Mitchell’s laws: To survive, a monetarily non-sovereign government must have a positive balance of payments. Economic austerity causes civil disorder. 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.
The long-standing, though currently Tea/Republican inspired, desire to reduce federal spending and deficits, is based on the erroneous beliefs that:
1. Federal taxes pay for federal spending so that by cutting spending, we can cut taxes. Fact: This was true before 1971, when we were on a gold standard. Today, there is no financial relationship between federal taxes and spending. Were taxes to fall to $0 or rise to $100 trillion, our Monetarily Sovereign federal government could pay any bill of any size.
2. Big government burdens our individual freedoms. Fact: A big nation needs a big government to provide the myriad benefits its big and diverse population desires. Federal laws can be burdensome, but federal spending is not. It is a gift of a Monetarily Sovereign government, the most brilliant form of government financing ever created.
That said, there is something insidious, essentially invisible, that happens when federal spending is reduced. The absence of benefits sneaks up on us, like the butterfly killer that leaves no clue, until one day there are no butterflies. You never will know how your life and America’s future will be affected by:
1. Reduced federal support for education. What child genius will not grow to invent the cancer cure or the unlimited, pollution-free fuel or the food that does not require farming? How many great scientists and artists and builders will not be created? You never will know.
2. Reduced federal support for health services. How many future leaders will not live to fulfill their potential? How much suffering will result? Which of your own relatives will die prematurely or live nonproductive lives? What preventable “black death” next will scourge the human race? You never will know.
3. Reduced police/military support. How many soldiers will die from inadequate equipment? How many civilians will be murdered for the lack of a cop-on-the-beat? How many investors will be cheated because federal agencies did not have the funds for proper supervision? You never will know.
4. Reduced aid to the poor. How many children will poverty turn to crime? How many great minds will be dulled by starvation before making their contribution to America and the world? How much of America’s potential will be lost to homelessness or to the struggle for bare existence? You never will know.
The list goes on and on: The lame who might have walked. The blind who might have seen. The children who might have given to America. The tornados and hurricanes and earthquakes that might have been foreseen. The money that investors might have saved. The inventions never invented. The recessions and depressions that might have been avoided. The wars that might have been won or prevented. The life-saving drugs that might have been developed. The people who might not have died too soon. The beauty never created. The ideas lost. The better world that might have been. You never will know.
And we trade all this potential for the reality of a meaner, uglier, less elegant life, especially for the lower classes, who will be affected most by deficit reduction, though we all will be affected. What a waste, given the tools we’ve been given, that we intentionally should deprive ourselves and our children and our grandchildren of the benefits a society can offer, and instead retreat toward the days of hardscrabble anarchy.
What have we lost? What will we lose tomorrow? You never will know.
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