two, the US dollar was accepted worldwide, and by 1964 the U.S. government started to relax its restrictions on the owning and trading of gold. By 1975 all restrictions were removed.

Getting back to Arizona, the Zero Hedge blog says this…

Rep. Mark Finchem (R-Tucson) introduced House Bill 2014 on Jan. 9. The legislation defines legal tender as “a medium of exchange, including specie, that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues.” “Specie” means coins having precious metal content. In effect, passage of the bill treats gold and silver specie as money.

Wrong.

First, U.S. government laws designate dollars (not gold) as legal tender. Second, “specie” means “coined money,” which originally meant creating money by stamping coins. Later “coining” meant creating money, period. Precious metal content was irrelevant to this, and remains so. Article 1 Section 8 of the U.S. Constitution says the Congress shall have power to “coin money, and regulate the value thereof.” The Constitution says nothing at all about what kind of metal the coins must be made of.

To repeat, all these errors are products of the false belief that money is physical, and therefore scarce, and that the only “real money” is gold.

As I noted above, the Arizona bill simply ends taxation of capital gains that are derived from the trading of precious metals.

The plague comes to my town

In the USA the word “jail” means a place for people with a sentence of one year or less, and usually has people convicted of misdemeanors. “Prison” (or “penitentiary”) means a place for people with a sentence of one year or more. Prisons usually holds people convicted of felonies.

The city where I live is about to become the first city in my state to have a privately owned jail.

The owner will be Corrections Corporation of America (CCA) which is so criminal and corrupt that it must regularly change its name. Currently it is known as “CoreCivic.”

(Another example of this is Blackwater, which consists of private death squads contracted by the CIA.  Blackwater changed its name to XE Services, and then to Academi. A Blackwater death squad murdered 14 Iraqi civilians in Nisour Square in Baghdad. Blackwater also provided bodyguards to Paul Bremer, who oversaw the theft of 12 billion U.S. dollars that were flown to Iraq after the invasion. Every two weeks, a C-130 aircraft flew from New York to Baghdad to deliver pallets of shrink-wrapped dollars that weighed a total of 363 tons. One flight on 22 June 2004 had 2.4 billion dollars. No one knows who stole the $12 billion, and Bremer was never charged with any crime. Twelve BILLION dollars.)

(INCIDENTALLY the U.S. government intended that $12 billion to be used for boosting the Iraqi economy. Meanwhile back in the USA, politicians claim that the way to boost the U.S. economy is to REMOVE dollars via austerity.)

So now my city will have a privately owned and operated jail. The rationale, as always, is that private ownership will “save money” for the city. The reality is that private ownership will be far more expensive for the city, since the owners seek to continually increase their profits via ever-higher fees and ever-shrinking services.

There are no exceptions to this rule. None. Never.

I have not had a chance to read the contract that my city will sign with Corrections Corporation, but such contracts always include guarantees that the local government will keep the privately owned jail (or prison) constantly full. This means that more and more people will be jailed for misdemeanors like J-walking. It also means that inmates will be treated like animals, and will be charged high fees for everything from toothbrushes to toilet paper. Inmates will be fed garbage, since private companies seek to constantly reduce their costs in order to constantly boost profits. Corrections Corporation will also treat its guards like dirt. Inmate deaths and suicides will explode in number, as will inmate lawsuits against the city.

Let me repeat that. When a privately owned jail commits offenses, and inmates file lawsuits, the party that pays is not the offending company, but local taxpayers. This is one reason why privatization never saves money for taxpayers. Quite the opposite. The Indianapolis Star reporta that Indianapolis Mayor Joe Hogsett plans to cancel a long-standing private jail contract with Corrections Corporation in hopes of saving the city millions of dollars.

The city council in my own town voted 4-to-2 to privatize the city jail, which means that four council members were stupid, or else they were bribed by Corrections Corporation. The city mayor is also stupid (or was bribed), since he too voted to sell out to Corrections Corporation.

Two months ago my city announced that it was planning to privatize its jail operations. Hundreds of city residents e-mailed city council members asking them not to do it. Yesterday when the vote was taken, protesters filled the city council chamber. All their pleas were ignored. Bribes speak louder than people.

Privatized prisons cause things like the “kids for cash” episode in which the owner of a privatized juvenile correction facility continually paid two judges to give maximum possible jail sentences for kids, in order to keep the jail facility full. Vast numbers of kids were jailed for trivial offenses — or for no offenses at all. (This was only a “scandal” because the victims were kids. When the victims are adults, the scam is simply “business.”)

Private prison companies are organized into Real Estate Investment Trusts (REITs) so they don’t have to pay city, county, state, or federal taxes.

Speaking of privatization, Trump will soon explain his plan to hand over most of America’s infrastructure to his rich cronies. Airports, bridges, highway rest stops, and other facilities will become privately owned, so that the gap between the rich and the rest can be dramatically widened.

Trump refers to this theft as “modernization.” His scam calls for creating $200 billion out of thin air, and using it to offer bribes to state, county, or municipal governments that surrender their public facilities to the rich. Australia started doing this in 2014, and calls the theft “asset recycling.”

In addition to bribes, Trump will use threats, which he calls “leverage.” For example, he will threaten to impose a tax increase on gasoline, in order to force state, county, and municipal governments to hand over their public assets. The federal tax on gasoline is now at 18.4 cents per gallon. Trump will tell the nation, “The gas tax has not been raised since 1993, and the U.S. government needs that revenue!”  Trump will also threaten to impose Internet sales taxes if the peasants do not comply.

The national privatization scam is being drawn up by Trump cronies like Gary Cohn, a Goldman Sachs investment banker (and militant Zionist). Also overseeing the theft is billionaire developer Richard LeFrak.

High on the list of things they want privatized are airports and air traffic control systems. When these are run for profit, air travel will become very dangerous, while monetary costs for average people will skyrocket. Public highways will become toll roads, thereby increasing the costs of everything. Rural and distressed communities will die. National parks will be handed to the rich, and will be renamed for their new owners. And of course none of the new owners will have to pay any taxes on their new profits. Trump has already said this.

Trump will say that America’s infrastructure is falling apart, and can only be saved via privatization. And he will get away with this lie, because most people refuse to acknowledge what they already know: that the U.S. government can “print” as many dollars as it likes out of thin air. The masses will rationalize their stupidity and their poverty, telling themselves that public enslavement is “public improvement.”

Billionaire developer Ricard LeFrak says the masses will become “socialized” to paying tolls. LeFrak says the U.S. government should borrow large sums at today’s low interest rates (even though the U.S. government does not borrow its spending money, since the government creates  money out of thin air.)

 

 

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CHANGE OF TOPIC

The Counterpunch article above falsely blames Germany and the Troika for Greece’s economic depression, which is now the longest and the worst in world history.

The actual reason for the Greek depression is that [1] Greece has a trade deficit, which means that Greece has no net money coming in from outside and [2] the Greek government cannot create its own money out of thin air.

As a result the Greek government must borrow all its money. Therefore Greece has an ever-expanding debt load. Therefore average Greeks will continue to have more and more poverty and austerity forever.

Greece could end this nightmare by dumping the euro and going back to the drachma, but Greek politicians refuse to do that, since Greek politicians are on the bankers’ payroll. Therefore the blame for the Greek nightmare lies not with Germany and the Troika, but with Greek politicians, and with average Greeks who refuse to see this.

It is human nature to live in denial. Since we don’t like to admit that we are stupid and selfish, we claim to be innocent victims of others.

There are some groups in Europe that understand these truths. That is why they are called “evil.”

Are you a “fascist”?

Before I get going, I just want to say that I have no interest in Trump, “Russia-gate” and all that nonsense.

By the way, tomorrow (23 May 2017) the White House will release its federal budget, which will outline how many dollars the U.S. government will create out of thin air for FY 2018 (which starts on 1 Oct 2017)  and who will get them. The budget will call for cutting programs like food stamps, and cutting popular family benefits like the child tax credit, while increasing spending on wars and on weapons makers. This sounds ominous, but it’s just a proposal that will be greatly modified by the U.S. Congress. So I ignore most commentary about it.


Anyway the item below includes the question, “Why do we allow the logic of the market to occupy our minds?”

The article starts by accepting the lie that neoliberalism is about “markets.”

Neoliberalism is an elusive term, typically used to describe such processes as privatization, deregulation, the cutting back of social and welfare provision, the retraction of the state, and the idealization of free-markets.

No. Neoliberalism opposes free markets, since all individuals must have equality before they can participate in a genuinely free market. Neoliberalism favors rigged and controlled markets. It favors monopolies and oligarchies. It does not favor equality or Democracy.

Neoliberalism is not an ideology or an economic doctrine. It is robbery. It is part of the global drive to create a world of slaves who toil for a handful of owners, instead of working for each other. This is done by privatization, by deregulation (i.e. decriminalization of the rich, plus added regulations for average people), and by the elimination of social and welfare provision, so that average people are at the mercy of their owners.

Speaking of neoliberalism, Diana Johnstone has a pretty good post about the bankers’ installation of Emmanuel Macron as their puppet president in France.

France has been rotting for 18 years because of the euro. By the time Macron’s term ends in 2022, poverty and inequality in France will be as bad as Greece. Perhaps worse. This will cause social unrest in France. There will be populist voices on the right and left, which the wealthy and the semi-wealthy will condemn as “fascists” and “communists.” If social unrest becomes uncontrollable, the rich will simply order the politicians to declare war on some nation, plus martial law in France.

Macron was elected by France’s huge population of old people. Among voters over 65, he won 80% against 20% for Le Pen.  Marine Le Pen did best with the youngest age group, 18 to 24, winning 44% against Macron’s 56%.

This mirrors the USA, where older people favored Hillary, and younger people favored Sanders (until Sanders was torpedoed, and until Sanders sold out to the Democrat establishment).

Evidently we must wait until enough old people die before there can be any possibility of change.

Johnstone says that 83% of people from “superior socio-professional categories” (rich doctors, lawyers, financiers, etc.) voted for Macron, because they knew that Macron would protect their privileges, and would increase inequality.

Meanwhile in “categories populaires” (ordinary folk with less education) the vote was 53% in favor of Le Pen. Among workers it was 63% in favor of Le Pen.

One of the many odd things about the latest French presidential election is the rejoicing among foreign “leftists” over the fact that the candidate of the rich defeated the candidate of the poor. It used to be the other way around, but that was long ago.

Sick, isn’t it?

In Paris, the capital, 90% of people voted for Macron. This is natural, considering that real estate prices have pushed the working class out of Paris, whose population is now overwhelmingly what is called “bobo” – the bohemian bourgeoisie. In these milieux, no one would ever dare speak a positive word about Marine Le Pen.

It’s called gentrification. After World War II, affluent and semi-affluent people moved from city centers out to the suburbs. Today, higher-income people are moving back to the city centers, and are causing housing prices to skyrocket. Where there is no space to build new houses, higher-income people live in luxury condos, or in very-high-rent apartments.

To accommodate them, larger cities are devoting more and more of their budgets to creating beautiful new parks and other amenities, while poor people are left to starve in the outlying areas.

This phenomenon is global, and it is accelerating.

Thus, when people in affluent neighborhoods condemn populists as “fascists” and “communists,” they are actually condemning any challenge to their privileges.