It’s the Stupidity, Stupid
[Clarification: In my last Update I said: “The [underfunding of social security] problem is our greedy, selfish, deregulated, globalized, financialized, free market, economic system. Over the years, workers weren’t paid enough money to properly fund the social security and Medicare systems.” Please note that I said …economic system. I didn’t mean to imply that every businessman or businesswoman is greedy and selfish. Many small and medium size business owners would love to pay good wages and offer generous benefits. But they can’t afford to do that and stay in business. I personally know what it’s like to work in a struggling small business where hard work, long hours and competence aren’t enough to make the business model work. I also know that the same business model can be very lucrative in a more prosperous area of the country. The key difference is the amount of money in circulation in the local economy. This brings us right back to the issue of Treasury issued, debt-free money. If the banks don’t put enough money into circulation, the government has to do it. And the government can do it without raising taxes, inflation or borrowing money. I’ve been explaining this, and people have been ignoring me, for eight and a half years.]
Actually, I’m not calling everyone who reads this blog Update stupid (despite the attention grabbing title). My objective is to warn people about the consequences and dangers of accepting stupid ideas as revealed wisdom. After more than eight years of stonewalling and silence, it is obvious that I have to try harder to get the attention of the politicians, the pundits, the mainstream media (MSM) and the general public. Calling people stupid will usually get their attention. I am not running again for public office (calling people stupid is not a good way to get votes). As a non candidate, I don’t have to pander to anyone. I have a populist message, that is: economic and social justice based on the U.S. Constitution and existing law.
I hope that everyone who reads this blog will write or call their Congressperson and ask him/her this question: If the U.S. Constitution and existing law give Congress the authority to direct the U.S. Treasury to issue debt-free legal tender currency: United States Notes (U.S. Notes) why do we have a $16.4 trillion national debt? Please click on this link to the U.S. Treasury Department web site: U.S. Treasury - FAQ: Legal Tender Status of Currency. There you will learn that everything I say about debt-free money is true.
On October 14, 1947, U.S. Air Force test pilot Chuck Yeager broke the sound barrier. On the day I get a politician to discuss Treasury issued, debt free legal tender United States Notes (Greenbacks), I will have finally broken through the Stupidity Barrier. There is no better illustration of America’s Stupidity Crisis than the current viral debate about minting trillion dollar platinum coins. This whole discussion hinges on the myth that: “The U.S. Treasury can only ‘coin’ money” and “Only the Federal Reserve can 'print' money.” I’ve debunked this myth so many times I’m starting to feel like an intellectual babysitter. If you click on the link to the U.S. Treasury Department web site above, you will learn that the Legal tender act of 1862 gives Congress the power to authorize the Treasury to issue debt free, legal tender paper currency, called United States Notes, in any amount. The worthless politicians, the shill “pundits” and the sold out “academics” have been stonewalling me and suppressing this truth for eight and a half years.
If you check the historical record, you will learn that United States Notes have been issued by the Treasury twice in the past. Under President Abraham Lincoln, $449,338,902 worth U.S. Notes was issued under the Legal tender act of 1862. Under President John F. Kennedy, $4 billion worth of U.S. Notes was issued in 1963. These were the famous silver certificates authorized by Executive Order 11110. (Don’t believe the disinformation put out about this E.O. I debunked this nonsense elsewhere on this site. The fact is silver certificates were issued.) It is also a historical fact that, after these two great presidents were murdered, Congress reversed their debt free monetary policies. Why did President Kennedy authorize debt-free money with an Executive Order? The explanation is obvious to me. He knew that Congress would never authorize the U.S. Notes under the Legal tender act of 1862. Members of Congress have stonewalled me on this issue for eight and a half years. I know exactly what President Kennedy was up against!
At the Treasury web site above, you will also learn the most stunning and most explosive fact of all. Three hundred million dollars worth of debt-free, legal tender, United States Notes are currently an unissued part of our national money supply. And it is Congress that controls the issuance and the amount! That’s why I say, the national debt is a scam and a scandal.
