I enjoyed the Occupy Pittsburgh protest march on Saturday (10-15-11). I tried to make myself and my sign as conspicuous as possible. In fact, I virtually led the march from the Hill District to Market Square. I was up front, ahead of the banner, next to the guy carrying the American flag. I waved my sign and stuck it right in front of the media cameras. Unfortunately, all the cameras stopped filming when I approached and started filming again a split second after I had passed. Nobody who watched the three local TV stations got to see my sign that read: SAVE SOCIAL SECURITY AND MEDICARE – WWW.RAYUHRIC.COM – THE NATIONAL DEBT IS A SCAM AND A SCANDAL.
The primary message of this web site is this: The federal government has the Constitutional and legal authority to issue debt-free money in any amount that is necessary to “promote the general welfare” of the American people. Promotion of the general welfare is a mandate issued in the first sentence of the United States Constitution to all federal politicians. The issuance of debt-free United States Notes (U. S. Notes or Greenbacks) can be done in accordance with article 1, section 8 paragraph 5 of the Constitution and the Legal Tender Act of 1862. Treasury issued, debt-free money is the only solution for our fiscal, monetary and economic problems.
However, there are other people who have competing plans for monetary reform. Recently, Congressman Dennis Kucinich (D-OH) has been promoting his H.R. 2990 NEED Act. The NEED Act is based on the ideas of Kaoru Yamaguchi of the American Monetary Institute. The H.R. 2990 legislation and the proposals of Professor Yamaguchi are, in my opinion, totally wrong. I tried to contact Congressman Kucinich repeatedly, but he refuses to acknowledge my correspondence.
Ellen Brown, author of the Web of Debt blog, promotes monetary reform based on Treasury issued, debt-free United States Notes. We are in agreement on this point. However, our ideas of how to implement the reform are much different. I would like to state emphatically that the Lincoln/KennedyMonetary Reform proposed on this web site is in no way connected with the ideas of Ellen Brown, Kaoru Yamaguchi, Congressmen Dennis Kucinich or Ron Paul. I want this point clearly on the record to avoid any confusion.
My proposals are based on the U.S. Constitution and existing law. Lincoln/KennedyMonetary Reform can be adopted immediately with no disruption to our economy and no change to our government. Under my reform proposals, we can have a perfectly legal $2 trillion (or more) debt-free stimulus to our economy with little or no inflation, without borrowing from the financial markets and no increase in taxes. Debt-free money can also be used to reduce or even eliminate the national debt. The objection that U.S. Notes will not be accepted internationally is totally without merit. United States Notes are legal tender just as Federal Reserve Notes are legal tender. Both have exactly the same value and they serve the same purpose. In fact, U.S. Notes are currently part of our national money supply. Because of opposition by Congress, $300 million of debt-free United States Notes remain uncirculated.
A quick Internet search of the U.S. Treasury Department web site: U.S. Treasury FAQ: Legal Tender Status of U.S. Currency will confirm the fact that my statements about debt-free United States Notes are true.
I have been trying for more than seven years to get a fair public hearing regarding U.S. Treasury issued debt-free money, without success. I have written to politicians, pundits, academics, educators, think tanks, advocacy organizations, the media and talk show hosts. So far, apparently, nobody is interested. The recent letters that I wrote to Pennsylvania Senators Pat Toomey, and Bob Casey, Pennsylvania Congressmen Tim Murphy, Mike Doyle, Jason Altmire, Mike Kelly and Pennsylvania State Representative Jesse White are reprinted on this web site. All have refused to acknowledge my correspondence. In 2004, I began my effort to convince our politicians to use Treasury issued, debt-free money for government expenditures rather than borrowing and taxing America into oblivion. In 2004, the national debt was $7.4 trillion. Today, as we all know, the national debt has exploded to $15 trillion.
JOBS, INFLATION and the “PAYROLL TAX CUT/HOLIDAY”
On this web site, I have tried to debunk most of the commonly accepted economic policy and monetary theory myths. Remember when we were told that high government debt would cause high interest rates? That myth has finally vaporized. I debunked the myth that “printing money causes inflation” previously on this blog. To save time, I won’t repeat my argument here. However, it is important to remember that printing money does not cause inflation.
Another myth that must be tossed into the dust bin of history is: “The government can’t create jobs. Only the private sector can create jobs.” This statement is so ridiculous I’m amazed that anyone would repeat it with a straight face. Of course the government can create jobs. The government creates thousands of jobs – important jobs, jobs that must be done. Conservatives and Republicans constantly repeat this myth because they want us to believe that we are totally, hopelessly dependent on the private sector for our jobs. Using 1929 as a starting point -- the stock market Crash, the Great Depression, periodic recessions, financial market bubbles and busts, commodity price bubbles and busts, the housing bubble, the credit crisis, the Great Recession, crushing personal and government debt, the working poor, Wall Street fraud and greed resulting in massive foreclosures, outsourcing, competition with overseas sweat shop labor, looted pension plans, record income inequality, Swiss bank accounts, millions without health insurance or a pension, offshore tax shelters, viciously contrived boom and bust “business cycles” and the final crash and burn into the “New Normal” of high unemployment and low wages -- proves that the private sector is a cruel and selfish provider.
Millions of Americans are looking for good jobs that don’t exist. There are lots of bad jobs, but raising a family properly requires an adequate income. Obviously, our economic system must provide enough good jobs in order for American families to be raised properly. With millions of Americans unemployed or underemployed, I say the general welfare of millions of Americans is not being promoted by the private sector. The conservative private sector shills on talk radio and television insist that the unemployed or underemployed take the bad (low wage) jobs and like it. The Occupy Movement is our way of telling the plutocrats in Washington, on Wall Street and in the media that we don’t like it.
Who is to blame for a high unemployment rate? Conservatives and Republicans claim that “only the private sector can create jobs.” Well, then I guess all the blame falls squarely on the private sector, not President Obama.
I’m amazed at how many people really believe the myth that the government can’t create jobs. Of course, the government can create jobs. However, in reality, the private sector and their agents in and out of government are doing everything they can to prevent the government from creating jobs. So, we should blame only the private sector for high unemployment. Don’t blame the government.
On this web site, I proposed the idea that the government should hire all the unemployed and underemployed Americans and pay them with U.S. Treasury issued debt-free money. The goal is full employment. There is plenty of work that can be done and needs to be done. The private sector shouldn’t mind if the government picks up the pieces and fixes the economy that was broken by the private sector.
As a result of 2007/2008 housing market crash (caused by Wall Street) and the resulting Great Recession (caused by Wall Street), federal, state and local governments are suffering from reduced tax revenues. Many government workers are facing layoffs. With a high unemployment rate (in our thoroughly globalized economy), finding a job in the private sector, with good pay and good benefits, has proven to be impossible for millions of Americans. Of course, producing unemployed and underemployed workers desperately searching for good jobs is what recessions are all about. In the words of one conservative economist: “High unemployment [is good because it] produces a pliable workforce.”
Conservatives and Republicans are piously demanding major cuts to government workforces at all levels. They say we just can’t afford “Big Government” (I thought this was a rich country). The fact that many government jobs are necessary and good for society is rarely, if ever, mentioned. Below are my recommendations for a “Jobs Bill” that will reduce unemployment and underemployment, stimulate the economy and increase the gross domestic product (GDP). This jobs bill will cost the taxpayers nothing.
A good example of necessary government is the Securities and Exchange Commission (SEC). One of the reasons for the 2007/2008 financial meltdown/global credit crisis was the failure of the SEC to do its job. Many claim that the SEC was/is understaffed and poorly led. To protect the American people from another 2007/2008 mortgage meltdown/global credit crisis, the government must reform and fully staff this vitally important agency with the best people available. No Wall Street moles allowed.
Another important and necessary government agency is the Commodity Futures Trading Commission (CFTC). This agency’s inaction is also blamed for the 2007/2008 mortgage meltdown/global credit crisis. In order to prevent Wall Street from running amuck again, this vital agency also must be reformed and fully staffed. No Wall Street moles allowed.
The Commerce Department also needs to be reformed and expanded. (Remember, none of this hiring will cost the taxpayers a penny because wages, salaries and benefits would be paid with Treasury issued debt-free money.) The mission of the Commerce Department is to: “promote job creation and improved living standards for all Americans.” For all the globalists working at the Commerce Department: the mission statement says Americans. This important agency can fulfill the mandate of its mission statement by requiring the private sector to act responsibly and in the interest of the American people.
The past performance of this agency leaves much to be desired. Where was the Commerce Department when our home electronics (the most advanced in the world) and textile industries disappeared? What did the head of Commerce think when much of our steel industry was dismantled? When U.S. auto companies were “making cars that people didn’t want to buy,” why didn’t the Commerce Department investigate? If I was in charge, I would have asked the CEOs in Detroit if they were deliberately destroying their industry so it could be de-unionized, outsourced, off shored and handed to our foreign competitors on a silver platter. What was the reaction of the Commerce Department to the Michael Moore movie “Roger and Me” that highlighted the economic devastation of Flint Michigan? That disaster was caused by General Motor’s management’s fifty year, unbroken string of “honest mistakes.” I’m still calling for a government investigation into the real causes of the destruction of American industry. I would love to work on that investigation (I’m available). No globalist Wall Street moles allowed at Commerce either.
I explained in my 8-16-2011 UPDATE on this web site, that downsizing and privatizing NASA is an exercise in stupidity. Why pay a fortune to the private sector and foreign governments for something our government can do for free using Treasury issued debt-free money? Expanding NASA, of course, will also provide many well paying government and private sector jobs.
The Defense Department is another source of important and necessary government jobs. Obviously, Defense Department spending must not be constrained by budget problems that are caused by Wall Street and the private sector. I hear lots of talk about waste, fraud and abuse in the Defense Department. However, as I explained in my campaign platform, waste, fraud and abuse in government is a separate issue from government spending. Conservative politicians want us to think that cutting government spending “across the board” will magically get rid of waste, fraud and abuse. The cure for waste, fraud and abuse is strict, honest government oversight. Things that are good and necessary must be funded, period. Things that are not good and not necessary are not funded. These decisions must not be influenced by campaign contributions.
The Defense Department is an ideal place for veterans to be hired. Our combat veterans are heroes. How much are they being shortchanged by budget constraints caused by the economic downturn (caused by Wall Street)? The Veterans Administration must never be underfunded and understaffed. This is a perfect place to employ veterans. Of all the good, sensible uses for Treasury issued debt-free money, veteran’s benefits and well paying jobs for veterans are right at the top of the list.
I hear prominent Democrats bragging about cutting $2 trillion of government spending. I don’t care how much money the politicians cut from the budget. All I want to know is what they cut and why they cut it. If politicians cut good and necessary government jobs because of lack of money; that means our political/economic system doesn’t work. When you consider the debt-free monetary reforms instituted under Presidents Abraham Lincoln and John F. Kennedy (before they were assassinated), the current budget “debate” becomes nothing but mindless gibberish. Politicians take note: we don’t have to go crawling to the banksters begging for money and more debt. Abraham Lincoln and John F. Kennedy proved that fact. Tragically, after they were dead, Congress destroyed everything they had accomplished regarding debt-free money. Thanks to that blunder, the American taxpayer has been thrown into a global school of loan sharks. As I previously explained, under our current, debt-based monetary system, it is impossible to pay off the national debt. When will this fact show up in the budget “debate”? Why is it that the brilliant, and Constitutional, debt-free monetary reforms of Lincoln and Kennedy are virtually nonexistent in the historical record and the public debate?
On the subject of the scrubbed “historical record,” how many people know that in 1933 there was a right wing plot to overthrow President Franklin D. Roosevelt? It was a hideous incident that makes our current, very ugly Wall Street scandal pale in comparison. Treason and corruption were swept under the historical rug. The hero/patriot of the story was General Smedley Butler. I invite everyone (especially conservative talk show hosts and pundits) to do an Internet search of The Business Plot to Overthrow Roosevelt.
In order to achieve full employment and solve the problem of our $15 trillion national debt, I propose a new Greenback Wing for the Democratic Party. This will counter the anti government (Republican light) Blue Dog Coalition. The Greenback Wing would promote the use of Treasury issued debt free money for government spending, economic development and reduction or elimination of the national debt.
Prominent Democrats brag about spending borrowed money and tax dollars to create private sector jobs. (This is known as Keynesian economics.) I would think it is the job of the private sector to create private sector jobs since they have lots of money. Ironically, it seems like the more tax money the Democrats spend to create jobs in the private sector, the more the private sector berates them for tax and spend liberalism. What ingratitude! What would have happened in 2008 if the government and the Federal Reserve had done nothing in the face of a global credit crisis? We would have had an unprecedented global economic disaster. What would happen if the government and the Federal Reserve took all that money back? (The global credit crisis again exposed the fatal flaw in our debt based, fractional reserve banking system.) I recommend that the Democrats fund good government jobs with Treasury issued debt free money. Let the private sector create private sector jobs.
President Franklin D. Roosevelt’s New Deal model of employing laid off workers would work perfectly today. The only difference would be, this time, no tax dollars or borrowing from the private sector would be required. The government-run Naval Aircraft Factory, located at the Philadelphia Navy Yard from 1917 to 1945, would be the model for American manufacturing, independent of the whims, caprice, selfishness and blunders of our globalized private sector. The “American” private sector gave away the store to Global Supply Chain. The time has come to finally put America First and dump globalism. National security is far more important than the Wall Street ideology of free market “creative destruction.”
The thousands of underpaid and abused social workers should be hired by the federal government and paid the good wages and benefits that they deserve. They have the thankless and dangerous job of picking up the human pieces of the society that exists outside of the gated communities and private schools. The private sector whines about our low math and science scores and then they search the third world for cheap mathematicians and scientists. The solution to our low math and science scores is more social workers and early childhood intervention. Neglected, abused, frightened and emotionally abandoned children are rarely, if ever, good at math and science. The problem isn’t the teachers or the schools. The problem is our society. A bad environment, with no intervention, is virtually guaranteed to produce problem children with low math and science scores.
When I was in elementary and high school, there were students who got straight As and students who couldn’t pass a test no matter how hard they tried. The top of the class and the bottom of the class had the same teacher. The conservative smear job of our teachers and public schools is an insult to the intelligence of anybody with an IQ above the level of a plant.
I wonder about the efficacy of private sector charities. An economic downturn always results in reduced funding for charities. If the charity is truly worthwhile, the hit and miss funding of voluntary contributions seems like a bad idea. And skeptics of religious based charities wonder if it is proper to promise a reward in heaven for a cash contribution to a charity that promotes increased church membership.
If a charity is worthwhile and legitimately altruistic, (with no ulterior motive) the work can be done by government social workers. Funding will come from Treasury issued debt free money. Of course, strict, honest oversight will be necessary to prevent waste, fraud and abuse. This would be a source of more well paying government jobs.
Many people rightly complain about our huge, complicated tax code. I’ve done my own taxes for years. I almost enjoy picking out loopholes as I read the tax booklet. Although I know, as a blue collar worker, none of the loopholes will apply to me. The tax booklet is required reading. Unfortunately, it gets more dense and mind numbing every year. Consequently, despite a fairly thorough search, I can never shake the nagging question: did I miss something in the code that applies to me?
This gave me an idea for how to make filing tax returns much less of a chore. Using debt-free money, vastly expand the IRS, and let the IRS figure our taxes, for free. The fully staffed IRS would send taxpayers a detailed breakdown of exactly what parts of the code apply to them and the amount of taxes owed. The taxpayer can then check the IRS’s work in the tax booklet. If the taxpayer agrees with the IRS’s opinion, a copy is made for the individual’s records and the original is signed and sent back to the IRS with a check or the IRS sends a refund. If the taxpayer disagrees with the IRS, the dispute should be easy to resolve because the IRS’s position is clearly stated. This same procedure could apply to all businesses. In addition, fully staffed regulatory agencies could apply this system to government regulation. These measures would remove much the so-called “uncertainty” that the private sector cites as an excuse to “justify” their Capital Strike. (During a capital strike, banks and businesses withdraw capital -- money – from the economy. This lowers economic growth and raises unemployment.)
My proposal would make the IRS much more taxpayer friendly, it would virtually eliminate cheating and it would create lots of well paying government jobs. If individuals or businesses would rather hire expensive tax attorneys, they will have the freedom to do that. And, proactive regulatory agencies would make government regulation much more business friendly, reduce the cost of compliance and make American businesses more competitive. If businesses would rather deal with regulation in house, they would have the freedom to do that.
Years ago, when the IRS was better staffed to help with tax problems, I took my tax problems to them. They had a nice waiting area with room to accommodate everybody with chairs to spare. They actually filled out my return! They explained what I was doing wrong, what part of the code applied to me and they always got me a refund, for free (sort of). I knew the return was done correctly, and I would have no tax problems. Those were the good old days before the Reagan Revolution, limited government and expensive tax accountants.
Thousands or even millions of good jobs can be saved and created, for free, if we follow the Constitution, the law and the example of Presidents Abraham Lincoln, Franklin D. Roosevelt and John F. Kennedy. We can have FULL employment with family supporting compensation if we can just get the private sector out of the way. I can almost hear the conservative talk show shills sneering at the idea of the government helping people: “You liberals want the government to solve all your problems. We don’t want the government picking winners and losers.” I’m not a liberal or a conservative. I’m a populist and I want the government to solve as many problems as possible. That’s a Constitutional mandate: “to promote the general welfare.” What’s the matter with that? As for winners and losers, since the 1950s, the private sector has been picking winners and losers. The list of winners includes Germany, Japan, Korea, China, India, Vietnam and Wall Street. The losers are American workers and America.
I won’t list all the good, important and necessary things that the government does and can do. This will just provoke a time consuming debate with the government haters. (They forget that the government they hate was created and defined by the Constitution that they claim to love.) I make a clear distinction between the institution of government and politicians. There is nothing wrong with our government, government is neutral. If you have bad politicians, you have bad government. If you have good politicians you have good government. The Founding Fathers gave us a great government but, thanks to conservative talk show hosts, conservative pundits and conservative politicians, it’s fashionable to hate the government. Here is a quote from my dictionary for the all those who get paid fat salaries and campaign contributions for slamming the American government: sedition incitement of discontent against [the] government – Syn. See TREASON. Am I defending the American government? Yes, absolutely. I still honor the oath I took when I enlisted in the American military in 1962. And I would like to remind all federal politicians of the oath they took when they assumed their office.
A perfect example of good government was the Full Employment Bill of 1945. This landmark legislation (introduced by Democratic Senator James Murray) could have created a truly just economic system. Tragically, conservatives in the House of Representatives aborted the bill before it could be born. In the spirit of the Full Employment Act of 1945, I have proposed on this web site a plan for full employment. The task is huge. Therefore, the government isn’t too big – it’s too small.
Why do we have high unemployment? Blame the private sector. The Wall Street mortgage disaster threw millions of Americans out of work. After the taxpayers and the Federal Reserve bailed out Wall Street and the private sector (and pumped up the stock markets), despite sitting on trillions of dollars of cash, the private sector imposed a capital strike on the American economy. The purpose of this economic blackmail, apparently, is to make sure economic growth is low enough and unemployment is high enough for the Republicans to use “Obama’s failed policies” as a campaign issue for the 2012 election. The Democratic Party will be discredited and more conservative Republicans (and more conservative Democrats) will be elected at all levels of government. Another election debacle like 2010 may complete the subjugation of the American government to the authority of the global private sector (the global supply chain). Another “benefit” of the capital strike -- for the private sector -- is that it forces the government to cut business/corporate taxes and government regulation in order to revive the economy.
Most economists agree that the current sluggish economy is the result of lack of consumer demand (of course, they ignore the capital strike). I blame the lack of demand on globalization, the New Normal and the capital strike. We can have FULL employment with good wages and benefits, without inflation or raising taxes or borrowing from the credit markets. If the politicians would like to explain why they refuse to follow the example of Presidents Abraham Lincoln, Franklin D. Roosevelt and John F. Kennedy to achieve full employment, they can contact me at PO Box 815, Coraopolis, PA 15108. I will reprint their correspondence on this site with my response. Incidentally, yesterday I checked my post office box and, as usual, there was no response from Senators Pat Toomey and Bob Casey. And there was no response from Congressmen Tim Murphy, Mike Doyle, Jason Altmire, Mike Kelly and Pennsylvania State Representative Jesse White.
