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.
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The Chicago Tribune editors, who refuse to learn economics, but continue to pontificate about economics, did it again. Here are some excerpts from their 9/8/11 editorial titled, “The confidence game.”

What if (President Obama) told the American people that returning to prosperity inevitably will be a long rugged path. That government can’t “fix” the economic malaise by creating jobs.

Actually, returning to prosperity needn’t be a “long rugged path” if the government will forget about cutting the deficit, and focus on stimulation. And the government can “fix’ the economic malaise by creating jobs, simply by buying more goods and services — roads, bridges, education, food and rents for the poor, police, disaster recovery, Social Security, Medicare for all, and the million other beneficial things the government has the power to do. And by eliminating some taxes, (first FICA), and reducing others (first increase the standard income tax deduction).

His signature policy — the $787 billion fiscal stimulus of 2009–failed to deliver the job growth he promised. It plunged the nation deeper into debt.

Yes, the stimulus, being too little, to late, didn’t provide job growth, but it did prevent further job losses. Had it been about five times as large, there would have been job growth. The starving patient needs more than one spoonful of porridge to return to health.

And what the Tribune refuses to learn: Federal debt could be eliminated, tomorrow, simply by crediting the checking accounts of T-security holders, and debiting their T-security accounts — a push of a button.

It will take years to climb out of the hole. If the U.S. government piles on regulation . .

Depends on the regulation. Clearly, better regulation of the financial institutions is needed. I’m surprised the Tribune hasn’t learned that. Well, O.K., I’m not surprised.

. . .Misallocates resources with temporary spending schemes . . .

In Tribune-speak, a “spending scheme” is any spending to stimulate the economy.

. . .and allows a crazy-quilt tax code to go ever-crazier, it will be a longer climb.

I’d agree, except for one detail. Every proposal at “tax simplification,” has been regressive, involving more taxes on the lower classes. Even Obama, the great defender of the poor, talks about “broadening the base,” which is code for sticking it to all those people who have so little income, they currently pay no taxes.

There have been suggestions to institute a value added tax, which would be regressive in that poorer people spend more of their income on goods and services. I discuss various tax schemes at Which Taxes are Fairest

. . . the nation will do better if Obama can inspire the private sector to have more trust that government won’t impose more obstacles.

To accomplish that, Obama must commit to a deliberate course of action that will lower the cost of doing business over time. he must avoid introducing more of the dizzying uncertainties that his presidency to date has delivered en masse. He has to resist “stimulus” ideas that will pile on more federal debt.

Yes, we certainly wouldn’t want stimulus ideas. And of course, the federal debt is so big, the government is unable to pay its bills. Right? All those federal checks bouncing prove the government is “broke” (according to John Boehmer). Where is the Tribune fact-checker when we need her?

In the most certain terms he can muster, he needs to convince the risk-takers, doers and makers of things — the jo-creators — that he has their interests at heart. Let them know that at long last he’s on their side. They need the confidence to take a risk, do something new, make something useful — put someone to work.

What lovely words, so much sound and fury signifying nothing. It’s the apt title of the Tribune editorial, “The confidence game.” The “confidence myth” goes like this: If magically you give business confidence, then they will create jobs and lift the economy by its bootstraps. How to do that never is spelled out, so let me assist:

Business gains confidence and hires people when people begin to buy goods and service. People buy when they have jobs and money. It’s a circle. So unless the government puts money into people’s pockets, by lowering taxes and/or increased spending — i.e. by increasing the deficit — we’ll just play ring around the rosie, and keep sinking.

For this editorial, I award the Chicago Tribune editors three dunce caps.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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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

MONETARY SOVEREIGNTY