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.
Those who understand Monetary Sovereignty continually wonder why the facts don’t seem to penetrate. The concept is so simple and straightforward, yet not one person in a thousand is willing to examine those facts, much less understand them or agree with their implications. Why?
I can remember an incident from the time I was five years old, and memory being what it is, I probably remember it wrong. The memory is of a family picnic. My uncle had built a bonfire, and my parents, uncles and aunts threw branches and leaves into it, which made the fire flare up in a big roar.
We kids loved it, but were not allowed to throw things into the fire, because it was considered dangerous. I recall whining about this, so after a time, my father said, “O.K., you can throw sand into the fire.” Thrilled, I picked up a handful of sand and threw it in, but the fire didn’t grow. So I threw another handful and another, but instead of flaring up, the fire grew smaller.
Finally, much to my dismay, the fire went out, and all the fun went out with it. I thought I was building the fire, but I was putting it out. And on the drive home, when I realized what I had done, I felt so sad. I fundamentally misunderstood the difference between wood and sand. That’s what I remember. That feeling of sadness and betrayal and ignorance.
And now I look at the American people, exactly 99% of whom are “99%ers,” demanding that federal spending be reduced, and taxes be increased – that Social Security be cut to save it, and Medicare and Medicaid and the military – in effect, throwing sand on the economic fire, and I empathize in advance, the sad, betrayed feeling they will have, and the feeling of ignorance.
So a fundamental misunderstanding about the nature of things may be part of it.
“Forgive them father, for they know not what they do.” I forgive them, but will they forgive themselves, when or if the realization sets in?
Then there are those of you who are parents; you know the drill. Something happens when your child becomes a teen: Based on your experience, you tell your teenage child to do something or not to do something, and what is the reaction? Anger at your interference? Disgust at your foolishness?
No matter that you have clear facts on your side. The teen brain doesn’t want to hear facts; he (or she) wants to hear what his contemporaries say. He wants to follow in the herd. He doesn’t want to think; he wants to feel. There is safety in the group.
And now I look at the American people. The facts of Monetary Sovereignty are irrefutable, but the people don’t want to hear facts. Their reaction to those facts is anger at this interference in their preconceived notions, disgust at the foolishness of those trying to explain the facts. The people not only want to follow the herd, they want to follow in the middle of the herd. They don’t want to think; they want to feel – safe.
Perhaps the teen brain has an evolutionary benefit, allowing humans to ignore facts in favor of group adhesion. And all of us retain vestiges of this teen-brain, even into our dotage. Our teen brain cheers passionately for our favorite sports team, when our logical brain tells us that team’s success will have zero practical benefit for us.
So teen brain may be part of it.
And then there is the “too-good-to-be-true” syndrome. Bad experience has taught us cynicism is wiser than optimism. The hard way seems more noble than the easy way. Politicians boast about their humble beginnings, as though climbing the ladder from the very bottom is superior to climbing it from the middle. And working for something is superior to having it given to you. And “if it seems to good to be true, it probably is.”
Monetary Sovereignty seems too good to be true. The federal government can pay any debt. In fact, it creates more money simply by paying its debts. Taxes are unnecessary. Borrowing is unnecessary. Bankruptcy is impossible. And all the while, inflation can be prevented. We can have Medicare for everyone. Education for everyone. A much richer Social Security. An end to poverty. We can have it all.
This cannot be. Our world is turned upside down. All we have been taught and all we believe is wrong. This is too good to be true; it cannot be true. It is Pollyanna.
So cynicism may be part of it.
In answer to the question, why don’t the facts penetrate — why don’t we get it — part may be that fundamental misunderstanding about the difference between people’s finances and the federal government’s finances. Part may be the teen brain. And part may be cynicism.
Put them all together and they spell “austerity,” for us, for our children and for our grandchildren. This will be our legacy. This is how we will be remembered.
Or maybe there’s something else. Searching. Searching.
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