–More credit agency nuttiness: Ignorance or criminality? Wednesday, Oct 29 2014 

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

Mitchell’s laws:
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:

http://www.cnbc.com/id/102132053

“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
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

–The Merger: How science created religion Monday, Oct 27 2014 

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

Mitchell’s laws:
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.
==================================================================================================================================================================

The Merger: How science created religion

There are times when each of us discusses things we don’t understand. This is one of those times.

Mathematics represents reality, and no one really knows why.

The physical sciences, physics, chemistry, astronomy, biology et al are based on mathematical formulas. Or perhaps “based on” is wrong. “Mirrored by” may be better. The laws of science are mathematical laws.

Science is prediction. Science is the search for cause and effect. If “A” happens, “B” happens, and we have created mathematical formulas for that.

Contrast that with religion. God moves in mysterious ways. We search for the formulas; we wish there were formulas; we believe there must be formulas. We act as though there are formulas. But we find none.

The good are rewarded. Or not. The bad are punished. Or not. Our prayers are answered. Or not. These are our formulas, but they are not reliably predictive. They seem random.

The social sciences, psychology, sociology et al are not as well founded in mathematics, though they try to be. The problem, in part, is complexity. A formula consists of terms and weights.

Two terms, properly weighted, always have the same result. For instance E = mc2, and mc2 always = E.

But what if instead of 2 terms there were trillions of terms, and the weight of each one affected the weights of all the others? And, what if these effects changed depending on myriad unknown outside factors, including both current and historical factors?

And, that is a description the human brain.

And its not just mind-numbing complexity, but rather a more fundamental problem: Free will.

Does free will exist? Are we more than the sum of our atoms and molecules and sensory inputs? Is there something beyond chemistry and quantum mechanics that gives us control, beyond mere cause and effect?

If free will exists, what does that say about the formulas of physics? How are the two compatible, if by our free will we, not mathematics, have the ability to change the course of atoms?

Economics tries to follow mathematics. But how many terms and how many weights will predict the S&P 500, just one year from today, let alone ten years? We’ve not yet discovered that formula. Economics is a social science. Unpredictable.

So strong is our need to apply mathematics to science – so strong is our desire to predict cause and effect and , thus to exert control — we simplify where we should not.

We say, “All things being equal,” which they never are. Investment chartists speak of “resistance levels” and “buy signals.” It is nonsense. There are no such levels or signals. They are prayers. They are religion.

When fact disputes our math, we change the math or we change the facts. We’ll do anything to join fact with mathematics. Anything to predict.

And this all came to mind, when I read a question and answer in the April edition of Discover Magazine:

Question: “How does (Max Tegmark’s discussion) account for radioactive decay or other random events. Are these things not truly random, or is there some mathematical equation for true randomness that we have yet to discover?
Colin Bott, Ann Arbor, MI

Answer:According to the Everett interpretation of quantum mechanics, randomness is an illusion.

There are effectively two universes, one where the atom decays and one where it doesn’t. There’s a copy of you in both univereses, and to both of you it feels random when you observe the atom and thereby find out which universe you’re in.

And so we have a statement from quantum mechanics, perhaps the most sophisticated science man ever has created.

No one truly understands quantum mechanics. It is too distant from our experience. So we invent mathematics to tell us what experience cannot. We believe mathematics mirrors reality.

As humans, we seek control, which requires our knowing cause and effect. In our desperation to find the mathematics of cause and effect, we may turn to the “Everett interpretation”of quantum mechanics.

Consider this: Every trillionth of a trillionth of a second, each one of the estimated 10 to the 78th power atoms (that’s 1 followed by 78 “0s”) in the observable universe does something. It moves; it splits; it gains or loses one or more electrons or neutrons. It changes in various ways.

According to the Everett interpretation, when just one of those atoms changes in just one way, an alternative universe exists: One universe where the atom changed in that certain way, and one universe where it did not.

If two atoms changed, there would be four universes: AA, AB, BA and BB. Now consider the number of universes necessary to accommodate every atom in our universe changing every trillionth of a trillionth of a second, and multiply that times every atom in every succeeding universe changing every trillionth of a trillionth of a second.

Today, you may be reading this article in your office. In another universe you are on the beach. In another, you are in a plane. Another, you are old. Another, you have three eyes. Another, you are a twin. Another, you are a cat in a garden. Endless, infinite variation.

Further, there is not just one version of you being a cat in a garden, but an infinite number of you being a cat in a garden. The Everett interpretation of quantum mechanics implies infinities of infinities.

Anything that possibly can happen has happened, and will happen, an infinite number of times. All that can be, was and is and will be.

And that means, Genesis happened. Adam, the Garden of Eden, Eve, the apple, the serpent. They all happened. An infinite number of times.

In fact, according to the Everett interpretation (and other, similar postulates) the entire bible happened – old and new Testaments, every version – they not only happened, but happened an infinite number of times.

As did the stories of the Koran, the Tipitaka, and indeed, the sacred texts of every religion, they all happened, not once, but infinitely.

Is the “Everett interpretation” reality? Impossible to say. It is one of many ideas, neither proved nor disproved, about a science we don’t understand.

All we can say is, it does rely on mathematics, and mathematics is thought to be the basis or mirror of all reality – depending on which mathematics, of course.

But if science and mathematics do prove that everything that can be, is, was and will be, then science and mathematics will have proved all the stories of all the religions. They all are true, somewhere.

Somewhere the good are rewarded. Somewhere the bad are punished. Somewhere our prayers are answered. Always.

Science will have proved religion. And that is the ultimate merger.

(In some universes, even resistance levels and buy signals actually might work.)

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

–The EU: World’s most evil parent starves her children Thursday, Oct 23 2014 

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

Mitchell’s laws:
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.

The wealthy mother shows a benevolent face to the public, while secretly starving her children.

She herself is well-fed, but she doles out minimal sustenance to her children, so that all slowly waste away, dying a bit each day. If any one child manages to starve a bit less than the others, that child is required to give part of its meager ration back to mother, who will mete it out to the sickest.

In this way, no child will dies and none ever will achieve health, for even the slightest departure from slow starvation will be punished.

That is the EU.

EU tells Britain to pay extra €2.1bn

Britain has been told to pay an extra €2.1bn to the EU budget within weeks on account of its relative prosperity. To compensate for its economy performing better than other EU countries since 1995, the UK will have to make a top-up payment on December 1 representing almost a fifth of the country’s net contribution last year.

The EU itself, that governing body, is Monetarily Sovereign. It is sovereign over the euro. It has the unlimited ability to create euros, never can run short of euros, never can be starved of euros.

By contrast, all euro nations, being monetarily non-sovereign are, as predicted, doing poorly.

The UK, which though a member of the EU, wisely retained its Monetary Sovereignty (though it often acts as though it had not). It survives somewhat better than its euro nation cousins, because it never can run short of pounds.

This infuriates the EU, which being owned by the upper .1% income/wealth/power leaders, wants all nations to starve equally.

(The goal, the only goal, the eternal goal of the rich is to widen the Gap between the rich and the rest.)

A Downing Street source said: “It’s not acceptable to just change the fees for previous years and demand them back at a moment’s notice.”

The source added: “The European Commission was not expecting this money and does not need this money and we will work with other countries similarly affected to do all we can to challenge this.”

The surcharge comes on top of the net UK contribution to the EU budget, which was £8.6bn in 2013.

Don’t be fooled. The British outrage is a charade, and the so-called “Downing Street source” is in on it.

Yes, the whole notion of the UK being punished for being less unsuccessful than the rest of the EU, is so laughable as to make one cry. And the joke continues with the fact that the EU, being Monetarily Sovereign, has no need for financial help, but demands it.

And the real joke is that the UK easily could afford to give the EU €2.1bn or €21bn or €2,100bn, without pain.

So what is going on here?

Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest.

We begin with the ultra rich, the .01% income group that controls the EU. It is the Gap that makes them rich, and the wider the Gap, the richer the are.

So they concoct a scheme in which they control the money supplies of all member nations, so that in the unlikely event any nation shows even subtle signs of success, that nation eventually will be punished for such audacity.

And of course, it isn’t the nations that are punished; it’s the people, the 99.9%. Nations don’t starve, go homeless or go without proper clothing. People do.

And it serves no purpose for the 99.9% to die. That doesn’t increase the Gap. No, the people must live scant, miserable, cringing lives, so that the rich can look down at them. That is the purpose of the Gap.

When necessary, the EU will dole out just enough hope, to make the people continue crawling, but not enough to allow them to walk.

Remember 2011?

Spanish and Italian Bond Yields Drop on E.C.B. Buying
By RAPHAEL MINDER
Published: August 9, 2011

MADRID — Spanish and Italian government bond prices rose and their yields fell Tuesday for a third consecutive session after the European Central Bank stepped in to purchase their sovereign debt, part of efforts to prevent the euro zone debt crisis from deepening in two of the largest economies that share the currency.

And 2012?

ECB introduces unlimited bond-buying in boldest attempt yet to end euro crisis
The Guardian, Thursday 6 September 2012

The European Central Bank (ECB) unveiled its boldest attempt yet to stabilise the battered single currency on Thursday when its president, Mario Draghi, announced a new programme of open-ended, unlimited buying of distressed government bonds.

The scheme is aimed at depressing the costs of borrowing for Spain and Italy and countering the risks of a fragmentation of the eurozone and the unravelling of the single currency.

