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●Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening <the gap between rich and poor.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●Everything in economics devolves to motive, and the motive is the Gap.
Today, October 29, 2014, reader Ian Winograd wrote:
Off topic, but here is something of interest:
“Moody’s reported on Wednesday that the U.S. government’s current fiscal position remains healthy but if there aren’t policy changes, there will be long-term risks from social spending that could affect the nation’s credit standing.
Spending, especially for Medicare and Social Security programs, will cause a rise in future deficits and debt levels toward the end of the decade, Moody’s said. An aging population will contribute to rising cost and demand for health-care services.
The report called for additional revenue, which could be realized from a higher-than-expected U.S. economic growth rate or policy changes such as an increase in Medicare premiums and co-payments.”
So Moody’s is going to lower the credit rating of a monetary sovereign nation, fearing that the US won’t be able to pay its bills.
This is the same company that gave A+ ratings to mortgages given to people with no jobs, no incomes and no assets.
My response was:
During and after the Great Recession, the credit agencies gave higher ratings to some monetarily non-sovereign euro nations and to many corporations (all of which are monetarily non-sovereign), than they gave to the U.S. government.
These agencies are owned by the rich, and their clients are the rich. The rich hate government spending, because most government spending benefits the middle- and lower-income groups.
And, of course they hate progressive income taxes (but love regressive FICA and sales taxes), because the rich pay “too much.”
In short, the credit agencies are paid to widen the Gap between the rich and the rest. And the management of Moody’s either is ignorant of basic economics, or they are criminals doing the bidding of the rich — and I doubt they are ignorant.
Moody’s is not the only “ignorant or criminal” rating agency. Take Standard & Poors (please):
Standard & Poors rates the following euro nations AAA: Austria, Finland, Germany, Luxembourg. It rates the euro nation, the Netherlands, AA+
All euro nations are monetarily non-sovereign, meaning they have no sovereign currency. They use an “alien” currency, the euro, over which they have no control. They can run short of euros.
They all rely on taxes and net exports to provide sufficient euros. If taxes and/or exports decline, they could be unable to pay their bills.
By contrast, the U.S. government is Monetarily Sovereign. It is sovereign over its currency, the dollar. It never can run short of dollars. It pays all its bills by creating dollars, ad hoc.
Even if all taxes fall to $0, and net exports remained below $0, the federal government will be able to pay its bills forever. Despite recessions, depressions, wars, inflations, stagflations and epidemics, no federal check ever has bounced. There is no need.
S&P rates the federal government AA+, below Austria, Finland, Germany and Luxembourg, and equal with the Netherlands.
Fitch, the 3rd large rating agency, provides equally “ignorant or criminal” ratings.
But, that is not the worst of it.
Here are three corporations (corporations!)rated AAA: Microsoft, Exxon Mobil, Johnson & Johnson. They all are monetarily non-sovereign. They cannot create money, because they have no sovereign currency. The rely on net sales and borrowing, to pay their bills.
Yet, these corporations are rated higher than the U.S. federal government!
Apple, with an AA+ rating, supposedly is as credit-worthy as the United States. And if you believe that, surely you will want to buy my bridge going to Brooklyn.
So what do you think? Ignorance or criminality?
Rodger Malcolm Mitchell
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.
THE RECESSION CLOCK
Vertical gray bars mark recessions.
As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.