Cure for recession, inflation, stagflation, depression. Solution for Medicare, Social Security and the economy

Solutions: The Federal Budget Deficit
Recession, Inflation, Depression, Stagflation

Please click the cover to see excerpts from FREE MONEY

Here are letters to various media, most often the Chicago Tribune, concerning the U.S. national debt and the Federal budget deficit. More than 100 letters have been written, all in the hopes of educating the media writers, who then could eductate their readers. Perhaps you might like to write to the media. Some addresses are below. You may write to me at: rmmadvertising@yahoo.com

September 18, 2007: Emailed to editors of the Chicago Tribune and the Chicago Sun Times as well as Senators Obama and Durbin
               You can make a note of this prediction:
               1. The economy will continue to sag.
               2. The Fed will embark on a series of interest rate cuts. These will have no effect, because cutting interest rates does not increase the amount of money in the economy. (Actually, it reduces the money supply, because the federal government pays less interest on its borrowing.)
               3. We will enter a recession, which can be cured only with tax cuts and an increase in federal spending.
               4. If the deficit continues to decline, we will enter a depression, as we have on six separate occasions in our history when the deficit declined.
                Meanwhile, having learned nothing from history, Senators Clinton and Obama will campaign on tax increases and a balanced budget.
Rodger Malcolm Mitchell
December 16, 2002
Mr. Steve Chapman
Chicago Tribune
435 N. Michigan Ave.
Chicago, IL 60611

Dear Mr. Chapman:

               I read your recent article titled, "Fiscal stimulus vows something for nothing, in which you say, "In case you haven't heard, we can't (get something for nothing)."
               Actually, in the case of money, we can and do. What do you think establishes the value of a dollar? Nothing. Or more specifically, full faith and credit.
               Ever since President Nixon cut the final connections between gold and the dollar, there has been no physical property that backs money. All the government promises you, is if you turn in that dollar you'll receive – a dollar. No, you can't demand a piece of the Washington Monument, or Yellowstone Park. All you get for your dollar is full faith and credit.
               Money is the ultimate something for nothing.
               The same is true of T-bills, another form of money, backed only by full faith and credit.
               History shows there never has been a time when the U.S. government has been unable to service its debts. Why. Because the government prints money.
               Beginning in 1982, the Reagan years, the federal debt rose an astounding six-fold. What would you have predicted then? Inflation? Recession? The end of the world as we know it? If so, you would have been wrong.
               What happened was the most robust economy in our history.
                Then when President Clinton ran a "prudent" surplus, we had a recession. Now that the government has again begun to run a deficit, we are climbing out of that recession. Based on history, the larger the deficit the healthier the economy.
               So, if our debt grows another six-fold, what do you now predict will happen?
               If you want to understand why, read FREE MONEY. , by Rodger Malcolm Mitchell.

Based on history, the larger the deficit
the healthier the economy.

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, FREE MONEY 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: 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 federal debt, thereby reducing the amount of money in the economy. If there were no debt, there would be no 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 the federal government budget with you, anywhere, any time and in any forum, under the condition that you publish the facts.

Sincerely,
Rodger Malcolm Mitchell

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.

February 6, 2003
Dear Ms. Lipinski:

               Please allow me to comment on your 2/5/03 editorial titled, "The Bush budget's disconnect."
               You said, ". . . the Bush White House can't pay for all this. It wants to spend more money, but not collect the taxes to pay for it."
               You misunderstand where money comes from. All government money is created – printed – by the government, in the form of bonds, notes and bills. The dollar bill in your purse is a Federal Reserve Note, backed by nothing except "full faith and credit." It simply was printed on almost-worthless paper, and it has value only because the government says so.
               The government pays for everything by creating money, in the form of bonds, notes and bills. Taxes do not create money. The government does not use taxes to pay its bills. The government uses the money it has created, to pay its bills.
               In fact, taxes destroy money by destroying (paying off) bonds, notes and bills. By removing money from the economy, taxes suppress the economy. All taxes do. Always.
               Because money is backed only by full faith and credit, and the U.S. government has no limit of full faith and credit, there is no limit to the amount of money the government can create. The government does need taxes.
               You may ask, "If the government just prints money, without collecting taxes, won't we have inflation? This is a common misconception. Inflation is loss in value of money. The value of money is based on supply and demand. Demand is based on risk and reward. And reward is based on interest rates. That is why, when inflation threatens, the Fed raises interest rates.
                Inflation always can be prevented through interest rate control. When the government prints money, inflation can be prevented by raising interest rates.
               You may ask, "If interest rates are raised, won't this make borrowing harder and suppress the economy?" This is another misconception. Have you noticed that repeated interest rate reductions never seem to stimulate the economy? Historically, there is no relationship between interest rates and economic growth.
               The reason: For every borrower there is a lender. High rates make borrowing less attractive, but make lending more attractive. High rates neither add nor subtract money from the economy – with one exception: When the government is forced to pay high rates this adds money to the economy.
               So, on balance, high rates tend to stimulate the economy. Just ask the millions of people who own government bonds. In summary, all taxes not only are unnecessary, they are bad for the economy, both in the short term and the long term. Historically, depressions have occurred when the government reduced the growth of money in the economy (euphemistically known as running a "surplus").
               Anyone whose goal is to injure the American economy, will work very hard to reduce the deficit.
                I would be glad to discuss the federal budget deficit with you, anywhere, any time and in any forum -- your office, my office, on the radio, on TV, in a restaurant, on a street corner in the Loop -- anywhere.
Sincerely,
Rodger Malcolm Mitchell

