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.
As I’ve been harping on, the debt-hawk effort to reduce the federal deficit has absolutely nothing to do with fiscal prudence, living within our means, not indebting our children, or any other fiscal platitude. It is part of a program designed to increase the gap between the rich and the not-so-rich. Period.
In that vein, here is a survey I received from my Senator, Mark Kirk:
Should Congress cut contributions to the Social Security Trust Fund (replacing these losses with downgraded Treasury debt) in effort to stimulate the economy?
Do not know _____
He accompanies this survey with a letter that reads, in part:
Social Security is not a welfare program. It is a retirement security program funded by contributions from each American worker to support senior citizens who met their Social Security obligations when they were asked to contribute to the system.
Congress is considering both Democratic and Republican proposals to cut contributions to the Social Security Trust Fund (also called the “payroll tax”) to stimulate the economy. The government would attempt to recoup these new losses to the Social Security Trust Fund by borrowing more, using downgraded U.S. government bonds. Democratic Senator Joe Manchin (D-WV) and I agree that we should protect Social Security’s Trust Fund . . .
So far, 83.97% of the respondents answered, “No,” meaning they do not want the FICA tax to be reduced. They want more money taken from their pockets and added to a mythical Trust Fund. You can’t fool all the people, all the time, but apparently you can fool 83.97% of them.
First, there is no trust fund. It is an accounting fiction, debited and credited at will, by the federal government.
Second, FICA doesn’t pay for Social Security any more than you can identify which of your tax dollars pay for any other federal spending. The government spends by crediting bank accounts, without regard to taxes, then debiting the general fund. Payroll taxes are not held separate from income taxes. (Truth be told, no taxes are “held.” They all are destroyed upon receipt. But that’s another story.)
Third, the government, being Monetarily Sovereign, doesn’t need to borrow dollars it has the unlimited ability to create.
Fourth, S&P’s downgrading of U.S. debt is yet another fraudulent act by the company that rated worthless mortgage securities, “AAA.”
Fifth, downgrading U.S. debt has no adverse effect on the U.S. economy. It doesn’t affect interest rates (the Fed controls rates), and even if it increased rates, the effect would be positive. High rates are stimulative, because they add federal dollars to the economy.)
Sixth, the question itself is a dishonest, two-part exercise in obfuscation. Most two-part questions are dishonest. Consider: “Should you send your child to school, thereby intentionally exposing him to the risks of deadly, communicable diseases, serious accidents, rampant crime, relentless bullying and bad teaching?” Yes or no?
Is this an honest question about school attendance? Is the statement that SS Trust Fund losses must be replaced with “downgraded Treasury debt” honest? Of course not.
All of this is part of the attempt to have you willingly flush your money down the toilet, increase the gap, and not blame the Republicans for increasing SS taxes. It is a scam far greater than anything Bernie Madoff ever dreamed of.
Think of the trillions that have been taken from working people under the guise of “insurance.” Even the name “FICA” — Federal Insurance Contributions Act — is a lie. It’s not insurance.
FICA, and indeed the entire tax system, is nothing more than a financial version of the Stockholm Syndrome.
In psychology, Stockholm Syndrome is an apparently paradoxical psychological phenomenon in which hostages express empathy and have positive feelings towards their captors, sometimes to the point of defending them. These feelings are generally considered irrational in light of the danger or risk endured by the victims, who essentially mistake a lack of abuse from their captors for an act of kindness. (Wikipedia)
Do you defend politicians, who vote to tax you a bit less, mistaking the reduced tax abuse for kindness? Do you accept your tax abuse, because you believe the government’s fables about the need for austerity?
If so, welcome to tax mythology, where you, the voter, are a puppet, and the richest 1% pull your strings.
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