Sunday, January 13, 2019

Raise The Floor, And Also Trim The Top

It is well known that excessive inequality is very harmful to both the economy and society at large.  Even before we learned the truth about Monetary Sovereignty (MS) and Modern Monetary Theory (MMT) in 2018, the TSAP has long supported both a Universal Basic Income for all, and has also supported hiking taxes on the rich as well.  And even after learning about MS and MMT, we still support hiking taxes on the ultra-rich, and for good reason.

Some may be scratching their heads.  Why do we even need federal taxes at all, if our Monetarily Sovereign federal government has infinite money?  They clearly don't need taxes to pay their bills.  But taxes also have other useful functions as well:
  • Taxes compel the use of the official currency, thereby giving it value in the first place.  
  • Taxes automatically "claw back" excess liquidity in the money supply due to the "velocity of money", thus to an extent crudely preventing demand-pull inflation before it happens.
  • Taxes can be used for social engineering (think vice taxes and Pigouvian taxes) in ways that are otherwise difficult, impossible, illiberal, illegal, and/or unethical to do by other means.
  • And finally, progressive taxes can be used to "trim the top" when levied on the top 0.1%, thus reducing inequality without leading to runaway inflation.  Rodger Malcolm Mitchell compares this to a "trophic cascade", such as when wolves (i.e. the federal government) keep elk populations (i.e. the oligarchs) from getting out of control and devouring everything in sight.
So what sort of federal taxes would be suitable for this purpose, knowing what we know now?
  • A rich-only, steeply progressive income tax like the kind that prevailed before WWII.  At least the first $100,000 to $500,000 would be exempt, and the new brackets would include marginal rates of 50% above the first $1 million, 70%, above the first $10 million, and perhaps 90% above the first $100 million.  With NO LOOPHOLES this time. 
  • Tax dividends and capital gains the exact same as ordinary income, but index the basis to inflation for capital gains.
  • For the largest corporations, especially those who are "too big to fail", a top tax rate of at least 50%, with NO LOOPHOLES this time.  Tax only retained earnings.  Smaller corporations should not be taxed at all.
  • The Universal Exchange Tax, i.e. a tiny tax of 0.1% or less on all electronic transactions.  It would actually be highly progressive in practice since the rich make a disproportionately high amount and number of transactions compared to the non-rich.  "The more you play, the more you pay."
  • Various vice taxes (alcohol, tobacco, cannabis, etc.) and Pigouvian taxes (pollution and resource depletion).
  • Land value taxes and severance taxes on natural resources such as oil and gas.
  • And, of course, the estate tax needs to be made more progressive as well.
State and local governments, of course, are not Monetarily Sovereign, and thus need to raise revenue to pay their bills.  And they can piggyback on the aforementioned federal taxes and levy their own, especially the Universal Exchange Tax and the land value tax and severance taxes, and thus reduce or eliminate their currently regressive sales and property taxes.  Additionally, federal aid to the states should be increased for precisesly the same reason.

A UBI would indeed abolish absolute poverty, no doubt about that.  And that alone would have numerous individual and social benefits.  But without progressive taxation of the top 1% and 0.1%, it would do nothing to reduce relative poverty, and may paradoxically increase inequality.  And inequality in itself is harmful, over and above the effects of poverty.  Thus, it is not enough to either raise the floor or trim the top, we need to do both.  Yesterday.

Thus, Rep. Alexandria Ocasio-Cortez essentially has the right idea as far as taxes go.  And of course, the oligarchs and their sycophantic lackeys are coming down hard on her, but that just goes to show how effective her ideas are in terms of reducing the Gap between the haves and have-nots, which the oligarchs utterly depend on.  All the more reason to do it.

Saturday, January 12, 2019

Do Deficits Matter? It Depends On One's Definition

The GOP has basically by word, deed, and especially by omission, admitted to being the party of "deficits don't matter, except when we say they do" hypocrisy.   The same party that excoriated Obama for initially high deficits (albeit inherited from Bush), has, under Trump, pushed the largest tax cut in recent history and blown up the deficit to approaching record levels now.  All while claiming that spending on Social Security, Medicare, and Medicaid, among other important programs, must be cut as a result.  You really cannot make this stuff up.

But is there any truth to the fears about deficit spending?  Not really, since the only real issues are political and psychological, which means they are all psychological.  Allow us to explain as follows:

Earlier this year, we at the TSAP have exposed the Big Lie of Economics, a lie so massive and specious that even WE partially fell for prior to 2018.  The Big Lie consists of the following statement and its corollaries:
  • Federal taxes pay for federal spending, and any shortfall in revenues (i.e. "deficit spending") must be made up by the federal government borrowing money to cover the deficit.
  • It must be this way, because otherwise the federal government will run short of dollars, which are finite.
  • The federal government is literally bankrupt and can no longer afford to keep paying for Social Security, Medicare, and Medicaid, let alone anything more ambitious and progressive.
  • Things like Universal Basic Income (UBI), tuition-free public college for all, state-of-the-art infrastructure, a Green New Deal, and single-payer Medicare For All sound like good ideas on paper, but we literally can't get the numbers to add up.  Sorry.  Oh well.
  • If the national debt as a percentage of GDP rises above some arbitrarily high level, the federal government will have no choice but to default.
  • Thus, we will have no choice but to accept an austerity "menu of pain" at this point, with both large tax hikes and/or deep spending cuts. (Austerity for the bottom 99%, that is.)
Do you still believe these statements? Well, guess what?  Each and every one of those specious statements is absolutely FALSE.  Period.  Not even a kernel of truth in there, except for the completely contrived self-fulfilling prophecy that believing such lies leads to, starting with the very first statement on that list, and it goes downhill from there. Federal taxes DO NOT pay for federal spending, because our federal government is Monetarily Sovereign and creates all the dollars they need to spend into existence on an ad hoc basis.  Tax dollars merely disappear into infinity, and the so-called "National Debt" is literally nothing more than a National Savings Account consisting of deposits in Treasury securities.  Yes, really.   And the only reason why we must currently match spending with taxes and/or "borrowing" is due to the arcane and archaic rules left over from when we actually had the gold standard.

