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.
Under the “Misery loves company” banner, the euro nations, having indulged in a spate of self-mutilation by adopting the euro, are really, really angry at Britain for remaining whole. Unfortunately, like naive teenagers who mindlessly join their peers in folly, Britain yet may succumb.
New York Times
Britain Suffers as a Bystander to the Euro’s Crisis
By Sarah Lyall and Stephen Castle, December 7, 2011
LONDON — No matter what happens at the European summit meeting on the euro in Brussels that begins Thursday, Britain is sure to lose.
There is looming recognition at 10 Downing Street that if the euro falls, Britain will sink along with everyone else.
Total myth. A Monetarily Sovereign nation never needs to “sink” financially. In the crazily extreme case where every last citizen and every last bank in Britain saw their eurobond holdings drop in value to zero, Britain still could exchange pounds for those worthless bonds, and just keep on sailing.
But if Europe manages to pull itself together by forging closer unity among the 17 countries that use the euro, then Britain faces being ever more marginalized in decisions on the Continent.
Many Europeans have been irritated by British Conservatives’ quiet satisfaction throughout the crisis with the decision not to join the euro (the United Kingdom ostentatiously kept its currency, the pound), particularly when juxtaposed with the panic over Britain’s inability to have any significant impact on Europe’s biggest crisis since the end of the cold war.
Sure they’re irritated. They blindly gave away the single most valuable asset any nation can have – their Monetary Sovereignty – and now they look with envy at a nation that was not so foolish. The euro nations resemble the followers of Harold Camping, that guy who repeatedly predicted the end of the world. These folks gave away all their money and worldly possessions, and undoubtedly are angry at those who weren’t so nuts.
“Germany is the unquestioned leader of Europe,” said Charles Grant, director of the Center for European Reform. “France is definitely subordinate to Germany, and Britain has less influence than at any time I can recall.”
Yes, Germany is the unquestioned leader of the broke, battered and busted. Weep for Britain, which being Monetarily Sovereign, can pay any bill of any size at any time, and does not need to come hat-in-hand to the EU, begging for euros. How sad for Britain.
Despite all that is at stake, Prime Minister David Cameron’s coalition government looks doomed to be cast in the role of impotent bystander, torn between anti-Europe forces and European leaders’ moves toward greater fiscal integration on the Continent — with or without Britain.
Yes, “doomed” to have money, while the euro nations continue to struggle with half-baked solutions to their mounting problems. There are two, and only two, long-term solutions for the euro nations:
1. Return to Monetary Sovereignty by re-adopting their sovereign currencies (just like Britain).
2. The EU to give (not lend) euros to member nations as needed (just like the U.S. can and should do for its states).
There are no other long-term solutions. None.
On Wednesday, Mr. Cameron told a fractious Parliament that his main goal in Brussels was to “seek safeguards for Britain” and “protect our own national interest” by resisting measures like a proposed financial transaction tax. But such Britain-centric rhetoric has annoyed the brokers of Europe’s future, Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France, who are trying to find a way to save the euro while imposing legally binding fiscal discipline on the Continent’s floundering southern economies.
In short, Merkel and Sarkozy scream, “Help, we’re drowning, because we drilled holes in our ship of state and then threw away our life preservers. So Britain, we want you to drill holes in your own boat, and jump in with us losers – or we’ll be angry at you.”
They have not been shy about expressing their frustration. Just six weeks ago, after Mr. Cameron tried to inject himself into talks about the euro, Mr. Sarkozy said bluntly, “You have lost a good opportunity to shut up.” He later added: “We are sick of you criticizing us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings.”
In even shorter, “We screwed up, and now we’re drowning. We can’t swim, things are getting worse by the minute, and we have no idea what to do. But we resent your advice. Glub, glub, glub.”
“Said Alexander Stubb, Finland’s minister for European affairs. “When we look at future E.U. rules, it is the triple-A countries that are running the show.”
Perfect. Monetarily non-sovereign France, which would go broke without EU help, has an AAA rating. The Monetarily Sovereign U.S., which cannot go broke, and needs no help, not only is rated AA by S&P, but has been threatened with further downgrades. That tells you nothing about the U.S., but speaks volumes about S&P (the guys who gave an AAA rating to worthless mortgage securities, and still haven’t admitted to being stupid or crooked.)
France and Germany have already made it abundantly clear that they will go ahead with their plans for the euro zone without regard to the needs or interests of Britain.
The explosive debate in Britain, while never welcome, comes at an unusually inopportune time for Mr. Cameron. The so-called special relationship with the United States is not looking all that special right now, and enormous cuts in defense spending are making it hard for the British military to maintain its status as America’s right hand.
The austerity budget is fraying at the edges, amid strikes and protests over layoffs and rising fees. Growth has been slowing, despite Mr. Cameron’s insistence that businesses would pick up the pace when it became clear that the government’s finances were sound. And now Britain looks to be in an unusually poor position to defend its interests in Europe.
And that is the saddest paragraph of all. Britain is Monetarily Sovereign, but as in the U.S., its leaders have convinced the populace they are monetarily non-sovereign. So, they subject their people to grinding austerity for no reason whatsoever.
Most dangerous to Mr. Cameron was the unwelcome intervention of the mayor of London, Boris Johnson, a potential wild-card rival for the Conservative leadership. Mr. Johnson, who is perhaps Britain’s most popular politician, enjoys injecting himself into questions of foreign policy when the spirit moves him.
If Britain was asked to sign a treaty creating “a very dominant economic government” across Europe, he told BBC radio, then Mr. Cameron should veto it. “And if we felt unable to veto it, I certainly think that it should be put to a referendum,” he said. He added that in rescuing the euro, there was a danger of “saving the cancer, not the patient.”
Exactly correct. There is no benefit for Britain, or any other Monetarily Sovereign nation (the U.S. included), in merging with the deadbeats of the eurozone. They may call Britain bad names, as they “tempt” the British with a nice, fancy suicide belt, but Britain was the smart one.
I pray the citizens of Britain soon understand the massive advantages they have in being Monetarily Sovereign. Too bad the citizens of the U.S. have not yet learned that lesson.
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