–Message from the rich: The U.S. Treasury is running short of dollars Monday, Aug 31 2015 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
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 single most important problem in economics is
the Gap between rich and poor.
•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.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

===================================================================================================================================================================================================================================================================================

Here are a few shameless quotes from this month’s Congressional Budget Office bulletin, as written by America’s richest.

As of March 15 (2015), the Treasury has (had) no room to borrow.

The debt limit—commonly referred to as the debt ceiling—is the maximum amount of debt that the Department of the Treasury can issue to the public and to other federal agencies.

That amount is set by law and has been increased over the years in order to finance the government’s operations.

The statement is mathematically illogical and factually wrong. Those of you who already understand Monetary Sovereignty are aware the federal debt does not, and cannot, finance the government’s operations.

First the mathematics. Federal debt is the total of T-securities — securities bought by non-government entities and by government agencies. The “debt” is nothing more than bank deposits in T-security accounts at the Federal Reserve Bank.

From where do these buyers obtain the dollars with which to buy T-securities and make these bank deposits?

All dollars come from two sources: Federal deficit spending and bank lending.

But where do the banks obtain the dollars to lend? Yes, they create most, but they must begin with “reserves.” These reserves come from the public in the form of deposits, and from the Federal Reserve Bank.

From where does the public obtain dollars to make deposits?

Bottom line: The initial source of all dollars is the Federal government. It is the federal government that, back in the 1770’s, created the first dollars from thin air. And it is the federal government that continues to create dollars from thin air, simply by paying bills.

Were it not for federal deficit spending, U.S. dollars could not exist.

The government is able to deficit spend endlessly because it is Monetarily Sovereign, i.e. sovereign over its own currency, the U.S. dollar. Being sovereign, the government can do anything it wishes with dollars.

It can create dollars endlessly (via deficit spending). It can destroy dollars (via taxing). It can change the value of dollars (via interest rate control).

Being Monetarily Sovereign, the federal government never needs to ask anyone for dollars — not you, not me, not China.

Contrary to the CBO’s implications, the U.S. Treasury never can run short of dollars unless Congress wills it.

Although dollar bills technically are not in themselves dollars (They are titles to dollars, much like car titles and house titles), the federal government can print all the dollar bills is wishes.

Being Monetarily Sovereign, the federal government makes the rules. If it wished, the federal government could print a trillion, trillion $100 bills and distribute them tomorrow. These bills would be legal tender for all debts. In short, you could use them the same way you use the dollars in your wallet.

Yes, that could cause an inflation, and yes, that is not how dollars are created. But the point is, the federal government cannot run short of its own sovereign currency — unless Congress and the President want that to happen.

The fact that Congress is able to increase the debt ceiling every year is proof there is no limit to the government’s ability to create dollars.

If the federal government did not create dollars, there would be no dollars for banks to lend and there would be no dollars with which to purchase T-securities (aka federal “debt”).

How does the federal government create dollars by paying bills?

To pay a bill, the government sends checks and wires to the creditors’ banks. These checks and wires are not money; they are instructions, telling the banks to increase the balances in the creditors’ checking accounts.

The instant the banks obey those instructions, and credit the accounts, dollars are created. The money supply (M1 and M2) increases. The Treasury creates dollars by sending instructions to banks.

The Congressional Budget Office projects that if the debt limit remains unchanged, the Treasury will run out of cash between mid-November and early December.

This sentence more properly should read, “If Congress prevents the Treasury from creating dollars, the Treasury will run out of cash between mid-November and early December.

On March 16, the debt limit was reset to $18.113 trillion to match the amount of outstanding debt.

Translation: Congress decided it doesn’t want the Treasury to create any more money. The point is not that the Treasury is unable to create all the money it wishes. The point is simply that Congress, at the behest of rich donors, doesn’t want the Treasury to create money to pay for benefits to the middle class and the poor (the “99%”).

This is not a financial decision. It is a political decision. Congress essentially is stamping its feet and saying, “I’ll take my ball and go home unless you give me my way.”

The annual battle over the debt ceiling is an extortion game, in which one party threatens to shut down the government unless certain laws are passed. And these laws may have little to nothing to do with financing.

