The Chairman's Report June 19 2020

Modern Monetary Theory &
Why It May Help
Pass The FAIRtax

Representative Alexandria Ocasio-Cortez, Bernie Sanders and a growing number of others in D.C. are pushing for MASSIVE new federal spending and don’t seem to care about whether the government will have enough money to actually pay for it.  Their solution is to just keep on printing more money and keep running up the federal debt.

It’s not just members of the Democratic Party thinking this way.  President Trump is apparently not too worried about the size of the national debt either.  In addition to the COVID-19 assistance programs, he is promoting programs to dramatically add to the debt each year.

This is a stark turnaround from 2016, when he promised he would eliminate the $19 trillion national debt in 8 years.  This year we will likely add nearly $4 trillion to our national debt, bringing the total to over $24 trillion.

What is money?  It’s paper currency, coins, or anything else, a person is willing to accept in exchange for a product or service.  In the 1920’s, a German worker receiving his paycheck would rush to the store because literally every hour, his money was worth less and the longer he waited to spend it, the less it would purchase.

Unfortunately, but not surprisingly, this is now true in Venezuela.

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Modern Monetary Theory (MMT)

It’s a great name because it implies it’s “modern”, but it was actually being advocated in the early part of the 20th century.  John Maynard Keynes relied on it as he promoted the acceptability of governments incurring a national debt.

Unfortunately, the growing acceptance of Modern Monetary Theory means we’ve abandoned the principle we must live within our means or find a way to pay for the things the government spends money on.

What is MMT?  The current leading proponent of MMT is Professor Stephanie Kelton.  Professor Kelton is currently a professor of economics at Stony Brook University and was the former chief economist for the Democrats on the U.S. Senate Budget Committee.  She was also Bernie Sanders’ economic advisor in 2016.

On the website Fast Company, Professor Kelton’s new book, “The Deficit Myth”, is reviewed.  According to Professor Kelton, not using MMT has created problems and she advances the following points and ideas:

-  There’s been a lot of foregone prosperity because we were trying to balance the federal budget
-  U.S. government is a currency issuer and has its own sovereign currency
-  Government’s deficit is the people’s surplus
-  A government surplus is sucking dollars out of the economy
-  A government deficit works like a blower; it blows dollars onto the balance sheet
-  MMT wants to take monetary control away from the Federal Reserve and let Congress determine the power, paying little notice to the deficit
-  Inflation, not the deficit, should be the major constraint on spending.  Inflation occurs during a thriving economy, when people have more purchasing power and, thus, there is a higher demand for goods
-  The increase in prices brought on by higher demand sends the value of the currency plummeting
-  This is when the federal government takes money out of the economy by increasing taxes

There are a lot of people who argue MMT must be correct.  Otherwise, the huge U.S. national debt would have created rampant inflation by now.  There are others who point to the country with the highest national debt compared to its gross domestic product, which isn’t Greece, but Japan, whose debt was 235% of its gross domestic product.  Yet, Japan has almost no inflation.

It’s an appealing concept.  Solve all of the infrastructure, education and health problems in the U.S. with no regard for the cost.  Just keep throwing money at the problems and ignore the ever increasing national debt.

It’s a concept apparently being enthusiastically, albeit quietly, embraced by politicians of both parties and it’s one we must understand as we look at replacing the corrupt income/payroll tax system with The FAIRtax.

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The Ruling Class  🤹  and their minions in D.C. are interested in one thing, securing benefits for themselves and making the rest of us pay for them.  To date, one of their largest money makers has been selling income/payroll tax benefits to people who can and will pay for them.

However, they must be salivating over the possibilities for wealth presented by adopting the MMT approach to economics.  This would provide The Ruling Class 🤴🏽 and their minions in D.C. virtually unlimited amounts of printed money they can provide to themselves and their friends.

There will no longer be the objections, weak as they were, there must at least be some attention paid to the budget deficit.  In fact, because federal taxes will likely become less important as the MMT theory of economics is fully applied, there is a high likelihood The Ruling Class and their D.C. minions will not want to be bothered with what will become the relatively small amounts they can make by selling tax favors.

Ironically, greed is the reason The Ruling Class and their minions will likely be OK with putting in a simpler federal tax system.  Under MMT, selling tax favors will become relatively small potatoes.  They’d rather spend their time and efforts diverting virtually unlimited amounts of printed money to themselves and their friends.

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Conclusion

It’s interesting in November we will be choosing between two candidates who both want to increase the national debt.  It will be a choice between who will possibly increase the national debt less, how the money will be spent, and which groups will benefit from the additional spending.

If MMT is fully adopted, think of who is going to be making the country’s fiscal decisions, a bunch of bureaucrats who have never run a business and who believe it’s not important a program operate within a real budget.  If a program exceeds its estimated costs, no problem.  Just have the Fed print more money.

The MMT concept is receiving more and more acceptance.  As noted earlier, if the MMT approach is adopted, The Ruling Class and their minions will have less and less motivation to sell income tax benefits as only a very small part of their income will be generated by those activities.

Of course, it’s hard to believe all of the Members of Congress really believe the national debt can continue to grow and grow with no consequences.  At some point the music will stop and the economy will come crashing down. They just hope it doesn’t happen on their watch. They hope they will have made their fortune by then and someone else will have to “fix” the problem they created.

It’s certain the “smart people” and the Members of Congress will go on the public airwaves boasting about how they are helping the American people by replacing the terrible income/payroll tax system with The FAIRtax.  They hope this will divert attention away from their new scheme to enrich themselves at our expense.

However, it will take a dedicated effort from all of us to ensure we SECURE REAL tax reform, The FAIRtax, and not some fake D.C. reform, vomited out in 2017. Without constant pressure from the people, we could have a government not only using disastrous MMT principles, but one who continues to impose a terrible federal tax system on all of us.

 
If you are ready to take a very significant step toward wresting control of your government back from a small group of corrupt people to make it possible for all of us to prosper, Go to our Homepage NOW, sign up to "Get-Updates", join with us to TAKE BACK CONTROL!

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Demand Congress to pass The FAIRtax—the only “Fair tax”!

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The author George Bernard Shaw said these words in a play he wrote, You see things; and you say “Why?”  But I dream things that never were; and I say “Why not?”

Isn’t it time for us to ask, “Why not?” 

President Trump, “Embrace The FAIRtax, the only real tax reform!  Stand up to the Swamp.  They will oppose you anyway because they see you as a threat.  What have you got to lose?”

The truth is the truth!  Remember, if we don't continue to tell the truth and demand a change, then George Orwell's "1984" quote may foretell our children's future: “If you want a picture of the future, imagine a boot stamping on a human face, forever"

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Thank you for staying FAIRtax strong!
 
Yours In Liberty!   Yours In Freedom!

Steve Hayes
Chairman, Americans For Fair Taxation

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