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US National Debt
national debt of the US
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. U. S. Federal Debt is the safest, most controllable form of debt. The federal government, alone among borrowers, never will default. Thus, there is no federal debt or deficit problem, and a balanced federal budget leads to a recession or a depression.
Federal Government Budget
Letters Regarding the Federal Government Budget and the U. S. Federal Debt Solution

10/5/01 To: Senator Dick Durbin

Dear Senator Durbin
                I would like to meet with you in Chicago, for fifteen minutes. The purpose is to describe and justify the two-step solution to our economic problems.
                Briefly:
                Four years ago, I wrote a book titled FREE MONEY.   Though the book was written during the economic boom, it predicted the recession and explained the specific causes.
                It predicted the Fed’s repeated interest rate cuts.
                It predicted the failure of those cuts to stimulate the economy.
                It predicted the inability of Congress to find a solution to the recession.
                It predicted a depression, unless two steps are taken – steps that are not now being considered by Congress or the Fed.
                I would like to show you these two steps and how we can solve the money problems of Social Security, Medicare, the military, the environment, the infrastructure, crime and terror prevention, education and the poor.
                From reading this fax, will you believe I can offer solutions that have eluded the country’s greatest minds? Of course not. But considering the potential reward to the nation, I hope you’ll feel it’s worth the risk of only fifteen minutes to learn.

Rodger Malcolm Mitchell


  Second Letter Regarding Federal Government Budget

February 4, 2003

Ann Marie Lipinski
Editor, Chicago Tribune
435 N. Michigan Ave
Chicago, IL 60611

Dear Ms. Lipinski:
                In your 2/3/03 editorial titled, “Why deficits matter,” you make several incorrect statements:
                Statement: “Interest on the federal debt takes money that could be spent on guns or butter or both.”
                Fact: Federal interest payments add money to the economy, putting cash into the pockets of consumers, local governments and businesses.  Reducing the deficit would require increased taxes or reduced spending, both of which “take money that could be spent on guns or butter.”  Which do you prefer, federal spending or consumer spending?
                Statement: “(The government interest payment) will buy nothing – it will pay for money that was borrowed and has already been spent.”
                Fact: The government interest payment will purchase food, clothing, shelter, education, law enforcement, public works, etc.  These purchases will be made by all the consumers, local governments and businesses that receive the interest payments.  Again, which do you prefer, federal spending or consumer spending?
                Statement: “The government is coming off those four rare years when it ran a surplus, and the economy is sluggish now . . . chronic deficit spending also makes it that much harder to grow the economy . . .”
                Fact: By now you should have learned that when the federal government runs a surplus the economy always turns sluggish.  The Great Depression was preceded by six years of federal surplus.  It was cured by the huge deficits of World War II. 
                When we began to run a surplus during the height of the boom, my book accurately predicted the recession.
                All depressions through U.S. history have come during  federal surpluses.  By contrast, the most recent economic boom followed the massive deficits of the Reagan years.  Those who cannot learn from history are doomed to repeat it.
                Statement: “Today’s taxpayers are barely aware of how much of their money is diverted to debt payments”
                Fact: U.S. U. S. Federal Debt payments do not “divert” money. Debt payments are identical in effect to all other federal spending: They send money into the economy. When taxpayers pay for debt payments, this is called a “surplus.”  The very definition of “deficit” is government spending that is not supported by taxpayers.  Tax payments do not pay for government spending. The government can spend without tax payments. The sole effect of tax payments is to reduce the U. S. Federal Debt, thereby reducing the amount of money in the economy.  If there were no US national debt, there would be no US money.
               
Statement: “ . . . the reckoning over Medicare, Medicaid and Social Security (will) be put off for tomorrow’s taxpayers.”
                Fact: Medicare, Medicaid and Social Security, need not be self-funded, any more than the military, NASA or Congress itself need be self-funded.  The ability of the federal government to produce money -- without inflation -- is unlimited. Medicare, Medicaid and Social Security can and should be funded by federal money creation – what you misleadingly term “deficit spending.”
                I would be glad to discuss these points with you, anywhere, any time and in any forum, under the condition that you publish the facts.
Sincerely,


Click the cover to see excerpts from FREE MONEY


Third Letter Regarding Federal Government Budget

February 1, 2005
Letters to the Editor
The Wall Street Journal
4300 Route 1 North
South Brunswick, NJ 08852

                It is widely believed that the Social Security system eventually will begin to pay out more in benefits than it collects in taxes. The Wall Street Journal is among the myriad papers publishing graphs and tables showing Social Security's eventual demise.
                Social Security is a government agency, as are the military, Congress, the White House, the Supreme Court et al.  Like all government agencies, it is supported not by taxes, but by federal borrowing.
                Why do we never hear that the Pentagon will run out of money, despite the lack of a “Pentagon fund?” Why is there no concern about the solvency of the Supreme Court?  The CIA? The FBI?  The FAA?
                Why, alone among the hundreds of federal agencies, does Social Security (and to a lesser extent, Medicare) “risk” insolvency? 
                In fact, they don’t.  The predicted insolvency is a myth.
                The federal government cannot go bankrupt, though technically it has been insolvent almost since its inception.  Nor can any government agency go bankrupt.
                Those who believe taxes pay for government spending will have difficulty explaining how the U. S. federal debt rose 7-fold in the past twenty years, yet we are no closer to bankruptcy today than we were then.
                Our $9 trillion U. S. federal debt shows that spending has exceeded taxes by $9 trillion, and continues to exceed taxes almost every year.  The government pays its bills, not with taxes but by creating money, and there is no known limit to the amount of money the federal government can create.
                In the 18-year period from 1982 though 2000, the government created $6 trillion additional dollars, while curing the then-existent inflation and stimulating the economy.
                What would happen were the government to create another 7-fold increase in U. S. national debt during the next 18 years?  For one thing, it could eliminate FICA, pay all Social Security benefits, and save us from all those misleading tables showing how Social Security will run out of money.
                It can’t and it won’t.  Will someone please learn a bit of economics, before driving the country mad?


Fourth Letter Regarding Federal Government Budget

January 28, 2007
Mr. Clive Crook
EDITORIAL DEPARTMENT
The Atlantic Monthly
600 New Hampshire Ave., NW
Washington, DC.

Dear Mr. Crook;
                This is a response to your February article title, “The Rancor Dividend,” in which you say “America’s fiscal policy is clearly unsustainable.” Although you don’t say why (a serious omission), I’d guess you mean that if the U. S. Federal Debt keeps growing at its current rate, there will come a time when the United States will not be able to service it.
                Again, you give no specifics. You don’t indicate what the current rate is (another omission), nor do you indicate when the U.S. won’t be able to service it (yet another omission). In short, your article seems to say “Debt is bad and surplus is good, and since everyone knows this, there’s no need to substantiate it, nor even to think about it.”
                It’s sad, when a respected magazine uses common knowledge rather than facts, as the basis for its arguments.  It’s sadder still when the facts neither are mentioned, nor to my knowledge, ever have been mentioned, by said respected magazine.  And what are these facts?  There are several:
1. A growing economy requires a growing supply of money.  Because all money is a form of debt, a growing economy requires a growing supply of debt.
2. This debt can come from public or private sources, but the safest source of debt is the federal government, because it alone, among all borrowers, has the unlimited ability to create money to pay its debt. This unlimited ability to create money means the Federal Government, and indeed all large, sovereign nations, cannot go bankrupt.
3. Debt growth causes GDP growth.  Draw a chart comparing total debt (public and private) growth with GDP growth, and you will find the two lines are parallel. Similarly, debt reduction leads to recessions and depressions. Consider what happens when we do not run a deficit: Every depression in U.S. history began with a federal government budget surplus:

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
                In 1998-2000 US federal debt growth slowed to 1.4% annually (President Clinton’s surplus).  A recession began in 2001.  Then, President Bush cut taxes, US federal debt growth rose, the recession ended, and the economy has continued to grow.
                The fundamental problem with your article is a premise based on the unsubstantiated (though commonly believed) assumption that growing US federal debt is fiscally imprudent. While growing debt may be imprudent for you, for me, for every local government and for every corporation, it is absolutely necessary for the growth of our economy. It is declining US federal debt that is imprudent.
                And that means US national debt (federal debt plus all other debt) must continue to rise.  Debt must rise faster than the inflation rate, just to maintain the real supply of money in the economy, and it must rise faster still, to affect economic growth. Your future inclusion of facts in your articles, will be appreciated.


Fifth Letter Regarding Federal Government Budget

June 26, 2007

To: The editors of the Chicago Tribune
Subject: Why federal government budget deficits are necessary for economic growth.

                Hello, again. It's been a while since I've written to you on this subject: “Clinton, GOP hail budget, tax deal . . . would yield the first balanced budget since 1969," Chicago Tribune, May 3, 1997.
                I predicted this much-applauded act would cause a recession if we were lucky and a depression if we were not.
                Within two years of the balanced federal government budget, here's what happened: “The NBER's Business Cycle Dating Committee has determined that . .  . the expansion that began in March 1991 ended in March 2001 and a recession began. The expansion lasted exactly 10 years, the longest in the NBER's chronology.” National Bureau of Economic Research, November 26, 2001.
                We were lucky. We had the recession.
                Do you remember this Tribune editorial? “They (tax cuts) should not be presented as a way to prevent an economic slowdown . . . Reducing the national debt should remain a priority, because it cuts debt service and leaves the nation in better shape to deal with future unexpected economic challenges. . . The last thing President Bush should do is jerk the nation back into the dreary era of federal budgets scripted in red.”
                The so-called “dreary era of federal government budgets, scripted in red,” continues today, while the economy grows and grows.
                I've sent you many letters, and even sent you my book FREE MONEY, which shows that recessions and depressions follow federal government budget surpluses, and economic growth is associated with deficits. In short, federal budget deficits create the money which is absolutely, positively necessary for the growth of our economy.
                Has the time come for the Tribune editorial writers to present the facts to your readers? I would be glad to assist. Just ask.
Sincerely,
Rodger Malcolm Mitchell


Real knowledge begins when common knowledge is questioned.


FREE MONEY: THE ANTIDOTE TO POPULAR WISDOM ABOUT SOCIAL SECURITY, MEDICARE, THE FEDERAL DEFICIT AND DEBT, TAXES AND THE ECONOMY.


To read solutions to the federal government deficit problem, click the FREE MONEY cover.

Medicare: A Solution to the Problem

Read Letters to the Media

US National Debt is $9 Trillion!

What does this logical progression tell you?
*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.
*U. S. Federal Debt is the safest, most controllable form of debt, because the federal government, alone among borrowers, never will default.
*Thus, there is no federal debt or deficit problem, and a balanced federal budget guarantees recession, and depression.


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

The Interest Rate Fallacy | Social Security Solutions | Medicare Solutions | Economic Solutions | Recession | Federal Debt of the U.S. | Federal Budget Deficit | Stagflation | National Debt Letters | Federal Deficit Solution | Balanced Federal Budget | Federal Deficit Problem | Federal Government Budget | US National Debt | National Debt Solution | A Child In Arms | Glossary of Economic Terms Debt, Money, Deficit, Spend, Owe | US National Debt Clock | Inflation and Stagflation | Pseudoeconomics   | Money supply and the weather | The Relationship Between Gold and Money | Social Security Reform | Does Federal Debt Cause Inflation? | The 5 Myths That Damage Our Economy | 10 Reasons to Eliminate FICA | Rodger M. Mitchell -- Ideas |