I won’t waste time explaining again why U.S. Notes are not unconstitutional. I will just say, per the U.S. Constitution, Congress can “coin” money. The word coin can also mean “create.” This is the logical justification for the Legal tender act of 1862. I cover this in detail elsewhere in this site. (All this necessary repetition is why these Updates are so “rambling.”) These are the historical facts that justified the original issuance of President Lincoln’s United States Notes. In 1862, while the Civil War was raging, the United States could no longer afford to back the dollar with gold or silver and the supply of these metals was insufficient to back the dollar anyway. The cost of the war caused a massive increase in government spending. Government debt quadrupled in one year. There was a bank panic. America was out of money and there were no buyers for U.S. government bonds. Without a new source of money, the war would have been lost, and the United States would have ceased to exist. President Lincoln’s brilliant solution to this existential crisis was U.S. Treasury issuance of UNITED STATES NOTES. During the course of the Civil War, in several installments, he induced Congress to increase the national money supply by twenty-five percent with no inflation.
But, in 1863, according to some historians, the U.S. Congress coerced President Lincoln into signing the totally redundant, totally destructive National Bank Act. (If he didn’t sign, they would authorize no more U.S. Notes.) This sellout of America and the American people led ultimately to the Federal Reserve and our $16.4 trillion national debt. President Lincoln let it be known that, after the Civil War was won, he would push to repeal the National Bank Act. Lincoln’s assassination killed any chance of a debt-free monetary system being established in America at that time. The clear similarity to the debt crisis of 1862 and today’s debt crisis is obvious. And the debt-free money solution to the current crisis is also obvious. Are our politicians too stupid to see this or are they too corrupted by campaign contributions and the prospect of six and seven figure “jobs” when they leave the government?
The current “debate” about raising the debt ceiling is scam. The politicians have to know that the dollar is backed by U.S. government debt (Treasury bills, bonds and notes). This fact is explained on the U.S. Treasury web site: U.S. Treasury - FAQ: Legal Tender Status of Currency. As the population expands, the economy will expand and, of course, the money supply must expand with the economy. Thus, as the money supply expands, the national debt must expand as well. This is why the debt ceiling will always be raised and the national debt will never be paid off under our current debt based monetary system. The Republican/conservative debt alarmism is just a ruse to “justify” attacking social security, Medicare, Medicaid and other necessary and beneficial functions of our government. If they really wanted to do something about the national debt, the Republican controlled Congress could authorize the Treasury to issue U.S. Notes, and we could start PAYING OFF the national debt. They could stop borrowing money from the worthless bond vigilante parasites, and they wouldn’t have to waste time arguing about raising the debt ceiling. And, they could stop bleeding the taxpayers to pay the enormous principal and interest of the national debt. But, if they did that, would the campaign contributions from Wall Street and the bond vigilantes dry up? Would there be no more useless six and seven figure “jobs” at Goldman Sachs and other investment banks offered to the politicians? Would there be no more phony “jobs” at worthless conservative “think” tanks offered to politicians? This insidious revolving door also applies to the so-called “bureaucrats” the politicians put on, and in charge of, policy making bodies and government agencies. Two perfect examples of these nests of Wall Street and private sector moles are the Council of Economic Advisors and the Securities and Exchange Commission. No wonder America’s financial situation is a disaster.
Let me repeat again, the national debt is a scam and a scandal!
Today, the talking heads on the cable “news” shows are, as usual, rambling on endlessly about the fiscal cliff, sequestration and the debt ceiling. As I explained previously, the whole “debate” is a scam. One aspect of the scam is the so-called “payroll tax cut.” A liberal “journalist” was talking about how important the payroll tax cut is for American workers. But, he failed to mention that the “tax cut” is robbing money from the so-called social security trust fund. I really hate to keep explaining this over and over, but someone has to counter the disinformation put out by the politicians, academics, pundits and news media.
Let me repeat, again, the FICA (social security) payroll deduction IS NOT A TAX!!! FICA stands for Federal INSURANCE Contribution Act. The deduction is a premium payment to a government administered insurance program. Anybody who calls the FICA deduction a tax is either ignorant, stupid or a liar. I think, years ago, the social security payroll deduction was labeled FICA on the W-2 form. I know it is called FICA on worker’s pay stubs. How convenient for the privatizers and government haters that, thanks to some mole, it now says “social security tax” on the W-2 form. This disinformation/lie is a good illustration of how the Stupidity Barrier works. The FICA deduction is supposed to go into a separate trust fund. But the FICA money instead goes into the general revenue fund and whatever money isn’t paid out in benefits is spent by the politicians. The amount that is spent by politicians becomes the infamous IOUs (intergovernmental debt) and is added to the national debt. The IOUs are government bonds that “earn interest.” But, it is us taxpayers who are liable for the debt and interest! Is this not theft of trust fund money and extortion of the taxpayers? This is the part of the story that is almost never discussed.
To make matters worse, because of the irresponsible, and allegedly, fraudulent actions of Wall Street bankers, people in the real estate business and the financial services “industry,” social security went into the red when the economy crashed after the 2007/2008 mortgage disaster/global credit crisis. This means there is not enough FICA money coming in to pay full social security benefits. Wall Street’s and the private sector’s responsibility for the FICA deficit and America’s current financial crisis is another taboo subject. FICA in the red means the deficit in social security benefit payments will be made up from the government’s general revenue fund. Since the federal government is running a trillion dollar plus deficit, money to make up the shortfall will be borrowed from the global credit markets. This rotten situation gives the conservatives and Republicans just what they want: the opportunity to denounce social security as a “welfare program” that adds to the budget deficit and national debt. The “socialist” Democrats and the “socialist” President Obama could denounce Wall Street and the private sector for wrecking the economy. They could denounce the deregulated, free market, globalized, private sector for not paying the workers enough to properly fund the social security and Medicare systems. Do those “socialists” do that? Not so much.
On the subject of disinformation, every time I hear the Democrats talk about the non-existent trust fund “surplus,” I think about the American Stupidity Crisis. The surplus has been spent. The mythical surplus is just an authorization to borrow more money from the global credit markets (and add that amount to national debt) or to steal money from us taxpayers to “replace” the money that was stolen from the trust fund and spent by the politicians. I’m getting so sick of explaining this over and over and over again.
In the future, if we ever break through the Stupidity Barrier, we can replace the stolen money and make up the funding shortfalls in social security, Medicare, Medicaid and the Pension Benefit Guarantee Corporation (PBGC) permanently with Treasury issued, debt-free, United States Notes. The funding crisis inflicted on federal, state and local governments by Wall Street and the private sector can only be fixed with Treasury issued debt free money. The barbaric tax and debt system that funds our governments dates back to the Dark Ages. It didn’t work then, and it doesn’t work now. A perfect illustration of this fact is the pitiful response to the hurricane Sandy disaster. Why do New Jersey politicians have to publicly beg for disaster relief? Where is our for-profit, private sector insurance “industry”? Obviously, the government has to step in. Tragically, the Constitution reading Republican hypocrites are holding up the relief funding because of their purported concern about the budget deficit and “bloated government.” If they really cared about budget deficits and the national debt, they would vote to authorize the Treasury to issue debt-free, legal tender, U.S. Notes and pay off the national debt.
I’m so sick of hearing Republicans and conservatives squawk about “…getting back to the Constitution and limited government.” Let me repeat again for the ignorant, government hating, private sector shill Republicans and conservatives: NOWHERE IN THE CONSTITUTION DOES THE TERM “LIMITED GOVERNMENT” OR EVEN THE CONCEPT OF LIMITED GOVERNMENT APPEAR. THE CONSTITUTION DEFINES OUR GOVERNMENT. IT DOES NOT SET LIMITS. TWENTY-SEVEN CONSTITUTIONAL AMENDMENTS PROVE THIS POINT!!!
Another insidious piece of disinformation is the percentage of anything to Gross Domestic Product (GDP). (Two examples are the national debt or government spending relative to GDP.) The GDP went over a cliff after the 2007/2008 crash and resulting Great Recession. The fact that Wall Street and globalization caused the low GDP is largely ignored. Now, the politicians and pundits, instead of demanding that the private sector fix the economy and raise the GDP, use the low GDP as a phony excuse to attack social security, Medicare, Medicaid and anything good that the government does. I won’t spend a lot of time debunking the myth that GDP is a relevant economic yardstick. I will just point out that businesses and corporations were/are making record profits, paying gigantic salaries, bonuses, perks, spitting out massive amounts of money in dividends and stock buybacks while the GDP was/is in the tank. It is also true that the GDP can be up and moving higher while workers wages and benefits are down and moving lower. The GDP number is meaningless in terms of what is good for America and the American people in general. In fact, the man who invented the GDP equation, Simon Kuznets, warned against using GDP as a measure of the general welfare of the American people.
However, even though GDP is a flawed measurement, it can be raised, the economy revived and unemployment virtually eliminated by the “jobs bill” that I proposed in my 2-11-2012 Update. That jobs bill requires no legislation from our catatonic Congress or tax dollars. The jobs bill that I proposed would be a New Deal type full employment program funded totally with debt-free, U.S. Notes. The jobs that I listed in that Update are just a starting point. Many, many more good, useful and well paying jobs can be created in this way. President Obama would only have to direct the federal agencies to start hiring more people. It’s as simple as that. Tragically, our politicians are, apparently, too stupid and corrupt to even discuss my proposal.
As I’ve explained over and over on this blog, the slow growth, high unemployment, stagnant and declining wages is the New Normal. The New Normal economy is caused by deunionization, globalization, Wall Street’s subprime mortgage disaster/global credit crisis, and the free flow of capital. Conservatives and Republicans try to blame “high” taxes and government regulation for the New Normal economy. This is total hogwash. All the complaining by the conservatives and Republicans is just a ruse designed to destroy the power of the government, cut taxes, destroy “entitlement” and fatten profits.
I’m shocked at the level of ignorance and stupidity in the public discussion of job creation, the budget deficit and the national debt. Why do people listen to anything Alan Greenspan, Robert Rubin, Larry Summers, Time magazine, Bill Clinton, George W. Bush, Arthur Levitt, Harvey Pitt, David Walker, Barney Frank, Chris Dodd, Hank Paulson, John Paulson, Franklin Raines, Phil Gramm, Gudd Gregg, Bob Corker, Jamie Dimon, Sandy Weill, Lloyd Blankfein, Alan Simpson, Erskine Boles, Warren Buffett, rating agencies, Ed Rendell, Pat Toomey, Ron Paul, John Snow, Frederick Mishkin, Art Laffer, Larry Kudlow, Rick Santelli, Joe Kernan, Joe Scarborough, Maria Bartiromo, Nancy Pelosi, Marsha Blackburn, Kay Bailey Hutchison, bankers, CEOs and many, many others have to say? Their advice is just as self-serving and worthless now as it was before the 2007/2008 crash, mortgage meltdown and global credit crisis, in my opinion. What do you have to do to be discredited in this country?! (I don’t blame Ben Bernanke or Tim Geithner because they were just underlings.)
I really hate to keep recounting my eight and a half year tale of woe about how I have been stonewalled by the politicians, the media and academia. But, now I have to blame the general public (who I have tried so hard to help) for stonewalling me as well. I ran for public office twice. I explained the Constitution based, debt-free alternative to America’s debt debacle to hundreds of people, and lost both elections. I was on the radio twice. I put signs on the side of the road. I put signs in my car. I put my literature in libraries, rest rooms, stores and rest stops on Interstate highways from Pittsburgh to upstate New York, New Jersey and the Ohio border. I’ve given my literature to Salvation Army bell ringers, and told them if you really want to help the poor, do what I say on my blog. I’ve marched and carried my sign at protest rallies. I’ve given written proposals about debt-free money to dozens of low and high ranking Democrats (and a smaller number of Republicans). I’ve written to the U.S. Treasury and the Federal Reserve. I’ve written to liberal think tanks and conservative talk shows. I’ve contacted groups, including the AARP, that claim to represent the interests of senior citizens. I tell everybody I know, and even strangers, to read my blog and write or call their Congressperson (who won’t answer my letters, e-mails or return my calls.)
People in China, Russia, Germany, Indonesia and many other countries are reading my blog. But, I can’t get Senator Pat Toomey, Senator Bob Casey, Congressman Tim Murphy, President Barack Obama or dozens of other politicians to respond to my correspondence in any meaningful way. I even wrote to the Justice Department to complain that the worthless politicians are denying me my first Amendment right to “petition the government for the redress of grievances”. I blew the whistle to the Justice Department on the politicians for stealing trust fund money and extorting money from taxpayers to “replace” the stolen money. But, after eight and a half years, despite my best effort, the responses have always been the same: a yawn, a blank stare or silence. Well, I’ve done my part as a responsible citizen. Apparently, the Stupidity Barrier is impenetrable.
Speaking of stupidity, I’m sick of hearing young people tell me that they know social security won’t be there when (if is a better word) they retire. They say: “I’m putting my money in the financial markets.” I invariably ask them: “Why aren’t you demanding that the politicians stop stealing your social security money?” Invariably, the response is a blank stare. Wall Street has these government haters convinced that they will retire and live off their investments. Remember when young people thought they would make so much money in the stock market that they would retire at 55? I have to laugh when the business shows crow about the current “bull market.” Yeah, the markets are up – from the last crash. The financial professionals tell us there has been “an average 9 % per year stock market gain since 1929”? Is this true or is this 9% a meaningless number like GDP? When the markets crashed in 2007/2008, the “smart money” sold out when the Dow was 14,000, stashed their profit in handy U.S. government debt, then bought back in when the Dow was 6600 and made a killing. Of course, at Dow 6600, most “retail investors” were wiped out and sitting helplessly on the sidelines.
In the past, on this site, I raised these two important questions: 1. Are the bond markets a giant shakedown operation of taxpayers and consumers? 2. Are the equity markets a Ponzi scheme? I would love to discuss these questions with entitlement hating, government slashing, financial regulation hating, former Wall Street banker/derivatives trader, restaurateur, and fanatically conservative Republican Pennsylvania Senator Pat Toomey. I also want him to explain how the derivative “products,” that he pioneered, caused fiscal chaos in American towns, cities and states. But, literally, from the day he took office as senator, he has refused to even acknowledge my letters, long distance phone calls or e-mails, let alone address the issues that I raise in my correspondence.
With debt-free U.S. Notes, the U.S. Treasury can fully fund federal, state and local governments and loan money to businesses interest free. When viewed in the context of Treasury issued debt-free money, it is self evident that the bond markets are a gigantic shakedown operation. Incidentally, I’ve always wondered why most large businesses and corporations never pay off their multi-billion dollar debt no matter how much profit they make.
But, what would indicate that the equity markets are a Ponzi scheme? Consider these historical facts. The Dow Jones “Industrial” Average was flat from 1965 to 1983. In 1983, the trend of businesses dumping their pensions and offering 401K plans went into high gear. At exactly this time, the Dow took off like a rocket to 14,000 and promptly crashed to 6600. Just like a classic Ponzi scheme, as long as the money pours in, stock prices inevitably go up. But when the economy crashed in 2007/2008 and many people stopped putting money into stocks, the markets crashed too. Despite Fed Chairman Ben Bernanke’s heroic efforts to rescue and support the equity markets, they seem to be stuck in a “trading range” lately. Is Wall Street waiting for social security privatization to power the next “major bull run”? The Wall Street shills on business shows and the conservative talk shows are constantly beating the drum for social security privatization. Are they part of a giant Ponzi scheme?
On the subject of stupidity, I did something really stupid. Before US Airways went bankrupt, a “legendary” billionaire Wall Street stock picker predicted that US Airways stock was going to $120 a share. Like so many of my fellow employees, I rushed out and bought US Airways stock. What we didn’t know then was (it was credibly reported) the “legendary stock picker” who predicted $120 a share was selling while we were buying. Buying that stock was against everything I believe in. But, everybody was buying. And “I would have been stupid” if I missed out on the big move. I didn’t want people to laugh at me when I missed my chance to get something for nothing. Well, US Airways stock subsequently crashed to ZERO!!! I, and the other “investors” (suckers), lost every penny we paid for our “ownership stake.” Was it a classic case of Wall Street “pump and dump”?
Incidentally, I read that when “retail investors” sue because of suspicious stock losses, the judges throw out the cases as fast as the alleged victims can file them. I just want that “legendary” billionaire stock picker to know that there were devastating consequences for some of the people who took his prediction to heart. That disaster reminds me of the “legendary” Wall Street traders who made billions of dollars by betting against the housing market. Who cares if millions of lives were ruined? When the talking heads on the business shows hang on your every word and call you are a “legend,” apparently, you can do no wrong. I know. I know. That kind of “work” is perfectly legal. And I’m sure these “legends” will say it sure beats wages aka useful, productive work. Billions of dollars are made buying and selling stocks and millions of dollars are made talking about buying and selling stocks. However, I have yet to figure out what useful purpose is served by buying and selling stocks.
As I said, the Stupidity Barrier has caused a Stupidity Crisis in America. I hate repeating the same points over and over, but maybe with enough repetition, the truth might finally sink in. The bipartisan attack on social security began in 1968 during the Johnson Administration when the so-called “unified budget” dumped social security money into the federal general revenue fund. President Richard Nixon continued to raid social security to help pay for the Vietnam War. Eventually, social security went into the red. In 1983, with bi-partisan support, the Alan Greenspan Commission “saved social security” by raising the payroll deduction, cutting benefits, taxing benefits and raising the retirement age. But the politicians kept on stealing the money! Then, in 1999, came the insane bi-partisan financial deregulation that ultimately put the “trust fund” again in the red in 2010. Now I would like to explain how the unified budget, the Bush/Obama tax cuts, 2 wars, globalization, bailouts of the financial services “industry,” the New Normal economy and the consequences of financial deregulation all work together to destroy vitally important government programs like social security, Medicare, Medicaid and the PBGC. And they also disrupt or prevent the many excellent things the government does, like hurricane Sandy relief.
The first Bush tax cut was put in place in June of 2001. I previously explained why those tax cuts should have been rescinded on September 12, 2001 (we were at war). In May of 2003, George W. Bush simultaneously put in place more tax cuts and invaded Iraq! This insanely stupid move glaringly illustrates the American Stupidity Crisis. Bush cleverly put the cost of the wars “off budget” so that the America people wouldn’t notice that we were borrowing the money from the global credit markets to pay for the wars. Of course, this irresponsible neo conservative blunder (no WMD) wiped out the surplus and exploded the national debt. Now fast forward to December 17, 2010. In a “rare example of bipartisan compromise,” “socialist” President Barack Obama thrilled his fellow multimillionaires and the billionaires and multibillionaires by extending the Bush tax cuts for two more years. His cover story was that he had to extend the tax cuts so he could extend unemployment benefits. And, that tough negotiator Obama forced the Republicans to let him rob social security for another year with the stupid, so-called “payroll tax cut.” (Republicans loved the idea.) When did that “socialist” Obama ever demand full employment from the private sector so we wouldn’t need unemployment benefits? When did that “socialist” Obama demand better pay (and better benefits) for workers from the private sector so social security and Medicare could be fully funded? But that “socialist” did slash government jobs and freeze the pay for government workers.
As I explained previously on this blog, these stupid budgetary “blunders” seem to be part of a bipartisan (along with the media and academia) PLAN to destroy “entitlements.” According to the pronouncements of the politicians and the pundits, all of our fiscal problems are the result of “out of control entitlements.” They ignore the two wars, the Bush/Obama tax cuts, the massive cost of the “War on Terror,” the massive cost of our global military footprint, corporate welfare, foreign aid and other government expenditures that have nothing to do with “entitlements.” They just whine and cry and worry and warn about nothing but ENTITLEMENTS. So, what is the obvious conclusion that I must draw from this? To them, all the above listed government spending and tax cuts are just fine, but entitlements are bad. Why are they bad? They are bad because they take money away from Wall Street and the insurance “industry.” The other day, I even heard Newt Gingrich talking about a private sector alternative to social security. Are you finally getting the picture?