Now, it’s 2014:

ECB Said to Buy Italian Bonds in Second Day of Purchases
By Alastair Marsh Oct 21, 2014

The ECB bought short-dated French notes from Societe Generale SA and BNP Paribas SA as well as Spanish securities from other lenders yesterday.

The ECB entered the 2.6 trillion-euro ($3.3 trillion) covered bond market after President Mario Draghi unveiled plans last month to bolster companies’ and households’ access to financing. Draghi, who also included asset-backed securities in the program, intends to expand the bank’s balance sheet by as much as 1 trillion euros to stave off deflation in the euro area.

“Covered bond purchases are a good means to apply quantitative easing in Europe and to increase the balance sheet of the ECB,” said Richard Schmidt, who helps oversee 220 billion euros of assets, including 55 billion euros of covered bonds, as a senior money manager at MEAG Munich Ergo Asset Management GmbH.

The beat goes on. Each year or so, the EU doles out crumbs of hope to the citizenry, so they will accept their poverty in return for a vague promise of future survival.

And the sad part of all this (aside from the fact that an asset management company, which looks to reap a fortune in trading fees, is all for it): Lending money to people who can’t pay back doesn’t improve their lives. It merely enslaves them.

Think of the loan shark, who keeps urging his victim to borrow more and more, with which to pay back previous loans.

The rich reap; the children suffer; and the cruelty of the rich does not end.

The EU.

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

–Really, really increase federal taxes on the rich Wednesday, Oct 22 2014 

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

Mitchell’s laws:
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.
==================================================================================================================================================================

Two facts:

Fact 1: Federal taxes do not support federal spending. If all federal taxes fell to $0 or rose to $999 trillion, neither event would affect the federal government’s ability to pay its bills, not even by a penny.

Fact 2: Federal taxes remove dollars from the economy, thereby depressing the economy.

So why do we say, “Really, really increase taxes on the rich”
And what do we mean by “really, really”?
And who are the rich?

In May of this year, we published TROPHIC CASCADE: How Yellowstone National Park opened my mind, which drew a parallel between the top predators in Yellowstone Park and the U.S. government, the “top predator” in U.S. economics.

You should read the article to see the reasoning.

One of the four recommendations made in this article was:

Progressively higher federal income taxes on high incomes, while eliminating federal taxes on lower incomes.

Step 7, in the “Nine Steps to Prosperity” reads, “Increase the standard income tax deduction annually.

Additionally, the progressive income tax top rate should rise again. We might consider something along the lines of 1964 tax rates, where the highest income bracket was about $3 million and taxed at 77%.

Further, all income – salaries, capital gains, gifts, inheritances, etc., should be taxed at the same rate.

Ultimately, those earning up to $500K annually would pay no federal taxes, and those above that level would pay 60%+, adjusted for inflation.

Which brings us to this article in the Huff Post:

Economists Say We Should Tax The Rich At 90 Percent
Benjamin Walsh; Posted: 10/22/2014

All Americans would be better off if top tax rates went back to Eisenhower-era levels when the top federal income tax rate was 91 percent, according to a new working paper by Fabian Kindermann from the University of Bonn and Dirk Krueger from the University of Pennsylvania.

Here is the conclusion from the report, charted:

monetary sovereignty

Kindermann and Krueger say that a top marginal tax rate in the range of 90 percent would decrease both income and wealth inequality, bring in more money for the government and increase everyone’s well-being.

While “bringing in more money for the government” is bad economics (a Monetarily Sovereign government doesn’t need or use tax dollars), “decreasing income and wealth inequality” is great economics for many reasons, both moral and fiscal.

It is rational to accept high income tax rates on top earners and low rates for the rest as a form of insurance.

This insurance takes the form of low-income people paying dramatically less in taxes. “Everyone who is below four times median income” — that’s about $210,000 for households — “pays less,” Kruger said.

Again, the economics is a bit squirrely, because raising or lowering top rates has nothing to do with bottom rates. Apparently the authors falsely believe the federal government needs tax dollars.

However, their conclusion is sound. The top rates should be raised significantly and the bottom rates lowered to zero.

In the Ten Steps to Prosperity, Step 7. says, “Increase the standard income tax deduction annually,” and Step 8. says, “Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income.”

The paper assumes that tax rates won’t stop a future Bill Gates from wanting to start Microsoft.

Agreed. Few of us begin a business with the plan to become one of the wealthiest people on earth.

Instead we hope to create a successful company and make a great living, and if we are very, very lucky, circumstance then takes over, and our successful company becomes wildly successful.

A marginal tax rate of 95% on the top .1% earners, would discourage precisely zero people from working.

Sadly, since the very rich have increased their control over Congress, the President and even the Supreme Court, the likelihood of this ever happening is quite low.

Yet, if presented to voters as a package — lower rates for the lower 99%; higher rates for the upper 1% — it probably would pass.

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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