Click the cover to see excerpts from FREE MONEY

February 26, 2003
Dear Ms. Lipinski:

                Please allow me to comment on your 2/25/03 editorial titled, "More spending, more debt."
                Every type of money in America is a form of debt. (Can you think of any type of money that is not a form of debt?) Your editorials consistently use the negative word "debt," when they could as easily, and more correctly, used the word, "money."
                The public does not understand that federal debt is money, but surely the Chicago Tribune should know this. The public does not understand that if federal debt were eliminated, all government money would disappear, but surely you should know it. The public does not understand that every depression in our history has been caused by a reduction in federal debt, but surely you should know it.
                Your editorial said, ". . .Washington has moved with breathtaking speed from a $237 billion surplus to a $304 billion deficit in just three years." Surely you must know, the $237 billion surplus meant $237 billion was removed from our economy, and removing that money caused the recession.
                Your editorial said, "The debt ceiling. That should make taxpayers want to raise the roof." In fact, there is no relationship between the amount of debt (i.e., the amount of federal money in our economy), and the amount of taxes we pay. None.
                Taxes do not service federal debt. Only money services federal debt, and the federal government has the unlimited ability to produce money, without inflation.
                If you owned a money-printing machine, would you ask me for money? No? So why does the federal government ask you for money?
                The federal government is not like you, or me, or any of the states, counties, cities or corporations. The federal government is the one entity in America that can produce money at will, and does not need to levy taxes or find other sources of money. Claiming that tax payers will be penalized by growing federal debt, is ill-informed or disingenuous.
                I would be glad to debate these points with you, anywhere, any time and in any forum -- your office, my office, on the radio, on TV, in a restaurant, on a street corner in the Loop -- anywhere you choose. Do you have the courage of your convictions?
Kindly,
Rodger Malcolm Mitchell

March 6, 2008
Public Editor
The New York Times
620 Eighth Avenue
New York, NY 10018

Subject: Bob Herbert's article titled, "The $2 Trillion Nightmare

               Bob Herbert made two errors in his piece, "The $2 Trillion Nightmare," errors so serious they nullify the article's fundamental meaning.
               First error: Mr. Herbert said, "The war in Iraq will ultimately cost U.S. taxpayers . . . an astonishing $2 trillion." This is completely false.
               The war, and indeed all federal expenditures, will not and have not, cost taxpayers one cent. If government spending were supported by taxes, we could not have the current $9 trillion federal debt. Any increase in spending would have to be matched by an increase in taxes. When tax revenues fall, spending would have to fall. That doesn't happen.
               There is no historical relationship between either tax rates or tax collections, and federal spending. In 1980, the federal debt was less than $1 trillion. During the succeeding 28 years, the debt increased an astounding 1,000%. Yet tax rates remained essentially the same and no federal check bounced.
               In short, taxpayers do not and will not pay for the war or for any other federal expenditure. Mr. Herbert even acknowledges this when he quotes Mr. Joseph Stiglitz, who said, ". . . this war has, effectively, been entirely financed by deficits."
               Note: Not by taxpayers, not by taxes, but by deficits.
               How is this possible? The federal government, unlike state and local governments and you and me, has the unlimited ability to create money. Even during the Great Depression, when tax collections were minimal, the federal government was able to pay for make-work projects to stimulate the economy, then ramp up spending for World War II. Again, no federal check bounced. Everything was paid for with deficit spending.
               Mr. Herbert's second error was again quoting Mr. Stiglitz, who said, "For a fraction of the cost of this war we could have put Social Security on a sound footing for the next half-century or more." The implication is that somehow war spending is preventing us from putting Social Security on a sound footing. Completely false.
               Ever since the war began, the government has created the money to fund it. Now the government plans to create $150 billion to stimulate the economy. Nothing stops the government from creating the money to fund Social Security and Medicare – even universal health care.
               Why do people believe the government can't afford these expenses, when it proves time and again it can? Because there is a widespread worry "turning on the presses," i.e. creating money, causes inflation. Apparently, a 1,000% money supply increase in only 28 years is not sufficient evidence to prove the falsity of this conjecture.
               During the Carter administration, money creation was relatively low and inflation was high. During the Reagan administration, money creation was enormous, and inflation was low. Why? Because inflation is not caused by money creation. It is caused by too-low interest rates.
               In summary, the U.S. government can pursue the war, support Social Security, universal health care, all types of research, education, law enforcement – virtually every benefit you can imagine, and it can do all this without costing taxpayers a dime. History proves it, despite all the theories to the contrary.
Rodger Malcolm Mitchell

March 31, 2003
Dear Ms. Lipinski:

                This is in regard to your 1/21/04 editorial titled "Bush's blind spot."
                You said, ". . . the cost of his tax cuts will . . . (put) more pressure on the federal treasury and on tomorrow's taxpayers." Both assumptions are wrong.
                Federal debt is the way the government supplies the economy with money. The Golden Rule of Economics is, "A growing economy requires a growing supply of money." So for the economy to grow, the federal government must run growing deficits.
                Cutting the deficit is a recipe for economic disaster. The depressions of 1819, 1837, 1857, 1873, 1893, and the "Great Depression" of 1929, all were preceded by federal surpluses. Recoveries always are created by federal deficits, i.e., the creation of money.
                President Clinton inherited a healthy economy. He ran a federal surplus and created a recession. President Bush ran a deficit and the economy is recovering.
                Taxpayers never will have to pay for the federal debt. The debtor is the federal government, not the taxpayers. The federal government and the U.S. citizens are not the same. The government is the borrower. The citizens (and others) are the lenders.
                It is the borrower that must pay a debt, not the lender.
                So where does the government get the money to pay its debts? By creating it. The government pays its debts by creating money, and has no need for taxes.
                Some worry that creating money causes inflation? Yet, in this time of rising federal debt, deflation has been as big a concern as inflation. Creating money does not cause inflation., and never has. Inflation comes from lack of demand for money. When inflation becomes a concern, Chairman Greenspan will raise interest rates, increasing the demand for money.
                You're concerned about deficits. Since, the Golden Rule of Economics is, "A growing economy requires a growing supply of money," where will the growing supply of money come from?
Kindest regards,
Rodger Malcolm Mitchell

Federal debt is the way the federal government
supplies the economy with money.

April 25, 2003
Dear Ms. Lipinski:

                Chairman Greenspan is one lucky fellow. The Chicago Tribune considers him "an able and patient steward of this economy." (Your 4/25 editorial titled, "Bullish on Greenspan.)
                That's just what a struggling economy needs: a patient steward, rather than someone who might actually do something.
                But that's unfair. The patient steward did do something. He put the phrase "irrational exuberance" into the lexicon, and one can see how effective that has been.
                Anyway, the recession is not his fault, because "a buying frenzy is hard to stop painlessly" . . . especially when the government was running a surplus which sucked massive amounts of money out of the economy.
                Of course, the patient steward might have warned the government that each of the last six depressions began with a federal surplus. But hey, how is a Fed Chairman expected to know that?
                And the patient steward has been "adroit" in "softening" the recession , "with a dozen interest rate cuts," which the book FREE MONEY. predicted would accomplish nothing -- and of course, have accomplished nothing.
                Perhaps, rather than"softening" the recession, he might have prevented and cured the recession. All he had to do was pump money into the economy and more importantly, encourage Congress to pump money in.
                Next time you talk with the patient steward, ask him, "Since a growing economy requires a growing supply of money, where will the money come from to grow this economy?"
                Yes, Chairman Greenspan is a lucky fellow. He's not blamed for the problems of the economy, but if we recover, you'll give him the credit. All he needs to do is sit in front of Congress and mumble incomprehensibles . . . and be a patient steward.
                By the way, you might be interested in www.rodgermitchell.com
Kindest regards,
Rodger Malcolm Mitchell

Click the cover to see excerpts from FREE MONEY

May 9, 2003

Mr. Walt Duka
c/o AARP Bulletin
601 E St. N. W.
Washington, DC 20049

Dear Mr. Duka:

               This is in regard to your article titled, “Deficits: Danger Ahead?” printed in the May 2003 issue of the AARP Bulletin.
               The primary thrust of the article is expressed in the first paragraph: “. . . too much (government) red ink could lead to an economic crisis . . .” Actually, in the history of the United States, a federal deficit never has created an economic crisis. Even the massive Reagan-era deficits, in which the debt grew six-fold in just 15 years, did not create a crisis. They created an economic boom.
               The greatest economic crises are created not by deficits, but by surpluses. Take a look at these figures:

In 1817-21 the federal debt was reduced by 29% Depression began in 1819
In 1823-36 “ ” “ ” “ 99.7% Depression began in 1837
In 1852-36 “ ” “ ” “ 59% Depression began in 1857
In 1867-73 “ ” “ ” “ 27% Depression began in 1873
In 1880-93 “ ” “ ” “ 57% Depression began in 1893
In 1920-30 “ ” “ ” “ 36% Depression began in 1929
In 1998-2000 federal debt growth slowed to 1.4% annually. Recession began in 2000.
In 2000 federal debt growth rose to 4.5% annually and the recession ended.

               You mentioned that, “Among other things, deficits reduce the money available for needed improvements, such a Medicare . . .” In fact, the opposite is true.
               Deficits pump money into the economy, increasing the amount of money available for Medicare et al. When the government runs a deficit, it sends more money into the economy than it removes through taxes. A federal deficit is an economic surplus.
               That’s why deficits stimulate the economy. They add money. Federal surpluses (which, in fact, are economic deficits) remove money from the economy, which is why they cause recessions and depressions.
               The Golden Rule of Economics is: “A growing economy requires a growing supply of money.” If the government does not run a deficit, how will money be added to the economy?
               Can the government run deficits forever? Can it run deficits of any size? Surprisingly, the answer is: There is no limit to the size of the debt the federal government, can service. The government has the unlimited ability to produce money.
               Reagan proved that even a six-fold debt increase in 15 years can be supported. If we did the same thing today, the federal debt could increase$30 trillion in the next 15 years, not only without adverse effect, but with very positive effect.
               I would be glad to discuss these points with you at any time.
Rodger Malcolm Mitchell

June 4, 2003
Paul E. Steiger
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281

Dear Mr. Steiger:

                A Tale of Two Leech Doctors
                A long time ago, doctors applied leeches to their sick patients. The leeches removed blood from the patients. An adequate supply of blood is vital to a patient's health, and because removing blood does nothing to stimulate recovery, the patients' condition grew worse. This did not bother the doctors, whose minds were fixed on one cure. Leech doctors learned nothing from experience. So they continued to apply leeches, again and again.
                Despite the "cure," a patient might recover, but more likely the patient will die. If a patient recovered, the leech doctor was hailed as a hero. If a patient died, everyone said the leech doctor did all he could.
                Not long ago, Dr. Greenspan applied an interest rate cut to the sick economy. The interest rate cut removed money from the economy (because the federal government paid less interest on its debts). An adequate supply of money is vital to economic health, and because removing money does nothing to stimulate recovery, the economy's condition grew worse. This did not bother Dr. Greenspan, whose mind was fixed on one cure. Dr. Greenspan learned nothing from experience. So he continued to apply interest rate cuts, again and again.
                Despite the "cure" the economy might recover, but more likely the economy will die. If the economy recovers, Dr. Greenspan will be hailed as a hero. If the economy dies, everyone will say Dr. Greenspan did all he could.
                The only thing that will stimulate recovery is a transfusion of money, the lifeblood of the economy. Read FREE MONEY. , by Rodger Malcolm Mitchell, to see how to save our economy.
Sincerely,
Rodger Malcolm Mitchell

June 4, 2003
Dear Mr. Steiger:

               A front page article in the June 4th Wall Street Journal says, "Federal Reserve Chairman Alan Greenspan and his European counterpart, Wim Duisenberg, signaled that they are contemplating interest rate cuts soon, moves that could help stimulate sluggish economies on both sides of the Atlantic and reduce the risk of global deflation."
               Chairman Greenspan believes that although the first dozen interest rate cuts did not stimulate our sluggish economy, the next one will do it. Clearly, he is lost. He is unaware that interest rates never have and never will stimulate the economy.
               Only one thing ever stimulates an economy: The infusion of money. And an interest rate cut does just the opposite. By reducing the interest the federal government must pay on its debts, the interest rate cut reduces the amount of money entering the economy.
               To stimulate the economy, the government dramatically must increase the federal deficit. That is the only method for adding money to the economy and for preventing a deflation. That is the only federal budget deficit solution.
               Please read FREE MONEY. by Rodger Malcolm Mitchell, and you'll understand.
Sincerely,
Rodger Malcolm Mitchell

June 20, 2003
Letters to the Editor
The New York Times
229 West 43rd Street
New York, NY 10036

               The various Medicare drug plans are needlessly complex, and this complexity is based on a tragic misunderstanding.
               Congress believes the government cannot afford to pay for all the drugs Medicare recipients must buy. So, our representatives have crafted intricately convoluted plans, hoping to make seniors believe they receive benefits, while actually receiving little or nothing.
               The tragic misunderstanding involves the concept, “the government cannot afford.”
               In truth, there is no expense the government cannot afford. The government could afford to pay for all of Medicare, even without any taxes. The government could afford to give full Medicare benefits to every man, woman and child in America. Add Social Security, and the government could afford that, too.
               Consider the year period, 1982 - 1997. In only fifteen years, the federal debt rose from under $1 trillion to almost $6 trillion, a six-fold increase. How did the government “afford” to increase spending so much?
               The answer: By creating money, which in financial terms is known as “borrowing.”
               Is there a limit to how much money the government can create (borrow)? No. Ever since President Nixon eliminated the last connection between gold and money, the U.S. government has had the unlimited ability to create money. That is why gold and money were divorced.
               What was the result of the massive increase in federal debt, beginning in 1982? The economy was stimulated. That also is what happened beginning in 1940. History and economics show that increasing federal debt stimulates the economy. (And federal surpluses cause recessions and depressions, which is what happened in 1929 and more recently, to President Clinton.)
               Now it is 2004, and the federal debt is about $6 trillion. What would happen if once again, the debt were to be increased six-fold in 15 years? Answer: Again the economy would be stimulated, and that additional $2 trillion per year would pay for all the drugs needed by every American.
               It is sad that Congress’s lack of economic knowledge will doom so many Americans to health care hardship. No, it’s not sad. It’s tragic.
Sincerely,
Rodger Malcolm Mitchell

June 26, 2003
Editor, The Wall Street Journal
Dear Mr. Steiger:

               House Minority Leader Nancy Pelosi said, “The Republicans are [on a] reckless tax cutting binge . . . They do it on a weekly basis, without any sense of what it does to plunge our children into indebtedness.”
               This comment reveals either a lack of knowledge about our economy, or the Democrats’ fear that the economy will recover while President Bush still is in office. Federal debt never has, never can and never will “plunge our children into indebtedness.” The debtor is the government, not our children, who actually are the creditors.
               During the period 1982 - 1997, the federal debt increased an astounding six-fold, from under $1 trillion, to nearly $6 trillion. Were any children plunged into indebtedness? No. In fact, the economy, and our children, prospered, because of the vast infusion of money.
               Those “indebted” children actually are the wealthy owners of federal bonds notes and bills. Every time Rep. Pelosi gives one of her children a T-bill she increases the debt. Does she think she also is plunging the child into indebtedness?
               Perhaps Rep. Pelosi was concerned that our children would have to pay additional taxes to service the additional debt. But history and economics show there is no relationship between taxes and federal debt. That’s why the debt grew so fast.
               The government never has and never will need tax money to service its debt. It merely rolls over its debt, which it can do endlessly.
               In summary, if Rep. Pelosi’s comment is due to economic ignorance, she should try to become educated, especially in her role of House Minority Leader. It’s dangerous for such an influential person to be so ill-informed.
                But, if her objective is to injure the American economy until election time, that’s known as “treason.”
Sincerely,
Rodger Malcolm Mitchell

Click the cover to see excerpts from FREE MONEY

August 25, 2003
Ann Marie Lipinski
Dear Ms. Lipinski:

               One never reads concerns that the Pentagon or Congress or the Supreme Court will go bankrupt. But, the Chicago Tribune, like most media, continually expresses concern that Social Security or Medicare will go bankrupt.
               Today (8/24/03) was Medicare's turn. Quoting President Bush, The Tribune said, "(A) massive overhaul . . . is necessary so the entire Medicare system doesn't . . . go bankrupt in the not-too-distant future."
               The Pentagon, Congress, the Supreme Court, Medicare and Social Security all are agencies of the U.S. government. As agencies of the U.S. government, they could go bankrupt only if the U.S. government went bankrupt.
               During the Great Depression, when millions of Americans were virtually penniless, neither the U.S. government, nor any of its agencies, went bankrupt. Twenty years ago, the federal debt was less than $1 trillion. Today, it approaches $7 trillion. Yet the federal government is no closer to bankruptcy than it ever has been -- meaning, not close at all.
               If you were bankrupt, you would not have enough money to service your debts. Your checks would bounce. That never has happened to the U.S. government, despite the massive debt increase, and indeed, it cannot happen.
               Unlike you and me, the U.S. government has the unlimited ability to create money. That is how it is able to service a debt that has grown 7-fold in only 20 years. The government always was, and always will be able to, service its debts. And despite common knowledge, creating money does not cause inflation, as should be obvious from today's concerns about deflation.
               No federal check ever has bounced. No check from the Pentagon, nor from Congress, nor from the Supreme Court nor from Medicare nor from Social Security, ever will bounce. Never.
               Because no federal check will bounce, no federal agency will go bankrupt.
               Once Congress and the American public understand the impossibility of federal agency bankruptcies, many of the illusionary problems facing Medicare and Social Security will disappear.
               The federal government easily can afford to provide health and drug coverage for every American. The only question is, what method will be used.
Sincerely
Rodger Malcolm Mitchell

November 4, 2003
Ann Marie Lipinski
Dear Ms. Lipinski:

               As I predicted in my several notes to you, the Clinton surplus caused a recession and the Bush deficit caused the current recovery.
               I have been invited, by the University of Missouri, to speak on this subject.
               If you’re interested in hearing how we can solve some of the problems regarding Social Security, Medicare, education, the ecology, taxation, etc. you can see me on Monday, 11/17/03 at:
The University of Missouri
Administration Building
5115 Oak Street
Kansas City, Missouri 64112

               The seminar is being run by the Center for Full Employment and Price Stability. I am scheduled to speak at 4:00 PM.
               It would be nice to talk with you, before or afterward.
Kindest regards,
Rodger Malcolm Mitchell

December 11, 2003
Ann Marie Lipinski
Dear Ms. Lipinski:

               I’m sorry you didn’t have the opportunity to attend my speech to The Center for Full Employment– University of Missouri, 11/17/03 ( "Free Money -- The Meteorology of Economics"). To see the text of the speech, go to www.rodgermitchell.com and click “Resources.” Those 4,500 words will teach you more about the U.S. economy, than you can imagine.
               In a related subject, a front page article in today’s Chicago Tribune indicated the cost of the FBI’s “Trilogy” (computer) system will cost $626 million, up from the original projection of $380 million.
               Will this addition $246 million expense threaten the financial viability of the FBI? Is there a danger of the FBI going bankrupt? Of course not. The FBI is a federal agency. No federal agency can go bankrupt.
               Social Security and Medicare also are federal agencies. What does this tell you about all the scare headlines, trumpeting the bankruptcy danger of Social Security and Medicare?
Kindest regards,
Rodger Malcolm Mitchell

January 24, 2004
Ann Marie Lipinski
Editor, Chicago Tribune
435 N. Michigan Ave.
Chicago, IL 60611
Dear Ms. Lipinski:

               This is in regard to your editorial titled "Washington's worst instincts."
               For years you have spoken against federal budget deficits. Yet despite dozens and dozens of editorials, not once have you provided historical evidence that deficits negatively affect either the economy or the taxpayers.
               For instance, you could have said, "Deficits cause depressions," and given historical examples. Ah, but there are no examples. On the contrary, it is surpluses that cause depressions. The Great Depression was preceded by several years of surpluses, as were prior depressions. Recovery from the Depression came with the Roosevelt war deficits.
               Or, you could have said, "Deficits cause recessions," and given historical evidence. Ah, but the evidence shows the contrary. The most recent recession coincided with the Clinton surplus, and the recovery coincides with the Bush deficits.
               Or you could have given examples of how deficits have been a burden on taxpayers, as you many times have claimed. Ah, but there are no examples of this, either. In fact, there is no historical relationship whatsoever between deficits and taxes.
               On the contrary, deficits are merely the government's method for producing the added money an economy requires to grow. In short, federal deficits are necessary.
               Your attitude seems to be, "Deficits are bad. No proof is necessary, because I just know deficits are bad, and that's that."
               Ah, but your readers deserve better.
Rodger Malcolm Mitchell

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, do 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 debt rose 7-fold in the past twenty years, yet we are no closer to bankruptcy today than we were then.
               Our $7 trillion debt shows that spending has exceeded taxes by $7 trillion, and continues to exceed taxes almost every year. The government pays it’s 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 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.
Rodger Malcolm Mitchell

February 4, 2005
James Kurfeld
c/o Newsday
235 Pinelawn Rd.
Melville, NY 11747-4250
Dear Mr. Kurfeld:

               Since Newsday has published many articles about the future of Social Security, and it’s big news today, I thought you’d enjoy trying to answer this simple quiz:
               Which of the following federal agencies might go bankrupt, unless there is a change in the law?
1. Bureau of Prisons
2. Centers for Disease Control and Prevention
3. Coast Guard
4. Central Intelligence Agency
5. Department of Justice
6. Department of State
7. Department of Labor
8. Department of Transportation
9. Department of the Air Force
10. Department of the Army
11. Department of the Navy
12. Department of the Treasury
13. Social Security Administration
14. Centers for Medicare & Medicaid Services
15. Department of Health and Human Services

               Answer: It is impossible for any federal agency to go bankrupt. None ever has; none ever will.
               Think about it: In the 200+ year history of the U.S., through recessions and depressions, have you ever heard of any federal agency going bankrupt? Has any federal check ever bounced?
               Now tell me again why you think Social Security could go bankrupt, while no other federal agency in history has gone bankrupt.
               Read my book.
Sincerely,
Rodger Malcolm Mitchell
Author of Free Money, Plan for Prosperity

February 27, 2004
Ann Marie Lipinski
Editor, Chicago Tribune
435 N. Michigan Ave.
Chicago , IL 60611

Dear Ms. Lipinski:

               Consider the irony in your 2/27/04 editorial, titled “Plain talk from the Chairman.”
               You said, “But what’s really outrageous here is how little hope there seems to be for an honest, constructive debate on these critical issues (the deficit) in the campaign.
               Is it equally outrageous that you never print the opposing side, namely that the federal deficit is absolutely necessary for our economic growth.
               There have been 8 depressions in American history. All were immediately preceded by federal surpluses and all recoveries coincided with federal deficits.
               You decry what you call “demagoguery and glib answers” yet you yourself take the populist approach by claiming “ deficits matter” and Social Security and Medicare are in financial trouble.
               If ever you decide to look at the facts, an event I’ve come to assume is highly unlikely, you’ll find that:
1. A federal “ deficit” merely is the government’s method for creating money, and that a growing economy requires a growing supply of money. The word “deficit” does not apply to the federal government.
2. No federal agency ever can go bankrupt – not the Pentagon, not the White House, not Congress, not the Supreme Court, etc., etc. etc. – no matter how much they spend. We could eliminate all federal taxes tomorrow, and the federal government would not go bankrupt. Through good times and bad, recessions, depressions, inflations, no federal agency ever has gone bankrupt, and none ever will. Your concern about Social Security is completely off target.
               Instead of looking at facts, you seem to be in awe of Chairman Greenspan’s “talking in a language that bears only a passing resemblance to English.” Here is the man who stood by helplessly, as the nation fell into recession, then frantically cut interest rates, time and time and time again – all to no avail. Finally, the deficit, which he hates, pulled us out of recession. Do Greenspan’s repeated failures trouble you enough ask yourself, “Why?” No, you are mesmerized by someone who mumbles incomprehensible nonsense, which clearly you don’t understand.
               And you ask for “honest constructive debate?” How about a little intellectual honesty from the Tribune.
Rodger Malcolm Mitchell

October 11, 2004
The Atlantic Monthly
77 N. Washington Street
Boston, MA 02114
To the Editor:
Re. The article titled, “A $2.4 Trillion Figure of Speech” (November 2004)

               To balance federal budget would cause a disaster, as it always has in the past. Every depression in U.S. history has coincided with a federal surplus; Every recovery has coincided with a deficit. The “Great Depression” of 1929 followed six years of federal surpluses. The recovery came when the government ran huge deficits, first for Fair Deal projects and then for World War II.
               A growing economy requires a growing supply of money, and a federal deficit is the government’s primary method for adding money to the economy. With a balanced budget, even the most modest inflation would reduce the real supply of money.
               Popular belief is, wars stimulate the economy. But wars just kill people. Deficit spending to finance wars stimulates the economy.
               To eliminate the federal debt would be to eliminate all federal money, because all federal money is federal debt. One fundamental purpose of governments is to create money. And contrary to common knowledge, printing money does not cause inflation. It is inflation that requires the printing of money – inflation and economic growth.
               Because the government has the unlimited ability to create money, Social Security never can go bankrupt. Nor can Medicare. Both are federal agencies, just as are Congress, the White House and the Pentagon. Despite massive cost overruns in military projects, no one voices the concern that the Pentagon will run out of money. It won’t and it can’t. No federal check ever will bounce. No federal agency ever will go bankrupt.
               Because Social Security and Medicare cannot run out of money, the whole privatizing concept is a charade designed to create an issue where none exists. FICA could be eliminated tomorrow, and neither Social Security nor Medicare would be adversely affected. In fact, eliminating FICA would give the economy a huge boost, and would be politically popular, because it would benefit the middle class.
               All federal taxes could be eliminated and the government would continue to operate just fine, thank you. And no, there would be no inflationary pressure, just as the huge Reagan deficits didn’t cause inflation (Inflation went down during that period.)
               Further, the government has the ability to pay everyone’s medical bills. Having millions of Americans go without health insurance is a national disgrace -- that and the ignorance that causes it.
               So why hasn’t someone suggested eliminating taxes? Why does Congress continue to struggle with health care, poverty and other financial / social issues? One wonders whether politicians truly believe that the federal budget must be balanced, or do they merely pander to public misunderstanding?.
Rodger Malcolm Mitchell

October 31, 2004
Ben Estes
Editor, Chicago Tribune
435 N. Michigan Ave.
Chicago, IL 60611
Dear Mr. Estes

