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 following article refers to yet another in a long, long list of economic misconceptions by the media, the old-line economists, the politicians and the public.
Treasury raises $12.2 million from sales of warrants in 17 banks that got bailout support
By Martin Crutsinger, AP Economics Writer | AP – Fri, Nov 18, 2011 10:07 AM EST
WASHINGTON (AP) — The Treasury Department has raised $12.2 million from the sale of warrants of 17 banks that received government support during the financial crisis. The sales are part of the government’s efforts to recoup the costs of the $700 billion financial bailout.
The 17 banks received approximately $1 billion in support from the Troubled Asset Relief Program in 2008 and 2009. All 17 have repaid the money and the warrants represent their last link to the TARP program.
Banks, other financial firms and U.S. carmakers received $413.4 billion from the taxpayer-funded bailout. So far, the government has recovered $317.6 billion. Of that amount, $9.1 billion has come through the sale of warrants.
For the abovementioned media, old-line economists, politicians and the public, this seems like great news. The U.S. government lent money and now it’s getting the money back. What could be better?
Just one little problem. How would you feel if the headline were, “Treasury increases taxes by $12.2 million”? Or, “Government wants to increase taxes by $700 billion”?
Money deducted from the private sector and credited to the federal government is identical with a federal tax. And like all federal taxes, this backward flow reduces the economy’s money supply and is anti-stimulative. It negatively impacts unemployment and slows the economy. Always.
And why does the Treasury need the dollars? It doesn’t. It has the unlimited ability to pay its bills. It can create as many dollars as it wishes. It does so by instructing banks to credit the accounts of depositors, which it can do endlessly. Send the government a legitimate invoice for $900 trillion, and it could pay you today, simply by instructing your bank to mark up your checking account by $900 trillion.
Yes, such a large payment could have other economic implications. But, from the government’s standpoint, paying the bill, or paying a bill a hundred times that large, would be no problem at all.
For you and me, dollars are precious and scarce. We work our whole lives to obtain dollars, the lack of which causes us personal misery. For our Monetarily Sovereign federal government, dollars are just numbers in balance sheets — numbers that can be changed at will.
Any time you read or hear about money deducted from the private sector and credited to the federal government, for any purpose, understand that the economy is being weakened.
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