As for inflation, there is essentially zero correlation between deficit spending and inflation, and history bears that out.  And even if there were inflation that resulted, that could be easily cured by raising interest rates as needed.  And due to the velocity of money, federal taxation of any kind, at even a relatively low rate, can to an extent automatically "claw back" any excesses in the money supply that may result, which can prevent inflation before it occurs.

So having established that, we must now note that sustaining the Big Lie, a lie that really only benefits the oligarchs and their sycophantic lackeys of both corporate duopoly parties in government, is now physically and metaphysically untenable.  Especially given the many converging real and contrived crises now facing our nation and world.  Make no mistake, we absolutely must end this Big Lie YESTERDAY or else face extremely painful austerity, recession, depression, or worse in the very near future.

Thus, we should all write letters to our Congresscritters based on the following sample letter written by the ever-insightful Dr. Joseph M. Firestone and disseminated by the ever-insightful Rodger Malcolm Mitchell:

Dear __________________
At one time or another you and nearly every one of your fellow Representatives (or Senators) have expressed great concern, even alarm, at the size of the national debt and the often increasing debt-to-GDP ratio.
Many of you have pointed out that if the national debt were broken down into how much each American owed that would add more than $50,000 to our individual debts, even though the national debt is not an obligation of each American citizen, but of our government.
You and your political allies have also pointed out that in view of the size of the national debt it is important for the Government to either reduce spending, raise taxes or both.
You have said doing this is necessary to be “fiscally responsible”, and, at least, to reduce the annual deficit, and the debt-to-GDP ratio.
You have voted for and supported legislation in order to be “fiscally responsible” in this way, and in doing so you have cut many programs of long standing that were delivering great benefits to people, harming them and their families.
Some of you have expressed regret and sorrow about this, while insisting on the need for sacrifice in order to be fiscally responsible.
I, your constituent, have heard this fiscal responsibility story from you for many years now, including your sentiments about how much you hate “the national debt,” what an evil it is, and how much we have to lighten its burden on our grandchildren.
In view of all this from you, it surprised me greatly to learn recently, that the very existence of the national debt is Congress’s fault, including your own and your colleagues. I say this for a very simple reason.
That reason is that you and your colleagues can, in an afternoon, make it standard legislative practice to include the following clause, or an alternative formulation meaning the same thing, in every appropriations bill or continuing resolution for Federal Spending. The clause is:
Now here comes the key part:
“Upon passage of this appropriations bill, the Federal Reserve is directed to fill the Treasury’s spending account at the New York Federal Reserve with the addition to its Reserve Balance necessary to spend the appropriation.
“In addition, the Federal Reserve is directed to fill the Treasury spending account with the additions to the Treasury Reserve balances necessary to repay all outstanding debt instruments including principal and interest as they fall due for the fiscal year of this appropriation.”
In short, the Federal Reserve would pay off T-securities, making the so-called “debt” disappear.
The Fed simply would create U.S. dollars from thin air, just as it always has been authorized to do, and just as it does when it buys federal bonds with its Quantitative Easing (QE) programs.
The first sentence provides the reserves necessary for the Treasury to spend its mandate from Congress without issuing new debt.
And the second provides the reserves necessary for the Treasury to pay down the existing outstanding Treasury debt instruments as they fall due within the time period of the appropriation or continuing resolution bill.
If this or similar language were included in every such bill it would mean that (1) deficit spending by Congress would no longer involve issuing new debt instruments, so the debt would no longer grow and (2) that all outstanding debt instruments would be paid off as they fall due as long as Congress continues to include the new language in all its appropriations bills and continuing resolutions.
So, it seems to me that the sole reason why the national debt exists at all in 2017 is that when President Nixon took the United States off the gold standard in 1971, the Congress did not adjust to the new reality of fiat monetary sovereignty by funding Federal spending using language like the above.
I believe that Congress made a grievous mistake in not changing its funding language immediately after the change to a fiat currency in 1971, and mandating the Federal Reserve to fill Treasury’s spending account with the reserves needed to spend its appropriations.
That mistake has led to the whole situation of debt terrorism we see around us now, and to all the damaging propaganda and horrible legislative outcomes we have suffered at the hands of Republicans and Democrats alike.
You have all been very wrong about the need to sacrifice. There was no need to sacrifice!
You have been all wrong about all of that for 40 years now, and you should all wear sackcloth and ashes and hang your heads for the damage you have done to America.
Since the Administration of President Carter we have been treated to these meaningless harangues about a faux financial problem that is purely one of politics and messaging and not one of public financing at all.
And this faux problem, solely of Congress’s own making has led to much suffering among most of the American people, including decades of less than full employment, the denial of universal health care coverage, deteriorating public spaces and infrastructure, refusal to deal with a life-threatening climate change problem, increasing economic inequality, a declining educational system, decreasing life expectancy, and a host of other problems too numerous to mention.
Well, I have had enough of all this, and especially of the pretense that the Federal Government doesn’t have enough money to buy any goods or services for sale using US currency.
I know that using the words above or words very like them, you and a majority of your colleagues in Congress can appropriate funds for anything you want to spend on.
So, never let me hear from you ever again that we can’t afford this good program or that good program or any other program that will benefit a majority of the people of the United States.
I now know that is a lie. And I insist that you never tell that lie again in public, and that from now on you advocate for and insist on legislative language similar to the above, being included in all appropriation bills and continuing resolutions passed by Congress.
I demand, that as my representative, you vote against any bill that lacks that language.
And I tell you now that if you fail to comply with this demand of mine, I will do all I can to defeat you in the next election and will work for and vote to elect any opponent of yours who is willing to promise that she or he will include such language in all appropriations bills or continuing resolutions.
In closing, I hope I have made myself abundantly clear. I insist that the lies and propaganda advancing faux fiscal responsibility stop immediately.
I insist that the issue of the national debt be taken off the table by including the language suggested above or a similar formulation, followed by gradual pay-off of all outstanding Treasury debt instruments. And I insist that you represent me in this way going forward and for as long as you serve.
I want Job 1 for you to be seeing to it to the best of your ability that this language is in all appropriation bills or continuing resolutions coming out of Congress. I will want other things from you too.
But, as I say, this is Job 1, and if you want my vote in the future you will see to it that it is well done, so that the various lies and fables surrounding Federal spending are at last ended, and so our nation may move forward to true fiscal responsibility, which is Government spending for public purpose.
Sincerely Yours, Your Constituent,
Granted, this letter is probably TL;DR and should perhaps be more concise, but the part in blue is really the heart and soul of the letter.  As Rodger Mitchell further explains:
The above letter is way too long to send as is. Further, I disagree with two of the points it makes: 
  1. I disagree that all “debt” (i.e. T-securities) should be allowed to expire...and not [be] replaced. T-securities serve useful purposes. They help the Fed control interest rates and they provide a safe place to hold large amounts of money.
  2. I disagree that “. . . Treasury Reserve balances (are)necessary to repay all outstanding debt.” Maturing Treasuries are repaid by transferring existing dollars from the T-security accounts back to the checking accounts of the T-security holders.  [Only the interest needs to be created anew.]
That said, the fundamental idea of having the Fed buy enough T-securities to reduce the outstanding “debt” would change the dialog, and ease the drive to cut social benefit spending.
And there you have it.  A bit more nuanced, but the same basic idea.  It would probably also be useful to add that there is a federal statute on the books that codifies the aforementioned arcane and archaic rules left over from when we actually had the gold standard.  That statute is codifed as 2 USC Ch. 20, most notably Section 902. Once one gets through the legalese mumbo-jumbo, one can plainly see that this requirement for "sequestration" upon "falling short" of federal budgetary dollars to pay bills is an outmoded contrivance that no longer serves any useful purpose at all.  Amending or repealing this obsolete section, or even the entire Chapter 20, is not just a good idea, but a matter of grave necessity to save our country at this point.  The same goes for 31 USC section 3101, which is the statute that imposes that other outmoded contrivance, the so-called "debt ceiling" as well.  Repealing both of these obsolete laws will permanently make it so the text in blue in the aforementioned letter will no longer need to be every spending bill as a formality to work around such laws each time going forward after the first one--especially if that text in blue were to be inserted in whatever remains of the repealed/amended 2 USC Ch. 20.

And instead of so-called "debt ceiling", which almost no other nation in the world has, we could simply have a spending limit that would be deemed automatically raised each time a new budget, continuing resolution, or appropriations bill is passed and signed into law, NOT by a separate vote. And that limit will only apply to spending on any new obligations taken on going forward, not on outstanding obligations.  The only functional reason for this at all would be as a "safety valve" or "circuit breaker" that would stop feeding the beast of inflation in the (unlikely) event of truly excessive inflation.

In the meantime, if Congress refuses to act, the executive branch does still have one powerful "ace in the hole":  the trillion-dollar coin.  While a pure "Treasury Warrant" idea is of very questionable legality and would likely be struck down by SCOTUS, under current law the Department of the Treasury has the explicit legal authority to mint platinum coins in literally any denomination.  Thus, they can easily mint one or two (or twenty!) trillion-dollar coins, or even a $100 trillion coin, as an effective workaround for the time being and use the resulting seigniorage to pay any bills and preclude default even if Congress plays "chicken" with the debt ceiling as a cudgel to force a default if they don't get their way.

TL;DR version:  Put simply, deficits really DON'T matter, except politically and psychologically.  And even that can be solved via Overt Congressional Financing (OCF).  As for the argument that economic growth must outpace bond yields, that is also just another version of the Big Lie debunked above, as OCF would essentially render it meaningless.

Again, to quote Dr. Firestone:

The national debt exists today because when the nation went off the gold standard in 1971 and adopted its fiat currency system, Congress did not explicitly repeal its mandate (very appropriate when our currency was convertible to gold on demand, at least in theory) requiring that the Government back all its deficit spending with already existing borrowed dollars whose convertibility was covered by our holdings of Gold. This Congressional mandate to borrow funds by issuing debt instruments when the Government deficit spends caused the national debt to persist until 1996. Congress, then, unintentionally, removed the mandate, leaving in its place the perceived compulsion of an old die-hard financial practice supported by the false ideology of neoliberalism, and a real, but unrecognized, option to abandon the practice by using platinum coin seigniorage. 
Had Congress repealed the practice when President Nixon took the country off the Gold Standard, and had we ceased to issue debt at that time, then the Government would have re-paid all of our 1971 debts as they came due, and both our national debt and our debt-to-GDP ratio would be at 0% today.

It's long past time to end the Big Lie already, period.  The very best time to do so was in 1971-1973 when we functionally got off the gold standard and/or 1975-1976 when all remaining nominal ties between gold and the dollar were formally severed for good.  The second best time is NOW.

Friday, January 4, 2019

Desperate Donald Is Off The Rails

The Donald is even more chaotic than usual lately, as the government shutdown continues with no end in sight because he won't get his way with his stupid wall.  And he is even more off the rails than usual, since he knows his days are numbered with the Mueller investigation closing in on him as we speak.  Indictment and/or impeachment are looking increasingly likely every day that goes by, especially with the new Democratic majority in the House.  So now Trump is doing everything he can to cause as much chaos as possible to "wag the dog" and distract from his myriad scandals, especially Russiagate.

The jig is up, Donald.  Do us all a YUUUGE favor and RESIGN, yesterday.

Sunday, December 30, 2018

What Will Cause The Next Big Crash of 2018-2019? (Updated)

There is a recent article by Matt Taibbi in both Rolling Stone and Common Dreams that predicts a looming economic disaster due to three colliding problems.  And those three problems are as follows:  1) FERAL Reserve monetary tightening, both in terms of raising interest rates as well as the more subtle but significant Quantitative Tightening (QT), 2) Trump's tax cuts depending on unrealistically high economic growth to "pay for themselves", and 3) Trump's tariffs and the resulting trade war.  And the collision of all three together will not end well, according to Taibbi, and he is probably right for the most part.

But even these are mere sideshows compared to the very biggest underlying root cause of the next looming crash, even if one or more of these problems are in fact the proverbial spark that sets off the financial powder keg.   So what is this underlying powder keg, exactly?  Well, it is the mother of all stock market bubbles, artificially inflated by corporations buying back their own stock to manipulate share prices.  And famous economist Ted Bauman predicts that when it finally bursts, any day now in fact, the market will quickly plummet by 70% or more, causing a crisis that makes 2008 and perhaps even 1929 look like a walk in the park by comparison.

