The Trump "Gaffe" That Wasn't

Back in 2016, then presidential candidate Donald Trump said a lot of outrageous and controversial things and too many gaffes to count.  But one in particular stands out in light of recent posts and current events, namely, the one in which he implied he would default on the national debt if he couldn't negotiate a better deal.  Now that is clearly not something for a politician or candidate to even joke about, let alone actually do.  But it was what he said after he was criticized for it and he backpedaled on it which was actually much more noteworthy:

This is the United States government. First of all, you never have to default because you print the money. I hate to tell you. So there’s never a default.

And that second "gaffe", ladies and gentlemen, was actually NOT a gaffe at all.  Why?  Because it is actually TRUE, believe it or not.  Even a stopped clock is right twice a day, after all.

Wait, what?  You read that correctly.  Modern Monetary Theory (MMT) has actually been arguing this for years now, as has Rodger Malcolm Mitchell and his own theory of Monetary Sovereignty (MS).  That is, a Monetarily Sovereign government like our own federal government and many others (but unlike the euro nations or any US state or local government) has the inherent and unlimited power to create money by fiat.  The only limits such a government has are those it chooses to impose on itself, such as the remaining arcane and archaic rules left over from when we actually had a gold standard before we got off of it in 1971.  The world changed in that year, but our "leaders" have apparently not gotten the memo.

You might want to sit down before you read any further.  Taxes do NOT actually pay for federal spending, rather, the government simply creates the money they spend ad hoc with a few clicks of a computer as they go along.  Nor is there any physical need for them to borrow money, but they do so anyway by issuing Treasury securities (i.e. T-bills, T-notes, and T-bonds) whenever they create new money that is unmatched by taxes in order to match it with borrowing--all because of those arcane and archaic rules that they could remove with a stroke of a pen if they chose to.  That is, IF they actually chose to.

So where do our tax dollars actually go then?  Well, one could argue that those dollars are effectively taken out of the economy and needlessly destroyed.  And yes, some of those dollars are ultimately destroyed in practice if not in theory.  But it is worse than that, for at least at some point before destruction, they first have to make a pit stop at the privately-owned FERAL Reserve, where they do little more than further enrich the bankster oligarchs.  Again, all because of those arcane and archaic rules.

And that big, scary number that we see on the National Debt Clock?  Well, nowadays the national debt is literally just an accounting gimmick.  What it really consists of are deposits in federal Treasury security accounts, not debt in the way that private debt is.  Effectively, it is really a national savings account, and deficit spending is simply when the government puts more money into the economy (via spending) than it takes out (via taxes and fees).  Thus, a deficit for the federal budget is actually a surplus for the rest of the economy, and vice-versa.

Of course, Rodger Mitchell has an even better, more fundamental idea that makes it so the government would never need to borrow a single penny ever again, and it doesn't require raising taxes OR cutting spending.  Not only that, but it would guarantee that Social Security and Medicare, and any other program, would remain fully funded indefinitely as well without the use of FICA taxes (or any other tax for that matter).  The solution, in his exact words:

The best way is to eliminate the federal budget deficit and debt: Ending government borrowing. The government has the unlimited ability to create and spend money without borrowing. The process will be: 

1) Congress will create an account called "Money." 

2) Congress will determine how much money this account contains. The process will be similar to the way Congress now determines the debt ceiling. 

3) Federal agencies will write checks against this account according to budgets decided by Congress. If any federal agency needed additional funds, Congress would decide whether or not to allow this spending, in the same way that Congress votes for additional spending by the military et al. 

This would eliminate concerns about "our grandchildren paying for the federal debt." There would be no federal debt.

And as long as such money were created without any interest or related fees (as per Ellen Brown) such a solution would actually work.  Modern Monetary Theory indeed supports such an idea.  But before we can do that, of course, we must first have an independent Treasury and/or a public national bank in place of the privately-owned FERAL Reserve.  (And since he mentioned the debt ceiling, that is another thing we should really get rid of as well in the meantime, since it does far more harm than good.)

Before that, there actually is a painless (albeit unconventional) method of paying off the existing debt in one fell swoop.  Not just this year's deficit, but ALL of the cumulative $21 trillion of the debt. It's called the Noble Solution (named after its creator, Richard E. Noble) and does not involve any significant tax hikes or spending cuts. So what is it? It's something we never would have advocated just a few years ago:  printing (electronically creating) money out of thin air to pay it off all at once.  After all, FERAL Reserve has been creating money out of thin air for decades now (including that recent whopping $16 trillion secret bailout of the banks, which eventually rose to nearly $30 trillion) so we might as well put this practice to productive use.  Money is really nothing more than an accounting entry nowadays, so let's make the entry and be done with it for good.

But wouldn't that lead to hyperinflation? Not if it is properly done with due diligence.  Noble points out that while creating such money is undoubtedly inflationary, using it to pay off the debt (which is in Treasury bonds and is thus already part of the money supply) would be deflationary in that it would shrink the money supply by an equal amount. Thus, the two effects would cancel each other out, as paper (electronic data) would be exchanged for paper (data). Of course, we would have to bypass the FERAL Reserve to avoid creating more debt in the process, such as #MintTheCoin. Or better yet, abolish or nationalize the FERAL Reserve entirely and return the power of money creation to its rightful owners, our elected representatives in Congress and the Department of the Treasury.  America would then be free and clear for the first time in history since Thomas Jefferson.  And it would cost us NOTHING.

Alternatively, Joseph M. Firestone points out that the very same effect can also be had more gradually, with Congress passing an Act (such as the very next budget or appropriations bill) that removes those arcane and archaic rules entirely, and mandates/guarantees than any new deficits as well as any outstanding Treasury securities (i.e. national debt) be funded / paid for automatically with the very same ad hoc money creation that they already do in practice, but no longer needing to match it with new borrowing or tax revenues.  Thus, the federal government would no longer need to borrow even one penny (i.e. issue any new Treasury securities) unless they truly wanted to for reasons unrelated to the federal budget.  And according to Rodger Mitchell, such bonds do, in fact, have other useful, unrelated functions (i.e. providing a safe haven for investors to park their money, and an effective platform for the government to control both short and long-term interest rates, and thus the demand for dollars).  But the point is they would no longer HAVE to do so just to meet their current and future fiscal obligations, so the national debt would stop increasing and gradually decrease as any existing  Treasury securities mature and/or are redeemed. And thus the 100% contrived political issue (and cudgel) that is the national debt / deficit would quickly become a dead issue, and we can finally focus on other, real priorities for a change.

So what are we waiting for?

Enough Is Enough Already! (Yet Again)

Another day, another horrible mass shooting.  Another week, another horrible school shooting--this time at a Santa Fe, Texas high school by an a 17 year old student armed with a common shotgun and pistol, who killed 8 students and 2 teachers, and injured at least ten others.  This was the deadliest school shootings since the Parkland school shooting on February 14, 2018, and the 22nd school shooting of 2018 to date.  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.  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, 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. 
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. 

While we don't know why this particular mass murderer did what he did, it was most likely due to a combination of toxic masculinity, easy access to deadly weapons, an apparent desire to copycat the infamous Columbine massacre, and some sort of grudge with the school that he shot up.  Regardless of the motive, the first two factors are absolutely essential for virtually all mass shootings, whether in schools or otherwise.

What is unusual about this particular shooting is the lack of any known "red flags" that most school shooters (and mass shooters in general) tend to share, as well as the fact that it was conducted with fairly common weapons (a pistol and shotgun that apparently belonged to his father) instead of the usually obligatory AR-15 or similar weapons of war.  He had no history of violence, and was even a varsity athlete.  He literally had only one known risk factor--access to his dad's guns at home.  And while he may very well be the exception that proves the rule, it also goes to show just how pervasive this epidemic is, to the point where it is no longer even quite as predictable anymore.  And how the sheer number of guns of all kinds in this country clearly doesn't seem to make us any safer either.

And before anyone starts getting on their anti-youth high horse about this, keep in mind that the zero-tolerance school policies put in place in the wake of Columbine, along with the increasingly prison-like atmosphere in schools these days, have done absolutely nothing to stop school shootings from increasing dramatically since then.  Such tragic events went from occurring an average of once or twice a year in the 1990s and early 2000s to nearly once a WEEK this year so far as well as the past few years.  If anything, one can argue that the "powder keg" atmosphere made things worse in the long run (especially in cases like these with no known risk factors aside from access to guns).  And of course, most mass shooters in general are over 21 and the vast, vast majority are over 18.  

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.

UPDATE:  Looks like the killer was a real "Nice Guy"(TM).  Like Elliot Rodger kind of "nice", that is.  So "nice", in fact, that at least the first of his victims was a girl who he had wanted to date but had rejected him.  Such an aggrieved male entitlement mentality is part and parcel of the toxic masculinity that underlies nearly every single mass shooting thus far.

The $21+ TRILLION Question

Although the government shutdown and debt-ceiling brinksmanship has been averted (for now), the $21+ TRILLION question remains:  what are we going to do about the national debt?  Especially now that it is set to skyrocket even further into the stratosphere due to both massive tax cuts (mainly for the rich and mega-corporations) and spending increases, including on our already over-bloated and over-extended military.  It is now mathematically impossible to pay it off at this point.  So what is the solution, then?

Obviously, if we find ourselves in a hole (especially one as deep as this), the very first thing we should do is stop digging.   That is known as the First Law of Holes.  That means no more deficit spending for the foreseeable future, period. But unfortunately, that's a lot easier said than done. Taxes will have to go up and spending will have to go down--dramatically.   And that would do more harm than good at the levels it would need to be done.  There is really no way around that.

