What Would Economic Justice Look Like?

What would economic justice look like? Such a topic should be widely discussed. I believe economic justice for the middle class and poor should be federally-funded.

The road to “Economic Justice” runs through understanding and realizing how our government operates, especially in regard to HOW our government funds the bills our Congress writes and passes.

Once you understand how our government funds our government, once you understand all federal taxes do not fund our government; nor do federal taxes come close to funding our government, then one may understand why there is enough money to fund the needs of We The People.

When Congress passes a bill it is sent to the U.S. Treasury Dept. who literally “orders” the Federal Reserve to deposit the funds set forth in the bill into the U.S. Gov’t bank account over at the U.S. Treasury Dept. The Federal Reserve Chairman literally sits at his computer and adds zeros to a U.S. government bank account. Yes, martha, the Federal Reserve creates money out of thin air with a few keystrokes.

We could fully fund the needs of the people by simply raising the top marginal corporate tax rate significantly, ala the fifties and sixties; and if that’s not enough funding, Congress could issue several trillion dollar coins of denomination and deposit those coins DIRECTLY into a U.S. Gov’t bank account at the U.S. Treasury Dept., thereby BYPASSING the Federal Reserve and BYPASSING increasing the national debt.

Congress has federally subsidized too many trillions of dollars in war machines, in prosecuting the War on Terror, in subsidizing multi-national, multi-billion dollar conglomerates instead of investing in We The People and our public infrastructure. It’s way past time for We The People to invest in We The People.

The best-kept secret in Washington is the secret in Plain Sight.

To quote Alan Greenspan, former Federal Reserve Chairman from 1987 until 2006, said:

I recommend instituting a UBI-FOR-ALL and federally-backed forgivable home loans.

It’s way past time for our Congress to fund WE THE PEOPLE instead of CREATING MONEY OUT OF THIN AIR ONLY TO GIVE IT ALL DIRECTLY TO GIANT CORPORATIONS, SPECIAL INTERESTS and the Great War Machine. It’s nothing short of obscene how our Congress has traditionally and faithfully subsidized BIG OIL AND GAS COMPANIES, THE BANKING INDUSTRY AND WALL ST. to the tune of trillions of dollars BUT HOW DARE YOU ASK FOR MONEY FOR THE PEOPLE!

In 2008, I didn’t hear anyone worrying about inflation when Obama issued blank checks to Wall St. and the banks!

If Congress doesn’t see the People’s need for guaranteed income and home ownership then we have the wrong Congress.

It’s no coincidence that the warmongers always fund the war machine. But the warmongers OPPOSE funding We The People, the way they shamefully funded F-35 fighter jets for years and years despite MASSIVE cost overruns and the fact the damn plane can’t fly at night or in a storm.

So how do we fund a UBI-FOR-ALL and home loans-for-all?

By Congress exercising Congress’ right to create money out of thin air.

It’s what Congress does and has been doing since the inception of the United States of America.

What About Inflation? Won’t Issuing More Money Devalue Our Dollar?

No. As long as we institute laws proscribing inflationary price increases, we can maintain a good economic equilibrium.

For contemporary examples of governments injecting new money to fund domestic growth, we can look to China and Japan. In the last two decades, China’s M2 money supply grew from 11 trillion yuan to 194 trillion yuan, a nearly 1,800% increase. Yet the average inflation rate of its Consumer Price Index hovered between 2% and 3% during that period. The flood of money injected into the economy did not trigger an inflationary crisis because China’s GDP grew at the same fast clip, allowing supply and demand to rise together. Another factor was the Chinese propensity to save. As incomes went up, the percent of income spent on goods and services went down.

In Japan, the massive stimulus programs called “Abenomics” have been funded through bond purchases by the Japanese central bank. The Bank of Japan has now “monetized” nearly half the government’s debt, injecting new money into the economy by purchasing government bonds with yen created on the bank’s books. If the US Fed did that, it would own $12 trillion in US government bonds, over three times the $3.6 trillion in Treasury debt it holds now. Yet Japan’s inflation rate remains stubbornly below the BOJ’s 2% target. Deflation continues to be a greater concern in Japan than inflation, despite unprecedented debt monetization by its central bank.

Joe Biden, Mitch McConnell and Donald Trump all share and espouse the notion if our government provided universal basic income-for-all — it will discourage people from working.

Biden, Trump and McConnell all three drink from the Master’s Cup and are very comfortable foisting the old Master-Slave relationship on the working class and poor.

These old guys are so tone-deaf they are not aware or don’t care they are insulting Americans by falsely claiming more income for Americans would stop them from working.

They believe only they alone can handle increased financial gain without sacrificing moral ground. What a bunch of a-holes!

Another criticism is that basic income-for-all would cause massive inflation.

NOTHING COULD BE FURTHER FROM THE TRUTH.

Webster’s Dictionary defines “inflation” as, “…a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services.”

That’s a highly-processed way of saying greed will drive merchants to raise prices as the greedy overreact to increased consumer purchasing power.

We have a cure for that kind of greed called LAWS.

There’s not one damn reason our Congress cannot pass a bill guaranteeeing a Basic Income-For-All along with federally-backed forgivable home loans, OTHER THAN INSTITUTIONALIZED RACISM/CLASSISM.

America is woke! America is finding out their Congressperson has been lying to them their entire lives, each time a Congressperson claims “there’s not enough money” for whatever it is you want to do. Realizing our government does not operate on a finite amount of money (as a household budget operates) is key to understanding the problem for working class and poor Americans is not IF there’s enough money, but WHO CONTROLS THE MONEY.

FUNDING PROGRAMS-FOR-ALL in the 21st Century:

Congresswoman Rashida Tlaib set forth her recommendation for funding:

c. The mechanics of this funding approach would be as follows:

• The Treasury Secretary would direct the U.S. Mint to issue two $1 trillion platinum coins, under the legal authority provided by 31 U.S.C. § 5112(k).

• Congress would direct the Federal Reserve to purchase the newly issued coins at full face value.

• The Federal Reserve would complete the purchase by crediting the U.S. Mint’s account at the Fed with $2 trillion in reserves.

• The Fed would retain ownership over the two $1 trillion coins permanently in order to ensure its own balance sheet remains fully capitalized by the Treasury.

• The Treasury Secretary would “sweep” the newly created reserve funds from the Mint’s account into the regular Treasury General Account.

• The Treasury would make the funds available to the Bureau of the Fiscal Service to disperse to every person in America in the form of pre-paid U.S. Debit Cards.

d. This approach would preserve the historical separation between fiscal and monetary policy and avoid financial entanglement between the Treasury and the Federal Reserve which would
eventually undermine the independence of the Fed.

In the long term, card infrastructure should be converted into a permanent, Treasury-administered digital public currency wallet system, to serve as a privacy-respecting “eCash” compliment to universal Fed Accounts and/or Postal Bank Accounts for All. This proposal should be accompanied by progressive tax reform to ensure that emergency relief provisioning does not exacerbate income or wealth inequality in the long-term.

Reported Income Increased and Taxes Paid Decreased in 2016
Taxpayers reported $10.2 trillion in adjusted gross income (AGI) on 140.9 million tax returns in 2016. Total AGI grew $14 billion from 2015 levels, less than the $434 billion increase from 2014 to 2015. There were 316,000 fewer tax returns filed in 2016 than in 2015, meaning that average AGI rose by $260 per return, or 0.4 percent.

Taxes paid fell slightly to $1.4 trillion for all taxpayers in 2016, a 0.8 percent decrease from the previous year. The average individual income tax rate for all taxpayers fell slightly, from 14.3 percent to 14.2 percent, and the average tax rate fell for all groups.

The share of income tax burden for the top 1 percent fell slightly as well, from 39 percent in 2015 to 37.3 percent in 2016.

In 2016, the bottom 50 percent of taxpayers (those with AGI below $40,078) earned 11.6 percent of total AGI. This group of taxpayers paid $43.9 billion in taxes, or roughly 3 percent of all income taxes in 2016.

In contrast, the top 1 percent of all taxpayers (taxpayers with AGI of $480,804 and above), earned 19.7 percent of all AGI in 2016, and paid 37.3 percent of all federal income taxes.

Half of American taxpayers earn less than $40,000 per year. I believe we do not need those earning less than $40,000 a year to pay $44 billion in federal taxes in order for our government to operate smoothly as needed.

The benefit of completely eliminating federal income taxes for the middle class/poor is astounding beyond the obvious benefit of increasing demand.

I’m referring to the long history of conservatives complaining about where, who and how their tax dollars are spent. If Billy couldn’t bitch about the government providing UBI for-all since it wasn’t coming out of Billy’s paycheck, what would Billy bitch about then?

‘Automatic BOOST To Communities Act’ Introduced In Congress That Includes Digital Dollar By 2021

A new bill introduced called the ‘Automatic BOOST to Communities Act’ is sponsored by Congresswoman Rashida Tlaib (D-MI) who sits on the Financial Services Committee and Congresswoman Pramila Jayapal (D-WA), Co-Chair of the Congressional Progressive Caucus. Cong. Tlaib originally introduced a policy proposal on March 21 that drew a great deal of public attention with the idea of having the U.S. Treasury mint two $1 trillion dollar platinum coins to fund stimulus payments.

In response to the speed at which the U.S. Treasury was delivering stimulus checks for COVID-19, Representative Tlaib told me, ‘It is obvious that the Federal Government, even Members of Congress, are completely disconnected with the reality of the majority of American people. The way they approached this is not based on leading with compassion nor is it based on logic of where is the greatest need and where can we make the greatest impact. They are throwing spaghetti on the wall and hoping it sticks…We are in a global pandemic. People cannot wait two weeks or four months as the IRS says in some cases for those that need relief.’


Congresswoman Tlaib (D-MI) and Congresswoman Jayapal (D-WA), co-sponsors of the ABC Act.

‘Mint The Coin!’ was the call from Representative Tlaib at a live campaign rally for former Presidential candidate Bernie Sanders, which was a call for support of her unique fiscal policy measure that is included in the ABC Act. Tlaib’s enthusiasm for a fiscal policy idea of $2 trillion dollar platinum coins to be minted by U.S. Treasury fueled a movement that had started called #MintTheCoin.

The idea avoids increasing the U.S. national debt by directing the U.S. Treasury to use its legal authority to create money under 31 U.S.C. § 5112(k), to mint the coins. The Federal Reserve would subsequently purchase them and provide a credit of $2 trillion to the account at the U.S. Treasury, through which the national debt would not be increased regarding what we owe to U.S. creditors.

‘We are at an unprecedented time and we have the capability of minting two coins, but also going through that route without actually increasing our debt or trying to allow our grandchildren or future generations to pay for it. It is not their fault nor their responsibility, I truly believe,’ said Congresswoman Tlaib. Her economic policy advisor Chastity Murphy added that the money set aside in the U.S. Treasury would not be subject to any setoffs, meaning Treasury would not be able to use the funds for other programs and kept them exclusively for funding stimulus payments.

Mail, Telephone, And In-Person Pick-Up Before Digital Dollar Cash and Wallets

At the end of the bill, there is a ‘sense of Congress’ resolution that by 2021 the Treasury offer e-wallets in the form of digital dollar wallet accounts and the Federal Reserve make available FedAccounts in the form of digital dollar cash accounts. This concept originally appeared in a draft discussion of the CARES Act, although ultimately was eliminated from consideration in the 3rd COVID-19 stimulus bill.

Jason Brett
Crypto & Blockchain
I write about blockchain regulation and policy.
I am a former U.S. Regulator with the FDIC, compliance examiner for the Making Home Affordable Program (HAMP) with the Treasury, and have been active in bitcoin and blockchain since 2016. I served in in the FDIC’s Capital Markets and Finance Divisions during the Global Financial Crisis of 2008-2009 working on qualitative, quantitative issues covering IndyMac Bank, Washington Mutual, Wachovia, Lehman Brothers, AIG, Citigroup, Merrill Lynch and Bank of America. I supported the FDIC’s Board at IndyMac bank with deposit run analysis, researched and explained synthetic collateralized debt obligations, credit default swaps, compiled the exposure of net notional derivatives in the financial system, and analyzed new programs by the Federal Reserve Board to stabilize the economy. I became interested in the importance of trust in the financial system and how the U.S. government manages the concept of trust. With the introduction of bitcoin and blockchain technology by a colleague in 2016, I entered into the blockchain industry, first with the Chamber of Digital Commerce as Director of Operations for Policy and then as the Policy Ambassador for ConsenSys. I am currently the founding CEO and President of a new non-profit called the Value Technology Foundation, with the purpose to conduct exclusively educational and charitable activities with regard to digital assets, blockchain, distributed ledger technologies and other relevant “value” technologies for the public welfare and economic benefits of the citizens of the United States. I hold a degree from Cornell University in Government (BA, 1997) and the Kogod School of Business (MBA, 2009).

Automatic Boost to Communities Act Policy Proposal- Cong. Rashida Tlaib

Automatic Boost to Communities Act Policy Proposal
Rep. Rashida Tlaib (MI-13)

Automatic BOOST to Communities Act
Congresswoman Rashida Tlaib (MI-13)

I. Summary:

In response to the Coronavirus crisis, the Automatic BOOST to Communities Act would immediately provide a U.S. Debit Card pre-loaded with $2000 to every person in America.
Each card would be recharged with $2,000 monthly until one year after the end of the Coronavirus crisis.

II. Guaranteeing Universality

“Every person” includes:

a. Dependents, so a couple with two children would receive 4 x $2000 = $8000 in total.

b. Non-citizens, including undocumented people, permanent residents, and temporary visitors whose stay exceeds three months.

c. Individuals who do not have a bank account, social security number, or permanent address.

d. People living in unincorporated territories or protectorates and Americans living abroad.

e. To ensure that this program is as universal and comprehensive as possible, the U.S. Treasury will develop its list of eligible individuals in coordination with the Internal Revenue Service, the Social Security Administration, the Federal Election Commission, and every other relevant federal, state, and local government agency, including state-level Departments of Motor Vehicles (DMVs).

III. Distributing the Money

a. The pre-paid cards would be distributed as U.S. Debit Cards and would be administered by the U.S. Treasury’s Bureau of the Fiscal Service.

b. These pre-paid digital cash cards could be used to withdraw physical currency at regular ATMs or FDIC-insured banks or credit unions or make payments at Point-ofSale terminals, as well as online. In addition, these cards could be topped-up with additional funds as needed, during and after the crisis.

c. All cardholder and interchange fees associated with use of distributed cards would be waived for the duration of the Coronavirus crisis.

d. The program would establish a common database of recipients identified by name and/or, where available, Employer Identification Numbers (EINs). Identifying information would not be shared with any other federal, state, or local agency, or any private entity.

e. Any individual who receives, activates, and uses more than the maximum number of cards authorized for themselves and their dependents, either as a result of fraud or administrative error, would have excess funds reclaimed in the future via appropriate mechanisms (i.e., tax refund deduction).

Automatic Boost to Communities Act Policy Proposal
Rep. Rashida Tlaib (MI-13)

f. Cards would be distributed in three ways:

1. Direct Mail: All individuals with an active address on file with any government agency would have a card sent to them to that address via USPS.

2. In Person Pick-Up: Individuals who do not have a permanent address, or who otherwise cannot or do not receive their U.S. Debit Card by mail—including undocumented people, permanent residents, and temporary visitors whose stay exceeds three months—could also obtain one directly from any FDIC-insured bank or credit union, or temporary card distribution stations that would be placed at local post offices and U.S. embassies overseas.

3. At-Risk Outreach: A dedicated Emergency Responder Corps would perform outreach to at-risk populations, including people who are elderly, homeless, physically disabled, or live in remote areas, to ensure they receive their U.S. Debit Card and to simultaneously perform a general wellness check in case they need additional targeted assistance.

IV. Funding the Program

a. This Automatic BOOST to Communities Act would be a money-financed fiscal program for which no additional U.S. debt would be issued.

b. Instead, the program would be funded directly from the Treasury, using its legal authority to create money via coin seigniorage, which is a statutory delegation of Congress’
constitutional power of the purse.

c. The mechanics of this funding approach would be as follows:

• The Treasury Secretary would direct the U.S. Mint to issue two $1 trillion platinum coins, under the legal authority provided by 31 U.S.C. § 5112(k).

• Congress would direct the Federal Reserve to purchase the newly issued coins at full face value.

• The Federal Reserve would complete the purchase by crediting the U.S. Mint’s account at the Fed with $2 trillion in reserves.

• The Fed would retain ownership over the two $1 trillion coins permanently in order to ensure its own balance sheet remains fully capitalized by the Treasury.

• The Treasury Secretary would “sweep” the newly created reserve funds from the Mint’s account into the regular Treasury General Account.

• The Treasury would make the funds available to the Bureau of the Fiscal Service to disperse to every person in America in the form of pre-paid U.S. Debit Cards.

d. This approach would preserve the historical separation between fiscal and monetary policy and avoid financial entanglement between the Treasury and the Federal Reserve which would
eventually undermine the independence of the Fed.

In the long term, the card infrastructure should be converted into a permanent, Treasuryadministered digital public currency wallet system, to serve as a privacy-respecting “eCash” complement to universal Fed Accounts and/or Postal Bank Accounts for All. This proposal should be accompanied by progressive tax reform to ensure that emergency relief provisioning does not exacerbate income or wealth inequality in the long-term.

U.S. Moves Closer To Digital Dollar

Jul 1, 2020, 07:16am EDT

On June 30th, 2020, the Senate Banking Committee held a hearing on the future of the digital dollar. The pressures to create a digital USD are mounting as China recently began testing its own digital currency – the DCEP, which will be included in popular applications like WeChat and AliPay. Of particular concern is widespread adoption of a digital yuan in emerging markets and in international trade.

The idea of a dollar-backed digital currency gained mainstream media attention last year during the Libra congress hearings, where Facebook introduced a new type of digital unit backed by a basket of currencies and commodities.

Although David Marcus insisted that Libra users will not have to put their trust in Facebook and that Libra was a decentralized currency, regulators weren’t buying it and expressed concern over the long-term threat to the traditional financial system. On July 9, 2019, regulators requested a moratorium on the project.

In December, Libra released a new roadmap, proposing several digital-fiat currencies deriving their values from the USD, British Pound, Swiss Franc and others, thus creating an efficiency layer on top of the current financial system. Users would be able to access these digital currencies through a wallet installed on their phone, and potentially through WhatsApp chat and Facebook Messenger.

Distributed issues of the $1200 COVID stimulus checks were issued, created new momentum for the digital dollar (and a more efficient financial distribution machine). It is no secret that many are still waiting for their stimulus checks, while $1.4 billion in stimulus was sent to dead people.

Most recently, Congresswomen Rashida Tlaib (D-Mich.) and Pramila Jayapal (D-Wash.) introduced a new stimulus proposal of $2,000 per month to residents through the Automatic BOOST to Communities Act (ABC Act). Under the ABC Act, Congress would authorize the Federal Reserve to create “FedAccounts,” or “Digital Dollar Account Wallets,” which would allow U.S. residents and business to access financial services through an app on their phone.

Building on this momentum, the Senate Banking Committee held a hearing continued the discussion of the digital dollar yesterday.

Some highlights from the hearing include:

Senator Tom Cotton (R-Ark.) stated, “The U.S. needs a digital dollar…The U.S. dollar has to keep earning that place in the global payments system. It has to be better than bitcoin … it has to be better than a digital yuan.”
Chairman Mike Crapo (R-Idaho) expressed concerns of regulator oversight for stable-coins.
Charles Cascarilla of Paxos testified advocating for stable-coins, stating that they address the “antiquated plumbing” of our financial system as well as financial inclusion. “Blockchain based stable-coins allow everyone access”.
Nakita Cuttino, visiting assistant professor of law at Duke University, discussed the friction in the current payday cycle and the rising demand for costly advanced-payment apps which could be resolved with digital currencies. “In the absence of public policy addressing open access payments and real-time payments, low-income and moderate-income Americans will continue to have limited resources needed, whether by traditional fringe services like payday loans or some novel fringe service.”
Former CFTC Chairman Chris Giancarlo and head of the Digital Dollar Project, emphasized the “social and national” benefits such as increased speed, lower costs and issues of financial inclusion. “Darwin said the most adaptable survive. And I think that is true when we transition to a new architecture. To adapt to it, will help bring benefits to the society at large.”
It is unclear how soon the digital dollar will come into existence, although increasing competition from China may be the push U.S. regulators needed.

Tatiana Koffman – Contributor
Crypto & Blockchain
I write about financial innovation. Follow on Twitter @tatianakoffman.

The Government Can Afford Anything It Wants

The idea that programs must be funded by tax dollars is a myth. Stephanie Kelton’s new book explains how money really works.

If you’re like me, once or twice in your life you have jolted awake from the edge of sleep wondering, How exactly does the government pay for the military? As we all know, the military is an expensive endeavor. In 2019, its budget was $716 billion, an increase of $80 billion over the previous year. Does the Department of Defense have a bank account with that $716 billion in it? If they do, who puts money in it, and where does that money come from? Who exactly will pay Raytheon for that sexy new air-to-air Peregrine missile? And where did that $80 billion come from? New taxes? In 2018? I thought that the only major legislative victory of the Trump administration was a tax cut.

The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy
by Stephanie Kelton

To find the answers, the economist Stephanie Kelton tells us in The Deficit Myth that we only need to look at congressional proceedings. For any government expenditure that isn’t automatic (like interest expenses or welfare programs), the House and Senate debate and then pass bills that require spending. For example, in 2017 the Senate happily voted 89–9 to pass a 1,215-page bill called the National Defense Authorization Act. It authorized $737 billion in spending. Once this bill passed, the Department of Defense could enter into contracts with weapons manufacturers like Raytheon. As soon as the ink dries, the U.S. Treasury instructs its bank, the Federal Reserve, to go into its computers and mark up Raytheon’s bank account. Money enters its account and it begins paying its workers, suppliers, and its CEO Thomas Kennedy’s $1 million salary.

The important thing here is that the Federal Reserve does not dip its hand into a pot of “tax dollars” to pay military contractors, nor is it required to check some mythical account where tax dollars live before it wires the money. In fact, that account doesn’t exist. As former Federal Reserve Chairman Ben Bernanke once noted, when the government pays for things, it is “not taxpayer money. We simply use the computer to mark up the size of the account.” Alan Greenspan, Bernanke’s libertarian predecessor at the Fed further clarified, “There’s nothing to prevent the federal government from creating as much money as it wants and paying it to someone.” The implication is that if Congress can pass a bill that requires some form of spending, the Federal Reserve can and will spend that money without limit, as is the case with the military. This directly contradicts ideas about government money espoused by leading politicians. The most prominent example was in 2009, when a C-SPAN host asked President Barack Obama, “At one point do we run out of money?” to which he responded, “Well, we are out of money now.” These statements are mutually exclusive; only one can prevail. So who is right?

The Federal Reserve does not dip its hand into a pot of “tax dollars” to pay military contractors, nor is it required to check some mythical account where tax dollars live before it wires the money.
The idea that the U.S. government can’t run out of money is the bedrock of an idea that Kelton is on the vanguard of promoting: Modern Monetary Theory. As the name implies, MMT is a set of newish ideas that maddeningly reopen a question that you’d think only a novice stoner or seven-year-old would dare ask: Where does money come from, and what does it do? MMT argues that money is a legal and political construct and that limits to government spending are not monetary and only mildly economic; they are primarily political. “MMT clarifies what is economically possible,” Kelton writes, “and thus shifts the terrain of policy debates that get hamstrung over questions of financial feasibility.” The book combats the limiting myths of economic reality, including the pervasive idea of a tax-funded federal government that can or can’t “afford” things.

In the early 1990s, MMT sprang partially formed from the mind of the hedge fund investor Warren Mosler. Mosler noticed that while politicians were concerned over deficit spending and raising tax dollars to pay for their initiatives, when you observed how the Treasury, Federal Reserve, and Congress actually worked, this was inaccurate. Taxes were useful for many things: They constrain spending to keep inflation in check, they guide citizens toward economic activities that the government wants to promote, they make the currency valuable by creating demand for it, and they create norms for encouraging or discouraging certain behavior. But they don’t raise money. When you pay your taxes, the Treasury just goes into your bank account and deletes the numbers from your digital balance.


As Zach Helfand notes in a profile of Kelton in the New Yorker, Mosler then peddled his theory in search of an audience. In 1993, he won over a then-private-sector Donald Rumsfeld in a steam room. Rumsfeld in turn introduced Mosler to Arthur Laffer, the conservative economist who devised the specious trickle-down theory of economics that has justified every major regressive corporate tax cut for the last 40 years.

Kelton skeptically encountered Mosler’s ideas on internet forums in the mid-1990s while studying at Cambridge University. She was soon convinced and published a paper in 1998 that became a foundational text for the field (provocatively titled in accordance with Betteridge’s law of headlines: “Can Taxes and Bonds Finance Government Spending?”). She took a teaching position at the MMT hotbed of University of Missouri Kansas City, and in time was consulting with politicians. In 2014, Senator Bernie Sanders appointed her as his chief economist for the Senate Budget Committee, an experience she draws on heavily in her book. Kelton was also an economic adviser to his 2016 presidential run.

As the title of her book suggests, Kelton sets out to dispel a number of myths about how the economy works, how the federal deficit works, and where money comes from. At the center of the story is the role of the taxpayer. “The taxpayer, according to the conventional view,” Kelton writes, “is at the center of the monetary universe because of the belief that the government has no money of its own.” This idea has been repeated so often that it comes off as common sense. Today, there is almost no part of the political spectrum that doesn’t employ its usage. Both sides gripe about their tax dollars paying for something they don’t approve of, whether it is the imperialist network of 800 U.S. military bases around the world or supposedly lavish lifestyles of welfare cheats. Even Bernie Sanders uses it when he purposes that a financial transaction tax will pay for free public colleges. When the House debates proposed legislation, Speaker Nancy Pelosi insists on enforcing the arbitrary PAYGO rule, which demands that new expenditures are balanced by new tax income. The Senate has a similar self-imposed constraint called the Byrd rule, and the so-called “debt ceiling” limits government spending in the same way.

The first problem with this is that, as Kelton writes, “in practice, the federal government almost never collects enough taxes to offset all of its spending.” The second, as noted in the introduction, is that—also in practice—tax income often doesn’t factor into the actual act of spending. And worse, it’s easy for politicians to game the system. Kelton reports that there are professors for hire, like University of Texas law professor Calvin Johnson, who have a litany of ready-made tax revenue schemes for lawmakers to shove into their bills. But if it’s all a sham, how did the tax-funding imperative emerge, and why does it persist?

The centrality of the taxpayer emerged sometime in the 1970s, likely after the establishment of the Senate Budget Committee and the Congressional Budget Office in 1974. It came to its full expression when Margaret Thatcher declared in 1983 that “the state has no source of money, other than the money people earn themselves. If the state wishes to spend more it can only do so by borrowing your savings or by taxing you more.” But didn’t the money come from the government in the first place? MMT says that Thatcher has it backward: The government spends money into the society and then taxes some of it back. Every dollar that is not taxed back is a person’s profit. “The government doesn’t need our money.” Kelton writes, “We need their money.” Intuitively, this seems true. Hard currency in the United States declares it is “Federal Reserve Note.” It’s the government’s money.

If this is true, we need a better understanding of how money gets into society. From a distance you might assume that there is one way—the Treasury printing money—when in fact currency enters society chaotically, from multiple possible vectors. One method is that the U.S. Mint prints paper dollars and coins and then sells them to the Federal Reserve, which then distributes them to banks. But most money is not distributed in hard currency. The Federal Reserve is in charge of adjusting interest rates and private banks’ “reserves,” which theoretically determines how much money they can carry. Then the banks lend that money out to their customers, often by adjusting their customers’ bank balance. In this case, the private bank has just conjured money out of thin air. The Federal Reserve also buys Treasury bonds, which Kelton asserts are like a special version of the U.S. dollar that pays a little interest. All of these banking activities are thought of as monetary policy.

The other way that money is created is not through banks but through fiscal policy, of which military spending and welfare programs are prime examples. When the Federal Reserve marks up a defense contractor’s bank account, here too money originates. Whenever the government directly spends somewhere, money is created. But if money is being created by a variegated, largely uncoordinated bizarre range of actors, what is the limit? The constraint, MMTers argue, is that if too much money enters the system, it can cause inflation. This erodes the value of the currency. Understood this way, MMT argues the limit to government spending is not the amount it brings back in tax dollars, but the amount of inflation that the spending incurs.

The government could be regularly handing out money to people with no ill effects, and yet it almost always refuses to do so.
The problem, for Kelton, is that since the 1980s we have over-relied on monetary policy (that is, Federal Reserve and Treasury actions) to originate, control, and disburse the money supply. We depend almost entirely on the Federal Reserve’s interest rate tweaks to get money into society, but the Federal Reserve really only opens and closes the spigot on credit, which privileges banks and large corporations that fund themselves primarily through certain types of credit. As we have seen during the recent ongoing economic crisis, the Federal Reserve does not and cannot directly intervene in specific areas that need help, such as for instance restaurants or black and brown communities that have been historically denied access to credit and resources. A fiscal method of controlling inflation and dealing with a crisis would be to enact wage controls, welfare spending, or possibly a jobs guarantee. This might remind you of New Deal programs, and for good reason. That was a time when the government stimulated the economy by giving people jobs and paying them money directly, instead of just expanding credit. The federal government created Social Security, an infusion of government money into the hands of retired citizens. As Kelton notes, all of these successful programs of fiscal spending, including the passage of Medicare, were signed into law with almost no awareness of what they would actually cost. The concerns of justice easily overrode petty questions of governmental deficits, and in the face of crisis, the threat of inflation was low.

Today, the threat of inflation is once again extremely low, even prior to the current economic catastrophe. Inflation since the Great Recession has barely crawled up to the Fed’s desirable goal of 2 percent. The truth is that we are further than ever from an activist government that engages in direct fiscal policy to make sure money and resources are distributed in a just way. The government could be regularly handing out money to people with no ill effects, and yet it almost always refuses to do so. (Except, of course, in the case of the paltry $1,200 checks the Treasury cut.) Furthermore, when it comes to averting disaster for working people and changing society, monetary policy has proven itself to be a limited tool. In response to the coronavirus pandemic, the Federal Reserve had engaged in the extreme limits of monetary policy by lowering interest rates to zero, buying and guaranteeing corporate debt, and in some cases lending money directly to some big businesses. Yet unemployment still exploded, and civil unrest seethes.

