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 If you enjoy discovery, you are in for a treat. Everything on this web site begins with this philosophy:
*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.
What is stagflation? What cures stagflation?
What cures inflation, recessions, depressions?
What is the one solution to Social Security and Medicare problems that does not include raising taxes or cutting benefits?
      "When an author puts himself on the line by embracing an unfashionable idea, even though he is guaranteed to generate scorn or indifference, this should somehow be recognized." Kary B. Mullis, Nobel laureate
      "If at first an idea does not sound absurd, then there is no hope for it." Albert Einstein
       "Intuitional belief and popular opinion are not science. If economics is to be respected as a science, and productively to influence our lives, it must look beyond intuition, and accept two unpopular facts illustrated in the excellent book, FREE MONEY: All money is debt, and a growing economy requires a growing supply of money." I. Klein, PhD
       "Conventional wisdom often is wrong." Steven D. Levitt and Stephen J. Dubner, Authors of FREAKONOMICS
      "I wrote FREE MONEY for you who enjoy thinking and discovering -- you who do not blithely accept the popular wisdom. 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? Rodger Malcolm Mitchell
        

Please click the cover to see excerpts from FREE MONEY.
Questions? Ask the author, Rodger Malcolm Mitchell at: rmmadvertising@yahoo.com
The Fed Has No Cure for Stagflation
To fight recessions the Fed cuts interest rates. To fight inflations the Fed does the opposite. It raises interest rates. But recession is not the opposite of inflation (The opposite of inflation is deflation.) When we have stagflation (the combination of inflation and recession) the Fed becomes paralyzed. It is afraid to use its primary tool, interest rate control. There is only one way to prevent and cure stagflation: Cure the inflation by raising interest rates, and cure the recession by pumping money into the economy via federal deficit spending. There is no other way.
Congress Giveth And The Fed Taketh Away
       Federal debt exceeds $9.4 trillion. To stimulate the economy, the Fed cuts the discount rate, impacting all interest rates. Every 1% interest rate reduction cuts $94 billion from federal interest payments (on T-bills, T-bonds and T-notes) to the economy. In early 2008, Congress added $150 billion to the economy as an economic stimulus. To cure recessions, Congress adds money while the Fed cuts it. FREE MONEY explains why.
Congress Giveth And Congress Taketh Away.
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 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 taxes. Six months later, while we remained in recession and the economy remained starved for money, Congress refused to cut taxes without adding new ones.
       FREE MONEY discusses this Congressional misunderstanding and contradiction of effort.
The Measure Of An Economy Is Money.
       Here is the train of logic that will allow you to predict our economy:
  • All forms of money actually are forms of debt. Currency, bank accounts, money market accounts, bonds and notes -- are both money and debt. The key difference is liquidity. A dollar bill (a debt of the U.S. government) is liquid, while bank CD's are less liquid forms of 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, a growing economy requires a growing supply of debt/money.
  • For an economy to grow, the debt/money supply must keep up with population growth, inflation and the current account deficit (money flowing out of the U.S.). Example: Say you want GDP to grow 3%. If population grows 1%, inflation 3% and the current account deficit is 1.4%, the supply of debt/money must grow about 8.7%. (1.01 x 1.03 x 1.014 x 1.03 = 8.7%).
  • The 6/08, federal debt was 9.4 trillion. Federal debt growth of 8.7% requires a deficit of $800 billion +.
  • "The Bush administration . . . projected a deficit for all of 2008 of $410 billion." (Associated Press, 2/12/08.) Even zero economic growth requires a deficit of more than $500 billion (1.01 x 1.03 x 1.014 x $9.4 trillion - $9.4 trillion = $500 billion).
  • The economy is more complex than one equation. Several factors affect economic growth. But fundamentally, total debt growth is required for economic growth. FREE MONEY provides a fuller explanation.
    Are Federal Taxes Really Necessary?
                  Most people dislike our federal tax system: Complex, unfair, onerous, costly and inefficient. Many politicians have tried to "fix" the federal tax system, but the solutions have been equally complex, unfair, etc.
                  These attempts to fix taxes beg the question, are federal taxes really necessary? Is the answer so obvious and trivial, we don't need to ask the question? 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 taxes?"
                  In 1980, after 200 years of existence, America had built a federal debt below $1 trillion. Today (6/08) it is $9.4 trillion. In only 28 years, the federal government spent more than $8.4 trillion dollars unsupported by taxes. How was this possible?
                  The question neither is obvious nor trivial. It may be the most important question in modern economics. It is discussed in FREE MONEY.
    Economics Has Become A Religion
                  Economics is complex, 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, though economics is easily as complex as any other science.
                  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 data, unquestioning followers, unsuccessful predictions, excessive attention to minutia, 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 take repeatedly futile actions 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.
                  Perhaps you have tired of our leaders' excuses for their failure to protect us. Perhaps you are uneasy with the boom/bust, uncontrolled wanderings of our economy, and would like to learn how we can create an enduring, controllable prosperity. If so, you will enjoy reading FREE MONEY.

    Please click the cover to see excerpts from FREE MONEY.
    Questions? Ask the author, Rodger Malcolm Mitchell at: rmmadvertising@yahoo.com
    Rate Cuts Do Not Stimulate The Economy
    April 4, 2008
                 Do you remember these headlines: "Employers slashed 80,000 jobs in March." "The U.S. central bank has lowered rates by 3 percentage points since mid-September" "The loss of jobs signals another interest rate cut by the Federal Reserve later this month." "Federal Reserve Chairman Ben Bernanke acknowledged Wednesday that the country could be heading toward a recession, saying federal policymakers are 'fighting against the wind' in combating it."

                 The Fed is lost. Rate cut after rate cut has done nothing. So what is the Fed's plan? Another rate cut. During the previous recession, the Fed also attempted rate cut after rate cut, to no avail. The recession, finally ended with the Bush tax cuts. The Fed has not learned from experience, but stubbornly adheres to the theory that interest rate cuts stimulate the economy.
                 Rate cuts do not stimulate the economy. They never have. They never will. Rate cuts stimulate inflation.
                 "Stimulating" an economy means making it larger. A large economy requires more money than does a smaller economy. Therefore, the only thing that stimulates the economy is the addition of money.
                 Rate cuts, by reducing the amount of interest the federal government pays, actually reduce the supply of money. We are on the edge of a recession, because the economy is starved for money. The coming "stimulus" checks will help, but they are too little and too late. This should have been done months ago, and the amounts should be far larger.
                 The only way to prevent or cure a recession: Federal deficit spending. There is no excuse for recession or inflation. These problems are not economic failures. They are leadership failures.
    The Fed is Reluctant to Learn From History
    The Fed seems to operate under the theory: If something doesn't work, do it again; if something absolutely doesn't work, do it again and again. Chairman Greenspan repeatedly cut interest rates to stimulate the economy, without effect. Chairman Bernanke again repeatedly has cut rates, but this time there has been an effect: Inflation.
    Do you believe:
                        -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 economic stagnation (stagflation), with interest rate control.
               That is the popular wisdom. 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.

         The red bar shows the annual percentage change in Total U.S. debt, (U.S. federal debt, state and local government debt, plus personal and corporate debt).  The green bar shows the annual percentage change in GDP.
         The yellow bar shows the annual percentage change in U.S. Federal Debt. Annual figures can be found at http://www.federalreserve.gov/releases/z1/current/z1r-2.pdf.
         The chart shows that changes in Total U.S. Debt parallel changes in GDP.   When Total U.S. debt grows quickly, the economy prospers.  When total U.S. debt grows slowly, the economy lags. The reason:  Debt and money are synonymous terms.
         All money is a form of debt.  Total U.S. debt is a measure of money in our economy. A growing economy requires a growing supply of money, which means a growing economy requires a growing supply of Total U.S. debt.

    Please click the cover to see excerpts from FREE MONEY.
    Questions? Ask the author, Rodger Malcolm Mitchell at: rmmadvertising@yahoo.com
    Why do we wait for recession, stagflation or depression before we stimulate the economy? Why do we not stimulate the economy to prevent recession, stagflation and depression? Why is the government able to pay for the military but unable to pay for Social Security and Medicare?
    Jan 21, 2008: An Open Letter to the Chicago Tribune and the nation about stagflation.
               The recession has begun. If interest rates continue to be cut stagflation will follow. The formal recession announcement awaits only the requisite two consecutive quarters of declining GNP (or whatever definition of " recession" suits the politicians).
               According to the January 21, 2008 Chicago Tribune, “Federal Reserve Board Chairman Ben Bernanke said, ‘fiscal action could be helpful’ (to ending the recession) if it is done right.”
               The Tribune goes on to say, “The chief reason a fiscal stimulus will probably fail is that it’s so hard to time it properly. Bernanke pointed out, ‘Stimulus that comes too late will not help support economic activity in the short term, and it could be actively destabilizing.’” The Tribune concludes its editorial with, “Even a well-designed fiscal stimulus has no more than an even chance of being worth the cost. A poorly designed one would surely be a waste.”
               The Tribune believes adding money to the economy must be done in a certain way. They say it would be wasteful to “aid state governments” and “finance alternative energy.” Sadly, while the politicians and the media waffle, the recession is upon us. Stagflation waits in the wings.
               The Tribune and Bernanke act as though money stops with its first use. Wrong, Tribune. Wrong, Bernanke. To end the recession, there are but two questions that need to be answered: How soon? And how much? How soon will we add money to the economy and how much will we add?
               It doesn’t matter to the economy where the money initially goes. All money added to the economy, no matter where it begins, ends in the same places.
               Visualize the government, in an attempt to end the recession, giving $500 billion to just one person(!). Let’s call him "Mr. Lucky."
               Mr. Lucky can spend the money, save the money or invest the money. If he spends the money, it will go to retailers, manufacturers and service providers, who in turn will spend the money, save the money or invest the money. The endless cycle will continue, spreading the money through the economy, ending the recession and preventing stagflation.
               If Mr. Lucky saves the money, he will put it in a bank, which will lend, spend, save or invest. Each of these actions will cause the money to go to retailers, manufacturers and service providers, who will initiate the endless cycle, circulate the money through the economy, ending the recession and preventing stagflation.
               If Mr. Lucky invests the money, it will go to investment instrument holders, who will (you guessed it) spend, save or invest the money, thereby circulating it through the economy, ending the recession and preventing stagflation.
               No matter what Mr. Lucky does with the money, short of burying it in his backyard, the money will circulate through the economy, which will end the recession and prevent stagflation.
               After its first use, all money added to the economy spreads throughout the economy. To worry about the first use, when trying to end a recession, is to have your priorities backwards. The key questions are: “How soon and how much?” The best answers are “Now” and “At least $500 billion to $1 trillion, and optimally more.” The government can use the money in specific, detailed ways, or it can spend lavishly on so-called "wasteful" projects. The result will be the same. The faster the money is injected, and the more money injected, the sooner and more robustly will the recession end and the economy recover.
               Pour water into a bathtub. No matter where you pour it, the tub fills. It's the same with money. No matter where you add it, the economy grows. So ladies and gentlemen, please stop dithering about where the money should go first. It doesn't matter to the recession or the economy. You have only two questions to answer: How soon and how much? The rest is just posturing and indecision.
               And oh, are you worried that adding money causes inflation? Raise interest rates. This always ends inflation, and no, high interest rates never have slowed business – but that’s the subject of another letter.
    Rodger Malcolm Mitchell
    There Never Can Be Tax Fairness
    Much time and effort is expended searching for a "fair" tax. See http://rodgermitchell.com/FairTaxes.html. It is a futile search. All taxes always will be unfair. The search should be for a way to eliminate taxes.
    There is a Solution to Medicare That Does Not Include Cutting Benefits Or Raising Taxes
              There are 400+ federal agencies, including all the military agencies, all the Departments, and dozens you never have hear 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. Nothing 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.
               But mysteriously, 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. You can read more about this in Free Money.
    In the book, FREE MONEY, Rodger Malcolm Mitchell proposes solutions to the Federal debt, and Federal deficit, inflation, recession, depression and stagflation, the Medicare and Social Security crises and high taxes. To see these solutions, read FREE MONEY. for the little known, but crucial facts about the Federal Government budget and the economy. FREE MONEY is easy to read. FREE MONEY is revealing. FREE MONEY is something you and every American should understand when you are asked to pay taxes.
            

    Please click the cover to see excerpts from FREE MONEY and for ordering information.
    Questions? Ask the author, Rodger Malcolm Mitchell at: rmmadvertising@yahoo.com
    How many of these thought-provoking questions can you answer? >
    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 wisdom, our grandchildren did not pay for the debt, interest rates and inflation were been 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: The Expression of popular Wisdom
               You may enjoy reading my discussions with members of the Concord Coalition, a group promoting popular wisdom. 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. To learn what I now predict, please click here to read:
                                                                          

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

    "Discovery begins when popular wisdom is questioned." Rodger Malcolm Mitchell
    The logic behind the need for substantial debt growth:
    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.
    8. For a GDP growth of 4% on a per-person basis, the total debt/money supply must increase at least 8%.
    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 needs 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.

              Common wisdom 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 total 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 increased demand? An increase in interest rates.
               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