Whenever you read that certain federal spending is “unaffordable” or “unsustainable,” you are witnessing the Big Lie.

The purpose of the the Big Lie: To fool you into believing certain benefits must be cut — i.e. Social Security, Medicare, Medicaid, poverty aids, education aids, etc.

It is the wealthy political contributors who want your benefits cut.

What Makes Up the Debt Subject to Limit?
Debt subject to the statutory limit consists of two main components: debt held by the public and debt held by government accounts.

Get it? Congress has limited the amount of T-securities it can sell to itself!

Congress includes under the misleading term “debt,” the amount of money the government has “borrowed” from itself. The purpose: To make the “debt” look more ominous.

If your left hand borrowed $100 from your right hand, would you have any difficulty paying the debt? Of course not. But Congress wants you to believe internal debt is some sort of threat or burden.

Of the $18.1 trillion in outstanding debt subject to limit, $13.1 trillion was held by the public and $5.0 trillion was held by government accounts as of July 31, 2015.

So, not only is the misnamed “debt” a phony issue, but the $18.1 trillion debt is a phony figure.

If the debt limit is not increased, the Treasury will not be authorized to issue additional debt that increases the amount outstanding.

That restriction would ultimately lead to delays of payments for government activities, a default on the government’s debt obligations, or both.

By CBO’s estimate, the Treasury would most likely be able to continue borrowing and have sufficient cash to make its usual payments through mid-November or early December without an increase in the debt limit.

Translation: If Congress fails to increase the “debt” ceiling, that is tantamount to Congress voting to cut Social Security and Medicare payments, military salaries, all other federal salaries and all other payments.

The “debt ceiling” is Congress’s method for cutting benefits to the 99%, without leaving any fingerprints.

Your senators and representatives fear being blamed for benefit cuts, so they pretend the government can’t afford these benefits. The “debt ceiling” provides a handy, no-blame excuse.

Why would Congress do that?

Because that is what the rich of America want.

The rich are rich only because of the Gap between them and the rest of us.

If there were no Gap, i.e. if everyone had the same amount of money, no one would be rich. And the wider the Gap, the richer the rich are.

More than money, the rich want relative power. An easy way for the rich to increase their relative power is to decrease the wealth of the 99% — i.e. to take away your money.

So the rich pay Congress (via campaign contributions) to cut Social Security, cut Medicare, cut Medicaid, cut federal payrolls and cut all other federal benefits to the 99%, under the pretense these benefits are “unaffordable” and “unsustainable.”

They call it “fiscal prudence.”

And they call T-securities “debt” rather than more properly “assets of the economy,” (for that is exactly what T-securities are: Assets of the economy.)

The rich know you always want to cut “debt,” but never would want to cut “assets of the economy.”

So it all is a gigantic con game, with the CBO (being an agency ruled by Congress) as a player.

You are supposed to believe that federal “debt,” (even “debt” owed to itself), is imprudent and must be cut, when in fact, cutting the debt takes dollars out of your pocket and leads to recessions and depressions, while it widens the Gap between the rich and you.

And in a great feat of cynicism and irony, the politicians pretend your children and grandchildren will have to pay the debt, when in fact, your children and grandchildren will pay for the lack of federal deficit spending.

Your children and grandchildren will be punished by needless reductions federal deficit spending, all because the rich instruct Congress to tell you the Treasury is running short of its own sovereign currency, the dollar.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
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
Monetary Sovereignty

Monetary Sovereignty

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.

#MONETARYSOVEREIGNTY

–Will we follow the Pied Piper of hatred into hell? Sunday, Aug 30 2015 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
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 single most important problem in economics is
the Gap between rich and poor.
•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.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

===================================================================================================================================================================================================================================================================================

On July 11th of this year, we published “Of whom does Donald Trump remind you?” It showed the parallels between the rise of Trump and the rise of Hitler and Mussolini.

By appealing to nationalism and bigotry, Hitler and Mussolini dragged their nations to insanity and destruction. Neither the Germans nor the Italians thought it “could happen here.” But it happened, and not only did the Nazi victims suffer, but the nations suffered.

