If ignorance contained calories, Senator Marco Rubio (R-FL) would weigh 10 tons.

If ignorance contained calories, Senator Marco Rubio would weigh 10 tons. Here are excerpts from a letter he sent to me.

I recently received response to a letter I sent him asking why a Monetarily Sovereign government was so hesitant to spend U.S. dollars on programs that help Americans.

Thank you for taking the time to express your thoughts regarding spending and the federal budget.

Understanding your views helps me to better represent Florida in the United States Senate, and I appreciate the opportunity to respond.

As of May 20, 2021, the US national debt had reached over $28.3 trillion. This is an unsustainable course that Congress must address.

Immediately, this Senator of the United States shows his ignorance of federal financing.

Being Monetarily Sovereign, the U.S. federal government can “sustain” any financial obligation denominated in its own sovereign currency, the U.S. dollar. As people who do understand federal finance have said:

Former Federal Reserve Chairman Alan Greenspan said: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it has because we can always print the money to do that.”

Former Federal Reserve Chairman Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. It’s not tax money… We simply use the computer to mark up the size of the account. “

St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

Federal finances are not similar to state/local government, business, or personal finances. Though the same words — “debt,” “deficit,” “owe,” “borrow,” “surplus,” etc., — are used for all types of finances, these words have different meanings, depending on which party’s money is being referenced.

Federal “debt” is not money the federal government owes. It is money the federal government holds for T-security owners. The so-called debt is nothing more that the total of deposits into T-security accounts (T-bills, T-notes, and T-bonds).

Unlike private bills, notes, and bonds, which do represent borrowing, federal bills, notes, and bonds do not. Because the U.S. government has the infinite ability to create U.S. dollars, it never borrows dollars.

T-security accounts are similar to safe-deposit boxes. Their purpose is not to provide the federal government with spending money, of which it already has an infinite supply. Just as a bank never touches the contents of safe deposit boxes and does not owe the depositor anything, the federal government never touches the dollars in T-security accounts, and does not owe the depositor anything.

When the accounts reach maturity, the government simply allows the depositor to reclaim them. This is not a financial burden on the government. It is infinitely “sustainable.”

The purposes of T-securities are:

1. To provide the public with a a safe place to store unused dollars. This stabilizes the value of dollars.
2. To help the U.S. government control interest rates by arbitrarily setting the rates for T-securities.

Though the so-called federal “debt” approaches $30 trillion, the U.S. government does not owe $30 trillion. It pays all its bills on time. It is not a “debtor.”

Rather than being called “debt,” those securities should go by their correct term: Deposits.

On February 3, 2021, Senator Cindy Hyde-Smith and I introduced a resolution to enact a balanced budget amendment to the United States Constitution.

“Balanced budget” is a good idea for states, businesses, you, and me, but a horrible idea for the federal government because it limits the amount of money in the private sector (also known as “the economy.”)

Rubio surely knows this, and also knows such an amendment has zero chance of passing. But he wants to fool you into thinking he is financially astute. 

The following graph shows that recessions begin with reduced federal deficits and end when deficits increase. The reason: Federal deficits add growth dollars to the economy.

Why are recessions introduced by reduced federal deficits? Because recessions are defined as two consecutive quarters of falling Gross Domestic Product (GDP). And GDP is calculated as follows:

GDP = Federal Spending + N0n-federal Spending + Net Exports

The more spending the greater is GDP. 

The bill has 14 co-sponsors and is referred to the Senate Committee on the Judiciary. On March 4, 2021, Representative Vern Buchanan introduced a companion resolution in the House of Representatives, referred to the House committee and the judiciary.

Thus, we are told that at least 14 Senators are ignorant about federal financing, a shocking indictment of people who each day make decisions about federal spending. Great power + ignorance = tragedy.

A balanced budget is based on common sense principles that should be installed in the US Constitution.

This would force politicians in Washington to do what every family across the United States must do to balance their budgets.

Senator Rubio should have the words “I am ignorant” tattooed on his forehead. A family should spend no more than its income. When the federal government spends no more than its income, the economy cannot grow.

Where would the additional money come from if not from the federal government?

Private banks create dollars by lending, but these dollars must be paid back, plus interest. Paying back loans destroys dollars.

The dollars spent by the federal government need not be paid back. Those are the dollars that grow GDP.

GDP = Federal Spending + Nonfederal Spending – Net Imports.

Because U.S. imports traditionally exceed exports, the federal government must run deficits for GDP to remain level. For GDP growth, the federal government must run deficits.

This would also prevent us from continually passing the bill to the next generation.

There is no bill being “passed to the next generation.” Federal deficit spending passes additional dollars to the next generation. It’s inconceivable that Sen. Rubio does not know this, so one must assume he is lying.

Much of the recent increase in the national debt has come from federal spending related to the COVID-19 pandemic. As you may know, COVID-19 was declared a public health emergency for the United States on January 30, 2020, after the outbreak began in Wuhan, China.

On March 27, 2020, President Trump signed into law the bipartisan act, which was a $2 trillion emergency relief package that, among other things, provides small businesses with direct assistance to stay in business and keep American workers employed.

Think, Sen. Rubio. If federal deficit spending was harmful, why would the federal government deficit spend to fight COVID? Why would the government spend to assist small businesses and keep American workers employed?

As chairman of the Senate committee and small business and enterprise ship last Congress, I included legislation that made $349 billion in forgivable loans to small businesses and nonprofits available through the paycheck protection program.

