Paging Dr. Firestone (Or, The Other Meaning of "Repo")

There has been trouble brewing lately in a little-understood corner of the financial markets, known as the repurchase agreements (or "repo") market.  Since mid-September of this year, when overnight borrowing rates spiked due to a shortage of liquidity (i.e. cash money), the FERAL Reserve has been injecting more new cash into the repo market (a sort of stealth QE) in the hopes of shoring it up.  Though this is really supposed to be a temporary measure.

And the shortage of cash in the repo market was most likely due to too many T-securities (i.e. US Treasury bills, notes, and bonds) on the market at one time, which in turn is a result of this year's high federal "deficit" spending.  (The previously record-high deficits a decade ago during the Great Recession coincided with QE which prevented any liquidity shortage then.)  If not resolved, this could indeed spell trouble far beyond just the repo market as well.

(Note that the repo market, which provides a type of short-term lending, is directly linked to money market funds, and is also directly or indirectly linked to the "plumbing" of the entire financial system as well.)

But literally the only reason this would even be an issue at all is due to the arcane and archaic rules that require federal "deficits" (i.e. spending not matched by tax revenues) to be matched by "borrowing" in the form of T-securities.  And literally all Congress needs to do is repeal those outdated rules and decouple spending, taxes, and "borrowing".  Wait, what?

Earlier this year and last 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.

Or, to quote Rodger Malcolm Mitchell:

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.

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, the entire problem is artificial, both 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.

And while the value of T-securities at any given time will mostly never fall all the way to zero, once they are decoupled from federal "deficit" spending, they will never again be any more than what the market wants, and likely a LOT lower than today, thus no surprise shortages of liquidity in the repo market or any other market that trades such securities.

It's long past time to end the Big Lie already, period.  The very best time to do so was in 1971 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.  And with the recent artificially contrived troubles in the repo market, it is more timely than ever now.

The Right Way To Do Medicare For All

With the debate about single-payer Medicare For All increasing in recent months, it is important to know a crucial detail about it.  While the main thrust of the debate lately has been how to "pay for" it all, and exactly which taxpayers will bear the brunt of it, the truth remains that our Monetarily Sovereign federal government by definition has infinite money, and thus does NOT actually need any taxes to pay for it (or anything else, for that matter), since federal taxes do NOT actually pay for federal spending at all.  That is in fact a Big Lie, and has been false ever since we got off the gold standard in 1971, yet for some reason most Americans seem to not have gotten the memo yet.

Notice how nobody seems too worried about how we are going to "pay for" the military with its truly massive price tag, after all.  That is in itself a kind of tacit admission that the Big Lie is in fact a lie, and that the emperor isn't wearing any clothes.  So no reason for all of this silly handwringing and harrumphing about how to "pay for" Medicare For All.

Yes, Virginia, we actually can have free and comprehensive health care for all Americans, period, with no deductibles, copays, cost-sharing, premiums, or taxes.  In fact, being the richest country in the world, we can aim even that much higher still than all of the other countries that currently have single-payer healthcare.  All we have to do is stop believing the Big Lie that federal taxes pay for federal spending.

So what are we waiting for?

Setting The Record Straight: Austerity Is NOT Good For The Economy

The evidence is overwhelming now.  Austerity is NOT good for the economy, for the same reason that applying leeches to cure anemia is not a good idea.  Money is the lifeblood of any economy, and cutting "deficit" spending (via tax hikes, spending cuts, or both) effectively shrinks the money supply.  And for a Monetarily Sovereign government like our own federal government, there is literally no good reason to do so at all, in good economic times or bad.

Never was, and never will be.  At least not in the post-gold standard world since August 15, 1971.

The infamous Reinhart and Rogoff (2010) outlier study that suggested that a debt/GDP ratio reaching some arbitrary level was inherently bad for the economy was roundly debunked in 2013 by a 28 year old grad student who discovered that the results were due to a coding error in the spreadsheet.  And even when Reinhart and Rogoff claimed that there still was a correlation (albeit much weaker), that was most likely due to reverse causation (i.e. due to countercylical policy responses to recessions) and residual or unmeasured confounding.

As for the Canadian experience that suggests that their austerity in the 1990s and early 2000s was somehow good for the economy has also been debunked.  The inherently harmful effects of austerity were masked by 1) an increase in the money supply, 2) a massive devaluation of the Canadian dollar, 3) a sharp cut in interest rates, 4) lag effects of previously massive deficit spending, and 5) secular global trends during that time period.  And of course, there was also the Alberta oil boom as well that continues to this day.  And they still experienced adverse effects in spite of their economic growth, particularly from the ruthless cuts to their otherwise legendary and stellar healthcare system that led to a "brain drain" and the notoriously longer "wait times" that opponents of single-payer Medicare For All disingenuously luuurve to scare ignorant Americans about.

