Cure for recession, inflation, stagflation, depression. Solution for Medicare, Social Security and the economy. balance of payments, balanced federal budget, balanced budget, bank failure, bank, bonds, CD, Concord Coalition, congress, cure recession, cure recession, cure stagflation, cure inflation, current account, cut interest, debt clock, debt, deficit solution, deficit, depression, depression solution, discount rate, discount rate, economics, economy, eliminate taxes, end taxes, end FICA, end FICA, fair tax, FDIC, federal deficit, federal deficit solution, federal government budget, federal reserve, federal tax, federal budget, federal debt, Federal Reserve, FICA, FREE MONEY, GDP, gold, gold standard, government budget, Gross Domestic Product, inflation solution, inflation, interest, interest rate, invest, Medicare cure, Medicare fix, Medicare reform, Medicare Solution, Medicare, money supply, money, mortgage, prevent stagflation, prevent depression, prevent inflation, prevent recession, prime rate, raise interest, recession, recession solution, reform social security, reform medicare, regressive tax, Rodger Malcolm Mitchell, Rodger Mitchell, safe investments, safe investment, Social Security fix, Social Security cure, Social Security solution, Social Security, Social Security reform, stagflation, stimulate economy, stimulus, tax reform, tax, taxpayers, the Fed
The measure of an economy is money.
A large
economy needs a larger supply of money than does a small
economy.
Therefore, a growing economy needs a growing supply of money.
All money is a form of debt.
Therefore, a growing economy requires a growing supply of debt.
U. S. Federal Debt is the safest, most controllable form of debt. The federal government, alone among borrowers, never will default.
Thus, there is no
federal debt or deficit problem, and a
balanced federal budget leads to a
recession or a depression.
Dear Senator Durbin
I would like to meet with you in Chicago, for fifteen minutes. The purpose is to describe and justify the two-step
solution
to our economic problems. Briefly:
Four years ago, I wrote a book titled
FREE MONEY.
Though the book was written during the economic boom, it predicted the recession and explained the specific causes.
It predicted the Fed’s repeated interest rate cuts.
It predicted the failure of those cuts to stimulate the economy.
It predicted the inability of Congress to find a
solution
to the recession.
It predicted a depression, unless two steps are taken – steps that are not now being considered by Congress or the Fed.
I would like to show you these two steps and how we can solve the
money
problems of
Social Security, Medicare, the military, the environment, the infrastructure, crime and terror prevention, education and the poor.
From reading this fax, will you believe I can offer
solutions
that have eluded the country’s greatest minds? Of course not. But considering the potential reward to the nation, I hope you’ll feel it’s worth the risk of only fifteen minutes to learn.
Ann Marie Lipinski
Editor, Chicago Tribune
435 N. Michigan Ave
Chicago, IL 60611
Dear Ms. Lipinski:
In your 2/3/03 editorial titled, “Why deficits matter,” you make several incorrect statements: Statement: “Interest on the federal
debt
takes
money
that could be spent on guns or butter or both.”
Fact: Federal interest payments addmoney
to the economy, putting cash into the pockets of consumers, local governments and businesses. Reducing the
deficit
would require increased
taxes
or reduced spending, both of which “take
money
that could be spent on guns or butter.” Which do you prefer, federal spending or consumer spending?
Statement: “(The government interest payment) will buy nothing – it will pay for
money
that was borrowed and has already been spent.”
Fact: The government interest payment will purchase food, clothing, shelter, education, law enforcement, public works, etc. These purchases will be made by all the consumers, local governments and businesses that receive the interest payments. Again, which do you prefer, federal spending or consumer spending?
Statement: “The government is coming off those four rare years when it ran a surplus, and the economy is sluggish now . . . chronic deficit spending also makes it that much harder to grow the economy . . .”
Fact: By now you should have learned that when the federal government runs a surplus the economy always turns sluggish. The
Great Depression
was preceded by six years of federal surplus. It was cured by the huge deficits of World War II.
When we began to run a surplus during the height of the boom, my book accurately predicted the recession. All
depressions
through U.S. history have come during federal surpluses. By contrast, the most recent economic boom followed the massive deficits of the Reagan years. Those who cannot learn from history are doomed to repeat it.
