Reduced money growth cannot increase economic growth. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
In 2008, when the stock market, and virtually every other market, crashed, President Obama undertook a series of economic stimuli. Though, as I predicted back then, those timid steps were proved to be too little and too late, they did prevent the recession from turning into a depression, and until recently the economy was beginning to creep out of its funk.
Of course, “stimulus” is just another word for deficit spending, i.e. pumping money into an economy that is starved for money. But incredibly, the President of the United States has no idea how the economy works (seems impossible, doesn’t it?), so equally incredibly, he voluntarily surrendered his only tool for saving the economy: Federal deficit spending.
Recently he made a pitiful gesture toward solving the economy’s most financial and emotional problem: Unemployment.
Obama seeks aid to help military veterans get jobs By Julie Pace, The Associated Press, 08/06/2011
WASHINGTON — President Barack Obama on Friday proposed tax credits and training programs to help thousands of U.S. service members returning from wars in Iraq and Afghanistan find jobs in the shaky economy at home.
The president announced his proposals after a report showed the nationwide unemployment rate remained over 9 percent.
He asked Congress to authorize a “Returning Heroes” credit for 2012-13 that would give companies that hire unemployed veterans a tax credit of up to $2,400. It would be $4,800 if the veteran has been unemployed for six months or more. Obama also called for an extension of the “Wounded Warriors” tax credit, which gives companies hiring vets with service-related disabilities a $4,800 credit. If the veteran has been unemployed for six months, it increases to $9,600.
The administration said the tax credits would cost the government about $120 million.
Oh, please. $120 million! Are you serious? The federal government is projected to spend $3,833,861 million this year. That’s 3 trillion, 833 billion, 861 million, and Mr. Obama would like to take that “all the way up” to $3,833,961 million — a pathetic three thousandths of one percent. Wow, talk about a timid step being too little, too late.
And if I know our President, he will try to convince the Tea/Republican party he really isn’t increasing the deficit, because as everyone knows, he already (foolishly) said he wouldn’t.
But wait, toward the bottom of the same article, we find:
Obama challenged Congress to work after its August recess on legislation to extend a tax break on Social Security payroll taxes, to further extend unemployment insurance and to pass a program for “putting construction workers back to work rebuilding America.”
Could this be the FICA holiday (or better yet, elimination) I called for way back in 2009? (“Ten Reasons To Eliminate FICA” ) And wouldn’t this increase the dreaded deficit Mr. Obama swore not to increase?
And what about extending unemployment insurance: doesn’t that also increase the deficit? And more construction work; further increase in the deficit? OMG, has the President belatedly understood this fundamental economic formula:
Federal Deficits – Net Imports = Net Private Saving.
And does he belatedly understand that deficit growth is the only way to get out of a recession and the only way to grow the economy?
One can hope so, but good luck Mr. President. You already have said the deficit is too high. And you must deal with those economically ignorant Tea/Republicans, not to mention your economically ignorant Democrats, all of whom not only agreed with you that the deficit is too high, but that austerity (aka “poverty”) is the way America wishes to live.
So how are you going to get yourself out of this jail you so foolishly built for yourself? How are you going to add money to an economy that is starved for money and headed for depression, without seeming to add money. How about:
“Pay no attention to that man behind the curtain.”
If you pull this one off in time for the election (that’s all that matters, isn’t it?), you indeed will be the wizard behind the curtain.
Rodger Malcolm Mitchell
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. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings