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.
One of my Senators, Dick Durbin, sent me a letter filled with economic ignorance, but the whole problem is expressed in one sentence.
Here is the letter. See if you can find the key sentence:
Dear Mr. Mitchell:
Thank you for contacting me about negotiations to raise our debt limit and to put us on a sustainable fiscal path. These are issues of utmost importance, and I appreciate hearing from you.
On August 2, 2011, I voted for and the Senate passed the Budget Control Act (S. 365). The President signed the bill into law later that day. S. 365 prevents a default on our nation’s debt and gives our economy the certainty it needs as it continues to recover from a historic recession. This deal is not perfect, nor is it the deal many of us would have made ourselves, but in the end and after weeks of partisan differences, both sides have come together and compromised to avoid an economic catastrophe. This agreement will begin the process of reducing our deficits and ensuring our long term recovery. Over the next weeks and months, we must do all that we can to make certain that a balanced and fair process that protects the most vulnerable in our society follows this first step.
We know how our enormous deficits began. In 2000, we had the largest budget surplus in history: $236 billion. The nonpartisan Congressional Budget Office was projecting surpluses of $5 trillion from 2001 through 2010. President Bush rejected President Clinton’s policies and set us on a new path paved with large deficits financed by foreign debt. Two huge tax cuts, two wars, and the Medicare prescription drug program – none of which was paid for – produced an enormous fiscal hole. This was compounded by the economic mismanagement in the financial sector which caused the recession.
To address this issue, President Obama created the Bipartisan Fiscal Commission, on which I was honored to serve. I spent much of that time listening to experts explain the risk that our growing debt poses to our national well-being. The results are alarming. The debt now exceeds $14 trillion and will explode to even more unsustainable levels in the future unless we act to reduce it now. If we do nothing to tackle our debt obligation, interest payments alone could exceed $1 trillion dollars in 2020.
In recent months, I have worked with a bipartisan group of my colleagues to craft a balanced plan for controlling our federal deficits. Throughout my service in Congress, I have supported a range of proposals to cut spending. Just as American families have had to cut back on spending, Congress, too, must make tough choices. There are only two honest ways to reduce our debt: cut spending and raise revenues. I am committed to pursuing proposals that do both. This is going to require sacrifice from both sides of the aisle. The debt is not a partisan problem, it is an American problem. The Budget Control Act will decrease our deficit by over $2 trillion in the next decade. It is a first step, not the final one.
I will continue to work to find commonsense solutions to rein in our ballooning debt without risking the economic recovery or breaking promises to senior citizens, working families, and future generations.
Thank you again for taking the time to contact me. I will keep your comments in mind as this debate continues.
Richard J. Durbin
United States Senator
In my opinion, the key statement of economic ignorance is this: “Just as American families have had to cut back on spending, Congress, too, must make tough choices.“ He does not understand the difference between Monetarily Sovereign federal financing and personal, kitchen-table financing.
For over forty years, the U.S. has been Monetarily Sovereign, and Congress still doesn’t understand it.
Just one little clown — the 1353rd –for Senator Durbin. He already has one from a previous post, so while pile them on.
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. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports