Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
The news about Greece grows louder.
In giving up the drachma, and taking on the euro, Greece voluntarily surrendered the single most valuable asset any nation can have: Its Monetary Sovereignty.
Greece now is monetarily non-sovereign. There is an absolute rule in economics: No monetarily non-sovereign government can survive long term without money coming in from outside its borders. Germany, another nation that gave up its most valuable asset, the mark, and also is monetarily non-sovereign, survives on exports. Nevada survives mostly on tourism (aka gambling). No monetarily non-sovereign can survive long-term on internal taxes or borrowing.
By contrast, Monetarily Sovereign nations do not need money coming in from outside their borders, because they create unlimited money simply by paying bills.
For Greece and the other euro nations, long term survival requires one of two, and only two, events:
1. Adopt some form of a sovereign currency, and become Monetarily Sovereign
2. The EU give (not lend) euros to its member nations as needed.
There are no other solutions. None. All the running in circles by the European financial geniuses will be to no avail. Each day they come up with some new lending plan, and the next day abandon it in favor of some other lending plan.
But none of these plans has any long-term benefit. The euro nations are like rats in a cage, scurrying in all directions, with no hope of freedom. But still they scurry, at top speed.
If you read about any plan that does not include #1 or #2 above, know that it will fail. Those who do not understand Monetary Sovereignty do not understand economics (and that goes for the U.S. politicians, media and old-line economists, who still believe the pre-1971, anti-debt economics.)
I have been awarding one to five dunce caps for economic ignorance, but now the ignorance has grown so pervasive, with the euro nation leaders and our own Tea/Republican, Democrats, and the media and the columnists and the old-line economists –none of whom understand that what happened in August 1971 completely changed economics — I feel even five dunce caps does not do justice to the universal economic ignorance.
So today, I award 1000 dunce caps to all the self-styled experts, who blather on and on, spouting intuitive economics, but know nothing of the facts Monetary Sovereignty exposes.
There is a second reason I award 1000 dunce caps: To demonstrate what sovereignty can do. I can create all I wish. I never will run short. I cannot be forced into dunce cap bankruptcy. I don’t have to “live within my means.” I don’t need a balanced budget. I don’t need to tax or borrow dunce caps. I don’t need to be dunce cap prudent. I am dunce cap sovereign.
In that sense I am identical with the United States government which is dollar sovereign. It too can create all the dollars it wishes, never will run short, cannot be forced into bankruptcy, doesn’t have to “live within its means,” doesn’t need a balanced budget, doesn’t need to tax or borrow and doesn’t need to be dollar prudent.
I now have awarded 1065 dunce caps. Because I levy zero dunce cap taxes, I have run a total deficit of 1065 dunce caps. If there were a dunce cap clock, it would read “1065 caps.” My children and grandchildren will not have to “pay for” my dunce cap deficit.
Attention American debt-hawks and euro nations: Is there any way I could draw a clearer picture for you? Now wake up. Your stubborn ignorance is killing your countries.
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