Recently, it looks like the stock market crash of 2018-2019 has already begun in earnest, with Trump's off-the-rails Twitter tirades and his chaos-manufacture in Washington including his stupid government shutdown being the primary catalysts.  Also, the FERAL Reserve raised interest rates yet again.  And it looks like the market has quite a way to fall still, after the worst Christmas Eve ever in history and the worst December since 1931.  The proverbial boil has now effectively been lanced, but the pus is still oozing out at a rapid pace, with much more to follow.

So how did we get here in the first place?  The story begins in the 1920s, when corporate stock buybacks were all the rage, and in fact caused the 1929 Wall Street crash.  The Great Depression soon followed.  In 1934, this highly manipulative practice was rightly outlawed, and the ban remained in effect for nearly half a century until the Reagan administration lifted this ban in 1982 as part of Reagan's deregulation platform.  And since 2010, stock buybacks have accelerated dramatically, artificially inflating the stock market numbers and lulling hapless investors into a false sense of security.  And the recent Republican tax cuts have only accelerated this trend even further (since corporations now have even more money with which to buy back their stocks).  That's right--"trickle down" theory is a myth.

And what goes up, must come down, and the bigger they are, the harder they fall.

Don't say you weren't warned.

Saturday, December 22, 2018

Dear Trump and Congressional Republicans: YOU'RE FIRED!

Well, it's official now. Trump's third government shutdown to date has begun.  All because he couldn't get Congress to give him $5 billion for his stupid border wall.   Yes, really.  And while at first he bragged about "owning" the shutdown, he then had the chutzpah to blame it on the Democrats.

Meanwhile, the Trump administration is chaotic, dysfunctional, and losing officials left and right, the stock market is crashing as we speak, and Trump himself is under federal investigation for numerous crimes and will most likely be impeached and/or indicted any day now.  We clearly don't have anything close to a functional government now.   The only silver lining?  This, along with the new Syria controversy, may be the catalyst, the very last straw, for the GOP to finally Dump Trump for good.

Once again, in case we didn't make it clear already:  YOU'RE FIRED!  Now go clean out your desk and GTFO.  Goodbye, and good riddance!  Don't let the door hit you on the way out, Donald!

Friday, December 21, 2018

Why We (Partly) Agree With Trump on Syria (and Afghanistan)

Trump just announced that he will be pulling all troops out of Syria, and reducing troops in Afghanistan as well.  Predictably, this has earned him strong condemnation from both corporate duopoly parties that are invested in the military-industrial complex.  The truth, however, is more nuanced than that, even if Trump doesn't really do nuance.

It is obvious now that Trump is clearly Putin’s puppet and is pulling out of Syria for the very basest of ulterior motives: to appease Putin and Erdogan, to “wag the dog” and distract from his mounting scandals, and of course to nurture his own fat relentless ego. And he is doing it as abruptly and chaotically as possible, without so much as a heads-up beforehand to our allies, especially the Kurds who he seems to have no qualms about selling down the river to Turkey. Very base and cowardly indeed.  

That said, sometimes even a stopped clock is right twice a day. As we have noted time and time again, we need to get the hell out of out of not just Syria, but also the decades-long quagmires of Iraq and Afghanistan, the latter of which is longer than Vietnam at this point. ISIL, though still in existence as a terrorist group (kinda like al-Qaeda and the Taliban, etc.) is nonetheless defeated territorially compared to 2014. Time for other countries/actors to step up to the plate and do whatever remains of the heavy lifting now.   Long past time for that, in fact.

And we also need to stop suborning Saudi Arabia’s unconscionable mass-murdering proxy war in Yemen as well (though Trump seems cool with that for now).

"Endless war" is NOT a sustainable strategy.  In fact, it is not even a strategy at all, but a concept, and an absurd one at that.  The only people who benefit from it are the oligarchs and the military-industrial complex, as the late Maj. Gen. Smedley Butler once famously noted in his 1935 book War Is A Racket.  (Of course, WWII was the exception that proves the rule.)

Whether a war is a “wham, bam, thank you ma’am” kind of war like Libya or a decade(s)-long quagmire like Vietnam, Iraq, or Afghanistan, the end result is essentially ultimately the same sort of disastrous failed state that becomes a magnet for extremists.  And once it becomes Quagmire Accomplished like it is currently, whether we leave now, a year from now, ten years from now, or 100 years from now, the result on the affected nation(s) we invade and subsequently leave is basically the same.  Quick withdrawal is thus the lesser evil on balance.

In fact, Tom Englehardt (Tom Dispatch) and Peter van Buren had the best idea of all--quick withdrawal, after getting ISIL where it really hurts by taking out their OIL.  Such targets--wellheads and oil trucks--are not at all hard to find, and are fairly easy to take out from the air.  And put diplomatic and economic pressure on Turkey and other so-called "allies" to stem the flow of Daesh oil as well.  Because oil is their primary source of funding, and removing that will cause them to quickly collapse of their own weight, and when they are seen as a failure then few would want to join them.  And once we take it out, then GTFO and let Daesh fall on their own sword.  (And apparently, we ended up doing a modest version of exactly that sort of oil campaign, with a fair amount of success, albeit late in the game and minus the withdrawal.)

The TSAP agrees with that idea, and we would also like to add to that.  We have said it before, and we will say it again.   Before withdrawing, we should give every *woman* over there an AK-47 and tell them to take over their country and mow down anyone who stands in their way. Let Allah sort it out. Problem solved. But of course, the mostly-male powers that be would not be too keen on that idea. After all, they wouldn't want women in THIS country getting any ideas, now would they?  (Of course, the TSAP believes that women should indeed take over the world in order to save it, so that wouldn't really be a bad idea, come to think of it.) Honestly, it is certainly a better idea than arming questionable male "rebels" who end up turning traitor.  Seriously, think about it.

