Jamie Dimon has a good solution to the wrong problem and a bad solution to no problem.

Jamie Dimon is CEO of JP Morgan. As such, his words carry a lot of weight, even when he has no idea what he is talking about.

Here’s Jamie Dimon’s sure-to-fail plan:

Jamie Dimon says the ‘Buffett Rule’ approach to taxing the wealthy could solve America’s debt problem

Story by fdemott@insider.com Buisiness Insider

“The Buffet rule” proposed a minimum tax rate of 30% for individuals making more than $1 million a year. (Buffett had famously criticized the tax system for allowing him to pay a lower tax rate than his secretary.)

The goal was to address the disproportionate tax burden on middle-class workers compared to the wealthy, who often earn a significant portion of their income through investments taxed at lower rates.

It’s Buffet’s way of narrowing the income/wealth/power Gap between the rich and the rest.

It’s a decent idea for that purpose. Unfortunately, Jamie Dimon has co-opted it for different idea—a terrible idea—reducing the so-called “federal debt,” which is neither federal nor debt.

It isn’t federal because the dollars deposited into Treasury Security Accounts are owned by the depositors and never touched or used by the federal government.

It isn’t debt because those accounts resemble safe deposit boxes, in which the government holds the contents but doesn’t use them and doesn’t owe them.

If someone deposits $1,000 into a bank safe deposit box, that bank’s “debt” does not rise.

By law, those Treasury account deposits equal the total of federal deficits, the difference between taxes and spending, which also are not owed to anyone.

The federal government pays all its bills in full and on time. It doesn’t owe dollars for past purchases, and it creates new dollars to pay for everything.

The sole purpose of offering T-bills, T-notes, and T=bonds to the public is to provide a safe storage place for unused U.S. dollars. This safety stabilizes the dollar.

Large dollar users like China, Canada, et. al. are loathe to keep vast dollar amounts in private banks, preferring the safety of the U.S. government for their dollars. Thus, the misnamed “federal debt” should be called T-security deposits and/or when they equal total deficits, federal dollar creation.

Wrongly calling these deposits “debt” gives the impression the federal government is “in debt,” which it is not.

JPMorgan CEO Jamie Dimon has put forth a solution to unrestrained US debt: Tax the rich at the same rate as middle-class people, or at a higher rate.

There is no good reason to “restrain” federal money creation.

1. It is not a burden on the federal government, which has the infinite ability to create dollars.

2. It is not a burden on taxpayers, because federal taxes do not fund federal spending

3. It benefits the economy by adding growth dollars.  

I. Infinite ability to add growth dollars. The federal government is Monetarily Sovereign. By passing laws (which the government has the infinite ability to do), it created the first dollars in the amounts it arbitrarily determined.

It retains the infinite ability to pass laws that create new dollars.

II. Not a burden on taxpayers. Having the infinite ability to create dollars, the federal government has no need to use tax dollars or to borrow dollars. The sole purpose of federal taxes is not to provide spending money but rather to:

–Assure demand for the dollar by requiring taxes to be paid in dollars –Control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to reward.

III. Benefits the economy by adding growth dollars. The most common measure of the economy is Gross Domestic Product (GDP) which is composed of Federal Spending, Non-federal Spending and Net Exports. Increases in federal spending grow the economy.

The following happens whenever the federal government reduces the so-called “debt” (dollars created). Every depression in U.S. history was introduced by deficit reduction:

1804-1812: U. S. Federal Debt reduced 48%. Depression began

1807. 1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.

1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.

1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.

1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.

1880-1893: U. S. Federal Debt reduced 57%. Depression began

1893. 1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.

1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

In August, Dimon told “PBS News Hour” that the country could clamp down on runaway borrowing without eliminating spending. Dimon said he expects that reducing the debt while still investing in the right initiatives is “doable.”

The U.S. government does not borrow dollars. If Dimon had only considered this, he would have known that a government with the infinite ability to create dollars has no reason to borrow them.

Unfortunately, misusing the word “debt” leads to the misunderstanding that the government borrows. It never does. To complicate matters further, the Treasury deposit documents are known as T-bonds, and in the private sector, the word “bond” is evidence of borrowing.

“I would spend the money that helps make it a better country, so some of this is infrastructure, earned-income tax credits, military,” he said. “I would have a competitive national tax system, and then I would maximize growth.”