Politicians, Republican and Democrat, steal money from the social security “trust fund,” spend it, and add that amount of the theft to the national debt. Then the national debt is used as an excuse to slash social security (and other vitally important government programs). Are we supposed to believe that the politicians don’t know that they are destroying the system when they steal trust fund money? Nobody could be that stupid. Unlike most my liberal friends, I listen to conservative talk radio. One of the many reasons why I find these Wall Street/private sector shills so despicable is the way they try to make fools of their audience. Here is an example: The conservative talkers love to tell us about how the politicians steal money from the social security “trust fund.” But, they spin it like this: “The liberal Democrats steal the money and spend it on government programs.” Here is the truth. All the money that isn’t paid out in benefits goes into the federal general revenue fund, stupid. (Of course, that was before Wall Street and the private sector put social security funding into the red.) But, would the conservative talkers ever demand that the politicians STOP STEALING THE MONEY? Not a chance. What is their “solution”? “Privatize social security so the politicians can’t steal your money.” No wonder the advertisers are lined up around the block. I wonder how many advertisers would sponsor me. Answer: ZERO.
I think I covered the bipartisan attack on social security pretty well. Now I would like to explain why Medicare is underfunded. As I explained in the first paragraph of this Update, the underfunding problem of social security is caused by low worker’s wages. The same problem caused the underfunding of Medicare. (Of course, politicians steal Medicare “trust fund” money too.) I am so sick of hearing conservatives, Republicans and Democrats whine and cry about how Medicare costs have increased more than inflation. Of course they have. So what? The research and development that produced all the wonderful advances in medical treatment cost money. And, all those new and wonderful treatments cost money. Get over it! At the time when my father died of a heart attack, none of the life saving treatments that we take for granted today were available. No stents, no heart-bypass operations, nothing. And, of course, all these wonderful treatments increase insurance costs. So, what’s the problem? The problem is our greedy, selfish, free market, capitalist system.
In all the thousands of words that I’ve written on this site, up till now, I think I’ve used the word capitalism once. I’ve avoided this word because it has been sanctified by that pillar of the Religious Right, Pat Robertson, when he coined the term “Christian Capitalism.” I won’t spend a lot of time talking about the evils of capitalism. This subject has been very competently covered by Michael Moore, Ralph Nader, Howard Zinn and many other fine people. When anyone attacks capitalism, they risk being labeled anti American. This charge is total hogwash. In fact, just the opposite is true. The myth that America and capitalism are synonymous is an insult to America. Many people accept the America equals capitalism myth because they don’t know the difference between capitalism and industrialism. And furthermore, I say wrapping the pillars of the New York Stock Exchange with the American flag is a desecration of our hallowed symbol.
But, before I move on, I would like to add a religious dimension to the discussion of “Christian Capitalism.” By definition, capitalism is loaning money for interest. Does Pat Robertson not know that loaning money for interest was illegal in all Christian countries for centuries after the death of Jesus? Back then, loaning money for interest was the sin of usury. To quote Jesus: “Loan not expecting to get anything back.” What would happen to the global financial system if these words were taken seriously? Government issued, debt free, fiat money is the solution to poverty and economic injustice around the world. I would like to tell Larry Kudlow that free market capitalism isn’t the solution. It’s the problem.
Now back to Medicare. The American economic system is a free market, globalized, financialized, deregulated, capitalist system. In fact, for millions of Americans, socialism is a dirty word. (I’m not a socialist, I’m a populist.) This is ironic because the U.S. Constitution “was established in order to promote the general welfare” of the American people. This sounds like the popular (as opposed to the textbook) definition socialism to me. Does this mean the Founding Fathers wanted to establish a Welfare State?! What do you think of that, Larry?
But, contrary to the spirit of the Constitution, in the early 1970s, a process of deunionization swept across the American economy and globalization became the rule. Unrelenting wage stagnation and decline began and continues to this day. At the same time, advances in healthcare took off in the opposite direction. These advances increased life expectancy (for some) and produced life saving treatments for deadly illnesses where none existed before. At that time, you didn’t have to be a rocket scientist to realize that for workers to afford these new treatments, their wages would have to go UP, not down. But, in a free market, globalized, capitalist economy the workers were at the mercy of Market Forces. Sweatshop wages and benefits were/are the benchmark ideal. According to the free market capitalists, we must chase that ideal in order to be “competitive.” Thus, full healthcare coverage for many workers must be sacrificed on the altar of global competition.