Look, we dig why the generals don't want to pull out anytime soon, especially not abruptly, and it's not just about job security either (though that is likely part of it too). No one wants it on their conscience if things go horribly wrong afterwards, and such consequences can in any way be linked (however tangentially and speciously) to such a withdrawal.  But Trump clearly has no conscience, and it was his decision, so we now get to let any potential adverse consequences weigh on his nonexistent conscience.  Thus, the generals should really see this as a golden window of opportunity to finally extricate ourselves from the quagmire of the Middle East wars--and even in a worst case scenario, everyone's hands will be clean but Trump's either way.  So what are we waiting for?

Like the song says, if we go it will be trouble, if we stay it will be double.  And those who fail to learn from history are doomed to repeat it.


JANUARY 2019 UPDATE:  Looks like the other notorious loose cannon of foreign policy, neocon John Bolton, is trying to delay the Syria pullout by "months or years".  So much for that.   In the meantime, is always fun for genuine progressives like us to watch neocons, neoliberals, neoconfederates, and Trump supporters fighting against each other.

Thursday, December 13, 2018

We Wish You A Mueller Christmas, And Impeachment Next Year

As we noted in our previous post, the walls are now closing in on the Donald as we speak. Impeachment and/or indictment are both more likely now than ever before.  There is the infamous Trump-Russia scandal, of course, along with too many other scandals to count, but did you ever think that the porn star hush money scandal (which turned out to be an illegal campaign finance violation, who knew?) would be the one that would most likely finally bring him down?  Even if that itself is somehow not enough, it seems to have been the wedge that finally got his former lawyer and fixer Michael Cohen to flip on him and sing like a canary--and he apparently has a LOT more dirty laundry on him that will soon be aired, most likely having to do with the Russiagate scandal.

And to make matters even worse for Trump, he doesn't just have Mueller to fear either.  He actually has even more to fear from Letitia James, the new Attorney General of New York State.  And he will not be able to pardon anyone for state-level crimes.

No wonder Trump is freaking out so much right now.  He knows his days are numbered.  One domino after another is falling as we speak, and it is only a matter of time before he himself is next.

Get your popcorn, this will get very interesting.  Donald, may you live in very interesting times indeed!

Saturday, December 8, 2018

It's Mueller Time!

The Mueller investigation of the Trump Crime Family is now in its endgame, and it isn't looking good at all for the Donald or any of his cronies.  Michael Cohen and Paul Manafort, along with several others, are now officially convicted (or very soon to be convicted) felons at this point, and it looks like both the Teflon Don (and probably Don Jr.) will soon be next.

Ruh roh.  (Cue the Dragnet music, Maestro!)

There is no longer any reasonable doubt at this point about collusion between the Trump campaign and the Putin regime of Russia, all technicalities aside.  Now it's more like, "what did they know and when did they know it" for each of these individuals involved, and they have already been caught in several lies in that regard.  Both Cohen and Manafort, along with Flynn and others, are apparently singing like canaries and throwing Trump and Jr. under the bus to save their own skins.  It's only a matter of time now.

Let's see:  bribery, money laundering, racketeering/RICO, conspiracy to commit election fraud, and conspiracy to defraud the United States are all at least on the table now as charges related to the Trump-Russia collusion scandal.  And even if somehow none of these charges end up sticking for whatever reason, there is always perjury, obstruction of justice, and witness tampering as well, all of which are not only impeachable offenses, but also punishable by prison as well.  (All of which are easily proven, by the way, and in this case are so glaringly obvious now.)  And you can probably also throw tax fraud and tax evasion in there for at least some of the members of the Trump Crime Family as well.

The jig is basically up now, Donald.  And Pence will most likely be implicated as well, if he hasn't been already.  At the very least, they can likely get Pence for misprision of felony, if not conspiracy to obstruct justice (and aiding and abetting) in the firing of James Comey.  So Trump would be wise to resign right now so Pence can pardon him, but even that would only buy the administration a little more time before they are all "Out Like Flynn" if not behind bars for a very long time.  Hope you like orange, Donald, because for once your clothing and skin will actually match!

It's beginning to look a lot like TREASON, everywhere Trump goes....

Saturday, November 17, 2018

The Big Lie of Economics Is Now Completely Unsustainable At This Point, So Let's End It Now

Earlier this year, we at the TSAP have exposed the Big Lie of Economics, a lie so massive and specious that even WE partially fell for prior to 2018.  The Big Lie consists of the following statement and its corollaries:
  • Federal taxes pay for federal spending, and any shortfall in revenues (i.e. "deficit spending") must be made up by the federal government borrowing money to cover the deficit.
  • It must be this way, because otherwise the federal government will run short of dollars, which are finite.
  • The federal government is literally bankrupt and can no longer afford to keep paying for Social Security, Medicare, and Medicaid, let alone anything more ambitious and progressive.
  • Things like Universal Basic Income (UBI), tuition-free public college for all, state-of-the-art infrastructure, a Green New Deal, and single-payer Medicare For All sound like good ideas on paper, but we literally can't get the numbers to add up.  Sorry.  Oh well.
  • If the national debt as a percentage of GDP rises above some arbitrarily high level, the federal government will have no choice but to default.
  • Thus, we will have no choice but to accept an austerity "menu of pain" at this point, with both large tax hikes and/or deep spending cuts. (Austerity for the bottom 99%, that is.)
Do you still believe these statements? Well, guess what?  Each and every one of those specious statements is absolutely FALSE.  Period.  Not even a kernel of truth in there, except for the completely contrived self-fulfilling prophecy that believing such lies leads to, starting with the very first statement on that list, and it goes downhill from there. Federal taxes DO NOT pay for federal spending, because our federal government is Monetarily Sovereign and creates all the dollars they need to spend into existence on an ad hoc basis.  Tax dollars merely disappear into infinity, and the so-called "National Debt" is literally nothing more than a National Savings Account consisting of deposits in Treasury securities.  Yes, really.   And the only reason why we must currently match spending with taxes and/or "borrowing" is due to the arcane and archaic rules left over from when we actually had the gold standard.

So having established that, we must now note that sustaining the Big Lie, a lie that really only benefits the oligarchs and their sycophantic lackeys of both corporate duopoly parties in government, is now physically and metaphysically untenable.  Especially given the many converging real and contrived crises now facing our nation and world.  Make no mistake, we absolutely must end this Big Lie YESTERDAY or else face extremely painful austerity, recession, depression, or worse in the very near future.