Statement: “Today’s taxpayers are barely aware of how much of their
money
is diverted to debt payments”
Fact: U.S.
U. S. Federal Debt
payments do not “divert”
money.
Debt payments are identical in effect to all other federal spending: They send
money
into the economy. When taxpayers pay for debt payments, this is called a “surplus.” The very definition of “deficit” is government spending that is not supported by taxpayers.
Tax
payments do not pay for government spending. The government can spend without
tax
payments. The sole effect of
tax
payments is to reduce the
U. S. Federal Debt, thereby reducing the amount of money in the economy. If there were no
US national debt, there would be no US money. Statement: “ . . . the reckoning over
Medicare,
Medicaid and
Social Security
(will) be put off for tomorrow’s taxpayers.”
Fact:
Medicare,
Medicaid and
Social Security,
need not be self-funded, any more than the military, NASA or Congress itself need be self-funded. The ability of the federal government to produce
money
-- without
inflation -- is unlimited.
Medicare,
Medicaid and
Social Security
can and should be funded by federal money creation – what you misleadingly term “deficit spending.”
I would be glad to discuss these points with you, anywhere, any time and in any forum, under the condition that you publish the facts.
Sincerely,
February 1, 2005
Letters to the Editor
The Wall Street Journal
4300 Route 1 North
South Brunswick, NJ 08852
It is widely believed that the
Social Security
system eventually will begin to pay out more in benefits than it collects in
taxes.
The Wall Street Journal is among the myriad papers publishing graphs and tables showing
Social Security's
eventual demise.
Social Security is a government agency, as are the military, Congress, the White House, the Supreme Court et al. Like all government agencies, it is supported not by
taxes,
but by federal borrowing.
Why do we never hear that the Pentagon will run out of money, despite the lack of a “Pentagon fund?” Why is there no concern about the solvency of the Supreme Court? The CIA? The FBI? The FAA?
Why, alone among the hundreds of federal agencies, does
Social Security
(and to a lesser extent,
Medicare)
“risk” insolvency?
In fact, they don’t. The predicted insolvency is a myth.
The federal government cannot go bankrupt, though technically it has been insolvent almost since its inception. Nor can any government agency go bankrupt.
Those who believe
taxes
pay for government spending will have difficulty explaining how the
U. S. federal debt
rose 7-fold in the past twenty years, yet we are no closer to bankruptcy today than we were then.
Our $9 trillion
U. S. federal debt
shows that spending has exceeded
taxes
by $9 trillion, and continues to
exceed
taxes
almost every year. The government pays its bills, not with
taxes
but by creating money, and there is no known limit to the amount of
money the federal government can create.
In the 18-year period from 1982 though 2000, the government created $6 trillion additional dollars, while curing the then-existent inflation and stimulating the economy.
What would happen were the government to create another 7-fold increase in
U. S. national debt
during the next 18 years? For one thing, it could eliminate FICA, pay all Social Security benefits, and save us from all those misleading tables
showing how Social Security will run out of money.
It can’t and it won’t. Will someone please learn a bit of economics, before driving the country mad?
Fourth Letter Regarding Federal Government Budget
January 28, 2007
Mr. Clive Crook
EDITORIAL DEPARTMENT
The Atlantic Monthly
600 New Hampshire Ave., NW
Washington, DC.
Dear Mr. Crook;
This is a response to your February article title, “The Rancor Dividend,” in which you say “America’s fiscal policy is clearly unsustainable.” Although you don’t say why (a serious omission), I’d guess you mean that if the
U. S. Federal Debt
keeps growing at its current rate, there will come a time when the United
States will not be able to service it.
Again, you give no specifics. You don’t indicate what the current rate is (another omission), nor do you indicate when the U.S. won’t be able to service it (yet another omission). In short, your article seems to say “Debt is bad and surplus is good, and since everyone knows this, there’s no need to substantiate it, nor even to think about it.”
It’s sad, when a respected magazine uses common knowledge rather than facts, as the basis for its arguments. It’s sadder still when the facts neither are mentioned, nor to my knowledge, ever have been
mentioned, by said respected magazine. And what are these facts? There are several:
1. A growing economy requires a growing supply of money. Because all money is a form of debt, a growing economy requires a growing supply of debt.
