7 Big Lies about the economy

The Seven Biggest Economic Lies
By Robert Reich, Robert Reich’s blog
12 October 11

The president’s jobs bill doesn’t have a chance in Congress – and the occupiers on Wall Street and elsewhere can’t become a national movement for a more equitable society – unless more Americans know the truth about the economy.

Here’s a short (2 minute 30 second) effort to rebut the seven biggest whoppers now being told by those who want to take America backwards. The major points:

1) Tax cuts for the rich trickle down to everyone else. Baloney. Ronald Reagan and George W. Bush both sliced taxes on the rich and what happened? Most Americans’ wages (measured by the real median wage) began flattening under Reagan and has dropped since George W. Bush. Trickle-down economics is a cruel joke

Read more.

7 thoughts on “7 Big Lies about the economy”

  1. All fixed by the 1 Biggest Truth about the Economy:

    which would help everybody and our future survivability.

    Ask Senator Bernie Sanders to sponsor in the Senate, Rep. Dennis Kucinich’s NEED Act HR 2990 to help everyone.

    Congressman Dennis Kucinich introduced the National Emergency Employment Defense Act (“NEED,” HR 6550*) which contains all the monetary reform provisions of The American Monetary Act- see the brochure at http://www.monetary.org.

    It is much more than regulation; it fundamentally reforms our private CREDIT/DEBT system now wrecking our nation and harming all humanity, and replaces it with a government MONEY system.

    The Act achieves reform with 3 basic provisions. All three are necessary; doing one or two of them wouldn’t work and could cause more damage.

    In brief:

    First the Federal Reserve gets incorporated into the U.S. Treasury where all new money is created by our government – what people think happens now.

    Second, It ends the fractional reserve system. Banks no longer have the accounting privilege of creating our money supply. All their previously issued credit is converted into U.S. Money through an elegant and gentle accounting change. The banks are held accountable for this conversion and from that point operate the way people think they do now – as intermediaries between depositors and borrowers.

    Third, new money is introduced by the government spending it into circulation for infrastructure, starting with the $2.2 trillion the engineers tell us is needed to properly maintain our infrastructure over the next 5 years. Infrastructure will include the necessary human infrastructure of health care and education.

  2. http://kucinich.house.gov/news/email/show.aspx?ID=X7EX6WS6JW7AZSDNJHSVS5UZXM

    Kucinich Proposes Landmark Jobs Plan

    Bill To Put 7 Million Americans Back to Work, Rebuild Infrastructure

    Washington D.C. (September 21, 2011) — As the nation struggles with long-term unemployment at rates not seen in generations and as infrastructure crumbles across the nation, Congressman Kucinich (D-OH) today introduced a dramatic new proposal to address our structural economic problems directly by creating over 7 million jobs.

The National Emergency Employment Defense (NEED) Act of 2011 would allow the federal government to directly fund badly-needed infrastructure repairs and fund education systems nationwide by spending money into circulation without increasing the national debt or causing inflation. 


    “The ability to coin money is an inherent power under Article I, Section 8 of the United States Constitution. The NEED Act would control inflation because it will enable the government to invest in America by creating infrastructure, which is real wealth. Inflation is caused when new money is created without the creation of new wealth,” explained Kucinich. 

    The proposal would also establish fiscal integrity, reassert Congressional sovereignty and regain control of monetary policy from private banks.


    Creating an Interest- and Debt- Free Money System 



    How the Economists Facilitated the Crisis and How HR 6550* Solves it

    (Now HR 2990)

    Economist Jamie Galbraith in testimony to the Senate Crime subcommittee on May 4th, 2010:

    False “monetary” beliefs (some call them theories) have misdirected public policy decisions for decades, with devastating effect! Errors of Concept, methodology and factual errors led to disastrous outcomes for our nation and have the potential to gradually take America down into an unprecedented abyss of lawlessness and deprivation. Consider the present insane calls for austerity. Economists have allowed the idea to prevail that a government has to be run the way a shopkeepers runs his store. These times call for greater care and some heroism among economists; and cowardice is no longer tolerable among those who do understand.

    Which particular monetary errors? Most importantly, economists have not understood or appreciated the difference between money and credit. That using credit for money is dangerous, harmful and unnecessary. Can’t they read Knapp’s “State Theory of Money, available in English since the early 1920s, to understand credit is just one type of money system, and not a good one at that?


    Many economists have falsely concluded that “all money is debt,” and while most money in our particular mis structured system is debt, this attitude ignores the possibility and necessity to define a better system based on government money, not private debt. This failure to understand the concept of government money as opposed to private credit, has had immense and deadly repercussions.

    The Great Henry Simons summed it up in one magnificent sentence in the 1930s:

“The mistake … lies in fearing money and trusting debt.”

    Henry Simons, (Economic Policy for a Free Society, 1930s, P.199)

    This fundamental error has allowed the most egregious banking and money system to dominate our society for a century. It has caused immense damage:

    For example: The privatization of our monetary system, with control over public policy being in unelected hands, for whoever controls the money system, over time will control the nation.

    And look what they have done with that power:

    * They’ve given special privilege to create money to some, and disadvantage to others; which has led to an obscene concentration of wealth and a corresponding poverty! This has encouraged lawlessness and corruption among the privileged; pushing them to diseased excess for acquisition, and ignoring those among us in great need.


    In our present system most of what we use for money – more accurately purchasing media – comes into existence as an interest bearing debt, when banks make loans. In that sense, most money in our fractional reserve system – is debt. But economists can’t seem to grasp that those rules can and must be changed. Afraid to confront their paymasters, who are benefitting from the injustice, they can’t conceive of practical ways we can use real government issued money for money instead of substituting private debt for it. They ignore previous attempts such as the Chicago Plan of the 1930s; and smear prior periods when such real money was used successfully.


    Thus, The NEED Act nationalizes the money system, not the banking system.


    All serious Monetary reformers understand that banks can not be allowed to create our money supply.


  3. workable link for above.


    How the Economists Facilitated the Crisis and How HR 6550* Solves it (HR 2990)

    I thank the EEA for this opportunity to address you. This talk is not meant as an attack but as a challenge to “young economists.” It’s important that the economic profession be held to account for its’ part in this crisis.

    The crisis gives a rare opportunity for reform. There’s no denying that the present “Economics” regime has been a key cause of the pain, suffering, illness and even death inflicted on America’s less affluent; and of the worldwide economic destruction we see. My observations are admittedly from an outsider and there should be a value for you from that perspective, but this was well expressed by Economist Jamie Galbraith in testimony to the Senate Crime subcommittee on May 4th, 2010:

    “I write to you from a disgraced profession. Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis.”

    With rare exceptions, those in control of the World’s monetary/economic agenda and the theories supporting it have helped bring the world to its knees. Shouldn’t they (and their theories) be held accountable? The challenge will be for “youngsters” like yourselves, to bring your chosen profession to its senses.


    Despite prejudice against government, most people are surprised to learn that history shows government has a far superior record in controlling the money system than private controllers have. And yes that includes the continental currency, the Greenbacks and even the German Hyperinflation; which by the way took place under a completely privatized German central bank, with all governmental influence removed! These facts, though not taught in your econ classes, are discussed at length in my book The Lost Science of Money available here. (by Stephen Zarlenga )

    Perhaps you will consider Prof. Kaoru Yamaguchi’s Systems Dynamics study of the American Monetary Act? He examined it with the most advanced computer systemology and found that:

    It pays off the national debt

    It provides the funds for infrastructure (solving the unemployment problem)

    It does this without causing inflation. You can read his results at http://www.monetary.org

    We invite thoughtful input from economists and others who have studied our money system. From you people who still have open minds. Ladies and Gentlemen, Thanks for your attention. We have some materials for you.



    Congressman Kucinich’s Historic Monetary Reform Bill

    September 21, 2011: Congressman Dennis Kucinich introduced an employment bill reforming our money system: The NEED Act proposes a historic money reform, containing all the monetary provisions of the American Monetary Act including ending “fractional reserve” banking.

    Demonstrations Ongoing Across the Nation!

    A major opportunity in the monetary reform movement is developing at places such as Wall Street in New York and the Federal Reserve Banks across the country. Now is the time to bring awareness of the solution to the monetary injustice that grips our nation. Help to further this progress by distributing as many copies as you can of the following four documents at your local demonstrations!

    Monetary Reform Now (half page flyer)
    The Need for Monetary Reform
    Fact Sheet for NEED Act
    Updated 32-page Brochure

  4. http://www.monetary.org/

    Demonstrations Ongoing Across the Nation!

    A major opportunity in the monetary reform movement is developing at places such as Wall Street in New York and the Federal Reserve Banks across the country. Now is the time to bring awareness of the solution to the monetary injustice that grips our nation. Help to further this progress by distributing as many copies as you can of the following four documents at your local demonstrations!