Thus, we should all write letters to our Congresscritters based on the following sample letter written by the ever-insightful Dr. Joseph M. Firestone and disseminated by the ever-insightful Rodger Malcolm Mitchell:

Dear __________________
At one time or another you and nearly every one of your fellow Representatives (or Senators) have expressed great concern, even alarm, at the size of the national debt and the often increasing debt-to-GDP ratio.
Many of you have pointed out that if the national debt were broken down into how much each American owed that would add more than $50,000 to our individual debts, even though the national debt is not an obligation of each American citizen, but of our government.
You and your political allies have also pointed out that in view of the size of the national debt it is important for the Government to either reduce spending, raise taxes or both.
You have said doing this is necessary to be “fiscally responsible”, and, at least, to reduce the annual deficit, and the debt-to-GDP ratio.
You have voted for and supported legislation in order to be “fiscally responsible” in this way, and in doing so you have cut many programs of long standing that were delivering great benefits to people, harming them and their families.
Some of you have expressed regret and sorrow about this, while insisting on the need for sacrifice in order to be fiscally responsible.
I, your constituent, have heard this fiscal responsibility story from you for many years now, including your sentiments about how much you hate “the national debt,” what an evil it is, and how much we have to lighten its burden on our grandchildren.
In view of all this from you, it surprised me greatly to learn recently, that the very existence of the national debt is Congress’s fault, including your own and your colleagues. I say this for a very simple reason.
That reason is that you and your colleagues can, in an afternoon, make it standard legislative practice to include the following clause, or an alternative formulation meaning the same thing, in every appropriations bill or continuing resolution for Federal Spending. The clause is:
Now here comes the key part:
“Upon passage of this appropriations bill, the Federal Reserve is directed to fill the Treasury’s spending account at the New York Federal Reserve with the addition to its Reserve Balance necessary to spend the appropriation.
“In addition, the Federal Reserve is directed to fill the Treasury spending account with the additions to the Treasury Reserve balances necessary to repay all outstanding debt instruments including principal and interest as they fall due for the fiscal year of this appropriation.”
In short, the Federal Reserve would pay off T-securities, making the so-called “debt” disappear.
The Fed simply would create U.S. dollars from thin air, just as it always has been authorized to do, and just as it does when it buys federal bonds with its Quantitative Easing (QE) programs.
The first sentence provides the reserves necessary for the Treasury to spend its mandate from Congress without issuing new debt.
And the second provides the reserves necessary for the Treasury to pay down the existing outstanding Treasury debt instruments as they fall due within the time period of the appropriation or continuing resolution bill.
If this or similar language were included in every such bill it would mean that (1) deficit spending by Congress would no longer involve issuing new debt instruments, so the debt would no longer grow and (2) that all outstanding debt instruments would be paid off as they fall due as long as Congress continues to include the new language in all its appropriations bills and continuing resolutions.
So, it seems to me that the sole reason why the national debt exists at all in 2017 is that when President Nixon took the United States off the gold standard in 1971, the Congress did not adjust to the new reality of fiat monetary sovereignty by funding Federal spending using language like the above.
I believe that Congress made a grievous mistake in not changing its funding language immediately after the change to a fiat currency in 1971, and mandating the Federal Reserve to fill Treasury’s spending account with the reserves needed to spend its appropriations.
That mistake has led to the whole situation of debt terrorism we see around us now, and to all the damaging propaganda and horrible legislative outcomes we have suffered at the hands of Republicans and Democrats alike.
You have all been very wrong about the need to sacrifice. There was no need to sacrifice!
You have been all wrong about all of that for 40 years now, and you should all wear sackcloth and ashes and hang your heads for the damage you have done to America.
Since the Administration of President Carter we have been treated to these meaningless harangues about a faux financial problem that is purely one of politics and messaging and not one of public financing at all.
And this faux problem, solely of Congress’s own making has led to much suffering among most of the American people, including decades of less than full employment, the denial of universal health care coverage, deteriorating public spaces and infrastructure, refusal to deal with a life-threatening climate change problem, increasing economic inequality, a declining educational system, decreasing life expectancy, and a host of other problems too numerous to mention.
Well, I have had enough of all this, and especially of the pretense that the Federal Government doesn’t have enough money to buy any goods or services for sale using US currency.
I know that using the words above or words very like them, you and a majority of your colleagues in Congress can appropriate funds for anything you want to spend on.
So, never let me hear from you ever again that we can’t afford this good program or that good program or any other program that will benefit a majority of the people of the United States.
I now know that is a lie. And I insist that you never tell that lie again in public, and that from now on you advocate for and insist on legislative language similar to the above, being included in all appropriation bills and continuing resolutions passed by Congress.
I demand, that as my representative, you vote against any bill that lacks that language.
And I tell you now that if you fail to comply with this demand of mine, I will do all I can to defeat you in the next election and will work for and vote to elect any opponent of yours who is willing to promise that she or he will include such language in all appropriations bills or continuing resolutions.
In closing, I hope I have made myself abundantly clear. I insist that the lies and propaganda advancing faux fiscal responsibility stop immediately.
I insist that the issue of the national debt be taken off the table by including the language suggested above or a similar formulation, followed by gradual pay-off of all outstanding Treasury debt instruments. And I insist that you represent me in this way going forward and for as long as you serve.
I want Job 1 for you to be seeing to it to the best of your ability that this language is in all appropriation bills or continuing resolutions coming out of Congress. I will want other things from you too.
But, as I say, this is Job 1, and if you want my vote in the future you will see to it that it is well done, so that the various lies and fables surrounding Federal spending are at last ended, and so our nation may move forward to true fiscal responsibility, which is Government spending for public purpose.
Sincerely Yours, Your Constituent,
Granted, this letter is probably TL;DR and should perhaps be more concise, but the part in blue is really the heart and soul of the letter.  As Rodger Mitchell further explains:
The above letter is way too long to send as is. Further, I disagree with two of the points it makes: 
  1. I disagree that all “debt” (i.e. T-securities) should be allowed to expire...and not [be] replaced. T-securities serve useful purposes. They help the Fed control interest rates and they provide a safe place to hold large amounts of money.
  2. I disagree that “. . . Treasury Reserve balances (are)necessary to repay all outstanding debt.” Maturing Treasuries are repaid by transferring existing dollars from the T-security accounts back to the checking accounts of the T-security holders.  [Only the interest needs to be created anew.]
That said, the fundamental idea of having the Fed buy enough T-securities to reduce the outstanding “debt” would change the dialog, and ease the drive to cut social benefit spending.
And there you have it.  A bit more nuanced, but the same basic idea.  It would probably also be useful to add that there is a federal statute on the books that codifies the aforementioned arcane and archaic rules left over from when we actually had the gold standard.  That statute is codifed as 2 USC Ch. 20, most notably Section 902. Once one gets through the legalese mumbo-jumbo, one can plainly see that this requirement for "sequestration" upon "falling short" of federal budgetary dollars to pay bills is an outmoded contrivance that no longer serves any useful purpose at all.  Amending or repealing this obsolete section, or even the entire Chapter 20, is not just a good idea, but a matter of grave necessity to save our country at this point.  The same goes for 31 USC section 3101, which is the statute that imposes that other outmoded contrivance, the so-called "debt ceiling" as well.  Repealing both of these obsolete laws will permanently make it so the text in blue in the aforementioned letter will no longer need to be every spending bill as a formality to work around such laws each time going forward after the first one--especially if that text in blue were to be inserted in whatever remains of the repealed/amended 2 USC Ch. 20.

