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It doesn't look good for approximately 140 million Americans at, near, or below the official poverty level. A litany of the ills plaguing these people would go on for pages. No one really seems to care. We've got brilliant people in all sectors of this economy, in every university and college, in Federal, state, and local government. There are geniuses hanging out in barber shops, beauty parlors, fast food joints, neighborhood bars, even in prison, and yet, 140 million are stuck in an economic/financial morass. Well, if they're stuck so are the rest of us, even the 1% after all there's just so much they can leach from us and keep everyone at some effective level of survival to provide for the 1%.
Is it because we don't know what to do, or we know what to do but can't, politically? Are we full of solutions and no agreements on which is best, or can't we compromise? Are there rules that some play by and others don't because they can't get in the game? Have these 140 million suffering Americans been told so often that this is the way it's going to be and they've gotten used to being near at or below the poverty level.
Look at what's happening to the OWS movement. The state is spending millions to contain, control, even incarcerate when all 99% of them want is to be heard. They want to petition their government. And they do so at the risk of arrest. Maybe they need jobs? That's it. Get some jobs and they go away. By that measure our economic problem could be resolved.
Ok, so let's go with it. First, who's going to pay for the jobs?
For the past four years 2007-2011 we've seen participation rates for the labor force go down to 46%. And unemployment rates, obviously go up, 22.5% while the government tells us it's only 8.3% because they use manipulated data to keep us from becoming an enraged "pitchfork mob."
With fewer and fewer job, folks need an extension of unemployment payments, and a reduction in income taxes.. With fewer people going to work businesses are not likely to be the best place to begin looking for a surge in new jobs. After all, they were the first ones to feel the pinch when the 100 mil stopped or slowed down their spending and stuff stayed on shelves longer, and they had to let the stock boys go, next the cashier, and then the salad bar lady etc. So businesses couldn't retain as much profit. If there were reserves they hung on to them, not wanting to risk investment when customers were holding back.
Well if business, the private sector, doesn't have the money to hire, or if they do have the money and won't hire, who does the hiring? And were does the money come from?
Ok, where does the public sector get the money to give to the 140 mil? Is it from tax collections and borrowing from foreign countries? No, and no.
Since August, 1971 the government has used a system of credits and debits to checking and savings accounts it has with the Federal Reserve Bank. There's no more payment in gold or convertibility of paper money to gold and vice versa. Now it's all paper.
Where's it come from? It comes from the same place the points come from for the Super Bowl score for the Giants and the Patriots. The guy at the stadium's computer clicks a mouse button and the Giants have 2 points. He does this for the Pats field goal. The stadium doesn't have a box filled with points. They come out of thin air. The government operates the same way. It never has nor doesn't have dollars to mark accounts up or mark accounts down.
The guy at the Treasury Department and the guy at the Federal Reserve and the guy at the IRS use their computers to credit and debit accounts. Your Social Security check for example...Treasury prints an amount on a piece of paper...$2,000. It debits the SS Trust Fund's checking account, $2,000 and credits your checking account $2,000. That's it.
You've got your money. No body had to dump silver or gold coins into your account.
Let's say you owed, $4,000 in income taxes. You take $4,000 in cash into the IRS. The clerk gives you a receipt, thanks you and tosses your cash into the shredder. There's an IRS record that you paid your tax. But the guys at the Treasury and the Federal Reserve could care less. They know your tax dollars are not needed as revenue to then pay for roads, defense, etc. The money for roads and everything else the government pays for comes from the same place the points for the Giants came from....thin air.
The reason this is so goes back to August, 1971 when President Nixon abandoned the gold standard once and for all. That made
Today, politicians, and Presidential advisors have conned us into believing that the government needs to balance its budget. Nonsense. We only need to guard against inflation. Monetary inflation has been held to 2% (www.shadowstats.com.) Commodity inflation is at 8-12% due to speculation not because of too much money chasing too few goods....supply and demand.
What's needed, right now, are fiscal policies, e.g., permanent tax reductions and deficit spending in amounts sufficiently large to reduce unemployment to 4%-5% over the next 12 months. We know federal tax collections are not used as sources of revenue but rather to constrain spending. Reducing tax rates is just plain good sense since it's demand that needs to be stimulated. The Mosler Plan's elimination of FICA should be coupled to across the board reductions of no less than 75% in marginal tax rates at all levels of the income spectrum. Added to these would be elimination of double taxation on corporate income and profits.
The Treasury and Fed would credit the reserve accounts for Social Security in the exact amounts that would have been paid by employees and employers. Since this is an accounting procedure, Treasury payments would not incur debt and would not count against the debt ceiling.