Monetary Reform Task Force

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$740 billion down, &760 billion to go!

Posted by dr.ron45 on January 14, 2013 at 4:45 PM

The Budget Control Act of 2011 tasked the "Super Committee" with finding ways to reduce the deficit over the next ten years by $1.5 trillion or more.  The Revenue Deal just passed at the beginning of this year accomplished $740 billion of that, leaving a balance of $760 billion that must be accomplished by March 1 in order to avert the sequester cuts that were provided by the BCA of 2011.  I have just posted my Deficit Reduction Act of 2013 that would accomplish at least $2.27 trillion in deficit reductions with US Green Money, almost three times the amount needed to set aside the sequester cuts.  And all without new income tax hikes or cuts to entitlement programs!  New pages have also been posted showing a comparison of US and Federal Reserve Notes, a bar graph showing Net Interest in comparison with other major programs, and data pertaining to spending and debt growth rates.

Mitch McConnell, John Boehner, and others are fond of saying, with great confidence, that the government in Washington DC has a spending problem that needs to be fixed.  But the government numbers posted on the web tell a different story.

I just published a couple of government charts on the new "Debt and Spending Growth" tab together with some of the downloadable data provided by a link at the sites indicated.  Disregarding the forecasts and just looking at the historical data for the period from 2008 to 2012 leads to the conclusion that as a percentage of GDP, the growth rate in debt (8.825% per year) is almost TEN TIMES greater than the growth rate in spending (0.8925%).  And the increase in spending, which has decreased from its high in 2009, is largely explained by the bailouts that required extraordinarily large outlays, most of which has been paid back now.  So the message from the data is that the US GOVERNMENT IS BORROWING TOO MUCH!  "It's a borrowing problem, stupid, not a spending problem!"

One of the reasons that we are borrowing too much is that we continue to have a debt-based monetary system.  As the economy grows, there needs to be more and more money to facilitate the growing number of transactions each year, so monetary expansion has to keep pace with growth in real output (GPD).  If the only way to expand the money supply is to borrow it, then of course the debt must keep growing exponentially at a rate pegged to the interest rate and the real GDP growth rate.  Hence, to break the vicious cycle, it is necessary to relearn the lessons of history that tell us that properly regulated debt-free government issued money leads to a much better result than continued reliance on debt-based money.  Ben Franklin brought prosperity to the colonies with government issued money; Abraham Lincoln won the Civil War with government issued money; the Canadian government maintained an almost constant national debt from 1935 to 1975 with government issued money; and the British Island Protectorates Guernsey and Jersey off the coast of France have been issuing government money with zero national debt and zero unemployment for almost 195 years!  The threat of inflation can be blocked by modern macroeconomic models and control theory technology that will make it possible to control inflation by regulating monetary expansion rates.  The amazing prospect of zero debt, zero unemployment, and zero inflation is within our grasp, but only with government issued debt-free money.  In view of the impending March 1 deadline, the time to get those greenbacks flowing again is now!

Updates of the White Paper and the Open Letter to the President will be posted soon.

Categories: Fiscal Cliff / Debt Ceiling

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