And instead of so-called "debt ceiling", which almost no other nation in the world has, we could simply have a spending limit that would be deemed automatically raised each time a new budget, continuing resolution, or appropriations bill is passed and signed into law, NOT by a separate vote. And that limit will only apply to spending on any new obligations taken on going forward, not on outstanding obligations.  The only functional reason for this at all would be as a "safety valve" or "circuit breaker" that would stop feeding the beast of inflation in the (unlikely) event of truly excessive inflation.

In the meantime, if Congress refuses to act, the executive branch does still have one powerful "ace in the hole":  the trillion-dollar coin.  While a pure "Treasury Warrant" idea is of very questionable legality and would likely be struck down by SCOTUS, under current law the Department of the Treasury has the explicit legal authority to mint platinum coins in literally any denomination.  Thus, they can easily mint one or two (or twenty!) trillion-dollar coins as a workaround for the time being and use the resulting seigniorage to pay any bills and preclude default even if Congress plays "chicken" with the debt ceiling as a cudgel to force a default if they don't get their way.

It's long past time to end the Big Lie already, period.  The very best time to do so was in 1971-1973 when we functionally got off the gold standard and/or 1975-1976 when all remaining nominal ties between gold and the dollar were formally severed for good.  The second best time is NOW.

Wednesday, November 7, 2018

The Beginning of the End for the Trump Regime

The 2018 midterm election results were a mixed bag overall, and while the Republicans kept control of the Senate and even gained a few seats, the Democrats got the biggest prize of all:  control of the House of Representatives, something they haven't had since 2010.  The House, as you may know, has the power to initiate impeachment against Trump, and launch all sorts of investigations of him.  And Mueller, who has been awfully quiet lately, will be dropping a major bombshell in his investigation of Trump within a matter of days.  You know, the Trump-Russia investigation?

No wonder Trump essentially forced Attorney General Jeff Sessions to resign today, and replaced him with a Trump loyalist, Matthew Whittaker.  He didn't waste any time, and also removed Rod Rosenstein from the investigation as well.  But this will likely backfire, as Nixon's infamous "Saturday Night Massacre" comes to mind.  Spoiler alert:  it didn't end well for him.

No matter how Trump tries to paint it as a victory for himself, the midtern election results overall favored the Democrats, who now have a majority in the House, while the Republicans are barely hanging onto the Senate with a slim majority that can still be filibustered and is no more than a handful of defectors away from failure.  And with a few exceptions, most state and local elections also tended to favor the Democrats this time as well, further making it harder for Trump to advance his vile and regressive agenda on the ground.

Trump's days are numbered.  Will the Democrats have the intestinal fortitude to do what needs to be done to thwart his agenda and eventually remove him or force him to resign in disgrace?  Or will they snatch defeat from the jaws of victory as they have time and again in the past?  We don't know, but given all of the newer Democrats in office, they are more likely to prevail now than any other time in recent history--at least the past eight years.

Sunday, November 4, 2018

Vote Blue, Like Your Life Depends On It!

We cannot emphasize this enough.  This one is for all the marbles, folks.  If we win, we will see the very first glimmer of light at the end of the tunnel that is America's long dark night of the soul.  If we lose, well, it's safe to say that all bets are off at that point.

The TSAP is of course neither Republican nor Democrat, and is clearly not a big fan of either corporate duopoly party in fact.  But we saw what happened in 2016 when too many people made the perfect the enemy of the good:  they ultimately ended up with neither.  And now Trump and the GOP are hell-bent on destroying for fun and profit what is left of everything that's still good about America.  So much damage is already done, but if the anticipated Blue Tsunami washes away the Red Tide that is currently drowning this country, there will at least be some hope of reversing it.  If not, the damage will most likely be irreversible at that point.

Thus, either the GOP suffers irreversible damage and essentially does seppuku, or America does.  The choice is ours, and we only get ONE SHOT this time.  This is literally a once in a lifetime opportunity to take our country back.  Republicans most likely will cheat as usual, but remember that cheating only works in close elections, not in landslides.

So get out there and VOTE BLUE like your life depends on it.  Because in many ways, it really does.

Sunday, October 28, 2018

Enough Is Enough Already! (Yet Again)

Another day, another horrible mass shooting.  This time, it was a truly deplorable and horrific anti-Semitic hate crime in which the genocidal mass murderer shot up a Pittsburgh syangogue because he, in his own words, "just want[ed] to kill Jews."  Yes, really.  This was in fact the deadliest attack on Jews in this country's history, but in context with the numerous other recent mass shootings it otherwise seems disturbingly banal.  Seems that mass shootings in general have become an almost daily occurrence in recent years, and school shootings in particular an almost weekly occurrence--in the USA at least.  But the rest of the industrialized world doesn't really seem to have this kind of problem, even in countries where anti-Semitism and hate groups in general are rife.  Why is that?  Well, there's always....

