Is economics logically simple or simply illogical?

In one sense, economics is logically simple. One pillar of economics is based on money, or more specifically the difference between the issuers of money (i.e. Monetarily Sovereign) and the mere users of money (i.e. monetarily non-sovereign).

All issuers of money create money the same way. They begin by creating laws or rules from thin air. These laws have no physical existence, and that fact gives the issuers the infinite ability to create laws.

The laws, in turn, create money, which also has no physical existence. You cannot see, taste, feel, hear, or smell a law or a number, or money.

What, for instance, does the number “ten” look like. Does it look like this: 10? Like this: X? Like this: Ten? Like this: 2×5? Like this: 20/2? Like this: Diez?

Laws, numbers, and money merely are concepts. They may be represented by paper forms or on computer screens but the actual laws, numbers, and money exist only as ideas which is why their creation is limited only by the desires of their creators.

The Monetarily Sovereign U.S. government could, if it wished, create a million laws and/or a trillion, trillion dollars, tomorrow, at virtually no cost.

A functionary merely presses a computer key and presto, money is created, sent, or destroyed — from thin air, through thin air, or back into thin air.

Store coupons, for instance, represent one form of money. The issuer (the store) can issue as many paper or electronic coupons as it wishes, and it sets their value.

Representations of coupons can appear in a printed mailer, or the local newspaper, or online.

Those who shop at, for instance, Bed, Bath, and Beyond, have come to realize there hardly is an end to the number of coupons a store can issue.

Yet, that retailer does not tax anyone to provide coupons, nor does it borrow coupons. It does not need a source of coupons. Its coupon limit is the amount of merchandise it wishes to discount.

The federal government doesn’t even suffer that limit.

The government literally has no limit. It cannot unintentionally run short of dollars. Contrary to common myth, the federal government needs not levy taxes nor borrow.

(Think about that the next time you send the Treasury your precious tax dollars or read about the useless battle about the “debt ceiling.”)

That one pillar of economics, Monetary Sovereignty, though unintuitive to some, is logicallysimple: The US federal government has the unlimited ability to create dollars from thin air and to determine their value.

But economics is simply illogical because the other pillar is human psychology, a study so complex and so bereft of certainly it makes quantum mechanics look like child’s play.

While quantum mechanics has predictable randomness, psychology is laden with unpredictable randomness. Perhaps the very center of this randomness, as related to economics, is Gap Psychology.

Gap Psychology, an extraordinarily powerful motivator, describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.”

The socio-economic distance between any two persons or groups is referred to as “The Gap.”

Gap Psychology dictates that while you may wish to narrow the Gap above you, those above you wish to widen that Gap.

Gap Psychology is the controlling motivator that makes you purchase luxury goods — cars, clothing, houses — rather than simply utilitarian products. It creates pride and shame, avarice and benevolence, desire and aversion. Beyond bare survival, Gap Psychology is the prime motivator for what we do, want, and believe.

The competing desires of the “have-more” and the “have-less” create a discord that is reflected in the aims of the two opposing political directions: The liberal vs. the conservative.

The real dissonance and complexity reveal themselves because all of us find ourselves, at times, in either camp. While the very top and the very bottom are less tergiversated, the vast middle majority is where much of the emotional conflict arises.

“Who am I”? “What am I?” “Where am I?” This is the sort of silent introspection most common at the middle, and most influenced by Gap Psychology.

You may be puzzled when someone of the middle-class shows scant concern for the plight of poor immigrants. You might have thought there would have been empathy rather than antipathy.

Yet, that person merely may have reflected the powerful push of Gap Psychology — the desire to widen the Gap below.

To make matters even more complex, you also may have noted charitable generosity to the poor by someone of the middle class, and that could be a manifestation of the Gap Psychology pull — the desire of the middle to narrow the Gap above by acting as though they imagine a “have-more” acts.

You will see this play out in charitable organizations, where the donation amounts are announced for all to see. Universities and hospitals take advantage of Gap Psychology when they name buildings for large donors.

While this is heralded as “generosity” by the benefactors, mostly it is just a reflection of the desire to widen the Gap below and to narrow the Gap above.

Another example: You might wonder why anyone other than a “have-most” would vote Republican. After all, it is the Democrats who offer the free medical, educational, and social services needed most by the middle and lower levels of society.

The reasons are, first, the common ignorance about the finances of our Monetarily Sovereign federal government, and the false belief that federal taxes fund federal spending. As noted above, federal taxes fund nothing.

But beyond that, there is the antipathy many of the middle class have for those below them, an antipathy so powerful they even are willing to accept less for themselves, just so those below receive less yet.

For those middle-class Republican voters, widening the Gap below can be more important than narrowing the Gap, above.

That example of Gap Psychology — hatred and fear of the underclass — is the primary source of bigotry. It demonstrates why the particularly virulent forms of bigotry can be found in the lower-middle classes — those who fear most the narrowing of the Gap.

Dictators make use of Gap Psychology by first designating an underclass — a religion, a nationality, a political belief — then positioning that underclass as a grasping danger, and finally claiming that he, the dictator, is the only one who can widen the Gap between the underclass and the rest of the populace. Scapegoating is a symptom of Gap Psychology.

Gap Psychology also becomes an even greater issue when resources are limited. From an evolutionary standpoint, it then makes sense then to distance oneself from those who have less and to join with those who have more.

During recessions and depressions, Gaps tend to widen near the top, as the very rich are able to employ the rest at starvation wages, while not feeling the pinch of poverty themselves.

IN SUMMARY
The two great pillars of economics are Monetary Sovereignty and Gap Psychology.

As a science, the former is logically simple, in that it merely states: A Monetarily Sovereign money issuer has absolute control over the money it issues — its quantity and its value —  and needs no exterior source of that money.

Though counterintuitive because of rampant false teaching, nothing could be simpler.

The latter is simply illogical “science,” because the goal of any science is predictability, while Gap Psychology relies on the unpredictable vagarities of human emotions and behavior.

Together, they determine the direction all economics.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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

The most important problems in economics involve:

1. Monetary Sovereignty describes money creation and destruction.
2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA
2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
3. Social Security for all
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually. 
8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY