Sunday, January 31, 2016

Why Did Gatlin Resign His Confederate Commission?

On March 19, 1862, five days after the Union Army gained control of much of North Carolina's coastal plain with its victory in the Battle of New Bern, the Confederacy dismissed Brigadier General Richard C. Gatlin from command of the Department of North Carolina. Gatlin, ill with fever in Goldsboro, was unable to lead his troops in New Bern, leaving Brigadier General Lawrence O'Bryan Branch to suffer the battlefield loss. The local newspapers excoriated Gatlin for the loss, claiming he had neglected New Bern's defenses and his Department in general, and that he was drunk during the battle. The papers soon recanted their stories, but for some reason Gatlin never was assigned another command in the Confederate Army. After spending a full year trying to determine why the Confederate War Department, a War Department that was in desperate need for experienced military leaders, overlooked him for another command position, he gave up and resigned his commission on March 23, 1863, effective September 8, 1862. We do not know why Gatlin became persona non grata. Bad publicity may have kept him from receiving another command, he may have refused to serve in Virginia, away from his beloved North Carolina, or there may have been other reasons. We may never know, but here is Gatlin's resignation. It was accepted and made official by Special Order No. 85 from the Confederate War Department in April 1863.

Gatlin's Resignation from the Provisional Army of the CSA

The following is a true and full transcription of a photocopy of a document written by Richard Caswell Gatlin, such document on file with the National Archives. The photocopy was sent to James L. Gaddis Jr from the National Archives upon his request for military records of Richard Caswell Gatlin July 5, 2001. Transcription by James L. Gaddis Jr, January 31, 2016.  
On the 19th Mar. 1862, Brig. Gen'l Gatlin was relieved from duty in the State of N. Carolina in consequence of ill health. On that day he addressed a note to the War Dep't asking an investigation into his conduct while in command of the Dep't of N.C. provided it had not met with the approval of the government, and this request was further urged in a note dated the 27th of March. The reply of Sect'y Randolph, though unsatisfactory from its neither exonerating or condemning, or promising investigation could only lead to one conclusion, viz that Gen'l Gatlin had been relieved for the reason stated in the order and from no other. Hence when he reported for duty on the 23rd of May 1862, he confidently expected to be at once assigned to a Command. This was not done however, and he continued to make the stated monthly reports until the month of September when he received Asst Adj't Gen'l Whiting's letter notifying him "that having no assignment, his appointment of Brigr Genl in the Provisional Army was vacated under the 2 par: of Genl Orders No 48." Soon after, Genl Gatlin proceeded to Richmond, and in an interview with Secty Randolph on the 24th of Sept, it was stated that the order was designed to be an exponent of the law, but if Genl Gatlin did not think that it applied to his case, he might protest, and the matter would be referred to the law Officer of the Government for his opinion.

The protest was then made, not with the vision of forcing his services upon the country, but to place himself in a position to again repeat his request, to have his conduct investigated by a proper tribunal, which could not be done so long as his appointment of Brigr Genl was not acknowledged by the Government. The investigation was the more to be desired, in as much as the Secty had stated that certain reports, rumours or allegations - not specified - prejudicial to Genl Gatlin had reached the War Dept. He had expected a speedy reply to his protest, as he did not presume but that the Secty had referred it according to promises. Up to this time however, nothing has been heard from the War Dept on the subject.

In as much as so much time has elapsed since the protest was made, that if an answer favorable to Genl Gatlin was now returned, he could hardly hope to have his conduct investigated, without which he would not willingly serve in the Army, he desires that the letter of Asst Adjt Genl Whiting be withdrawn or cancelled, and his resignation of the appointment of Brigr. Genl in the Provisional Army - which he believes he still holds under the law - be accepted to take effect on the 8th Sept. 1862, the date of Major Whiting's  letter.

March 20th 1863. 

Thursday, January 14, 2016

Are US Dollars Really Federal Debt?

Here is how defines debt:

1.       Something that is owed or that one is bound to pay to or perform for another: a debt of $50.
2.       A liability or obligation to pay or render something: My debt to her for advice is not to be discharged easily.
3.       The condition of being under such an obligation: His gambling losses put him deeply in debt.
4.       Theology. An offense requiring reparation; a sin; a trespass.

Because we are not discussing theology, forget about #4. Let us, though, discuss the US dollar and its relation to debt.

