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.
. . . in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods. It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation . . .
—Adolf Hitler , Mein Kampf, vol. I, ch. X
Once we believed that in America, hard work and a good plan would allow even the poorest among us to climb the economic ladder. We believed “rags-to-riches” was a natural outgrowth of the American experience. We believed in the American dream.
Now, the rich have used The Big Lie to convince the poor to vote against their own best interests. The so-called “99%” have been sold the idea that a mean, hardscrabble life is a noble life, that pain leads to pleasure and that austerity is the road to prosperity. The wealthy“1%” of America don’t believe these things for themselves, of course. They are exempt from The Big Lie, and the poor don’t object.
The American dream always has been a cooperative enterprise between Americans and the American government, each relying on the other. It begins with the belief that anything is possible, if you truly strive. It continues with the belief you can make a better life for yourself, and an even better life for your children, and they will make a better life for their children.
By necessity, the American dream includes a beneficial government that unlike those heavy-handed European monarchies of yore, encourages and assists entrepreneurial growth by providing financial and social support – a government that looks out for the little guy, a government that “has your back.”
That beneficial government first does what a government is formed to do: It creates money. And it assures that even the poorest among us have access, not only to dollars, but to the benefits dollars can buy – access to education, food, housing, health care, transportation, communication, protection and the law.
On August 15, 1971, the U.S. acquired the most valuable asset any nation can have– more valuable than its land or minerals or its water or crops – and that asset is Monetary Sovereignty, the unlimited ability to control its money supply. No longer would our government’s hands be tied by tax collections. Federal spending only would be limited by inflation, and inflation could be controlled with interest rates. The stage was set for the “99%” to receive the government support the American dream requires.
But though the underlying facts changed in 1971, the teaching of our leaders never did. Americans were told The Big Lie: That despite Monetary Sovereignty, federal finances continue to be like personal finances – limited by income – and that federal income pays for federal spending, and without income there can be no spending. It was as though Monetary Sovereignty never happened.
Even today, the vast majority of economists, and virtually all politicians, media and columnists deny the implications of what happened in 1971. So, we remain blinded to the most important event in U.S. economic history.
Visualize any medical doctor denying the germ theory of disease or any physicist denying the existence of atoms, or any geographer denying the world is round, and you have a parallel with professional economists denying Monetary Sovereignty, so central is this basic truth of economics.
While there always have been worries about federal deficits and debt, and these worries earlier had a basis in fact, the federal government was not greatly hindered. Massive federal deficit spending cured the Great Depression at a time when the U.S. was monetarily non-sovereign. Now, ironically, when there should be no worries at all about deficits and debt, a group called the Tea Party has risen to focus on these meaningless numbers, and by spreading The Big Lie, has turned the entire nation into debt watchers.
And this focus has impacted the poor more than the rich, contributing to the increased financial gap between them, destroying the American dream. The people have been taught federal deficits are “unsustainable,” a “ticking time bomb.” They have been taught federal deficit spending will cause inflation “eventually,” though there is no historical relationship between federal deficits and inflation. They have been taught our children and grandchildren will pay for today’s federal debt, a debt they neither own nor ever will pay.
The people have been taught that sacrifice now will protect our children and grandchildren, though in fact, sacrifice now actually will punish those children and grandchildren.
Cut Social Security? Punish the children and grandchildren of the “99%.”
Cut Medicare? Punish the children and grandchildren of the “99%.”
Cut support for education? Punish the children and grandchildren of the “99%.”
Cut FDA oversight of food and drugs? Punish the children and grandchildren of the “99%.”
Cut oversight of banks and other financial institutions? Punish the children and grandchildren of the “99%.”
Cut support for medical and physical research? Punish the children and grandchildren of the “99%.”
Cut support for education? Punish the children and grandchildren of the “99%.”
Don’t extend unemployment benefits: Punish the children and grandchildren of the “99%.”
All of these facts are obvious to even the most casual observer, yet they disappear in the face of the Big Lie, which is that a Monetarily Sovereign nation somehow can run short of the money it has the unlimited ability to create, and that it must borrow and tax in order to obtain its money, and that like you and me, it can have difficulty paying its debts with its own money, and that federal benefits, particularly benefits to the “99%”, must be reduced.
The Big Lie comes from the “1%” influence on the economists, the media and the politicians, all of whom are financed by the wealthy. It is the “1%’s” method for protecting, and indeed, expanding the gap between rich and poor. That is the motivation, and we have seen the effect, but what is the cure?
Clearly, rational facts do not overcome The Big Lie. Instead, I believe there must be an event or series of events, so horrifying that a desperate public will ignore The Big Lie and seek refuge in a bigger truth.
Today, we are in the early stages of such an event – a terrible recession – and political action to reduce the federal deficit will exacerbate this recession until it turns into a full-blown depression, and the resultant riots and chaos perhaps will be sufficient to turn even the most brainwashed toward the fundamental truths of Monetary Sovereignty.
The wealthy will fight with every resource at their command. They will intimidate the economists and the media and the politicians. They will deny the facts. They will claim patriotism and moral high ground. They will shame and deceive.
And they might win, and if they do, we have seen the end of the American dream.
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