As for Iceland in the wake of their 2008 financial crisis, they actually did more austerity than any country not named Greece.  But their austerity cuts did not begin in earnest until 2010, and the effects were essentially masked by a sharp devaluation in their currency as well as lag effects from previous deficit spending.  Thus, their massive recovery still occured in spite of budget cuts and tax hikes.

And how about the biggy:  the postwar surpluses in the late 1940 and early 1950s in the USA?  That was a deficit spending cut of a whopping 35% of GDP, yet the economy still grew like gangbusters.  But again, that growth was in spite of, not because of, their massive deficit reduction.  It was masked by massive increases in private-sector debt, lag effects of the previously massive deficits of WWII, and of course the relatively short-lived unique competitive advantage the USA had as the only major developed economy that was not devastated by the war.  And there were some fairly deep deflationary recessions during that time in 1948-1949 and 1954-1955, and before long, the federal government saw the need to run deficits once again to keep the secular economic boom going (which it did).

Thus, these exceptions really only prove the rule.  Not only is the conventional "wisdom" about austerity inaccurate, but it is in fact 100% wrong at least as far as federal finances go.  If anything, so called "deficit" spending is needed to ensure robust economic growth in the long run.  All the more reason to put an end to the Big Lie and finally decouple federal spending from taxes and Treasury securities yesterday.

In fact, since a growing economy requires a growing supply of money, and the fact that GDP = Federal Spending + Nonfederal Spending + Net Exports, one can therefore argue that a deficit/GDP ratio of at least 3% on average is needed to maintain robust economic growth of 3% per year or higher.  And to cure recessions, depressions, or secular stagnation, an even higher ratio is needed, perhaps as high as 7% or 8% even.  No wonder the EU has been persistently in the doldrums:  they actually set a 3% ceiling on their members' deficit/GDP ratios, they all have painfully high and regressive taxes such as VAT, and worse still, those nations who use the Euro are monetarily non-sovereign and cannot create their own money.

And for any country who is still contemplating fiscal austerity in spite of all this: at the very least, the growth of the money supply needs to be maintained by other means, namely the loosening of monetary policy.  Failure to do so will risk a recession or even a depression.  Note that GDP growth (or lack thereof) tends to lag the growth (or lack thereof) of the money supply by four quarters (one year) on average, sometimes even longer if there is a lot of momentum, so any apparent lack of immediate adverse effects should really not lull one into complacency.

Please note that until about 2014, the TSAP once did support austerity as well as a return to the gold standard.  We no longer do, and deeply regret ever giving any sort of credence to these outmoded ideas based on fundamental ignorance of economics.

Just Print The Money

What seemingly intractable problems can be solved with just four simple words?  And which current presidential candidate once actually said those four exact words, "just print the money", or at least the last three of those four magic words?

A)  Bernie Sanders
B)  Elizabeth Warren
C)  Kamala Harris
D)  Joe Biden
E)  Donald Trump

Give up?  Scroll down to find the answer:

The answer, believe it or not, is E, Donald Trump.  Yes, THAT Donald Trump.  Meanwhile all of the other 2020 candidates (sorry Bernie, but even you don't get a pass on this one) are apparently too cowardly to utter those words when asked how they will "pay for" the various high-ticket items on their wish list.

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 [just] 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 so-called "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 attached to its creation (as per Ellen Brown), such a solution would actually work.  Modern Monetary Theory indeed supports such an idea.  Congress can already spend money into existence rather than lend it into existence, all they would have to do now is officially decouple such spending from taxes and Treasury securities.  (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?  In a word, NO.  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).   Besides, inflation and hyperinflation is NOT caused by money creation, but rather by shortages of food and/or energy, leading to reverse causation.  Of course, we would have to bypass the FERAL Reserve to avoid creating more debt in the process, such as #MintTheCoin. Or better yet, 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.

Not like it really matters, since as we already noted, the "debt" is not even really debt at all, but simply deposits in Treasury securities.  And as Mitchell notes, since the federal government has infinite money, it does not actually touch those deposits at all, but simply returns the existing money in those accounts to the account holders by transferring it, while adding newly-created interest dollars to whatever amount is there.  Thus, to "pay off" / extinguish the debt completely, the only new money that needs to be created is the interest, and that new money will stimulate the economy.  You read that right.

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.

You know, things like Universal Basic Income, Medicare For All, free college, improvements to education, rebuilding our crumbling infrastructure, and stuff like that.  All of which can be readily "paid for" with the stroke of a pen and the click of a computer key.   No taxes or borrowing required.  And if the "inflation dragon" ever does happen rear its ugly head again, simply raising interest rates will quash it, as will the practice of draining excess bank reserves and "sterilizing" cash inflows at the FERAL Reserve (which again, really should be nationalized to to become truly FEDERAL) when the newly-created dollars pass through many hands and then the banks and make an inevitable pit stop there.  Problem solved.  And any inflation that is driven by food and energy shortages can be resolved by simply redirecting federal spending to incentivize the producers of such to produce more, by buying such products at a premium and selling (or giving them away) at a loss.  Hey, it's infinite money, remember?

So what are we waiting for?

When Will The Trump Bubble Burst?

With impeachment now a foregone conclusion, the trade war still ongoing and damaging the economy, and Trump generally making a mess of things, people are wondering, when will the stock market bubble finally burst?  Like a dog on a leash, it eventually has to snap back to reality sometime.  All the corporate stock buybacks in the world or FERAL Reserve machinations will not be able to postpone it forever.  As history has shown, what goes up, must come down.  And the bigger they are, the harder they fall.

The massive federal "deficit" spending (which to be honest, is really a non-problem for a Monetarily Sovereign government like ours) from 2018 onwards is of course fueling the economy right now in spite of Trump's general wrecking-ball economic and non-economic policies.  More federal "deficit" spending = more money supply = more growth dollars = more economic growth, as a general rule.  But eventually even that will not be enough to stop the damage being done by Trump's recklessness, especially since so much of that new money creation is going to the where in least needs to go (into the hands of the rich and mega-corporations, Wall Street instead of Main Street.  Especially if the Republicans decide to actually start cutting Social Security, Medicare, Medicaid, and other vital programs while cynically using the "deficit" hysteria as a cudgel.  Yes, they will actually have the chutzpah to try that at some point.

You can really only do so much damage before papering over it no longer works anymore.

Trump's Syria Withdrawal Is Reckless And Treacherous, But...

Trump just announced that he will be abruptly pulling all troops out of northern Syria, while allowing Turkey to invade Syria, essentially throwing our Kurdish allies to the wolves after all they did for us for so many years now.  Predictably, this has earned him strong condemnation from both corporate duopoly parties that are invested in the military-industrial complex, but not only from them.  The truth, however, is a bit 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.  

We at the TSAP thus condemn Trump's withdrawal for the way he is doing it and the timing of it.  But...

That said, sometimes even a stopped clock can be 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 clearly 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 in general 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.

For Iraq and Afghanistan, we need to get out yesterday.  For Syria, it is more nuanced and complicated thanks to Turkey's latest incursion into Syria, and of course what that means for the Kurds (spoiler alert: it isn't good).  Thus, being a bit less hasty with withdrawing the 1000 or so troops in Syria specifically would probably be the least-worst idea right now.  And in all of these countries, a post-withdrawal Marshall Plan would also be a good idea as well to help deal with the aftermath.

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.

UPDATE:  Just 24 hours after he recklessly shunted troops to the side in Syria (he didn't actually remove them yet from Syria, but plans to) to pave the way for the Turks to invade and slaughter the Kurds (which they are apparently doing right now), he ordered 1800 troops to Saudi Arabia, because reasons, perhaps to provoke Iran.  This man is extremely dangerous right now, amd clearly unfit for command even as dogcatcher, let alone President of the United States.

The Donald Is Circling The Drain

It really does NOT look good for the Donald these days.  A formal impeachment inquiry has now been officially launched against him, and it looks like he will be impeached any day now.  This time, it is because Trump allegedly tried to pressure a foreign government, the Ukraine, to give him political dirt on Joe Biden's son.  That, and so many other things in Trump's laundry list of scandals are now coming back to haunt him.  And that is a VERY long list indeed!

With dirty tricks like that, he makes even Tricky Dick Nixon look like an angel by comparison!

Of course, the House can only charge him with such "high crimes and misdemeanors", and it is up to the Senate to actually try him and vote on whether or not he should be removed, which requires a two-thirds majority to do so.  But even if they don't have the votes to remove him before the 2020 election, it is just a little over a year away, and him having this sort of a dark and ominous cloud hanging over him would certainly NOT help him win re-election at all.

And now with his stupid trade war really starting to bite hard and wreak havoc with both the national and global economy, and his latest foray into the asinine War on Vaping, he is pissing off more and more of his erstwhile supporters, making it even more likely that he will be creamed in 2020 either way.

The jig is up, Donald.  Now go do us all a favor and RESIGN, yesterday.  Don't let the door hit you on the way out.  Or as you like to say, "YOU'RE FIRED!"

UPDATE:  It looks like Trump threw Pence under the bus as well.  So we may very well get a two-for-one impeachment special as a result.  Plus, if Trump eventually does a Nixon and pre-emptively resigns in hopes of Pence pardoning him, he will surely be out of luck now.  Hey, that's karma!

How To Prevent--And Cure--The Next (Or Any) Recession Or Depression (Updated)

With a recession likely coming later this year or next year at the latest, it is important to realize the causes so such recessions can be cured or even prevented in the first place.  Enter Rodger Malcolm Mitchell, the guru of Monetary Sovereignty, penned this important and timely article.

He notes that every single recession and virtually every depression in history has been preceded by a cut in federal deficit spending, or worse, a federal surplus.  That is not coincidence, since cutting the federal deficit slows the growth of the money supply, and surpluses actually shrink the money supply, all else being equal.  (Federal deficit spending = spending new dollars into existence.)  A growing economy requires a growing supply of money, and when the money supply fails to keep up with the demand for money for too long, the economy reacts by shrinking.  Thus, barring a truly massive increase in private debt (i.e. more money lent into existence by banks), deficit cuts ultimately result in recessions and surpluses result in depressions or at least really long and deep recessions.  And recessions and depressions can only be cured by increasing the money supply dramatically, typically by increasing federal deficit spending.  That's it.

And this makes perfect sense, since GDP is literally nothing more than a money measure.  To wit, GDP = Federal Spending + Nonfederal Spending + Net Exports.  Kinda hard to grow that without sufficiently growing the money supply as well.

Everything else is basically a sideshow, but that said, sometimes sideshows can be significant too.  Take the current Trump Trade War, for example.  This lose-lose, negative-sum game would have been recessionary by now had it not been for the massive growth in the federal deficit occurring at the same time, and eventually it may still cause the next recession in spite of the deficit.  But if the Republicans decide to cut federal spending because of manufactured deficit hysteria, that will cause a far worse recession or depression, on top of the consequences of the trade war.  And Wall Street recklessness can indeed cause financial crises, which of course can have knock-on effects on Main Street as well, as we have seen numerous times already.  Though even that is most likely due to the fact that stock market crashes--or any other asset price crash--will shrink the money supply, all else being equal.  And that is especially true when there is a "credit crunch" where banks suddenly refuse to lend as much as before, as we have seen in the wake of both the 1929 and 2008 stock market crashes (but not 1987).

What about oil and gasoline prices?  True, 10 out of the past 11 recessions have been preceded by sharp increases in fuel prices.  And that makes sense in a country in which oil is the lifeblood of the economy.  But even this is more nuanced than one may think.  Neither increases in interest rates alone nor increases in fuel prices alone seem to be enough to cause a recession by themselves unless such increases are truly extreme, which is very rare.  But the simultaneous combination of significantly large increases in both (that is, a sharp hike in the Fed Funds Rate by more than 2.00-2.50% AND at least a doubling of crude oil prices within a year or two) appears to be sufficient to cause a recession.  Of course, given how rare it is for recessions to not be preceded by cuts in deficit spending, it is not clear if sufficient deficit spending can be enough to prevent an oil-induced recession while interest rates are also hiked to prevent or cure inflation.  But at the very least, increasing federal deficits will cure such recessions once the inflation dragon is defeated.

The Fed recently cut the Fed Funds Rate by 0.25 percentage points (25 basis points), while noting that there would not likely be any more cuts this year.  And the stock market lurched downward upon that announcement, and lurched down again the following day thanks to Trump's further escalation of the trade war, and yet again following China's predictable retaliation.  Cutting interest rates is basically like pushing on a string, and in any case it may be too late to fully prevent the next recession that is largely induced by Trump's trade war.

Overall, we know what causes virtually all recessions and depressions.  That means we also know how to prevent and cure them as well.  That is, when recession hits, or ideally before it hits, we should increase federal deficit spending, or at least refrain from cutting it.  It's really not rocket science.

Enough Is Enough Already! (Yet Again)

Another day, another horrible mass shooting.  This time, it was in fact TWO mass shootings within 24 hours:  one in El Paso, Texas, followed by another in Dayton, Ohio, and so far at least the first one (if not the second as well) appeared to be fueled by racism, xenophobia, and white nationalism (much like the one at the garlic festival in Gilroy, California just days prior).  These two shootings are among the deadliest 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.  So far there have been 251 mass shootings in 2019 alone.   But the rest of the industrialized world doesn't really seem to have this kind of problem, even in countries where racism, xenophobia, 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. 

And like other cases of domestic terrorism, these were most likely due to a combination of toxic masculinity, easy access to deadly weapons (especially the obligatory semi-automatic AR-15, AK-47, or their knockoffs), and a virulent racism and xenophobia 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 like Trump himself apparently had done recently).  Regardless of the motive, the first two factors are absolutely essential for virtually all mass shootings.   To be clear, these atrocities are, even more disturbingly, NOT isolated incidents or flukes, but the tip of a very large iceberg of hate and violence that appears to be getting worse in recent years.

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.

It's (Still) Mueller Time!