GUNS.

America is the land of 300 million guns, and combined with a culture that is crazier and more violent than most other "developed" countries, and much more extreme inequality, it is a very lethal combination indeed.  And some states, most notably Florida and Texas, but also Pennsylvania as well, have particularly lax gun laws compared to other states.  Of course, the biggest elephant in the room is the fact that at least 98% of mass shooters are MEN.  Thanks to the patriarchy and the sort of "toxic masculinity" that it creates, combined with the above factors, too many men end up resorting to violence.  Like the Iron Maiden song says, "a briefcase, a lunch, and a man on the edge".  With a gun. I mean, what could possibly go wrong, right?

There should be no doubt at this point that something needs to be done.  However, we do not believe that banning all guns for everyone, or adopting British or European-style gun laws, is the solution, as the genie is already out of the bottle, and there is also that whole Constitution thingy as well.  Thus, the TSAP recommends that the following measures be taken:

  1. Bring back a new and improved 1994 assault-weapons ban yesterday, this time with more teeth.  This time, include all rapid-fire devices and all magazines with more than ten rounds in the ban as well as the previously-banned types of semi-automatic rifles and their knockoffs.
  2. Remove the 20-year ban on gun violence research, yesterday. 
  3. End the gun-show loophole and implement universal background checks, yesterday.
  4. Put a significant excise tax on all bullets/ammo, like Chris Rock recommended. (Seriously)
  5. Treat ammo sales the same as gun sales.  Or better yet, treat bullets like Sudafed:  must show ID, limit on the number that one can buy, the number bought would be recorded, and if you do buy too many, you will be investigated.
  6. Pass a "one gun a month" law at the federal level.  And consider perhaps putting a limit on the number of guns that an individual can own at a given time, except for antiques/relics/curios.
  7. Require reporting of lost or stolen guns.
  8. Regulate firearms like other consumer products in terms of health and safety standards--currently such standards are nonexistent.
  9. Improve enforcement of existing gun laws, which tend not to be enforced very well these days, and improve state reporting of prohibited persons to NICS.  Also, prohibit anyone on the terrorism watch list from buying any guns, period--and consider hate groups to be domestic terrorists as well.
  10. Consider a massive gun buyback program, one that pays significantly more than what the guns are worth on the street.  Voluntary for any still-legal weapons, mandatory for any newly-banned ones. 
  11. And last but not least, improve our woefully-inadequate mental healthcare system.
Of course, to truly solve our gun violence problem would require a fundamental overhaul and transformation of our society, which the TSAP clearly supports.  We need to go from being what Riane Eisler calls a "dominator" society to more of a "partnership" society, as the latter kind is far less violent overall.   But in the meantime, the aforementioned recommendations would go a long way towards taking the dangerous edge off of the problem. 

The motive in this case was very clear:  he hated Jews and wanted to kill them.  And like other cases of domestic terrorism, it was most likely due to a combination of toxic masculinity, easy access to deadly weapons (especially the obligatory semi-automatic AR-15 or its knockoffs), and a virulent anti-Semitism fueled by the so-called "alt-right" (read:  white supremacists, KKK, and neo-Nazis) as well as the Trump administration that nods, winks, and looks the other way (when they aren't stoking the fire themselves).  Regardless of the motive, the first two factors are absolutely essential for virtually all mass shootings, whether in places of worship or otherwise.

And on the heels of another incident of Trump-inspired right-wing domestic terrorism, the pipe bombs sent by an angry and disgruntled Trump supporter to various prominent Democrats, this becomes even more disturbingly NOT an isolated incident or fluke, but the tip of a very large iceberg of virulent hate and violence.

I don't know about you, but my favorite part of the Second Amendment is where it says "well-regulated".  Too bad so many Republican Congresscritters who are bought and paid for by the NRA can't seem to read the first half of the freaking sentence.  Oh, and nevermind that when it was written, guns at that time fired at most one round per minute, not 600+ per minute like so many of today's killing machines.  Not like the gun lobby and their lackeys really do nuance.

Saturday, October 27, 2018

What Will Really Cause The Next Big Crash?

There is a recent article by Matt Taibbi in both Rolling Stone and Common Dreams that predicts a looming economic disaster due to three colliding problems.  And those three problems are as follows:  1) FERAL Reserve monetary tightening, both in terms of raising interest rates as well as the more subtle but significant Quantitative Tightening  (QT), 2) Trump's tax cuts depending on unrealistically high economic growth to "pay for themselves", and 3) Trump's tariffs and the resulting trade war.  And the collision of all three together will not end well, according to Taibbi, and he is probably right for the most part.

But even these are mere sideshows compared to the very biggest underlying root cause of the next looming crash, even if one or more of these problems are in fact the proverbial spark that sets off the financial powder keg.   So what is this underlying powder keg, exactly?  Well, it is the mother of all stock market bubbles, artificially inflated by corporations buying back their own stock to manipulate share prices.  And famous economist Ted Bauman predicts that when it finally bursts, any day now in fact, the market will quickly plummet by 70% or more, causing a crisis that makes 2008 and perhaps even 1929 look like a walk in the park by comparison.

So how did we get here in the first place?  The story begins in the 1920s, when corporate stock buybacks were all the rage, and in fact caused the 1929 Wall Street crash.  The Great Depression soon followed.  In 1934, this highly manipulative practice was rightly outlawed, and the ban remained in effect for nearly half a century until the Reagan administration lifted this ban in 1982 as part of Reagan's deregulation platform.  And since 2010, stock buybacks have accelerated dramatically, artificially inflating the stock market numbers and lulling hapless investors into a false sense of security.  And the recent Republican tax cuts have only accelerated this trend even further (since corporations now have even more money with which to buy back their stocks).

And what goes up, must come down, and the bigger they are, the harder they fall.

Don't say you weren't warned.  On the bright side though, if the crash occurs before the November 6 election, it will essentially guarantee that the predicted Blue Wave will be a Blue Tsunami, washing away the current vile Red Tide of Trump and his sycophantic Republican lackeys, no matter how much GOP cheating occurs (and surely there will be plenty).