               I was disappointed in the column titled “ECONOMICS 101: THE EXPERTS GRADE THE CANDIDATES” in the October 31 Business section. The three experts, Professors Edward Snyder, Austan Goolsbee and Randall Kroszner misunderstand the basic truth of federal budgeting. Goolsbee said, “Tax cuts may have made sense before the economy collapsed, but not after. Spending is out of control.”
               Completely wrong.
               What the three experts should have said is, “A growing economy requires a growing supply of money. Where will the money come from to grow this economy? Answer: The government adds money to the economy by spending more than it receives. A large and growing deficit is necessary for a growing economy.
               “All U.S. depressions have been associated with federal surpluses and all recoveries have been associated with deficits. No sovereign nation can run out of money to pay its bills, because the government has the unlimited ability to create money.
               “Money creation does not cause inflation, which nevertheless can be prevented and cured with interest rate control. Further, history shows that high interest rates do not inhibit the economy, nor do low rates stimulate the economy.
               “No federal agency ever can run out of money, unless the government wills it. Neither the Pentagon, nor the White House, nor Congress nor the Supreme Court ever can go bankrupt, because they are federal agencies. Medicare and Social Security also are federal agencies and also cannot run out of money unless the government wills it. No federal check ever has bounced. So all the schemes to ‘save’ Social Security are unnecessary, ill-informed and harmful. The federal government can support Medicare and Social Security fully, even were FICA to be eliminated.
               “Because the government has the unlimited ability to produce money, all taxes are fiscally unnecessary and harmful to the economy. The government has the power to provide health care, education, infrastructure, defense, police and a desirable ecology, all without the need for taxes.
               “Taxes evolved when physical assets such as farm goods and minerals were used as money. The system simplified when gold became the only ‘real’ money. But all physical assets are scarce, money creation remained limited, and economies lurched from recession to recession. When U.S. money finally was divorced from gold, the government acquired the unlimited ability to create money and the unlimited power to grow our economy. Taxes became unnecessary.
               “There is not one iota of evidence to indicate that a large and growing deficit is bad for the economy. On the contrary, all the evidence indicates deficits are absolutely necessary.
               “So ask not why the deficit is so large. Ask why taxes exist and why the government doesn’t provide the health care, education, infrastructure, etc. we need.”
               Unfortunately, the experts went along with the tired old concept that somehow a federal deficit is bad and the federal debt should be cut. Question for the experts: If you owned a money-printing machine, and legally could create all the money you wanted, would you ask me for money? No? Then why does the federal government ask you for money?
               Suggestion for the experts: Read FREE MONEY. PLAN FOR PROSPERITY. I promise you’ll learn something important.
Sincerely,
Rodger Malcolm Mitchell

Click the cover to see excerpts from FREE MONEY

FOR IMMEDIATE RELEASE – May 12, 2005.
Concord Coalition Stumped

               The Concord Coalition, founded in 1992, is an organization dedicated to eliminating federal budget deficits. To this end, Concord offers papers, press releases and speeches decrying the federal debt. Concord positions itself as experts in understanding the U.S. economy and the needs of Social Security and Medicare.
               On May 5, 2005, Rodger Malcolm Mitchell, author of the book Free Money (www.rodgermitchell.com) challenged Concord to substantiate its position. He wrote to Concord’s Executive Director, Robert Bixby, Policy Analyst, Dr. Josh Gordon and other Concord leaders, asking a simple question: “A growing economy requires a growing supply of money. Where will the additional money come from to grow our economy?”
               By May 12, 2005, Dr. Gordon had said he didn’t know the answer, and the balance of the Concord executives have been unwilling or unable to answer this fundamental question.
               According to Mitchell, “Any group that makes so many statements about our economy, while criticizing those who disagree with them, and even publishes a “Tough Choices Fiscal Responsibility Scorecard,” not only should be able to answer that basic question in economics, but should be anxious to do so. A full week has gone by, without an answer from the other executives at Concord, indicating the answer nullifies Concord’s no-deficit position.”
               Mitchell continues, “The correct answer is, the federal government produces the additional money by running what misleadingly are called ‘deficits.’ The only way the federal government can add money to the U.S. economy is by creating debt.
               “Money creation by the federal government is more important today than ever, because of two factors: The trade deficit has caused a large and continuing outflow of money, from the U.S. economy. The private sector, which also creates money by creating debt, has created so much debt that further increases would result in a dangerous increase in private bankruptcies. While private borrowers risk bankruptcy, the federal government does not.
               “Without substantial federal money creation (deficits), the economy will starve for money and we will slip into recession or depression. This has happened often in the past. Every depression in American history was immediately preceded by a federal surplus and cured by federal deficits. The Great Depression of 1929 was immediately preceded by a decade of federal surpluses, and ended only when the federal government ran deficits to finance social programs and WWII.
                “Concord also preaches an increase in private saving vs. spending, without defining the word ‘saving.’ (It’s debt.) But they do not reveal how an increase in private saving would be possible were the government to remove more money from the economy (taxes) than it puts in (spending). In short, the federal surplus, which Concord promotes, would make impoverish the economy and make private saving more difficult.”
              &nbs