The Russiagate scandal, along with Trump's other myriad scandals, is not going away anytime soon.  And after Mueller testified to Congress, he made it clear that Trump was NOT exonerated, particularly for the high crime of obstruction of justice, though under current Justice Deparment rules a sitting president cannot be indicted.  Thus, Congress needs to impeach him.  And Nancy Pelosi really needs to stop dithering about it and get the ball rolling yesterday.

We Still Condemn Trump's Deplorable Immigration Policy

Trump's deplorable immigration policy is only getting worse it seems.  While the administration has supposedly stopped separating undocumented children from their parents at the border, the children thay have been separated already have still not been reunited.  And as there is currently a crisis at the border with all of the recent asylum seekers, they are increasingly being detained in deplorable conditions without adequate food, water, and sanitation.   We literally have innocent children being treated worse than convicted felons in this country.

And yes, "concentration camps" is the correct term, since the dictionary definition is "the mass detention of civilans without trial".   So it looks like AOC is apparently spot-on.  This is how it started in 1930s Germany, after all--first they had detention camps, then slave-labor camps, and only from 1941 onward did they have extermination (death) camps.

Look, it is clear that a lot of people don't like the term "concentration camps".  Maybe we should call them "torture camps" instead, given that what all too often occurs in them meets the internationally recognized definition of torture, especially when it involves children.  Or perhaps we should call them "Trump Camps" to guarantee that historians forever attach their memory to his name and vile and disgusting legacy, while ironically giving him a perverse ego boost without him even seeing the irony.

Meanwhile, the Trump administration is planning even more ICE raids for the purpose of deporting more and more undocumented immigrants, including those who have been living here for years or decades and have no criminal records.

Clearly, such cruelty for cruelty's sake has NOT been any sort of deterrent, as the number of illegal border crossings has gone from the lowest it has been in years in much of 2017 to the highest it has been in decades by March 2019.  Let that sink in.

That kinda backfired, didn't it?  Meanwhile, the 100% preventable illnesses, injuries, and deaths of both children and adults in these camps just keep piling up every day that goes by.  We can no longer call our country a "shining city on a hill" anymore as long as this continues.  Even the late Ronald Reagan (who coined both that phrase, as well as the MAGA slogan, by the way) must be spinning in his grave right now.

To be sure, the crisis at the border does not have any easy, ready-made solutions at this point, and certainly requires thinking outside the box.  Ideally, all immigrants should come in through the proper channels legally.  But the system is currently broken, and when those proper channels are blocked off by the powers that be, for political reasons, clearly something has to give as a result.  And the train has basically left the station at this point.

Don't look away.  This is how it starts, people.  The banality of evil, and "we were just following orders" and "the law is the law".  So where's the long-overdue outrage?  Remember, the only thing it takes for evil to prosper, is for good people to do nothing.  Seriously.

No War With Iran!

After the recent attacks on oil tankers in the Sea of Oman and Strait of Hormuz by an unknown attacker, Trump and his warmongering cronies are now hastily blaming Iran for these attacks.  But there is plenty of reason to believe they are being, shall we say, "economical with the truth".

The timing alone is suspicious, as Trump has every reason to "wag the dog" to deflect from his ever-mounting scandals including, but not limited to, Russiagate.  Also, the evidence is lacking and what little there is, just doesn't really seem to add up.  And we know that Trump has been hell-bent on provoking Iran ever since pulling out of the nuclear deal last year.  Time will tell, of course, but this really has "false flag" written all over it.

Besides, going to war with Iran would most likely be a disaster of epic proportions, and certainly not something to take lightly.   And even if Iran does somehow turn out to be the culprit, the fact remains that the ships attacked were not even American tankers (they were Norwegian and Japanese), and fully zero Americans were harmed in the process.  In fact, this was apparently a "property damage only" (PDO) incident.  So let's NOT fall for this would-be modern-day Gulf of Tonkin incident and get sucked into yet another decades-long quagmire again.

The best foreign policy can be summed up in four words:  "first, do no harm".  Seriously, this is not a game, and the stakes have never been higher now.

UPDATE:  Just a few days later on June 20, Iran confirmed that they shot down an unmanned American spy drone (again, PDO) that they claim was flying in their airspace, while the Trump administration claims it was over international waters.  Time will tell who is telling the truth, perhaps even both if, for example, it turns out that the drone entered Iranian airspace first but was subsequently shot down over international waters.  Maritime borders can be tricky and nuanced.  Regardless, this is still not a good reason to go to war with Iran.

It is exceeding unlikely that the Orange Cheeto in Chief actually wants a shooting war with Iran.  He himself has said as much.  He would rather just bluff to make himself look tough while distracting from his myriad scandals closing in on him in the late stage of his failed presidency.   And his puppetmaster Putin apparently doesn't want him to go to war with his buddy Iran, either.  But now that Iran apparently called his bluff, and Bolton and Pompeo are still itching for war, the United States is now in a very precarious situation thanks to Trump's stupid bear-poking saber-rattling routines, and a war may still happen inadvertently in spite of him canceling it at the last minute.  He is clearly like a crackhead playing with matches and gasoline, and every day he seems more and more unfit for the office of dogcatcher, let alone for the office of the Presidency.

