NJ Governor Signs “Rain Tax” Bill; Residents Can Now BE TAXED When It Rains On Their Property

In what is one of the most corrupt and vile things to have ever happened to the American political system, residents of New Jersey will now be taxed when something 100% out of their control happens. New Jersey’s governor Phil Murphy signed 19 bills into law on Monday, one of which, was the so-called “rain tax.”

Unfortunately, there were supporters of this tyrannical and wholly dictatorial law. Dubbed S-1073, supporters call it “flood defense,” and say it will serve as a long-needed tool to manage flooding and dirty runoff from rainwater.  So there are actually human beings on earth who want others and themselves stolen from because it rains.  There is nothing more disturbing that the current political path the United States is currently one.  It’s downright horrifying, actually.

Government is downright evil and shameless when it comes to taxation. These pillagers of the public just sit around all day thinking and dreaming of events and things to tax. – Judy Morris Report

“Most importantly, it gives communities a way to access new resources in a fair and equitable manner, and invest in related benefits such as additional green space. We urge the governor to sign it,” said New Jersey Future’s Chris Sturm, who serves as the advocacy group’s managing director for policy and water, according to a report by Patch.

Some have criticized the bill (albeit, now enough) saying that it would impose taxes “based on the weather” which is an unfair system of stealing the money of others. Obviously, if you have any heart at all.  It also gives the government much more power and more authority to steal more money by expanding what’s already an overly unfair burden (all taxation is “unfair”) on New Jersey residents who were saddled with several new taxes in 2019.

Assemblyman Christopher DePhillips has said the “rain-tax” bill permits local communities to tax “based on the weather,” and allows unlimited bonding and debt to be placed on the backs of property taxpayers. Not that bonding and debt aren’t already on the backs of the taxpayer, it is, but now New Jersey gets to carry the financial burden when it rains.  “The last thing this state needs is more debt and another runaway tax. Especially one that taxes the weather” said DePhillips.

The so-called soft socialism of western nations is just an illusion. Western nations are bankrupt, their economies are disintegrating before their very eyes and the promises of lifetime pensions, welfare and healthcare are nothing more than propaganda lies that voters willingly drink. In the end, they will have nothing and be much worse off. Such is the fate of a person who votes for the police powers of the state to steal from another to give them what they want but never earned.Judy Morris Report

 

 

NJ Governor Signs “Rain Tax” Bill; Residents Can Now BE TAXED When It Rains On Their Property

In what is one of the most corrupt and vile things to have ever happened to the American political system, residents of New Jersey will now be taxed when something 100% out of their control happens. New Jersey’s governor Phil Murphy signed 19 bills into law on Monday, one of which, was the so-called “rain tax.”

Unfortunately, there were supporters of this tyrannical and wholly dictatorial law. Dubbed S-1073, supporters call it “flood defense,” and say it will serve as a long-needed tool to manage flooding and dirty runoff from rainwater.  So there are actually human beings on earth who want others and themselves stolen from because it rains.  There is nothing more disturbing that the current political path the United States is currently one.  It’s downright horrifying, actually.

Government is downright evil and shameless when it comes to taxation. These pillagers of the public just sit around all day thinking and dreaming of events and things to tax. – Judy Morris Report

“Most importantly, it gives communities a way to access new resources in a fair and equitable manner, and invest in related benefits such as additional green space. We urge the governor to sign it,” said New Jersey Future’s Chris Sturm, who serves as the advocacy group’s managing director for policy and water, according to a report by Patch.

Some have criticized the bill (albeit, now enough) saying that it would impose taxes “based on the weather” which is an unfair system of stealing the money of others. Obviously, if you have any heart at all.  It also gives the government much more power and more authority to steal more money by expanding what’s already an overly unfair burden (all taxation is “unfair”) on New Jersey residents who were saddled with several new taxes in 2019.

Assemblyman Christopher DePhillips has said the “rain-tax” bill permits local communities to tax “based on the weather,” and allows unlimited bonding and debt to be placed on the backs of property taxpayers. Not that bonding and debt aren’t already on the backs of the taxpayer, it is, but now New Jersey gets to carry the financial burden when it rains.  “The last thing this state needs is more debt and another runaway tax. Especially one that taxes the weather” said DePhillips.

The so-called soft socialism of western nations is just an illusion. Western nations are bankrupt, their economies are disintegrating before their very eyes and the promises of lifetime pensions, welfare and healthcare are nothing more than propaganda lies that voters willingly drink. In the end, they will have nothing and be much worse off. Such is the fate of a person who votes for the police powers of the state to steal from another to give them what they want but never earned.Judy Morris Report

 

 

Keynes Is Dead – This Is The ‘Long-Run’

Authored by Charles Gave via Evergreen Gavekal blog,

“In the long run, we are all dead.”
–JOHN MAYNARD KEYNES

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INTRODUCTION

John Maynard Keynes, an English economist and author, has been held in high esteem for several decades thanks to his groundbreaking work in economics in the early 20th century. The theory he popularized in an attempt to better understand the Great Depression, aptly named Keynesian theory, revolutionized demand-side economic policy at the time.

For those who haven’t studied the riveting subject of macroeconomics since college – sarcasm, of course, for everyone out there that doesn’t live and breathe the subject like we do – Keynes advocated for increased government spending and lower taxes to stimulate economy activity, especially during times of economic hardship. Subsequently, long after his death, Keynes’ disciples proposed that optimal economic performance could be achieved through frequent “fine-tuning” by government monetary and fiscal policies (i.e. interest rates, relative to the former, and taxes/spending in the case of the latter).

Consequently, like so many well-intentioned policy initiatives meant to cope with emergency conditions, Keynes’ prescription has morphed into constant application even during mild cyclical downturns. Moreover, the other part of his master plan—to run surpluses during good times–has been almost totally ignored by election-driven politicians (are there any other kind?).

In the case of the global monetary mandarins following the financial crisis of 2007-2008, the slightest market turbulence or economic hiccup has caused them to resort to Keynesian remedies that were once reserved for true crises. As noted in prior EVAs, the net effect is a global addiction to stimulus, especially to ultra-low interest rate policies (ULIPs). But more on that in the next installment of Bubble 3.0

As this week’s missive from Charles Gave puts forth, the question facing investors is whether Keynesian economics is dead after years being used and abused. The sorry growth record of countries which for years, if not decades, have resorted to levels of stimulus that would have made Keynes blush, indicates that its effectiveness has diminished—if not vanished. Moreover, it increasingly appears that these desperate measures have done more harm than good. In other words, it seems that a chronic overreliance on short-term, feel-good medications has led to a serious long-lasting disease. The question is particularly relevant in the European Union (EU), where interest rates have plummeted over the last 10 years to near zero, or even below. This has made it nearly impossible to stimulate a significant return on capital in the midst of a slowing economy with shrinking savings and rising debt levels. Sound at all familiar to you?

KEYNES IS DEAD; THIS IS THE LONG RUN

Yogi Berra once said that “in theory, there is no difference between theory and practice. In practice, there is”. Take cutting interest rates as an example. According to (Keynesian) theory, reducing interest rates is a way to borrow from future demand in order to prevent a recession today. That’s the theory, and the theory is sound. But then comes the practice, and in Europe today, we are in practice up to our necks.

When interest rates reach zero, or even worse linger in negative territory, it is safe to assume there is no more future demand left that can be brought forward to today. So, after a while, if you want to keep consuming beyond your production, the only solution is to use past savings.

For example, in Germany long rates have fallen from 4.5% in 2007 to 0.3% today. Now imagine a German pension fund (or insurance company) portfolio, fully invested (for the sake of argument) in German bunds. Further, imagine that 10% of the portfolio matures every year. Finally, imagine that this pension fund needs to pay out 3% of its value every year in pension benefits.

Between 2007 and 2011, the yield on bunds hovered around 3%, so our pension fund didn’t face a problem. The bund yield was roughly equal to the distribution rate, ensuring that the pension fund could pay its pensioners from its coupons. However, since Mario Draghi’s 2012 “whatever it takes”’ speech, yields on bunds have collapsed and now hover around 0.3%. For our hypothetical German pension fund, its income from bond coupons (0.3%) is now no longer sufficient to cover the annual pay-out to its pensioners (3%).

This means it has to sell bonds. Logically, the first bonds to get the chop will be the higher-coupon bonds bought a long time ago, because those are the bonds on which the fund has made the greatest capital gains. But selling these means the fund will receive lower average coupons in the future. And of course, the proceeds of maturing bonds and any new inflows will be invested in newly-issued bonds with a much lower yield.

Eventually, the pension fund will run out of older bonds to sell, and the only solution will be to either a) start paying pensions out of its capital, or b) to reduce its pension payouts massively.

At the risk of flogging a dead horse: when interest rates reach zero, after a while capital gains disappear, and the only way to maintain consumption is to start consuming the system’s existing stock of savings. At this point, pensioners stop living off the return on their capital, and start living on the return of their capital.

Take France as an example: one of the triggers behind the Gilet Jaune protests was the French government’s decision to stop the indexation of pensions to the French inflation rate. Could this highly unpopular decision have been made necessary by the fact that pension funds had reached the point at which the distribution of capital, rather than the distribution of returns, had started?

The low interest rate environment means that the stock of French savings is currently insufficient to provide adequate returns to retirees. So, to maintain French pensioners’ purchasing power, the only other option for the French government would have been to raise taxes on working people. But at this point in France, higher taxes are both politically and economically impossible (France is not only world champion in soccer, but also in direct and indirect taxation).

To put it simply, once the “euthanasia of the rentier” has been achieved, Keynesian policies stop working. As a result, the question confronting investors is whether Keynes is dead, and whether they are now stuck in the long run; a long run where bringing forward tomorrow’s consumption to today is no longer an option. If so, then it seems obvious that the final victims of the euro experiment will be the pensioners of Northern Europe.

Perhaps we are getting close to this point, given the current buzz in policy circles around a new way to monetize this shortfall in savings. Of course, a cynic might observe that there is nothing new about having central banks print money to make up savings shortfalls. However, in this case our cynic would be wrong. There is something new this time: a new name! Specifically, printing money for governments to spend, even when savings don’t allow for such spending, is now called Modern Monetary Theory, or MMT.

Of course, the name is something of an oxymoron; there is really nothing modern about this monetary theory. Confusing money creation with wealth creation was at the core of the debate between John Law and Richard Cantillon 300 years ago. For Law (a Scot who fled British justice, took refuge in France, and within a few years managed to drive what was then the leading economic power of the day into near bankruptcy), increases in the supply of money would lead to the employment of unused land and labor, which in turn would lead to higher productivity. Meanwhile, Cantillon explained in his Essay On Commerce that mistaking money for wealth always leads to disaster. Plus ça change...

Amazon’s second headquarters faces new blocks in Virginia funding vote

March 16, 2019

By Nandita Bose

WASHINGTON (Reuters) – Amazon.com Inc’s plan to set up a second headquarters in northern Virginia, after being rebuffed in New York, will face its first test when local officials vote on Saturday on a proposed financial package worth an estimated $51 million.

Amazon in November picked National Landing, a site jointly owned by Arlington County and the City of Alexandria, just outside of Washington, along with New York for its so-called HQ2 or second headquarters.

That followed a year-long search in which hundreds of municipalities, ranging from Newark, New Jersey, to Indianapolis, competed for the coveted tax-dollars and high-wage jobs the project promises.

Amazon in February abruptly scrapped plans to build part of its second headquarters in New York after opposition from local leaders, who were upset by incentives promised by state and city politicians.

While opposition in Arlington is still nascent, the vote has become a political flashpoint between the project’s supporters and activist opponents. It has given local activists the chance to push for a delay so that the county’s proposal can be reviewed and debated further.

A five-member panel of the Arlington County Board will vote on whether Amazon will receive the estimated $51 million, a fraction of the $481 million promised by the county. Only 5 percent of the incentives are direct.

Amazon has also been offered a $750 million package by the state that the Virginia General Assembly approved with little opposition.

The scene at Saturday’s vote is likely to be different. At least 100 members from local activist groups are expected to attend.

Protests are expected to begin at least an hour before the vote comes up for hearing at 1 pm EST, Reuters has learnt from labor groups.

The $51 million includes a controversial direct financial incentive or cash grant of $23 million to Amazon over 15 years, which will be collected from taxes on Arlington hotel rooms. The grant is contingent upon Amazon occupying six million square feet of office space over the first 16 years.

Arlington has also offered to invest about $28 million over 10 years of future property tax revenue in onsite infrastructure and open space at the headquarters site.

A filing on the county board’s website says the $23 million grant and the $28 million in strategic public infrastructure investments were “instrumental in Amazon choosing Arlington for its headquarters.”

A county spokesman declined to comment.

Arlington County Chair Christian Dorsey has stated publicly he had “no interest” in postponing the vote, had heard no suggestions to do so from other board members, and expected the measure to pass.

Amazon’s 25,000 new jobs will help offset the more than 34,000 jobs Arlington has lost since 2003 due to federal agency closures and other factors, and help diversify the local economy, company spokeswoman Jill Kerr said. “Our investment of $2.5 billion will generate more than $3.2 billion in tax revenue which can be used for public services.”

Activists from For Us, Not Amazon, a coalition of nine labor groups and grassroots organizations working in areas such as minority advocacy, are not convinced.

Roshan Abraham, an organizer from Our Revolution Arlington, a coalition member, said his group wants Amazon to engage with the community more, hold public hearings on the company’s investments, address rising housing costs, displacement of low-income families near the proposed site and donate to affordable housing funds.

“What we are very concerned about is Amazon has met behind close doors, at invitation events, but haven’t met with the community in a public, accessible way,” he said.

Amazon said it has met with many community leaders and residents, including local businesses, nonprofits, and community and civic associations and will continue to engage with them as it expands its presence in Arlington.

(Reporting by Nandita Bose in Washington; Editing by Richard Chang)

Basement-Dwelling Millennials Beware: Reverse Mortgages May Evaporate Your Inheritance 

With nearly 90% of millennials reporting that they have less than $10,000 in savings and more than 100 million Americans of working age with nothing in retirement accounts, we have bad news for basement-dwelling millennials invested in the “waiting for Mom and Dad to die” model;

Reverse mortgages are set to make a comeback if a consortium of lenders have their way, according to Bloomberg.

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Columbia Business School real estate professor Chris Mayer – who’s also the CEO of reverse mortgage lender Longbridge Financial, says the widely-panned financial arrangements deserve a second look. Mayer is a former economist at the Federal Reserve of Boston with a Ph.D. from MIT. 

In 2012, Mayer co-founded Longbridge, based in Mahwah, New Jersey, and in 2013 became CEO. He’s on the board of the National Reverse Mortgage Lenders Association. He said his company, which services 10,000 loans, hasn’t had a single completed foreclosure because of failure to pay property taxes or insurance. –Bloomberg

Reverse mortgages allow homeowners to pull equity from their home in monthly installments, lines of credit or lump sums. Over time, their loan balance grows – coming due upon the borrower’s death. At this point, the house is sold to pay off the loan – typically leaving heirs with little to nothing

Elderly borrowers, meanwhile, must continue to pay taxes, insurance, maintenance and utilities – which can lead to foreclosure.

While even some critics agree that reverse mortgages make sense for some homeowners – they have been criticized for excessive fees and tempting older Americans into spending their home equity early instead of using it for things such as healthcare expenses. Fees on a $100,000 loan on a house worth $200,000, for example, can total as much as $10,000 – and are typically wrapped into the mortgage. 

The profits are significant, the oversight is minimal, and greed could work to the disadvantage of seniors who should be protected by government programs and not targeted as prey,” said critic Dave Stevens – former Obama administration Federal Housing Administration commissioner and former CEO of the Mortgage Bankers Association. 

To support his claims that reverse mortgages are far less risky than they used to be, Mayer cites a 2014 study by Alicia Munnell of Boston College’s Center for Retirement Research. Munnell, a professor and former assistant secretary of the Treasury Department in the Clinton Administration (who once invested $150,000 in Mayer’s company and has since sold her stake). Munnell concluded that industry changes requiring lenders to assess a prospective borrower’s ability to pay property taxes and homeowner’s insurance significantly reduces the risk of a reverse mortgage

The number of reverse mortgages, or Home Equity Conversion Mortgages (HECM) in the United States between 2005 and 2018 has not shown a recent upward trend – however that may change if Mayer and his cohorts are able to convince homeowners that reverse mortgages aren’t what they used to be. 

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Cleaning up their image

For years, the reverse mortgage industry has relied on celebrity pitchmen to convince Americans to part with the equity in their homes in order to maintain their lifestyle. 

The late Fred Thompson, a U.S. senator and Law & Order actor, represented American Advisors Group, the industry’s biggest player. These days, the same company leans on actor Tom Selleck.

Just like you, I thought reverse mortgages had to have some catch,” Selleck says in an online video. “Then I did some homework and found out it’s not any of that. It’s not another way for a bank to get your house.

Michael Douglas, in his Golden Globe-winning performance on the Netflix series The Kominsky Method, satirizes such pitches. His financially desperate character, an acting teacher, quits filming a reverse mortgage commercial because he can’t stomach the script. –Bloomberg

In 2016, American Advisers and two other companies were accused by the US Consumer Financial Protection Bureau of running deceptive ads. Without admitting guilt, American Advisers agreed to add more caveats to its promotions and paid a $400,000 fine. 

As a result, the company has made “significant investments” in compliance, according to company spokesman Ryan Whittington, adding that reverse mortgages are now “highly regulated, viable financial tools,” which require homeowners to undergo third-party counseling before participating in one. 

The FHA has backed more than 1 million such reverse mortgages. Homeowners pay into an insurance fund an upfront fee equal to 2 percent of a home’s value, as well as an additional half a percentage point every year.

After the last housing crash, taxpayers had to make up a $1.7 billion shortfall because of reverse mortgage losses. Over the past five years, the government has been tightening rules, such as requiring homeowners to show they can afford tax and insurance payments. –Bloomberg

As a result of tightened regulations, the number of reverse mortgage loans has dropped significantly since 2008. 

Making the case for reverse mortgages is Shelly Giordino – a former executive at reverse mortgage company Security 1 Lending, who co-founded the Funding Longevity Task Force in 2012. 

Giordino now works for Mutual of Obama’s reverse mortgage division as their “head cheerleader” for positive reverse mortgages research. One Reverse Mortgage CEO Gregg Smith said that the group is promoting “true academic research” to convince the public that reverse mortgages are a good idea. 

Mayer under fire

University of Massachusetts economics professor Gerald Epstein says that Columbia may need to scrutinize Mayer’s business relationships for conflicts of interest. 

They really should be careful when people have this kind of dual loyalty,” said Epstein. 

Columbia said it monitors Mayer’s employment as CEO of the mortgage company to ensure compliance with its policies. “Professor Mayer has demonstrated a commitment to openness and transparency by disclosing outside affiliations,” said Chris Cashman, a spokesman for the business school. Mayer has a “special appointment,” which reduces his salary and teaching load and also caps his hours at Longbridge, Cashman said.

Likewise, Boston College said it reviewed Professor Munnell’s investment in Mayer’s company, on whose board she served from 2012 through 2014. Munnell said another round of investors in 2016 bought out her $150,000 stake in Longbridge for an additional $4,000 in interest.

“Anytime I had a conversation like this, I had to say at the beginning that I have $150,000 in Longbridge,” said Munnell. “I had to do it all the time. I’m just as happy to be out, for my academic life.” 

Trump ex-aide Manafort hit with 3-1/2 more years in prison, new charges

March 13, 2019

By Andy Sullivan and Jan Wolfe

WASHINGTON (Reuters) – President Donald Trump’s former campaign chairman Paul Manafort was sentenced to about 3-1/2 more years in prison and was hit with a fresh set of criminal charges in New York on Wednesday, drawing sympathy from a president who declined to say whether he would issue a pardon.

Manafort, 69, is due to spend a total of 7-1/2 years behind bars when the sentence by U.S. District Judge Amy Berman Jackson for crimes related to secret lobbying and witness tampering is combined with another of just under four years issued by a different judge in Virginia last Thursday. He has already served nine months of the sentence.

The veteran Republican operative has received the longest prison term yet in Special Counsel Robert Mueller’s investigation of possible collusion between the Trump campaign and Russia during the 2016 presidential election.

It amounts to a sharp fall for a man who earned millions of dollars as an international political consultant to pro-Russia politicians in Ukraine and dodged more than $6 million in taxes by hiding his income in offshore bank accounts.

That money could have been used by the government to help pay for veterans’ hospitals and other services, Jackson told Manafort, who was brought into the courtroom in a wheelchair because of a condition called gout.

“Why? Not to support a family, but to sustain a lifestyle at the most opulent and extravagant level possible. More houses than one family can enjoy. More suits than one man can wear,” Jackson said, referring to Manafort’s previous luxuries.

Just minutes after Jackson read her sentence, the Manhattan district attorney unveiled a separate indictment charging Manafort with residential mortgage fraud and other New York state crimes, which unlike the federal charges cannot be erased by a presidential pardon. Manafort faces up to 25 years in prison on the three most serious charges.

“No one is beyond the law in New York,” District Attorney Cyrus Vance, a Democrat, said in a statement.

Trump, who in November said he had not ruled out giving Manafort a pardon, on Wednesday said that “I have not even given it a thought.”

“It’s not something that’s right now in my mind. I do feel badly for Paul Manafort – that I can tell you,” the Republican president told reporters at the White House.

Trump has called Mueller’s investigation a “witch hunt,” and Manafort’s lawyers have argued that this case does nothing to prove that the campaign conspired with Russia. They have noted that the crimes sending him to prison stem from his lobbying work, not his time with Trump’s campaign.

“But for a short stint as a campaign manager in a presidential election, I don’t think we’d be here today,” Manafort lawyer Kevin Downing told Jackson.

Jackson suggested that the “‘no collusion’ mantra” was simply aimed at winning a pardon from Trump. Jackson added that Mueller’s ongoing investigation could yet reveal that Manafort worked with Russian interests during the campaign.

‘A HARSH LESSON’

Prosecutor Andrew Weissmann said Manafort had engaged in an extensive cover-up that deceived the U.S. government and the American public, and continued to try to undermine the investigation even after he pleaded guilty.

“He engaged in crime again and again. He has not learned a harsh lesson. He has served to undermine, not promote, American ideals,” Weissmann said.

Manafort, clad in a dark suit and a purple tie instead of the jail garb he wore to his Virginia sentencing, apologized for his actions and asked Jackson not to impose any prison time on top of the 47 months he was given by U.S. District Judge T.S. Ellis in Alexandria.

“This case has taken everything from me already – my properties, my cash, my life insurance, trust accounts for my children and grandchildren, and even more,” Manafort said.

“Saying ‘I’m sorry I got caught’ is not an inspiring plea for leniency,” the judge told Manafort.

She also said Manafort’s expression of remorse rang hollow.

“It’s hard to overstate the number of lies and the amount of fraud and the extraordinary amount of money involved,” Jackson said.

Jackson had ruled on Feb. 13 that Manafort breached his agreement to cooperate with Mueller’s office by lying to prosecutors about matters pertinent to the Russia probe including his interactions with a business partner they have said has ties to Russian intelligence.

Jackson’s sentence builds on what many legal experts called the surprisingly lenient sentence from Ellis when Manafort was sentenced for his August 2018 tax fraud and bank fraud convictions – far shy of federal sentencing guidelines. Ellis last week praised Manafort’s “otherwise blameless life.”

The sentence Manafort received from Jackson was well below the 10 years he could have faced for the two criminal counts to which he pleaded guilty in September 2018.

Jackson showed little sympathy for the argument by Manafort’s lawyers that his failure to disclose lobbying activity on behalf of Ukraine was little more than a paperwork error.

In a chaotic scene outside the courthouse, Downing said Mueller’s two cases against his client had shown “no evidence of any collusion with Russians,” as protesters called Manafort a “traitor” and a “liar.”

Mueller is preparing to submit to U.S. Attorney General William Barr a report on his investigation into whether Trump’s campaign conspired with Russia and whether Trump has unlawfully sought to obstruct the probe. Trump has denied collusion and obstruction and Russia has denied U.S. intelligence findings that it interfered in the election to boost Trump.

Manafort is one of the 34 people and three companies charged by Mueller. Others who have pleaded guilty include former campaign aides Rick Gates and George Papadopoulos, former U.S. national security adviser Michael Flynn and former Trump personal lawyer Michael Cohen. Longtime Trump adviser Roger Stone has pleaded not guilty.

(Additional reporting by Karen Freifeld and Nathan Layne in New York; Editing by Will Dunham)

How States/Empires Collapse In Four Easy Steps

Authored by Charles Hugh Smith via OfTwoMinds blog,

The promises cannot be met, and so society decays into warring elites and competing constituencies.

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There is a grand, majestic tragedy in the inevitable collapse of once-thriving states and empires: it all seemed so permanent at its peak, so godlike in its power, and then slowly but surely, too many grandiose, unrealistic promises were made to too many elites and constituencies, and then as growth decays to stagnation, the only way to maintain the status quo is to appear to meet all the promises by creating money out of thin air, i.e. debauching the currency.

This political expediency works most wonderfully for a time: people don’t realize the silver content of their coinage is being cut to near-zero, or there’s nothing holding up the value of their currency but trickery and vague allusions to past glory.

Trust in the state/empire’s currency suddenly collapses in a phase shift: all seems well until the moment the avalanche sweeps it all away.

It’s a simple progression: during the permanent-growth-is-our-birthright phase of self-reinforcing virtuous cycles, when everything is expanding rapidly–credit, resources, jobs, capital, profits, state tax revenues, etc.–promises are made to elites and constituencies that look easy to meet as the economy is projected to expand rapidly essentially forever.

But virtuous cycles decay to unvirtuous cycles of bureaucratic sclerosis and corruption, systemic friction, declining productivity and resource depletion, and the rise of parasitic elites who contribute nothing but skim plenty saps the surplus available for productive reinvestment.

Every elite under pressure to satisfy the demands of those who were over-promised in the good times reverts to the same two financial fixes: debt and currency debasement. First the state borrows and borrows and borrows, all under the belief that “the government can’t go broke because it issues its own money.”

Any rationalization will do in the phase of stagnation, but the reality is it’s all political expediency: lacking the resources to pay all the promises, the state borrows from the future to maintain the illusion of stability.

Alas, the future arrives, and the interest on the debt begins stripmining tax revenues needed to fund the essential responsibilities of the state/empire. At this point, the ruling elites pursue two equally fatal fixes: they raise taxes on the remaining productive class while the parastic elites pay little or nothing, and they devalue the currency so they can continue to pay the promised sums with less actual wealth.

The productive class either escapes to other climes, goes underground or opts out. As tax revenues fall, the ruling elites turn in desperation to debauching the state currency, in effect issuing 10 units of currency for every 1 unit of actual purchasing power.

This maintains the fiction that the promises are being met, but the purchasing power of the currency erodes so drastically that the parasitic elites and the constituencies eventually catch on and demand a full payment of what was promised back in good times.

This demand cannot be met, and so society decays into warring elites and competing constituencies. The only real solution–to make severe sacrifices in order to live within the modest means available and jettison the parasitic elites–is politically and culturally unpalatable to a citizenry steeped in a belief that good times should be forever and it’s the fault of the ruling party of the moment rather than a failure of the entire system.

Then the “free” distribution of bread and circuses ramps up and the silver shipped to phantom legions defending the borders ends up in the quartermasters’ pockets. The delusional state of the ruling elite infects the general populace, and magical thinking abounds, as do vague claims to future greatness based on the mythologies of previous eras that had earned prosperity with sacrifice and thrift.

The entire global status quo is in the stagnation phase, and the promises that cannot be met are looming large. And so the politically expedient ruling elites turn to debt and financial trickery to stave off the reckoning. This works for a few years but it guarantees the coming collapse.

Expansion, maturation, stagnation and collapse:

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If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

How States/Empires Collapse in Four Easy Steps

There is a grand, majestic tragedy in the inevitable collapse of once-thriving states and empires: it all seemed so permanent at its peak, so godlike in its power, and then slowly but surely, too many grandiose, unrealistic promises were made to too many elites and constituencies, and then as growth decays to stagnation, the only way to maintain the status quo is to appear to meet all the promises by creating money out of thin air, i.e. debauching the currency.

This political expediency works most wonderfully for a time: people don’t realize the silver content of their coinage is being cut to near-zero, or there’s nothing holding up the value of their currency but trickery and vague allusions to past glory.

Trust in the state/empire’s currency suddenly collapses in a phase shift: all seems well until the moment the avalanche sweeps it all away.

It’s a simple progression: during the permanent-growth-is-our-birthright phase of self-reinforcing virtuous cycles, when everything is expanding rapidly–credit, resources, jobs, capital, profits, state tax revenues, etc.–promises are made to elites and constituencies that look easy to meet as the economy is projected to expand rapidly essentially forever.

But virtuous cycles decay to unvirtuous cycles of bureaucratic sclerosis and corruption, systemic friction, declining productivity and resource depletion, and the rise of parasitic elites who contribute nothing but skim plenty saps the surplus available for productive reinvestment.

Every elite under pressure to satisfy the demands of those who were over-promised in the good times reverts to the same two financial fixes: debt and currency debasement. First the state borrows and borrows and borrows, all under the belief that “the government can’t go broke because it issues its own money.”

Any rationalization will do in the phase of stagnation, but the reality is it’s all political expediency: lacking the resources to pay all the promises, the state borrows from the future to maintain the illusion of stability.

Alas, the future arrives, and the interest on the debt begins stripmining tax revenues needed to fund the essential responsibilities of the state/empire. At this point, the ruling elites pursue two equally fatal fixes: they raise taxes on the remaining productive class while the parastic elites pay little or nothing, and they devalue the currency so they can continue to pay the promised sums with less actual wealth.

The productive class either escapes to other climes, goes underground or opts out. As tax revenues fall, the ruling elites turn in desperation to debauching the state currency, in effect issuing 10 units of currency for every 1 unit of actual purchasing power.

This maintains the fiction that the promises are being met, but the purchasing power of the currency erodes so drastically that the parasitic elites and the constituencies eventually catch on and demand a full payment of what was promised back in good times.

This demand cannot be met, and so society decays into warring elites and competing constituencies. The only real solution–to make severe sacrifices in order to live within the modest means available and jettison the parasitic elites–is politically and culturally unpalatable to a citizenry steeped in a belief that good times should be forever and it’s the fault of the ruling party of the moment rather than a failure of the entire system.

Then the “free” distribution of bread and circuses ramps up and the silver shipped to phantom legions defending the borders ends up in the quartermasters’ pockets. The delusional state of the ruling elite infects the general populace, and magical thinking abounds, as do vague claims to future greatness based on the mythologies of previous eras that had earned prosperity with sacrifice and thrift.

The entire global status quo is in the stagnation phase, and the promises that cannot be met are looming large. And so the politically expedient ruling elites turn to debt and financial trickery to stave off the reckoning. This works for a few years but it guarantees the coming collapse.

Expansion, maturation, stagnation and collapse:

 

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.

My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format. 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Finland’s Government Collapsed Under Weight Of Socialized Healthcare

Authored by Mac Slavo via SHTFplan.com,

Finland’s government has collapsed just weeks before the general election.  New socialist and communist reforms have failed due to the rising costs of healthcare.

Healthcare costs, which are high because of governments, have caused the collapse of the Finnish government. Prime Minister Juha Sipila and the rest of the cabinet resigned after the governing coalition failed to pass reforms in parliament to the country’s regional government and health services, the Wall Street Journal reports.

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Filthy Blood stained examining room in Cumana Hospital, Cumana, Venezuela. August 2018

Finland, like much of the developed world, faces an aging population, with around 26 percent of its citizens expected to be over 65 by the year 2030, an increase of 5 percent from today.  The strain on the socialized medical system is impossible to ignore, and cannot be fixed by more government interference.

And the problems with socialism continue, as money is taken from some and given to others, eventually, the takers will outnumber the makers.

As an increasing number of people live longer in retirement, the cost of providing pension and healthcare benefits can rise. Those increased costs are paid for by taxes collected from of the working-age population – who make up a smaller percentage of the population than in decades past. -BBC

The only reform that could possibly help these failing systems is to have the government step back and let competition and the free market thrive. Of course, that’s the one thing governments cannot and will not do because it means giving up power and control over people’s lives.

Reuters reports that soaring treatment costs and longer life spans have particularly affected Nordic countries. It isn’t just Finland.  Sweden and Denmark face similar bleak outlooks for their socialism as well. 

“Nordic countries, where comprehensive welfare is the cornerstone of the social model, have been among the most affected,” according to Reuters. 

“But reform has been controversial and, in Finland, plans to cut costs and boost efficiency have stalled for years.”

The Kaiser Family Foundation found that 58 percent of Americans oppose “Medicare for all” if told it would eliminate private health insurance plans, and 60 percent oppose it if it requires higher taxes, according to a report by the Washington Free Beacon. Americans are general living paycheck to paycheck and already suffer under an unjust and burdensome tax system. Socialized medicine would mean one thing is for certain: more of your money will be stolen from you to pay for it. It isn’t about giving everyone healthcare, it’s about a boost in power and control for government officials and politicians who think they have the right to steal from us and run our lives.

When is enough enough?

DoubleLine’s Jeffrey Gundlach calls Modern Monetary Theory a ‘crackpot’ idea

March 12, 2019

By Jennifer Ablan and Trevor Hunnicutt

(Reuters) – Jeffrey Gundlach, the chief executive of DoubleLine Capital and Wall Street’s Bond King, called the increasingly popular Modern Monetary Theory backed by progressives a “crackpot” idea.

Gundlach, who oversees more than $123 billion, said on an investor webcast on Tuesday that Modern Monetary Theory is “complete nonsense, yet it is being used to justify a massive socialist program.”

Modern monetary theorists argue government spending, and deficits as needed, should be used to meet the full employment and inflation mandates currently tasked to the U.S. Federal Reserve. Taxes may not be needed to support all spending since the government can create more money and inflation is the main restraint on government spending, according to the theory.

The ideas have gained currency with some economists and Democratic Party politicians but have also been met with fierce criticism.

A leading proponent of Modern Monetary Theory, State University of New York at Stony Brook economics professor Stephanie Kelton, advised democratic socialist U.S. Senator Bernie Sanders in his 2016 run for the Democratic presidential nomination, and Representative Alexandria Ocasio-Cortez has also expressed openness to the idea.

“What happens when the economy turns down?” he asked. Gundlach added that the “ridiculous” MMT is a way of monetizing debt and could lead to a significant boycott of long-term bonds. The ideas could gain popularity if the United States enters a recession in 2020, ahead of the next presidential election.

Populist discontent has struck a nerve with some voters in the United States, with liberals calling for higher taxes on the rich and more spending to promote economic equality.

Gundlach said the timing of a college bribery scandal reinforces that populist narrative.

Federal authorities arrested dozens on Tuesday for a $25 million scheme to help wealthy Americans, including actresses Felicity Huffman and Lori Loughlin and some finance executives, cheat their children’s way into elite universities, such as Yale and Stanford.

Gundlach said: “It really doesn’t do all of us in the world of finance a lot of reputational good…look at these people, turning the table in their favor. It’s really pretty horrifying.”

Gundlach said the college bribery scandal “really helps the Elizabeth Warren crowd.”

Warren vowed on Friday to break up Amazon.com Inc, Alphabet Inc’s Google and Facebook Inc if elected U.S. president to promote competition in the technology sector.

Addressing the run-up in the U.S. stock market, Gundlach said he still thinks stocks are in a bear market. “The stock market was and is in a bear market,” he said, adding stocks could go negative again this year.

Gundlach said the market rebound stemmed from the “remarkable 180-degree turn” from the Federal Reserve, which is straying away from quantitative tightening. He said the Fed will likely keep $3.5 trillion in assets on its balance sheet. “Maybe they realize that there really isn’t anybody to buy all the bonds that appear to be potentially in prospect other than the central bank,” Gundlach said.

(Reporting by Jennifer Ablan and Trevor Hunnicutt; Editing by Phil Berlowitz and Lisa Shumaker)

The Source Of Killer Inflation: Services

Authored by Charles Hugh Smith via OfTwoMinds blog,

The soaring cost of services is driven by a number of factors.

What will the future bring: fire (inflation) or ice (deflation)? The short answer: both, but in very different doses. Goods that are tradeable and exposed to technologically driven commodification will decline in price (deflation) while untradeable services that are difficult to commoditize will increase in price (inflation), generating a self-reinforcing feedback loop of wage-price inflation.

Gordon Long and I discuss these trends in our latest program The Supply-Demand Services Problem (YouTube).

The big difference between goods that drop in price (TVs, etc.) and services that are exploding higher (healthcare, childcare, elderly care, higher education, local taxes and fees, etc.) is the relative size each occupies in the household budget: a new TV is a couple hundred bucks and a once-every-few-years purchase, while all the services cost thousands of dollars annually– or even tens of thousands of dollars.

A new TV or electronic gew-gaw is signal noise in the household budget while services consume the most of what’s left after paying for housing and transport.

A 10% decline in the cost of a new TV is $25, while a 10% increase in annual tuition and college fees is $2,500. Add in thousands more for childcare, elderly care, local taxes and fees and healthcare, and the deflationary impact of tradeable goods is trivial compared to the increases in untradeable services.

Not all goods are declining in sticker price. vehicles are rising sharply in price, a fact that’s erased by hedonic adjustments in official inflation (the new car is supposedly so much better than the previous model that the “price” actually declines-heh).

Then there’s the inexorable shrinkage of quantity and quality. The package that once held 16 ounces now contains 13.4 ounces, and the appliance that once lasted for years now lasts a few months as the quality of components is reduced.

The soaring cost of services is driven by a number of factors:

1. The cost of staying in business is rising: wages are going up, overhead is going up, rent is going up, regulatory burdens are increasing, compliance costs more and local taxes, fees and licensing are skyrocketing.

This drives the costs of local small services ever higher: childcare, haircuts, elderly care, educational enrichment programs, and so on.

2. Competition that would suppress price increases has been destroyed by cartels and monopolies and regulatory capture. Big Pharma has eliminated foreign competition, higher education is a rapacious cartel, healthcare is nothing more than a collection of cartels, Internet and telephony providers are either local monopolies or cartels, and so on.

3. In the endless quest for higher quarterly profits, Corporate America has stripped out on-the-job education, preferring to poach high-value workers from competitors rather than invest in in-house training. This has reduced the pool of workers with up-to-date real-world skills, as a college diploma even in the sciences doesn’t translate to marketable skills.

This dynamic pushes wages higher via poaching while reducing the supply of qualified workers.

4. Service-sector infrastructure is often obsolete, kludgy and costly. Insiders are loathe to invest in technologies that might reduce headcount, and even when funds are made available the integration of legacy systems often yields extremely poor results.

5. The cartel-monopoly structure of service sectors has inhibited the spread of cost-cutting technologies; online education that leads to a diploma should be nearly free and universally accessible, (see my book The Nearly Free University), but instead the higher education cartel continues to exact its pound of flesh for a diploma, a scrap of paper with rapidly diminishing returns in an economy over-supplied with college graduates and workers with advanced degrees.

6. The demands on workers’ time and energy continually increases, leaving many unable to provide the services that were once performed in the home–childcare, elderly care, food prepared at home, and so on.

7. The cultural focus on academic achievement and entertainment has stripped away basic skills that were once common, forcing households to pay for pricey services: changing the oil in a car, basic plumbing and home repairs, etc. are now uncommon skills.

8. These social and demographic trends are reducing the supply of service expertise: small business owners (Baby Boomers) are retiring and the skills of starting and operating a service business in a costly regulatory thicket are not being taught or nurtured.

As a result, there is a widening gap between demand and supply of essential services. This asymmetry is not easily remedied and as a result it will generate self-reinforcing inflation that the economy is ill-prepared to pay.

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There is much more in our program (39:52):

*  *  *

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format. My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF). My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

The Source of Killer Inflation: Services

What will the future bring: fire (inflation) or ice (deflation)? The short answer: both, but in very different doses. Goods that are tradeable and exposed to technologically driven commodification will decline in price (deflation) while untradeable services that are difficult to commoditize will increase in price (inflation), generating a self-reinforcing feedback loop of wage-price inflation.

Gordon Long and I discuss these trends in our latest program The Supply-Demand Services Problem (YouTube).

The big difference between goods that drop in price (TVs, etc.) and services that are exploding higher (healthcare, childcare, elderly care, higher education, local taxes and fees, etc.) is the relative size each occupies in the household budget: a new TV is a couple hundred bucks and a once-every-few-years purchase, while all the services cost thousands of dollars annually– or even tens of thousands of dollars.

A new TV or electronic gew-gaw is signal noise in the household budget while services consume the most of what’s left after paying for housing and transport.

A 10% decline in the cost of a new TV is $25, while a 10% increase in annual tuition and college fees is $2,500. Add in thousands more for childcare, elderly care, local taxes and fees and healthcare, and the deflationary impact of tradeable goods is trivial compared to the increases in untradeable services.

Not all goods are declining in sticker price. vehicles are rising sharply in price, a fact that’s erased by hedonic adjustments in official inflation (the new car is supposedly so much better than the previous model that the “price” actually declines-heh).

Then there’s the inexorable shrinkage of quantity and quality. The package that once held 16 ounces now contains 13.4 ounces, and the appliance that once lasted for years now lasts a few months as the quality of components is reduced.

The soaring cost of services is driven by a number of factors:

1. The cost of staying in business is rising: wages are going up, overhead is going up, rent is going up, regulatory burdens are increasing, compliance costs more and local taxes, fees and licensing are skyrocketing.

This drives the costs of local small services ever higher: childcare, haircuts, elderly care, educational enrichment programs, and so on.

2. Competition that would suppress price increases has been destroyed by cartels and monopolies and regulatory capture. Big Pharma has eliminated foreign competition, higher education is a rapacious cartel, healthcare is nothing more than a collection of cartels, Internet and telephony providers are either local monopolies or cartels, and so on.

3. In the endless quest for higher quarterly profits, Corporate America has stripped out on-the-job education, preferring to poach high-value workers from competitors rather than invest in in-house training. This has reduced the pool of workers with up-to-date real-world skills, as a college diploma even in the sciences doesn’t translate to marketable skills.

This dynamic pushes wages higher via poaching while reducing the supply of qualified workers.

4. Service-sector infrastructure is often obsolete, kludgy and costly. Insiders are loathe to invest in technologies that might reduce headcount, and even when funds are made available the integration of legacy systems often yields extremely poor results.

5. The cartel-monopoly structure of service sectors has inhibited the spread of cost-cutting technologies; online education that leads to a diploma should be nearly free and universally accessible, (see my book The Nearly Free University), but instead the higher education cartel continues to exact its pound of flesh for a diploma, a scrap of paper with rapidly diminishing returns in an economy over-supplied with college graduates and workers with advanced degrees.

6. The demands on workers’ time and energy continually increases, leaving many unable to provide the services that were once performed in the home–childcare, elderly care, food prepared at home, and so on.

7. The cultural focus on academic achievement and entertainment has stripped away basic skills that were once common, forcing households to pay for pricey services: changing the oil in a car, basic plumbing and home repairs, etc. are now uncommon skills.

8. These social and demographic trends are reducing the supply of service expertise: small business owners (Baby Boomers) are retiring and the skills of starting and operating a service business in a costly regulatory thicket are not being taught or nurtured.