But, what about inflation? If the government prints the money to hire all the unemployed and underemployed workers and pays them good wages and benefits, wouldn’t that debase our currency and cause inflation? NO! No, because our money is not a commodity. Dollars are a medium of exchange; their value is regulated, by law (Congress), according the Constitution: article 1, section 8 paragraph 5. When currency speculators set the value of the dollar, that is a violation of the Constitution, and, I would assume, illegal. Therefore, the size of our money supply has no bearing on the value of our currency. Of course, if Congress and the Treasury issued enough debt- free money to wallpaper our walls, that would debase the currency. This is the red herring that is always thrown on the table to justify an inadequate money supply. But there is no reason for Congress to authorize the Treasury to issue more money than the economy actually needs to promote the general welfare of the American people. There are several causes of inflation. But printing money is not one of them.
What are the real causes of inflation? Two income families is a major inflationary factor. More disposable income in a household means the private sector can, and does, jack up prices to gobble up the extra income. A healthy economy is another excuse to raise prices. When people have more money to spend, prices will invariably go up. This is what I call Greed Inflation. Greed inflation is a result of a free market, unregulated economy. Blaming the government’s “printing money” for inflation is economic disinformation. It’s a clever head fake that directs our attention away from the real causes of inflation.
Why did gasoline cost four dollars a gallon in June of 2008? The price peaked because we were nearing the end of the pre crash bubble economy. And the speculators in commodity markets knew that it was their last chance to really gouge the consumers before Wall Street’s Great Recession wrecked the economy. Four dollars a gallon gasoline is a textbook example of greed inflation. (Of course, you will never find the term in any textbook.) We had four dollars per gallon gas before “helicopter Ben” Bernanke had to throw trillions of dollars at the global financial system to prevent a second Great Depression. Where was the hyperinflation that the Gold Bugs and Bond Vigilantes were frantically warning us about? (Another myth debunked.) Of course, a conservative will say the pre crash economy did have more (borrowed) money available for consumers to spend so naturally prices had to go up. This is the “law” of supply and demand, right? Wrong. Prices went up because of greed inflation.
Did the cost of oil production go up? Did the oil field workers get pay raises? Did some Arab Sheik demand more for his oil? The answer to all these questions is – probably not. (When oil was $140 per barrel, a Saudi prince said he would sell oil to anybody with a tanker for $65 a barrel.) So, why was oil $140 a Barrel? Because “The Markets” said it was $140 a barrel.
How did the commodity speculators drive the price of oil from $65 to $140? They did it by flooding the oil market with money. The price of a commodity goes up when speculators buy massive positions in futures or options contracts. There are supposed to be “position limits” to prevent so-called “excessive” speculation. However, when oil rockets from $65 to $140 and then crashes to $60 it would seem to indicate that position limits aren’t getting the job done. My point is that the Federal Reserve “printing money” had nothing to do with the oil price spike. The problem was greed inflation.
The speculators could push the price of oil to $140 a barrel because hot money was pouring into the U.S. housing market from all over the world. This money inflated the housing bubble. Billions (trillions?) of dollars of fictitious “securitization” credit money was injected into the economy by the cash bloated financial markets. The speculators/banks, hedge funds and oil companies knew exactly how to get their hands on that money. The price spike had nothing to do with the Federal Reserve printing money or low interest rates. This is the fundamental lesson we must learn about inflation: the private sector will charge whatever the hapless American consumer will bear. This is greed inflation. When consumers are strapped for cash, prices will go down. Supply and demand is just a fictitious “textbook” excuse.
Another inflationary factor is the hoarding of a commodity. Some people claim that this was the real cause of the oil price spikes in the 1970s. Gasoline rapidly went from 35 cents to $1.35 a gallon. Was there really an oil shortage? Were we really “running out of oil”? People in a position to know say no. Consider this question: Why didn’t the price of gasoline return to thirty five cents a gallon when, in the 1980s, we had an oil glut? The logic of supply and demand pricing would call for the price to have fallen below thirty-five cents a gallon. Instead, the price trend was up and it never stopped rising until it hit four dollars a gallon.
The supposed law of supply and demand is based on the idea that the supply of a commodity is limited and the demand for the commodity determines the price. In reality, The Market’s judgment of these two factors is subjective, arbitrary and self-serving. The level in oil storage tanks dropping from 85% to 75% is no reason to jack up prices. Increased holiday driving is no reason to jack up prices. (In theory, increased consumption should lower prices because increased production lowers unit cost.) Prices can swing wildly even if there is no actual shortage. That’s why many commodity speculators, the banks they work for and hedge funds are very rich despite the fact that their function is supposed to be regulated by position limits. It’s a classic case of pump and dump. Does commodity speculation serve any purpose other than to make speculators, banks and hedge funds rich? I’ve heard the arguments for speculation, and I find them unconvincing. Deadly food riots in poor countries are a good reason to take a close look at the way commodity markets work. If supply remains adequate, should increased demand cause a price increase? Selling more of a product should make the price go down. Should commodities as vital as food and energy be subject to so-called market forces?
Even if supply and demand pricing was true and valid (something I don’t accept), Treasury issued debt-free United States Notes would be exempt from this supposed rule of economics. Why? The supply of United States Notes is unlimited, (unlike Federal Reserve Notes). This fact is the key to restoring prosperity to America. As I said above, if Congress and the Treasury issued enough debt-free money to wallpaper our walls, that would debase the currency. But why would Congress do that? They wouldn’t deliberately destroy the value of the dollar in order to discredit “fiat money,” would they? (I debunked the myth that money printing caused the German hyperinflation of the 1920s in part three of my article “SocialSecurity/Pensions.”) It is true that we have to depend on the intelligence and integrity of our elected officials in order to make my Lincoln/Kennedy Monetary reform proposals work properly. Many people will say this is a major snag in my proposal. However, the politicians can find a detailed explanation of how debt-free United States Notes can solve our fiscal and economic problems in my article “Lincoln/KennedyMonetary Reform”.