Take Back The Flag

Just pointing out that today is Flag Day.  But this blog looks no different today because we display the Stars and Stripes every day (albeit inverted ever since Trump took office, as our nation is in distress).

To all the ignorant fools who burn it, remember what it is that you're really burning, and all those that fought and died for it. Those who consider themselves to be on the political left would be better served by "taking back the Flag" and waving it proudly, so it is not perverted into an ultra-right-wing symbol by the fascists. Make it clear that the government policies you oppose are not in the national interest. And let everyone know that you can just as strongly love this country as you fear its government.  In fact, plenty of true patriots often do feel that way, and as Jefferson once said, "dissent is the highest form of patriotism."

The Flag is not Republican, Democrat, liberal, conservative, or belonging to any other faction. It is the American Flag, and it belongs to all of us.  Live free or die!

How To Prevent--And Cure--The Next (Or Any) Recession Or Depression

With a recession likely coming later this year or next year at the latest, it is important to realize the causes so such recessions can be cured or even prevented in the first place.  Enter Rodger Malcolm Mitchell, the guru of Monetary Sovereignty, penned this important and timely article.

He notes that every single recession and virtually every depression in history has been preceded by a cut in federal deficit spending, or worse, a federal surplus.  That is not coincidence, since cutting the federal deficit slows the growth of the money supply, and surpluses actually shrink the money supply, all else being equal.  (Federal deficit spending = spending new dollars into existence.)  A growing economy requires a growing supply of money, and when the money supply fails to keep up with the demand for money for too long, the economy reacts by shrinking.  Thus, barring a truly massive increase in private debt (i.e. more money lent into existence by banks) deficit cuts ultimately result in recessions and surpluses result in depressions or at least really long and deep recessions.  And recessions and depressions can only be cured by increasing the money supply dramatically, typically by increasing federal deficit spending.  That's it.

And this makes perfect sense, since GDP is literally nothing more than a money measure.  To wit, GDP = Federal Spending + Nonfederal Spending + Net Exports.  Kinda hard to grow that without sufficently growing the money supply as well.

Everything else is basically a sideshow, but that said, sometimes sideshows can be significant too.  Take the current Trump Trade War, for example.  This lose-lose, negative-sum game would have been recessionary by now had it not been for the massive growth in the federal deficit occurring at the same time, and eventually it may still cause the next recession in spite of the deficit.  But if the Republicans decide to cut federal spending because of manufactured deficit hysteria, that will cause a far worse recession or depression, on top of the consequences of the trade war.  And Wall Street recklessness can indeed cause financial crises, which of course can have knock-on effects on Main Street as well, as we have seen numerous times already.  Though even that is most likely due to the fact that stock market crashes--or any other asset price crash--will shrink the money supply, all else being equal.  And that is especially true when there is a "credit crunch" where banks suddenly refuse to lend as much as before, as we have seen in the wake of both the 1929 and 2008 stock market crashes (but not 1987).

What about oil and gasoline prices?  True, 10 out of the past 11 recessions have been preceded by sharp increases in fuel prices.  And that makes sense in a country in which oil is the lifeblood of the economy.  But even this is more nuanced than one may think.  Neither increases in interest rates alone nor increases in fuel prices alone seem to be enough to cause a recession by themselves unless such increases are truly extreme, which is very rare.  But the simultaneous combination of significantly large increases in both (that is, a sharp hike in the Fed Funds Rate by more than 2.00-2.50% AND at least a doubling of crude oil prices within a year or two) appears to be sufficient to cause a recession.  Of course, given how rare it is for recessions to not be preceded by cuts in deficit spending, it is not clear if sufficient deficit spending can be enough to prevent an oil-induced recession while interest rates are also hiked to prevent or cure inflation.  But at the very least, increasing federal deficits will cure such recessions once the inflation dragon is defeated.

Overall, we know what causes virtually all recessions and depressions.  That means we also know how to prevent and cure them as well.  That is, when recession hits, or ideally before it hits, we should increase federal deficit spending, or at least refrain from cutting it.  It's really not rocket science.

The Best Way To Honor Our Fallen Heroes

This Memorial Day, and any other day of the year for that matter, the best way to honor our fallen heroes is to stop making more of them, as blogger Dave Hitt famously noted.  We need to bring our troops home and stop sending more and more of our servicemembers to these unnecessary wars of choice.  And of course, our Veterans need to be properly cared for as well, something that, with few exceptions, both corporate duopoly parties in government have consistently failed to do for decades now.

Let us now take a moment of silence for our fallen heroes who have made the ultimate sacrifice for our country.

What The (Latest) Right-Wing Attack On Women's Reproductive Rights Is Really About (Hint: It's NOT The Sanctity Of Life)

In recent weeks, the long-standing right-wing assault on women's reproductive rights has heated up dramatically.  Now that there are enough right-wing reactionary judges on the Supreme Court to seriously endanger Roe v. Wade, several states have passed increasingly restrictive abortion laws.  It did not stop with the TRAP laws, bizarre restrictions, and attempts to defund Planned Parenthood years ago.  And it will NOT stop with the latest "heartbeat" laws in Missouri, Ohio, and Georgia, or with Alabama's near-absolute BAN on abortion either.  And if unchecked, it will NOT stop with overturning Roe v. Wade (and Doe v. Bolton) either, since after that, Griswold v. Connecticut and Eisenstadt v. Baird (the cases that legalized birth control) is ultimately in their sights as well.

Now you see why they were in such a rush to get Brett Kavanaugh confirmed despite the cloud of sexual assault (including attempted rape) allegations hanging over his head.  But why the recent push to ultimately eradicate women's reproductive rights NOW?  Why has it become so feverish, more so than usual?  It is no coincidence that Alabama's draconian abortion ban was signed into law on the same day that it was announced that the birth rate, particularly the total fertility rate (TFR), had apparently dropped to a new low for the USA:  1.728 children per woman. Granted it is not the only reason, but the panic among both the religulous reich as well as the corporate oligarchy is certainly palpable, since capitalism depends on growth for the sake of growth, the ideology of the cancer cell that eventually kills its host, by the way.  It's basically one giant Ponzi scheme, with patriarchy as its main protection racket.

What we are witnessing is a sort of "birth strike" by American women, and even men as well, particularly of the Millennial generation.   Given the outrageous cost of living these days, and especially the cost of raising even one child (let alone two or more), lack of social support for parents and a fraying social safety net in general, stagnant wages, a hollowed-out middle class, and the massive albatross of student loan debt, it actually makes perfect sense.  They are the ones who are actually thinking rationally here.

And contrary to what the naysayers may claim, that is actually a very GOOD thing on balance.  The world is grossly overpopulated and in serious ecological overshoot, and Americans' truly elephantine ecological footprint per capita due to our massive pollution and overconsumption of resources only makes it that much more important to reduce birthrates in the USA relative to the rest of the world.  And such grave ecological concerns greatly dwarf any social and economic concerns about population aging and other consequences of low birthrates.  Especially since with a Monetarily Sovereign government like our own federal government, money is literally no object when it comes to things like Social Security, Medicare, Medicaid, and things like that--the government can literally only go broke if they choose to.  And our addiction to economic growth is also part of the problem in terms of ecological sustainability, so that fear needs to be jettisoned at once as well.

In fact, one recent study finds the ideal TFR in terms of standards of living overall is in fact in the 1.5-2.0 range, basically the same as what the TSAP has long advocated since our founding nearly a decade ago in 2009.  Yes, really.  Take that, birth dearthers!

Of course, it is not all wine and roses either.  The very same New York Times article that we referenced in a previous post does note that both women and men are on average having fewer kids than their own self-reported ideal numbers, primarly due to economic reasons.  Part of the decline in fertility is due to Millennial women having more choices than previous generations, of course, but at the same time those choices are severely constrained by economics.  Our nation has a truly abysmal record of providing paid family leave, high-quality childcare, and social safety net benefits in general compared to most other modern and even semi-modern countries.  And in spite of increasing gender equality in many ways, the modern workplace remains both largely male-dominated and male-defined, and thus stuck in the past in terms of work-life balance.  And while the perennial fears of low birthrates are largely overblown, it is still entirely possible that if they eventually fall to extremely low levels (such as Japan's 1.2-1.4 over the past two decades) and remain that low for decades at a time, we may very well hit a "pothole" on the road to sustainability.  So there is still plenty of room for improvement in that regard, even if current TFRs are right where they should be.  And besides, it is simply the right thing to do regardless of fertility rates and any concerns about such numbers.

If the pro-lifers and pro-natalists really cared, they would instantly advocate not only very generous paid family leave and subsidized (if not free), high-quality childcare, but would also support things like Universal Basic Income (UBI) to eliminate poverty (especially child poverty) while also (partially) compensating the unpaid work of mothers (and some fathers as well).  They would also advocate better quality education from pre-K through post-grad, also free, as opposed to currently trying to kill the entire public education system via death by a thousand cuts.  They would advocate better work-life balance for both women AND men, higher minimum wages, and especially shortening the workweek (what's the point of having kids if you are never going to see them?).  And they would also advocate single-payer Medicare For All.  But do you see them advocating any of those things?  Of course not.  Gee, I wonder why.