The US Dollar is a Federal Debt

Clearly, a US dollar satisfies both definitions 1 and 2. When the federal government spends, it issues US dollars. Each dollar is a federal IOU, that is, an accounting liability to the government and an asset to the holder. That IOU (the dollar itself) signifies that the US government owes something to the holder of that dollar. That something is simply a credit for one US dollar, not 1/35th of an ounce of gold, nor a chunk of silver, but only another US dollar. That is because the US monetary system is a fiat monetary system with a currency not pegged to any commodity or to any other country's currency. It seems evident that the US dollar is, in fact, a debt of the US government and that, consequently, the US government is in debt to the holder of that dollar.

How Ae Debts Discharged?

Paying a debt discharges the debt. Example: I owe you $5.00. If I give you $5.00, the debt is paid. I no longer owe you $5.00. By giving you $5.00, I have transferred my $5.00 asset to you, thus reducing my assets. I also have reduced my liability by $5.00. Even though I may be cash-poor now, I no longer am obligated to pay you. My side of the transaction is in balance because both my liability and asset have been reduced equally. You, on the other hand gained a $5.00 cash asset but you lost a $5.00 loan asset. You are better off cash wise, but you no longer have a loan due you. Your side of the transaction is in balance because you have gained and lost equal amounts of assets. The crux is that the debt is eliminated by paying it back.

How Does the Government Discharge Its Dollar Debts?

Okay, this is going to sound bizarre, but there is no way the federal government can discharge its US dollar debt to you by paying it. Think about it. If you have $5.00 (a $5.00 bill, $5.00 in your checking account, or whatever), it means the federal government owes you $5.00. Remember that US dollars are a form of government debt. If the government then pays you another $5.00, it does not discharge the original debt; it simply means that the government is now in debt to you for $10.00. This is because US dollars are IOUs, that is, federal liabilities. Paying money to you does not reduce the federal liability - it increases it. Consequently, the federal government cannot discharge or reduce its debt by issuing more money. No. The federal government can reduce its debt (at least the debt inherent in the US dollar) only by taking those dollars back! Stop now. Think about that. Only by taking those dollars back can the government pay its debt to you. Stated another way, the federal government can discharge its US dollar debt to you only by your paying it! Got that? The government owes you money and the only way it can stop owing you that money is for YOU to pay that money back.

How does it take money back? It taxes you. By taxing you the government removes your asset, removes its liability, and voila, the liability, the asset, and, thus, the US dollar are all gone. Once back in the hands of the issuer the IOU no longer exists. The debt is gone, accounted out of existence. Taxes can be viewed as the government reneging on its debts. Federal taxes simply remove money from your pocket and from the money supply.

So Are US Dollars Really Debt?

If the person to whom the debt is owed must pay off the debt to the debtor, as with federal taxes, is it really debt to begin with? Is the US dollar, although clearly a federal liability, really a federal debt to you the holder? You can decide that for yourself. If US dollars are not debt, then does the federal government actually accrue any debt by spending? You can decide that also.

Tuesday, January 12, 2016

Please Do Not Bite That Apple

I keep hearing phrases like "our country is broken", "government intrusion on our lives", "we must take the country back", "this country is on the wrong path", and so on. I do not know about you, but these observations, or mindless bitching or whatever they are, fail to resonate with me. My life is certainly no worse than it was say, ten years ago, and in many ways, it is better. Americans as a whole are certainly in better shape than they were following the economic debacle of 2008. Employment has rebounded, gas prices are low, our military presence has wound down in far off war zones, inflation is nearly non-existent, good health care is at my disposal, no one has taken my gun, and I have not had to cough up anything to the federal government other than more taxes than I think are necessary. Consequently, I fail to appreciate the growing din of people sounding off about an out-of-control federal government.   

I am angry with the federal government, however, not for being overbearing on me or for spending my taxpayer money. I am angry with the federal government for continuing the charade that it must borrow and tax in order to have money. The federal government does not need or spend our tax dollars and it can never go broke thanks to the flexibility of its fiat monetary system. Welfare queens are not living off my income. The federal debt, the annual deficit, and warnings that we owe billions to China are about as true as the Uncle Remus Tales and as dangerous as dust-bunnies under the couch. Really, the federal government continues its "poor-mouth" charade as an excuse to avoid doing for the American people what the American people most need, providing the infrastructure basis for people to make decent livings and to avoid becoming helpless victims of the economy. In no way do I fear that the federal government is coming after me or that it wants to run my life.

Many folks in this country seem to have gotten meaner over the past few years. So many appear to have lost track of the fact that we live in a society rather than in a loose amalgamation of individuals. I often think this may be a subconscious response to our having a black president although, if presented with such an assertion, people would vehemently deny it. The rise of the Tea Party and what I call the "Minutemen for Christ" mentality, that is, evangelical, gun-totin', tough-talking, Bible thumping folks who disdain the public good in favor of what they consider to be individual rights, is far more troubling (and irritating) to me than notions of ours becoming a "socialist" or "communist" country. Neither of those adjectives is realistic. No, I am more afraid of the dark side - the side that disdains doing public good for fear of losing individual rights. The growing love affair with private anarchist, totalitarian, corporate, plutocratic leanings that see swelling all around me, especially here in the South but also overtly within the Republican Party and covertly within the Democratic Party looms far more dangerously in my thinking. From a couple of acerbic, loudmouth dinks in our own local county commission; to Nazi-looking federal legislators, some running for president and some not; to an irreverent, bombastic, charismatic like Donald Trump; our statesmen are becoming less like public servants and more like public serpents. 

Tuesday, January 5, 2016

So You Think $19 Trillion Is a Lot of Money?

F/Y         Redeemed Amount

2005       $37,859,890,000,000
2006       $35,910,551,000,000
2007       $38,242,892,000,000
2008       $42,120,248,000,000
2009       $52,531,898,000,000
2010       $63,780,546,000,000
2011       $63,968,929,000,000
2012       $67,407,248,000,000
2013       $61,491,537,000,000
2014       $63,566,328,000,000
2015       $60,448,876,000,000

See the numbers above? The dollar amounts are in the trillions. What do you think they are?

The first column is the US government fiscal year.

The second column is the amount of federal "debt" that the government paid off in that fiscal year.* Note that each year's payment is far greater than the current federal debt.

Whaaat? Paid off? Wait a minute! The entire federal debt is only $19 trillion. Why would the government have paid such big numbers and, if it did, why is there still a $19 trillion debt?

The answer lies in the definition of federal "debt". The federal "debt" is not a credit card balance or a long list of unpaid bills no matter what Paul Ryan, Rand Paul, Ted Cruz, and Barack Obama may tell you. No. The federal "debt" is nothing like that. In fact, "federal debt" is a misleading code phrase for outstanding US Treasury securities. US Treasury securities are interest-bearing investments or savings accounts, much like bank CDs, sold by the Treasury to the public, primarily to lessen the number of dollars in circulation.

Treasury securities are classified by maturity length. Treasury "bills" mature in 1 year or less. Treasury "notes" mature in from 2 to 10 years. Treasury "bonds" mature in longer than 10 years. Each Treasury security sold is a separate "debt" of the Treasury to the purchaser of the security. Each time the security expires and the Treasury redeems it, the Treasury has paid off that debt. There are thousands of Treasury securities in existence. Thousands of Treasury securities expire every day, every week, every month and every year and when they expire, the Treasury redeems them, that is, the Treasury pays them off. For example, let us say I buy a 3-month $1000 T-bill for $950. At the end of three months, the T-bill expires and the Treasury pays me $1000. Boom! That federal debt is paid. I may turn around and buy another 3-month T-bill and the process repeats. If I buy a new T-bill each time one expires, I will have bought four $1000 T-bills in a year and been paid $4000 by the Treasury. Of that $4000 I received, $3800 was money I had originally invested and $200 was interest I earned. If I buy a fifth $1000 T-bill, the federal "debt" on my T-bill will be $1000 until that T-bill expires and is redeemed.

So it is with all so-called "federal debt". In 2015, for example, the Treasury paid off over $60 trillion ($60,448,876,000,000) in Treasury securities, largely short-term Treasury bills and notes, thus paying off that amount in federal debt. So why is there still $19 trillion in federal debt? Because there are $19 trillion in Treasury securities that have not matured yet. Those securities will be redeemed (paid off) as they mature, just like all Treasury securities have been paid off on maturity since the late 1780s. The US has never defaulted on a Treasury security, which means the US has never defaulted on its "debt". Notice that the bulk of the money the Treasury uses to "pay off" Treasury securities is the money originally invested by the buyers of the securities. The Treasury returns the investors' money and pays only interest. Most of the time, the investors opt to reinvest in new Treasury securities and renew the "debt". That's why the federal "debt" continues to exist even as it is paid off.