However, there actually is a painless (albeit unconventional) method of paying off the debt in one fell swoop.  Not just this year's deficit, but ALL of the cumulative $21 trillion of the debt. It's called the Noble Solution (named after its creator, Richard E. Noble) and does not involve any significant tax hikes or spending cuts. So what is it? It's something we never would have advocated just a few years ago:  printing (electronically creating) money out of thin air to pay it off all at once.  Alas, the genie is out of the bottle now, as the Feral Reserve has been creating money out of thin air for decades (including that recent whopping $16 trillion secret bailout of the banks, which eventually rose to nearly $30 trillion) so we might as well put this practice to productive use.  Money is really nothing more than an accounting entry nowadays, so let's make the entry and be done with it for good.

But wouldn't that lead to hyperinflation? Not if it is properly done with due diligence.  Noble points out that while creating money is undoubtedly inflationary, using it to pay off the debt (which is in Treasury bonds and is thus already part of the money supply) would be deflationary in that it would shrink the money supply by an equal amount. Thus, the two effects would cancel each other out, as paper (electronic data) would be exchanged for paper (data). Of course, we would have to bypass the Feral Reserve to avoid creating more debt in the process, such as #MintTheCoin. Or better yet, abolish or nationalize the FERAL Reserve entirely and return the power of money creation to its rightful owners, our elected representatives in Congress and the Department of the Treasury.  America would then be free and clear for the first time in history since Thomas Jefferson.

Of course, while doing it once may not be harmful, doing it regularly can be.  To make sure we never have to do this again, we must make sure the debt never, ever, reaches such stratospheric levels again, period.  In addition to nationalizing the Feral Reserve to make it a public national bank that creates interest-free currency, fiscal policy must be tightened after the Noble Solution is implemented and the debt is paid off.  We have already outlined in previous posts what must be done as far as taxes and spending are concerned.  Alternatively, or in addition to the above, there is also the legendary Warren Buffett's clever idea:  make a law that anytime the budget deficit exceeds 3% of GDP, all sitting members of Congress are ineligible for re-election, period.  Problem solved.

Of course, the longer-term drivers of future debt obligations are the programs that make up so-called "entitlement" spending, mainly Social Security, Medicare, and Medicaid.   But even here, there is less than meets the eye.  For Social Security, that can be resolved by 1) scrapping the wage cap on FICA taxes (or raising it to an arbitrarily high level like $1 million or $10 million), 2) indexing initial benefits to prices or median wages instead of average wages, and 3) very gradually raising the full retirement age to 70 for those born after 1980 or so.  In fact, if we did all those things plus a very slight 0.2% hike in the FICA tax, we could even expand Social Security (and perhaps briefly lower the retirement age a bit in the short term) while still keeping it solvent for the foreseeable future.  For Medicare and Medicaid, the only real long-term solution to their burgeoning fiscal woes is a truly universal single-payer healthcare system that can bend the cost curve downward by taking the profit out of healthcare and especially tackling the price-gouging of Big Pharma.  Any other proposed solutions are mere window-dressing at best.

Of course, Rodger Mitchell has an even better, more fundamental idea that makes it so the government would never need to borrow a single penny ever again, and it doesn't require raising taxes OR cutting spending.  Not only that, but it would guarantee that Social Security and Medicare, and any other program, would remain fully funded indefinitely as well without the use of FICA taxes (or any other tax for that matter).  The solution, in his exact words:

The best way is to eliminate the federal budget deficit and debt: Ending government borrowing. The government has the unlimited ability to create and spend money without borrowing. The process will be: 

1) Congress will create an account called "Money." 

2) Congress will determine how much money this account contains. The process will be similar to the way Congress now determines the debt ceiling. 

3) Federal agencies will write checks against this account according to budgets decided by Congress. If any federal agency needed additional funds, Congress would decide whether or not to allow this spending, in the same way that Congress votes for additional spending by the military et al. 

This would eliminate concerns about "our grandchildren paying for the federal debt." There would be no federal debt.

And as long as such money were created without any interest or related fees (as per Ellen Brown) such a solution would actually work.  Modern Monetary Theory indeed supports such an idea.  But before we can do that, of course, we must first have an independent Treasury and/or a public national bank in place of the privately-owned FERAL Reserve.  (And since he mentioned the debt ceiling, that is another thing we should really get rid of as well in the meantime, since it does far more harm than good.)

But the bottom line is that the debt must be defeated, and soon.  We simply cannot afford to continue kicking this can further down the road.  Otherwise we may very well go the way of the Romans.  The greatest tragedy of which being the fact that it was all 100% contrived and therefore 100% avoidable all along.