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.
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Here is a hint about how to cure unemployment.
In the following graph, the blue line shows annual percentage changes in the civilian employment / population ratio. The higher the line, the lower is unemployment (allowing for varying definitions of “unemployment.”)
The red line shows annual percentage changes in federal debt, which under current law corresponds to annual percentage changes in the federal deficit.
Notice how movement in the blue line (employment %) generally follows movement in the red line (deficits) by 1 to 3 years. For clarity, let’s examine the results in smaller increments. Take the period, 1975 – 1980:
Deficit growth reaches a peak in 1976, then declines. Employment reaches a peak in 1978, then declines.
Or take the period, 1979 – 1985. Deficit growth peaks in 1981, falls back, then peaks again in 1983. Employment peaks in 1981, falls back, then peaks again in 1984.
In the next graph, deficit growth reaches a trough in 1989; employment reaches a trough in 1991.
In the next graph, deficits peak in 1992 and 2004. Employment peaks in 1994 and 2006. The 2000 deficit trough is followed by the 2002 employment trough.
And now we come to the latest graph. Deficits peak in 2009 and employment — well, we don’t know. What do you think will happen if the Congressional supercommittee succeeds in cutting deficits? (Remember that the U.S. is Monetarily Sovereign, so has zero need to reduce deficits.)
I know. I know. Correlation doesn’t necessarily mean causation. But add the above data to the fact that every depression has been preceded by years of federal surpluses, plus the sheer logic of money supply reductions having an adverse affect on the economy, and I come to one inescapable conclusion: Deficit-cutting by Congress, the President and the “super committee,” will give us a super recession, with massive unemployment.
The American economy needs federal deficit increases, today, tomorrow and far into the future. The American government, being Monetarily Sovereign, can and should provide those deficit increases.
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
#Monetary Sovereignty - Mitchell 
No Good!
The goverment made loans to the auto industry,it saved them and created jobs as well as all those saved.It also returned a profit to the taxpayers.
Justaluckyfool does not wish to predict the future,but I would guess,if it worked before that means it won’t if done again.
Of course if “THE FEDERAL BANK OF AMERICA” were a reality The Federal Bank of America could be lending TRILLIONS to all productive entities at extremely low rates ,with great terms.
PLEASE CHALLENGE: “justaluckyfool-The All Inclusive Solution.The Federal Bank Of America.
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Oophs,that would not be deficit spending.
If $1 trillion were made in loans,there would be $1 trillion in assets.If average at 3% for 24 years,a future value of $2 trillion.Not a bad return for not “breaking a glass” by lending to all.
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The expanded graphs tell a compelling story, that is not so easily visible in the longer-term one, because of the scale.
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Excellent data, Rodger.
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Every economist in the Obama administration should read this post.
Increase the deficit to increase jobs. It’s so simple.
President Obama should propose to grow the size of the military massively. That’s a jobs plan any Republican would usually be inclined to support, were it not Obama’s idea.
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RMM,
If the U.S. government were to continually increase deficit spending to the extent that you suggest it should…
How should we effectively deal with “bubbles” ? Could a housing bubble and collpase still occur in a world of much higher U.S. government deficits? If so, what’s the best way to deal with speculative bubbles so that they don’t wreck the economy?
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Bubbles can’t be prevented by federal policy, fiscal or monetary. Bubbles are not a matter of money supply or demand. Every bubble has different causes and must be dealt with individually.
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Rodger,
1.”Bubbles not a matter of monetary supply or demand”
“Believe nothing merely because you have been told it…
But whatsoever, after due examination and analysis…”(Gautama Siddharta]
**How can you have a bubble without a supply of funding,or a demand (a greater fool)?
2.”Every bubble has different cause and must be dealt with individualy”
**(a) Eliminate the funding supply.All bubbles could be stopped dead in their tracks-(a) cut off their supply of funding by increasing margin in increments of 100%. (ask the Hunt Bros.if that would work?)
(b)Eliminate the demand (profit?,greed?,the next fool)
Isn’t the real problem,the recognition of a “true”real bubble
while it is in the process of forming?
by
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