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.
Living creatures continually are faced with survival decisions based on the “greater threat.” African animals often are at their most vulnerable to attack by lions or crocodiles, when bending over a river to get a drink. But they do it because the greater survival threat is dehydration, so they choose the immediately, lesser threat.
Consider cancer, for which there are four common treatments: Surgery, radiation, chemotherapy and do nothing. From the time of birth, we all have cancer cells in our body, but we do nothing because the body’s existing immunity system captures and kills those cells.
If the cancer eludes our natural immunity, “do nothing” may not be our option of choice – it may be a greater threat — and we may elect more aggressive treatments, all of which have risks. We then may decide that, for instance, cancer is a greater threat than surgery, radiation or chemo.
Every law passed by every government poses one or more threats. At the very least, every law threatens your freedom, as it requires you to do something you might not wish to do. But you obey the law because disobedience is a greater threat. There are laws against driving faster than certain speeds. You obey those laws because either danger, or more often, being arrested, pose a greater threat than does the loss of your freedom to drive fast.
A threat may be considered “greater,” because of its immediacy, its severity or its likelihood. People smoke cigarettes, because though the threat of early death is severe, smokers don’t perceive it to be immediate or even likely.
Our ability to assess immediacy, severity and likelihood often is flawed. People, who are afraid of airplanes, willingly drive cars. Though statistically, the threat of death is greater when driving a car, it is perceived to be less likely or immediate than it really is.
All of the above is a prelude to the following brief discussions:
Which is the greater threat today: Recession or inflation?
Inflation occurs when there is a shortage of certain (or all) goods and services, compared with the amount of money available to buy them. In modern America, the shortage of goods and services actually has narrowed to a shortage of oil, the price of which affects the prices of all other goods and services.
Inflation is a measure of supply and demand, or more accurately, a comparision between the supply and demand for goods and services versus the supply and demand for money. This leaves us with four methods for preventing/curing inflation:
1. Increase the supply of goods and services.
2. Decrease the demand for goods and services.
3. Decrease the supply of money.
4. Increase the demand for money.
Every effort to fight inflation involves one or more of the above four methods.
Recession, a general slowing of business activity, has many specific causes, but all relate to insufficient consumer spending. For a very short period, the insufficiency of available products can cause recession. But, particularly in today’s world economy, product shortages generally are short-lived. Because the total of human desires never is satisfied, insufficient consumer spending generally results from insufficient available spending money.
The federal government affects the money supply by spending and taxing. Spending adds money to the economy and taxing removes money. When government spending exceeds government taxing, that is called “deficit spending.”
Fighting recession requires an increase in net consumer spending, and with the federal government being the single largest consumer, the prevention/cure for recession requires increased federal deficit spending.
All of the above brings us to the original question: Which is the greater threat today, recession or inflation? To assess “greater,” look at immediacy, severity and likelihood.
Immediacy: Most economists acknowledge that we are very close to another recession, or even in a continuation of the past recession, while inflation has, for many years, been well controlled by the Fed. (“Well controlled” meaning close the Fed’s desired range of 2% – 3%.) Recession is far more immediate than inflation.
Severity: One can debate whether the ultimate of a recession (depression) is worse than the ultimate of an inflation (hyper-inflation). Depending on specific circumstance, they both are devastating and can be considered equally severe.
Likelihood: The U.S. never has had a hyper-inflation and has had at least six depressions, perhaps more, depending on definition. The likelihood of depression is greater than of hyper-inflation.
All things considered – immediacy, severity and likelihood – recession is a greater threat than inflation. Unfortunately, our federal government’s restrictions on deficit spending, work against low-threat inflation, while exacerbating high-threat recession. Like the driver who is afraid to fly, our government’s assessment of inflation’s threat versus recession’s threat is flawed. And this will take us into more and more “car crashes” — more and more severe recessions.
Which is the greater threat today: Domestic terrorism or loss of freedom?
Compared to America’s population, our losses to domestic terrorism have been minuscule. Add all the deaths caused by the 1995 Oklahoma City bombing plus all the losses, twelve years later, from the 9/11/11 flights, and you get the approximate number of people killed in auto accidents, every two months, year after year after year in America. (http://www.census.gov/compendia/statab/2012/tables/12s1103.pdf)
And this remarkably low terrorism figure was achieved with the level of government control that existed during the times of Al Qaeda’s greatest power. Now that Osama bin Laden and a great many other Al Qaeda leaders have been killed, the risks of domestic terrorism have declined to the point where you have about the same chance of being killed by a cow as by a terrorist. http://tierneylab.blogs.nytimes.com/2009/07/31/dangerous-cows/
Yet illogically, the laws against terrorism keep getting stronger and stronger. And as with all laws, increasing the strength of laws reduces our freedoms. The most recent NDAA bill represents another step toward restricting our freedoms versus fighting domestic terrorism.
The Tea Party Patriots is a group devoted to “constitutionally limited government.” Why limited? Because they rightly believe government over-regulation is oppressive. Yet illogically, the same people most enamored with Tea Party principles, support the federal government’s over-regulation in fighting the so-called “war on terrorism.”
Realistically, the United States is too powerful to be defeated in war. No country can invade us, take over our government and rule us by force. There is only one way we, as a people, can lose our freedom, and that is if our own government takes it from us.
Look around the world, and everywhere you find freedom crushed, you’ll see it crushed from within – by the nation’s own military, its own police, its own government. Excessive government regulation against perceived, domestic terrorism is the greatest threat to America, and to our freedom.
All things considered – immediacy, severity and likelihood – loss of freedom is a greater threat than domestic terrorism. Unfortunately, our federal government’s more recent legislation restricts the freedom of every American, while doing little against the comparatively low threat to each American, of domestic terrorism.
Again, like the driver who is afraid to fly, our government’s assessment of domestic terrorism’s threat to each American versus that American’s loss of freedom, is flawed. And, as each law binds us, like one more rope around our wrists, our future is to awaken one day to find we have lost everything.
Whenever any government, local or national, considers a law, the question must always be asked, “Which is the greater threat, the problem this law addresses or the dangers inherent in the law itself?
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