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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Do you think Barry Ritholtz finally gets it? Remember, this is the same Barry Ritholtz who wrote a scare article titled, “Who Will Buy Treasuries When the Fed Doesn’t” in which he described U.S. Treasuries as a Ponzi Scheme.
And when I wrote that the U.S. is Monetarily Sovereign and doesn’t need to sell Treasuries, nor is it in any danger of defaulting, this is the same Barry Ritholtz who said, “Jeebus, you fucking sovereign guys are such dreadful bores.” (Exact quote) And then he erased all my comments from his blog.
Now, the newly enlightened (?) Barry writes at http://finance.yahoo.com/news/why-sovereign-debt-ratings-may-161948941.html?l=1
The US still controls its own currency and issues debt in that currency. The US government can always fund its spending, regardless of access to external debt markets or tax revenues, so long as it keeps inflation under control and doesn’t push aggregate spending beyond the economy’s capacity.
The euro zone isn’t like that. The governments of France, Italy, Spain, and Germany issue debt in the euro, a currency they do not control.
Exactly correct, Barry. No Ponzi scheme. No concerns about who will buy our debt. Unlike the monetarily non-sovereign euro nations, the Monetarily Sovereign U.S. has only one constraint on its deficit spending: Inflation, not the ability to service its debt.
Since inflation is under control, and will be for the foreseeable future, and our real and immediate problem is lack of money and growth, why have the politicians, the media and Barry been so crazed about reducing the federal debt?
Ignorance and/or servility to the wealthy 1%. Which do you think describes Barry?
I ended the post titled, “The conversation Barry Ritholtz wouldn’t publish” with this line: “I expect that sometime down the road, Monetary Sovereignty will be understood and accepted by the mainstream, and Barry then will tell you he knew it all the time.”
Getting there, Barry. Late to the party, but always welcome.
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. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Ironically his quote is one of the most succinct, comprehensive and understandable definitions of monetary sovereignty I’ve read. It reads like a “unified theory” as it addresses inflation, taxes, spending, borrowing all in one.
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Agreed, and he “knew” it all the time.
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Krugman cannot be far behind.
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Tom,
Maybe Congress and the President next?
No, they’ll be last.
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why is it that people find it so hard to accept these truths when told? do they still believe in the tooth fairy, santa claus, the easter bunny? do they think that there is a dollar fairy, a gold fairy? it boggles the mind. my teenage boys can grasp this information. i think it is made to sound confusing to keep the sheeple in the dark, and it works.
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Good work Roger. Who is next on your list? Timothy Geithner?
Did you give any dunce caps to Barry Ritholz? You have get those back.
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I stopped reading BR ages ago. For someone who pretends he has such an open mind he seemed terribly closed-minded to me and you’re 100% correct. He’ll now claim you misunderstood him and he knew this all along. Incredible!
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Utterly amazing, but it does show that factual information can penetrate even the most hard-headed, fixed idea people. And Ritholtz’s statement is actually very, very good.
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Congratulations Rodger!
Forget it, you won’t get any credit, but it was never about that anyway. Good to see more people get it, thanks to you.
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Wait a second, are you sure RItholtz wrote this? He is only quoted there, and the author seems to be John Carney, a celebrated MMT convert.
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You guys sure know how to destroy my hopes and dreams. Apparently Barry still doesn’t get it. I got so excited I misread the article. Oh, woe.
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WOW,you guys play ruff.
Ok,A Monetary Sovereign Nation can issue an unlimited amount of its own currency.
**********************QUOTE….
Perhaps no words more accurately and succinctly illustrate the confusion about economics than “Monetary Sovereignty.” It is not a theory or a hypothesis or a philosophy. In its essence it merely is a description of the way federal financing actually works.
A Monetarily Sovereign government has the exclusively unlimited power to create its sovereign currency. Monetary Sovereignty is the foundation of economics. The United States is Monetarily Sovereign. It has the exclusively unlimited power to create the dollar. China, Canada, Australia and Japan are Monetarily Sovereign. They have the exclusively unlimited power to create their sovereign currencies.”
OK that is 100% true.BUT hwhat does that have to do with the solution or creation of economic crisis.
Yes there is the power to create or destroy its own currency,but it does not automatically mean that it can create or destroy any economic problem.
It’s like when I answer a question,”what will the future price of (anything) be,in a year or five years.I can give a truthful and EXACT answer It will be….HIGHER,LOWER,or the SAME.
And so it is with “Monetary Sovereignty”
Also I disagree that “so long as it keeps inflation under control”
because that is not a restriction to a system that has no restrictions-limitless issue.Understood that it is an undisirable consequence that I believe is totally controlable.
The flaw with the USA’s Monetary Sovereignty is that it allows a now government agency or person to charge compound interest on that money and to have the power to issue duplicate currency by fraction reserve banking,that with this combination they can and will become the sole possesors of all the currency.
Ben Bernanke is proving your point.In the last few years he printed more than the total deficit and he can print (electronically) more.I pray daily that HE STOPS DOING THE DEVIL’s WORK by giving it to those who would use it for their own gain.IF he were to only betray the 1% and charge interest on that money and use that income (interest) for the people,we woudl be on the road to the real pursuit of happiness.
justaluckyfool@aoldyxt
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It’s called “decaf”, dude…try it.
And while you’re free to drink that cup of coffee, do yourself a favor and read the articles at the left.
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agreed this is very well said and good to see, but this article doesn’t seem to be written by Barry. Are you sure Barry wrote those lines?
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Must be wishful thinking on my part. O.K., I admit it. I misread. Barry Ritholtz still doesn’t get it.
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Rodger, I posted this over at Mike’s and Peter Cooper pointed out int e comments that the article is by MMT-friendly John Carney of CNBC, not Ritholtz, and that the quote is not connected with Ritholtz. I just checked and Ritholtz is quoted in Carney’s article but in a different context. I’m afraid we are celebrating this conversion prematurely.
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One step forward, one step back.
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Hi Tom, it is actually a different Peter who spotted this. I always go by “peterc” or my full name. (There seem to be a lot of Peters in MMT world.) Well done to the real Peter. 🙂
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I think it possible that you may have wrongly attributed the quotation on which this post is based to Barry Ritholtz. The article was written by John Carney, and Ritholtz was directly quoted only once;
“It seems the markets force them to act, that traders are issuing the call long before the analysts at Moody’s or S&P actually downgrade a corporate or sovereign ratings[sic],” Ritholtz writes. There’s also an earlier reference to Ritholtz, again referring to a rating agency.
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Oh darn, does that mean Barry still is clueless?
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I suspect (with actually no basis to do so), that alot of the people at the top actually do “get it”. But what would happen if every American accepted that taxes are not necessary to fund government spending. How long before there would be an outcry to abolish all taxes. I mean look at how much of a furvor now about reducing / limiting taxes at all costs – when the mainstream agrees that they are essential. What would happen if everyone thought they weren’t?
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Ah, the silly “What-if-everybody?” question. Is there anything everybody ever does?
Anyway, your point is, what? Taxes are too low? Just right? Or should I lie like a politician and tell the people taxes really are necessary, when they are not? Is that your suggestion?
If we eliminated all taxes tomorrow (which nowhere have I ever suggested) we would have a crisis. What I do suggest is reducing taxes annually, by increasing the standard deduction $10K per year. Over time, no one will pay taxes, and the nation will grow.
Rodger Malcolm Mitchell
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I didn’t say that you said that all federal taxes should be eliminated tomorrow. But if federal taxes were eliminated eventually (though I think at $10 per year I won’t be around to enjoy it much), wouldn’t that take away a significant check on inflation (for the future)?
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Typo. Should read $10K.
Taxes are a very poor check on inflation. Way too slow. Way to political. Not incremental . Which taxes should be cut and by how much and for how long? By they time taxes actually get cut, the economy would have crashed.
First check on inflation: The one the Fed always uses: Raise interest rates. Quick. Non-political. Can be done in small increments. Easily reversed.
Rodger Malcolm Mitchell
Only if that doesn’t work, cut spending.
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I was so excited to read good ol’ Barry had finally clued in. I guess not.
Silver lining: At least he won’t be claiming to be the smart one in the room as per your prediction.
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If even a quarter (maybe less) of the people understood the monetary functions as they “could be” proposed by MS or MMT or Kucinich’s plan, then we could abolish the only thing that is holding any possible prescriptions back, the usurious central banks. They have a vested interest in keeping the masses in the dark…to maintain control of the sacred privilege of credit creation (out of thin air at 30-1 , and with interest). Until this status quo is challenged all prescriptions are a political impossibility.
The case evidence is too strong to keep denying that the money owners are pulling the strings- not the treasury or the fools in Congress, or the Puppetmaster Prez. The creditor class gets a bailout, the debtors get austerity and a road to permanent debt peonage. How long are we going to keep thinking this is some kind of mistaken policy implementation? This is a direct assault. This needs to become an abolition movement.
(regular Pete, no R, No RC)
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http://charleshughsmith.blogspot.com/2011/12/eu-fiscal-union-eu-debt-serfdom.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+google%2FRzFQ+%28oftwominds%29
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