As a result, there is a widening gap between demand and supply of essential services. This asymmetry is not easily remedied and as a result it will generate self-reinforcing inflation that the economy is ill-prepared to pay.

There is much more in our program:

(39:52) 

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.

My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format. 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

The Source of Killer Inflation: Services

What will the future bring: fire (inflation) or ice (deflation)? The short answer: both, but in very different doses. Goods that are tradeable and exposed to technologically driven commodification will decline in price (deflation) while untradeable services that are difficult to commoditize will increase in price (inflation), generating a self-reinforcing feedback loop of wage-price inflation.

Gordon Long and I discuss these trends in our latest program The Supply-Demand Services Problem (YouTube).

The big difference between goods that drop in price (TVs, etc.) and services that are exploding higher (healthcare, childcare, elderly care, higher education, local taxes and fees, etc.) is the relative size each occupies in the household budget: a new TV is a couple hundred bucks and a once-every-few-years purchase, while all the services cost thousands of dollars annually– or even tens of thousands of dollars.

A new TV or electronic gew-gaw is signal noise in the household budget while services consume the most of what’s left after paying for housing and transport.

A 10% decline in the cost of a new TV is $25, while a 10% increase in annual tuition and college fees is $2,500. Add in thousands more for childcare, elderly care, local taxes and fees and healthcare, and the deflationary impact of tradeable goods is trivial compared to the increases in untradeable services.

Not all goods are declining in sticker price. vehicles are rising sharply in price, a fact that’s erased by hedonic adjustments in official inflation (the new car is supposedly so much better than the previous model that the “price” actually declines-heh).

Then there’s the inexorable shrinkage of quantity and quality. The package that once held 16 ounces now contains 13.4 ounces, and the appliance that once lasted for years now lasts a few months as the quality of components is reduced.

The soaring cost of services is driven by a number of factors:

1. The cost of staying in business is rising: wages are going up, overhead is going up, rent is going up, regulatory burdens are increasing, compliance costs more and local taxes, fees and licensing are skyrocketing.

This drives the costs of local small services ever higher: childcare, haircuts, elderly care, educational enrichment programs, and so on.

2. Competition that would suppress price increases has been destroyed by cartels and monopolies and regulatory capture. Big Pharma has eliminated foreign competition, higher education is a rapacious cartel, healthcare is nothing more than a collection of cartels, Internet and telephony providers are either local monopolies or cartels, and so on.

3. In the endless quest for higher quarterly profits, Corporate America has stripped out on-the-job education, preferring to poach high-value workers from competitors rather than invest in in-house training. This has reduced the pool of workers with up-to-date real-world skills, as a college diploma even in the sciences doesn’t translate to marketable skills.

This dynamic pushes wages higher via poaching while reducing the supply of qualified workers.

4. Service-sector infrastructure is often obsolete, kludgy and costly. Insiders are loathe to invest in technologies that might reduce headcount, and even when funds are made available the integration of legacy systems often yields extremely poor results.

5. The cartel-monopoly structure of service sectors has inhibited the spread of cost-cutting technologies; online education that leads to a diploma should be nearly free and universally accessible, (see my book The Nearly Free University), but instead the higher education cartel continues to exact its pound of flesh for a diploma, a scrap of paper with rapidly diminishing returns in an economy over-supplied with college graduates and workers with advanced degrees.

6. The demands on workers’ time and energy continually increases, leaving many unable to provide the services that were once performed in the home–childcare, elderly care, food prepared at home, and so on.

7. The cultural focus on academic achievement and entertainment has stripped away basic skills that were once common, forcing households to pay for pricey services: changing the oil in a car, basic plumbing and home repairs, etc. are now uncommon skills.

8. These social and demographic trends are reducing the supply of service expertise: small business owners (Baby Boomers) are retiring and the skills of starting and operating a service business in a costly regulatory thicket are not being taught or nurtured.

As a result, there is a widening gap between demand and supply of essential services. This asymmetry is not easily remedied and as a result it will generate self-reinforcing inflation that the economy is ill-prepared to pay.

There is much more in our program:

(39:52) 

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.

My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format. 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Finland’s Government Collapsed Under Weight Of Socialized Healthcare

Finland’s government has collapsed just weeks before the general election.  New socialist and communist reforms have failed due to the rising costs of healthcare.

Healthcare costs, which are high because of governments, have caused the collapse of the Finnish government. Prime Minister Juha Sipila and the rest of the cabinet resigned after the governing coalition failed to pass reforms in parliament to the country’s regional government and health services, the Wall Street Journal reports. Finland, like much of the developed world, faces an aging population, with around 26 percent of its citizens expected to be over 65 by the year 2030, an increase of 5 percent from today.  The strain on the socialized medical system is impossible to ignore, and cannot be fixed by more government interference.

And the problems with socialism continue, as money is taken from some and given to others, eventually, the takers will outnumber the makers.

As an increasing number of people live longer in retirement, the cost of providing pension and healthcare benefits can rise. Those increased costs are paid for by taxes collected from of the working-age population – who make up a smaller percentage of the population than in decades past. -BBC

The only reform that could possibly help these failing systems is to have the government step back and let competition and the free market thrive. Of course, that’s the one thing governments cannot and will not do because it means giving up power and control over people’s lives.

Reuters reports that soaring treatment costs and longer life spans have particularly affected Nordic countries. It isn’t just Finland.  Sweden and Denmark face similar bleak outlooks for their socialism as well.  “Nordic countries, where comprehensive welfare is the cornerstone of the social model, have been among the most affected,” according to Reuters. “But reform has been controversial and, in Finland, plans to cut costs and boost efficiency have stalled for years.”

The Kaiser Family Foundation found that 58 percent of Americans oppose “Medicare for all” if told it would eliminate private health insurance plans, and 60 percent oppose it if it requires higher taxes, according to a report by the Washington Free Beacon. Americans are general living paycheck to paycheck and already suffer under an unjust and burdensome tax system. Socialized medicine would mean one thing is for certain: more of your money will be stolen from you to pay for it. It isn’t about giving everyone healthcare, it’s about a boost in power and control for government officials and politicians who think they have the right to steal from us and run our lives.

When is enough enough?

Turnout falls to lowest yet in French ‘yellow vest’ protests

March 9, 2019

By Danielle Rouquié and Sarah White

PARIS (Reuters) – Turnout at “yellow vest” protests across France, a backlash against high living costs that has lasted nearly four months, fell on Saturday to its lowest level yet.

People wearing the neon high-visibility vests that have come to symbolize the movement were joined in Paris by others donning pink tops, as child-care workers turned out against a reform of their unemployment subsidies.

Demonstrators on the Champs-Elysees avenue were pushed back at one point by water cannon, and sporadic clashes with police erupted in other cities including Lyon, Bordeaux and Toulouse, though the protests largely passed off peacefully.

Some protesters staged a “flashmob” at Paris’ Charles de Gaulle airport, waving French flags and dancing in one of the terminals, television footage on BFM TV showed.

Some 28,600 people turned out overall, according to the interior ministry, with 3,000 of those in Paris – down from 39,300 across France the previous Saturday, and a far cry from the nearly 300,000 who blocked roads and marched in cities in mid-November.

Some campaigners are calling for a bigger show of force next weekend, when a series of town hall-style debates launched by President Emmanuel Macron to try to quell anger is due to end.

What started out last November as an outcry against Macron’s plan to hike fuel taxes — part of his bid to push a cleaner energy model — has morphed into a broader, leaderless movement decrying the government as out of touch with the hardships faced by some households and low-income workers.

Macron dropped the fuel tax increase and budgeted an extra 10 billion euros ($11 billion) to help the poorest workers.

Since riots in December, recent demonstrations have been largely peaceful. On Saturday in Paris, 19 people had been arrested by 6:35 p.m., police said.

In an Ifop poll taken on March 7 and 8 for the online news site Atlantico, 54 percent expressed sympathy with the ‘yellow vests’ — up from 50 percent in mid-February, but down from a peak of 72 percent.

Macron’s popularity has also improved in recent weeks. An Ipsos poll released on March 6 gave him an approval rating of 28 percent, up 8 points since December.

(Reporting by Sarah White, Danielle Rouquie and Reuters TV; Editing by Kevin Liffey)

Which States Have The Highest Taxes On Marijuana?

Submitted by Priceonomics

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When comparing cannabis prices across states that have recreationally legalized, it’s easy to assume that the rates at which cannabis is taxed dictate the prices consumers are paying in dispensaries. For example, California has high tax rates for their cannabis, and also have some of the most expensive prices on the legal market.  

As an online cannabis price comparison and dispensary locator service, Wikileaf has access to data on weed prices across the country. We ranked the recreationally legal states, first by tax rates, and then by the average cost per eighth. We found that while Washington has the highest tax on cannabis at 47%, they find themselves one of the less expensive state to buy cannabis.

Conversely, Alaska is the most expensive state to purchase cannabis in, while having lower taxes.  While taxes certainly do have an effect on the price that consumers pay for cannabis in dispensaries, Wikileaf’s data shows that the rate at which cannabis is taxed is not the only factor that dictates market price.

These are the sales tax rates on cannabis from each recreational state on consumer-facing sales taxes through January 2019:

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Washington tops the list, taking up to 37 percent from cannabis purchases, followed by Oregon at 17 percent, California and Colorado at 15 percent, Maine and Nevada at 10 percent and Massachusetts at 6.3 percent. Alaska is the only state on the list so far that doesn’t tax on cannabis purchases.

Sales Tax Isn’t The Only Cost Passed On To Consumers

Somewhere between 37 and 0 percent is a big difference. However, those sales tax rates aren’t the only tax you’re paying. Many states have additional taxes and fees to pair with their tax rates on purchases.

For example, while Alaska doesn’t tax their cannabis purchases, they do charge growers $50 per ounce, and growers in Maine are charged anywhere between $94 and $325 per pound on top of their 10 percent sales tax rate. These are the additional taxes that consumers end up paying per recreational state:

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When you add up the taxes on dispensaries, growers, sales, and local government taxes, you get a fuller picture of how taxed the cannabis industry actually is. With all of those costs together, here’s a clearer picture of which states are collecting the most from legal cannabis.

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Washington cannabis is taxed at 47.1%, making that state’s marijuana the most taxed in the country. California comes in second, at a tax rate of 40.3%. Yet, according to Wikileaf’s menu data below, the average price of an eighth after all taxes in Washington is the fifth most expensive out of eight states, while California comes in two spots more expensive.

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If taxes are the main reason why cannabis prices are high, then it’s tough to explain why, despite Washingtonian cannabis buyers being taxed 7 percent more overall than Californians, their price per eighth is around $8 less. What’s even more surprising is Alaska, only the fifth most taxed state, is actually the most expensive state to purchase weed in. So while there may be a correlation between taxes and prices, our data indicates that there is not a direct causal relationship between the two.

Since each state has its own regulations and framework for recreational cannabis, there isn’t any blanket reason for why prices are the way they are across all states. However, those particular factors that affect the price of cannabis in every single state all seem to affect one thing: supply. Let’s look closer at California as an example.

California: Other Causes of High Prices

California has an extensive application process for obtaining their licenses, one that has been muddled with roadblocks. This makes it both difficult AND expensive to obtain legal licenses, severely choking off the cannabis supply in a state once flush with legal weed. According to Bloomberg, there were a grand total of 1,100 registered cannabis dispensaries in the state prior to legalization. Now, there are only 410 registered dispensaries.

Considering that those 410 dispensaries are competing with a massive Californian black market (which estimates say is much larger than the current legal market in 2018,) the industry in California is worse off than it seems.

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According to those estimates, the legal sales in California totaling $2.5 billion in 2018 are more than doubled by the nearly 5.9 billion the black market accounted for in 2017. That’s a massive portion of a very lucrative pie that the legal cannabis industry in California has to contend with.

On top of the red tape and political issues, the supply (volume of growers) and environmental factors need to be considered as well. Droughts and wildfires raging through the state has limited crop yields and driven up the prices, with some producers claiming to have lost as much as an entire year’s crop in the most recent wildfires.

While taxes certainly do affect the price of weed, they don’t tell the whole story. We took data that ranked recreationally legal states in order of highest tax rates and compared it against Wikileaf’s pricing data for the average cost of an eighth in each of these states. If the rates at which each state taxes cannabis determines its market price, then you would expect the rankings from the two data sets to match. However, the fact that they don’t match leads us to two conclusions. The first is that there is a correlative, not causal, relationship between taxes and marijuana prices. The second conclusion is that there are other culprits for both high and low prices of cannabis, such as in the case of California.

U.S. accuses Palestinians of manufacturing crisis over tax transfer

March 8, 2019

By Michelle Nichols

UNITED NATIONS (Reuters) – The United States accused the Palestinians on Friday of manufacturing a crisis by rejecting the first 2019 monthly tax transfer from Israel because it slashed a portion designated for financial support to families of militants jailed in Israel.

The United Nations Security Council met behind closed doors to discuss the issue at the request of Kuwait and Indonesia. U.S President Donald Trump’s Middle East peace envoy Jason Greenblatt represented Washington at the meeting.

“It is entirely inappropriate to focus on Israel as the source of this crisis. It is the Palestinian Authority that has chosen to manufacture the current crisis,” Greenblatt told the 15-member council, according to U.N. diplomats in attendance.

The U.S. mission to the United Nations declined to comment on Greenblatt’s remarks. The Palestinians have condemned the Israeli decision as “piracy.”

Greenblatt and White House adviser Jared Kushner have been working on a plan to mediate peace between Israel and the Palestinians. U.N. diplomats said Greenblatt gave no details of the plan on Friday.

Palestinians have refused to discuss any peace blueprint with the United States in the wake of Trump’s recognition of Jerusalem as Israel’s capital in 2017.

The Palestinian decision on the tax transfer came despite increasing cash flow troubles, caused in part by U.S. aid cuts, that could destabilize the Palestinian Authority, an interim self-government body set up following the 1993 Oslo accords between the Palestinians and Israel.

Under the interim accords, Israel collects taxes on imports into the Israeli-occupied West Bank and in the Gaza Strip, an enclave under Palestinian Islamist rule since 2007, and makes monthly transfers of the proceeds to the PA.

The tax transfers make up about half of the PA’s budget, according to Palestinian Finance Ministry data. On Feb. 17, Israel announced a freeze on about 5 percent of that money affecting stipends the PA pays to families of Palestinian militants killed or jailed by Israel.

“It’s a unilateral decision in violation of existing bilateral agreement,” Kuwait’s U.N. Ambassador Mansour al-Otaibi told reporters after the Security Council discussion.

According to diplomats, Greenblatt said the Palestinian payments to militants’ families “creates incentives for further acts of terrorism.” The United States passed legislation last year to reduce aid to the PA unless it stopped the pay-outs.

Greenblatt called on other council members to join the United States in urging the Palestinian Authority to end the payments, diplomats said.

(Reporting by Michelle Nichols at the United Nations; Editing by James Dalgleish)

Alexandria Ocasio-Cortez’ Mother Flees from New York to Florida to Escape from the High Tax Burden Her Daughter Promotes

Alexandria Ocasio-Cortez’ mother, Blanca, left the liberal state of New York because she could not afford the high property tax while her daughter is pushing to massively raise taxes to implement her Green New Deal that would cost tens of trillions of dollars and would break the country.

A Green New Basic Income Guarantee

U.S. military spending eight years ago was at $1.2 trillion per year, when one added in the nukes in the Energy Department, the Homeland Security Department, the CIA, interest on debt, veterans’ care, etc. Now it’s at $1.3 trillion. In the years since military spending has been dramatically increased, the United States has been made less safe, less liked, less environmentally sustainable, less free, less prosperous, less tolerant, and less democratic. Moving money to other areas significantly expands the economy, rewarding the shift financially as well as in many other ways. In fact, the same money spent on clean energy jobs returns a 50% increase in taxes over money spent on military jobs.

It has been estimated that eliminating child poverty would save $0.5 trillion per year in reduced spending on healthcare, drop-outs, and crime. Experiments with a Basic Income Guarantee have in fact improved health and education and reduced crime. It’s safe to assume that eliminating adult poverty would also create significant savings. We know that single-payer healthcare, which costs less, would create major savings (and cover veterans along with everyone else), and that cleaner air, water, and land would reduce the need for healthcare. We know that fossil fuel subsidies and mass-incarceration and highway expansion are enormously expensive but counterproductive. And we know that the most extremely wealthy corporations and individuals could be taxed a trillion dollars a year without suffering — an action that would have additional societal benefits even if the money were burned.

There is really no dispute that there is a gigantic amount of money to work with. There is, simply, the question of what to do with it, whether to tax it, and if it’s taxed how to spend it. Or, rather, there isn’t any question if we want to survive as a species. A Green New Deal that creates 20 million jobs is a necessity. A negative income tax that costs $175 billion per year is perfectly achievable, and would cost significantly less (or provide more to the fewer people in need) if created in combination with 20 million jobs and in combination with any reduction in less effective anti-poverty programs.

Giving people who need it money while taxing money from people who can afford it would require little more bureaucracy than exists now, and much less than is required by some other programs. It would not tell people how they have to spend their money or try to monitor how they do. It would be pretty darn respectful, and I’ve seen more bald assertions than evidence that anyone would take it as an insult. But it would still fall far short of the ideal of handing 285 million adults, including the billionaires, $50,000 cash each year. That would cost $14.25 trillion. But 20 million jobs at $50,000 per year would cost $1 trillion. That’s a huge number but perfectly doable. Some priorities would have to change. If, for example, sports announcers were to thank their troops for watching from 138 countries instead of 175, would anyone even notice?

There are millions of ways to go about reducing poverty, globally or with a narrower focus. I favor a number of them in combination, including legalizing the right to organize unions and strike — which has additional democratic advantages, and including a maximum wage tied to a minimum wage to which value is restored and even increased.

A new book called A Few Thousand Dollars by Robert Friedman carefully examines a number of ways of reducing poverty that have proven at least somewhat effective. Many of them involve creating savings accounts that multiply the amount of money saved but restrict how it can be used. Expanding this idea beyond its advocates’ dreams, by providing $3,000 for 200 million adults, would cost $0.6 trillion plus the bureaucracy.

In his book, Friedman examines case studies and the best designs for savings accounts dedicated to education, to houses, and to starting businesses. But these all restrict one’s options. Friedman even holds up the GI Bill as a model for anti-poverty programs because its benefits were supposedly earned through a “service.” Whatever you think of the so-called service and of whether we could survive its repetition, it was for most people compulsory. Friedman says that the notion that one shouldn’t want a “handout” is what “makes our country great” — this being of course the wealthy country with the most poverty on earth. “Greatness” is never connected to facts.

Unfortunately, we don’t have time to fiddle around with too many schemes, and we need to apply any workable schemes globally, as so much of the suffering from poverty is among the other 96%. But what we are compelled to do, namely launch a massive program of climate and environment protection, conversion to clean energy, disarmament and conversion to peaceful industries, also creates jobs in a manner never seen by even your very flashiest of “job creators.”

Let’s get started!

Financial Crisis: The Trade War Cost AMERICANS $1.4 Billion PER MONTH Last Year

Tariffs are taxes, and like any regulation or tax, the increased cost will get passed onto the consumer.  Although this is common sense, many still don’t believe that the trade war had an impact on their financial situation.  However, just last year, Americans (not the Chinese) spent $1.4 billion per month on trade war taxes.

The Trump Administration’s trade policies and increased tariffs cost American consumers $1.4 billion a month last year. Not many media outlets were there to tell anyone the honest truth that it’s the American public that will pay the tariffs, not the Chinese government.

Financial Experts Warn: Americans WILL Pay The Cost Of A Trade War

Regardless of President Donald Trump’s declaration that he is winning the trade war, American farmers and consumers appear to be the casualties. Two separate papers published over the weekend found that the cost of Trump’s duties (tariffs, so theft) to the U.S. economy was in the billions and being borne largely by American consumers.  Chinese companies aren’t paying the tariffs.  They simply raise their prices and American consumers or businesses shoulder the burden, and it didn’t take businesses long to pass on the cost to the consumer. The papers also declared that some of the world’s leading trade economists have said Trump’s tariffs would be the most consequential trade experiment seen since the 1930 Smoot-Hawley tariffs blamed for worsening the Great Depression.

“This is kind of the worst-case scenario in terms of consumers,’’ David Weinstein, who analyzed the data, said in an interview. “It’s pretty unclear that this trade war is a net win for the economy at this point.’’ According to Time, in a separate paper published on Sunday four economists including Pinelopi Goldberg, the World Bank’s chief economist and a former editor-in-chief of the prestigious American Economic Review, put the annual losses from the higher cost of imports alone for the U.S. economy at $68.8 billion, or almost 0.4 percent of gross domestic product.

Goldberg’s study also found that consumers and U.S. companies were paying most of the costs of the tariffs. Additionally, after factoring in the retaliation by other countries, the main victims of Trump’s trade wars had been farmers and blue-collar workers in areas that supported Trump in the 2016 election.

After accounting for the impact of higher tax (theft) revenue and the higher prices set by domestic producers, the study found the aggregate annual loss for the U.S. economy fell to $6.4 billion, or 0.03 percent of GDP. So increasing taxes doesn’t boost the economy? Who knew, other than everyone with two brain cells to rub together.

Top 26 Billionaires Now Worth More Than 3.8 Billion People Combined

Globally, the income gap has widened to “record heights in modern history,” and 26 individuals now hold as much in assets as the lowest 50% of the world’s population. The development charity Oxfam suggests a wealth tax of 1%.

By S.T. Patrick

To mark the beginning of the World Economic Forum in Davos, Switzerland, the development charity Oxfam released its annual wealth check report. It states that 2018 was a year in which the income gap widened to record heights in modern history. In fact, the 26 most wealthy billionaires now own as many assets as the lowest 50% of the world’s population, some 3.8 billion people.

According to Oxfam, the wealth of the “Top 26 Billionaires” increased in 2018 by $900 billion, or $2.5 billion per day. In 2016, the number of the world’s richest billionaires needed to eclipse half of the world’s population was 61. It was 43 in 2017.

Oxfam does have a solution. The charity’s suggestions in the report include a wealth tax of 1% that would “educate every child not in school and provide healthcare that would prevent 3 million deaths.”

Oxfam is not a Robin Hood organization with a desire to rob the rich and give to the poor. They share some of the same concerns as conservatives and libertarians who also have a desire to earn wealth, but on an equal playing field and while ensuring that public services for the poor are of the same quality as public services for the rich.

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Matthew Spencer, the director of campaigns and policies for Oxfam, said: “Women are dying for lack of decent maternity care and children are being denied an education that could be their route out of poverty. No one should be condemned to an earlier grave or a life of illiteracy simply because they were born poor. … It doesn’t have to be this way—there is enough wealth in the world to provide everyone with a fair chance in life. Governments should act to ensure that taxes raised from wealth and businesses paying their fair share are used to fund free, good-quality public services that can save and transform people’s lives.”

The report listed multiple interesting findings: When consumption taxes are included, the poorest 10% of Brits are paying a significantly higher tax rate than the richest 10% (comparatively, 49% to 34%). In the last two years, a new billionaire was created every two days. Since the financial crisis of 2008, the number of billionaires globally has nearly doubled.

The world’s richest man is American Jeff Bezos, the founder of “Amazon.com.” In 2018, his total wealth increased to $112 billion. No man may be an island, but Bezos is a country (or even continent) unto himself. His $112 billion is larger than the Gross Domestic Product (GDP) of over 120 countries including Morocco, Ecuador, Puerto Rico, Lithuania, Bosnia, Croatia, and Afghanistan.

Survival of the Richest, Jeffries
Available from the AFP Online Store.

Author and AFP journalist Donald Jeffries wrote about these issues illuminatingly in his vital work, The Survival of the Richest: How the Corruption of the Marketplace and the Disparity of Wealth Created the Greatest Conspiracy of All. In it, Jeffries writes about the structural and attitudinal issues that cause the economic inequality that divides even the wealthiest nations, those where resources and wealth should not be limited.

“The wealth in our society is plentiful,” Jeffries writes, “but it’s been absconded by a relative handful of exceptionally greedy individuals. Even most Ayn Rand disciples would understand that it wouldn’t be right for one child in a preschool to hoard all the toys while the others sat around and cried. But they freely defend a system that permits a faction of humanity to have far more than they could ever hope to spend, while condemning most of the world’s population to what Thomas Wolfe termed ‘lives of quiet desperation.’ ”

Americans have become so divided over partisan politics that we can no longer discern right from wrong, heartless indifference from human compassion. Any discussion about raising the marginal tax rate on billionaires is not inching toward “pinko communism” any more than a widowed grandmother wanting to afford staying in her own home is being a “capitalist pig.”

American capitalists are right to want people to strive for increases in wealth, but in doing so, what we should all strive for is a level playing field. Equal opportunity cannot be had by anyone in the lower 99% when the top 1% continues to buy politicians, hire lobbyists to write advantageous legislation, loophole billions in taxes, and pretend to help the needy by starting a sham foundation as a tax haven.

S.T. Patrick holds degrees in both journalism and social studies education. He spent 10 years as an educator and now hosts the “Midnight Writer News Show.” His email is [email protected]. He is also an occasional contributor to TBR history magazine and the current managing editor of Deep Truth Journal (DTJ).

Alexandria Ocasio-Cortez’s Own Mother Moved Out Of New York Because The Taxes Were Too High

Alexandria Ocasio-Cortez continues to come up with new ways to bankrupt America, but meanwhile we have now learned that her mother actually moved out of New York because the taxes were too high.  When AOC’s father Sergio died, things got very tough financially for the family, and at one point Blanca Ocasio-Cortez was unable to pay the mortgage on the family home for an entire year.  But ultimately she was able to come to an agreement with the bank, and she ended up moving to Florida where taxes and the cost of living are much lower

‘I was cleaning houses in the morning and working as a secretary at a hospital in the afternoon. I was working from 6am until 11pm. And I prayed and prayed, and things worked out. After the children graduated from college, I figured it was time for me to move to Florida.’

Blanca said it was a no-brainer, adding: ‘I was paying $10,000 a year in real estate taxes up north. I’m paying $600 a year in Florida. It’s stress-free down here.’

And of course it greatly helps that there is no state income tax in Florida, while New York has the highest tax burden in the entire country by a wide margin.

Things are particularly oppressive in New York City.  On top of federal taxes, state taxes, exceedingly high property taxes and a whole bunch of other taxes, the city itself also imposes an income tax on those residing there.

By the time it is all said and done, some New Yorkers end up handing over close to 50 percent of their incomes to various government entities once all forms of taxation are taken into consideration.

This is the socialist environment that has given us Alexandria Ocasio-Cortez.

And it isn’t as if the money is being used well.  In fact, it has just been revealed that Mayor Bill de Blasio’s wife was handed $900,000,000 for a mental health program, and nobody seems to know what happened to the money

New York City Mayor Bill de Blasio’s wife, Chirlane McCray, was given $900 million to start a mental health initiative focusing on helping the homeless in the city. Four years later, no one seems to know what that money was actually used for, according to the New York Post.

The City Council discovered this shocking amount of potential waste during a meeting Wednesday. And while it sounds good to spend heavily on a mental health initiative, it appears that nobody has noticed any real benefits from that investment.

Perhaps NYC would have been better off spending that money bolstering their police.

So far in 2019, the murder rate in the city is up 37 percent compared to last year.

New York City is a total mess, and now AOC wants to make the entire nation just like it.

But AOC is far more ambitious than your typical tax and spend liberal.  She wants to take government spending to crazy new levels that nobody has ever seen before.

For example, one new study has determined that AOC’s “Green New Deal” would cost U.S. taxpayers approximately 93 trillion dollars.  The following comes from Fox News

The sweeping “Green New Deal” proposed by Rep. Alexandria Ocasio-Cortez, D-N.Y., could cost as much as $93 trillion, or approximately $600,000 per household, according to a new study co-authored by the former director of the nonpartisan Congressional Budget Office.

The sobering and staggering cost estimate came as Democratic presidential hopeful Kamala Harris pointedly declined in an interview broadcast Sunday to put a price tag on the Green New Deal and “Medicare-for-all,” saying “it’s not about a cost,” but rather return on investment. The Green New Deal’s botched rollout included the release of an official document by Ocasio-Cortez’s office that promised economic security even for those “unwilling to work,” and called for the elimination of “farting cows” and air travel.

To put that number in perspective, U.S. GDP is about 19 trillion dollars a year, and the U.S. national debt is sitting at just over 22 trillion dollars right now.

It is easy to attack AOC, because she is the perfect member of Congress for the “idiocracy” that America has become.

She literally doesn’t know what she is talking about on just about any issue that you could possibly name, but the people of her district decided to send her to Washington anyway.  And the frightening thing is that there are quite a few other new members of Congress that are even worse than her.

But as bad as AOC is, I have to give her credit for one thing.

At least she is willing to stand up and fight for what she believes.

If you regularly follow my work, you already know that I can’t stand the “seat fillers” in Washington that are interested in little more than protecting their political careers at all costs.  They never make any waves, they never fight for anything important, and they spend most of their time raising money for the next campaign.

Because if you do stick your neck out in Washington, very powerful people will likely bring the hammer down on you, and that is something that AOC is finding out right now

Two political action committees founded by Rep. Alexandria Ocasio-Cortez’s top aide funneled over $1 million in political donations into two of his own private companies, according to a complaint filed with the Federal Election Commission on Monday.

The cash transfers from the PACs — overseen by Saikat Chakrabarti, the freshman socialist Democrat’s chief of staff — run counter to her pledges to increase transparency and reduce the influence of “dark money” in politics.

Chakrabarti’s companies appear to have been set up for the sole purpose of obscuring how the political donations were used.

Of course the truth is that just about every member of Congress is deeply corrupt and should be kicked out of office.

But until the American people wake up and decide to take their government back, this is what we are stuck with, and that is a very depressing reality.

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

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Modern Monetary Theory As Snake Oil

Authored by Doug Henwood via JacobinMag.com,

MMT is billed by its advocates as a radical new way to understand money and debt. But it’ll take more than a few keystrokes to change the economy.

“When we dream it, when we dream it, when we dream it

We’ll dream it, dream it for free, free money

Free money, free money, free money, free money, free money, free money”

– Patti Smith

Now that policies made famous by Bernie Sanders, like Medicare for All and free college, and newer ones like the Green New Deal, are infiltrating the political mainstream, advocates are always faced with the question: “how would you pay for them?” Although there are good answers to “this question” that could even be shrunk down to a TV-friendly length and vocabulary, they’re not always forthcoming. Even self-described socialists seem to have a hard time saying the word “taxes.” How lovely would it be if you could just dismiss the question as an irrelevant distraction?

Conveniently, there’s an economic doctrine that allows you to do just that: Modern Monetary Theory (MMT). Newly elected Rep. Alexandria Ocasio-Cortez is at least MMT-curious, and it’s all over Marxist reading groups and Democratic Socialists of America chapters. It’s even seeping into the business press — Bloomberg’s Joe Weisenthal is friendly to the doctrine. James Wilson of the New York Times tweeted recently, “The speed with which young activists on both left and right are migrating toward MMT is going to have a profound effect on US politics in the 2020s and 2030s.”

While adherents strenuously profess that MMT is subtler and more complex than this, its main selling point is that governments need not tax or borrow in order to spend – they can just create money out of thin air. A few computer keystrokes and everyone gets health insurance, student debt disappears, and we can save the climate too, without all that messy class conflict.

That’s a bit of a caricature, but as we’ll see, not an outlandish one.

At the center of MMT is a small group of academics, reinforced by a fervent army of acolytes on social media. Leading academic names include L. Randall Wray, now of the Levy Institute at Bard College; Stephanie Kelton at Stony Brook; Scott Fullwiler of the University of Missouri at Kansas City (UMKC, which has served as the MMT’s Vatican — both Wray and Kelton spent many years there); Pavlina Tcherneva, also of Bard (though she got her PhD and spent six years at UMKC). Though not a core member of the club, James Galbraith of the University of Texas, a prominent progressive economist, is a fellow traveler. Hovering above, behind, and around them is the figure of Warren Mosler, who runs a hedge fund, holds forth on MMT, and writes big checks in support of the cause. Mosler, whom Galbraith has described as a “national treasure,” isn’t afflicted with false modesty: he calls his blog “the center of the universe” and on it quotes a description of his very slender book Soft Currency Economics as “The most important book ever written.” He lives in the US Virgin Islands because it is a tax shelter with nice weather, a point worth keeping in mind when we look more closely at MMTers’ thoughts on taxation.

Two founding documents of MMT both came out in 1998: Wray’s book Understanding Modern Money and Kelton’s paper “Can Taxes and Bonds Finance Government Spending? Both argue for several points that remain central to MMT today: governments designate the one official currency for a country by accepting only that unit for the payment of taxes. And a “monetarily sovereign” government — the United States is one, Greece isn’t (because of the euro), Brazil’s status is ambiguous (since it issues its own currency but has nowhere near the power or autonomy of the US) — can issue that currency without limit. As Wray put it, “The government does not ‘need’ the ‘public’s money’ in order to spend; rather the public needs the ‘government’s money’ in order to pay taxes. Once this is understood, it becomes clear that neither taxes nor government bonds ‘finance’ government spending.” You might be wondering where income earned on the job fits into all of this, but the world of production doesn’t play a large role in the theory.

But having tempted us into thinking that taxes were dispensable, Wray pulls a bait and switch. Since there is a risk that too much government spending would spark inflation, the government might need to cool things down, meaning create a recession — though Wray shies away from using the word — by raising taxes. Taxes, MMT holds, should be used as tools of economic management, but must never be thought of as “funding” government. To think that would be to indulge in an orthodox superstition.

Kelton’s paper foreshadowed what would become a trademark of MMT writing: detailed accounting exercises designed to show what happens, mechanically speaking, when the government spends money. These are mobilized to ask “why should the government take from the private sector the money . . . that it alone is capable of creating? . . . Indeed, the entire process of taxing and spending must, as a matter of logic, have begun with the government first creating (and spending) new government money.” Government is as a God, giving economic life through spending: until it spends, we have no money. Taxes and borrowing are merely means to manage the level of reserves in the banking system.

Much of the MMT literature is an elaboration of the arithmetic of bank reserves, the money banks set aside as a backstop against a run, in the form of cash in the vault or deposits held at the central bank. Reserve accounting is important if you’re a financial economist or a central banker, but it’s of limited relevance to anyone concerned with big-picture economic questions. Absent from Kelton’s paper, Wray’s book, and much of the subsequent MMT literature, is any sense of what money means in the private economy, where workers labor and capitalists profit from their toil and compete with each other to maximize that profit, a complex network of social relations mediated by money.

Although the politics of MMT lean left, the angle of the tilt is hard to measure precisely. Mosler was described by a colleague as “politics agnostic”; by Yves Smith of Naked Capitalism, a promoter of the school, as a “conservative.” Wray has said MMT is compatible with a libertarian, small government view of the world. Kelton, in an interview with the activist and journalist Nomiki Konst in which she describes MMT as a “brand,” graciously concedes that “Marx was important at some point.”

Despite advertising its modernity with its name, MMT has roots going back over a century. Its earliest precursor is The State Theory of Money by the right-wing German economist Georg Friedrich Knapp, published in 1905. It is an odd book. Using a cascade of terms like “hylolepsy” and “synchartism,” Knapp argues that the state names the currency by law, and by the practice of only accepting tax payments denominated in that currency. This doctrine, known as chartalism, is in one sense incontrovertible; states feel very strongly about their currency and punish people who counterfeit it. You must pay taxes in the official currency or you will go to jail. No modern country not in crisis would tolerate multiple currencies circulating in its borders (though the dollar didn’t become the sole legal US currency until 1863). But how that official currency relates to the rest of society is barely addressed.

A second ancestor of MMT, and one its proponents cite frequently, is a 1946 paper by the New Deal adviser and businessman Beardsley Ruml that appeared in American Affairs: A Quarterly Journal of Free Opinion, a publication of the then quite conservative National Industrial Conference Board. The eccentric Ruml, identified in the magazine’s notes on contributors as “an audacious thinker,” declared in the title of his essay that “Taxes for Revenue are Obsolete.” The central claim is in this passage:

The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government. . . . Final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity. The United States is a national state which has a central banking system, the Federal Reserve System, and whose currency, for domestic purposes, is not convertible into any commodity. It follows that our Federal Government has final freedom from the money market in meeting its financial requirements.

It’s an early statement of the MMTers’ favorite hobbyhorse: taxes might be useful to tinker with the income distribution, or discourage vices, or to fight inflation by draining purchasing power from the economy. But governments don’t really need the revenue — they can just print the money.

Since Ruml’s essay is based on pure assertion, his oracular status among MMTers seems to come from his role as chair of the Federal Reserve Bank of New York. But that’s mostly an honorary post. (Its current occupant is Sara Horowitz, founder of the Freelancers Union.) He had no special knowledge of central banking or fiscal politics. In the 1920s, Ruml doled out money for the Rockefeller Foundation. In 1926, he gave some of that money to the Geneva Institute, a Swiss think tank that would become, in the historian Quinn Slobodian’s words, “an important institutional hub for the future neoliberals.” Ruml’s day job at the time he wrote the American Affairs essay was as chair of Macy’s, a role he took after years of service as its treasurer.

An occasional subject for New Yorker profiles in the 1940s and 1950s, Ruml also served on a number of corporate boards, including that of Muzak, whose aural product he recommended to a “Talk of the Town” reporter as a great way to improve productivity by 18 percent among people doing “monotonous” work. Perhaps not coincidentally, more than half of his American Affairs essay is devoted to denouncing the corporate profits tax as “evil,” part of Ruml’s campaign, outlined in a three-part 1945 New Yorker profile, to eliminate it.

MMTers mostly forget about this part of the Ruml oeuvre: though Warren Mosler, writing in the Huffington Post,acknowledged that Ruml “was writing about the merits of corporate taxes,” he didn’t reproduce Ruml’s characterization of them as evil, which might have alienated HuffPo’s liberal audience.

Although the politics of MMT leans left, the angle of the tilt is hard to measure precisely.

Aside from Knapp and Ruml, MMTers take inspiration from the economist Abba Lerner, in particular his 1943 paper, “Functional Finance and the Federal Debt,” which is neither outlandish nor right-wing. It was written in the middle of World War II, when fiscal prudence didn’t merely take a back seat to the war effort, it wasn’t even in the vehicle. Because of the war experience, all the old rules of balanced-budget fiscal orthodoxy seemed utterly antique, and the conviction grew that clever fiscal management could tame the business cycle and minimize unemployment.

Lerner’s opening sentence expresses a wish for the postwar world: “Apart from the necessity of winning the war, there is no task facing society today so important as the elimination of economic insecurity.” His proposed doctrine of functional finance held that “government fiscal policy, its spending and taxing, its borrowing and repayment of loans, its issue of new money and its withdrawal of money, shall all be undertaken with an eye only to the results of these actions on the economy and not to any established traditional doctrine about what is sound or unsound.” In other words, if unemployment is rising, loosen policy (boost spending, cut taxes, lower interest rates), and if inflation is rising, tighten policy (the reverse). On first glance, this sounds completely reasonable. But on second, it’s a lot more complicated.

For one thing, it often takes time to understand what’s going on in the economy, and it takes even more time to change policy — and sometimes, like in the 1970s, unemployment and inflation are both rising, and it’s not obvious what policy should do in response. Anyone who’s watched Congress struggle with tax and spending policy has to wonder how anyone could believe that fiscal policy could be fine-tuned with requisite speed and precision.

MMTers extend this hubris about the precision and power of policymaking to the realm of interest rates, which they think the central bank is completely in control of and should be kept as close to zero as possible. (Mosler thinks rates should actually be zero.) Although MMTers tend to talk casually of “the” interest rate, in fact there are many. Long-term government bonds, for example, are almost always going to carry higher rates than short-term ones, because so many more unpredictable things can happen before the bond reaches maturity. And either is going to yield less than a bank loan of similar maturity to an oil wildcatter or the corner bodega, because of the higher risk of default.

Without higher interest rates to compensate for greater default risk or longer maturities, there will simply be no one willing to buy the bonds or issue the loans. MMTers would answer that the Federal Reserve (or any comparable central bank around the world) could buy up the bonds instead. But that would, if carried to extremes, run the risk of runaway inflation — and it still wouldn’t help the wildcatter or the bodega owner. MMTers say little about how far this process could be carried on.

That brings us to the next problem: inflation. When the printing presses run freely, it’s not only reactionaries who think that runs the risk of spiraling prices. As I was researching this piece, many people to whom I described MMT, from Democrats to Marxists, brought it up as a worry. MMTers are coy about the topic — they never say how much is too much, and they profess great confidence in their ability to control it. In a paper criticizing MMT, the left-Keynesian economist Thomas Palley says he’s heard a “leading” MMTer say inflation less than 40 percent is “costless.” That’s nearly three times the modern US record of just under 15 percent in 1980, which was widely regarded, and not just by bondholders, as a crisis. Since wages typically lag behind price changes, inflations can lead to real declines in living standards.

Though it might scandalize some liberals to say so, it’s dangerous to be sanguine about inflation. People find it destabilizing and it feeds a hunger for order. The rise in inflation through the 1970s that climaxed in that 15 percent record helped grease the way for Reagan. The extreme inflation of Weimar Germany in the 1920s contributed to the rise of Hitler. As a British diplomat stationed at the embassy in Berlin wrote to his bosses at home during the hyperinflation: “The population is ripe to accept any system of firmness or for any man who appears to know what he wants and issues commands in a loud, bold voice.”

The standard view of the Weimer inflation is that the German economy, severely damaged by World War I and forced to make huge reparations payments to the victors, wasn’t up to the task — it just didn’t have the productive capacity, and its citizens were both unwilling and unable to pay the necessary taxes. So instead the government just printed money and spent it, not only to pay its own bills, but to support bank lending to the private sector. (The printing presses were so overworked that they had trouble keeping up with the demand for fresh banknotes. At least keystroke money wouldn’t face this problem.) Inflation peaked at 29,500 percent in October 1923, meaning that prices doubled every four days. The value of the mark collapsed from 320 per US dollar in early 1922 to over 4 trillion per dollar in late 1923, meaning the mark lost 99.999999992 percent of its value in a year and a half. The value of the real wage, if it’s possible to measure amid such rapid inflation, fell by over 80 percent, as pay badly lagged price increases.

In When Money Dies, a classic popular history of the Weimar inflation, Adam Fergusson wrote that the savaging of living standards brought “hunger, disease, destitution and sometimes death” to the mass of Germans. Hyperinflation was only stopped with a deep austerity program — government spending cuts, layoffs, wage cuts, the usual. Tax payments were linked to gold values, not the worthless notes from the printing press. Unemployment soared. But the inflation ended.

Wray’s explanation of the Weimar hyperinflation, one of the most dazzling of all time, is odd. The deficits, Wray explained in his book, were caused by the inflation, not the other way around. In the end, “Germany adopted a new currency, and while it was not legal tender, it was designated acceptable for tax payment. The hyperinflation ended.” Almost nothing about the printing press — he dismisses “printing money” explanations as “far too simple” — and nothing at all about the austerity program. No, there was just an unexplained monetary intervention somehow linked to tax payments. Weimar Germany may be an extreme case, but since it’s often brought up by critics of MMT — “won’t all that keystroking lead to inflation, like Argentina or Weimar?” — it’s one for which they need to have a good answer. Wray’s reluctance to face head-on the risks of printing money makes you wonder how confident he really is of his own theory.

Another serious problem with MMT is its embeddedness in a rich-country perspective, and in particular American exceptionalism — in this case the “exorbitant privilege,” as a French finance minister once put it, that comes with issuing the world’s dominant currency. Countries around the world keep their reserves (basically rainy-day funds on a very large scale held by governments at their central banks) in dollars, which make them effectively a captive market for US Treasury bonds (which is how the dollars are kept). Also, major commodities like oil are priced in dollars, forcing countries to accumulate the currency to pay for essential imports. That means the United States, exceptionally, can run giant deficits and borrow on a vast scale with little constraint (so far). Nor do we have to worry about the value of the dollar (for now, though you have to wonder how long the exorbitant privilege will last in a world where US dominance is eroding).

But less privileged countries have to worry about foreign investors dumping their bonds and driving down the value of their currency, which would jack up interest rates and inflation. Salvador Allende’s government greatly increased spending and raised the incomes of the poorest in Chile in the early 1970s; that worked nicely for a while, but then inflation took off. Allende wasn’t operating from the MMT playbook, merely resorting to policies pursued by many progressive governments facing political opposition and resource constraints. But such experiments rarely end well, and similar problems would face a poor country trying to stimulate its way to prosperity today, as we see in Venezuela now.

Compared to the United States, such countries enjoy less “monetary sovereignty” — a core MMT concept. A monetarily sovereign state is one that can spend its currency at will, including from pure keystrokes. America enjoys a lot of monetary sovereignty; so do Canada, Japan, and Britain, though to a lesser degree. Those countries need, for example, to import things priced in dollars, like oil, and the value of their currency has a direct effect on living standards that Americans are insulated from because we can print the currency in which that oil is priced. Brazil, in turn, has even less freedom; it needs harder currencies like dollars and euros to import commodities and advanced manufactured goods; and poorer countries like Bolivia or Ghana have even less. To buy essential imports, these countries often have to borrow in those hard currencies. To pay off the loans, they need to earn foreign currency through exports.

MMT has little helpful to say about that situation — in fact, its advocates sometimes seem to lecture them that foreign borrowing is risky, which it is, but sometimes it’s the only way you can buy power plants and locomotives. MMTers like William Mitchell and Wray write as if borrowing abroad is just a bad choice, and not something forced on subordinate economies. When I asked Mosler what MMT had to offer Turkey, a country whose currency has been losing value for the last four years and had something of a financial crisis in the summer of 2018, he responded with a bit of avian whimsy: “Without our recipe for Turkey they’re a dead duck.” (In fact, Turkey had been pursuing MMT-friendly expansionary fiscal and monetary policies, including state guarantees of private corporate debt, and inflation was around 11–12 percent and rising.) Not satisfied with that answer, I said that while I understood the risks of borrowing in a foreign currency, which Turkey had done a lot of, there’s not much sophisticated capital equipment available for sale in Turkish lira. Mosler answered, wrongly, that you could actually buy “a lot” of such goods in lira, and that “Any nation can sustain domestic full employment without imports of capital goods” — totally missing the point that a country looking to ascend in the global economic hierarchy needs investment goods that are only made in countries like Germany or Japan.

Member countries in the euro are a case unto themselves. Greece and the other debtors on the continent’s periphery have little sovereignty — they have big foreign debts in a currency they can’t print. Greece could have left the euro, as many on the Left urged, but that would have been massively disruptive, and even leaving that aside, it wouldn’t have addressed the country’s long-standing structural weaknesses, like an underfunded state and an underdeveloped industrial infrastructure. Symptomatic of that relative weakness: in the twenty years prior to the introduction of the euro, the drachma lost 88 percent of its value. Inflation over that period averaged over 14 percent a year. In 1980, Greek per capita GDP was 73 percent of the US’s; by 2002, that had fallen to 60 percent. In other words, Greece’s economic problems long predate the euro. And even though they don’t literally print the currency, core eurozone countries like Germany and the Netherlands hardly suffer from their formal lack of monetary sovereignty. What matters far more is your place in the global economic food chain — and that can be annoyingly sticky.

MMT’s unacknowledged dependence on the exorbitant privilege of the United States —Mitchell is about the only high-profile MMTer from abroad — is almost completely unaddressed by its proponents.

MMT is an outgrowth of a school called post-Keynesian (PK) economics. In fact, several of the principals met each other on a post-Keynesian thought listserv in the late 1990s. PK economics has several sub-schools, and there’s not much point in getting too deeply into each, but there are some general points about it relevant to a discussion of MMT. Most PKs are left of center, and some are even socialists. They deplore the orthodox turn of a lot of mainstream Keynesians, whom they view as technicians of the business cycle not interested in deeper structural issues. They emphasize the importance of money and credit, particularly their destabilizing possibilities through speculative bubbles, far more than more mainstream sorts, who tend to believe the system is self-equilibrating and money exerts little mischief of its own.

One interesting strand of PK thought is endogenous money theory, which is the opposite of the monetarist theory made famous by Milton Friedman. Monetarists believe the central bank controls the money supply through its power to create and disseminate money via the banking system: the Fed injects cash into the financial system by buying Treasury bonds from private holders (not from the Treasury itself) and then banks are free to lend this newborn monetary hoard. Endogenous money theorists, in contrast, believe that money creation is driven by demand for credit coming from private actors, like businesses and consumers. Banks make loans and then scramble to fund them. Most of the time, the central bank accommodates banks’ demand for fresh money by pumping funds into the financial system (except when it’s trying to provoke a recession by frustrating their lust for fresh reserves). For those who care, this endogenous money view is similar to Marx’s theory of money. It’s also consistent with the way many central bankers see things. In normal times, the central bank injects enough money into the system to keep the wheels of commerce spinning, but it’s not what generates the spin. The work of production and distribution does that.

MMTers junk a lot of the most interesting stuff about PK economics. Unlike Joan Robinson, an early contributor to the PK tradition, they rarely ask what she called “the greatest of all economic questions . . . what is growth for?” (Or, as she said elsewhere, “Now that we all agree that government expenditure can maintain employment we should argue about what the expenditure should be for.”) Inspired by Knapp’s chartalist theory, they minimize the role of private credit demand in driving the economy; like Friedman they believe the government drives the creation of money (Friedman through the central bank, MMT through federal spending). Wray, who once wrote a book on the topic, now dismisses endogenous money as a “trivial advance” next to MMT.

MMTers show a strange lack of interest in the specificity of capitalism — how production and distribution are organized, how demand for credit arises in the course of commerce, how people earn their living and under what conditions — and their rejection of earlier PK work on money renders nearly invisible any link between money and things or money and people (or people and things via money). Marx said a man carries his bond with society in his pocket, a recognition that money is one of our principal modes of social organization and control. Or, as Antonio Negri put it in one of his more lucid moments, money has only one face, that of the boss. If you don’t work and do as you’re told, you go broke and starve.

Through the fantasy of effortless keystroke money, all those relations of necessity and power supposedly get wiped away. But it’s not some imposed scarcity of money itself that produces those relations.

MMT’s lack of interest in the relationship between money and the real economy causes adherents to overlook the connection between taxing, spending, and the allocation of resources. We have homeless people living on the streets of San Francisco blocks from Twitter and Uber’s headquarters, bridges collapsing, trains derailing, schools falling to bits — the entire structure of private opulence and public squalor, as John Kenneth Galbraith put it long ago, because the public sector is starved for resources. Taxing takes those resources out of private hands and puts them into public ones, with at least the potential for them to be spent on more humane pursuits. Fewer Lamborghinis, more bullet trains. Fewer Hamptons houses, more public housing.

Enacting single payer, for example, isn’t just a matter of a few billion extra keystrokes. It means dismantling the absurd administrative apparatus of the US health care system, shifting premiums for private insurance into public expenditures, transforming the price-gouging business model of the drug industry, and taking care of workers displaced by the renovation.

You could say something similar about climate change. Kelton, for example, wrote this on Twitter:

How I imagine the conversation between the last two people on [emoji for Earth]

“There were plans to save humanity, but they didn’t cost out.”

“They should have learned #MMT.”

Keystrokes will save the Earth! Except they won’t. We need a wholesale revamping of our energy and transportation systems, the spatial organization of our cities, and the fundamental processes of industrial and agricultural production. To do that, we need to step on private capital’s freedom of investment, which strikes at the heart of ruling-class power.

MMTers will sometimes say they want to tax the rich because they’re too rich, but Wray said at a recent conference that he sees no point in framing the issue as taxing the rich to expand public services — presumably because government doesn’t need to tax to spend. Elsewhere, he has written that taxing the rich is “a fool’s errand” because of their political power. He told Bloomberg Businessweek he was “a bit disappointed” that Ocasio-Cortez connected tax hikes to the Green New Deal. And he once blamed the devastation of Camden, New Jersey on high tax rates — which makes it hard to explain the wealth of the very highly taxed New York City; the real Camden is lightly taxed and relies heavily on state aid.

It seems that many on the contemporary American left are still under the tax-phobic legacy spell of post-Reagan politics, which makes MMT seem appealing — an easy answer to “how are you going to pay for that?” Shortly before her election to Congress, Alexandria Ocasio-Cortez was stumped by that question in a TV interview with Jake Tapper. Afterwards she met with Kelton and had kind things to say about MMT.

AOC’s defenders quickly noted, correctly (as she herself had earlier), that no one asks that question when it comes to funding the Pentagon or tax cuts for the rich. But there’s a good reason the Pentagon and upper-bracket tax cuts get a pass from the fiscal police. Cruise missiles and making plutocrats even richer reinforce existing social hierarchies. Medicare for All and free college tuition weaken them. Depending on employers for health insurance makes workers more pliable; forcing students to borrow heavily to pay their tuition bills makes them more likely to adhere to the straight and narrow on graduation. Bosses and their hired scribes don’t want to create “new entitlements,” even if single payer could cut their health insurance costs. The last thing they want to do is encourage the population to make fresh demands. It’s much better to keep the masses on their back foot, as the Brits say.

Taxation may not be full expropriation but it’s the next best thing in this fallen world. It is a form, however mild, of socialization — transforming private investment and consumption into public expenditures. And divorcing taxation of the rich from the provision of public services throws aside the material and agitational advantages of waging class war through fiscal politics. Rich people would have a lot harder time complaining about their money being taken to educate kids and save the planet than if it were taken just because they’re too rich.

A critical part of the MMT agenda is a job guarantee (JG), a policy under which the federal government becomes the employer of last resort (ELR). Unlike MMT’s monetary theorizing, the JG has nothing to do with the school’s core chartalist concept, and it deals directly with a crucial aspect of the real economy, namely the labor market. With a JG, the chronically unemployed could find decent work, and the temporarily unemployed would be accommodated until they find permanent work.

For an outline of the JG, we can look at a paper by Pavlina Tcherneva, who’s been the MMT school’s specialist on the proposal. At recent levels of US unemployment, Tcherneva estimates 10–15 million people could be employed in a JG program (which would be another 6–10 percent on top of those who are already working for pay). The additional income earned by those in the JG program would, by increasing demand for goods and services, probably boost employment by another 4 million or so, using standard economic models. That would bring the employed share of the US population to record levels by a comfortable margin, though it would still leave it below Swedish and Icelandic rates.

Tcherneva would have the jobs pay $15 an hour, with full benefits (health insurance, childcare, paid leave, and retirement; her colleague Mosler, hedgie that he is, would set the pay much lower). That works out to an annual income of $31,200, close to the median level of personal income.

By her estimates, and those of her MMT colleagues, the JG would cost 1–2 percent of GDP, though that would be partly offset by reduced spending on unemployment benefits and poverty programs. This is probably an underestimate, but whatever the exact numbers, the budgetary costs would not be remotely crushing.

Care work would be a large part of her JG model, not just because of the social need but also to reach “the least-skilled and most marginalized groups in the labor market.” Traditional infrastructure work disproportionately employs men, and that’s not adequate to the task. She envisions JG workers deployed in care for the environment (drawing on New Deal models like the Civilian Conservation Corps, as well as addressing more modern concerns like reducing food deserts), care for communities (trash removal, school gardens, tool-lending libraries, classes, historical-site restoration), and care for people (elder care, after-school programs, help for former prisoners). For not fully disclosed reasons, Tcherneva and her MMT comrades want to shield the private sector from JG competition. It’s not clear whether public sector workers would enjoy the same shield; it might be tempting, after all, to replace well-paid union labor with workers passing through the JG program.

A JG could exist without the rest of the MMT apparatus. The school’s special tweak on the idea is to conceive of the program as an integral part of macroeconomic regulation. Like economists across the political spectrum, MMTers believe that when the economy exceeds full employment, inflation will result (though they’re vague on the details of when “full employment” happens, or “inflation,” for that matter). To cool inflation, MMTers would raise taxes and/or sell government bonds to reduce purchasing power in the private economy. This would cause a recession, but instead of becoming unemployed, workers would enter the JG program. For the chronically unemployed, a $15 steady wage might look like a half-decent deal, and not living under constant threat of abuse or layoff (because of the government guarantee, and a presumably high bar for being fired) would be a great nonmonetary compensation. But for a lot of workers who would enter the JG program because they lost their regular jobs to a recession, $15 would mark a pay cut — it’s slightly more than half the average hourly wage — and quite possibly a waste of their skills, even if it did stave off absolute penury. That’s softer than the conventional approach, but it’s still not painless.

There’s material to admire in the JG, but there are some problems. The shyness about big infrastructure projects — in another recent paper, Tcherneva and four MMT colleagues explicitly differentiate their JG scheme from the New Deal’s Works Progress Administration (WPA) — is inexplicable. Yes, lots of care work needs to be done, and that would be essential to any humane policy agenda. And yes, infrastructure has a manly prestige that is missing in caring labor, which is often marginalized as “women’s work.” Care work badly needs to be taken far more seriously (though it’s hard to see how having it done by a transient workforce contributes to that). But women can do vital infrastructure work too. Tcherneva et al. quote Nick Taylor’s book on the WPA as saying it brought the United States into the twentieth century. (A look at the Living New Deal’s catalogue of WPA projects shows the degree to which we’re still living on it — schools, highways, hospitals, post offices, airports, harbors, public art — and haven’t really built anything on a comparable scale since.) The JG is not designed to bring us into the twenty-first, unless you think casualized labor is a model for our time.

JG work could fill some important social needs, but how seriously dedicated to serving those needs could the program be if it were staffed by a transient workforce? Sometimes the whole concept sounds like workfare. Invoking that word isn’t just polemic. In a review of a book by the great post-Keynesian economist Hyman Minsky, whose JG program is the direct ancestor of MMT’s, Flavia Dantas, who’s written on the JG for the Levy Institute, cites Minsky (his words are in the embedded quotes): “Although well intentioned,” welfare schemes intended for poverty reduction among those fit to work were “‘poorly thought-out programs’ that appealed to ‘sentimentality with regard to hunger and clichés about consumer sovereignty,’ created government-dependency, and disrupted ‘social cohesion or domestic tranquility.’” (Some of this — “sentimentality with regard to hunger”! — sounds like it was lifted from the Daily Caller.) To Minsky, denying the people the right to work — which he saw as a fundamental human propensity — was a “major social injustice,” in Dantas’s words.

Writing in 1944, Beardsley Ruml of all people offered a persuasive critique of using a JG as a mechanism for regulating the business cycle. Ruminating in a largely orthodox fashion — no proto-MMT kinks here — on the prospects for a postwar fiscal policy, he cautioned against using public works projects as a countercyclical strategy, because of

the human undesirability of bringing hundreds of thousands of men into the construction industry and forcing them out again as an offset to the free play of economic forces elsewhere in the business system. These men are not statistical units that can be properly moved from one column of an accounting sheet to another in order to preserve a general balanced level of employment. Nor can they be shifted long distances from their homes to places and at times convenient to the business cycle.

Despite the advocates’ assurances that they don’t want to compete with private sector jobs, the $15 an hour pay could have a substantial impact on the national wage structure. Though it’s a bit more than half the average hourly wage, it’s at about the thirty-seventh percentile of the wage distribution, meaning 37 percent of workers are paid that much or less. It would be nothing but good to raise their wages, but we should be honest about how disruptive it might be. It would put a lot of low-wage employers out of business — often deservedly so — and force survivors to cut back on staffing, with machines taking the place of people if possible. It would have massively uneven geographic effects. Nearly one in six metropolitan areas — mostly small, and in the South — have a median wage below $15; more than two-thirds, accounting for well over a third of employment, have a median below $18.

Not only would such a program challenge the American wage structure in profound ways, it would change the entire boss-worker relation. In a classic 1943 essay, “Political Aspects of Full Employment,” the economist Michal Kalecki noted — perhaps optimistically — that while Keynesian economic management could assure a low unemployment rate close to zero over the long term, the capitalist class would resist this. One reason is that investment and hiring depend on the confidence of the business class, and they want politicians to be dedicated to keeping that level of confidence high. Shake that confidence and managers will pull back and throw the economy into a slump. You might think that the strong markets of a full-employment economy would appeal to managers and stockholders, but there would be a larger political problem. As Kalecki wrote, “under a regime of permanent full employment, the ‘sack’ would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. . . . Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the ‘normal’ capitalist system.”

These disruptions would all be good for the working class, but to the bosses they’d look like quasi-revolutionary acts. When I interviewed Kshama Sawant, the socialist member of the Seattle city council who put a $15 minimum wage at the core of her agenda, in 2015, I asked her how she dealt with how system-challenging it was; she didn’t retreat. She said it was “an all-out class battle” — and if the system can’t pay, which it has a very hard time doing, that becomes a tool for showing that system is bad. That’s the kind of thinking that it will take to get $15 an hour, which would require a very different kind of politics than MMT seems to contemplate.

And if we had a political movement strong enough to force full-employment policies on the state, then why stop with a mere JG? What about democratizing the workplace, reorganizing production to be ecologically sustainable, socializing property via taxation and public spending, and eventually expropriating the capitalist class? If you’re going to challenge ruling-class power, as a JG would do, why stop there?

If the job guarantee is MMT’s most attractive feature, the style of argument habitually employed by its proponents is among the ugliest. A classic example is a response by Wray and occasional collaborator Éric Tymoigne to a fairly friendly critique of the school by the left-Keynesian economist Thomas Palley, in which they accuse him of wanting to combat inflation with unemployment and poverty, a dishonest insult that they compound with this footnote: “Palley has been caught on video complaining that if a JG provides jobs to everyone, the poor will be able to eat . . .” (The video is from an exchange between Palley and Mosler, in which Palley says that providing the unemployed with jobs in South Africa would promote demand for electricity, food, TVs, and other goods that the country doesn’t have the capacity to produce.)

Tymoigne and Wray’s response to Palley barely addressed any of his substantive points — among other things, its vagueness about the causes and consequences of inflation, its naïve belief in the curative powers of fiscal policy, its irrelevance to the problems of poorer countries, its lack of interest in how the JG might tempt anti-worker governments to replace public sector workers with underpaid transients — and just reasserted the catechism, spiced up with some rude caricatures. They also guard their turf jealously. When asked by the liberal economist Dani Rodrik to react to a polite and friendly effort by two left economists to reconcile MMT with more mainstream schools of economics, Kelton pronounced herself “not remotely” comfortable. Rodrik had called the economists’ paper an MMT “explainer”; she urged him to be “careful about labeling any post with MMT in its title an ‘MMT explainer.’” The brand must be protected.

And they can be extremely slippery. If you ask, “Do you really believe the government doesn’t need to tax or borrow to spend,” which is something they frequently do argue, they’ll deny it. When questioned by a sympathetic Ryan Grim of the Intercept about what happens when the government spends without taxing or borrowing (something the United States never does, but bracket that for now), Kelton says it depends on who gets the money. If rich people get it, they’d probably save it. If poor people get it, “they’d spend it into the economy.” She had nothing to say about whether the economy could accommodate that demand. She professed “tremendous respect [for] the real constraints in the economy,” but in fact MMTers have almost nothing to say about those — and Mosler, Tymoigne, and Wray responded to Palley’s comments on the topic with insults. Nor do they ever remind their social media fans, intoxicated by the power of keystrokes, about those constraints.

Sometimes it’s really hard to figure out just what MMTers believe. Are they just saying, in very roundabout ways, that it’s okay for the federal government to run a small deficit in normal times and occasional big ones in crises like 2008? That would be hard for anyone but the most wicked austerity hound to disagree with.

Or is it that we shouldn’t worry about deficits at all? Kelton, asked about the Trump tax cuts, said she was ready for Tax Cuts 2.0. So, should we then not worry about the rising ratio of federal debt to GDP that comes with big deficits, and the increased share of spending devoted to debt service (which is a gift to bondholders, who are mostly quite rich)? Will there never be a point at which even the US government might find it hard to float new bonds to pay off the old ones and finance fresh spending? Debt, as the late sociologist James O’Connor said, increases capital’s power over the state: a government that is not pursuing market-friendly policies will find it hard to get a loan. Is that not a concern? Could we solve that problem by just having the Fed buy the bonds? Aside from the fact that that’s technically illegal, isn’t it a few steps down the road to Weimar? At what point would debt become worrisome? As with inflation, MMTers just never say.

MMTers can have a complicated relationship with facts. In an article offering a strategy for funding a Green New Deal — just spend the money, don’t worry about where it’s going to come from — Stephanie Kelton, Andres Bernal, and Greg Carlock claim that “the government’s bank — the Federal Reserve — clears the payments by crediting the seller’s bank account with digital dollars. In other words, Congress can pass any budget it chooses, and our government already pays for everything by creating new money.” But the government doesn’t do that. It spends only money gotten from tax revenues or bond sales. (If you don’t believe me, look at a Daily Treasury Statement, a daily accounting of the federal government’s income and outgo. It looks a lot like any normal financial statement, only with a lot more zeroes.) The Fed is forbidden by law to purchase bonds directly from the Treasury. The recent episode of quantitative easing (QE), designed to fight the Great Recession, was a partial exception: the Fed did buy huge gobs of Treasury bonds in an effort to stimulate the economy. That program is now over. But even then, the Fed only bought existing securities from private holders; the government cannot spend via keystrokes money created out of thin air.

Compounding the error, Kelton et al. claim money creation out of thin air was “how we paid for the first New Deal. The government didn’t go out and collect money — by taxing and borrowing — because the economy had collapsed and no one had any money (except the oligarchs).” But federal debt more than doubled between 1932 and 1939. That’s not a bad thing, but there’s no point in denying it, unless you’re trying to sell a bill of goods.

On social media, the style of argumentation is even more striking. Critiques are first met with the assertion that you just don’t understand — you haven’t read enough of the literature to comment knowledgeably. But they’re quick to resort to mockery and insult. One of my favorite instances came from two of the more prominent younger members of the school, who had these persuasive reactions to my critiques on Facebook.

The mass of MMT rank-and-filers on social media are incredibly fervent. One acolyte emitted 220 tweets in response to a critique I’d offered.

MMT’s most charming style of polemicizing comes from Scott Ferguson, a film and media studies academic, author of Declarations of Dependence: Money, Aesthetics, and the Politics of Care. Under the spell of MMT, Ferguson urges radicals to junk “the Marxist image of money as a private, finite, and alienable quantum of value” and discover “money is a boundless public center that can be made to support all.” He proceeds to a series of declarations of a sort you don’t usually find in a university press book (though this one was subsidized by Warren Mosler):

Seize the money relation!

Enlist the aesthetic in money’s expansion!

Hail money as the center of caretaking!

Declare your dependence on care’s center!

Relinquish attachments to thisness!

Imagine a boundless public center!

Never forsake abstraction for gravity’s attractions!

Exalt abstraction as the locus of care!

It goes on for over two hundred pages, as Ferguson summons Heidegger and the Eucharist to uncover in this new notion of money endless reservoirs and beauty and tenderness. This develops the utopian potential of MMT in ways that are outside the economist’s standard skillset, but it bears a tenuous relation with earthly reality.

I’ve had little good to say about MMT, and a conclusion is not the place to change that. It is a voice against austerity, but with the United States running trillion-dollar deficits, tight fiscal policy isn’t the major enemy right now here. (Europe is a different story, of course.) The major problems at the fiscal level are what we spend money on and what we don’t. If anything, we’re closer to terminal now than we were fifty years ago, when Martin Luther King Jr said, “a nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.”

More broadly, we have a private economy driven by exploitation, overwork, asset stripping, and ecological destruction. MMT has little or nothing on offer to fight any of this. The job guarantee is a contribution, though a flawed one, and it’s not at the core of the theory, which proceeds from the keystroke fantasy. That fantasy looks like a weak response to decades of anti-tax mania coming from the Right, which has left many liberals looking for an easy way out. It would be sad to see the socialist left, which looks stronger than it has in decades, fall for this snake oil. It’s a phantasm, a late-imperial fever dream, not a serious economic policy.

In New Jersey, When It Rains, You’re Poor

The Garden State, plagued with the highest property taxes in the nation, now plans to saddle residents with a “rain tax.”

By Dave Gahary

New Jersey has been the butt of jokes for as long as most of us can remember, some well-deserved, others not. This writer was born and raised in the state, commonly referred to as “the cockpit of the revolution,” because more battles and encampments took place there than in any other state, and “the armpit of the revolution,” most likely attributed to the many smelly factories that once dotted the more urban areas of the peninsula.

Lately, however, the Garden State has come to be identified with the highest property taxes in the nation—2018 median real estate taxes paid were $7,601—and the state that more residents moved out of than any other state in 2018—66.8% of moves exiting versus entering. New Jersey has been ranked in the Top 10 “outbound” states for the past 10 years, according to a recent United Van Lines Annual National Movers Study.

But now New Jersey is in the process of heaping more misery onto its tax-challenged denizens, by introducing a new tax, a so-called “rain tax.”

Think the IRS Never Loses Cases? Think again!

A bill is sitting on the ultra-liberal, sanctuary city-supporting governor’s desk right now that, if signed, would give New Jersey’s counties and municipalities the power to collect a tax from properties with large paved surfaces such as parking lots. So basically, the more it rains—or snows—the more these surfaces prevent drainage into the natural environment, and the more water exists as runoff. Put away your rain dance gear, New Jerseyites.

N.J. Assembly Bill 2694 and Senate Bill 1073, which “authorizes municipalities, counties, and certain authorities to establish stormwater utilities” had strong support in both chambers.

At the heart of the bill is something called “stormwater management systems,” which is the control and use of stormwater runoff by capturing and/or reusing it. Proper management of stormwater can lessen runoff, which has increased due to more parking lots, roads, buildings, and other impermeable surfaces. Runoff is undesirable because of flooding concerns, but save for a handful of areas and towns, New Jersey has never had serious flooding concerns.

Predictably, this issue is being tied—by those promoting it—to rising sea levels and “global warming/climate change,” the latter a discounted theory which has been mocked unceasingly this winter season, as record-breaking cold temperatures and snowstorms lay bare the ridiculous claim that the planet is warming due to humans, when in fact it’s been in a cooling trend since 1992.

None of this will stop the central planners in the Garden State, however, who are giving all sewerage authorities in the state a wide berth to drain more money from hapless state residents.

“Every sewerage authority is hereby authorized to charge and collect rents, rates, fees, or other charges for direct or indirect use or services of its stormwater management system,” reads the Senate bill.

The bill’s ominous language should frighten all residents of the state: “The stormwater service charges may be charged to and collected from the owner or occupant, or both, of any real property. The owner of any real property shall be liable for and shall pay the stormwater service charges to the sewerage authority at the time when and place where these charges are due and payable.”

And how will all this new infrastructure be paid for?

“The bill would permit municipalities and counties to finance the creation, operation, and maintenance of stormwater utilities through the imposition of user fees and the issuance of bonds.”

That’s right, the moneyed global elite would be the ones to benefit from this new scheme, via the issuance of bonds.

What bothers some most about this bill is the free hand it gives to moneyed interests.

“We all want to protect our environment,” stated N.J. State Senator Thomas H. Kean Jr., the Republican Leader of the Senate since 2008 and the son of the former N.J. governor. “We all want to preserve it for future generations. But this is a weighted tax. The citizens of New Jersey . . . really with no oversight and no way to defend themselves against tax increases at local levels.”

Wasn’t taxation without representation one of the main reasons our forefathers founded this once-great nation?

With N.J. residents being squeezed by an elite political structure, we may see the beginnings of a new rebellion, in the state so well-known for its propensity to challenge the corrupt elite.

Dave Gahary, a former submariner in the U.S. Navy, prevailed in a suit brought by the New York Stock Exchange in an attempt to silence him. Dave is the producer of an upcoming full-length feature film about the attack on the USS Liberty. See erasingtheliberty.com for more information and to get the new book on which the movie will be based, Erasing the Liberty.

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