2. This debt can come from public or private sources, but the safest source of debt is the federal government
, because it alone, among all borrowers, has the unlimited ability to create money to pay its debt. This unlimited ability to create money means the Federal Government, and indeed all large, sovereign nations, cannot go bankrupt.
3. Debt growth causes GDP growth
. Draw a chart comparing total debt (public and private) growth with GDP growth, and you will find the two lines are parallel. Similarly, debt reduction leads to recessions and depressions. Consider what happens when we do not run a deficit:
Every depression in U.S. history began with a federal government budget surplus:
1817-1821:
U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836:
U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857:
U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893:
U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930:
U. S. Federal Debt reduced 36%. Depression began 1929.
1998-2001: U. S. Federal Debt reduced 9%. Recession began 2001
In 1998-2000
US federal debt
growth slowed to 1.4% annually (President Clinton’s surplus). A recession began in 2001. Then, President Bush cut taxes,
US federal debt
growth rose, the recession ended, and the economy has continued to grow.
The fundamental problem with your article is a premise based on the unsubstantiated (though commonly believed) assumption that growing
US federal debt
is fiscally imprudent. While growing debt may be imprudent for you, for me, for every local government and for every corporation, it is absolutely
necessary for the growth of our economy. It is declining
US federal debt
that is imprudent.
And that means
US national debt (federal debt plus all other debt)
must continue to rise. Debt must rise faster than the
inflation rate, just to maintain the real supply of money in the economy, and it must rise faster still, to affect economic growth. Your future inclusion of facts in your articles, will be appreciated.
Fifth Letter Regarding Federal Government Budget
June 26, 2007
To: The editors of the Chicago Tribune
Subject: Why federal government budget deficits are necessary for economic growth.
Hello, again. It's been a while since I've written to you on this subject: “Clinton, GOP hail budget, tax deal . . . would yield the first balanced budget since 1969," Chicago Tribune, May 3, 1997.
I predicted this much-applauded act would cause a recession if we were lucky and a depression if we were not.
Within two years of the balanced federal government budget, here's what happened: “The NBER's Business Cycle Dating Committee has determined that . . . the expansion that began in March 1991 ended in March 2001 and a recession began. The expansion lasted exactly 10 years, the longest in the NBER's chronology.” National Bureau of Economic Research, November 26, 2001.
We were lucky. We had the recession.
Do you remember this Tribune editorial? “They (tax cuts) should not be presented as a way to prevent an economic slowdown
. . . Reducing the national debt should remain a priority, because it cuts debt service and leaves the nation in better shape to deal with future
unexpected economic challenges. . . The last thing President Bush should do
is jerk the nation back into the dreary era of federal budgets scripted in
red.”
The so-called “dreary era of federal government budgets, scripted in red,” continues today, while the economy grows and grows.
I've sent you many letters, and even sent you my book FREE MONEY, which shows that recessions and depressions follow federal government budget surpluses, and economic growth is associated with deficits. In short, federal budget deficits create the money which is absolutely, positively necessary for the growth of our economy.
Has the time come for the Tribune editorial writers to present the facts to your readers? I would be glad to assist. Just ask.
Sincerely,
Rodger Malcolm Mitchell
Real knowledge begins when common knowledge is questioned.
FREE MONEY: THE ANTIDOTE TO POPULAR WISDOM ABOUT SOCIAL SECURITY, MEDICARE, THE FEDERAL DEFICIT AND DEBT, TAXES AND THE ECONOMY.
To read
solutions
to the federal government deficit problem, click the
FREE MONEY
cover.
What does this logical progression tell you?
*A large
economy needs a larger supply of money than does a small
economy.
*Therefore, a growing economy needs a growing supply of money.
*All money is a form of debt.
*Therefore, a growing economy requires a growing supply of debt.
*U. S. Federal Debt is the safest, most controllable form of debt, because the federal government, alone among borrowers, never will default.
*Thus, there is no
federal debt or deficit problem, and a
balanced federal budget guarantees
recession, and depression.
