New Economic Perspectives has the article The People’s Money (Part 2).

You will be amazed at how much smarter you become when you read this. The words are fairly simple, but they are so far from what you have been told to believe that you might have to read it slowly and then reread it.

Here is a sample to get you started.

The overarching purpose of the Federal Reserve Act was to enable “money” to be created, as necessary, to support the scale of commerce that American Enterprise decides to undertake and accomplish. If the labor, materials, energy, technology, and ingenuity exist to do something—and it is desirable that it should be done—it is illogical to say it can’t be done because there isn’t enough “money” in the system to pay for the doing of it.

Politifact pretended to do some fact checking in the article Rand Paul’s claim about taxes went over poorly on The View, but it was pretty accurate.

“We’ve taken the poor off of the rolls. They don’t pay income tax any more. Most people below $50,000 don’t pay any income tax,” Paul said during the Oct. 11 episode. “The top 1 percent in our country pay 40%.”

This is what I call a factoid. It is a fact out of context that is supposed to engender a certain feeling in you. If you put it in the context of the percentage of income and wealth that the top 1% has, then it would not seem like the rich are overburdened. The panel on the TV show The View are just not qualified to present useful information to the public about the subject. What is the morality of pretending that they are qualified? How many people know that The View is a case of the uninformed trying to inform others who are uninformed?

Here is a piece of context that Politifact added.

The picture shifts once you include other types of federal taxation. Those below $50,000 still pay a small share of the full federal tax burden, but the share paid by the top 1% falls to about 30%

Here is something from 2007 data in a 2012 article from The Dreaded New York TImes, Measuring the Top 1% by Wealth, Not Income.

But an analysis of the Fed data is still revealing in that it shows the wealth gap, as measured by net worth, is much more extreme than the chasm as measured by income.

This is another excerpt from the 2007 data. Remember that inequality has grown significantly since 2007 before the economic crash.

The wealthiest 1 percent took in about 16 percent of overall income — 8 percent of the money earned from salaries and wages, but 36 percent of the income earned from self-employment.

I still have not found the figure that gives the percentage of wealth owned by the top 1%. Remember that the wealth grows as stock prices rise, but until the stock is sold, the paper gain is not considered income. It is “unrealized” capital gains that do not get taxed.

Here is some info from the WikiPedia article Wealth inequality in the United States.

Just prior to President Obama’s 2014 State of the Union Address, media[7] reported that the top wealthiest 1% possess 40% of the nation’s wealth; the bottom 80% own 7%; similarly, but later, the media reported, the “richest 1 percent in the United States now own more additional income than the bottom 90 percent”.[8] The gap between the top 10% and the middle class is over 1,000%; that increases another 1,000% for the top 1%.

YouTube has the video Economic Update: Worker Co-Ops, Socialism’s Future.

If you learned about socialism in the 20th century, or heard the propaganda about it that continues, then perhaps it will be a good idea to learn what it means now. Socialism is changing in ways that most people in the USA don’t know.

I was wondering if Bernie Sanders is even aware of these changes. Then I thought about his experiences in his youth with a kibbutz in Israel. I’m no expert on the way a kibbutz works, but I suspect there is a lot of similarity to what Richard Wolff describes in this talk (only as far as how production was organized).

Here is a little snippet from a Wikipedia article on Bernie Sanders.

In 1963 Sanders and Deborah Shiling Messing, whom he met in college, volunteered for several months on the Israeli kibbutz Sha’ar HaAmakim.

New Economic Perspectives has the article The People’s Money (Part 1).

The Federal Reserve System, then, was cobbled together to solve these three problems. No one claimed it was the perfect solution. There were many compromises made to reach consensus in in the U.S. Congress. The banking interests didn’t want politics and the government to run the show. The government didn’t want the bankers to have exclusive control over something that the common good, ultimately, depended on. The FED, then, became a partnership—partially under the banker’s control, partly under the control of the federal government.

I think this is a pretty good description of how money works in the USA. See if you find anything in this description that you didn’t already know. If you have questions, then there are answers. The discussion can happen on my Facebook post, or you can join the conversation on New Economic Perspectives.

YouTube has the video Did We Abandon The Kurds?

This is an education you probably wouldn’t have gotten anywhere else. Now that Kim Iverson has done the research and made this presentation to us, it wouldn’t surprise me if other independent journalists start telling you similar stories. She starts out hyping the story, and all her hype turns out to be true. This story will change your minds about a lot of things you thought you knew.

I think the lesson is that we should never promise an ally that we will support them in anything and everything they choose to do. We should certainly not make such promises to someone who happens to align with our interests on one issue at a moment in time. Even if Donald Trump is the only one who seems to recognize that the love affair is over and we need to go our separate ways, he may turn out to be right.

Mondragon is a very large cooperative business that started in the Basque region of Spain. It is hard for me to get a really solid understanding of how it works. So I grab at opportunities to learn more. This doesn’t answer every question I can think of, but it does push my thinking in a direction that I might find will be very productive. If it does not keep pushing me in a productive direction, I will just lose interest in it. I have found that education is a process of accumulating information. This blog is one of my repositories of accumulated information.

Democracy At Work published the podcast All Things Co-op: Mondragon.

The New Republic has the article Spreading the Gospel of Modern Monetary Theory.

It is a very good article, but I want you to go into reading the article with the following caution firmly in mind.

A government that issues its own currency cannot run out of money in any real sense and needn’t rely on taxation or budget cuts to make up funding shortfalls. The true limit on spending isn’t the numbers on federal balance sheets but inflation, which MMT proponents argue can be managed by taxation and other policy mechanisms.

All the above is exactly true, but somehow the implications of the message still get lost. We need taxes to control inflation. If we spend and spend until the economy recovers to the point where we need more taxation, it will take too long to get increased taxation through Congress. That’s why now is when we need to introduce the ideas of more steeply graduated tax, fewer exemptions for the wealthy, and a wealth tax. These taxes need also to be flexible to accommodate current economic conditions. (Or maybe it is the government spending that needs to be flexible. Or both)

Modern Money Theory (MMT) is a description of how money works in a modern economy. A modern economy is one that is less than 6,000 years old. Before 6,000 years ago MMT does not claim to know how money, if there was the concept, worked.

To clarify the description, MMT introduces the concept of sector balances. The way to think about sector balances is to think of three sectors of the economy as pots of money as shown in Figure 1.

Figure 1. Three Pots representing the Sectors

Figure 1, as I have drawn it here, is a description of the situation in the USA. That is why one of the pots is labeled US Federal Government. The other two pots represent all other parts of the domestic economy and all other parts of economies in the rest of the world.

When talking about USA Treasury bonds, the MMT founders get loose with the sector balances by saying that treasury bonds are another form of money. Doing this confuses the situation that MMT is trying to explain. Let us admit that US Treasury securities (bonds) are not exactly the same as money. If they were exactly the same, why would there be two words for them? A USA treasury security is a promise to pay money, but it is not money. What makes the economy go round is money, not USA Treasury securities.

Now I can talk about money flows in the economy according to MMT, but applying a strict definition of sector balances. The pots are only accounting for deposits of money and its flow among the pots as signified by the labels on the flow arrows.

By the laws currently in effect in the USA, if the federal government wants to run a deficit, it must sell treasury securities to the non-government sectors. When this happens, money is taken from the non-government pots and flows into the the government pot. In exchange the entities that the pots represent are given Treasury Securities. When government spends the money, money flows back from the government pot into the non-government pots. When the government spends money that is called a deficit, no new net money is in the non-government pots. The money that is spent came from those pots.

If the Federal Reserve Bank (which is part of the government) buys bonds from the non-government sector, it is putting money into the non-government pots in exchange for the bonds that it has bought. If someone in the non-government sector buys bonds from someone else in a non-government sector, then no money flows from the government sector pot. The money is either just stirred around in the same non-government pot, or it flows from one non-government pot to the other non-government pot.

When the federal government spends money (except for the Federal Reserve Bank), it can only spend money it has taken in from taxes or from selling bonds. It does not create new money to put into the non-government sector. It only spends money it first took out of the non-government sector.

How does new money get into the non-government sector pots? The Federal Reserve Bank is the only entity in this economic universe that creates money. It can put the money into the non-government pots by lending it to the non-government banks, who then lend it to the people. The Federal Reserve Bank can also put money into the non-government pots by exchanging the money for USA Treasury securities owned by the non-government sectors.

The net growth of the non-government economy comes from the net amount of money flowing into (and out of) the non-government pots out of (and into) the Federal Government pot. The non-government pots have no way to tell if they contain new money or old money or what mixture of the two that they have. The technical term is that money is fungible.

With this description in mind, you can now judge whether a particular government action stimulates growth of the non-government economy or does the opposite.

Wired has published the article Why Are Rich People So Mean?

Decades of “greed is good” messaging has sought to remove a sense of shame from being a beneficiary of outrageous extremes of wealth inequality. Still, the shame lingers, because the messaging runs up against one of our species’ deepest innate values. Institutions seeking to justify a fundamentally anti-human economic system constantly rebroadcast the message that winning the money game will bring satisfaction and happiness. But we’ve got around 300,000 years of ancestral experience telling us it just isn’t so. Selfishness may be essential to civilization, but that only raises the question of whether a civilization so out of step with our evolved nature makes sense for the human beings within it.

The corruption of mind is what I believe caused people like Ayn Rand and Milton Friedman to be so blind to why poor people stay poor and rich people stay rich. Rand’s books like Atlas Shrugged and The Fountainhead completely ignored these factors. Then there is the book Capitalism and Freedom by Milton Friedman.

Friedman argues for economic freedom as a precondition for political freedom. He defines “liberal” in European Enlightenment terms, contrasting with an American usage that he believes has been corrupted since the Great Depression. His views are especially popular among American conservatives and libertarians.

Are the people struggling under crushing student debt really free? How about the people who lost their homes to corrupt mortgage lenders? Are they really free? Then there is the crushing medical bill debt. Does that make people free?

Democracy Now! has a 6 part series where they interview Edward Snowden now that he has just published his book Permanent Record. Each link below takes you to a video part of the series. Each article has links to the 6 parts.

Part 1: “Financial Censorship Is Still Censorship”: Edward Snowden Slams Justice Dept. Lawsuit Against Him

Part 2: Edward Snowden Condemns Trump’s Mistreatment of Whistleblower Who Exposed Ukraine Scandal

Part 3: Permanent Record: Why NSA Whistleblower Edward Snowden Risked His Life to Expose Surveillance State

Part 4: Edward Snowden: Private Contractors Play Key Role in U.S. Intelligence’s “Creeping Authoritarianism”

Part 5: Snowden Reveals How He Secretly Exposed NSA Criminal Wrongdoing Without Getting Arrested

Part 6: Whistleblower Edward Snowden on Trump, Obama & How He Ended Up in Russia to Avoid U.S. Extradition