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.
What’s another name for 261 crazed fools running amok? The House of Representatives
WASHINGTON POST: Posted at 02:17 PM ET, 11/18/2011
Balanced budget amendment falls short in the House
By Felicia Sonmez
The House on Friday fell short of approving a balanced budget amendment to the Constitution, as the Republican majority failed to secure the support of enough Democrats to give the measure the two-thirds necessary for passage.
The measure, which is nearly identical to a balanced budget amendment that passed the House in January 1995, received 261 “yes” votes and 165 “no” votes.
Only 25 Democrats joined most Republicans in voting in favor of the amendment, which would need to secure two-thirds in the Senate as well as be ratified by three-quarters of the states in order to take effect.
By definition, a balanced budget amendment would assure that the U.S. money supply never could grow. So with, for instance, an inflation rate of only 2%, the amount of real (inflation adjusted) money in America would fall about 20% in only 10 years. In 20 years, America’s money supply would be down to 2/3 of what it is today.
Under a balanced budget requirement, what could the U.S. do to fight the inevitable recession? Nothing. America immediately would fall into depression. We would lose our Monetary Sovereignty, the single most valuable asset any nation could have.
Such is the economic ignorance of a House of Representatives that understands nothing of Monetary Sovereignty, so believes federal finances are like kitchen-table, family finances. Yes, families must balance their budgets, but the federal government never should.
Even reduced deficit growth causes recessions, never mind what zero deficit growth would do. (In the graph below, see how recessions begin after periods of reduced deficit growth and end with periods of increased deficit growth.)
The only good news is that 165 Representatives had the good sense to vote against this terrible bill.
I award 261 dunce caps, one for each Representative who voted to cripple America, turning us into a gigantic version of monetarily non-sovereign Greece.
(I now am running a dunce cap deficit of 1344 caps. I understand the House is putting together a balanced dunce cap amendment, which would prevent my creation of any additional dunce caps.)
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