Money is Debt? Federal Taxes Are Unnecessary?

The new book, Free Money by Rodger Malcolm Mitchell, describes in lay language, counterintuitive solutions to the problems of Social Security, recession and high taxes

If you enjoy new ideas, you may enjoy the book, FREE MONEY, by Rodger Malcolm Mitchell. In 1995, during the height of the economic boom, Mitchell wrote his recently published book, in which he predicted the recession, explaining when it would occur, and why.

Mitchell also predicted the series of interest rate cuts and their failure to stimulate the economy. He described the steps - only a few which have been instituted - required to cure the recession and to prevent future recessions.

The book begins simply with what Mitchell calls, the Golden Rule of Economics: A growing economy requires a growing supply of money." This seems reasonable to most readers, until they are told, all money is debt, so a growing economy requires a growing supply of debt!

As Mitchell says, Most lay people find this impossible to believe. Even members of Congress, who should understand, seem baffled by this basic bit of economics."

FREE MONEY shows how your bank accounts are debts of banks. The banks owe you (whom Mitchell calls a lender") the money in your accounts. The bank doesnt actually have this money. It has lent it to others. So you rely on the banks full faith and credit. The value of your bank account depends on the value of your banks full faith and credit.

In fact, the value of all money depends on the issuers full faith and credit. Money market accounts are debts of money market funds; travelers checks are debts of the issuer.

Even the currency in your wallet is debt - debt of the U.S. government, which owes you what gives that green paper its value, full faith and credit. The government guarantees you can use the currency as money and pay your taxes with it.

According to Mitchell, The governments definitions of money, M1, M2, M3 and L, have changed many times, and currently dont include what I believe are some of the most important forms: T-Bills, Bonds and Notes, corporate and municipal bonds, mortgages and other forms of debt. When you include them, you see that the greater the increase in Total Debt (total money), the greater the increase in Gross Domestic Product.

All of this leads to Mitchells most controversial concepts: Federal surpluses, which remove money from the economy, cause depressions. The government can produce an unlimited amount of debt/money, without inflation. Federal taxes are unnecessary, indeed harmful. FICA should be eliminated. Social Security never can run out of money. Nor can Medicare. Nor can any other federal project. If the government wants the project to survive, it needs only to print the necessary money.

Each concept is explained in a simplicity you will have no trouble understanding, even if economics is not your expertise. Though Mitchells logic is well constructed, you have the feeling, It couldnt be that easy, or the experts would have discovered it." Such is the fate of new ideas.

Mitchell even addresses that problem.

Free Money, by Rodger Malcolm Mitchell, is available on Amazon.com.