It is what always happens to the people, when bigotry rules. Germans and Italians were devastated by their bigotry. The American South suffered for its bigotry. The Mideast is convulsed by its bigotry.

The abovementioned post, which contained eerily similar photos of Trump and Hitler, said:

Trump has lied to make undocumented Mexican immigrants scapegoats.

He falsely claims Mexicans are responsible for “lots of problems.” He falsely claims they are criminals and rapists, responsible for illegal drugs.

He claims the final solution for these “problems” is to deport undocumented Mexicans.

Hitler, like Trump, falsely had claimed Jews were responsible for “lots of problems,” and that they were criminals.

And now, just like Hitler, Trump proposes to round up 11 million men, women and children and deport them.

How would he do it? Would he have jackbooted storm troopers kick in doors, and drag screaming, crying people out to cattle cars, where they will be sent off to concentration camps?

Recently, perhaps belatedly, others have caught on to what is happening to our nation.

‘Fascist’ Trump Isn’t First Demagogue Laughed Off As A Buffoon
August 25, 2015

Although he is still a clown, nobody laughs at Donald Trump anymore — which may be the real purpose of his candidacy, at least as far as he is concerned.

The casino mogul is pleased to instill fear among Republican elites, as he dominates their presidential nominating contest — and forces them to face a hard question about the man who is exciting such belligerent enthusiasm among Republican voters.

Trump is channeling toxic currents from the past—namely, his appeals to racial bigotry, his xenophobic and truculent attitude toward other nations, and his extremist “solution” to the problem of illegal immigration.

Others have observed that the Republicans have only themselves to blame for encouraging the crude prejudices that Trump now calls forth.

Imagine a country that seeks to round up millions of brown-skinned people by force, transforming itself into a police state, while mobs of vigilantes in militias scourge the frightened families out of hiding.

It is not hard to predict scenes of bloodshed and horror.

And now that Trump has attracted large crowds of willing bigots, the rest of the Republican party may feel obliged to “Nazify,” as they follow him into hell.

Republican Christie proposes tracking immigrants like FedEx packages

(Reuters) – New Jersey Governor Chris Christie said on Saturday if he were elected president he would combat illegal immigration by creating a system to track foreign visitors the way FedEx tracks packages.

With real estate mogul Trump taking a hard line on illegal immigration, other Republican candidates in the 2016 White House race have sought to toughen their stances as well.

Christie did not say specifically how the system he proposes would track people the same way packages are tracked by FedEx, which scans a bar code on the package at each step in the delivery process.

Rather than making the people wear a bar code, how about making them wear a yellow Star of David. There may still be some people in Europe who can advise about how that system works.

Is this what Trump wants?

Donald Trump’s ex-wife once said Trump kept a book of Hitler’s speeches by his bed

Ivana Trump told her lawyer Michael Kennedy that from time to time her husband reads a book of Hitler’s collected speeches, My New Order, which he keeps in a cabinet by his bed.

Hitler was one of history’s most prolific orators, building a genocidal Nazi regime with speeches that bewitched audiences.

“He learned how to become a charismatic speaker, and people, for whatever reason, became enamored with him.”

Does all this sound frighteningly familiar?

But Trump’s bigotry does not end with immigrants, just as Hitler’s did not end with Jews. Hitler built hatred for all other nations:

MAHER: TRUMP’S CHINA RHETORIC ‘THE WAY HITLER USED TO TALK ABOUT THE JEWS’

Maher stated, while talking about one of Trump’s speeches on Tuesday, “Then he goes to China, ‘They’ve taken our money and our jobs. … It’s one of the greatest thefts in the history of the world…’

That’s the way Hitler used to talk about the Jews.

It also is the way Hitler talked about the Russians, the Poles, the Czechs, the English et al.

Donald Trump And Adolf Hitler

In the weeks and months to come, you will read more articles paralleling Trump and Hitler, but more importantly, paralleling the people of Germany and the people of America — the way they willingly followed the Pied Piper of hatred into hell.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
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
Monetary Sovereignty

Monetary Sovereignty

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.

#MONETARYSOVEREIGNTY

–Washington Times gun-nut headline Saturday, Aug 29 2015 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
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 single most important problem in economics is
the Gap between rich and poor.
•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.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

===================================================================================================================================================================================================================================================================================

The Washington Times, being right-wing, feels obligated to make increasingly foolish arguments for arming every man, woman and child in America.

Here is the latest such:

White House concedes new gun laws wouldn’t have stopped Va. gunman

What are we supposed to make of that headline? The White House “conceded” something that is quite true. Any current or proposed gun laws can’t stop an armed, angry fool from shooting people.

The Times headline implies that the White House first argued differently, then “conceded” the obvious. Ah, what a “concession” that was.

What next? How about, “White House concedes National Rifle Association (NRA)is paid by gun manufacturers to convince people to buy guns.”

White House press secretary Josh Earnest said it appears that a proposal championed by President Obama to require background checks on purchases at gun shows “would not have applied in this particular case.”

Law enforcement officials said gunman Vester Flanagan used a Glock handgun in Wednesday’s shooting, one of two that he bought last month. He legally bought two Glock model 19 handguns from a Virginia dealer.

Now, that headline might have read:

“White House concedes that arming everyone would not have prevented Flanagan from killing two innocent people.”
or
“White House concedes that if Flanagan could not obtain a gun he probably would not have killed.”
or
“White House concedes that guns really do kill people, and if you own a gun you have a higher probability of being killed by a gun than if you don’t own a gun.”

But, of course, the first two are obvious, and the third is statistical fact, and all three imply our gun laws are stupid at best and suicidal in effect — and that is something a right-winger has been brainwashed (by the gun manufacturers) to resist.

Gun-nuts are taken with mindless slogans, for instance the NRA’s Wayne LaPierre”s famous: “The only thing that stops a bad guy with a gun, is a good guy with a gun.”

Clearly that slogan isn’t true, because it wouldn’t have helped in the above-mentioned case or in thousands of other shootings in America. So I would like to propose a much truer slogan:

“The only thing that stops a bad guy with a gun is the same bad guy without a gun.”

Now there is a true slogan.

Yes, some might be amazed to learn that, in fact, guns actually do kill people, and the more people who have guns the more people who are killed by guns.

Surely, the White House would “concede” those statements.

(To reduce the carnage, we should pass two simple laws:

A. Any person who commits a felony while carrying a gun, shall be sentenced to a prison term of 20 years to life, in addition to the term for the felony itself.

B. Any provider of a gun that is used in a felony shall have the same criminal and civil liability as the actual perpetrator of the felony.

Those should help until someone comes up with a better idea.)

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
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
Monetary Sovereignty

Monetary Sovereignty

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.

#MONETARYSOVEREIGNTY

–Why the markets went cra-a-a-azy Thursday, Aug 27 2015 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
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 single most important problem in economics is
the Gap between rich and poor.
•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.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

===================================================================================================================================================================================================================================================================================

Sorry for the platitudes, but the markets really did drop like a a stone and rise like a rocket — and many people would like to know why.

Ask any stock broker, any economist or any financial media writer, what the market will do tomorrow (let alone next week or next year) and you will get answers. The problem is: All the answers will be different.

If these people knew, they wouldn’t be stock brokers, economists or financial media writers. They would be sailors — on their own yachts, moored near their own mansions on their private islands.

First, the economies of the world are quite complex — more than complex: Chaotic. Remember the bit about the butterfly flapping its wings in Brazil which causes a hurricane over Florida? That’s chaos theory.

Chaos is a mathematical expression of the fact that in some circumstances, small occurrences can have huge effects on seemingly unrelated events.

The stock market is a classic example of chaos, in that all sorts of events — profits, losses, murders, speeches, sales, weather, diseases, etc. or lack thereof can move, not just individual stockes, but the market as a whole.

Why should your favorite American stock go down because China fails to meet one analysts’s expectations about exports? Probably no simple, straight-line reason. But “A” causes “B,” which in turn causes “C” . . . and by the time you get all the way back to “Z” the effect has become magnified — or disappeared.

(Think of the “Telephone Game,” in which one person whispers a message to another person, who in turn whispers to a third person. And by the time you get to the 20th person, the message has changed in a completely unpredictable way.)

Chaos prevents us from deducing what effect a change in cause “A” will have on “Z.”

But it’s even worse than that.

The prices on the stock market are not based on cause and effect. They are based on predicted causes and their predicted effects. In essence, millions of people are saying, “I predict millions of different “A’s” will happen, and if all those different “A’s” happen, then I predict “B’s” will happen to the stock or the stock market as a whole.”

So, as if chaos were not bad enough, we are faced with chaotic predictions about chaos. (Will that butterfly flap its wings, and if so, how many times, how high, where and when?)

But, it’s even worse than that.

Most stock trading, which affects pricing, is not based on the myriad fundamentals of the world’s economies, but rather on computer-based logarithms, not in any way connected to reality (or the multiple realities in which we live.)

Those computers make millions of trades every second, and not one of those trades can be justified on any rational basis. A stop was hit. An arbitrary support was breached. A trade was executed 1/8th of a second after another trade, and not before.

And then the next computer “seeing” the previous trade, has arbitrarily been programmed to react in certain ways, except under certain sets of circumstances, in which case it will react in different ways — and so the little snowball rolls downhill, picking up a random assortment of stones, twigs, branches trees and other snowballs, then stops — or not.

Even rear vision is not 20/20. Ask those aforementioned stock brokers, economists and financial media writers why the market has moved the way it has, and you will receive explanations that are just as wrong as their predictions.

Consider the weather. It is a chaotic system.

We know the weather can’t be predicted accurately much past three days. We safely can predict that January weather in Chicago will be, on average, cooler than July weather in Chicago — except there actually have been some January days that were warmer than some July days.

But even explaining yesterday’s weather can be a chore. Ask the meteorologist why the high was 72F and the low was 60F and he/she will tell you about high and low pressures, jet streams, wind directions, clouds, solar flares, etc. Then ask him/her why those highs, lows, jet streams, etc. came into being, and he will be flummoxed.

None of the above is to say that all prediction is impossible. Back in 2005, is said in a speech, “Because of the Euro, no euro nation can control its own money supply. The Euro is the worst economic idea since the recession-era, Smoot-Hawley Tariff. The economies of European nations are doomed by the euro.”

I had no idea when or exactly how. And in fact, ten years later not one European nation has been “doomed,” though clearly the eurozone is in deep trouble, and Greece is teetering on the “doom” edge.

And at the bottom of this post you will see “Recession Clocks” which show you that reduced deficit spending leads to recessions and increased deficit spending cures recessions.

But exactly when will the next recession arrive? I don’t know. I suspect it will be around 2020, but that’s just a WAG (Wild Ass Guess), based on the history of a recession every ten years or so. It could come sooner, though probably not later.

Bill Clinton’s surplus caused a recession, and if Barack Obama achieves his surplus, I expect that to cause a recession, too.

I predict there then will be a fight about whether to stimulate the economy with deficit spending (Democrats) or by cutting taxes on the rich (Republicans).

I know the current reductions in deficit spending will lead to a recession, not only because they always have, but because cutting deficit spending reduces money growth, and money growth is part of Gross Domestic Product growth.

And, I knew the euro would be a disaster, because it forced countries to surrender the single most valuable asset they had: Their Monetary Sovereignty. You can’t give up such a valuable asset without suffering economic damage.

So don’t ask your favorite stock broker, economist, financial media writers or me what the market will do next week, next month or next year. We don’t know. The Fed doesn’t know. The politicians don’t know. Nobody knows, not even the TV meteorologist.

Don’t believe anyone who says they know.

Don’t even ask us why the markets went crazy this week. We don’t know that either, though we will be happy to give you many explanations.

You will be far smarter to buy:
1. Heavy clothing for Chicago’s winters.
2. Light clothing for Chicago’s summers.
3. ETF’s that charge low expenses, no commissions and cover the biggest and best growth companies, plus perhaps a bond ETF for a bit of diversity.

(SCHG has been very good to me.)

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
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
Monetary Sovereignty

Monetary Sovereignty

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.

#MONETARYSOVEREIGNTY

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