Many people worry about the size of the federal debt and demand that it be paid off. But they do not realize, or know, that federal debt is paid off every day, Treasury security by Treasury security, even as new securities are sold. It is virtually impossible for the US to renege on its debts unless Congress does something stupid by refusing to honor and redeem Treasury securities as they expire.

So the next time some political ying-yang warns that the federal debt is out of control, that we can't afford any more debt, and that our grandchildren will be saddled with the debt, remember that every year the government actually pays off federal debt many times larger than the current debt amount. In fact, in the last eleven years the US government has paid off the debt, that is, it has redeemed US Treasury securities, in an amount well over $600 trillion and the country has not gone bankrupt, has not defaulted on its "debt", and has not had to sell out to China. And we are worried about today's $19 trillion "debt", that is, $19 trillion in outstanding Treasury securities? Please. Get serious America and get on with the business of running this country.

Remember that the US government pays its bills as it goes with newly issued US dollars. It does not borrow money or run up a credit bill, or spend the Treasury security investments. The term "debt" is technically accurate because the Treasury does owe the holders of Treasury securities the money invested in those securities, but the government has no overdue bills or overextended credit or goods bought on layaway. And it always redeems its Treasury securities as they come due, to the tune of $60 trillion last year alone.


Sunday, January 3, 2016

Politics - This, That, and the Other


How much of Donald Trump's early presidential campaign success is attributable to his not being a Washington insider? It is difficult to determine, but we are hearing more and more folks, including some of the candidates, express hope for a President from outside the Beltway, new blood so to speak, someone not steeped in the old politics. Trump, and earlier Ben Carson, Carly Fiorina, and some of the various governors, have enjoyed poll popularity over the insider candidates. If space between the new president and the old DC ways is what the people want, the people might want to be careful what they wish for. Do you remember 2008 when a then Washington outsider, a first-term DC newbie senator with only four years in office, won the presidency on the wings of a "Hope and Change" motto? Since then we have had nothing but rancor and malfunction between the executive and the legislative branches, and polarization among the American people. It shows that picking an outsider for president is not necessarily a prescription for harmony and progress in the federal government and satisfaction among the electorate. If Trump wins, would he be able to exert sway over the Congress? Would Washington suddenly morph into a model of cooperation and good judgment? Hah! Yeh, you bet. I suspect we could count on four or eight more years of stalemate, bickering, and ineffective government.


Many things puzzle me, but one I understand the least is the slogan "We must take back the country!" When people say this I wonder who took the country, when did they take it, and where did they go with it? Apparently, the slogan is a metaphor for government having done something offensive to the right wing. Does it mean someone breached the Constitution? Does it mean white, Anglo-Saxon, protestants no longer constitute a majority? Does it mean foreign labor has relegated American manufacturing to second place? Does it mean the rich now have all the money? Does it mean having a President with an un-American sounding name makes us hostages to the Middle East? Does it mean we should demand that Pittsburgh start belching smoke again? I just do not know what it means. The only people I have heard threatening to "retake the country" are frustrated libertarian-type thinkers who seem to eschew any form of governmental intervention in any facet of American life. Those people apparently think the United States has been hijacked somewhere along the way and that we should mount up, strap on our six-shooters, form a big posse, and rescue it.

The Other:

One other thing, I am getting tired of people claiming that Social Security is an investment program when in actuality it is simply, by design, a federal welfare program, no different than food stamps or Section 8 housing. People often cite payment of payroll taxes as their "premium" that funds their future SS income. Thus, they think they are "investing" in Social Security. It is not so. Our payroll taxes go into the same federal accounting black hole as do our income taxes and all federal taxes. By collecting taxes, including payroll taxes, the federal government destroys dollars. It always pays for all its spending with newly created federal IOUs, that is, new US dollars. In short, we pay taxes, we do not pay premiums, and the federal government can and does fund SS independently of any tax collections. Only the people who meet the eligibility requirements of SS receive SS payments just as only the people who meet the eligibility requirements of food stamps receive SNAP payments. If you are one of those who bitterly despise federal welfare you should, in good conscience, forego your Social Security checks when the time comes. In the meantime, if you want to complain, complain about rising payroll taxes that reduce the national money supply, pay for nothing, and fool you into thinking you are investing in Social Security.