And, of course, the private sector insurance companies are in business to make a profit. Consequently, providing healthcare coverage for sick, old people is not part of the New Normal business model. This is why we have Medicare for sick, old people. But the workers were never paid enough to properly fund the Medicare system. What is the free market, capitalist’s solution to the underfunding problem that they caused? Raise the eligibility age and slap the sick, old people with higher premiums and higher co pays. Unfortunately, this is a brutal hardship for the vast majority sick, old people. I thought “free market capitalism was the best path to prosperity,” Larry.
When it was announced that the Democrats were going to try for so-called “universal health care,” my healthcare premium jumped fifty percent. My wife’s premium exploded one hundred and fifty percent! Free market capitalism certainly made us less prosperous, Larry. I asked an insurance company representative this question: if the government subsidy to the insurance “industry” (actually a private sector bureaucracy) was cut thirteen percent, why did my premium go up fifty and my wife’s premium one hundred fifty percent? The insurance company representative said: “You don’t understand accounting.” Maybe so, but I do understand one thing: Our free market capitalist system doesn’t work in the spirit of the United States Constitution. Free market capitalism is certainly capable of producing prosperity and wealth for some of the people, but it certainly does not promote the general welfare of all the people, Larry.
Nothing illustrates this fact more clearly than the conservative/Republican attack on Medicaid. They whine and cry about the cost of Medicaid just like they whine and cry about the cost of anything the government does to promote the general welfare of the American people. Whose fault is it that we even need Medicaid? Medicaid is a government program for “people and families with low income.” In other words, the system covers the working poor who can’t afford health insurance (and sick, poor people). This gets us right back to the low wages paid by the private sector. And, to add insult to injury, taxpayer’s dollars are given to private sector insurance companies who “provide all or most of the Medicaid recipient’s healthcare needs.” What a joke! I thought this was a government program. How did the private sector get in on the act? Is this not an unnecessary layer of bureaucracy?
I won’t spend any more time talking about the obvious problem. I will just repeat my solution: fully fund social security, Medicare, Medicaid and the PBGC with Treasury issued, debt-free, legal tender United States Notes. Obviously, as I pointed out above, many small and medium size businesses can’t afford to provide full healthcare coverage for their employees. Some could provide the coverage and pass the cost on to the consumers, but this would be inflationary. Only the government can provide the money for full healthcare coverage for Medicare and low wage workers. How would the government know which businesses need financial help to provide full healthcare coverage? The government already knows because the IRS knows. The qualifying businesses wouldn’t have to fill out any forms or endure any “government red tape.” The system would be completely automatic. The IRS would hire all the additional personnel necessary to administer this automatic system, and they would be paid with Treasury issued debt-free U.S. Notes. U.S. Notes would be transferred directly from the Treasury to the Medicare and Medicaid systems and paid directly to the healthcare providers. No tax dollars or government borrowing would be required. Fully funded Medicare and Medicaid systems would literally save lives. No more insurance company death panels. Cash flush Medicare and Medicaid systems would be a boon to our healthcare industry, provide thousands of well paying government jobs, and the result would be a significant increase in our Gross Domestic Product. What could be more fair, simple and benevolent? This system would be voluntary, however. If a business objects to “big government intrusion into their business,” they can decline the government help. They would be free to choose the old fashioned free market, capitalist model. Of course, the free marketers will probably complain that they are at a disadvantage. However, the Constitution was established to “promote the general welfare” of the American people. The Medicare and Medicaid funding system outlined above does exactly that. If the free marketers want to argue, they can argue with the United States Constitution.
[I’m still reading “Better, Stronger, Faster -- the Myth of American Decline…” by Daniel Gross. So far, I have read nothing in this book to allay my fear that America is in a very serious state of decline.]
Rebuttals to my analysis and proposals from politicians, policy makers, reputable pundits, academics and business leaders can be sent to Post Office box 815, Coraopolis, PA 15108.