Here, the Senator who wants a balanced budget boasts about helping pass $349 billion in deficit spending. Does he realize how ignorant that is?

On December 27, 2020, President Trump signed into law an act that provided $1.4 trillion to fund the federal government through September 30, 2021.

While reducing federal spending is one of my top priorities, I believe it was appropriate during the COVID-19 pandemic to help small businesses stay open by providing government assistance.

Does this make any financial sense at all? The people of America were in financial difficulty, so to combat that, the federal government spent more dollars, which, according to the 14 ignorant Senators, put the nation in greater financial difficulty.

It boggles the mind to see that Rubio et al. see no contradiction. Federal spending helps America because it adds dollars to the economy — dollars that do not need to be paid back.

If the federal government ran a balanced budget, the dollars would have to be paid back, at which time America would suffer a depression.

U.S. depressions tend to come on the heels of federal surpluses.

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
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.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

On March 11, 2021, President Biden signed the American Rescue Plan Act, a $1.9 trillion COVID-19 relief package, into law, unlike previous COVID-19 relief packages. This bill was passed with a solely partisan vote in the Senate.

I did not support that bill as it spent hundreds of billions of dollars on items unrelated to COVID-19 recovery, including bail-out for state and local governments.

It also failed to reopen schools, created welfare programs, and funded ridiculous pet projects like an underground railway in Silicon Valley.

In addition to the wasteful spending enacted by the plan, President Biden has proposed even more wasteful spending in his proposed federal budget. Despite having just spent $1.9 trillion, President Biden has proposed a more than 1.5 trillion federal discretionary budget.

Now that the economy is reopening, Congress must rein in reckless federal spending and prioritize policies that get Americans back to work and help the economy cover.

Totally illogical. The so-called “wasteful spending” was not wasteful. It added growth dollars to GDP. “Prioritize polices that get Americans back to work,” signals that Rubio believes the poor are lazy bums with no aspirations to improve their lives. 

So, if you give the poor and middle classes any financial aid, they simply will stop working. That is the claim of the idle rich as they lounge on their yachts.

Today, the economy is healthy and growing. Inflation is dropping. Interest rates will fall, all because of the “wasteful spending.”

While Sen. Rubio may disagree with the projects being funded, there is no such thing as federal wasteful spending. Federal spending adds growth dollars to the economy. It creates jobs and helps businesses.

Imagine the federal government spending a billion dollars to dig a hole and fill it in. Is that wasteful? No, because it would employ people and aid businesses.

It also would cost federal taxpayers nothing because, contrary to popular myth, federal taxes do not fund federal spending. The federal government pays all its bills by creating new dollars ad hoc. It does not use tax dollars. It does not “live within its means.” It cannot run short of dollars, even if it collected $0 taxes.

 Federal taxes are destroyed upon receipt.  (State/local tax dollars go into private banks and are not destroyed.)

You pay your federal taxes with dollars from your checking account. Those dollars are part of the M2 money supply measure. But when they reach the U.S. Treasury, they no longer are part of any money supply measure. They are effectively destroyed. 

The public can be excused for its ignorance about federal financing. We, the people, rely on our political representatives to understand. That’s why we vote for them. So, for Senators to be so ignorant about federal finance is a disgrace.

Example: Because of such ignorance, Medicare woefully lacks coverage. It doesn’t pay for Health care costs for spouses and dependents, deductibles and co-payments, long-term hospitalization, dental, non-medically necessary vision and hearing, non-medically necessary foot care, nursing home care, international medical care, and cosmetic surgery.

Why?

The federal government has infinite dollars, which it creates by pressing computer keys. Why does Medicare not pay for many things?

Let’s say your father is a billionaire, and you ask him to pay your dental bill. Would you refuse? The federal government, which has far more money than a billionaire, refuses. Why?

Because Senators like Rubio spread the disinformation that the government must live within its means and that taxpayers fund federal spending — both are lies.

Consider colorectal cancer. Each year, over 150,000 Americans are diagnosed with colon cancer. It’s the fourth-leading cause of cancer in the United States and the second-leading cause of cancer-related deaths.

Clinical guidelines recommend colon cancer screening begin at age 45 for people at average risk. Screening should begin sooner for anyone with a family history or other risk factors. One would think the infinitely rich federal government would do everything possible to detect, treat, and cure colon cancer.

But no. If during a screening, your doctor finds and removes a polyp or other tissue, you pay 15% of the Medicare-Approved Amount for your doctor’s services. In a hospital outpatient setting or ambulatory surgical center, you also pay the facility a 15% coinsurance amount.

For many people, those 15% charges are a financial hardship. Why must you pay anything?

Why are there Medicare deductibles? Why are there co-payments? Why is long-term hospitalization not covered? Why aren’t reading glasses covered? Why aren’t nursing homes covered?

Ignorance.

The U.S. government is infinitely rich — far richer than anyone who has lived. Yet, Sen. Rubio et al. claim that federal spending is “unsustainable” and the government should run a “balanced budget.”

The sole mission of any government is to protect and improve the people’s lives. Being Monetarily Sovereign, the U.S. government can easily afford to protect and enhance your life.”

–Comprehensive, no-deductible health care insurance for every man, woman, and child in America

–Social Security for every person in America, with unique benefits for the elderly

–Extend free education from grades K-12 to K-16+

The rich don’t want it because they want the rest of us to be desperate. They want a workforce that will accept low-pay, low-benefit jobs, hoping we won’t outlive our money somehow.

Sen. Rubio, of course, has no such worries. He expects you to vote for his health and retirement security, not yours.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.