MMT argues that money is not an abstraction but a method for facilitating the distribution of real resources. Inflation occurs when too much money is chasing actually scarce resources. If, say, home health care workers were all paid $10 million a year, this would probably make the prices of homes explode. This wouldn’t be good. We should aim to have home health care workers paid as much as possible without raising inflation. Maybe this could be done through wage control, or maybe by limiting the prices of houses, or by placing a high tax on incomes to limit spending. But what the specific policy is, and at what level, is hard to say. It behooves us as a society to debate and figure that out. This is to say that MMT refocuses our attention away from budget squabbles in Congress and back to the real question for any government with complete control over its own currency: How do we best distribute the real resources of a society?

When you consider governing from an MMT lens, you have to consider different questions. Is there enough insulin in the world for every diabetic? Do we have enough concrete and steel to build permanently cheap public housing? Enough asphalt to fix our roads? Enough hospitals to treat the sick? In a wealthy country like the United States, the answer is observably yes. Kelton writes that, “MMT teaches us that if we have the real resources we need … then the money can always be made available.” The taxpayer myth and deficit fears are convenient fables that allow politicians to do nothing about rampant poverty, crumbling infrastructure, or a debt-crushed working class. “If they couldn’t hide behind the deficit myth,” Kelton writes, “what excuse would they use to justify withholding support? It helps to have a bad cop.” (It should be noted that states and cities, because they do not issue their own currency and are often legally mandated to balance their budgets, are technically dependent on tax income to balance their budgets. But federal aid, upon which they all rely, is, in MMT’s lens, limited only by inflation.)

The taxpayer myth and deficit fears are convenient fables that allow politicians to do nothing about rampant poverty, crumbling infrastructure, or a debt-crushed working class.
The irony of this conclusion is that it reveals MMT to be an economic theory that demotes economics, from being a field that dictates how, why, and when resources are distributed, to one that is more janitorial; one that is useful primarily to monitor inflation and interest rates. It puts politics back on the steering wheel, theoretically democratizing economic decisions. This is, of course, a dangerous proposition. As we have seen, MMT is already practiced by warmongering politicians who see no problem with unlimited military spending.

But if MMT is a dangerous proposition, it is because democracy itself is a dangerous proposition. That’s why it is inaccurate to describe it as a lefty economic theory, as much of the media does. At best, it reinvigorates some basic functions of the democratic process and provides tools to engage in mortal combat with deficit hawks like Mitch McConnell and Nancy Pelosi. It can’t prescribe change in a particular partisan direction (though Kelton, a liberal, provides a few ideas of her own in the final chapter, like a federal jobs guarantee). MMT is simply a different way to describe the basic mechanisms of how money functions.

“The problem we have today,” Kelton writes, “is that economic policy is often prescribed by people who, despite holding advanced degrees in economics, possess no real understanding of how our monetary system works.” The idea is that a basic understanding of how money works, of MMT precepts, could empower any citizen to fight for a better world. But this will only happen once we reconcile what the country is capable of and what the people are willing to do. “Austerity,” Kelton writes, “is a failure of imagination.” So what kind of society do we want to imagine, if we unshackle ourselves from the language of taxpayer-funded, deficit-diminishing government? Are we willing to stop shoveling resources into the military (and its domestic paramilitary offshoot, police departments) and start diverting them to working-class communities? If everyone deserves to be safe, housed, and prosperous, let’s instruct the Federal Reserve to start marking up some different accounts.

Robin Kaiser-Schatzlein @robinsreport

U.S. GOVERNMENT BEST KEPT SECRET: INSTITUTIONALIZED RACISM/CLASSISM

Old habits are hard to break. White Congress has been controlling U.S. economics since Day One.

Since Day One our politicians have been telling us the BIG FAT LIE that our government runs our finances like a household budget with a finite amount of money.

Nothing could be further from the truth.

Congress is like a light bulb. How many psychiatrists does it take to change a light bulb? ANSWER: None. The lightbulb has to want to change.

In other words, our U.S. Constitution charges Congress with the duly-authorized power to create money.