Another inflationary factor is the hundreds of millions (billions?) of dollars that the private sector lavishes on conservative think tanks, shadowy industry propaganda groups and operatives, “Astroturf” movements and “dark money” organizations. These costs are added to the price of the products we buy. That causes inflation. Or, the money is taken from the pay checks and benefits of the workers, thus, lowering their standard of living. (The effect on workers is the same as inflation.) A gig at a conservative think tank is a plum job that requires nothing in the way of useful, productive work (the same can be said about Astroturf movements and dark money “bundlers”). I can’t help but wonder, do these conservative think tanks hire scholars or shills? What do I think of the so-called “liberal/progressive” think tanks? Don’t ask.
The “cost of money” is another cause of inflation. The billions of dollars that business pay in interest is added to the price of the things we buy. If I was the head of the Commerce Department, I would ask our corporate executives why they never pay off their long term corporate debt no matter how profitable they are. It seems like every major corporation has a permanent three or four billion dollar long term debt. (It is a little known fact that in the early twentieth century, many businesses were financing their expansion out of profits. The stock market Crash and the Great Depression put a stop to that.) If we followed the Constitution, businesses could borrow United States Notes at low interest rates or interest free from the Treasury or from a reformed Federal Reserve System. We wouldn’t have to worry about a private sector capital strike ruining the economy. Unfortunately, it is highly unlikely that Congress would ever take the corporate debt cash cow away from Wall Street and the Bond Vigilantes. Remember, we pay for the interest when we buy virtually any product or service.
The money businesses spend on advertizing and promotion is inflationary, because it is added to the price of the goods and services we buy. Do we really have to pay celebrities and athletes millions of dollars to endorse a product that they may or may not use or even like? Isn’t a paid endorsement inherently dishonest? I think the Asian sweat shop workers who made the products the millionaire celebrities endorse deserve the money more than these so-called “role-models.” And let’s not forget the American workers who lost their jobs to the Asian sweat shop workers. Anybody who buys a product because a famous person endorsed it is acting irrationally to say the least.
As I explained previously, banks and insurance companies are expensive, redundant private sector bureaucracies, not industries. If President Obama would have done what many of us Democrats working on his campaign hoped he would do, we would have universal health care in the form of Medicare for all. I worked on President Obama’s election campaign, and I wrote to him more than once explaining how we could fund Medicare for all workers with legal tender United States Notes. The Obama campaign ignored me (as did the Kerry Campaign in 2004). My proposals are based on the Constitution; I thought a Constitutional scholar like Barack Obama would be interested. How does this relate to inflation? Besides saving the enormous, redundant administrative costs of the private sector insurance “industry,” consumers would save the millions of dollars that insurance companies lavish on advertizing and promotion. The cost of the massive amount of redundant, mind numbing paperwork generated by the health insurance “industry” would be eliminated by Medicare for all workers. And thousands of oxygen producing, CO2 absorbing trees would live to do their job. These savings would apply to all insurance companies. If the government got into the insurance business (bureaucracy), American consumers could put billions of extra dollars in their pockets. And we would no longer have greedy corporations and businesses and insurance company death panels denying health care to workers, their families and retirees who desperately need it. U.S. Note funded Medicare for all workers would have no spending limits based on cost because there would be no profit motive. Doctors and patients would make healthcare decisions – not insurance companies.
Lavish corporate and business spending on salaries, bonuses, perks, multimillion dollar golden parachutes, corporate/business jets, showpiece office towers, swag passed out to the corporate elite and the beautiful people, huge contributions to “charities,” corporate/business funding of (and controlling) the economics departments of our colleges and universities; all this profligate spending is inflationary. Conservatives will tell us this is all just the cost of doing business. But then they say good wages, healthcare and a pension for the workers will make America uncompetitive. Is this a valid business model or are some businesses, corporations and their shareholders just spendthrift, greedy and selfish?
The unimaginably expensive lifestyles of some of the executives, owners and inheritors of businesses and some celebrities and some athletes are a major inflationary factor: A 2011 Bugatti Veyron Super Sports car will set you back $2.4 million. At auction, a 1957 Ferrari 250 Testa Rossa cost the lucky bidder $12.1 million. The cost of $100 million homes has to come from somewhere. Two hundred million dollar 450 foot yachts are far from the biggest or the most expensive on the market. Besides the initial cost of a $60 million private jet or ship size yacht, you have to factor in the cost of a crew and fuel. The cost of this fantastic extravagance is slapped onto the price of the products and the services that we buy.
The cost of the hundreds of millions (billions?) of dollars that businesses, corporations and shareholders spend on lobbyists, politicians, super PACs and political campaigns is inflationary. Paying dividends to people who contribute nothing to a corporation simply because they own stock is inflationary (what a scam). Buying back stock at a premium is inflationary. I know that the stockholders who bought the initial public offering gave money to the corporation. However, that money could have been borrowed and paid back, ending the transaction. Stockholders are permanent parasites on the backs of corporations. They constantly demand more work for less pay from the workers so stockholders can make a capital gain when the stock price goes up. Stockholders don’t have to actually WORK for their money. Capital gain profits are “passive income.” It’s passive because the shareholders don’t actually WORK for the money. This is the new “American Dream:” make $21 million a year WITHOUT WORKING, like Mitt Romney. Or, have your parents give you $20 million – no WORK required. I thought capitalism was supposed to be efficient. Economists claim they can calculate the productivity of a worker. If you calculated the productivity of someone who lives off their investments or millions of dollars from their parents, the resulting number would be negative infinity!
The huge costs of unnecessary mergers and acquisitions and corporate “turnarounds” are inflationary. The fat fees, costs and debt incurred when a private equity company like Bain Capital “returns a struggling business to profitability,” are inflationary. I know that some of these costs are taken out of the hide of the workers but the rest are inflationary. Does any government agency ever investigate how these “struggling” companies got into trouble? Was it all just a slick and lucrative stock play? Does the “work” that Bain Capital does prove that the old American dream for many American workers is a myth?
I could go on but I think I made my point that all the inflationary factors listed above have nothing to do with the government printing money. Conservatives blame the Federal Reserve’s “money printing and pump priming” for inflation. As I explained above, this is simply not true. In fact, Abraham Lincoln proved that increasing the money supply does not cause inflation. He increased the money supply by 25% with no inflation. Many people get angry at Federal Reserve Chairman Ben Bernanke when he says the rate of inflation is low. But, from his perspective, the rate is low. He is too polite or too constrained to slam the Wall Street speculators and greedy businesses for the inflation. Getting rid of the speculation and imposing price controls on commodities would control much of the greed inflation and show that Chairman Bernanke’s numbers are credible. In 1921, if the German Weimar Republic had suppressed speculation and imposed price, currency and interest rate controls, the hyperinflation would have been stopped in its tracks, regardless of how much money was in circulation. If Weimar had controlled inflation, the Nazis never would have taken over Germany. Weimar’s hands off, free market blunder and the Great Depression gave Hitler credibility in the eyes of the German people. Our politicians can learn an important lesson from the mistakes of the Weimar Republic and Andrew Mellon.
“PAYROLL TAX CUT/HOLIDAY”
After more than seven years of stonewalling my monetary reforms, the Democratic Party has finally pushed me out of the Party organization (I’m still a Democrat, however). Their idiotic “payroll tax cut/holiday” is one blunder too many. For more than seven years I have been telling anybody who will listen that the so-called payroll tax IS NOT A TAX! The FICA/social security deduction is a premium payment to a government administered insurance/pension plan. FICA stands for Federal Insurance Contribution Act. If my memory is correct, the payroll deduction at one time was simply called FICA on the W-2 form. I suspect that some Wall Street mole crawled into the government and dishonestly changed the name of the deduction. Paying taxes is a major sore spot these days. So, calling the FICA deduction a tax makes it seem like an onerous government imposition to some people. The politicians think that calling FICA a tax somehow makes it a tax. It doesn’t. That’s just their phony justification for spending our social security money like a tax. Anybody who calls the social security payroll deduction a tax is either ignorant, stupid or a liar. What if the politicians intercepted your car insurance payment or took money from your bank account or your investment portfolio and spent it? Stealing “trust fund” money is the same thing. I hear economists lament the “low savings rate” of the American people. But they never mention the fact that the $4.6 trillion raided and spent from all the trust funds was the savings of the American people!
From the first day that President Roosevelt proposed the social security program, conservatives and Republicans have tried to destroy it. Evidence of this fact can be found in the historical record. Now, the Democrats have joined the crusade to destroy social security. The so-called “payroll tax cut” is only the latest in a long list of sellouts, but it was the one that caused me to resign from the county Democratic committee.
The so-called payroll tax cut is a Republican idea that raids more money from the so-called social security “trust fund.” As I explained previously on this site, the $2.6 trillion raided from the mythical trust fund has been added to the national debt by the politicians. However, since it was the politicians who spent the $2.6 trillion, it’s THE POLITICIANS who owe the money to the trust fund, not the taxpayers. Maybe we should attach their salaries and confiscate their campaign contributions. They owe us that money.
Like the derivatives salesmen who exacerbated the 2007/2008 financial crisis, the politicians put $2.6 trillion worth of IOUs in the trust fund with no money to back them up. The IOUs are nothing but debt loaded on the backs of us taxpayers. Thanks to the Democrats, you can tack the cost/debt of the so-called payroll tax cut right onto the $2.6 trillion trust fund debt that is part of the $15 trillion national debt. With all the hot air swirling around about how to pay for the payroll tax cut extension, it seems that nobody thought to ask the politicians how the original payroll tax cut was paid for. It wasn’t. The money was borrowed.