So can you really blame young people for effectively going on a (partial) reproductive strike given the world we currently live in?  Of course not.

The best way to sum things up:  Want us Millennials to have (more) kids?  Give us a quarter-million dollars, then we'll talk.  Because that's about how much it costs on average to raise a child from birth through age 18--and that doesn't even include college.  And besides, our Mother Earth will truly thank us in the long run.  Otherwise, silence is golden.  Capisce?

The Mueller Report Is Out--And Even The Redacted Version Is A Lot More Damning Than Trump Wants You To Believe

Well, the much anticipated Mueller Report is out now, and even the redacted version is a LOT more damning than Trump or Barr want anyone to believe.  Seriously.  While it is ostensibly inconclusive about Trump's personal participation in the Russian hacking and interference, the three most important words in the entire 400+ page report are "does NOT exonerate", particularly in relation to the high crime of obstruction of justice. And even the inconclusiveness was largely due 1) important evidence apparently being deleted/destroyed by some of the major players in the Russiagate scandal, and 2) apparent duress, however subtle, to one degree or another, from the Justice Department under Trump.

I mean, this is the very same Donald Trump who unceremoniously fired FBI Director James Comey, then forced Attorney General Jeff Sessions to resign, and even tried to fire Robert Mueller himself--all because he wanted the ever-growing Russiagate investigation to just go away already.  Ipse dixit--he himself said it, after all.  If that is not a textbook example of obstruction of justice, and one that would make even Tricky Dick Nixon himself blush, in fact, I really don't know what is anymore.

And that is just the redacted version!  In other words, Trump is NOT out of the woods yet, if ever.  His fate now rests in the hands of Congress, as well as the Southern District of New York, who is now led by Attorney General Letitia James.  So Donald, if I were you, I would do us all a YUUUGE favor and RESIGN, yesterday.  Then pray that you don't ultimately end up behind bars, because I doubt they would take very kindly to the likes of you in the big house.

Here's A Novel Idea: Just Abolish It Already!

Now that a federal judge recently struck down as unconstitutional the longstanding requirement that only men, and not women, have to register for Selective Service (aka the draft), its legal status is in limbo until the Supreme Court sorts it out.  Some believe that the best solution is to expand it to include women, and that does indeed make sense from a gender equality perspective.  But here is an even better solution:  just abolish it already, period.

The United States has not had an active draft since it was officially abolished in 1973, at the end of the Vietnam War, and for good reason:  it no longer made any sense.  Following that, the requirement to register for Selective Service was subsequently ended in 1975, pushing the Selective Service System into "deep standby", which was essentially complete hibernation.  After all, it makes no sense to have registration if there is no active draft or chance for one in the near future, right?  Such hibernation lasted until 1980, when President Carter reactivated the registration requirement--but not the draft itself--in order to, in his own words, "send a signal to the Russians" since the Cold War looked like it was (briefly) heating up a bit once again.  Fair enough.

But here we are now in 2019, and the largely symbolic registration requirement still remains in effect, and for what, exactly?  It is basically an antiquated relic from a time when given the technology (or lack thereof) of the day, it may have been perhaps a bit more difficult to quickly reactivate a draft even if truly necessary.  But even in 1980, and with relatively puny enforcement, the registration system was back up and running within a matter of months despite being idle for five years.  And today if they really wanted to, even without registration, the government could literally find anyone they wanted to draft from all of the many other databases that already exist.  That method may have a bit more friction to it, of course, but a little bit of friction for something with that much gravitas is really not a bad thing.

And the odds of an active draft ever being reinstated in the foreseeable future are almost nil given today's technology and the increasingly professional nature of the US Armed Forces.  Even if we run very short of troops, we can simply pay them more and we will be thus able to meet our recruiting goals.  And if we still can't meet our goals, we should really question the wisdom of whatever war(s) we happen to be fighting at that time, and exactly whose interests are really being served.  To put it bluntly, a country that needs a draft to defend itself deserves to lose, and in a truly just war, conscription would be unnecessary since volunteers would surely be plentiful.

(Some would note exceptions, of course, but those very rare exceptions only prove the rule.)

Therefore, the TSAP believes that registration requirement be abolished at once and the Selective Service System be put back into the hibernation of "deep standby" just like it was in 1975-1980.  And if they like, they can also update the law currently on the books to include women in the event it is ever reactivated in the future.  But make no mistake, the TSAP has never, and will never, support a draft--unless of course you mean the "consensual conscription" idea that we have floated before in which all wars longer than 90 days are put up to a popular vote, and only "yes" voters (and perhaps followed by abstainers) would get drafted.  That's about as fair as it gets.  Otherwise, we unequivocally say, as they famously said back in the day:

"HELL NO, WE WON'T GO!"

and, as the late Major General Smedley Butler famously said,

"TO HELL WITH WAR!"