The case for waste

We often have written about government waste:

*Sen. Rick Scott “bravely” opposes wasteful federal spending, but even here, he’s wrong.

*The Wasteful Spending Myth and The Big Lie

*The 5 ways to eliminate wasteful federal spending

*There is no wasteful federal spending

There are other examples, but listing them would be wasteful — of your time and mine.

I looked online for claims about federal government wasteful spending. Here are a few of the hundreds I found:

Camo Uniforms for the Afghan Army: The Pentagon spent $28 million on camouflage uniforms for the Afghan National Army that were unsuitable for the desert environment.

Hipster Anti-Smoking Campaign: The National Institutes of Health spent $5 million on a campaign targeting hipsters to stop smoking, including paying them to blog about quitting.

Quail Cocaine Study: Over $500,000 was spent to study how cocaine affects the sexual behavior of Japanese quails.

Hamster Fights: More than $3 million was spent on research involving hamster fights to study aggression1.

Solar Panels for Veterans Affairs: The Department of Veterans Affairs spent $8 million on solar panels that were never used.

The Federal Register–every member of Congress automatically receives a new copy every day, at a $1 million annual cost, even though the contents are available for free online.

I could waste time listing dozens more, but these alone “waste” about $45.5 million a year, which is sufficient to outrage a Congress that voted for these expenditures and the media, which wasted time writing about them, but only on slow news days.

Before I comment further, perhaps we should try to agree on something fundamental: What is “waste”?

I suggest waste is anything that costs significantly more than its benefits over any agreed-upon period.

For instance, let me start with the gross basics: When a bear poops in the woods, is that poop considered waste?

No, because it costs the bear nothing and benefits the forest by providing growth nutrients.

Based on that definition, are the above examples of waste truly waste, or are they more like that cost-free, beneficial bear poop?

Let’s assume there was no benefit to those cameo uniforms, anti-smoking campaigns, quail cocaine studies, etc.

Did they fall under the costs-more-than-its-benefits criterion for waste?

I say, “No.”

Every one of them took dollars from a federal government that has the infinite ability to create unlimited dollars at the touch of a computer key.

So the cost was negligible — perhaps similar to the bear’s cost in expending the effort to squat.

As former Fed Chairman Ben Bernanke said, “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

But what was the benefit? Every one of those endeavors added dollars to the Gross Domestic Product.

Not only did they grow the economy as a whole, but they benefitted specific individuals. Businesses employed people to create those uniforms, the solar panels, and the printed federal register.

People were paid dollars to run the hamster and cocaine studies.

Those people used their newly earned dollars to buy things from other businesses with employees. The new money flowed through the economy, benefiting thousands and then thousands more.

It is quite possible that down the line, you yourself might have received dollars that began with the quail cocaine study.

One might object, “Taxpayer dollars were spent. The money came from somewhere.”

In reality, not one dollar, not even one cent, of taxpayer money was spent.

The federal government (unlike state and local governments) pays all its bills with newly created dollars.

Like the first U.S. dollars, created from thin air in 1794, and all subsequent trillions of dollars, the dollars that paid for “wasteful” federal spending were created at no cost, from thin air.

Here’s how it’s done now:

1. 1. To pay an invoice, the federal government creates instructions (not dollars) from thin air. The instructions are in the form of a check or wire.
   2. The instructions tell the creditor’s bank  to increase the balance in the creditor’s checking account (“Pay to the order of _____.”)
   3. The bank obeys those instructions by pressing computer keys. The instant the bank presses those keys, new dollars appear out of thin air and are added to the M2 money supply.
   4. The instructions then are passed to the Federal Reserve which first “clears” them by tallying them against the government’s checking account ( Treasury General Account).
   5. Finally, the creditor’s bank is informed that the check has cleared so it can balance its books.

Everything is just numbers in accounts based on instructions and laws. So long as the federal government can create laws, it can create instructions and dollars. The government has no limits other than the self-imposed.

Many people don’t understand that all dollars are just numbers in accounts.

There are no physical dollars. Even a dollar bill is not a dollar. It is the title to a dollar. Just as a house title is not a house, and a car title is not a car, a dollar bill is not a dollar. It is a bearer instrument saying, in essence, “The bearer of this bill is the owner of a dollar.”

Eventually, that paper instrument will be shredded, but dollars, having been created from thin air, are immortal until someone pays off a debt somewhere in the world, at which time dollars will be destroyed.

In summary, all dollars are digital entries—numbers, nothing else. There are no physical dollars. The federal government controls all those entries by passing laws. 

To talk about federal waste is akin to saying that the federal government wastes numbers. It’s like worrying that the federal government will run short of the number “seven.”

The federal government can pass a law saying that the Social Security “Trust Fund” now has an additional ten trillion dollars, and those dollars would instantly exist.

It is illogical to claim that the federal government wastes the dollars it has the infinite ability to create. You cannot waste what is available in unlimited quantities.

The real federal waste comes not from faulty spending but from failure to use resources infinitely available. The real waste comes from statements like these:

• The Social Security Trust Fund will run out of money in (year).
• FICA funds Social Security and Medicare.
• Federal trust funds pay for (program).
• The Medicare Trust Fund will run out of money in (year).
• The debt ceiling is a prudent way to (_____).
• The federal government should live within its means.
• The federal debt is too high.
• The federal deficit is too high.
• The federal debt or deficit is unsustainable.
• Government spending causes inflation
• The federal government can’t afford to pay for (program).
• Federal taxes fund federal spending.
• Federal funding of (program) is a waste of money
• Federal funding of (program) is a waste of taxpayer money.
• Federal benefits for (program) must be cut or taxes increased.
• The federal government should lend, not give, money to (anyone or anything).
• Federal finances are like personal, business, or local government finances

Not one of these commonly heard statements is correct. Not one.

They all mark the writer or speaker as ignorant about our government’s Monetary Sovereignty or as wanting to widen the income/wealth/power Gap between the rich and the rest.

When you read about federal government waste, remember this: When a Monetarily Sovereign government, having unlimited funds, doesn’t spend to feed the hungry, house the poor, or protect its people, that is the worst possible waste, the waste of the government’s power to do good.

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