I’m amazed at how all the Democrats and their allies in the media stay on message. They always call the FICA deduction a tax and they never mention that the original payroll tax cut was paid for with borrowed money. It was the Republicans who blew the whistle on that. Nevertheless, the Republicans love the so-called payroll tax cut. The Democrats insist that the trust fund has a $2.6 trillion surplus and it’s good until 2035. If this is true, why don’t the politicians just pay for the payroll tax cut with trust fund money? The answer is obvious; there isn’t any trust fund money. The money to pay for the FICA funding shortfall and the payroll tax cut comes from the general revenue fund. Since the general fund is already in the red, the additional money for social security is borrowed and added to the national debt. But the most outrageous and infuriating aspect of the Democrat’s so-called pay roll tax cut is that the national debt is the excuse the conservatives and Republicans use “justify” slashing social security! Is it possible that the Democrats don’t understand how this self-defeating dynamic actually works?
For more than seven years, in numerous letters to politicians and in articles on my web sites, I clearly explained that the $2.6 trillion raided from social security will never be replaced under our current monetary system. (The ongoing dilemma over how to pay for the so-called payroll tax cut extension clearly illustrates this point.) All the proposed “solutions” to the contrived “social security crisis” involve cutting benefits, cutting other parts of the government or raising taxes. This is simply robbing Peter to pay Paul the money that was robbed from Paul. There are only two ways to literally replace the missing $2.6 trillion; force the politicians who spent the money to pay it back or replace the money with United States Notes. Obviously, only the second solution is practicable. Until the money is literally replaced, I consider the money stolen. Using Treasury issued U.S. Notes, we can replace the $4.6 trillion stolen from all the government trust funds and make social security, Medicare, Medicaid, the Pension Benefit Guarantee Corporation and all the trust funds permanently solvent (without raising taxes or borrowing money.)
I would like to remind everybody that it was the private sector that caused the weak economy and the shortfalls in tax revenue and social security contributions. But, despite all the trouble they’ve caused, the private sector is still pushing our government around just as much as they did before they blew up the world economy. The Wall Street shills and stooges in the media, academia and government are happy to give the banksters and the private sector a pass and move on. Meanwhile, The Markets, the politicians, academia and the private sector pundits are calling for “painful austerity” from the American people to fix the debt problems that were caused by the politicians and the private sector. The private sector (with the help of their crony politicians and crony regulators) wrecked the economy. But the private sector’s paid shills in the media; academia and the government try to blame the government and the Federal Reserve for the damage. It’s unfortunate that so many Americans fall for this disinformation head fake.
I would like to make a few more comments about President Obama’s “Jobs Bill.” He wants to use general fund tax money to pay for infrastructure, roads and bridges. Did it occur to anybody to ask how we paid for infrastructure before the Great Recession created the need for a jobs bill? Answer: the gasoline tax. Thanks to the Great Recession, high gas prices, the New Normal and more fuel efficient cars, people are driving less and using less gasoline. As a result, the gas tax revenue is inadequate. Instead of raising taxes or borrowing more money, the politicians should pay for infrastructure, roads and bridges with Treasury issued debt-free United States Notes. They can use the same Constitutional authorization that Abraham Lincoln used to pay for the Civil War. I wonder what Constitutional scholar Barack Obama thinks about this idea?
I read about a proposed commuter railroad from the Pittsburgh suburbs to the city. The project is dead in the water because there is no government infrastructure money. The government infrastructure money can be provided debt-free and tax free if we believe article 1, Section 8, paragraph 5 of the Constitution. The money can be issued under the authority of The Legal Tender Act of 1862.
I hear lots of talk about extending unemployment benefits with tax dollars and borrowed general fund money. I have a better idea: FULL EMPLOYMENT. I already explained how we can do that. So, I won’t repeat my proposal here.
I tried, unsuccessfully, to keep this article brief. There is much more to say but it will have to wait for a future update. If Senator Pat Toomey or any other reputable politician, pundit, academic or economist would like to challenge my analysis, they can contact me at:
PO Box 815,
Coraopolis, PA 15108
I will put their objections and my rebuttals on this web site. Our debate will be public and in the historical record. This is a debate I have been trying to provoke for more than seven years. I’m getting tired of waiting.
I have a message for the Occupy Movement and the Tea Party Movement: DEMAND THAT OUR ELECTED LEADERS ADDRESS THE ISSUE OF DEBT FREE MONEY. The politicians can do this by responding to the open letters on this web site.
Here are some suggestions for signs and chants at future Occupy and Tea Party rallies and protests: DEBT FREE MONEY! DFM! UNITED STATES NOTES! U.S. NOTES! USN! ARTICLE 1, SECTION 8, PARAGRAPH 5! PAY OFF THE NATIONAL DEBT WITH UNITED STATES NOTES! LINCOLN/KENNEDY MONETARY REFORM! LINCOLN AND KENNEDY KNEW WHAT TO DO --- BUT THEY WERE ASSASSINATED! LEGAL TENDER ACT OF 1862! FULL EMPLOYMENT BILL OF 1945! USURY USED TO BE A SIN! THE “PAYROLL TAX” IS NOT A TAX! FICA IS INSURANCE! FEDERAL INSURANCE CONTRIBUTION ACT! STOP STEALING MY “TRUST FUND” MONEY! THE POLITICIANS OWE SOCIAL SECURITY $2.6 TRILLION! THE POLITICIANS OWE ALL THE TRUST FUNDS $4.6 TRILLION! BOOST GDP WITH DFM! BOOST GDP WITH USN! CURRENCY SPECULATION IS UNCONSTITUTIONAL! IS CURRENCY SPECULATION ILLEGAL?!