Here, Dimon shows ignorance of federal finance. He thinks the government spends the dollars deposited in T-security accounts. It doesn’t. The government creates new dollars to pay for all purchases.

To pay a creditor, the federal government creates instructions (checks or wires), not dollars, instructing the creditor’s bank to increase the balance in the creditor’s checking account.

As soon as the bank follows those instructions, new dollars are added to the M2 money supply. That is the federal government’s method for creating money.

Calls for wealthier Americans to pay higher taxes have grown louder in the past year as economists have searched for answers to the federal government’s skyrocketing debt.

The “answers” to the federal government’s skyrocketing “debt” (i.e., growth dollars added to the economy) are to keep on skyrocketing. That is what has made the U.S. economy the healthiest in the world.

Anxiety has grown as the government’s debt pile has ballooned to a record $35 trillion. The Congressional Budget Office has projected that it could make up 6% of US GDP by the end of this year, far outpacing the 50-year average of 3.7%.

This takes us back to the meaningless debt/GDP ratio.

It is a number that predicts nothing, demonstrates nothing, and says nothing about the federal government’s financial health.

If you go to Debt-to-GDP Ratio by Country, you will find no relationship between those ratios and any country’s creditworthiness.

The “best” (lowest) Debt/GDP ratios belong to ten nations I wouldn’t trust with ten cents. The “worst” ratios include two of the world’s strongest economies, Japan and the United States. This demonstrates the uselessness of Debt/GDP.

Banker Jamie Dimon amazingly doesn’t seem to understand federal finance. There is no connection between Debt and GDP that would reflect on a nation’s  — especially a Monetarily Sovereign nation’s — ability to pay its bills. Even this prominent banker is confused by the term “debt.”

If debt remains unchecked amid high interest rates, the government will face higher borrowing costs. Some say that this might compound debt levels and that the US could eventually spiral into a default.

You have just read the most ignorant paragraph in his entire commentary.

1. The Fed sets interest rates to control inflation. It can set them at any level it chooses. The government does not need to attract depositors to T-securities. If there are not enough depositors to satisfy the current law, the government can simply change the law.
2. The government does not borrow
3. Even if it did borrow, it could pay high interest rates indefinitely.
4. Higher debt (i.e., deposit) levels are not a concern. The government merely stores the T-certificate deposits at any level, so this is not a burden on anyone.
5. The federal government cannot default. It has infinite money. The only possibility of default could come from Congress’s refusal to pay, for instance, because of the truly foolish “debt ceiling.”

Otherwise, higher borrowing costs mean Washington will have less to spend on social initiatives.

More ignorance. Washington always has infinite to spend of social initiatives.

A recent report from the Peter G. Peterson Foundation pointed out that the Congressional Budget Office has estimated that by 2054, interest payments on the debt will triple Washington’s historical spending on research and development, infrastructure, and education.

That makes no difference. When you have infinite money, spending more on anything simply grows GDP, a good thing.

Dimon has been among Wall Street’s most consistent voices to raise the alarm, frequently saying runaway borrowing will amplify inflation and interest-rate pressures through the coming decade.

This is the same nonsense that is continually spouted by the rich to discourage spending on social benefits for those who are not rich. If you would like to read 85 years of the same nonsense scare stories, go to: Historical BULLSHIT Claims the Federal Debt Is a “Ticking Time Bomb”: From Sept. 26, 1940 to October 10, 2024.

Not everyone shares Dimon’s optimism that tax hikes alone can solve this problem. Though some commentators have pushed for tax-hike proposals that embrace all income levels, others have urged both Democrats and Republicans to consider spending cuts as well.

Spending cuts would be good if you believe if you believe the rich should get richer and the rest should get poorer. Spending cuts would cure those “problems.” Does anyone believe that the CEO of JP Morgan thinks that way.

However, speaking with PBS, Dimon argued that the US should continue to spend money that helps maintain its economic strength and creates a more equitable income environment.

The previous sentence was the only sensible one in the entire Business Insider article. They saved the only good statement for last. If you happen to know Mr. Dimon, be sure to congratulate him on ending his comments with one true statement. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

MONETARY SOVEREIGNTY

Source: https://mythfighter.com/2024/10/23/jamie-dimon-has-a-good-solution-to-the-wrong-problem-and-a-bad-solution-to-no-problem/