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.
When the Republican Party sold its soul to the Tea Party, the devil was bound to show up and demand his due. And here he is. The Tea Party, that anti-government, anti-spending, anti-people group promised an election victory, and the Republicans, abandoning all sense of morality, compromise and history, leaped at it.
What the Tea Party didn’t mention is that reduced deficit spending invariably leads to recessions and depressions and great human hardship, and while you can fool the voters for a while, you can’t fool them long enough to make a lasting election impact.
So now we have the formerly pro-business party, a party I formerly supported, because it was pro-GDP growth, facing the devil of reality. Cut federal deficit spending and not only do you destroy the economy in general, but you destroy many specifics like employment, Medicare, Medicaid, Social Security, roads, bridges, the military, support for the poor and the million other things deficit spending brings to voters.
Just one tiny example:
Chicago Tribune; 12/21/11;
Young women’s use of reproductive health care down
Fewer U.S. women 15 to 24 are receiving reproductive health care . . . This includes services such as Pap tests, pregnancy tests, contraception prescriptions, test for sexually transmitted disease and other gynecological and obstetric care. . . Several factors may be contributing including the decline in public sector clinics serving the poor, increasing unemployment and the corresponding lack of health insurance . . .
And then there’s
The Washington Post
Should the doc fix get fixed?
Posted by Sarah Kliff at 11:12 AM ET, 12/20/2011
(Kelley McCall – AP) It’s become a tenet of conventional wisdom for Republicans and Democrats alike: The government will not cut Medicare doctors’ salaries. For 15 years now, the formula used to determine how much doctors get paid has not kept up with growth in health-care costs. So Congress reliably passes a “doc fix” and appropriates additional funds to cover the shortfall, sometimes giving providers a slight raise.
Imagine any sane people engaging in such a charade? The formula is bad, so rather than correcting the formula, Congress repeatedly patches a “fix.” This allows the people in Congress to waste time and effort, year-in and year-out fighting about the same issue, using the same arguments.
One can argue about doctor compensation, but it would be difficult to argue that reducing doctor compensation somehow will increase the quantity or quality of doctors, or any other aspect of health care.
What is the basis for the argument and why is it in question now? The basis is federal deficit spending and the reason it suddenly is a problem: The Tea Party’s hold on the Republican Party.
And as part of the above:
Washington Post; 12/21/11
Congress leaves town with an uneasy stalemate and looming payroll tax hike
The House voted on Tuesday to reject a Senate compromise that would have extended a federal payroll tax holiday for two months and continued unemployment benefits for the long-term jobless.
The Republicans are caught. Viscerally, they support business and rich people, so they have to demand inclusion of the Keystone XL oil pipeline in the bill. (Don’t ask what this has to do with the payroll tax. Congress’s arcane rules allow anything to be included in any bill for anything.)
The Tea Party fringe (aka the tail wagging the dog), demands that any tax reduction be balanced by a spending reduction – so-called “fiscal responsibility” – but each spending reduction is hated by millions of voters.
And voters don’t want to see their taxes raised, especially when (wrongly) believing the taxes will go into the hands of an insane, inept, crooked Congress. Actually, federal tax money doesn’t go into anyone’s hands; it’s destroyed upon receipt. But the Tea/Republican Party has voters so confused, their understanding of economics has fallen even from its previous, minimal levels.
So by embracing the devil, and departing from their business-growth, GDP-growth roots, the Republicans find themselves damned if they do and damned if they don’t – and a well deserved damning it is.
I predicted this dilemma way back in April, 2010 (http://rodgermmitchell.wordpress.com/2010/04/01/republicans-fall-into-obama-trap/). I get no pleasure now from seeing my prediction come true, because it took no genius to base that prediction on these absolute facts:
1. Federal Deficits – Net Imports = Net Private Savings. Reduce deficits and you reduce the private savings that spur economic growth.
2. GPD = Federal and Private Spending and Investment – Net Imports. Reduce federal spending and private spending, and you reduce GDP
3. The government pays for millions of things voters want.
4. The government is Monetarily Sovereign, so can pay any bill of any size at any time.
I pray my formerly beloved Republican Party finally acquires the stones to renounce and ditch the Tea Party, and return to its pro-GDP growth roots. Then, it no longer will be burdened with its current crop of mad hatter presidential candidates, and might even acquire a modicum of respect.
Today, the Democrats are the lesser of two evils. They too don’t understand economics — They are, after all, the “tax and spend” party — but they vote from their hearts, they are closer to the 99%, and their souls don’t belong to the devil.
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
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports