Balanced Federal Budget, Federal Deficit Solution Federal Deficit Problem Balanced Federal Budget Federal Government Budget
FREE MONEY: What cures stagflation?
What cures inflation, recession, depression?
What is the one solution to Social Security and Medicare problems that does not include raising taxes or cutting benefits?
Faith is belief without evidence; science is belief from evidence.
What historical data indicates high deficits are beneficial and do not cause recessions, depressions, inflations or tax increases, crowd out lending funds or have any other negative economic effect? See: Rodger M. Mitchell -- Ideas
      Did the recession surprise you? In 1998, during the height of an economic boom, Rodger Malcolm Mitchell predicted the recession of 2001, explaining when it would occur and what events would cause it. Mr. Mitchell predicted the series of Greenspan interest rate cuts and their failure to stimulate the economy.
      In 2007, Mr. Mitchell again predicted a recession, detailing the causes and the solutions.
       In FREE MONEY, Mr. Mitchell shows you how to predict our economy. He also describes solutions to Medicare, universal health care and Social Security.
      Test your knowledge. How many of these questions can you answer?
  1. Is the federal deficit too high?
  2. Do large federal deficits cause inflations, stagflations or recessions?
  3. Does the Fed have the power to prevent or cure stagflations?
  4. Will you or your grandchildren have to pay the federal debt?
  5. Do low interest rates stimulate our economy?
  6. Does taxpayers' money pay for federal stimulus spending?
  7. Would elimination of FICA cause Social Security and Medicare insolvency?
  8. Is owning money different from owning debt?
  9. Should business pay its fair share of taxes?
  10. Could a very large tax cut cause federal government bankruptcy?
  11. Are there affordable solutions -- without tax increases -- to street crime, universal health care, Medicare, Social Security, poverty, military and educational needs, and a deteriorating ecosystem and infrastructure?
          Surprisingly, the answers to 1-10 all are "No." The answer to 11 is "Yes."
FREE MONEY will discuss these counterintuitive answers, and help you predict the course of our economy.
See: Rodger's Blog

Please click to see excerpts from FREE MONEY. Questions? Ask the author, Rodger Malcolm Mitchell at:

THOUGHTS from Rodger Malcolm Mitchell

October 5, 2009
      The problem with debt hawks is they don’t understand what has happened to money. We went off the gold standard, but debt hawks think money still is a physical substance. It isn't. That is why you and I do not “have” money. We only are “credited with” money.
      Visualize this. You go to a football game and the scoreboard reads 14 – 7. You might say one team “has” 14 points and the other team “has” 7 points. But in reality, the scoreboard merely has “credited” one team with 14 points and the other team with 7 points. The points are not physical things. No one “has” them.
      Why is this important? Because in the economy, you and I are the teams and the government is the scoreboard. Points are not a real substance. Teams are merely credited with points. Money no longer (after we went off the gold standard) is a real substance. You and I merely are credited with money. In our economy, money is just a way to keep score.
      The scoreboard never runs out of points. The government never runs out of the ability to credit you with dollars. The scoreboard does not need to ask either team to return some points so it can credit more points. Crediting a team with points does not reduce the scoreboard’s ability to credit more points. Crediting people or companies with money does not reduce the government’s ability to credit more money.
      Imagine you decide to start a country from scratch. What is the first thing you will do? The people in your country need money, so you, as the government, will credit them with money. How? They will give you material things and services; you will credit their accounts.
      Debt hawks will call this exchange “deficit spending,” and they will demand that the people credit you, the government, back with some of the money. That’s called “taxation.” It is identical with giving the scoreboard back some points.
      The scoreboard neither has nor needs points. The federal government neither has nor lacks money. It never needs to be credited with money. It is the scoreboard. It can credit, endlessly.
      The debt hawks continue to use gold-standard thinking, when money was a physical substance and so, was scarce to the government. Today, if the government wanted to give you $1 trillion, it simply would credit your bank account for $1 trillion, and debit its own balance sheets. Nothing physical would happen except the movement of a few electrons. The government can do this endlessly. Crediting you for $1 trillion neither increases nor decreases the government's ability to credit you for additional trillions.
      The government does not have a stash of money from which it spends. The government has no money at all. It merely credits bank accounts.
      Some may fear this can cause inflation, but the government now has absolute control over the value of its money through its control over both supply and demand (interest rates).
      The world changed in 1971, the end of the gold standard, and the debt hawks have not yet understood that. They are thinking with gold-standard logic, when money was a physical substance.
      For a better, more interesting, explanation than this, please go to and on the left side of the page, click “The seven deadly innocent frauds.” My friend, Warren Mosler, plans to run for President of the United States on the basis of his financial knowledge and the economy. You’ll find it quite informative.
August 15, 2009
       When China passes the U.S. as the world's dominant economy, you can blame our politicians whose single-minded goal is to win elections rather than to help America. You also can blame the economists, who parrot the popular wisdom that federal debts are unsustainable and cause recessions, inflations, high taxes and harmful high interest rates. Surprisingly, no evidence supports these intuitive beliefs.
       Contrary to popular wisdom:
--Fact: The U.S. government has the unlimited ability to print money, thus the unlimited ability to "sustain" any size debt.
--Fact: In the past 50 years, there has been no relationship between large deficits and inflation. Data indicates inflation is more closely related to energy costs, specifically to oil, than to any other factor.
--Fact: In only 15 years, from 1979 through 1994, taxes were cut and the federal debt grew an astounding 500%. This massive, unprecidented money printing did not cause inflation or high taxes. Instead, we entered a long period of economic growth, low taxes and moderate interest rates. Repeating that 500% debt growth would yield a $72 trillion debt by 2024 with an average deficit of $4 trillion -- and the same economic growth, the same low taxes and the same moderate interest rates.
--Fact: All six depressions in U.S. history immediately followed years of federal surpluses. Every recovery coincided with increases in debt growth.
--Fact: All nine recessions in the past 50 years immediately followed reductions in federal debt growth. Every recovery coincided with increases in debt growth, such as we are seeing, today.
--Fact: There is no historical relationship between high interest rates and slow economic growth. Similarly, low interest rates have not stimulated growth.
--Fact: There is no historical relationship between deficits and tax rates, which have remained level for the past 60 years. Even considering population growth, tax receipts have not kept pace with deficit spending. Without tax increases, there is no mechanism for our grandchildren to pay for debt. The debt is owed by the government, not by taxpayers, and so long as tax rates remain level, taxpayers never will pay it.
--Fact: When the federal government makes a profit on any domestic investment, that money comes from our economy, reducing the ability of the economy to grow. The money does not go to taxpayers. Rather, it reduces the federal debt, which is not paid for by taxpayers. Federal profits are anti-stimulus.
      The factually unsupported fear of federal deficits in the U.S., when compared with the lack of such fear in China, is why we will fail and they will succeed.

Comments? Write Rodger Malcolm Mitchell

Click to see: More Thoughts from Rodger Malcolm Mitchell

Click to see: Comments by people who should know better

  1. What Is The FREE MONEY Cure For Stagflation?
  2. Congress Giveth And The Fed Taketh Away
  3. Congress Giveth And Congress Taketh Away
  4. How Fast Must Debt Grow For The Economy To Grow?
  5. Are Federal Taxes Really Necessary? The Most Important Question In Economics
  6. How Has Economics Become A Religion?
  7. Do Low Interest Rates Stimulate The Economy?
  8. With Which Of These Popular Beliefs Do You Agree?
  9. 1/21/08: An Open Letter to the Chicago Tribune and the Nation about Stagflation
  10. Can There Ever Be Tax Fairness?
  11. FREE MONEY Solution to Medicare and Social Security That Does Not Include Cutting Benefits Or Raising Taxes
  12. What Is The FREE MONEY Solution to the Federal Budget Deficit Problem?
  13. How Many Of These Thought-Provoking Questions Can You Answer?
  14. Concord Coalition: A Prime Source of Popular Faith
  15. The FREE MONEY Logic Behind The Need For Substantial Debt Growth
  16. Your Complete, One-Minute Course In Economics
  17. Debt Clocks And Other Misleading Web Sites
  18. FREE MONEY Shows Why Low Interest Rates Do Not Stimulate The Economy
  19. FREE MONEY Shows Why Balanced Federal Budgets Lead to Recessions and Depressions
  20. Is Gold Safer Than Dollars?
  21. What is the Relationship Between Federal Debt and Inflation?
  22. How Much Does Federal Spending Cost Taxpayers?
  23. The 8 Myths That Damage Our Economy
  24. Ten Reasons to Eliminate FICA
  25. Faith In Economics
  26. See: Rodger's Blog
Please click the cover to see excerpts from FREE MONEY. Questions? Ask the author, Rodger Malcolm Mitchell at:

Congress Giveth And The Fed Taketh Away

March 1, 2008: By the start of 2008, Federal debt exceeded $9.4 trillion. The economy had fallen into stagflation. In a vain effort to stimulate the economy, the Fed repeatedly cut the discount rate, impacting all interest rates. Every 1% interest rate reduction cut $94 billion from federal interest payments (on T-bills, T-bonds and T-notes) to the economy. Meanwhile, Congress added $150 billion to the economy as an economic stimulus. To cure the recession, Congress added money to the economy, while the Fed cut it. To understand the full implications, please read FREE MONEY.

Congress Giveth And Congress Taketh Away.

June 27, 2008 -- News stories:
      "January 25, 2008; House leaders and the Bush administration reached agreement yesterday on a $150 billion economic stimulus package." Congress giveth.
      "June 25, 2008: The House voted Wednesday to protect more than 20 million taxpayers in danger of being slapped with a federal tax increase averaging $2,300 because of the alternative minimum tax. House Democrats, insisting that fixing the AMT must not add to the federal deficit, inserted about $61.5 billion in new revenues." Congress taketh away.
      Summary: Congress, recognizing the economy was in recession and starved for money, voted to send $150 billion into the economy, without raising federal taxes. Six months later, while we remained in recession and the economy remained starved for money, Congress refused to cut taxes without adding new taxes.
       FREE MONEY discusses this Congressional misunderstanding and contradiction of effort.

How Fast Must Debt Grow For The Economy To Grow?

February 15, 2008:
  • All forms of money actually are forms of debt. Currency, bank accounts, money market accounts, bonds and notes -- are both money and debt, differing only in liquidity. A dollar bill (a debt of the U.S. government) and a checking account (a debt of a bank) are quite liquid. A savings account (also a debt of a bank) is somewhat less liquid. Publicly traded bonds and notes are less liquid still, while bank CD's and real estate mortgages fall near the lower end of liquidity. All are forms of debt and money.
  • Economies are measured by money. GDP is one of many economic measures, nearly all of which measure money. A larger economy has more debt/money than does a smaller economy. Therefore, to grow an economy requires a growing supply of debt/money.
  • For an economy to grow, the debt/money supply must exceed population growth, inflation and the current account deficit (net money flowing out of the U.S.).
          A 3% inflation, against a total debt/money supply of $33 trillion, costs $1 trillion in real money, annually. Today's 1% population growth costs another $330 billion in per capita money. Include a $800 billion current account deficit, and the money supply must grow $2.1 trillion, or nearly 6.5% just to break even � that is, for a no-growth economy.
          By the first quarter of 2008, total debt/money growth had fallen to $5.3%, which was less than necessary for ongoing zero growth. In short, the economy had become starved for money (aka "credit crunch"), which is the root of today's problems.
          The economy is more complex than one equation. Several factors affect economic growth. But fundamentally, total, per-capita, domestic, real debt/money growth is required for economic growth. FREE MONEY provides a fuller explanation.

    Contrary to popular faith, the last nine recessions have been preceded by declining federal deficit growth. Every recovery coincided with increased deficit growth.

  • Are Federal Taxes Really Necessary? The Most Important Question In Modern Economics.

    March 12, 2008: Most people dislike our federal tax system. Attempts to fix it beg the question, are federal taxes necessary? Is your reaction, "Of course, federal taxes are necessary. How else could the government pay its bills? And if federal taxes were not necessary, why have the world's greatest economists not eliminated federal taxes?"
                  By 1980, after 200 years of existence, America had built a federal debt below $1 trillion. Only 28 years later, federal debt had ballooned almost 900% to $9.4 trillion. If federal taxes are necessary how, in only 28 years, was the federal government able to spent more than $8.4 trillion dollars unsupported by taxes?
                 Federal taxes are a relic from the days when money was backed by physical substances, like gold and silver. Because the supply of that collateral was limited, the government's ability to create and spend money was equally limited, which necessitated levying taxes. Today's money no longer is backed by any physical asset. It is backed only by "full faith and credit," which the government has in unlimited supply. What is "full faith and credit"? It is a series of federal government guarantees that may seem ephemeral, but are quite real and quite valuable. These guarantees include:
    1. The government will accept U.S. currency in payment of taxes
    2. It will pay it's debts (T-bills et al) and its bills with U.S. currency
    3. It will force all your domestic creditors to accept U.S. currency, if you offer it, to satisfy your debt.
    4. It will not require domestic creditors to accept any other money
    5. It will maintain a market for U.S. currency
    6. It will continue to use U.S. currency and will not change to another currency.
    7. All forms of U.S. currency will be reciprocal, that is five $1 bills always will equal one $5 bill and vice versa. A $1,000 T-bill is worth exactly 1,000 $1 bills. All money is debt and all debt requires collateral. The above guarantees form the collateral for U.S. money.
                   The amount of a debt is limited by the amount of collateral available to the borrower. Because the federal government has an unlimited supply of the above guarantees, it has the power and authority to create an unlimited supply of debt/money. Because there is no limit to the amount of money the federal government can produce, there is no limit to the amount of debt the government can service.
                   For that reason, the question, "Are federal taxes really necessary?" may be the most important question in modern economics. It is discussed in FREE MONEY.

    How Has Economics Become A Religion?

    April 7, 2005: Economics is a complex science, though many lay people believe they understand economics through intuition. The same people who admit they don't understand physics, chemistry or paleontology, will have strong opinions about economics.
                  Do you believe the federal debt is "too high" and that our children and grandchildren will have to pay it? Or that Social Security and Medicare, could go bankrupt? Or that a federal surplus benefits the U.S. economy and large federal debt makes borrowing more difficult? Or that cutting interest rates stimulates the economy?
                  These beliefs are widely accepted, yet, the evidence does not support these beliefs.
                 Belief without evidence is not science. It is religion. Economics has become a religion. It sports high priests (Nobel winners), rote recitals of theory without supporting data, unquestioning followers, unsuccessful predictions, excessive attention to minutia, lack of experimentation, resistance to change, anger at nonbelievers.
                  Our economy lurches from boom to recession and back, while those responsible preach that we are responsible for our economic problems. Like shamans they speak in tongues (Chairman Greenspan was especially good at this) and repeatedly take futile actions (i.e. promise surpluses) to prove they are doing something. Yet they neither control the present nor predict the future. Their rain dances (interest rate cuts) do not bring rain (economic stimulus), yet the ritual never changes.
                  To learn how we can create an enduring, controllable prosperity, you may find FREE MONEY of interest.

    Please click the cover to see excerpts from FREE MONEY.
    Questions? Ask the author, Rodger Malcolm Mitchell at:

    With Which Of These Popular Beliefs Do You Agree?

    February 15, 2006
                        -The federal government budget is too large?
                        -The US national debt, deficit and spending are too high?
                        -Our children will pay the federal debt through higher taxes?
                        -There is a federal government budget crisis?
                        -Social Security and Medicare might go bankrupt?
                        -High federal spending causes inflation, high taxes and/or high interest rates?
                        -We can't afford health insurance or a good education for everyone?
                        -Cutting interest rates stimulates the economy and helps prevent a recession?
                        -The U.S. National debt uses up investment funds?
                        -The Fed can cure inflation and stagflation with interest rate control.
               That is the popular faith. Yet, historical data do not support any of these beliefs. When tenets are universally accepted, and especially when they disagree with history, the thinking person reexamines the faith. FREE MONEY will give you the facts about money, federal debt, the federal deficit, Social Security, Medicare, education and federal spending, inflation, recession, depressions, stagflation and taxation.

    Can There Ever Be Tax Fairness?

               Much time and effort is expended searching for a "fair" tax. It is a futile search. All taxes always will be unfair. (See tax.) The search should be for a way to eliminate taxes. FREE MONEY shows you how federal taxes and federal debt can be eliminated.