    Monetary Reform Now (half page flyer)
    The Need for Monetary Reform
    Fact Sheet for NEED Act
    Updated 32-page Brochure

    Byron Dale simply, powerfully describes the source of our money injustice:


    Why Are We Short Of Money? Why?

    The World Economy Trembles
    Because Every Nation Is Short Of Money.


    Money Is The Easiest Thing In The World To Create.

    It Is Done On a Computer.
    Type It In. Press enter.
    That Is, In Fact, How They Do It Now.
    But, They Only Do It As A Loan.


    Because You Let Them.
    That’s Stupid.
    Don’t Be Stupid.

    You Can’t Borrow Yourself Out Of Debt.


    In The United States, You Do Not Have To Settle For
    Banker Created Debt.
    There Is The Solution To This Economic Crisis.


    Think about it:
    If the banks are the only ones who create money,
    and you have to give it back to them (loan payments) – two things happen.

    1st. You have to give it back!! You never get to keep it in exchange for goods/services. In the aggregate (combined picture) you do the work, but can’t keep the money.


    2nd. If the banks are the only ones allowed to create money, and then only as a loan, in the aggregate, you have to borrow to pay interest!

    IMPOSSIBLE to get out of debt.


    U.S. Constitution
    The Congress shall have Power …
    To coin Money, regulate the Value thereof…

    So Do It!!


  5. Dennis Kucinich’s proposal changes our money so that it is not DEBT…freeing people by providing jobs that fix our infrastructure.

    I would like some additional clarification about how HR 2990 might affect money internationally. Jim Sinclair states that during a crisis America’s International Balance Sheet is always settled in gold. So, gold is rising in price (for over a decade) to try to catch up to America’s international debt.

    It seems to me that Kucinich and Sinclair could both be correct. However, any further info regarding this would be appreciated.


    The Mathematics Of Gold
    May 26, 2011
    by Jim Sinclair

    Dear CIGAs,
    Little by little, I am passing on ALL that I have learned from Jesse through Bert and Bert’s knowledge to those that read here, every day, in thanks for your support of me and mine. 
–JEBS (James Edwin Bertram Sinclair)


    Because gold is held by many central banks, once as a reserve currency but now as an inventory currency, it functions as a swing asset to balance the International Balance sheet of the US.

    Central banks are sellers of dollars but still hold, by default, large dollar inventories.
    China has hedged its dollar position 50% through commitments to long term dollar commercial agreements, pay in, mineral, and energy deals internationally. That is an act of pure genius.

    We can assume other central banks still hold 90% of their reported dollar positions, on average unhedged by commercial obligation positions.

    In crisis times, the US dollar price of gold ALWAYS seeks to balance the International Balance Sheet of the USA.


    Take 90% of international US dollar debt less China and then add 50% of the US debt owned by China. Then divide that number by the ounces supposed to be owned by the US Treasury. The result is where gold wants to go.


    There were a few submissions within a fairly tight range, among them:


    Dear Jim,

    The following is an analysis of your Mathematics of Gold. The analysis was conducted by our summer intern and we thought it may be of interest to your readers.

    Kind Regards
Isaac Matzner

    Case: The Mathematics of Gold

    International US dollar debt: $4.4792 trillion (approximately 32% of total US debt of $14.32 trillion)

    Portion of international US dollar debt held by China: $1.1449 trillion

    90% of total US international debt less portion held by China = 0.90 * ($4.4792 trillion – $1.1449 trillion) = $3.00087 trillion (A)

    50% of international US dollar debt held by China = 0.50 * $1.1449 trillion = $0.57245 trillion (B)

    Total foreign currency reserves held by People’s Bank of China (Central Bank): $3.045 trillion

    Therefore, A + B = $3.57332 trillion (C)

    Total US holdings of gold = 8,133.5 tonnes = 8,133.5 * 35,273.9619 = 286.900770 million ounces (D)

    Therefore, C/D = $12,454.8986 per ounce ~ $12,455 per ounce

    Balance of Payments is an account of financial flows between a country and the rest of the world. It consists of the Current account and the Capital account. Current account consists of the trading account (exports minus imports of good and services), income account (factor payments from abroad minus factor payments to abroad) and the transfer payments account (foreign aid received minus foreign aid disbursed). Capital account, which is in surplus on account of increasing foreign investments in US treasury securities and in deficit for increased US investments in foreign securities and reserves. A surplus in the current account should always be balanced by a deficit in the capital account and vice-versa. That is, the balance of payments must always balance.


  6. The new not yet distributed $100 dollar bill has many gold symbols and revolutionary language. However, if it will be used as DEBT money, it will not be change. For a picture see:


    hint: If it says “Note” on it, it is a debt instrument.
    Each one of these in circulation represents
    more debt than there is money to pay it off.


    So, You Think You Have A Chance
    In This Market?

    When a “mystery bank” can move 380 tonnes of gold in one transaction, why would you be so foolish as to think that this is a ‘free market” or that you could base a currency on gold?

    Besides, if you allow the banks to lend the gold, as they did here, you’ll be in worse shape than you are now.

    Your country can be wealthy in minerals and resources, but it will not help if your currency is DEBT.


    Hyperinflation and Zimbabwe – Myth, Misinformation and the “Expert”

    Austrians say the problem is too much paper. Keynesians say the government should spend more. Neither camp has a solid grasp on the effects of interest and both groups are in denial, when it comes to fully understanding debt.

    In fact, in macroeconomic terms, you can hardly find a model that illustrates this: the money needed to pay interest is never created inside the system and that principal is extinguished from circulation when a payment of principal is made.


    NEWS FLASH: Hyperinflation is not caused by paper money. It is not caused by too much money. It is caused by unpayable interest rates.


    This did not happen to Zimbabwe because they did not have enough gold.
    This did not happen to Zimbabwe because they did not have enough natural resources.
    This did not happen to Zimbabwe because the government spent too little.
    This did not happen to Zimbabwe because they had too much paper money.
    This happened because they had too much debt and the unpayable interest is destroying them.

    Say, aren’t the people dependent on bank loans for a medium of exchange and don’t the banks set the interest rates on their loaned money?

    When the banks hike the interest rates to manipulate the money supply to the point that only 15% of the people can work, the medium of exchange is destroyed and the banks end up with the gold, is that financial terrorism?

  7. http://www.monetary.org/intro-to-monetary-reform/faqs

    7) Doesn’t your AMA proposal merely continue with a fiat money system?
    Shouldn’t we be using gold and silver instead? Wouldn’t that provide a more stable money?

    Our system is absolutely a fiat money system. But that’s a good thing, not a bad one. In reaction to the many problems caused by our privatized fiat money system over the decades, many Americans have blamed fiat money for our troubles, and they support using valuable commodities for money.

    But Folks! The problem is not fiat money, because all advanced money is a fiat of the Law! The problem is privately issued fiat money. Then that is like a private tax on all of us imposed by those with the privilege to privately issue fiat money. Private fiat money must now stop forever!

    Aristotle gave us the science of money in the 4th century B.C. which he summarized as: “Money exists not by nature but by law!” So Aristotle accurately defines money as a legal fiat.

    As for gold, most systems pretending to be gold systems have been frauds which never had the gold to back up their promises. And remember if you are still in a stage of trading things (such as gold) for other things, you are still operating in some form of barter system, not a real money system, and therefore not having the potential advantages as are available through the American Monetary Act!

    And finally as regards gold and silver: Please do not confuse a good investment with a good money system. From time to time gold and silver are good investments. However you want very different results from an investment than you want from a money. Obviously you want an investment to go up and keep going up. But you want money to remain fairly stable. Rising money would mean that you’d end up paying your debts in much more valuable money. For example the mortgage on your house would keep rising if the value of money kept rising.

    Also, contrary to prevailing prejudice, gold and silver have both been very volatile and not stable at all. Just check out the long term gold chart.


    Our current Debt Money is created by banker’s credit in loans to government, business and people that is extinguished from circulation once paid back. But, never created is the money to pay the interest. So, we can never get out of debt when our money is debt.


    Bankruptcies – No End In Sight.

    Don’t you wonder what happens to the money that was borrowed and then spent into the economy, when a person goes bankrupt?

    The money is now “out” in the economy, right? It did not get paid back to the bank, right?

    That is the money, that the rest of the “customers” of this scam the banking system is running on the world, use to pay their interest. As you know, there is no mechanism in the system, to create money to pay interest, the way it is set up now.

    We should change that so that we have a system that works without requiring bankruptcies, fraud and money laundering – just to function.



    News: Chicago Teachers Union Supports HR 2990

    Important progress has been achieved in the ongoing pursuit of monetary reform. With the endorsement by the 29,000 strong Chicago Teachers Union, the NEED Act is gaining substantial momentum in the efforts to clean up our country’s unstable economy.




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