24 May 2013

food_stamps

The US government creates money out of thin air, simply by crediting bank accounts. Hence the US government has no need or use for tax revenue, and in fact destroys such revenue the instant it is paid. The money is destroyed when bank accounts are debited to pay federal taxes.

It’s all a system of credits and debts, i.e. of changing the numbers in bank accounts. Coins and bills are not money. They are exchangeable claims to money. They represent values within the digital banking system.

If I type $1,000.00 and then I type $0 (zero), where did the  thousand dollars go? Nowhere. It was vaporized.  (Or as austerians would say, it was “reformed.”)

The US federal government does the same thing, constantly.

laptop

This happens every day, right in front of you.  You can do it yourself if you have electronic banking. At home, on your computer, you can move money from one bank account to the other, or you can pay bills, etc.

The US government does the same thing, except it can add to the numbers overall (unlike you). It can pay any bill or debt of any size, just by changing the numbers in bank accounts.

Hence there is no federal government “debt crisis,” and no need for the government to “save money.”

uncle_sam_computer

hot_air

Despite all this, most people think money is physical, and comes from a physical source somewhere. They angrily defend their delusion, and smugly deny reality. They believe the lie that the government has a “debt crisis,” that government money is limited, and that we must have austerity.

There is no limit to how much money the federal government can produce, since money is purely digital. The only conceivable impediment would be inflation, which can be easily controlled.

only_balloon

Benefits are also digital for the Supplemental Nutrition Assistance Program (SNAP, a.k.a. “food stamps”). The benefits are money. Recipients have bank accounts that are credited (digitally added to) by the U.S. government once a month by $133 on average. Again, there is no limit to how many benefits the US government can issue, since the government issues food stamp benefits by simply changing numbers in computer accounts.

Beneficiaries carry government-issued debit cards called EBT cards (Electronic Benefit Transfer) . You can see a generic card below. Different states have different designs on their cards. Some beneficiaries are children (210,000 low-income children get free school meals by presenting their EBT cards). Most households on food stamps have children, seniors, or disabled citizens.

ebtcard

The number of Americans receiving SNAP benefits has more than doubled since 2000, and is now at 47 million people, or one in seven Americans. With it, government spending has increased. (And  as we all know, government spending is bad if it helps average people, and good if it helps rich people get richer.)

jeff_sessions

money_vault

Food stamps are perhaps the only thing that holds American society together. People meekly submit to endless abuses and poverty, but when people have no food, they revolt.

Because of EBT cards, millions of Americans are able to go to work, rather than spend all their time growing vegetables in their back yards. Because they can go to work, they can pay rent, and be consumers.

It’s amazing that demand for food stamps is not higher. According to the Social Security Administration’s Average Wage Index, the median annual wage for 2010, the most recent year for which data is available, was more than $26,300. That means half of the nation’s 150,398,796 wage earners made less. That means 75 million live under, on, or just above the official poverty line. But only 47 million get food stamps.

paul_ryan_food_stamps

Now politicians want to cut that number down, in order to deepen the depression and worsen people’s suffering. A new federal budget proposed by the U.S. Senate would cut EBT benefits by $4 billion. The House version would cut food stamps by $20.5 billion, and kick 2 million people out of the program. This is in addition to the across-the-board reduction in benefits that every food stamp recipient will experience starting November 1, 2013. On that date, the increase in SNAP benefits established by the American Reinvestment and Recovery Act (ARRA) will end, resulting in a loss of approximately $25 in monthly SNAP benefits for a family of four.

Senator John Thune (R-S.D.) says:

Since President Obama assumed office, participation in SNAP … has increased from 32 million to 47.8 million people, and annual spending on SNAP has doubled to $80 billion in fiscal year 2012. Over the next 10 years, SNAP is projected to cost taxpayers almost $760 billion….

That’s a lie. Food stamps cost taxpayers exactly nothing. The US government creates the benefits out of thin air by crediting bank accounts, remember?

This explosive growth in both the SNAP enrollment and federal cost of the program is alarming and requires lawmakers to take cost-effective legislative control measures.

Thune is just another Republican asshole obsessed with widening the gap between the rich and the rest. The number of people needing food stamps is exploding, because the depression is exploding. But the right-wing retards don’t care. They just want people to suffer.

rush_limbaugh

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rogoff

Harvard professors Ken Rogoff and Carmen Reinhart were disgraced when their “research” was exposed as lies and fabrications. (They were not “errors.”)

Today Rogoff attacked his exposers, saying the idea that too much austerity is killing Europe is “spectacularly muddle-headed.”

Can you believe him? Because of austerity (made necessary by the euro currency) many Spaniards are eating out of garbage cans. Italians face malaria outbreaks. Forests are being chopped down and burned because no one can afford to buy fuel. Suicide in Europe is rampant. And here is this filthy little worm.

But then Rogoff becomes contrite, and speaks some truth, perhaps hoping it will make people stop laughing at him…

The eurozone’s difficulties stem from European financial and monetary integration having gotten too far ahead of actual political, fiscal, and banking union. This is not a problem with which Keynes was familiar, much less one that he sought to address.

The Rogoff-worm is talking about the euro currency. And yes, Keynes never referred to nations that surrender their Monetary Sovereignty, as the euro-zone has.

Any realistic strategy for dealing with the euro-zone crisis must involve massive write-downs (forgiveness) of peripheral countries’ debt. These countries’ massive combined bank and government debt – the distinction everywhere in Europe has become blurred – makes rapid sustained growth a dream.

The debt will continue to mount as long as the euro-zone nations use the euro currency. Reason: they must borrow all their money. They cannot create it out of thin air, on a computer keyboard, like the USA and most other nations can.

France will play the central role in deciding the euro’s fate. Germany cannot carry the euro on its shoulders alone indefinitely. France needs to become a second anchor of growth and stability.

That won’t happen. The ECB in Germany issues all the money (euros). This has let Germany get rich by enslaving all the other euro-zone nations. Germany will never let go of its scam. Nor will politicians in the slave states stop defending Germany, since the politicians are on the ECB payroll. Besides, Germany’s scam has widened the gap between the 1% and 99% across the euro-zone. It’s not only Germany that gets richer, but the 1% in the slave nations.

Debt write-downs and guarantees will inevitably bloat Germany’s government debt, as the authorities are forced to bail out German banks (and probably some neighboring countries’ banks).

So what? Germany can get limitless money from the ECB in Germany. The ECB creates money out of thin air.

This is what has been lost in the debate about Europe of late: However loud and aggressive the anti-austerity movement becomes, there still will be no simple Keynesian cure for the single currency’s debt and growth woes.

No, Rogoff-worm, what has been lost is the simple fact that the euro currency must go. Either that, or else Germany must allow a true banking union in which the ECB gives (not lends) money to the euro-states.

http://www.project-syndicate.org/commentary/a-structural-focus-for-the-euro-crisis-by-kenneth-rogoff#1y19W7RuEVwGci3e.99

A couple of bloggers have discussed Rogoff’s article, saying he is wrong. They say that what the euro-zone needs is not debt write-offs, but Keynesian-style stimulus spending. The bloggers do not understand that in the euro-zone, all money is borrowed from the ECB, meaning all stimulus spending and “bail-outs” are debt bombs.

More spending causes more debt. More debt causes more austerity. More austerity causes more debt.

dog_chasing_tail

snake

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bloomberg

The Congressional Budget Office says the federal budget deficit has been shrinking by about $42 billion a month for the past six months. That’s $42 billion a month that austerity sucks out of the US economy. Thus, the depression has been worsening by $42 billion a month, or $140 million each day.

The CBO projects that the deficit will fall to $342 billion by 2015, which will create a depression much worse than the 1930s depression.

Republicans want still more cuts. They say it is to head off exploding long-term debt driven by rising spending on Medicare, Medicaid, and Social Security.

That’s a lie, of course, since the US government has never had a “debt crisis,” and never will.

Here’s Bloomberg Business:

As millions of baby boomers retire, entitlement spending will start eating up government funds.

Garbage. How can they “eat up” government funds? The government creates its money out of thin air by crediting bank accounts, remember? Its source is limitless. And even if money were limited, it would still circulate in the economy. When I buy something, I do not “eat” the money. I give the money to someone else.

Also, today’s low interest rates, which allow the government to sell 10-year Treasury bonds below 2 percent, won’t last forever.

More garbage. The Fed sets whatever interest rate it chooses, irrespective of “the markets.” No one “allows” the Treasury to sell T-securities, or the Fed to choose what interest the Fed pays on those securities.

As you can see, these financial web sites are full of bullshit.

http://www.businessweek.com/articles/2013-05-23/the-deficit-is-shrinking-and-nobody-cares

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How’s this for contradiction?

Treasury Secretary Jack Lew told Congress that Obama’s administration is “overachieving on deficit reduction,” as he defended Obama for submitting a budget that never balances.

“If anything, we are overachieving on deficit reduction right now. So, the goal, you know, should not be to balance the budget right now.”

 Lew then confirmed that budget policymakers should plan to raise taxes.

Oh great. Lew says we should ease up on austerity (i.e. tax increases ) so we can have more austerity.

“I think that we should have a fair mix of spending reductions and loophole closing that would give us the ability to, in a fair and balanced way, be on a long-term path to fiscal sustainability.”

Cut, cut, cut your way to prosperity.

http://washingtonexaminer.com/treasury-secretary-we-are-overachieving-on-deficit-reduction/article/2530355

prosperity

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2 Responses to 24 May 2013

  1. Jennet says:

    In a New York Times report on Apple’s tax evasion gimmicks I found this in a paragraph:

    “Because of these strategies, tax experts say, Washington is forced to rely more and heavily on payroll taxes and individual income taxes to finance the government’s operations.”

    I wanted to learn exactly how the federal government destroys tax revenue upon receipt. Is this an indisputable fact?

    If so, why the insanity of collecting taxes?

    Thanks.

    • quatloosx says:

      [1] “Because of these strategies, tax experts say, Washington is forced to rely more and heavily on payroll taxes and individual income taxes to finance the government’s operations.”

      This is a lie. The US government creates money by ordering banks to credit accounts. In this way, money is created out of thin air.

      [2] “I wanted to learn exactly how the federal government destroys tax revenue upon receipt. Is this an indisputable fact?”

      Yes, since money is purely digital, and not physical. I’ve done numerous graphic illustrations of this in the blog posts below.

      When you send a tax check to the IRS, the IRS sends instructions to your bank to debit your account by the amount of the check. Where does the debited money go? It goes nowhere. It disappears. POOF. The numbers in your account are simply lowered by the amount of your tax check. Thus, your digital money is destroyed the instant it is “paid” (i.e. debited from your account).

      Likewise the government creates money by crediting bank accounts (i.e. changing the numbers upward). It does not need or use the digital money in your bank account.

      This process is not secret or mysterious. It is how the money system works everywhere, every day, right in front of you. All money is purely digital. None of it is physical. When you deposit a check in a bank, does money physically “move” anywhere? No. The numbers are simply changed in computers.

      As for coins and currency notes, these are not actually money. They are claims to money, i.e. claims to digital values in the bank computers. Coins and notes can be traded and used to buy things, just as bonds can be traded, or titles on vehicles can be traded, or mortgage notes, or T-securities, and so on.

      [3] “Why then the insanity of collecting taxes?”

      States, counties, and muncipalities need tax revenue, since they cannot create money from nothing. At least, not debt-free money. The state government of North Dakota has its own bank (the Bank of North Dakota) which creates loan money out of nothing, simply by crediting bank accounts.

      However, the federal government does not need or use tax revenue. Why would it, when the US government creates money by simply changing the numbers in bank computers? The federal government collects taxes in order to sustain the lie that money is physical and limited. This lie, this illlusion, sustains the federal government’s power over you.

      Adherents to Modern Money Theory (MMT) say that federal taxes are necessary to control inflation. I say this is nonsense. The Fed controls inflation by controlling interest rates, which the Fed can change in an instant.

      It’s all a game based on illusions.

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