    FREE MONEY Solution to Medicare and Social Security That Does Not Include Cutting Benefits Or Raising Taxes

    August 3, 2008: There are 400+ federal agencies, including all the military agencies, all the Departments, and dozens you never have heard of. Expenditures for two, and only two, of these agencies, are limited by an earmarked tax: Medicare and Social Security.
               When the military needs money to pursue the wars in Iraq and Afghanistan, Congress quickly votes hundreds of billions of dollars to this effort. No tax limits this budget.
               When the economy needed a stimulus, Congress quickly voted $150 billion to this effort. There was no earmarked tax limiting this effort. When Freddie Mac and Fannie Mae ran into financial difficulties, the Treasury immediately gave them a blank check. No taxes were allocated for this effort. When Bear Stearns showed serious financial stress, the Federal Reserve Bank of New York stepped with a financial rescue package intended to keep the firm afloat.
              When the FDIC was forced to take over IndyMac Bancorp, no new taxes were levied to cover this government expenditure. In 2008, the government voted more than $1 trillion to save the economy, and no new taxes have been voted.
               But, when Social Security and Medicare have financial difficulties, Congress is unable to come up with a solution. The solution is this: Fund Medicare and Social Security the same way we fund the other 400+ federal agencies, not through taxes, but through deficit spending.
               The total cost of Medicare is about $750 billion -- less than the costs of economic stimulus. The government could afford to pay for all of Medicare, let alone Medicare cost increases. You can read the detailed solution to Social Security and Medicare problems in FREE MONEY.

    What Is The Free Money Solution to the Federal Budget Deficit Problem?

    January 10, 2005: The best way is to eliminate the federal budget deficit and debt: Ending government borrowing. The government has the unlimited ability to create and spend money without borrowing. The process will be:
    1. Congress will create an account called "Money."
    2. Congress will determine how much money this account contains. The process will be similar to the way Congress now determines the debt ceiling.
    3. Federal agencies will write checks against this account according to budgets decided by Congress. If any federal agency needed additional funds, Congress would decide whether or not to allow this spending, in the same way that Congress votes for additional spending by the military et al.
                  This would eliminate concerns about "our grandchildren paying for the federal debt." There would be no federal debt.

    How Many Of These Thought-Provoking Questions Can You Answer?

    September 17, 2007
    1. What is the
    tax -free national debt solution to Social Security and Medicare financial problems?
    2. Why did the fastest debt growth in U.S. history precede an economic boom and low inflation?
    3. Why has every U.S. depression come after a federal surplus, and every recovery corresponded with a federal deficit?
    4. Why will our children never have to pay for federal deficits?
    5. Where will the necessary, added money come from to grow our economy?
    6. Why are the only two federal agencies, funded by direct tax collections, in financial difficulty?
    7. Why does the federal government not need or use tax money to pay for goods, services or debt service?
    8. What is stagflation and what is the cure for stagflation ?
    9. What really would happen if all federal taxes were eliminated?
    10. In the 25 years following 1982, federal debt increased an astounding 800%. Despite "debt clocks" and dire predictions based on popular faith, our grandchildren did not pay for the debt, interest rates and inflation were controlled, GDP kept rising, no nation refused to buy our debt and there was no shortage of lending funds. How was this possible?
              You'll find the answers to these questions, and many more, in FREE MONEY

            How can you explain the widespread belief that taking money out of an economy (with higher taxes and/or less federal spending) will help that economy grow?
               "We cling to a long-accepted theory, just as we cling to an old suit of clothes. "New notions and new styles worry us." Professor Asa Gray, in defending Darwin's theory of evolution.

    Concord Coalition: A Prime Source of Popular Faith

    November 17, 2008: You may enjoy reading my discussions with members of the Concord Coalition, a group promoting popular faith. We argue about money, Social Security, Medicare, the federal debt and federal deficit. For a few samples, click here.
               If you are an investor, you may gain an investment edge. You'll learn a simple, but reliable, approach to predicting the economy. You'll discover which event (and only this event) will trigger the next recession.
               If you are an economist, FREE MONEY. will give you new ideas for your own writing. This is the book owned by more than 200 of America's leading economists.
               If you are a politician, you'll see concepts to help you craft laws that will grow America.

