The higher the interest rates, the more in demand are dollar-denominated bonds, notes, and bills, and the more in demand are the dollars with which to buy these bonds, notes, and bills. The increased demand for dollars increases the value of dollars, which is counter to inflation.
When the U.S. Federal Reserve senses inflation, it raises interest rates, and when it deems inflation too low, it lowers rates. By controlling interest rates, the Fed controls inflation.
These are absolute facts, just as true as Semmelweiss's assertion that hand-washing helps prevent disease -- and just as disbelieved by the public.
And as Semmelweis's peers did not want the public to understand the truth about hand-washing, todays politicians, media and university economists do not want the public to understand the truth about Monetary Sovereignty.
Potential loss of prestige and power motivated Semmelweis's peers to tell their big lie; potential loss of prestige and power is what motivates today's BIG LIE in economics.
It begins with the rich. What makes them rich? The power and prestige Gap between them and the rest of us. If there were no Gap, no one would be rich and no one would be poor. We all would be the same.
So the rich want to widen the Gap. That is their primary motivation.
And to widen the Gap they bribe the politicians (via campaign contributions), bribe the media (via ownership of the media), and bribe the economists (via contributions to universities).
They bribe these people to tell THE BIG LIE, so all you read and hear is based on THE BIG LIE, and as a result, you believe THE BIG LIE.
What is THE BIG LIE? Here it is in just 5 words: FEDERAL TAXES FUND FEDERAL SPENDING.
Unlike state taxes, unlike county taxes, and unlike city taxes, federal taxes do nothing but remove dollars from the economy. They do not fund anything. Once received they disappear from the money supply. They are a net loss for the economy and for taxpayers.
Belief in THE BIG LIE has caused more economic damage than all the wars, all the floods, all the droughts, all the volcanic eruptions and all the crime in world history.
The absolute fact is: Federal taxes are too high and federal spending is too low.
My friend Stephanie Kelton, the chair of the economics department at the University of Missouri, Kansas City, understands Monetary Sovereignty well. She was hired by Bernie Sanders to be his chief economics advisor.
Yet, Bernie's proposals are filled with commentary about how certain federal taxes would support his suggested federal programs.
Bernie knows this is a lie, because Stephanie knows it is a lie. They know federal taxes do not fund federal spending. They know the federal government cannot run short of the currency it invented. They know our social programs are not financially "unsustainable."
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