               Using the FREE MONEY formula for economic growth, I bought stocks when I predicted the economic boom of the 1980s. I sold my stocks when I predicted the recession at the end of the Clinton administration. I again bought stocks when I predicted the recovery and sold them at the beginning of 2007. To learn what I now predict, please click here to read:

    Please click the cover to see excerpts from FREE MONEY.
    Questions? Ask the author, Rodger Malcolm Mitchell at:

    The FREE MONEY Logic Behind The Need For Substantial Debt Growth:

    August 30, 2008
    1. A large
    economy requires more money than does a small economy.
    2. All forms of money actually are forms of debt.
    3. Therefore a large economy requires more debt than does a small economy.
    4. Therefore, a growing economy requires a growing supply of debt.
    5. When inflation is at 3%, the total amount of real money in the economy will decline by 3%, unless more debt/money is created.
    6. Further, when the population increases 1%, the amount of money per person decreases by 1%, unless more money is created.
    7. Therefore, with inflation at 3% and population growth at 1%, a debt/money increase of 4% is needed each year, just to accomplish zero growth (1.01 x 1.03 = 1.04).
    8. Continuing the above example (3% inflation + 1% population growth), a per-capita GDP growth of 4% requires the total debt/money supply to increase at least 8% (1.01 x 1.03 x 1.04 = 1.08).
    9. The trade deficit (more money leaving the country than entering) in 2007 was $711 billion, or above 5% of the $13 trillion GDP, which brings the per-person total debt/money (federal, state, local government plus all private debt) creation requirement to nearly 14%.

    History shows that when total debt does not increase enough, as happened prior to the most recent recession, and is happening now (2008), we have slow economic growth, a recession or a depression.

    There is no modern relationship between deficits and inflation

              Popular faith holds that increasing the money supply causes inflation. History shows that is not correct. As you can see in the above graph, there is no relationship between changes in federal debt/money, shown in blue, and a loss in value of money (inflation), shown in red.
              The value of money is determined by supply and demand. So, it is true that increasing the money supply without interest rate control would lead to inflation, unless the demand also was increased. What increases demand? An increase in interest rates. Demand is based on risk and reward, and the reward for owning money is interest. The higher our interest rates, the greater the demand for our debt/money.
               In short, deficit spending will not cause inflation if we increase interest rates, thereby increasing the demand for money. We have the power to prevent inflation.
               But won't raising interest rates slow the economy? The graph below (in "FREE MONEY Shows Why Low Interest Rates Do Not Stimulate The Economy") shows there is no relationship between high interest rates and slow GDP growth. The opposite is true. GDP grows faster when rates are high, perhaps because high interest rates force the government to pay more interest, which adds more money to the economy.

    The Complete, One-Minute Course in Economics

              Click this link to learn "everything" you need to know about economics, in just one minute.
               Then read FREE MONEY to enjoy discussions of a balanced Federal budget, inflation and stagflation, and depression, federal taxes and tax cuts, federal debt, federal deficit, interest rates, recessions, money supply, Social Security reform, poverty, "debt clocks", Social Security bankruptcy, FICA, fiscal responsibility, Social Security privatization, Medicare reform, Medicare bankruptcy, treasury bills, notes and bonds and economic forecasting. Also, see a more accurate Glossary of economic terms. It's much more than a Glossary. It's a philosophy.

    Associated Press:
              "12/19/2007 WASHINGTON - "Congress approved $70 billion Wednesday for military operations in Iraq and Afghanistan. The House's 272-142 vote also sent the president a $555 billion catchall spending bill that combines the war money with money for 14 Cabinet departments."
              "6/30/2008 WASHINGTON - "Bush signs $162 billion war spending bill"
              (Why are Medicare and Social Security in danger of bankruptcy?)

    Debt Clocks and Other Misleading Web Sites.

              If you do an Internet search of the words "federal deficit," you'll find hundreds of sites warning about the federal government's debt burden. You'll see "debt clocks" with cautions that the Federal Debt has reached a huge number. Stated or unstated will be the belief the federal government lives beyond its means and one day, many awful things will happen.
              You'll see statements of belief that increasing federal debt causes inflation, recession or stagflation. Yet nowhere will you find a graph showing the true relationship between federal debt and inflation. The graph appears in FREE MONEY.
               And you will see many statements of belief that increasing federal debt causes high interest rates, which will cause a recession. Yet, you will not see a graph showing the true relationship between high interest rates and low GDP growth. (For reasons explained in FREE MONEY, there actually is a positive relationship between high interest rates and GDP growth).
              And nowhere will you find a chart showing the true relationship between total U.S. debt growth and GDP growth (They run generally parallel). Nor will you find an explanation of how the U.S. government, with the unlimited power to create money, ever can have difficulty paying its debts.
               For the facts about inflation, recession, depression, stagflation and interest rates please read FREE MONEY.

    FREE MONEY Shows Why Low Interest Rates Do Not Stimulate The Economy

    Low interest rates do not stimulate the economy.

    The above chart demonstrates that high interest
    rates do not and never have impeded the economy, while low interest rates do not and never have stimulated the economy -- again, contrary to popular faith. There is, in fact, a small correlation between high rates and economic growth. How can that be? When the federal government is forced to pay more interest, additional money is pumped into the economy, which stimulates the economy.

    FREE MONEY Shows Why Balanced Federal Budgets Lead to Recessions and Depressions

               �There is no historical data to demonstrate that a balanced budget enhances gross domestic product or any other indicator of economic productivity . . . On six consecutive occasions from 1817 until 1930, when government cut spending considerably without simultaneously seeking to stimulate the economy with equally deep tax cuts . . . depressions arose.� Michael Johns, The World and I, April 1996
               In 1997, the
    Chicago Tribune newspaper published an editorial headlined, "Clinton, GOP hail budget, tax deal . . . would yield the first balanced budget since 1969" Chicago Tribune, May 3, 1997."
              FREE MONEY concepts predicted this much-applauded act would cause a recession if we were lucky and a depression if we were not. We were lucky. We had the recession.
              If we were not so "lucky," and the surplus had lasted longer, this is what might have happened:
    1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
    1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
    1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
    1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
    1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
    1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
    1998-2001: U. S. Federal Debt reduced 9%.    Recession began 2001
    2004-2008: Deficit Growth reduced 40%. Recession began 2008.

              It is a terrible myth that balancing the federal budget benefits the economy. It never has and it never will. It starves the economy for money. Balancing the federal budget is a prescription for economic disaster.
          When the federal budget is balanced, even the slightest inflation causes the amount of real money in the economy to decline. Example: If a $50 trillion economy experiences a 3% inflation together with a balanced budget, the following year it will have only $48.5 trillion in real money and a recession. After 10 years of a balanced federal budget and 3% inflation, that economy will have only $37 trillion in real money -- and a deep depression.
          Money is the life-blood of an economy. The bigger the economy, the more "blood" it needs. Running a federal surplus is like applying leaches to a person suffering from anemia.

    How Much Does Federal Spending Cost Taxpayers?

          We all have seen the headlines: "Iraq surge to cost taxpayers $200+ billion"; Taxpayers pay $150 billion for economic stimulus package," etc. Unfortunately, these headlines, and their accompanying articles, are highly misleading.
          The only cost to taxpayers is taxes If taxes are not increased, taxpayers pay nothing for government spending. Congress and the President have not increased taxes. Tax rates actually have been reduced from the Clinton days. So, the Iraq war and the economic stimulus did not cost you one dime.
          In the past 30 years, the federal government has spent $11 trillion (That's $11 thousand billion) completely unsupported by any taxes. Neither you nor your children nor your grandchildren have paid, or ever will pay, for these expenditures (barring unnecessary tax increases). Who pays for them? The federal government. How? By deficit spending.
          Because the federal government has the unlimited ability to create and spend money, it also has the unlimited ability to service its debts, which it has been proving for the past 30 years. So the next time you read or hear that the federal government is spending "taxpayers' dollars," remember: It isn't true.
    Only taxes cost taxpayers. The federal government can pay all its bills without raising taxes, that is, without costing taxpayers one cent. The federal government could pay all its bills, even were all federal taxes to be eliminated. And no, this would not cause inflation, as Jimmy Carter (moderate deficit with high inflation) and Ronald Reagan (very high deficit with low inflation) have proved.
          Perhaps the most misleading words about our economy are �taxpayers� money.� Let�s keep two facts in mind:
    1. The federal government is not a tax payer; it is a tax receiver. So when the government spends money it is not spending tax payer�s money. It is spending tax receiver�s money.
    2. Federal government spending has no relationship to federal taxation. Increased spending does not cause increased federal taxes, nor does decreased spending cause decreased taxes. (Contrast this with state and local government spending which is tied closely to tax receipts.)
          Even the experts are confused. In March 2009, Professor Robert Salomon, Associate Professor of Management at NYU's Stern School of Business said �Why should GM and Chrysler use money loaned by the U.S. Government to transfer wealth from U.S. taxpayers to exiting
          What the professor seems to forget is those employees are taxpayers. Further, if those employees did not receive one cent, we taxpayers would not pay any less in taxes.
          Money going from the government to the private sector enriches the economy, just as money going the opposite direction (i.e. taxes) impoverishes the economy. This is the reason for federal stimulus packages. When it comes to the economy, remember this: Federal spending helps; federal taxes hurt.
          The government has the unlimited ability to create money, and government money does no good until it is sent into the economy. Because all the stimulus packages have come from deficit spending, not one dime of taxpayers� money has been sent to GM, Chrysler et al.
          Further, if you want to stimulate the economy, it�s silly to lend money to private companies, because when lent money must be paid back, the economy is weakened. Stimulus money always should be given, not lent.
          When the government makes a profit, the economy takes a loss. Statements that taxpayers can profit from loans to industry, are misleading. So-called taxpayer profits actually are money sent to the government, and similar to taxes, they are an economic loss.
          When you read the words �taxpayers� money,� in an article that complains about government spending, you can be sure the author has no idea what he�s talking about.

    2. Federal Budget Deficit
    3. Social Security and Medicare Solutions
    4. National Debt Letters
    5. Federal Deficit Solution
    6. Concord Coalition.
    7. Balanced Federal Budget
    8. Federal Deficit Problem
    9. Federal Government Budget
    10. US National Debt
    11. National Debt Solution
    12. A Child In Arms
    13. Inflation and Stagflation
    14. Glossary of Economic Terms Debt, Money, Deficit, Spend, Owe
    15. U.S. National Debt
    16. US National Debt Clock

    Please click the cover to see excerpts from FREE MONEY and for ordering information.
    Questions? Ask the author, Rodger Malcolm Mitchell at:

    Medicare: A Solution to the Problem
    Read Letters to the Media
    US National Debt
    See: Rodger's Blog

    For those who want a balanced budget, here is a history lesson:

    1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
    1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
    1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
    1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
    1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
    1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
    1998-2001: U. S. Federal Debt reduced 9%.    Recession began 2001

    The measure of an Economy is money. A large economy needs a larger supply of money than does a small economy. Therefore, a growing economy needs a growing supply of money. All money is a form of debt. Therefore, a growing economy requires a growing supply of debt.
    The Interest Rate Fallacy | Social Security Solutions And Reform | Medicare Solutions And Reform | Solutions To Our Economic Problems | Recessions, Depressions, Inflations, Stagflations: Causes and Cures | Federal Debt of the U.S. | Why We Need The Federal Budget Deficit | Stagflation: What It Is And How It is Prevented And Cured | Interesting Letters To The Media | Is There A Federal Deficit Solution? | Should We Have A Balanced Federal Budget? | What Is The Federal Deficit Problem? | How The Federal Government Budget Affects The Economy | A Discussion Of The US National Debt | The National Debt Solution | Short Stories: A Child In Arms | Glossary of Economic Terms Debt, Money, Deficit, Spend, Owe | US National Debt Clock | The Solution to Inflation and Stagflation | What Is Pseudoeconomics?   | How Is Money Supply Like The Weather? | Do Low Interest Rates Help The Economy? | The Solution to Federal Tax Reform | What Is The Relationship Between Gold and Money? | Why Do You Pay Taxes? | Social Security Reform | Does Federal Debt Cause Inflation? | The 5 Myths That Damage Our Economy | 10 Reasons to Eliminate FICA | Opinions Sent to the Media | Faith In Economics | GETROYS | Letter to Tribune | Senator Hillary Clinton | Thoughts from Rodger Malcolm Mitchell | Rodger Malcolm Mitchell's blog | Rodger M. Mitchell -- Ideas | Speech at the University of Missouri, Kansas City